Non-Reportable  

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal No  .      3804                of   2018 (  Arising out of   S.L.P. (  Civil  )   No  . 39067   of   2013)

M.P. POWER GENERATION CO. LTD. & ANR.  .... Appellants

Versus

ANSALDO ENERGIA SPA & ANR.              ….Respondents

J U D G M E N T

L. NAGESWARA RAO, J.

Leave granted.  

1. M.P.  Power  Generation Co.  Ltd.  formerly known as

Madhya  Pradesh  Electricity  Board  (hereinafter

referred  to  as  ‘the  Board’)  invited  proposals  for

refurbishment of Units 3 and 4 of the Thermal Power

Plants at Amarkantak having the capacity of 120 MW

by a notice inviting tender dated 24th October, 1996.

A  provisional  Letter  of  Intent  for  refurbishment  of

Thermal  Power Plant of 2 x 120 MW Phase–II  was

issued by the Board to Respondent No.1, ANSALDO

Energia SPA (for short ‘the Claimant’) on 11th May,

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1999.   Thereafter,  on  24th August,  1999  four

Agreements were signed between the Claimants and

the  Board  viz  Overall  Coordination  Agreement,

Offshore Supply Contract, Onshore Supply Contract

and Onshore Services Contract.          

2. A Bank Guarantee dated 22nd February,  2000 was

furnished by the Claimants as per Clause 9.2 (a) of

the  Onshore  Supply  Contract  for  Rs.  9,29,20,000/-

(10 per cent of the Onshore Supply Contract price).

Another  Bank  Guarantee  was  furnished  by  the

Claimants  on  23rd February,  2000  as  per  the

stipulation in Clause 9.2(a) of the Offshore Supply

Agreement for US $ 1,708,100/-.   The above Bank

Guarantees  were  given  towards  advance payment

that  was  to  be  made  by  the  Board.   On  24th

February, 2000, a Performance Bond was executed

by the ANZ Grindlays Bank Limited on behalf of the

Claimants for Rs.18,48,00,000/-   (10 per cent of the

total Contract price) pursuant to Clause 4.1 of the

Overall  Coordination  Agreement.   The  Board

subsequently  made  advance  payments  of  the

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amounts  equivalent  to  the  two  Bank  Guarantees

dated 22nd February, 2000 and 23rd February, 2000

given by the Claimant.     

3. The Zero Date (i.e. effective date of Contract) as per

Clause 7 of the Overall Coordination Agreement is as

follows:

“7. Notice to Proceed 7.1 Zero Date (Effective Date of Contract)

The zero date of the Contract shall mean the date on  which  the  all  the  following  conditions  are fulfilled: (i) Signature of the Contract (ii) Receipt by ANSALDO of the Notice to Proceed (iii) Receipt by MPEB the Bank Guarantee from

ANSALDO for the Advance Payment (10% of the Contract Price)

(iv) Receipt by ANSALDO of the Advance Payment (v) Receipt by ANSALDO of the Letter of Credit for the Offshore Supply and Letter of Comfort/ Support for Onshore Supply and Onshore Services (vi) Financial tie-up of PFC loans

7.2 If the Start Date has not occurred on or before six (6) months after the date hereof, then the Contract will  automatically  expire,  without  any  liability  on either side and the price will cease to be valid and will be subject to renegotiation.   

7.3 MPEB may not issue a Notice to Proceed under any of  the Refurbishment Contracts  without  issuing a Notice to Proceed under all of the Contracts.”   

4. It  was  agreed  between  the  parties  that  the  Zero

Date would be 9th March,  2000.   Thereafter,  there

was  exchange  of  correspondence  and  several

meetings held between the Claimant and the Board

for  resolution  of  certain  issues.   In  response  to  a 3

letter written by the Board on 15th June, 2001, the

Claimant wrote to the Board on 21st June, 2001 to

treat  the  Agreement  as  expired.   The  Claimant

stated in the said letter that it was suspending the

performance  of  the  Agreement.   There  was  a

reference to violation of a fundamental condition of

the  Contract  i.e.  non-furnishing  of  a  Letter  of

Comfort  from  the  Power  Finance  Corporation  as

provided  in  Clause  5.6  of  the  Onshore  Supply

Contract.   The  Claimant  further  complained  of  a

misrepresentation  of  the  warranty  contained  in

Clause 19.2 (vii) of both the Onshore and Offshore

Supply  Contracts  and Clause  20.2  of  the  Onshore

Services Contract.

5. The Board invoked the three Bank Guarantees  on

23rd June, 2001.  Thereafter, the Board proceeded to

issue a notice for default as provided in Clause 16.3

of the Offshore and Onshore Supply Contracts and

Clause 17.3 of Onshore Services Contracts on 29th

August, 2001.  The Board complained of substantial

breach of Agreement on the part  of the Claimant.

The Claimant was given 30 days’ time for curing the 4

defaults.  The Claimant responded by submitting a

representation  on  8th January,  2000.  Not  satisfied

with  the  explanation  given  by  the  Claimant,  the

Board terminated the contract.  The Claimant raised

a  dispute  which  was  referred  to  Arbitration.   The

Arbitral  Tribunal  passed an award in favour  of the

Claimant on 23rd September, 2004 in the following

terms:  

“1) It is declared that: a) The  three  Bank  Guarantees  were wrongfully invoked  and  encashed  by the Respondent. b) The  agreements  were  wrongfully terminated by the Respondent. c) The  agreements  are  voidable  at  the option of  the Claimants and have been avoided by them.   

2) The Respondent shall pay to the Claimants: i) the  sum  of  Rs  39,80,98,429/-  with interest thereon  at  the  rate  of  12% per annum from 5th July, 2001 till the date of the Award and thereafter  until  payment  or realization.   ii) the  sum  of  Rs.11,14,55,042/-  with interest thereon  at  the  rate  of  12% per annum from 29th July,  2002,  being  the date of the claim, till  the  date  of  the Award and thereafter until payment  or realization. iii) The  respondent  shall  pay  to  the Claimants the  sum  of  Rs.2000000  as and by way of costs, including the costs of the arbitration proceedings."   

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6. The Petition filed by the Board under Section 34 of

the Arbitration and Conciliation Act, 1996 (for short

“the Act”) was allowed by the learned 7th Additional

District  Judge,  Jabalpur  and  the  award  dated  23rd

September, 2004 of the Arbitral Tribunal set aside.

