The court upheld the Arbitral Tribunal's finding that a contractor is not liable for damages unless the claimant proves actual loss, emphasizing limited scope for judicial review of arbitral awards.

JUDGMENT

Vibhu Bakhru, J. NTPC Vidyut Vyapar Nigam Limited (hereinafter "NVVNL") 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 20.11.2020 (hereinafter "the impugned award") rendered by an Arbitral Tribunal comprising of Justice (Retired) V.N. Khare, former Chief Justice of India, Mr Ambarish Dave and Justice (Retired) D.P. Wadhwa, former Judge of the Supreme Court of India as the Presiding Arbitrator.

2. The impugned award was rendered in the context of disputes that had arisen between NVVNL and respondent no.1 (hereinafter "Symphony") in connection with a Power Purchase Agreement (hereinafter the "PPA") entered into between NVVNL and Symphony.

3. Essentially, the dispute between NVVNL and Symphony are centered around the question whether NVVNL is entitled to recover liquidated damages from Symphony in terms of clause 4.6 of the PPA. NVVNL claims that it is entitled to recover Rs.2,87,77,000/- (Rupees Two Crores, Eighty-Seven Lakhs, Seventy-Seven Thousand only) as liquidated damages being 10% of the Performance Bank Guarantee furnished by Symphony, as according to NVVNL, Symphony had failed to commission the solar power plant for generating 10 MW capacity on or before the Scheduled Commissioning Date.

4. According to NVVNL, Symphony had commissioned 5 MW capacity on or before 26.02.2013 (the Scheduled Commissioning Date) and commissioned the balance 5 MW on 27.02.2013. NVVNL claimed that it was thus, entitled to recover half of 20% of the Performance Bank Guarantee in terms of Clause 4.6 of the PPA. Symphony disputed the aforesaid claim as according to Symphony, it had commissioned the Solar Power Generating project before the Scheduled Commissioning Date. It claimed that it had completed and installed 10 MW of solar power generating capacity on 21.02.2013.

5. The Arbitral Tribunal held in favour of Symphony and accepted its contention that it had completed and installed the solar power plant with 10 MW capacity on or before the Scheduled Commissioning Date of 26.02.2013. Accordingly, the Tribunal held that NVVNL was not entitled to recover any liquidated damages. The Arbitral Tribunal further held, in any event, NVVNL could not recover damages under clause 4.6 of the PPA without establishing that it had suffered any loss.

6. Accordingly, the Arbitral Tribunal directed that the Performance Bank Guarantee furnished by Symphony be discharged. It also awarded costs of Rs.1,08,66,000/- (Rupees One Crore Eight Lacs and Sixty-Six Thousand only) in favour of Symphony.

7. It is contended on behalf of NVVNL that the impugned award is patently erroneous as it is contrary to the terms of the PPA. It is contended on behalf of NVVNL that the impugned award disregards the Minutes of the Meeting of Commissioning Committee of 25.02.2013/26.02.2013 - which recorded that Symphony had electrically connected only 7.04 MW capacity as on 25.02.2013 - and therefore, the impugned award is patently illegal and is liable to be set aside.

Factual Background

8. The Government of India launched the Jawaharlal Nehru National Solar Mission (hereinafter "JNNSM") with the objective to establish India as a global leader in solar energy. The Government of India through the Ministry of New and Renewable En