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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Bharat Sanchar Nigam Limited - Appellant
Versus
Teracom Limited - Respondent
O.M.P. (COMM) 431/2019 & I.A. 14326/2019
Decided On : 28-03-2022
Constitution of India,1950 - Article 11 - Arbitration and Conciliation Act, 1996 - Section 34 - Terminal Devices - Teracom furnished a Performance Bank Guarantee - Respondent was entitled to 80% of the total payment on supply of IFWT equipment at site, and balance 20% payment after one year of equipment’s satisfactory performance and on signing of Annual Maintenance Contract (AMC) with respective State Telecom Circles under BSNL along with submission of the Performance Bank Guarantee - BSNL had issued a Notice Inviting Tenders for purchase of units of Integrated Fixed Wireless Terminal Devices (IFWT), CDMA Terminals - Respondent participated in the said tender and was declared as the successful bidder - Teracom informed BSNL that even though it had provided complete supply of IFWT equipment, several State Telecom Circles of BSNL had failed to release 80% of the payment due to it.
Finding of the Court:
Arbitral Tribunal had examined BSNL’s contention and rejected claim, essentially, on four grounds - First, it found that there was no such claim for a set off made in Statement of Defence filed by BSNL. Second, it found that in respect of the Kerala Circle, BSNL had claimed levy of penalty by four letters - Perusal of said letters did not indicate that BSNL had made a case for a set off - Third, that issue of levy of penalty was disputed and same had not crystalised - Arbitral Tribunal noted that BSNL’s claim for imposition of levy of penalty appeared to be, ex facie, barred by limitation - Could have been raised as claim for a set off had arisen after Statement of Defence/Reply to Statement of Claims, was filed. Undisputedly - Order to claim a set off, it was necessary for BSNL to have established that an ascertained sum of money was due and payable to it. And, since no such defence was raised - Respect of Kerala Circle and, a Purchase Order case of Madhya Pradesh Circle - Even assuming that any claim for a set off was crystalised after filing of the Statement of Defence, it was open for BSNL to have sought an amendment to its Statement of Defence.
Result: Petition is dismissed
JUDGMENT
Vibhu Bakhru, J. - The petitioner (hereafter 'BSNL') has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter 'the A&C Act') impugning an arbitral award dated 28.06.2019 delivered by an Arbitral Tribunal constituted by a Sole Arbitrator (hereafter the 'Arbitral Tribunal').
2. On 15.07.2010, BSNL had issued a Notice Inviting Tenders (NIT), being no. MM/NWP-CDMA/072010/000393, for purchase of 9,80,000 units of Integrated Fixed Wireless Terminal Devices (IFWT), CDMA Terminals. The respondent (hereafter 'Teracom') participated in the said tender and was declared as the successful bidder.
3. Accordingly, BSNL issued an Advance Purchase Order (hereafter 'APO') on 02.12.2010, in favour of Teracom for purchase of 3,75,000 units of WLL CDMA 2000 lx IFWTs. In terms of the APO, on 18.12.2010, Teracom furnished a Performance Bank Guarantee bearing number 21641LG025810 for an amount of ? 2,12,97,000/-, which was valid for a period of three years.
4. On 02.02.2011, BSNL placed a Purchase Order bearing P.O no. CE/PO/009/2010-2011 (hereafter the 'Contract') for procurement of 3,75,000 units of WLL CDMA 2000 lx IFWTs (LI, PKG-1) from the respondent, for a total value of Rs. 42,59,29,581/-.
5. In terms of Article 11 of the Contract, the respondent was entitled to 80% of the total payment on supply of the IFWT equipment at site, and the balance 20% payment after one year of the equipment's satisfactory performance and on signing of the Annual Maintenance Contract (AMC) with the respective State Telecom Circles under BSNL along with submission of the Performance Bank Guarantee.
6. Admittedly, there was delay in payment of 80% of the total payment that was due under the Contract. By its letter dated 09.04.2012, Teracom informed BSNL that even though it had provided complete supply of the IFWT equipment, several State Telecom Circles of BSNL had failed to release 80% of the payment due to it.
7. Correspondence was exchanged between Teracom and various State Telecom Circles from May, 2014 till December, 2016. Teracom states that most State Telecom Circles had thereafter, released the payments, which were due to Teracom; however, an amount of ? 1,52,91,987/- remained outstanding.
8. The Performance Bank Guarantee dated 18.12.2010 was initially for a term of three years but Teracom had extended the same from time to time, at the instance of BSNL. It was last extended till 30.09.2017. On 01.08.2017, BSNL, once again, called upon Teracom to extend the Performance Bank Guarantee till 30.09.2018. Teracom resisted the said request. Thereafter, by its letter dated 10.08.2017, Teracom stated it had met all its obligations under the Contract and requested that the Performance Bank Guarantee be released. BSNL did not do so and invoked the Performance Bank Guarantee on 09.01.2018.
9. In view of the disputes between the parties, Teracom issued a notice dated 27.01.2018 to the Chairman and Managing Director, BSNL, invoking the Arbitration Agreement and seeking reference of the disputes to arbitration.
10. Before the Arbitral Tribunal, Teracom raised the following claims:
"Claim no. 1:- Entitlement to refund an amount of Rs. 21,297,000.00 which is equivalent to PBG by the claimant in terms of APO dated 02-12-2010.
Claim no. 2:- Payment towards outstanding dues of Rs. 1.53 Crores towards the bills raised by the claimant.
Claim no. 3:- Interest at the rate of 18% per annum on the claims of the claimant till the date of passing the award at the first instance. Further to treat the amount as Principal Sum awarded and grant further interest at the rate of 18% per annum till the amount is paid to the claimant in total.
Claim no. 4:- Litigation cost.
Claim no. 5:- Payment of Rs. 1 crore by the respondent for breach of contract, harassment, mental agony and damages
Claim no. 6:- Any further reliefs for the claimant as found entitled."
11. BSNL filed its Statement of Defence, however, it did not raise any Counter-claims.
12. By the im
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