The subsequent contract did not supersede the previous contract, and the damages awarded were prohibited by the contract.

JUDGMENT :

Prayer: This Original Petition has been filed under section 34 of the Arbitration and Conciliation Act that the Award of the second respondent dated 20.10.2010 extent that it rejects the claim of the petition for cancellation charges and allows the counter claims of the first respondent may be set aside.

Aggrieved over the Award of the Sole Arbitrator rejecting the major claim and allowing the counter claim, the present petition has been filed challenging the Award on various grounds.

2. Brief facts leading to filing of this petition is as follows :

The petitioner has been engaged in manufacturing and supply of elevators and escalators and maintenance thereon under the collaboration with Kone Corporation, Finland. The respondent approached the claimant for supply, erection and commissioning of 5 elevators and 7 escalators for their projects one at Poonam Mall and other at Multiplex complex at Wardhaman Nagar, Nagpur. After negotiation, two base agreements were entered into between the claimant and the respondent on 19.12.2005 one in respect of supply, erection and installation of one goods cum passenger elevator and 4 passenger elevators along with service specification and other in respect of supply, erection and installation of escalators. Subsequently, two supplemental agreements were entered into on 16.02.2006 both relating to the designing and supply of escalators with technical specifications and for installation, testing and commissioning.

3. As per the terms of the agreement, the contract price for 7 escalators was Rs.1,22,95,000/- and the price for 5 escalators was Rs.70,50,000/-. The payment schedule for the elevators is as follows :

(i) 30% of the Contract value fixed free advance along with order

(ii) 20% of the Contract value at the time of submission of the general arrangement drawing [GAD]

(iii) 40% of the contract value upon intimation that the materials are ready to despatch

(iv) 5% of the contract value upon commencement of intimation.

So far as escalators are concerned, the schedule of payment as per the supplemental agreed letter 31.12.2005 is as follows :

(i) 30% of the contract value as fixed free advance along with order

(ii) 60% of the contract value upon intimation that the materials are ready for despatch

(iii) 5% of the contract value upon commencement of the installation

(iv) 5% of the contract value upon completion of the installation.

In the event of the respondent's failure to make payment within the stipulated period, the respondent would be liable to pay interest % 24% p.a. from the day of default on the overdue amount.

In the event of cancellation of the contract by the respondent, the claimant would be charging the respondent as follows :

(a) 15% of the contract value, if the order is cancelled before the General Agreement Drawing is prepared.

(b) 25% of the Contract value, if the order is cancelled within one month after General Agreement Drawing is approved

(c) 80% of the Contract value, if the order is cancelled after two months of the approval of general agreement drawing

(d) 90% of the Contract value, if the Order is cancelled after intimation that materials are ready for despatch.

Accordingly, job orders were given for manufacture and supply of 7 escalators in their China Office on 28.03.2006 and which was confirmed by the Claimant's China office on 04.04.2006. The claimant completed installation and erection of elevators and the escalators at the multiplex complex site at Wardhaman Nagar. During the process of installation and erection of escalators and elevators, the claimant underwent lot of difficulties as the site was not made available by the respondent with the following defects :

(a) The margin home was not ready shaft's brick work on the ground floor was not completed

(b) shaft was not lasted and scaffolding was not provided

(c) entrance hall was not provided and three phase, two phase electric power supply was not provided.

With the above difficulties, the claimant completed the erection/in