TaxTMI 
TaxTMI 
2019 (4) TMI 1927
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....itioner has impugned the part of the majority award allowing the part of the claims made by the respondents whereas the Petitioner in Arbitration Petition No.599 of 2015 has challenged the part of the majority award, rejecting the part of the claim made by the Petitioner in that arbitration petition. 2. Vestas Wind Technology India, Petitioner in Arbitration Petition No.1088 of 2015 was the original Respondent whereas M/s.Inox Renewables Limited was the original Claimant in the arbitral proceedings. For the sake of convenience, parties in the later part of this judgment are referred to as per their original status in the arbitral proceedings. By consent of parties, both the petitions are heard together and are being disposed of by a common order. 3. Some time in the year 2006, M/s.Gujarat Fluorochemicals Limited evinced interest in investing in Wind Turbine Generators (WTGs) and invited offers from various WEG manufacturers. The respondents along with several other parties submitted their offers to the Claimant for supply,erection and commissioning of 14 WTGs at Gude Panchghani Village Site, Sangli District. The offer was made by an entity called NEG Mircon (India) Private Lt....
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....the specific representations regarding generation estimates coupled with repeated claims of being the provider of most advanced technology and having extensive R & D base worldwide, the Claimant was induced into believing that the proposal of the Respondent was the most attractive proposal vis-a-vis the proposals received from the other developers. 7. It is also the case of the Claimant that the choice of the Claimant was also influenced by the fact that the parent company of the Respondent had globally acquired 'NEG Micon.' The Respondent had also allegedly assured the Claimant that with the merger of these two world leaders, a company like the Claimant would receive the best support in terms of technology, know-how and operations. The Respondent expressed its keen interest in undertaking the implementation and execution of the Wind Farm Project on "Turnkey Basis." The site that was selected and proposed by the Respondent for the said Wind Farm Project was evaluated, selected and acquired by the Respondent at Gude-Panchgani, Taluka Shirala, District Sangli, Maharashtra on its own, based on the wind resource assessment and energy production estimate claimed to have been ....
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....In the offer letter dated 24th November 2006, the Respondent quoted estimated average energy generation of Wind Farm at (gross) LCS as 49.71 lakh Kwh per WTG per annum. The said representation was made by the Respondent to the Claimant constituted the essential premise for the Claimant for entering into a definitive contract with the respondent. It is the case of the Claimant that the Claimant had made it very clear to the Respondent several times prior to entering into the contract for the Wind Farm Project that the Claimant was desirous of setting up Wind Farm Project only if it would provide viable returns on a long term basis and thus it was vital that the estimated average annual energy generation as represented by the Respondent was carried out properly, diligently and reliably done to ensure viable operations of the Wind Farm Project. 11. According to the claimant, the Claimant accordingly decided to enter into the contract with the Respondent for setting up of the Wind Farm Project in Gude-Panchgani, Maharashtra entailing huge investment, totally relying on the genuineness and reliability of such figures of the estimated average annual energy generation. It is the case o....
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....is 49.71 lakhs per WEG corrected to Park Efficiency and Air Density. During the period between February and March, 2007, all the 14 WTGs at the sites were identified by it. The said Wind Farm Project was required to be interconnected with the local grid to enable the evacuation of power from the Wind Farm Project. 17. It is the case of the Claimant that relying on the financial projections made out by the Respondent on the basis of the annual energy generation estimates of the Wind Farm Project, the Claimant entered into a 'Energy Purchase Agreement' dated 18th June 2007 for the sale of power generated from all the 14 WTGs with the Maharashtra State Electricity Distribution Company Limited (MSEDCL) with minimum wind energy obligation of 50.589 MU per annum. The tariff and other critical parameters of the EPA were as per the stipulations laid down in the tariff order of the MEC dated 24th November 2003 for procurement of wind energy and wheeling for third party sale or self use. 18. It is the case of the Claimant that the standard of services provided by the Respondent was not at all satisfactory and short of the good engineering practices in design, implementation and....
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....tion for 20 years based on the expected annual average generation level estimated by the respondent, and claimed that the same was based on the vast knowledge and technical know how the Respondent possessed in this field. It is the case of the Claimant that the Respondent was fully aware that it was not possible for the Claimant to estimate the energy generation itself and develop any business model whatsoever without the expected annual average generation indicated by the respondent. The representation of the Respondent regarding the expected annual average generation of Wind Farm Project was therefore the most important and crucial factor for determining the feasibility and viability of the Wind Farm Project. 23. It is the case of the Claimant that the Respondent had represented that it had carried out the wind resource analysis for the site, based on its world class technical know how and knowledge and based on the same, had evaluated the site, and finding it viable, had acquired the site for development of the Wind Farm Projects. The Respondent had also represented that it had carried out micro-siting exercise, and thereafter had erected and commissioned the Wind Farm Projec....
