The court emphasized the importance of fulfilling payment obligations in a contract and upheld the principle that breach of payment obligations justifies refusal to make further deliveries.

JUDGMENT

Sanjeev Narula, J. (Oral)--The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter "the Act"] is directed against an award dated 4th December, 2021, passed by Retd. Mr. Justice Pradeep Nandrajog, former Chief Justice of the Bombay High Court (Sole Arbitrator), whereby the claims of the Respondent (Claimant in arbitration) were allowed and the counter claims of the Petitioner stood rejected.

The Facts

2. Petitioner was awarded a turnkey contract by Tripura State Electricity Corporation Ltd. [hereinafter "the TSECL"] to create additional power infrastructure in the State of Tripura under the scheme of Deen Dayal Upadhaya Gram Jyoti Yojana under the aegis of the Ministry of Power, Govt. of India. For this purpose, Petitioner required 4500 KM of ACSR (Aluminium Conductors with Steel Reinforced) Dog Conductors [hereinafter referred to as `conductors'] and Respondent, being a manufacturer and supplier of the said Conductors, negotiated a supply contract with the Petitioner. Petitioner issued four Purchase Orders on the Respondent for a total amount of Rs.30,47,94,000/- for purchase of 4500 kms of conductors which were to be delivered in four lots. The details of the Purchase Orders are as follows:

"v) Purchase Order No. MHIDPL/ DDUGJY/ WS/P0/19-20/004 dated 10.09.2019 for a contract price of INR 7,31,50,560/-;

vi) Purchase Order No. MHIDPL/ DDU-GJY/NU/P0/19-20/004 dated 09.09.2019 for a contract price of INR 6,90,86,640/-;

vii) Purchase Order No. MHIDPL/DDUGJY/ DK/P0/19-20/004 dated 09.09.2019 for a Contract Price of INR 7,11,18,600/-;

viii) Purchase Order No. MHIDPL/DDUGJY/ GS/P0/19-20/004 dated 09.09.2019 for a Contract Price of INR 9, 14,38,200/-;"

3. The Purchase Orders also refer to Annexure 1 which was sent by the Petitioner to the Respondent, on 21st November, 2019.

4. Subsequently, parties executed an agreement dated 27th November 2019 setting out the terms and conditions of the supply [hereinafter, `the Agreement'].

5. The Respondent initially supplied 1126.861 km of conductors and raised 22 invoices for an amount of Rs.7,63,21,500/-. Thereafter, further supply of 511.992 km of Conductors was made between 5th March, 2020 to 19th March, 2020 and ten invoices totalling Rs.3,46,72,823/- were raised.

6. Disputes arose between the parties regarding supply of balance quantity of conductors. According to Respondent/Claimant, goods were ready for delivery but were not dispatched because the Petitioner had failed to make the entire payment of previous supplies. Petitioner, on the other hand, contended that there was a short-supply and wrongly repudiation of the contract by the Respondent, as well as non-adherence to the conditions stipulated in Annexure to the Purchase Orders. Additionally, the Petitioner contended that on account of the delay on the part of the Respondent, they were entitled to recover risk purchase damages and liquidated damages as stipulated in Clause 12 of the Agreement.

7. In arbitration, Claimant inter alia claimed on time outstanding amount against invoices (Rs.3,65,47,082/-) alongwith interest @ 12% (Rs.63,69,911/-) and cost of arbitration. Petitioner contested these claims citing illegal and unilateral repudiation of contract by Claimant, and raised counter-claims for liquidated damages in view of: delay in supply (Rs.41.91 Lakhs); non-supply of remaining material (Rs.1.94 Crores); compensation for loss suffered due to risk purchase (Rs.6.27 Crores) and arbitration costs. By the impugned Award, the Tribunal rejected the counter claims of the Petitioner herein and allowed Claims No. 1, 2 and 3 of the Respondent/Claimant, holding that the outstanding balance price in sum of Rs.3,65,47,082 is payable by the Respondent (Petitioner herein) to the Claimant alongwith interest of 12% per annum for the delayed payment. The Arbitrator further awarded costs in the sum of Rs.17,49,000/- to be paid within 30 days from the date of Award failing which the same was to b