The  learned  Additional  District  Judge  upheld  the

findings of the Arbitral Tribunal on Issues No.1 to 7.

Breach  of  contract  by  the  Board  in  view  of  (a)

violation of a fundamental condition of the contract

i.e.,  not  furnishing  Letter  of  Comfort  from  Power

Finance  Corporation  and,  (b)  misrepresentation  by

the Board in Clause 19.2 (vii) of the agreements as

concluded by the Arbitral Tribunal were approved by

the learned Additional District Judge.  However, the

Learned Additional District Judge found fault with the

award  pertaining  to  Bank  Guarantees  and  the

amounts  specified  in  Exhibit-  GG  of  the  Claim

Petition.  On the basis of the opinion that the Arbitral

Tribunal  had  acted  in  excess  of  its  jurisdiction  in

granting  relief  to  the  Claimant  under  the  above

heads, the learned Additional District Judge set aside

the award.   6

7. Aggrieved  by  the  rejection  of  Issue  No.13  by  the

Arbitral  Tribunal  which  pertains  to  amounts

mentioned  in  Exhibit-  HH  to  the  Statement  of

Claim(Damages for the wrongful breach of Contract),

the Claimant preferred an application under Section

34 of the Act.  The said application was dismissed by

the  learned Additional  District  Judge.   The Appeal

filed by the Claimant against the judgment of the

learned Additional District Judge was later withdrawn

and the dismissal has attained finality.   We are not

concerned with the said claim in this case.  

8. The Claimant filed an appeal before the High Court

challenging the judgment of the Additional District

Judge  by  which  the  Award  of  the  Arbitral  Tribunal

was  set  aside.  The  High  Court  set  aside  the

judgment  of  the  learned  Additional  District  Judge

and restored the award of the Arbitral Tribunal. The

High  Court  held  that  the  Additional  District  Judge

committed  a  serious  error  in  interfering  with  the

finding of the Arbitral Tribunal on Issues 9 to 12 after

upholding the award in respect of Issues 1 to 7.  The

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High  Court  observed  that  Bank  Guarantees  are

independent  contracts  between  the  Bank  and  the

beneficiary.  Relying upon the conditions in the Bank

Guarantees which related to the invocation only on

the  ‘non-fulfillment  of  contractual  obligations’,  the

High  Court  approved  the  findings  of  the  Arbitral

Tribunal that the Board could not have invoked the

Bank  Guarantees  without  proving  breach  of

contractual obligations on the part of the Claimant.

Aggrieved by the judgment of the High Court,  the

Board has filed the above Appeal.  

The Agreements

9. As stated above, the Contract between the Claimant

and the Board pertains to refurbishment of Units 3

and  4  of  the  Amarkantak  Thermal  Power  Station

located in Shadol District of Madhya Pradesh. Four

Agreements  in  all  were  entered  into  between  the

Claimant  and the  Board.   An  Overall  Coordination

Agreement  was  executed  on  24th August,  1999

which  provided  for  three  other  Agreements  which

are :  (i) Offshore Supply Contract,  (ii) Onshore Supply Contract,  

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(iii) Onshore Services Contract.  

10. It is necessary to refer to the relevant provisions

of the Agreements for a better understanding of the

issues  involved  in  this  case.    As  per  the

Agreements,  the  target  completion  period  for  the

first and the second Unit was 18 ½ months and 22 ½

months  from  the  issuance  of  notice  to  proceed

respectively.   

11. Clause 4 of the Overall Coordination Agreement

which  deals  with  Performance  Guarantees  is  as

follows:  

“4. Performance Guarantees 4.1 ANSALDO shall deliver to MPEB within fifteen days

from the Zero Date, as defined in Clause 3 of each of  the  Offshore  Supply  Contract,  the  Onshore Supply  Contract  and  the  Onshore  Services Contract, a performance bond (as per attachment to this Co-ordination Agreement) in the sum of ten per cent (10%) of the total Contract Price which may  be  drawn  against  only  in  the  event  that ANSALDO does not perform the activities towards faithful fulfillment of all the terms and conditions of this Agreement except for the fulfillment of the Guaranteed  Parameters,  which  are  covered  in clauses 4.2 and 4.3 herein.   The validity  of  the Bank Guarantee shall expire upon the earlier of  

(i) the Completion Date plus six (6) months towards Claim Period;

(ii) the  date  of  termination  of  this  Agreement pursuant to Clause 17  of the Offshore Supply and Onshore  Supply  Contract  or  Clause  18  of  the Onshore  Services  Contract  plus  six  (6)  months towards Claim Period provided the termination is not due to breach  of  Contract  on  part  of ANSALDO;  

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(iii) upon submission of Guarantee Bond as per clause 4.3 of this Agreement.

4.2 ANSALDO shall deliver to MPEB a Bank Guarantee (as  per  attachment  to  this  Co-ordination Agreement in the sum of twelve and one half per cent  (12  ½  %)  of  the  Total  Contract  Price  to guarantee the successful  achievement  of  the Guarantee  Parameters  (Indemnity  Bank Guarantee).  Such Bank  Guarantee  shall  be delivered to MPEB on the date ANSALDO submits its initial  monthly invoice for payment to MPEB. The validity of such Bank Guarantee shall expire on the earlier of:  

(i) Completion  Date  plus  six  (6)  months  towards Claim Period;

(ii) the  date  of  termination  of  this  Agreement pursuant to Clause 17 of the Offshore Supply and Onshore  Supply  Contract  or  Clause  18  of  the Onshore  Services  Contract  plus  six  (6)  months towards Claim Period provided the termination is not  due  to  breach  of  Contract  on  part  of ANSALDO. For the sake of  administration of  the Indemnity Bank Guarantee, the following will apply:

(i) Tolerances  for  the  various  guaranteed parameters,  will  be  as  per  the  International Standards (BS, ASME, DIN, Japanese and Russian)  

(ii) If there are any shortfalls beyond the tolerances, ANSALDO  will  be  provided  reasonable  time  for rectifying  the  defects,  with  no  financial implications  to  MPEB.   Such reasonable  periods will  not  be  considered  for  computation  of  the Contractual Delivery Period.   

(iii) Beyond the occurrence of item (i) and (ii) above, the Indemnity Bank Guarantee can be drawn.   

