The court affirmed that guaranteed payments in an arbitration agreement are not contingent on payments from a principal contractor, ensuring obligations are fulfilled regardless of external contractual performance.

JUDGMENT :

TARA VITASTA GANJU, J.

PREFACE

1. The present Appeal has been filed by the Appellant under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as “A&C Act”] against the judgement dated 22.01.2019 passed by the learned Single Judge of this Court in OMP (COMM) No. 17/2017 captioned Telecommunication Consultants India Ltd. v. Next Generation Business Power Systems Ltd. [hereinafter referred to as “Impugned Judgment”]. By the Impugned Judgment, the learned Single Judge has partly upheld an award dated 23.08.2014 [hereinafter referred to as “Arbitral Award”] passed by the learned Sole Arbitrator.

2. An Appeal was also filed by the Respondent before this Court being FAO (OS) (COMM) No. 171/2019 captioned Telecommunication Consultants India Ltd. (TCIL) v. NGBPS Ltd. By an order dated 28.05.2024, the Appeal filed by the Respondent was dismissed by this Court with directions for the release of the amounts deposited by the Respondent before the Court in favour of the Appellant.

3. At the outset and as is recorded in the order dated 16.05.2019 passed by the Coordinate Bench of this Court, the challenge in the present Appeal was confined by the Appellant to only three findings:

(i) The claim for deducted/withheld amount of Rs. 60,01,890/- with interest thereon;

(ii) The claim for amounts deducted in the 31^st quarter in respect of Annual Technical Support (ATS) for Rs. 14,64,203/-

(iii) The claim for an amount deducted in the sum of Rs. 35,00,000/- in respect of 32^nd quarter.

4. The Government of Gujarat [hereinafter referred to as “GOG”] awarded to the Respondent a contract for Third Party Inspection of the Gujarat State Wide Area Network Project including performance level monitoring and reporting by an agreement dated 15.03.2002 [hereinafter referred to as “GSWAN Project”]. Subsequently, the Respondent entered into an agreement with the Appellant dated 18.04.2002 for providing sub-consultancy for the GSWAN Project of GOG [hereinafter referred to as “Agreement”]. The dispute between the parties arose in respect of this Agreement for sub-consultancy services to the Respondent.

5. The salient terms of the Agreement were that the Agreement would remain in operation for a period up to 14.04.2010 (almost 8 years) with a provision for extension of the Agreement. In terms of Clause 11 of Schedule IV of the Agreement, the Appellant was entitled to collect quarterly guaranteed revenue payments in the sum of Rs. 35,00,000/- for a period of 8 years or 32 quarters against invoices raised from time to time.

6. Upon termination/expiry of the Agreement on 14.04.2010, a third- party agency called M/s PCS Technology Ltd. [hereinafter referred to as “PCS”] was appointed by GOG to take over the GSWAN Project.

7. It is the case of the Appellant that the disputes arose after the 20^th quarter as up to then, the Respondent was making timely payments to the Appellant. However, between 21^st to 31^st quarter, the Respondent illegally retained an amount of Rs. 60,01,890/- from the payments due.

8. A demand notice was served upon the Respondent on 12.07.2010 demanding an amount of Rs. 1,30,01,890/-. Subsequently, on 29.07.2010, the Respondent invoked the bank guarantee which was available as security in th