JUDGMENT

Manmohan, J. (Oral)

1. Present petition has been filed under Section 34 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as "Act, 1996") challenging the arbitral Award dated 25th March, 2003 passed by an Arbitral Tribunal comprising Mr. Justice (Retd.) Rangnath Misra (Presiding Arbitrator), Mr. Justice (Retd.) S. Ranganathan and Mr. Justice (Retd.) Guman Mal Lodha.

2. Though the facts of the present case have been extensively set out in the arbitral Award, the relevant facts are that Kalyani Mukand Limited (earlier known as 'Kalyani Konkan Sponge Private Limited') was formed by its promoters for implementing a sponge iron project in the Raigarh District of Maharasthra. The Gas Linkage Committee set up by the Ministry of Petroleum and Natural Gas allocated .75 MMSCMD of natural gas in favour of respondent-claimant specifically for its proposed project. Respondent-claimant was to be supplied gas from ICP-Heera Pipeline which was being implemented at the relevant time by ONGC.

3. It was decided that respondent-claimant along with Nippon Denro Ispat Ltd., which is now known as Ispat India Ltd. (in short "I.I.L.") would set up their industries adjacent to each other in Raigarh District of Maharashtra. In fact, as both the projects required vast areas of land, respondent-claimant as well as I.I.L. approached Government of Maharastra's agency called SICOM for acquiring land.

4. On 24th October, 1991, Government of Maharashtra permitted SICOM to acquire land in Pen Taluka, District Raigarh for the said two companies.

5. On 8th January, 1992, respondent-claimant dropped the proposal of land acquisition through SICOM and decided to acquire land directly only through private negotiations. In fact, on 10th March, 1992 Government of Maharashtra directed SICOM to suspend land acquisition proceedings for respondent-claimant.

6. On 30th March, 1992, respondent-claimant entered into Gas Supply Contract with petitioner-objector wherein it was stated that supply of gas would commence from 31st December, 1995. The Schedule of Activities which were to be completed by respondent-claimant was stipulated in Annexure II of the said contract, which reads as under:

7. One of the relevant terms of the Gas Supply Contract is reproduced hereinbelow:

"2.02 (iii) The BUYER has indicated the schedule of implementation of key activities of their plant as per ANNEXURE-II to the CONTRACT. The BUYER shall provide the documentary proof to the SELLER of the completion of each of the activities. In case any of the activity is not completed within 3 months of the date indicated in Annexure-II, the SELLER shall recover 25% of the bank guarantee amount per delayed activity from the Bank Guarantee. Further, if the BUYER does not complete the activity No. 3 mentioned in Annexure-II within six months of the date indicated in CONTRACT and forfeit the deposit as well as the amount of the Bank guarantee. Provided further that in case activity No. 3 is completed within six months but drawal of gas is not started within six months of the date of commencement indicated in clause 2.01 above, the amount of Bank Guarantee and deposit shall stand forfeited without prejudice to other rights under the CONTRACT."

(emphasis supplied)

8. On 6th April, 1993, respondent-claimant wrote a letter to the Minister of State, Ministry of Petroleum and Natural Gas (hereinafter referred to as "Ministry") requesting for change of gas allocation from sponge iron project to a power project on the ground that the initial proposed project would be less profitable and there was considerable power shortage in the State of Maharashtra.

9. On 13th May, 1993, petitioner-objector intimated to respondent-claimant that as there was a possibility of delay in implementation of ICP-Heera Pi