4.3 ANSLDO shall deliver to MPEB a Bank Guarantee (as  per  attachment  to  this  Co-ordination Agreement)  in  the  sum  of  15%  of  the  Total Contract  Price  no  later  than  the  First  Unit Completion Date which may be drawn only in the event the Guarantee Parameters for  Three Years are not met, with respect to each of  Unit No.3  and  Unit  No.4  during  the  applicable Guaranteed Period for Three Years.  The validity of such Bank Guarantee shall  expire at the end of the third year after the date of the Second Unit Completion Date.”   

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Clause  9.2  of  the  Offshore  and  Onshore  Supply

Contracts which provides for issuance of Bank Guarantee

against submission of advance payment, reads as under:   

OFFSHORE SUPPLY CONTRACT “9   Contract Price and Terms of Payment 9.1  As  payment  for  ANSALDO’S  performance  of  the supplies and obligations under this Contract, MPEB shall pay to ANSALDO an amount of Seventeen Million Eighty One  Thousand  (17.081  Million)  US  Dollars,  as  per  the price breakdown furnished in the Sixth Schedule.  

9.2 TERMS OF PAYMENT a)  MPEB  shall  pay  to  ANSALDO  an  interest  free advance payment “the Advance Payment”) equal to ten per cent (10 %) of the Contract Price on the date on which MPEB issues the Notice to Proceed Against submission of Advance Payment Bank Guarantee on declining basis,  of  equivalent  value,  valid upto the date of completion of the last supplies.”   

ONSHORE SUPPLY CONTRACT “9.   Contract Price and Terms of Payment 9.1  As payment for ANSALDO’S performance of the supplies and obligations under this Contract,  MPEB shall  pay  to  ANSALDO  an  amount  of  Rs.  Nine Hundred Twenty Nine Million Two Hundred thousand (929.20  Million  Rs.),  as  per  the  price  breakdown furnished in the Sixth Schedule.  

9.2 TERMS OF PAYMENT a)  MPEB  shall  pay  to  ANSALDO  an  interest  free advance payment “the Advance Payment”) equal to ten per cent (10 %) of the Contract Price on the date on which MPEB issues the Notice to Proceed Against submission of Advance Payment Bank Guarantee on declining basis,  of  equivalent  value,  valid upto the date of completion of the last supplies.”   

Clause 16.3 of the Offshore Supply Contract requires

a written notice to be issued to the defaulting party in case

of a substantial breach of the Agreement.  A cure period of 11

30 days is provided in Clause 16.4 to the defaulting party

after receipt of the notice under Clause 16.3.  Termination

of  the  agreement  as  per  Clause  17  is  in  the  following

terms:   

“17. Termination  17.1  If  (i)  a  substantial  breach  specified  in  a  notice

under clause 16.3 is not remedied within the Cure Period; or (ii)  a Force Majeure has occurred and has continued as indicated in Clause 15.5; then the non-Defaulting Party in the circumstances of sub-Clause  (i),  and  either  party,  in   the circumstances  of  sub-clause  (ii),  may  without prejudice to any other right or remedy in respect of  any  pre-existing  breach,  terminate  this agreement  by  further  notice  in  writing  to  the Defaulting Party.

17.2 Upon termination of this Agreement, MPEB shall pay to ANSALDO, in full the following:

(i) the  value  of  the  Equipment  supplied  and  any other  work  performed  up  to  the  date  of termination  which  was  not  previously  paid  by MPEB;

(ii) any cost incurred by ANSALDO after the date of termination incurred as a result of the termination due to fault of MPEB;  

17.3 Upon  termination  of  this  Agreement,  any remaining  Equipment  for  which  payment  has been received by ANSALDO in the performance of its  obligations  or  delays  its  performance  under this agreement.”

Representations  and  warranties  on  the  part  of  the

Board  are  dealt  with  in  Clause  19.2.   Clause  19.2  (vii)

which  is  relevant  for  the  purpose  of  this  case  reads  as

under:  

“19.2 MPEB represents and warrants to ANSALDO that: …. ….

(vii) Each of Unit No.3 and Unit No.4 was designed and constructed to achieve the Operating Parameters,

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and did in fact operate at 120 MW when operating in accordance with Good Industry Practice.”   

Similar  provisions  relating  to  default  notice,

termination and warranties in the Offshore Supply Contract

are  there  in  the  Onshore  Supply  and  Onshore  Services

Contracts as well.   

Award of the Arbitral Tribunal

12. The Arbitral Tribunal framed the following issues

for  determination  of  the  dispute  raised  by  the

Claimant:   

“1. Whether  the  Respondent  had  supplied  the technical  documents  and  information  to  the Claimants  as  required by  Clause 5.8  (iv)  of  the Onshore Services Agreement?

2. Whether the Claimants had waived the production of  the  Letter  of  Comfort  of  the  Power

Finance Corporation as required by Clause 5.6 of the Onshore Supply Contract and Schedule 7?

3. Thereto and Clause 5.14 of the Onshore Services  Contract and Schedule 7 thereto?

4. Whether  the  issuance  of  the  Letter  Comfort/ Support  by  Power  Finance  Corporation  to  Asia Power Projects Pvt. Ltd. (Claimant No.2) (“ASPL”) was  a  fundamental  condition  of  the  contract agreements?

5. Whether Units 3 and 4 of the Amarkantak Power Station did in fact operate at a capacity of 120 MW when they were first installed in 1997 when  

operating in accordance with Good Industry  Practice as warranted by the Respondent in

Clause 19.2 (vii) of the conditions of contract for Offshore and Onshore Supplies and Clause 20.2   

(vii)  of  the  conditions  of  contract  for Onshore Services?

6. Whether  the  Respondent  co-operated  with  the   Claimants in carrying out the RLA tests?

7. Whether  the  Respondent’s  insistence  on   approving the Claimants’ vendors was legal?

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8. Whether  the  unilateral  amendment  by  the Respondent  of  the Letter  of  Credit  without  the   

consent  in  writing  of  ANSALDO  Energia S.P.A. – Claimant No.1 (“ANSALDO”) was wrongful and whether  such  amendment  required  the consent of ANSALDO and of its bankers?

9. Whether the invocation and encashment by the   Respondent  of  the  Bank  Guarantees  was

wrongful, premature, illegal and fraudulent? 10. Whether  the  termination  of  the  Contract   

Agreements  by  the  Respondent  was wrongful?

