IMPORTANT POINTS
Contract can be terminated on breach of terms of contract of fundamental nature.
Finding of fact rendered by arbitrators on basis of evidence on record should not be scrutinized by court as if sitting in appeal.
A party justifiably terminating contract for fundamental breach thereof would be entitled to claim damages for entire contract.
Belated amendment application id liable to be rejected.

JUDGMENT :

A.K. Sikri, J.

The appellant herein had awarded a contract to the respondent. Dispute had arisen leading to the constitution of an Arbitral Tribunal (having regard to the Arbitration Agreement contained in the contract between the parties) and those arbitration proceedings culminated in the Arbitral Award dated June 18, 2004. An application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) was filed by the appellant, questioning the correctness of the Award which was dismissed by the learned Single Judge of the High Court vide orders dated March 18, 2009 and April 30, 2009 thereby affirming the Arbitral Award. Intra-court appeal thereagainst, which was preferred by the appellant, has been dismissed by the Division Bench of the High Court vide judgment dated October 19, 2013. It is the validity of that judgment which is the subject matter of the instant appeal.

2. With the aforesaid preliminary comments on the nature of proceedings, we turn to the events that took place, in a chronological manner, that are relevant for deciding the lis:

EVENTS :

The respondent was awarded a contract for installation of Low Tension Load Management Systems (LTLMS) at various locations by the appellant during the year 1993-1994. The respondent participated in another tender in the year 1996 for installation of approximately 23000 numbers LTLMS. The appellant awarded a work order dated January 15, 1997 for installation of 11760 numbers of LTLMS to the respondent against the above tender of 1996 and the balance quantities were awarded to other tenderers. According to the appellant, against the installation made by the respondent previously in the year 1993-1994, there were large scale complaints and the issue of defective equipments having been supplied by the respondent which issue was being raised in the press repeatedly. In view of the criticism faced by the respondent, the respondent voluntarily offered to not only supply 11760 LTLMS against the order placed in January 1997 but also undertook to replace all defective Low Tension Switched Capacitators (LTSCs) supplied by them against the previous contract of 1993-1994 with new technology LTLMS and charge the old lease rentals against the replaced LTSC during the pendency of the earlier contract. The appellant accepting the package offer by the respondents issued Letter of Intent in respect of 12555 numbers panel of 1993-1994 contract objects to be replaced by new panels along with additional quantity of 23672 numbers fresh panels. The appellant finally placed a composite work order dated March 27, 1997 with the respondent to:

(i) Supply 11,760 numbers equipments against the tender of 1996-1997 contract. B-I Locations;

(ii) 12,555 numbers replacement of equipments against the 1993-1994 contract – B-II locations; and

(iii) 23,672 numbers equipments which was a package with the B-II locations – B-III locations.

Clause 5.1 of the letter of Work Order dated March 27, 1997 provided as under:

“The supply and installation of the LM Systems shall commence within four months from the date of this work order or opening of Letter of Credit or receipt of complete list of locations of DTCs whichever is later. The entire supply and installation of LM System covered under schedules at Annexure – B-I, Annexure – B-II and Annexure – B-III shall be completed within twenty months thereafter.”

3. During the execution of the said contract, some issues arose between the parties. As per the respondents, the appellant primarily committed two kinds of breaches, namely, the appellant did not supply the list of location where the contract objects had to be installed and, further, the appellant also did not renew the Letter of Credit (LC) through which the lease rentals were being paid for the installed objects. A series of correspondence was exchanged between the parties on the aforesaid two counts as the appellant maintained that it had not committed any fault in respect