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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
NTPC Ltd - Appellant
Versus
Tecpro Systems Ltd - Respondent
Arbitration Appeal (COMM.) No. 58 of 2021
Decided On : 29-10-2021
Arbitration and Conciliation Act - Dispute between NTPC and TSL - Section 37(2)(b) of the A&C Act - Contracts for Coal Handling Plant Package for Pakri Barwadih Coal Mining Project - Extended Coal Handling Plant Package - TSL's claims for costs incurred, loss of profits, and compensation - NTPC's termination of contracts - TSL's application under Section 17 of the A&C Act - Impugned orders directing NTPC to maintain status quo and conduct joint measurements set aside
Fact of the Case:
NTPC and TSL were in dispute over contracts for Coal Handling Plant Package and Extended Coal Handling Plant Package. TSL claimed costs incurred, loss of profits, and compensation, while NTPC terminated the contracts. TSL filed an application under Section 17 of the A&C Act, seeking to set aside the termination and restrain NTPC from creating third party interests.
Finding of the Court:
The court found that the reliefs sought by TSL were substantive and outside the scope of Section 17 of the A&C Act. The impugned orders directing NTPC to maintain status quo and conduct joint measurements were set aside.
Issues: Dispute over contracts, TSL's claims, NTPC's termination of contracts, TSL's application under Section 17 of the A&C Act
Ratio Decidendi: The court held that the reliefs sought by TSL were not in aid of the final relief and were outside the scope of Section 17 of the A&C Act. The impugned orders were set aside as they were not related to the disputes pending before the Arbitral Tribunal.
Final Decision: The appeal was allowed, and the impugned orders directing NTPC to maintain status quo and conduct joint measurements were set aside. NTPC and TSL were bound to comply with obligations regarding joint measurements.
JUDGMENT
Vibhu Bakhru, J. - The appellant (hereafter NTPC) has filed the present appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 (hereafter the A&C Act), inter alia, impugning the orders dated 14.09.2021 and 29.09.2021 passed by the learned Arbitral Tribunal. Insofar as the order dated 14.09.2021 is concerned, NTPC assails the same to the limited extent that it directs maintenance of status quo with respect to the subject Projects.
2. The Arbitral Tribunal is in seisin of the dispute between the parties relating to Supply and Services Contracts dated 17.05.2011 for Coal Handling Plant Package for Pakri Barwadih Coal Mining Project (main CHP Contracts); and the Supply and Services Contracts dated 20.10.2011 for the Extended Coal Handling Plant Package for Pakri Barwadih Coal Mining Project Block (extended CHP Contracts).
3. The respondent (hereafter TSL) claims that it is an established Engineering Procurement and Construction (EPC) Contractor and is engaged in providing turnkey solutions, inter alia, in respect of bulk material handling systems for cement, power and steels sectors.
4. NTPC is a public sector undertaking and was allocated the Pakri Barwadih Coal Block in Hazaribagh District of Jharkhand.
5. On 01.02.2010, NTPC issued invitation for bids for supply of installation of Coal Handling Plants Package Pakri Barwadih Coal Mining Block. The petitioner applied for the tender documents and on 20.02.2010 submitted its proposal for executing the works relating to the said Project. Thereafter, on 31.03.2011, NTPC issued the Notification of Award awarding the said contracts to TSL. Thereafter, NTPC issued another invitation for the extended supply and installation of the Coal Handling Plants package for Pakri Barwadih Coal Mining Block. TSL submitted its proposal pursuant to the said invitation. NTPC accepted the same and issued a Notification of Award dated 05.10.2011 for the extended supply and installation of CHP Package for Pakri Barwadih Coal Mining Block.
6. In the meantime, on 17.05.2011, NTPC and TSL entered into two separate Contracts for the Supply and Services respectively for setting up the facilities. Thereafter, on 20.10.2011, the parties entered into two further Contracts referred to as extended First Contract and extended Second Contract.
7. TSL claims that NTPC has failed and neglected to perform its obligations for due performance of the contracts in question including failure to timely hand over of encumbrance free work front; interfering extensively in execution of the project, which disrupted the works and inordinately delayed their completion; and, failure to make timely payments, amongst other breaches.
8. TSL claims that in view of the above, the execution of the contracts in question were delayed entirely for the reasons attributable to NTPC. TSL claims that since it was understood that NTPC was responsible for the delays, it also granted repeated extensions for completion of the contracts in question.
9. TSL claims that it is entitled to recover all costs incurred by it in carrying out the works for setting up the facilities and in addition, is entitled to be compensated for all loss and damages suffered as a consequence of breach on the part of NTPC in performing its obligations in a timely manner. TSL has also made a claim in respect of wrongful invocation of the performance bank guarantees.
10. NTPC disputed TSLs claims and in view of the said disputes, TSL issued a notice dated 25.04.2019 invoking the arbitration clause under the contracts in question. Both, NTPC and TSL, nominated their respective arbitrators. And, both the nominated arbitrators appointed the presiding arbitrator, thus constituting the Arbitral Tribunal.
11. On 27.01.2020, TSL filed its Statement of Claims dated 18.01.2020 before the Arbitral Tribunal. Summary of Claims as set out by TSL in its Statement of
The court clarified the scope of Section 17 of the A&C Act, emphasizing that interim measures should be in aid of the final relief and related to the disputes pending before the Arbitral Tribunal.
The scope of interim relief under Section 17 of the Arbitration and Conciliation Act is strictly limited to matters directly aiding the final relief sought in arbitration.
Arbitral tribunals have discretion over fact-finding, and courts should not re-evaluate evidence unless decisions violate public policy or involve patent illegality.
Point of Law : In terms of Section 11(6A) of the A&C Act, the scope of examination under Section 11 of the A&C Act is limited to the existence of the arbitration agreement.
Point of Law : In terms of Section 11(6A) of the A&C Act, the scope of examination under Section 11 of the A&C Act is limited to the existence of the arbitration agreement
Arbitral tribunals must not reject claims on non-arbitrability if disputes are sufficiently raised, and recovery rates must reflect reasonable estimates based on contractual terms and evidence.
The Arbitral Tribunal's decision falls within its jurisdiction and does not amount to patent illegality, as it was based on a plausible interpretation of the exclusionary clause in the contracts and ....
The Arbitral Tribunal has considerable discretion in evaluating evidence and interpreting contract clauses, and its decision cannot be interfered with unless found to be patently illegal or in confli....
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