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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
Voith Hydro LTDA & Ors. - Decree Holders
Versus
NTPC Limited - Judgment Debtor
OMP (ENF.) (COMM.) 64 of 2018 & IA No. 5231 of 2018, EA 960 of 2019, EA 194 of 2020, EA 196 of 2020, EA 988 of 2020 & EA 1236 of 2020
Decided On : 19-03-2021
Arbitration and Conciliation Act, 1996 – Sections 34 and 36 – Arbitration agreement - Arbitral Award and pre-award interest - binding agreement- Bank Guarantee Charges – Liability of - Voith’s case that the amount paid by NTPC falls short of the amount payable by it for discharge of the Arbitral Award - Whether there is any binding agreement between the parties whereby they have agreed that amounts awarded in foreign currency would be computed at the exchange rate as prevalent? If not, the exchange rate to be applied for discharge of the amounts awarded in foreign currency - Whether it was open for NTPC to deduct TDS on the awarded amounts and whether the deduction of the said amount and deposit of the same with the Income Tax Authorities constitutes a discharge of the amounts awarded to the aforesaid extent - Whether petitioner is entitled to charges for extending the Bank Guarantees, as claimed?
Finding of the court: Court does not consider it apposite to accede to its prayer for Bank Guarantee Charges which were incurred by Voith for furnishing the Bank Guarantees against payments in terms of the Niti Aayog Circular. It was also pointed out that NTPC had released the payment under the Niti Aayog Circular while accepting the Advance BGs to cover part of the amount so released. It was submitted that in this view, the Advance BGs should also be considered as Bank Guarantees furnished in terms of the Niti Aayog Circular. It is relevant to note that NTPC had deducted TDS in two tranches. It had deducted Rs.2,58,55,348/- (Rs.1,32,10,961/- on the principal and Rs.1,26,44,387/- on the interest) and had deposited the same on 07.12.2018. This amount was deducted at the time of remission of money in terms of the Niti Aayog Circular. The second tranche of Rs.1,34,488/- was deducted by NTPC while depositing the balance amount. Out of the aforesaid amount Rs.1,10,84,032/- was deducted on account of the principal amount and Rs.23,50,456/- on account of interest
Result: Petition rejected
JUDGMENT :
VIBHU BAKHRU, J.
1. By this order, this Court shall dispose of the application filed by the Decree Holders - Ex. Appl. (OS) 988/2020 - whereby the Decree Holders (hereafter collectively referred to as ‘Voith’) have, inter alia, sought directions against the Judgment Debtor (hereafter ‘NTPC’) to pay a sum of Rs.21,17,72,890.83/-. According to Voith, the said sum remains to be paid by NTPC to discharge the Arbitral Award dated 23.08.2016 (hereafter ‘the Award’), which is sought to be enforced under Section 36 of the Arbitration and Conciliation Act, 1996 (hereafter the ‘A&C Act’). In addition, Voith also prays that directions be issued to NTPC to forthwith pay it Rs.2,88,31,380/-, which is the cost incurred by Voith to extend the Bank Guarantees furnished to NTPC.
2. The Award was passed in the context of disputes that had arisen between the parties in connection with an agreement for execution of a Hydro Electric Project to be constructed on the river Bhagirathi known as Loharinag Pala Hydro Electric Power Project (4x150MW).
3. In terms of the Award, Voith was awarded a total sum of USD 10,688,455.95; EUR 3,341,171.32; and Rs.153,495,177.90. The compensation awarded to Voith under various heads, as summarized by the Arbitral Tribunal, is set out below:-
USD EUR INR
A. Engineering 325,871.38 926,789.53 95,356,757.96
B. Material 12,547,850.37 2,992,800.66 186,932,479.79
C. Model Test - 639,203.14 -
D. On-site expenses - - 19,249,500.00
E. Off-site expenses 871,962.20 915,069.97 259,235,689.53
F. Bank Guarantees - 229,472,02 377,004.62
Less Advance Received (3,057,228.00) -(2,362,164.00) -(407,656,254.00)
Total 10,688,455.95 3,341,171.32 153,495,177.90
4. The Arbitral Tribunal awarded pre-award interest at the rate of 2.5% per annum, compounded annually, on the amount of USD 10,688,455.95 and EUR 3,341,171.32 from 08.05.2013 till the date of the Award. The Arbitral Tribunal also awarded pre-award interest at the rate 8.5% per annum, compounded annually, on the amount of INR 153,495,177,90 from 08.05.2013 till the date of the Award. The Arbitral Tribunal also awarded post-award interest from the date of the Award till the date of payment at the same rates. NTPC was further directed to return all Advance Bank Guarantees furnished by Voith.
5. NTPC challenged the aforesaid Award under Section 34 of the A&C Act, in OMP (COMM) 16/2017, which was dismissed by this Court on 02.07.2019.
6. In compliance with the order dated 06.02.2017 passed by this Court in OMP (COMM) 16/2017, Voith had extended the Bank Guarantees furnished by it to the Judgment Debtor against the advance received by them during the term of the contract. Concededly, the said advance was adjusted in determining the amounts awarded. The details of the said Bank Guarantees (hereafter the ‘Advance BGs’) are set out below:
Bank Guarantee No. Bank/Date of issuance Bank Guarantee Amount Expiry date
GO191148450 ANZ Bank USD 1,528,614
EUR 900,961 16 February 2020
24 January 2019
GO191128450 ANZ Bank
29 January 2019 INR 203,828,127
EUR 280,121 16 February 2020
GO191158450 ANZ Bank
24 January2019 USD 1,528,614
EUR 900,961 16 February 2020
GO191138450 ANZ Bank
24 January 2019 INR 203,828,127
EUR 280,121 16 February 2020
7. The Advance BGs were valid till 16.02.2020. In the proceedings pertaining to NTPC’s challenge to the Award - OMP(COMM) 16/2017 - a statement was made on behalf of NTPC stating that it was willing to release 75% of the awarded amount against an Unconditional Bank Guarantee in view of the Circular issued by Niti Aayog (hereafter the ‘Niti Aayog Circular’). This Court noted the said statement and directed that NTPC would be bound to comply with the same. In compliance with the aforesaid order, NTPC paid a sum of Rs.76,11,36,565/- to Voith. This was against the Bank Guarantee (Reference No. IGT1803108 dated 05.10.2019) furnished by BNP Paribas, whereby it guaranteed a sum of Rs.9,86,74,263.87/-; EUR 24,70,794.28/-; USD 85,67,414.33; and GBP 76,798.13 (The said Bank Guarantee is ref
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