The interpretation of the contract terms, rejection of coal rakes based on single parameter, and the grant of interest at 10% per annum were the central legal points established in the judgment.

ORDER

Sant Parkash, J. - The aforesaid presence is being recorded through video conferencing since the proceedings are being conducted in virtual court. 1. The appellant has preferred the instant appeal under Section 37 of the Arbitration & Conciliation Act, 1996 (for short, Arbitration Act'), against order dated 05.01.2018, passed by the Special Commercial Court presided over by the Additional District Judge, Gurugram, vide which, Award dated 19.12.2014 (Annexure A-1) passed by the Arbitral Tribunal has been partly upheld.

2. The appellant - Haryana Power Generation Corporation Limited issued a notice inviting Tender dated 01.03.2012 for supply of 14.5 lac metric tones imported steam coal in bulk on High Seas Sale basis of Type-1 GCV Air Dried Basis (ADB) 6300 Kcal/Kg over a period of six months i.e. from October 2012 to March 2013, to be supplied to three power plants i.e. PTPS, Panipat (6 lac MT), DCRTPP, Yamuna Nagar (2 lac MT) and RGTPP, Khedar (6.5 lac MT). The last date for submission of bids was 19.04.2012.

3. Letter of acceptance dated 13.09.2012 was issued in favour of respondent No.1 - M/s MSTC Ltd., it being the lowest bidder. Earlier to that, respondent No.2 - M/s Adani Enterprises Limited had entered into an Associate Supplier Agreement dated 04.11.2011 with respondent No.1 to supply imported coal in the Indian Market in order to cater to the needs of imported coal by public sector undertakings like respondent No.1 - MSTC. As respondent No.1 was the successful bidder in the aforesaid tender, respondent No.2 - M/s Adani Enterprises Limited sent a confirmation letter dated 29.09.2012, agreeing to carry out supply and inland handling of imported coal to the appellant, on behalf of respondent No.1. Accordingly, respondent No.1 sent a communication dated 03.10.2012 informing the appellant about respondent No.2 being inland logistics agency for supply of imported coal. Thereafter, the appellant issued Purchase Order dated 17.10.2012 in favour of respondent No.1, which subsequently issued a Work Order dated 17.10.2012 in favour of respondent No.2 for handling and supply of imported coal to the appellant. Copies of Purchase Order and Work Order are appended with the appeal as Annexure A-3 (colly.).

4. Though, supply of coal rakes was commenced by respondent No.2 to thermal plants in Haryana but in terms of clause 5 of Work Order, various parameters of the supplies made, were to remain strictly within the range of variation set out therein.

During the execution of contract, out of 30 imported coal rakes supplied to appellant's power generating stations, 27 were rejected due to Total Moisture (ARB - As Received Basis) Parameter crossing the tolerance limit as per the provisions of Clause 5 of Work Order and 3 coal rakes were rejected as their Hard grove Grind ability Index (HGI) was lower than the limit prescribed in the clause ibid.

5. Aggrieved by the aforesaid action of the appellant, respondents vide letters dated 11.10.2013 and 16.10.2013 requested for invocation of arbitration proceedings under the Arbitration Act read with clause 22 of Work Order and clause 23 of Purchase Order, showing their disparity to clauses of the aforesaid purchase & Work Orders dated 17.10.2012, whereafter the appellant requested Mr. Harbans Lal Bajaj to give his acceptance to be a Sole Arbitrator to adjudicate the issue raised by the respondents. The acceptance was conveyed vide letters dated 06.11.2013 and 02.01.2014, whereafter the appellant, vide letter dated 05.02.2014 requested the Sole Arbitrator to initiate the process for arbitration between the parties. Accordingly, Arbitration Tribunal stood constituted.

6. After considering the submissions of parties, the Arbitrator vide Award dated 19.12.2014 held as under :-

"39. The Respondent is right in rejecting the three (3) coal rakes having HGI lower than the rejection value as no adjustment in this parameter is permissible. The Respondent is entitled to consume these three rejected coal rakes f