11. Whether the Claimants are entitled to the amount claimed in Exhibit FF to the Statement of Claim?

12. Whether the Claimants are entitled to the amount claimed in Exhibit GG to the Statement of Claim?

13. Whether the Claimants are entitled to the amount claimed in Exhibit HH to the Statement of Claim?

14. Whether the Respondent is entitled to any of the  amounts/ claimed by it in its Counter Claim?

15.  Whether  the  Tribunal  should  award  the   continuation  of  the  Interim  Order  of  the

Jabalpur District  Court  dated  July  6  and  7, 2001?

16. What  order  should  the  Tribunal  pronounce  for   costs? ”

13. The  Arbitral  Tribunal  held  that  there  was

misrepresentation  on  the  part  of  the  Board  in

respect  of the capacity of  the Plant as well  as its

operating parameters and breach of a fundamental

condition  of  the  contract  relating  to  Letter  of

Comfort  not  being  furnished.   Termination  of  the

contract was found to be bad in law.  Issues No.1

and 4 were answered as follows:  

“Dealing with  Issue No.4 first,  the terms of  the representation and warranty clause needs to be noted.   The  Respondent  “represents  and warrants”  to  the  Claimants  that  “each  of  Unit

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Nos.3  and  4  was  designed  and  constructed  to achieve  the  operating  parameters  and,  in  fact, operated  at  120  MW  when  operated  in accordance  with  good  industry  practice”.   The representation  that  the  Respondent  made  and warranted  was  twofold;  first,  in  respect  of  the operating  parameters  that  the  Units  were designed  and  constructed  to  achieve  and, secondly that the Units did, in fact, operate at 120 MW,  when  operating  in  accordance  with  good industry practice.  It  would  appear  from  the  evidence  of  the Respondent’s  witness  Saxena  that  the  first representation  and  warranty  was  made  only  of the  strength  of  the  manufacturer’s  plaque attached to the Units, but this representation and warranty  is  of  far  less  import  than  the representation and warranty that the Units had, in fact,  operated  at  120  MW  when  operated  in accordance with good industry practice.  It is an admitted position that no performance test upon commissioning of the Units had been carried out. It is clear upon the evidence that the only record which the Respondent had which showed that the Units had in fact operated at 120 MW were the log sheets of February 23,26, 27, 1983 for Unit Nos.3 and December 29, 30 and 31, 1982 and February 24, 25, 26 and 27, 1983 for Unit No.4.   In the first place, these do not show and it  is not the case that they show that the operation of the Units at those times was in accordance with good industry practice.   Moreover,  even if  one were to ignore the  inconsistencies  pointed  by  the  Claimants’ witnesses in the log sheets, a representation and warranty of this magnitude was unwarranted for the language of the representation and warranty suggests  that  the  Units  were  operated  over  a span of time, of about 25 years, to produce 120 MW  when  operated  in  accordance  with  good industry  practice.   The  inconsistencies  cannot, however,  be ignored for they suggest that what was recorded in the concerned log sheet was not, in fact, the production of 120 MW.  When, for the same  hour  of  the  same  day,  the  production  is measured at 120 MW at one spot and 115 MW at another,  it  cannot  be  said  with  any  confidence that the production was in fact 120 MW.   The  representation  and  warranty  given  to  the Respondent as aforesaid, must, therefore, be held to  be  a  positive  assertion  in  a  manner  not

15

warranted by the information of the Respondent, of  that  which  was  not  true,  though  the Respondent might believe it to be true.  In other words,  the  representation  and  warranty  was  a misrepresentation as defined by Section 18 of the Contract  Act.   The  evidence  of  the  Claimant’s witness Richetti is that the Claimants entered into the contracts only because of this representation and warranty and his evidence to that effect has not  been  dented  in  cross  examination.   Under Section 19 of the Contract Act, when consent to an agreement is caused by misrepresentation, the agreement is a contract voidable at the option of the  party  whose  consent  was  so  caused.   The Claimants desire  to avoid the contracts  and we think that, in the circumstances they are entitled to do so. In  so  far  as  Issue  No.1  is  concerned,  the Respondent contracted to make available to the Claimants, free of charge, “all relevant records of the power station and the existing Operations and Maintenance  Manual  of  the  power  station.”  Mr. Agnihotri  submitted  that  the  words  “relevant records”  meant  such  records  as  were  in  the possession of the Respondent. We do not find this interpretation acceptable.  “All relevant records of the power station” covers each and every record relating to the power station that is relevant for the  purpose of  the  refurbishment  thereof.   The phraseology used leads to the conclusion that the Respondent  was  stating  that  it  had  in  its possession  all  the  relevant  records  and  would make them available to the Claimants, along with the  operations  and  maintenance  manual.   The evidence  on  record  shows  clearly  that  the Respondent  possessed very  few of  the relevant records  of  the  Units.  The  failure  of  the Respondent  to  supply  to  the  Claimants  the relevant  records  of  the Units  was very likely  to have a material adverse effect on the ability of the Claimants to perform their obligations under the  contract  and,  as  such,  was  a  substantial breach by the Respondent of the contract.”

14. The Arbitral Tribunal determined Issues 2 and 3

in  favour  of  the Claimant  by observing that  there

16

was no waiver on the part of the Claimant regarding

production of the Letter of Comfort.  The production

of  the  Letter  of  Comfort  was  a  fundamental

condition  of  the  Agreements  and  the  failure  to

produce the same was a breach on the part of the

Board.  The invocation of Bank Guarantees by the

Board  was  found  to  be  improper  by  the  Arbitral

Tribunal in its findings on Issues 8 and 9.  According

to  the  Tribunal,  the  Contract  could  have  been

terminated only after expiry of 30 days’ cure period.

The invocation of Bank Guarantees in this case was

done  on  23rd June,  2001  which  was  prior  to  the

issuance  of  the  notice  of  default  on  29th August,

2001.   The  termination  of  the  Agreement  by  the

Board  was  found  to  be  bad  in  law.   Exhibit–FF

annexed to the Statement of Claim sought for by the

Claimant pertains to the return of the amounts for

which Bank Guarantees were given by the Claimant

and  invoked  by  the  Board,  along  with  interest.

Exhibit-  GG  to  the  Statement  of  Claim  includes

amount spent by the Claimant towards the Residual

Life  Assessment  (R.L.A.)  Study  and  other  material 17

procured including electric drum level indicator, UPS

system– 20 KVA, boiler pressure parts, etc.  After a

detailed  scrutiny  of  the  evidence  on  record,  the

Arbitral  Tribunal  awarded  the  Claimant  amounts

mentioned in Exhibits- FF and GG appended to the

Statement  of  Claim.  Issue  No.  13  was  answered

against the Claimant.  Claim forming part of Ex. HH

(damages  for  wrongful  termination  of  contract)  to

the statement of claim was rejected.  

