The main legal point established is that the force majeure clause can be invoked when the performance of a contract becomes impossible due to unforeseen circumstances, leading to frustration of the contract.

1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) has been filed by the petitioner challenging the arbitral award dated 24.08.2015 passed by the Sole Arbitrator in case no. 12(3)10-D(P)(P-S) Cell/AT-348 dated 25/07/2013.

2. The disputes between the parties relate to the non supply of “General Purpose Receivers (144 Nos.)” by the respondent to the petitioner.

3. The petitioner vide its Acceptance of Tender dated 25.07.2013 had placed an order of supply of the following items on the respondent:

“Procurement of Professional DRM Monitor Receiver and DRM General Receiver:-

Comcon
	Description	Make & Model	Unit	Qty	Unit Price without Vat/Service Tax (in Rupees)	VAT/Service Tax %	VAT/Service Tax Amount in Rs.	Total Price with Tax in Rs.
3.1	PROFESSIONAL DRM MONITORING Receiver along with standard accessories. Such as Jog Wheel as per clause 2.1 of section II with following configuration options included: GPS receiver, 2RS232,2 relay outputs, builtin loudspeaker, external loudspeaker outputs, Alarm system and built in DVD drive	RF Mondial RF-SE 12	Nos.	36	1155350.00	5%	57767.50	43672230.00
3.2	DRM General Purpose Receiver along with standard accessories as per clause 2.2 of section II	Uniwave DRM General purpose Receiver	Nos.	144	19955.00	12.50%	2494.38	3232710.00

4. The agreement contains a force majeure Clause, which is reproduced herein under:-

“20. FORCE MAJEURE

In the event of either party being rendered unable by force majeure to perform any obligation required to be performed by them under the contract, if any concluded, the relative obligation of the part affected by such force majeure lasts. The terms “Force Majeure” as implied here is shall mean acts of God, War, Civil riots, fire directly affecting the performance of the contract, floods and Acts and Regulations of respective Government of the two parties, namely the organization and the contractor. Both upon the occurrence of such cause and upon its termination, the party alleging that it has been rendered unable as aforesaid, shall within seventy two hours of the alleged beginning and ending thereof giving full particulars and satisfactory evidence in support of its claim. If deliveries are suspended by force majeure conditions lasting for more than 2 (two) months, the Organization shall have the option of canceling this contract in whole or part at its discretion without any liability on its part.”

The agreement further authorizes the petitioner to levy liquidated damages in case of failure of the respondent to supply the equipments. The equipments were to be supplied on or before 31.10.2013.

5. In terms of the agreement, the respondent had also submitted to the petitioner a Performance Bank Guarantee for an amount of Rs. 24,32,700/-, equivalent to 5% of total contract value, which was Rs. 4,86,53,416/-.

6. There is no dispute regarding the fact that the respondent supplied the Professional DRM Monitor Receiver to the petitioner. As far as the DRM Monitor General Purpose Receiver were concerned, the make and model approved by the petitioner was “UNIWAVE DRM General Purpose Receiver”. The respondent vide its letter dated 01.08.2013 i.e. within the period of supply and in fact, within a week of the Acceptance of the Tender, informed the respondent that in spite of repeated attempts, the manufacturer of the equipment, which is a company managed by an individual technocrat, was not responding and from the informal information received from the industry sources, it had been learnt that the concerned key person is having some serious personal problem and is not active in business. A request was, therefore, made to the petitioner to accept the