JUDGMENT :

SHREE CHANDRASHEKHAR, J.

1. M/s APCO INFRATECH Ltd. [in short APCO] has filed this Commercial Appeal under section 13(1-A) of the Commercial Courts Act , 2015 against the judgment dated 30th May 2019 passed by the Presiding Officer of the Commercial Court at Ranchi in Commercial (REVOC) Case No. 117 of 2015. The Commercial Court has set aside the arbitral Award dated 15th May 2015 on the ground that the composition of the arbitral Tribunal was not as per the agreement of the parties and, therefore, the arbitral Award was liable to be set aside under section 34 (2) (a) (v) of the Arbitration and Conciliation Act, 1996 [in short AC Act].

2. Briefly stated, the Indian Oil Corporation Limited [in short IOCL] awarded the work for “Civil Works for Pipeline Tank Terminal at Amousi near Lucknow” [in short the Project] in the State of Uttar Pradesh to M/s MECON Limited [in short, MECON] and in turn, the MECON invited bids in two parts for executing the Project captioned as Civil Works (Package-I) and Civil Works (Package-II) and both works were awarded to the APCO vide LOIs dated 15th March 2001 and 11th June 2001. The total value of the subject works was Rs. 3,55,87,269/- for Package-I and Rs. 4,55,37,886/- for Package-II and the Project was to be completed within 8 months. The Work Order dated 11th March 2001 enclosed the schedule of rates and various other taxes described in Attachment-2 wherein it was provided that (i) the schedule of rates and the total contract price shall remain firm throughout the contract period, (ii) no variation in the schedule of rates on any account is permissible and (iii) the unit rates are inclusive of Income Tax, Sales Tax, Octroi duty, if applicable, and all applicable taxes, duties and levies. The schedule of rates provided that the contract price shall include and cover the cost of materials, labor, tools and tackles, construction equipment, templates, scaffoldings, transportation, power and water, and shall also include the cost of insurance covering 3rd party liability, loss of human life and risk of damages on other material/equipment. The agreed terms of payment were provided in Attachment-3 which contained a condition that “the payment shall be released only on receipt of the corresponding payment from IOCL” which is the Principal employer for the Project.

3. The Work Order dated 15th March 2001 which contained the aforesaid conditions for payment under clause 4.0 is extracted below:

MECON LIMITED

(A Government of India Enterprise)

Dated: 15.03.2001

WORK ORDER

M/s APCO Constructions (P) Ltd.

3/14, Viswas Khand,

Gomati Nagar,

Lucknow-226010

Uttar Pradesh

Fax No. 0522-308153

Dear Sirs,

Subject: Works Order for Civil Works (Package-I) required for Pipeline Tank Terminal at Amousi Near Lucknow, in the State of Uttar Pradesh.

Ref:

1. Our Works Tender Enquiry No. MEC/S/2323/11/11/WC/001 dated 19.12.2000

2. Your Offer No. APCO/2001/MECON/1388 dated 30.12.2000

3. List of enclosed documents and correspondence-Attachment-I

4. Our LOI/FAX Order No. 43/33/2323/02/1515 dated 15.01.2001

With reference to above, we MECON LIMITED, are pleased to place this work order on you for the subject jobs for a value of Rs. 3,55,87,269/- (Rupees Three crore fifty five lakhs eighty seven thousand two hundred sixty nine only) as per the terms and conditions of the documents forming the part of this works order for execution of the subject job at Pipeline Tank Terminal of IOCL