The main legal point established in the judgment is that the interpretation of a contract by an Arbitral Tribunal must be reasonable and in accordance with the terms of the contract, and such interpretation would not be open to challenge under Section 34 of the Arbitration & Conciliation Act, 1996.

NAVIN CHAWLA, J.

I.A. 2044/2018

Allowed, subject to all just exceptions.

O.M.P. (COMM) 70/2018

1. This petition under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) has been filed by the petitioner challenging the Arbitral Award dated 9th November, 2017. The learned senior counsel for the petitioner submits that the Arbitral Tribunal has acted in ignorance of the terms of the Agreement between the parties while awarding the amounts in favour of the petitioner. In this regard, the learned senior counsel for the petitioner has drawn my attention to clause 35.2 of the Agreement and submits that in case of termination of the contract by the supplier i.e. the respondent herein, pursuant to the suspension of the contract/work ordered by the purchasers i.e. the petitioner herein, the respondent would be entitled to 105% of the “cost incurred by the supplier”. He submits that, in the present case, the Arbitral Tribunal, instead of awarding the “cost incurred by the respondent”, has taken into account the price of the contract, which would certainly be more than the cost and, therefore, the award is liable to be set aside. He further submits that in absence of proof of any loss suffered by the respondent, the Arbitral Tribunal could not have awarded 105% of the price of the contract in favour of the respondent. The learned senior counsel, to support the above arguments, has relied upon the definition of “contract price” as given in the contract as also the payment schedule agreed between the parties.

2. I have considered the submission made by learned senior counsel for the petitioner, however, I am unable to agree with the same. Clause 35 of the Agreement is reproduced herein under:-

“35 Termination und Suspension

35.1 Termination

35.1.1 The Purchaser may at any time on breach of this Contract by the Suppliers under Clause 32.1 hereof, give them a written notice of such breach. If the Supplier do not commence appropriate measure within a period of 30 (thirty) days after issuance of such notice to remedy that breach, then the Purchaser may terminate this Contract at any time thereafter stating therein the date of termination. The Supplier shall then be liable the Purchaser in accordance with Clause 32.3 hereinabove.

35.1.2 The Purchaser reserves the right to terminate the Contract at any time by giving a notice of no less than 1 (one) month without assigning any reason. The Supplier shall stop the performance of the Contract from the date of termination and hand over all the drawings, documents, plant and equipment including all the rights of work to the Purchaser. The Purchaser shall pay to the Supplier 105% (one hundred and five percent) of the cost incurred by the Supplier till the date of termination as compensation after adjusting payments already made till the termination. No consequential damages shall be payable by the Purchaser to the Supplier in the event of such termination.

35.1.3 If the Purchaser fails to pay to the Supplier any undisputed payment as required hereunder and such failure continues for 45 (forty five) days after written notice thereof has been given to the Purchaser by the Supplier, then the Supplier shall give 10 (ten) days prior notice to the Purchaser and thereafter may suspend any Works or part thereof as per Clause 35.2 thereof.

35.2 Suspension

35.2.1 The Purchaser may suspend the work in whole or in part at any time by giving Supplier notice in writing to such effect stating the nature, the date and the anticipated duration of such suspension. On receiving the notice of suspension, the Supplier shall stop all such work which the Purchaser has directed to be suspended with immediate effect. The Supplier shall continue to perform other work in terms of the Contract which the Purchaser has not suspended. The Supplier shall resume the suspended work as expeditiously as possible after receipt of such withdrawal of suspension notice.

35.2.2 During suspension, the Su