Submissions  

15. We  have  heard  Shri  Dushyant  Dave,  learned

Senior  Counsel  for  the  Appellants  and  Shri  S.U.

Kamdar,  learned  Senior  Counsel  for  the

Respondents.  Shri Dave submitted that the award of

the Arbitral Tribunal suffers from fundamental flaws

and  requires  interference.   He  relied  upon  the

judgments of this Court to contend that the award is

perverse and is vitiated due to patent illegality.  He

found fault with the finding of the Arbitral Tribunal

that there was misrepresentation on the part of the

Board.   He  submitted  that  the  plant  was

manufactured  by  BHEL  in  the  year  1972  which 18

certified that the Units have the capacity of 120 MW.

Commenting on the representation and warranties

found  in  Clause  19.2  (vii)  of  the  Agreements,  he

stated  that  it  cannot  be  said  that  there  was  any

misrepresentation  on  the  part  of  the  Board.   He

placed reliance on the log sheets to show that the

plant  was running to its  capacity of  120 MW.  He

further  submitted  that  there  were  about  13

inspections  conducted  by  experts  from  the

Claimants’ side and it is inconceivable that they did

not know about the capacity and performance of the

plant.  He argued that all the available records were

furnished to  the  Claimant.   According  to  him,  the

Claimant had full knowledge about the capacity and

the performance of the plant in spite of which they

did not perform their part of the Contract for reasons

best known to them.  Shri Dave proceeded to submit

that  after  a  series  of  meetings  and  exchange  of

letters, the Claimant agreed for the Zero Date as 9th

March, 2000.  After such agreement, the Claimant is

said to have waived its right of claiming the Letter of

Comfort  from  the  Power  Finance  Corporation. 19

According to him, the Letter of Comfort was not a

fundamental condition of the Contract and it had no

bearing on the performance of the obligation on the

part  of  the  Claimant.   He  further  stated  that  the

Claimant  was aware of  the fact  that  the amounts

advanced to the Claimant were given by the Power

Finance Corporation to  the Board.   He found fault

with  the  finding  of  the  Arbitral  Tribunal  that  the

termination of the Contract by the Board was illegal.    16. Shri  Dave  highlighted  the  error  committed  by

Arbitral Tribunal in treating all the Bank Guarantees

as furnished in pursuance of Clause 4 of the Overall

Coordination  Agreement.   The  conclusion  of  the

Arbitral  Tribunal  that  the  invocation  of  the  Bank

Guarantee was not proper as it was done prior to the

termination of the Contract was challenged by Shri

Dave.   He  further  urged  that  the  award  towards

Issue No.12 deserves to be set aside as the Claimant

has  been  awarded  compensation  for  the  goods

which were not supplied.  According to Shri  Dave,

the Claimant neither supplied nor commenced any

work according to the Contract in spite of which the 20

Arbitral Tribunal has allowed these claims.  There is

a  lack  of  judicial  approach on  the  part  of  arbitral

Tribunal for which reason Shri Dave urged that the

award deserves to be set aside.    

17. Shri  S.U.  Kamdar,  learned  Senior  Counsel

contended that the award of the Arbitral Tribunal is

well  reasoned after  taking  into  account  the entire

material on record and it does not suffer from any

infirmity.   He  submitted  that  the  parameters  for

exercise of power by the Courts under Section 34 of

the Act are well settled.  Applying the principles laid

down  by  this  Court  in  several  judgments,  Shri

Kamdar contended that  this  Appeal  should not  be

entertained.   He  further  submitted  that  a  plain

reading  of  the  Clause  19.2  (vii)  pertaining  to  the

representation and warranties would show that there

was a misrepresentation on the part of the Board.

The  Clause  which  was  added  after  deliberations

between the parties is to the effect that both Units 3

and  4  operated  at  120  MW  when  operating  in

accordance with good industry practice.  He referred

to  the  evidence  on  record  before  the  Tribunal  to 21

argue  that  there  is  no  material  to  show  that  the

plant  operated  at  120  MW.   He  stated  that  the

incomplete log sheets that were filed by the Board

also suffer from internal discrepancies as rightly held

by  the  Arbitral  Tribunal.   Shri  Kamdar  further

submitted that the Arbitral Tribunal correctly found

furnishing  a  Letter  of  Comfort  by  Power  Finance

Corporation  to  be  a  fundamental  condition  which

was breached by the Board.  He relied upon Clause

22 of both the Supply Contracts to submit that the

counsel for the Board was not right in arguing that

there was a waiver on the part of the Claimant. He

further  argued  that  there  is  voluminous  oral  and

documentary  evidence  on  record  to  demonstrate

that  material  was  procured  and  equipment  was

manufactured  for  supply  as  per  the  terms  of  the

contract.  He also stated that the equipment which

was  specially  designed  for  the  Thermal  Plants  at

Amarkantak will be of no use to any other plant.  It

was only due to the breach on the part of the Board

that the supply did not take place.  Concluding his

22

submissions, Shri Kamdar submitted that the appeal

deserves to be dismissed.   

Section 34 of the Act - ‘Public Policy’

18. It is necessary to refer to the settled law on the

scope of Sections 34 of the Act.  In this case we are

concerned with the point as to whether an arbitral

award can be set aside for being in conflict with the

public policy of India.  An arbitral award can be set

aside if  it  is  contrary to  (a)  fundamental  policy of

Indian law, or (b) the interest of India, or (c) justice

or  morality.   (Renusagar  Power  Co.  Ltd.  v.

General Electric Co.1 )  Patent illegality was added

to the above three grounds in ONGC v. Saw Pipes

Ltd.2.  Illegality must go to the root of the matter

and incase the illegality is of trivial nature it cannot

be held that the award is against the public policy.  It

was further observed in the said judgment  (ONGC

v. Saw Pipes (supra)) that an award could also be

set aside if it is so unfair and unreasonable that it

shocks  the  conscience  of  the  Court.  In  Delhi

Development Authority v.  M/s. R.S. Sharma &

1  (1994)  Supp.1 SCC 644 2  (2003) 5 SCC 705  

23

Co.3 it was held that an award can be interfered with

by the Court under Section 34 of the Act when it is

contrary to : a) substantive provisions of law; or  b) provisions of the 1996 Act; or  c) against the terms of the respective contract; or  d) patently illegal; or e) prejudicial to the rights of the parties   

The  fundamental  policy  of  India  was  explained  in

ONGC Ltd. v. Western Geco International Co. Ltd.4 as

including  all  such  fundamental  principles  as  providing  a

basis for administration of justice and enforcement of law

in this country. It was held inter alia, that a duty is cast on

every tribunal  or  authority  exercising powers  that  affect

the rights or obligations of the parties to show a ‘judicial

approach’.   It  was  further  held  that  judicial  approach

ensures that an authority acts bona fide and deals with the

subject in a fair, reasonable and objective manner and its

decision is not actuated by any extraneous considerations.

