JUDGMENT :

(Prayer in O.P.No.103 of 2010 This Petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the Award dated 17.08.2009 passed by the Respondents 2 and 4 in favour of the first Respondent and for costs.

W.P.No.30308 of 2004 This Writ Petition has been filed under Article 226 of the Constitution of India, to issue a writ of mandamus to direct the Respondents to release the following payments due to the Petitioner with interest at the rate of 12.25% p.a., in respect of the concluded contract P.O. No.833 dated 09.08.2000.

1. The Petitioner, the Tamil Nadu Transmission Corporation Ltd (TANTRANSCO), which was previously known as the Tamil Nadu Electricity Board (TNEB), was the respondent before the Arbitral Tribunal. An arbitral award dated 17.08.2009 (the Award) is assailed under Section 34 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act).

W.P.No.30308 of 2004 was filed by the first Respondent herein for a direction to the Petitioner herein to release the sum of Rs.57,14,498/-. Since this claim was also the subject matter of arbitral proceedings, the writ petition is liable to be disposed of as per the decision in O.P.No.103 of 2010.

2. The first Respondent is a company engaged in the manufacture and supply of high tension porcelain insulators. The first Respondent was awarded Contract No.T-563, dated 29.09.1995(Ex.C-2), which is governed by the contract documents, including the General Conditions of Contract. Under Contract No.T-563, the first Respondent supplied insulators to the Petitioner between October 1995 and August 1997. In respect thereof, the Petitioner made payments except for the 10% retention amount. Pursuant to complaints from the Petitioner with regard to the quality of insulators, the first Respondent replaced the defective insulators upon request by the Petitioner even after the applicable warranty period had expired.

3. Subsequent to Contract T-563, the Petitioner awarded about eight contracts for supply of insulators to the first Respondent between 1997 and 2000. Payments were withheld under the said contracts by the Petitioner without providing reasons therefor. Eventually, by letter dated 10.02.2004, the Petitioner informed the first Respondent that the following deductions were made towards Contract T-563 from amounts payable in respect of subsequent contracts: a sum of Rs.28,07,024/- as liquidated damages towards delayed supply; and a sum of Rs.83,64,782/- under the head ‘other recoveries’ on account of alleged expenditure incurred to replace the defective insulators. Thus, the total amount deducted by the Petitioner was about Rs.1.11 crore. By computing interest thereon at 12% per annum, the first Respondent made an aggregate claim for a sum of about Rs.1.52 crore. By invoking the arbitration clause in Contract No.T-563, a claim for a sum of Rs.1,52,35,938.33/- with interest thereon at 12% per annum was made. The Petitioner filed a counter statement by which the claims made by the first Respondent herein were refuted on the ground that the total expenditure incurred by the Petitioner towards labour charges was a sum of Rs.51,56,579/-, the amount deducted towards liquidated damages was a sum of Rs.28,15,800/- and a further sum of Rs.32,08,258/- was deducted on account of audit objections. The deductions under the above mentioned three heads were set out in Annexures A to C of the counter statement. A rejoinder was filed by the first Respondent herein.

4. Based on the pleadings, the Arbitral Tribunal framed 14 issues, which are set out in paragraph 9 of the Award. The first two issues pertained to whether the claims mad