The main legal point established in the judgment is the principle of least interference with arbitral awards and the commercial sense of contractual terms.

S.RAVINDRA BHAT, J.

1. This appeal, by Vedanta Ltd (hereafter “Vedanta”) under Section 37 of the Arbitration and Conciliation Act, 1996 (hereafter “the Act”) questions the judgment of a learned single judge, dismissing its petition under Section 34 of that Act. The petition challenged the award of an arbitral tribunal, (dated 9th November, 2017).

2. The facts of the case are that Vedanta was granted environmental clearance for its existing plant i.e. Alumina Refinery of 1 MTPA in Lanjigarh, Orissa. The Alumina Refinery with 1 MTPA in Lanjigarh, Orissa along with captive power plant of 75MW, were operational since 2007. The respondent (hereafter “Shenzhen”), a Chinese company, provides energy infrastructure construction services. It offers power plants and construction and maintenance services; it also designs procurement and construction work with reference to the Power Plant Project. It belongs to the SEPCO group of companies. Vedanta is engaged in the business of production of metallurgical grade aluminum and other aluminum product. It had an alumina refinery of capacity of 1 MTPA and captive power plant of 75 MW at Lanjigarh, Kalahandi District, Orissa for which the environmental clearance was granted on 22.09.2004. Vedanta wished to expand the capacity of the refinery from 1 MTPA to 5 MTPA and a corresponding increase in generation capacity of its power plant from 75 MW to 300 MW. To this end, it applied, on 03.10.2007 to the Ministry of Environment and Forests (hereafter called “MoEF”) for environmental clearance; on 12.03.2008 it was issued the Terms of Reference. Later, without obtaining the requisite environmental clearance for the expansion, on 06.04.2008 Vedanta issued a letter of intent (LOI) to Shenzhen for design, engineering, manufacture, supply, custom clearance, transportation, uploading, civil works, storage, erection, testing, commissioning and performance of guarantee test of co-generation power plant comprising of 05 units on turn-key basis. Resultantly, four contracts were entered into on 22.05.2008: (i) Offshore Engineering and Technical Services Contract. (ii) Offshore Supply Contract. (iii) Onshore Services and Construction Contract and (iv) Onshore Supply Contract. These shall be hereafter collectively called “the contracts”. In addition to these contracts, Shenzhen, on the same day (22.05.2008) executed a guarantee agreement. Further, in terms of the EPC Contracts, Shenzhen submitted performance bank guarantee amounting to 10% of the EPC Contract price and also submitted advance bank guarantee again amounting to 10% of the EPC Contracts.

3. The said EPC Contracts contained an arbitration clause. Shenzhen started the project work on 01.05.2008. It raised invoices from time to time towards the construction of the project according to payment schedule as agreed upon and stipulated in the contract, and the payments were being made by Vedanta, except for withholding the amount towards meeting the last three milestones and for quality guarantee. The payments were to be released to Shenzhen in terms of clause 4.3 of Schedule 4 of the EPC Contracts. Similar clauses are there in all the EPC Contracts, and one of such clauses being clause 4.3 of the Onshore Supply Contract is reproduced herein below:

“4.3. Payment Terms:

4.3.1 Subject to any deductions from the Contract price as per Contract the supplier shall been titled to receive the Contract price in the following manner:

4.3.1.1 Supply of Plant & Equipment Spares

4.3.1.1.1 10% Advance against submission of Advance Bank Guarantee of equal amount and Performance Bank Guarantee of 10% the Contract price.

4.3.1.1.2 10% against receipt of material at site on pro rata basis at per billing schedule to be approved by the purchaser.

4.3.1.1.3 5% against the mechanical completion (pro rata for each unit).

4.3. 1.45% against successful synchronization (pro rata for each unit)

4.3.1.1.5 10% against successful completion of PG test (prorated for each unit) except for th