It was also held that the requirement of application of mind

on  the  part  of  the  adjudicatory  authority  is  so  deeply

embedded in our jurisprudence that it can be described as

a  fundamental  policy  of  Indian  law.   This  Court  further

3  (2008) 13 SCC 80 4  (2014) 9 SCC 263

24

observed that the award of the Arbitral Tribunal is open to

challenge when the arbitrators fail  to  draw an inference

which ought to be drawn or if they had drawn an inference

which on the face of it is untenable resulting in miscarriage

of justice. The Court has the power to modify the offending

part  of  the  award  in  case  it  is  severable  from the  rest

according  to  the  said  judgment  (Western  Geco  ltd.

(supra)).          

19. The limit of exercise of power by Courts under

Section  34  of  the  Act  has  been  comprehensively

dealt  with  by  Justice  R.F.  Nariman  in  the  case  of

Associate  Builders v.  Delhi  Development

Authority5.  Lack of judicial approach,  violation of

principles of  natural  justice,  perversity and  patent

illegality have  been  identified  as  grounds  for

interference with  an award of  the Arbitrator.   The

restrictions  placed  on  the  exercise  of  power  of  a

Court  under  Section  34  of  the  Act  have  been

analyzed and enumerated in  Associated Builders

(supra) which are as follows:

5  (2015) 3 SCC 49 25

a) The Court under Section 34(2) of the Act, does not

act  as  a  Court  of  appeal  while  applying  the  ground  of

“public  policy”  to  an  arbitral  award  and  consequently

errors of fact cannot be corrected.   

b)  A  possible  view  by  the  arbitrator  on  facts  has

necessarily  to  pass  muster  as  the  Arbitrator  is  the  sole

judge of the quantity and quality of the evidence.   

c)  Insufficiency  of  evidence  cannot  be  a  ground  for

interference by the Court. Re-examination of the facts to

find out whether a different decision can be arrived at is

impermissible under Section 34 (2) of the Act.

d)  An  award  can  be  set  aside  only  if  it  shocks  the

conscience of the Court.

e)  Illegality  must  go to  the root  of  the matter  and

cannot be of a trivial nature for interference by a Court.  A

reasonable construction of the terms of the contract by the

arbitrator cannot be interfered with by the Court.  Error of

construction  is  within  the  jurisdiction  of  the  Arbitrator.

Hence, no interference is warranted.   

f)  If  there  are  two  possible  interpretations  of  the

terms of the contract, the arbitrator’s interpretation has to

26

be  accepted  and  the  Court  under  Section  34  cannot

substitute its opinion over the Arbitrator’s view.

Application of the Law

20. The Arbitral Tribunal held that the termination of

the contract by the Board on 08.01.2002 was illegal.

This  finding  was  on  the  basis  that  the  Board

committed a breach of the contract.  The breach of

the contract on the part of the Board was due to the

failure in furnishing Letter of Comfort from the Power

Finance  Corporation,  non-supply  of  the  technical

documents  and information  as  required  by  Clause

5.8  (iv)  of  the  Onshore  Service  Agreement  and

misrepresentation.   

Letter of Comfort and Waiver

21. Clause  5.14  of  the  Onshore  Services  Contract

and  Clause  5.6  of  the  Onshore  Supply  Contract

provide for  an irrevocable Letter  of  Comfort  to  be

issued by the Power Finance Corporation in favour of

the Claimant, on the date of issuance of the Notice

to  Proceed  by  the  Board.   There  is  a  further

requirement in the said Clauses that the Board shall

ensure that the Letter of Comfort is maintained in

27

full  force  and  effect  throughout  the  term  of  the

agreements.  The Claimant’s  contention  before  the

Arbitral  Tribunal  was  that  the  production  of  the

Letter  of  Comfort  was  a  fundamental  condition  of

the agreements and the failure to produce it was a

breach  of  the  contract.   The  Board’s  response  to

such contention was that the Claimant is deemed to

have waived the production of the Letter of Comfort.

Waiver was pleaded by the Board on the basis of a

letter  dated  10.03.2000  written  by  the  Claimant

accepting the Zero Date as 09.03.2000 and the oral

concession  made  by  Sh.  G.  Ravindran,  a

representative of the Claimant.  

22. The Arbitral Tribunal opined that the production

of Letter of Comfort was a fundamental condition of

the agreements and the Claimant cannot be said to

have  waived  the  production  of  Letter  of  Comfort.

The  contention  of  oral  concession  made  by

Sh.G.Ravindran  was  considered  by  the  Arbitral

Tribunal  with reference to the evidence on record.

The  oral  evidence  of  Sh.  Saxena,  Superintending

Engineer  and  Sh.Shrivastava,  Additional 28

Superintending Engineer of the Board was referred

to by the Arbitral Tribunal to hold that they admitted

to  the  fact  that  there  was  no  waiver  to  the

production  of  Letter  of  Comfort  in  writing  by  the

Claimants.   Sh.Saxena,  Superintending Engineer of

the  Board  stated  in  his  evidence  that

Sh.G.Ravinderan  made  a  concession  of  waiver  of

production  of  the  Letter  of  Comfort  in  a  meeting.

However,  the details  of  the  meeting could  not  be

given by Sh.Saxena.  The Arbitral Tribunal refused to

accept the point canvassed by the Board relating to

waiver on the basis of the evidence of Sh.Saxena.

The contents of the letter dated 10.03.2000, written

by the Claimant to the Board were examined by the

Arbitral  Tribunal  to  conclude  that  there  was  no

waiver  of  production  of  the  Letter  of  Comfort.

