The termination of a contract can be deemed wrongful if it is primarily due to the actions of the party seeking termination and if the party fails to provide essential documentation or withholds payments.

JUDGMENT

Vibhu Bakhru, J. - Introduction

1. GAIL (India) Ltd. (hereinafter 'GAIL') has filed the present petition under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the 'A&C Act') impugning an arbitral award dated 31.07.2018 (hereinafter the 'impugned award') delivered by an Arbitral Tribunal constituted of Justice (Retd.) Aftab Alam, former Judge of the Supreme Court as the Sole Arbitrator (hereinafter the 'Arbitral Tribunal').

2. The impugned award was rendered in the context of disputes that have arisen between the parties in connection with a contract for construction of a residential colony for the employees of GAIL who are employed at LPG Recovery Plant at Ghandhar, District Bharuch, Gujarat (hereafter 'the Contract'). GAIL had terminated the Contract alleging that the respondent, M/s Gupta Bros (India), had failed to perform its obligations and complete the work within the stipulated period.

3. GAIL had, thereafter, engaged another contractor for completion of the balance work at the risk and costs of the respondent. GAIL claimed that in terms of the Contract, it was entitled to be reimbursed the additional amount paid for completion of the works (the amount spent in excess of the agreed consideration) along with administrative charges at the rate of 10% of the additional amount. Accordingly GAIL claimed a sum of Rs. 7,38,10,000/- on account of balance works executed at the respondent's risk and cost. GAIL recovered part of the amount by encashing the Contract Performance Bank Guarantee (hereafter 'the PBG') of Rs. 1,65,00,000/- and selling certain construction equipment belonging to the respondent for a sum of Rs. 5,00,000/-. GAIL claimed the remaining amount along with interest at the rate of 18% per annum.

4. The respondent disputed the claims made by GAIL. It contended that GAIL was responsible for the delay in execution of the project and therefore, the termination of the Contract by GAIL was illegal. It also claimed that GAIL's termination of the Contract was motivated to punish the respondent for taking recourse to Courts to challenge GAIL's of blacklisting the respondent in respect of another contract. The respondent also raised several counter-claims premised on the aforesaid assertions.

5. The Arbitral Tribunal accepted the respondent's case that GAIL did not have any grounds to terminate the Contract and the termination of the Contract were wrongful and unsustainable. The Arbitral Tribunal rejected the claims raised by GAIL. Insofar as the counter claims are concerned, the Arbitral Tribunal allowed the respondent's claim for payment of work done but not paid; refund of the amount recovered by encashment of PBG; and refund of bank charges along with interest at the rate of 12% per annum from 10.10.2014 till the date of payment. The remaining counterclaims were rejected.

6. The respondent has accepted the impugned award and has not challenged the impugned award to the extent it has rejected the counter-claims. GAIL, being aggrieved by the impugned award, has filed the present petition.

Factual Context

7. GAIL issued a Notice dated 16.03.2010 inviting offers for construction of residential accommodation / quarters / bachelors accommodation for its employees / officials at Bharuch in Gujarat, Rajamundry in Andhra Pradesh and Khera in Madhya Pradesh. The bidders were permitted to submit separate bids for the projects at the aforesaid three locations. The bids submitted by the respondent for the project at Bharuch in Gujarat and Rajamundry in Andhra Pradesh were accepted. On 27.07.2010, GAIL issued a Fax of Acceptance (FOA) on 27.07.2010 communicating its acceptance of the bids submitted by the respondent for the projects at the said two locations (Bharuch and Rajamundry).

8. The controversy in the present case relates to the Contract for executing the works at Bharuch (hereinafter 'the Project')