The court held that the contract could not be terminated on the ground of delay as the Airport Authority of India (AAI) had waived the requirement of 'time being the essence'. The court also found that the reasons for termination as stated in the termination letter were not sustainable. The court further held that the Purchase Order was not procured by fraud.

JUDGMENT

Vibhu Bakhru, J. - Airport Authority of India (hereafter 'AAI'), is a Statutory Body constituted under the Airports Authority of India Act, 1994. It 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 13.03.3019 (hereafter the 'impugned award') made by the Arbitral Tribunal comprising of a former Chief Justice of India as the Sole Arbitrator.

2. The impugned award was rendered in respect of disputes that had arisen between the parties in relation to a Purchase Order dated 13.07.2017 for the supply of four thousand stainless steel passenger baggage trolleys (hereafter 'PBTs') along with their comprehensive annual maintenance contract.

3. On 11.04.2017, AAI issued a Notice Inviting Tenders (hereafter 'NIT') being Tender No. Tech/06/2017 for "Supply and Comprehensive Annual Maintenance Contract" (hereafter 'CAMC') of four thousand stainless steel PBTs at thirteen airports at an estimated tender cost of Rs. 5.42 crores. Out of the above estimated amount, a sum of Rs. 39,81,160/- was payable to the successful bidder on completion of the supplies, after the expiry of the defect liability period.

4. The respondent, Bentwood Seating Systems (P) Ltd. (hereafter 'BSS'), was declared the highest bidder. Accordingly, AAI issued a Letter of Intent (LoI) in terms of which BSS was required to sign a 'Contract Agreement' and complete all requirements as stipulated in the NIT. The value of the contract was accepted at Rs. 4,62,82,000.05/-.

5. On 30.06.2017, AAI called upon BSS to clarify the impact of all indirect taxes including Octroi and Sales Entry Tax, based upon the implementation of the Goods and Service Tax (GST) legislations, which were to be effective from 01.07.2017. The said letter was duly acknowledged by BSS on 05.07.2017. Subsequently, BSS completed all formalities and, AAI issued a Purchase Order on 13.07.2017. In terms of the Purchase Order, BSS was asked to execute the 'Contract Agreement' within thirty days from the date.

6. On 14.08.2017, BSS acknowledged the receipt of the Purchase Order and informed AAI that the prototype of a PBT had been dispatched from China and expected to receive it from Kolkata within the week.

7. On 21.08.2017, AAI sent a letter requesting BSS to inform the date and time of inspection of the prototype PBT. Subsequently, the inspection was carried at the factory premises of BSS on 24.08.2017. Thereafter, by letter dated 31.08.2017, AAI informed BSS that the Competent Authority had accepted the inspection report and called upon BSS to start bulkproduction of the PBTs and to intimate the date of pre-dispatch inspection of the first lot of the PBTs.

8. Aai claims that certain communications were exchanged with BSS whereby BSS was informed that the said PBTs were urgently required at the consignee airports to meet the operational requirements. BSS was also called to inform AAI about the next date of inspection. On 12.10.2017 and 24.10.2017, AAI informed BSS that all four thousand PBTs were required to be arranged for pre-dispatch inspection on or before 20.10.2017. AAI also sought reasons for not completing the order within the time as prescribed in terms of Paragraph No. 8 of the Purchase Order. Thereafter, BSS was requested to confirm the date of final inspection of the total quantity of PBTs as 02.11.2017.

9. Consequently, the final inspection for the PBTs was scheduled on 02.11.2017. AAI through another letter dated 27.10.2017 informed BSS of the constitution of a committee of two officers, to visit the premises of BSS, at Kolkata on 02.11.2017 for carrying on the pre-dispatch inspection. Apparently, the two member committee visited the premises of BSS on the given date. The Inspection Report dated 02.11.2017 indicates that the PBTs could not be inspected as the same were not available on site.