Section 37 jurisdiction constrained to patent illegality; employer liable to reimburse custom duties where delay in exemption certificate despite requests prevented waiver, per contract clauses on duty payment.

The present Civil Arbitration Appeal seeks consideration of the judgment dated 08.10.2018, passed by the learned Single Judge in Arbitration Case No. 1 of 2018, titled Himachal Pradesh Power Corporation Ltd. vs. M/s Orange Business Service India Technology Pvt. Ltd , whereby the Award dated 17.10.2017, passed by the learned Arbitrator in favour of the claimant/respondent herein has been affirmed.

2. A brief narration of relevant facts, necessary for the adjudication of this Appeal, may be noticed.

3. The claimant/respondent herein is a Company incorporated and registered under The Companies Act, 1956 having its registered office at DSO-601-603, 607-608, 6th floor, DLF South Court, Saket, New Delhi-110017 and is engaged in the business of rendering service in the field of Information technology infrastructure. The appellant herein, on the other hand, is an incorporated Company and is a State Government undertaking of Himachal Pradesh.

4. Apparently, claimant/ respondent herein participated in a bid invited by the appellant for Installation and commissioning of IT infrastructure, Data Centre and Disaster Recovery centre for ERP Implementation with Himachal Pradesh Power Corporation Ltd. After evaluation, the appellant, vide letter dated 19.09.2011, accepted the claimant's bid dated 28.06.2011 for execution of Installation and commissioning of aforesaid project for a consideration of Rs.19,61,52,962.00 (Nineteen crore sixty one lakh fifty two thousand nine hundred and sixty two).

5. The parties inter se entered into an Agreement dated 20.10.2011 and agreed to be abide by the terms and conditions of the said Agreement. The execution of the work under the Agreement was to procure equipments through import and install the same. The project was to be completed by the claimant/ respondent within 21-90 days in terms of C1-8.2. of the said Agreement, failing which, the claimant/respondent would be liable to liquidated damages in terms of Section 8 (6) of the said Agreement.

6. The claimant/respondent was to handle all imported materials at its own expenses at the points of import in terms of Clause 21.4 subject to the employer's obligation under the GCC sub-clause-14.2. which provided that employer shall bear and promptly pay all custom & import duties. The claimant imported the equipments after paying necessary customs duty at the time of import and utilized them in the project. After making payment towards customs duties corresponding debit notes were submitted to the appellant for information and reimbursement. At the relevant time, the appellant had not raised any protest either to the import or the amount of custom duty.

7. Clause 45 of the Agreement provided for dispute resolution before the Dispute Board. Since the dispute arose between the parties, the appellant invoked Clause-45 of the agreement which provided a Three Member Dispute Board who by majority decision held the claimant entitled to reimbursement of a sum of Rs. 1,00,30,984/- (rupees one crore thirty thousand hundred eighty four only) with interest.

8. Being dissatisfied with the decision of the Dispute Board, appellant refused to pay the amount and gave a notice of dissatisfaction dated 05.04.2016 against the said decision. The claimant/respondent herein slapped a legal notice