Chennai Petroleum Corporation Ltd. , Represented by its Chief General Manager [HR & Legal], M. Sankaranarayanan vs Ion Exchange [India] Ltd. , Registered office at ‘Ion House', Chennai

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(Mad) 1686

IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. SATHISH KUMAR, J.
M/s. Chennai Petroleum Corporation Ltd., Represented by its Chief General Manager [HR & Legal], M. Sankaranarayanan - Petitioner
Versus
M/s. Ion Exchange [India] Ltd., Registered office at ‘Ion House', Chennai - Respondent
Original Petition Nos.492, 544 of 2020 & Application Nos.2666 of 2020 & 2992 of 2021
Decided On : 07-10-2021

Advocates Appeared:
For the Petitioner: Arjun Suresh.
For the Respondent: V. Ramakrishnan, SC, G. Sivasankaran.

Headnote:
Arbitration and Conciliation Act,1996 - Section 34 and 34 (2) (b) (ii) & 2-A - Amendment Act - Section 28(3) – Contract – Claims - Claimant is a leading water treatment company and is a pioneer in Reverse Osmosis Technology - They were awarded with a contract by respondent for construction of Desalination Plant - Originally tender was invited for a period of one year - Claimant submitted its offer and the price quoted was certain sum per month - After meeting, price per month was revised to certain lakhs per month for two years contract period - Accordingly, Letter of Acceptance was issued by respondent on a contract was entered between claimant and respondent - Claimant took over operation and maintenance and continued the operations and maintenance for contractual period - Whether the claims made by the claimant are arbitrable – Held, Clause 45 of Special Conditions of Contract does not specify payment of pendent lite interest - It only envisages rate of interest in event of interest is awarded by arbitrator - Therefore, merely because the rate of interest is suggested in Special Conditions of Contract, it cannot be said that such clause permit the arbitrator to award pendent lite interest - However, post interest at the rate of 15% Ordered by the arbitrator is confirmed and rest of the award is also confirmed including post award interest - Accordingly, this Court do not find none of grounds under section 34 of Arbitration and Conciliation Act to interfere the award other than interest portion in O.P. - Accordingly, the Original Petition in O.P.No. is partially allowed setting aside granting of pendent lite interest alone and rest of the award is confirmed - Accordingly, the Original Petition is dismissed.

JUDGMENT :

(Prayer: Petitions filed under section 34 (2) (b) (ii) & 2-A of the Arbitration and Conciliation Act,. 1996, O.P.No.492 of 2020 to partially set aside the impugned arbitral Award dated 23.04.2018 modified vide Order dated 03.09.2018, in so far as it directs payment of a sum of Rs.1,09,33,063/- to the respondent with interest thereon and allow this petition in costs and O.P.No.544 of 220 filed to set aside the Arbitral Award dated 23 April 2018 [Received on 26 April 2018] passed by the Arbitral Tribunal in so far as related the claim Nos.1 to 4, 5, 7 and 9 to 14 rejected by the Arbitral Tribunal with costs.)

1. Aggrieved over the award passed by the learned sole arbitrator, O.P.No.492 of 2020 filed by the respondent to set aside the award. O.P.No.544 of 2020 has been filed by the claimant against the award disallowing certain claims.

2. Since both the Original Petitions arise out of the same award, the parties are referred as per their ranking in O.P.No.492 of 2020 and the petitioner in O.P.No.492 of 2020 Chennai Petroleum Corporation [CPCL] is referred as the claimant and the respondent in O.P.No.492 of 2020 Ion Exchange [India] Ltd. [IOIL] is referred as the respondent.

3. Brief facts leading to filing of this original petitions is as follows:

The claimant is a leading water treatment company and is a pioneer in Reverse Osmosis Technology. They were awarded with a contract by the respondent for construction of the Desalination Plant [LSTK2] out of LSTK- 1 to 3. Originally tender was invited for a period of one year. The claimant submitted its offer on 06.04.2009 and the price quoted was Rs.1.07 Crore per month. After meeting, the price per month was revised to 65 lakhs per month for two years contract period. Accordingly, Letter of Acceptance was issued by the respondent on 04.10.2010. On 22.10.2010 a contract was entered between the claimant and the respondent. The claimant took over the operation and maintenance on 24.10.2020 and continued the operations and maintenance for the contractual period upto 23.10.2012. It is the contention of the claimant that although the claimant fulfilled its contractual obligations, the respondent did not pay large amount which was due and payable to the claimant under the contract. Hence, the claimant raised the following claims:

1.	Claimant engaged key operations and maintenance personal at the respondent’s insistence from 05.02.2010 until 23.10.2010	Rs.7,42,500/-
2.	Outstanding monthly running bills claim [out of Rs.200 lakhs, - Rs.110 lakhs already paid on 01.03.2013]	Rs.90,25,492/-
3.	Interest on the unpaid outstanding monthly running bills from 01.03.2013 to 31.07.2015 at 18% per annum	Rs.39,25,701/-
4.	Interest on amounts wrongly deducted towards Security Deposit between November 2011 and July 202 from the date of deduction upto 26.04.2013 at 18% per annum [Security Deposit repaid on 26.04.2013	Rs,9,51,517/-
5.	Amount wrongfully deducted by the respondent as penalty for shortfall in quality of treated water	Rs.81,58,475/-
6.	Interest on the amount wrongly deducted by the respondent as penalty for shortfall in quality or treated water from the dates upto 31.07.2015 at 18% per annum	Rs.41,90,77/-
7.	Amount wrongfully deducted and retained by the respondent as Penalty for the shortfall in quantity of Treated Water [Rs,58 lakhs deducted out of which Rs.36.54 lakhs was paid on 09.04.13. The balance is claimed here	Rs.36,55,233/-
8.	Interest on the amount wrongfully deducted and retained by the respondent as penalty for shortfall in quantity of treated water from the dates of deduction upto 31.07.2015 at 18 per annum	Rs.27,05,079/-
9.	Amount wrongfully, deducted and retained by the respondent towards stoppage of plant on account of labourers problem from the adjacen

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