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2019 Supreme(Del) 1318
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, J.
Sunborne Energy Rajasthan Solar Pvt Ltd - Appellant
Versus
NTPC Vidyut Vyapar Nigam Ltd - Respondent
Original Miscellaneous Petition (Comm) No. 222 of 2016; Interlocutory Application No. 23592 of 2015
Decided On : 15-04-2019
Tarun Johri, Adv., Ankur Gupta, Adv., Ankit Saini, Adv., Bharat Sangal, Adv., Babita Kushwaha, Adv.
Headnote:
Arbitration and Conciliation Act, 1996 - Section 34 - Arbitral Award - Power Purchase Agreement - Bank Guarantee - Delays arising while dealing with governmental and public sector authorities being normal and foreseeable, cannot amount to a Force Majeure event - Arbitral Tribunal having rightly come to a finding that the delay was caused due to lack of reasonable care by the petitioner - The same does not constitute a Force Majeure event justifying grant of extension of time to the petitioner - Respondent was to pay a fixed rate of tariff - Electricity was to be supplied to the Discom at the known tariff - Damages were easily ascertainable for the respondent - No evidence led in support of damages - Petitioner would have also suffered a consequence of reduction in tariff for its failure to meet the scheduled commissioning date - There was no reason for the petitioner to have intentionally caused such delay - Petitioner cannot be penalized by forfeiting the amount of Performance Bank Guarantee - Parties were aware of the difference between the tariff that the respondent can claim from the Discoms and the tariff - Liquidated damages for the delay in commissioning of the project - No such plea seems to have been taken by the petitioner before the Arbitral Tribunal - Costs of Rs. 10,00,000/- awarded by the Arbitral Tribunal is justified.
Navin Chawla, J.
The petitioner by way of this present petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') challenges the majority Arbitral Award dated 27.10.2015 (hereinafter referred to as 'Impugned Award') passed by the Arbitral Tribunal dismissing the claims filed by the petitioner, while holding the respondent as entitled to encash the Bank Guarantee for Rs.2,62,27,000.00 furnished by the petitioner, and also awarding costs of proceedings in favour of the respondent.
2. The disputes in the case are in relation to the Power Purchase Agreement (PPA) dated 27.01.2012 executed between the parties.
3. The Government of India having launched the Jawaharlal Nehru National Solar Mission (JNNSM) to establish India as a global leader in solar energy, the Respondent was designated as the nodal agency by the Ministry of Power, Government of India.
4. The respondent issued a Request for Selection (RfS) on 24.08.2011 to set up grid connected solar PV Project under Phase-I Batch-II of JNNSM for purchase of power for 25 years.
5. The petitioner being a successful bidder, a Letter of Intent (LOI) was issued in its favour on 28.12.2011, in terms whereof the petitioner was to set up a 5MW solar power project in Jodhpur, Rajasthan for purchase of power by the respondent.
6. In terms of the LOI, the petitioner furnished three Performance Bank Guarantees, including one dated 23.01.2012 for an amount of Rs. 2,62,27,000.00 (representing 20% of the total amount of Performance Bank Guarantee to be submitted).
7. The parties thereafter entered into the PPA dated 27.01.2012.
8. As per Article 1.1 of the PPA, the Scheduled Commissioning Date, i.e. the date from which the solar electric power of 5MW was to be supplied by the petitioner, was 26.02.2013. The project was however actually commissioned on 26.03.2013, i.e. after one month from the stipulated date.
9. On the said date, the petitioner sent a letter seeking extension of time in the commissioning date from 26.02.2013 to 26.03.2013 and requesting the respondent against invocation of the Bank Guarantees submitted by it. The respondent however, vide letter dated 04.04.2013 rejected the petitioner's request for extension of time.
10. The petitioner filed a petition under Section 9 of the Act, being OMP 338/2013, before this Court, wherein the Court on 11.04.2013, directed that status quo be maintained with respect to the Bank Guarantee dated 23.01.2012.
11. In the meantime, the petitioner invoked the Arbitration Agreement in the PPA for resolution of the disputes culminating in the passing of the Impugned Award.
12. In view of the invocation of arbitration, OMP 338/2013 was finally disposed of by the Court on 22.01.2014 directing that the interim order dated 11.04.2013 is to continue till the same is vacated or modified by the Arbitral Tribunal so appointed.
13. The Arbitral Tribunal thereafter passed the Impugned Award by a majority of 2:1. One of the Arbitrators authored his minority opinion allowing the claims of the petitioner.
14. The disputes between the parties revolve around the non grant of extension of time for the delay of one month in commissioning the project and the necessary consequence of respondent's entitlement to invocation of petitioner's Bank Guarantee in pursuance of levy of liquidated damages for the delay.
15. It may be noted at this point that during the course of hearing, vide order dated 16.12.2016, the Bank Guarantee dated 23.01.2012 for Rs. 2,62,27,000 by HSBC Bank was allowed by this Court to be replaced by a new Bank Guarantee dated 23.11.2016 for an equivalent amount furnished by the petitioner.
16. It is the case of the petitioner that it had purchased a piece of land measuring 200 bighas ('initial land') in District Jodhpur, Rajasthan on 27.12.2011 itself for the development of the Project. However, the said land being agricultural, the petitioner applied to the competent authorities to change the use of la