According to the Arbitral Tribunal, the Claimant did

not insist on the Letter of Comfort to be produced as

a  pre-condition  to  the  Zero  Date,  which  did  not

preclude to their seeking the same at a later date as

per  Clause  16.5  of  the  Overall  Co-ordination

Agreement and Clause 22 & 23 of the Supply and 29

Services Contracts respectively.   The production of

the Letter of Comfort was a fundamental condition

of  the  agreements  and the  failure  to  produce the

same was a breach by the Board. The above findings

on  the  Letter  of  Comfort  are  on  appreciation  of

evidence.  We do not see any reason to differ with

the said findings.  

Non-Supply of Documents and Misrepresentation

23. The evidence of Sh. Cesare Ricchetti, Electrical

Engineer working with the Claimant is to the effect

that he took part in the negotiations which led to the

signing  of  the  contract.   He  deposed  that  he

requested for information from the Station Director

of the Board at Amarkantak and Sh. B.S. Chouhan,

Member  Generation,  as  to  whether  Units  3  and 4

were originally designed and constructed to achieve

a  capacity  of  120  MW.   The  Station  Director

responded to the query and confirmed that the Units

had  been  designed  and  constructed  to  achieve  a

capacity of 120 MW.  Sh.Ricchetti further stated that

it was not possible on a visual inspection to assess

the originally installed capacity.  The capacity could

30

have been assessed by examining the parameters

and methods  used during  the  original  design,  the

operational  log  data  and the  original  performance

test.   These  records  were  not  furnished  to  the

Claimants  despite  repeated  requests  by  the

Claimants.  As the Claimants were not satisfied with

the  material,  they  insisted  on  a  formal  warranty,

which  was  included  in  Clause  19.2  (vii)  of  the

Onshore  Supply  Agreement,  Clause 19.2(vii)  reads

as follows:

“19.2  MPEB  represents  and  warrants  to  ANSALDO that: ……. (vii) each of Unit No.3 and Unit No.4 was designed and  constructed  to  achieve  the  operating parameters, and did in fact operate at 120 MW when operating  in  accordance  with  good  industry practice.”

24.  Sh. Ricchetti categorically stated in his evidence

that Claimants would not have signed the contracts

without  the  above warranty.  Sh.Saxena,  Additional

Superintending Engineer deposed before the Arbitral

Tribunal that the warranty was made on the strength

of the manufacturer’s plaque attached to the Units.

He stated that  the Units  had,  in  fact,  operated at

120 MW when the performance was in accordance 31

with good industrial practice.  The Arbitral Tribunal

took note of the fact that no performance test was

carried  out  upon  commissioning  of  the  Units.

Considering the log sheets that were filed on behalf

of the Board for three days in December, 1982 and

four days in February, 1983, the Arbitral Tribunal was

of the opinion that the said records do not show that

the Units  operated at  120 MW was in  accordance

with good industrial practice. Moreover, the Tribunal

found  that  there  were  inconsistencies  in  the

readings recorded in  the log sheets.   The Arbitral

Tribunal concluded that the positive averment by the

Board that the Units were, in fact, operating at 120

MW  for  over  a  period  of  25  years  was  clearly  a

misrepresentation.   According  to  the  Arbitral

Tribunal,  the  Claimant  was  entitled  to  avoid  the

contract as the consent to the contract was obtained

by a misrepresentation.   

25. Sh.  Dave  submitted  that  the  Arbitral  Tribunal

committed a serious error in concluding that there

was misrepresentation on the part of the Board.  He

also criticized the findings of the Arbitral Tribunal on 32

Section  19  of  the  contract  by  relying  upon

illustration (b) therein.  It will be useful to reproduce

Sections 18 and 19 of the Indian Contract Act, 1872

which read as under:

“18. "Misrepresentation" defined "Misrepresentation" means and includes- (1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true; (2)  any  breach  of  duty  which,  without  an  intent  to deceive, gains and advantage to the person committing it, or any one claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him; (3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.

19. Voidability of agreements without free consent

When  consent  to  an  agreement  is  caused  by coercion, fraud or misrepresentation, the agreement is a contract  voidable  at  the  option  of  the  party  whose consent was so caused.

A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the  position  in  which  he  would  have  been  if  the representations made had been true.

Exception: If  such  consent  was  caused  by misrepresentation  or  by  silence,  fraudulent  within  the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the  means  of  discovering  the  truth  with  ordinary diligence.

Explanation: A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such  fraud  was  practiced,  or  to  whom  such misrepresentation was made, does not render a contract voidable.

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Illustrations

(a)  .....

(b)  A,  by  a  misrepresentation,  leads  B  erroneously  to believe  that  five  hundred  mounds  of  indigo  are  made annually at A's factory. B examines the accounts of the factory,  which  show that  only  four  hundred  maunds  of indigo have been made. After this B buys the factory. The contract  is  not  voidable  on  account  of  A's misrepresentation.”

26. On  appreciation  of  the  oral  and  documentary

evidence  produced  by  the  parties,  the  assertion

made by the Board that the Units were achieving a

capacity of 120 MW when operating in accordance

with the good industrial  practice, was found to be

incorrect by the Arbitral Tribunal.  We do not intend

to take a different view on the findings of the fact

recorded by the Arbitral Tribunal.

27. Even if  the Board believed that  Units  3 and 4

were in fact designed for a capacity of 120 MW and

operated at 120 MW, if it was found later that the

assertion  relating  to  the  said  capacity  and

functioning  was  not  true,  a  clear  case  of

misrepresentation,  as per Section 18 of the Contract

Act was made out.  34

28. Mr.Dave relied upon the exception to Section 19.

According  to  the  exception,  a  contract  is  not

voidable if the party whose consent was taken had

the  means  of  discovering  the  truth  with  ordinary

diligence,  even  if  the  consent  was  caused  by

misrepresentation.  He also relied upon illustration

(b), which deals with sale of a factory by B on the

representation of A that 500 mounds of Indigo are

made annually in the factory belonging to A. As B

purchased the factory after examining the accounts

of  the  factory,  the  contract  was  not  voidable  on

account of A’s misrepresentation.   Sh.  Dave relied

upon a  judgment  of  the Full  Bench of  the Judicial

Commissioner’s Court, Nagpur, in (Hazi) Mahomad

Hazi Wali Mahomad v. Ramappa6.  In that case,

the Defendant in the suit represented to the Plaintiff

that the value of the property was about Rs.9,000/-.

