Point of Law: Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act, 1996 before commencing arbitration.

JUDGMENT :

1. Petitioners claim to be engaged in the business of designing, developing, manufacturing, marketing and/or sale of telecommunications related products worldwide. According to petitioners, Bharat Sanchar Nigam Limited (BSNL) invited bids for planning, supply, installation and commissioning of IMPCS 20/30 Combo Network (Phase V) vide tender No.: MM/CMTS/032006/000301 dated 22.03.2006 and B&CCS (Billing and Customer Care System including DR) and COTS Solution, which were part of overall IMPCS 20/30 network (Phase V) solution designed by petitioners, were to be delivered to the BSNL as per tender specifications and requirement. For this purpose, petitioners entered into Cooperation Agreement Nos. PACIND3009032002RUB & PACCHNHW09032002 RUA dated 20.03.2009 with the respondent.

2. During the course of hearing, learned counsel for the petitioners submitted that Clause 4.4 of the Agreement clearly stipulated that time is of the essence under the agreement and the respondent is obligated to follow the project time line and ensure that no delay is there in supply and implementation; Clause 4.5 of Agreement stipulated that the respondent was to provide (one) year Operation and Maintenance support; Clauses 4.6 and 10.3 of the Agreements read with Clause 1.2.1 stipulated that respondent was required to provide three years’ 7X24 warranty services from the date of commissioning of the complete network in the service area. It was also submitted that respondent was responsible for bearing all the expenses for repair and replacement of the supplied solution and provide the same free of charge to the petitioners during the subsistence of the warranty period. It was also stipulated in both the Agreements that in case BSNL imposes any penalty on the petitioners due to delay in restoration/replacement/fixing of the fault with B&CCS and COTS solution, the respondent shall pay the complete penalty imposed and also if the respondent has to get the defects remedied from a third party, that shall be at complete risk and expense of the respondent.

3. Learned counsel for the petitioners further submitted that based on the aforesaid agreements and assurances, the petitioners issued four purchase orders to respondent for hardware implementation, integration of B&CCS and other components, integration of new element with billing system and performance tuning with expanded billing system, disaster recovery and business continuity system, application, software, drives, modem, printer, web based application with customizable OUI for data analysis and COTS package. According to petitioners, the aforesaid work was commissioned after a delay on 25.06.2012 and was valid till 24.06.2013 and the associated warranted for complete solution/products supplied was valid till 24.06.2015.

4. Learned counsel next submitted that during the subsistence of warranty period under the said agreements, BSNL raised several issues with regard to solution and products supplied by the respondent, however, respondent in direct breach of its contractual obligation did not rectify/resolve certain issues. Several e-mails and communications were made by the petitioners to the respondent during that one year requesting respondent to fix the issues and admittedly, in a few of the communications, respondent acknowledged the pending issues and assured the petitioners that all the issues will be resolved/rectified. In order to rectify the defects and due to inaction of respondent, petitioners engaged a Third-Party Vendor and in terms of the agreements, the third party vendor was wholly at the risk and cost of respondent and the same was informed to the respondent.

5. According to counsel for petitioners, thereafter meetings were held between petitioners and respondent on 26.10.2016; 06.12.2016; 15.11.2018 and 27.11.2018 wherein respondent always assured the petitioners that their team will check the claims of petitioners and revert, however, respondent failed to perform its contractual ob