W.P. (C) No.13522/2009

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IN THE HIGH COURT OF DELHI AT NEW DELHI

W.P. (C) 13522/2009 & CMs 15068/09 (for stay) and

3998/2010 (for delay)

Reserved on: March 23, 2011

Decision on: April 20, 2011

ALSTOM PROJECTS INDIA LTD. ..... Petitioners

AND ANR.

Through: Mr. Rajiv Nayar, Senior

Advocate with Mr. Sulabh Tewari,

Advocate.

Versus

ORIENTAL INSURANCE COMPANY ..... Respondents

LIMITED

Through: Mr. Vishnu Mehra, Advocate.

CORAM: JUSTICE S. MURALIDHAR

1. Whether Reporters of local papers may be

allowed to see the judgment?

No

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported in Digest? Yes

JUDGMENT

20.04.2011

1. The petitioners challenge a demand raised by the Respondent

Oriental Insurance Company Ltd. (OICL) on Petitioner No.1 Alstom

Projects India Ltd. (APIL) for an additional premium in the sum of

Rs.1,49,88,732/- and applicable service tax in relation to an Erection

All Risk Insurance (EARI) cover policy issued by OICL.

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Background facts

2. APIL, having its registered office at Mumbai, is stated to be

engaged in the business of design, manufacture, installation and

servicing of power generation equipments in India and abroad.

Petitioner No. 2 is stated to be a shareholder and Director of APIL.

APIL and the Gujarat State Electricity Corporation Ltd. (GSECL)

entered into an Agreement dated 27^th April, 2007 for Onshore

Services under which APIL was required to design, engineer,

procure equipment, materials, supplies and carry out erection,

conduct testing and commissioning of a 370 MW combined cycle

power plant in Surat, Gujarat. Alstom Switzerland Ltd. (ASL)

entered into an agreement on the same date with GSECL for

Offshore Equipment and Spare Parts Supply (CIF) under which ASL

was required to design, engineer, procure and manufacture, carry out

testing, shop assembly, pack, and transport the equipment, materials,

supplies on a CIF basis pertaining to the power plant. Work for the

power plant commenced on 29^th May 2007 and the reliability run at

the site was completed on 18^th November 2009.

3. APIL invited bids from OICL, M/s. United India Insurance

Company Ltd. (UIIL) and M/s. ICICI Lombard General Insurance

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Company Ltd. (ILGICL) through its insurance broker, M/s. Aon

Global Insurance Brokers Pvt. Ltd. (`Aon Global’) for taking an

EARI cover for covering material damage, third party liability and

other add on covers as well as a Marine Insurance cover for the

power plant. The requirements of APL were communicated to each

of the aforementioned insurance companies by Aon Global by quote

slips on 4^th October 2007 and invitation for final quotes was sent on

6^th November 2007. It is stated that while OICL submitted a quote of

Rs.6,64,88,287/-, UIIL submitted a quote of Rs.6,13,96,316/- and

ILGICL a quote of Rs.6,82,74,471. OICL by its letter dated 7^th

November, 2007 offered to provide EARI cover at a premium of

Rs.6,25,42,060/- and Marine Insurance cover at a premium of

Rs.39,46,227/- to be paid in specified instalments. APIL states that

although OICL’s offer was not the lowest, APIL accepted it in view

of the long standing relationship between the parties and the

representation and assurance of OICL that it would provide the best

standards of services under the policy to be concluded between the

parties. Upon APIL’s acceptance of OICL’s offer, OICL issued both

a Marine Policy as well as an EARI Policy. OICL was the lead

insurer with a share of 50% in the sum insured and in the premium

whereas UIIL and ILGICL were the other insurers with a share of

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25% each in the sum insured