Jackson A.J.C. held that even if such a statement was

made by the Defendant, the Plaintiff was not entitled

for a decree on the ground that it was impossible to

believe  that  the  Plaintiffs  solely  relied  upon  the

6  AIR 1929 Nagpur 254 35

statement of the Defendant as to the value of the

property.  It was further held that the Plaintiff could

have  obtained  the  value  of  the  property  without

much  trouble.   In  view  of  the  above  facts,  the

Judicial Commission observed as follows:

“Under S.19, Contract Act, the rights given to a party who has entered into a contract under fraud or misrepresentation,  are  to  avoid  the  contract  or  to insist on the contract being performed.  The section does  not  entitle  the  party  to  insist  on  an  entirely different  contract  being performed.   Moreover,  the rights given by S.19 are given only to a party whose consent to the contract was, in fact, caused by the fraud or misrepresentation.”   

The said judgment has no application to the facts of

this  case.  Similarly,  Ganga Retreat & Towers Ltd.  v.

State of Rajasthan7 relied upon by Sh.Dave would not be

of any assistance to him.  

29. As  discussed  earlier,  the  evidence  on  record

discloses that the Claimants could not ascertain the

actual capacity and the functioning of the Units in

spite of their best efforts.  The relevant records were

not furnished by the Board to enable the Claimants

to  ascertain  the  actual  facts.   The  evidence  on

record supports the contention of the Claimants that

it  was  not  possible  to  ascertain  the  capacity  and

7  (2003) 12 SCC 91 36

functioning of the Units only on the basis of visual

inspections. We are afraid that we cannot agree with

the  submission  of  Sh.Dave  on  the  point  of

misrepresentation  as  we  find  no  good  reason  to

differ from the view taken by the Arbitral Tribunal.

Ext.GG-  Value  of  the  Equipments  Supplied  and Works Performed

30. An  amount  of  Rs.11,14,55,042/-  with  interest

was claimed towards the value of the RLA study and

the  performance  of  work  relating  to  drum  level

system, UPA system, pressure parts and engineering

drawings  which  could  not  be  supplied  due  to  the

termination of the agreements.  A detailed affidavit

was  filed  by  Sh.Fabio  Rolla  in  lieu  of  his

examination-in-chief.   Voluminous  evidence  was

produced  to  show the  actual  expenditure  towards

the  above  works.   There  was  no  meaningful

cross-examination of Sh. Fabio Rolla on behalf of the

Board.   The  determination  of  Issue  No.12  by  the

Arbitral  Tribunal  holding  that  the  Claimants  are

entitled to the amounts claimed in Ex.GG annexed to

the statement of claim i.e.  Rs.11,14,55,042/- is on

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the basis of appreciation of evidence.  We have no

hesitation in approving the said finding of fact of the

Arbitral Tribunal.  

Ext. FF- Refund of amounts of Bank Guarantees

31. The Claimants furnished three Bank Guarantees.

Two  Bank  Guarantees  dated  22.02.2000  and

23.02.2000  were  for  Rs.9.29  crores  and  US  $

1,708,100/-  towards  the  advance  payment  to  be

paid by the Board.  The third Bank Guarantee was

given by ANZ Grindlays Bank, New Delhi on behalf of

the Claimant for Rs.18.48 crores which was towards

performance  guarantee  under  Clause  4.1  of  the

Overall  Coordination  Agreement.  The  Bank

Guarantees dated 22.02.2000 and 23.02.2000 were

in terms of Clause 9.2 of the Onshore and Offshore

Supply  Contracts  respectively.   All  the  three  Bank

Guarantees  were  invoked  by  the  Board  on

23.06.2001.   The  Bank  Guarantees  given  on

22.02.2000  and  23.02.2000  were  conditional.  The

condition  for  invocation  of  such  Bank  Guarantees

was ‘non-fulfillment of the contractual obligations by

the  debtor’.   The  third  Bank  Guarantee  of

38

24.02.2000 was an unconditional  Bank Guarantee.

The  Arbitral  Tribunal  was  of  the  opinion  that  the

invocation of the Bank Guarantee was improper as it

was  not  preceded  by  a  Notice  of  Default  as

contemplated in Clause 16.3 of the Supply Contracts

and  a  subsequent  notice  of  termination  under

Clause 17.1 of the Supply Contracts.  In view of the

finding  of  the  Arbitral  Tribunal  that  the  Board

committed  a  serious  breach  of  the  contract  and

wrongfully  terminated  the  contract,  the  Claimant

was held to be entitled to return of the amounts for

which the Bank Guarantees were given.   

32. The Bank Guarantee given on 24.02.2000 was a

Performance  Bank  Guarantee  and  the  Claimant  is

entitled for return of the amount for which the Bank

Guarantee  was  given.    The  Arbitral  Tribunal,

however,  failed to take notice of the fact that the

other  two  Bank  Guarantees  were  given  for  the

amounts to be advanced by the Board.  In fact, the

Board  had  advanced  the  said  amounts  to  the

Claimants.  We are of the opinion that the Claimant

is not entitled for return of the amounts involved in 39

the  Bank  Guarantees  dated  22.02.2000  and

23.02.2000  as  they  were  towards  the  amounts

advanced by the Board.  The rejection of the claim

pertaining to the damages mentioned in Ex. HH of

the statement of claim which includes loss of profit,

over-heads  and  loss  of  commercial  opportunities

clearly  indicates  that  the  Arbitral  Tribunal  never

intended  to  grant  any  damages  to  the  Claimant.

The claims allowed by the Arbitral Tribunal pertained

only to the return of the Claimants’ money involved

in the Bank Guarantees and the amounts actually

spent by the Claimants.   

Conclusion

33. We uphold the award of the Arbitral Tribunal with

the modification that the Claimants are not entitled

for  the  amounts  involved in  the  Bank  Guarantees

dated  22.02.2000  and  23.02.2000  given  by  the

Claimants.  34. To  avoid  confusion,  the  Award  of

Rs.11,14,55,042/-,  with interest at the rate of 12%

per  annum from 29th July,  2002  until  payment  or

realization  towards  the  claim  in  Ex.GG  and

40

Rs.18,48,00,000/- with interest thereon at the rate of

12% per annum from 5th July, 2001 until payment or

realization,  which  is  the  amount  pertaining  to  the

Performance Bank Guarantee, is affirmed.

35. For  the  afore-stated  reasons,  the  appeals  are

dismissed with the above modification.     

        ........................................J.

                                                              [S.A. BOBDE]

               ........................................J.       [L. NAGESWARA RAO]

New Delhi, April 16, 2018

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