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.... the then experience of the Claimant in respect of the said project, it had to put on hold its programme for long term investment in establishing around 1000 MW capacity projects. 27. The Respondent however tried to justify energy generation estimates represented by the Respondent by producing a Performance Evaluation Report dated 26th October,2007. It is the case of the Claimant that the said report obtained by the Respondent dated 26th October,2007 was clearly an afterthought on the part of the Respondent wherein an attempt to create a paper trail was made so as to wriggle out of its responsibilities and liabilities. Vide its response dated 22nd November, 2007, the respondent, re-affirmed its findings that the energy generation estimates provided by the Respondent were inflated by almost 34%. 28. It is the case of the Claimant that the said response of the consultant M/s.Garrad Hassan and Partners Limited reinforced the apprehension of the Claimant that right from the initial stages, the Respondent had worked to a design and had made reckless fraudulent representation to the Claimant with a view to induce Claimant to enter into a contract with the Respondent for the Wind Fa....
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....ck in position it was, before the agreements were executed. In 3rd paragraph of Heads of Claim under claim 'A', the Claimant urged that the Claimant was entitled for the compensation towards the huge valuable time and recovery of expenditure wasted in reliance of the contract. The Claimant quantified the claim at Rs. 200,40,09,750/- i.e. in three parts (A) refund of the consideration paid by the Claimant to the Respondent in the sum of Rs. 154,46,19,305/-, (b) interest at the rate of 24% per annum Rs. 34,35,24,856/- and (c) compensation towards the time and expenditure wasted on the contract Rs. 11,58,65,589/-. The said calculation was made only upto 30th May, 2008. The Claimant sought leave of the arbitral tribunal to submit recalculated figure as and when directed to do so. 33. Under Head 'B', the Claimant made alternate claim for damages alleged to have been suffered by him due to fraudulent and reckless grossly negligent misrepresentations made by the Respondent as may be assessed by the arbitral tribunal on the basis of the material on record and evidence led by the claimant. It was alleged that the said loss was likely to keep resulting in colossal recurrin....
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....identical offers one each for Tamil Nadu and Maharashtra containing various disclaimers including the fact that long term wind data was not available, seasonal variations between different years had not been taken into account. There could be thus variations in generation from year to year, the annual general may vary within the wind farm for each WEG. 38. On 28th July, 2006, the Claimant sent an email to the Respondent demanding guarantees for generation. On 1st August, 2006, the Respondent sent an email to the Claimant declining to give any generation guarantee. On 3rd August, 2006, the Claimant sent an email to the Respondent reiterating its demand for guarantee generation. On 5th August, 2006, the Claimant sent an email to the Respondent once again demanding guarantee generation and stipulating penalties for breach of guarantee. 39. On 7th August, 2006, the Respondent replied to the email dated 5th August, 2006 and informed the Claimant that time frame for supply by September was not possible and it could be possible only by December. The Respondent could not guarantee any shortfall on account of lower wind. The penalty suggested by the Claimant was not accepted and the R....
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....y, 2007, the Claimant and the Respondent entered into a supply agreement. Learned Senior Counsel placed reliance on paragraphs 26, 27, 27.1, 30, 31, 31.3 and 31.4 of the arbitral award and submits that those paragraphs of the arbitral award will clearly indicate that the Claimant proceeded to enter into the supply agreement in spite of refusal by the Respondent to hand over wind data information sought for by their expert. The supply agreement had been entered into after scrutinizing its clause by clause. The considerable changes had been made in the supply agreement as compared to the final offer. The supply agreement was discussed threadbare and was entered into by both parties with equal bargaining power as a bilateral document with full knowledge of all consequences. 44. It is submitted that the impugned award would also indicate that once a well informed party enters into a commercial contract after due negotiations, the said party is bound by the terms of the contract and cannot seek the help of Court to wriggle out of the consequences. The terms of the commercial contract must be given full effect too. Primacy must be given to the express clauses in the document and only ....
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..... It is submitted that the basis of the claim for damages wasneither pleaded nor argued before the arbitral tribunal by the claimant. The arbitral tribunal has, however, awarded damages under second part of section 19 of the Indian Contract Act, 1872. In support of this submission, he invited my attention to paragraphs 53.1 and 55 of the majority award. He submits that no opportunity was at all given by the arbitral tribunal to the Respondent before considering the effect of section 19 of the Indian Contract Act, 1872. Learned Senior Counsel invited my attention to some of the portions of the oral evidence led by the claimant. 49. It is submitted by the learned Senior Counsel that although the arbitral tribunal had in paragraph 51.1 of the majority award had clearly recorded that the Claimant had given up claim (A), and though even according to the arbitral tribunal, the Claimant had alleged a fraud and misrepresentation insofar as the alleged claim is concerned without any arguments advanced on the second part of section 19 of the Indian Contract Act, 1872, the arbitral tribunal in paragraphs 51.1, 53, 53.1, 54 and 54.1 of the majority award has awarded the alternate claim made....
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....Limited, AIR 1968, SC 1355 and more particularly paragraph 4. He also placed reliance on section 35 of the Specific Relief Act, 1963 and paragraph 45.1 of the majority award and would submit that there is neither any provision in section 35 of the Specific Relief Act, 1963 nor any other section of the said Act permitting a party to sue for rescission of the agreement and in the alternate for specific performance. He also placed reliance on a passage from "Fry of Specific Performance, 6th Edition" referred in the judgment of the Hon'ble Supreme Court in the aforesaid judgment. 54. It is submitted by the learned Senior Counsel that thoughelection of the relief as was at the stage of filing the proceedings cannot be permitted to be made subsequently and that also without rendering an opportunity to the respondent. No evidence was led by either party on the claim for damages. He submits that the claim for damages made by the Claimant was on the basis of rescission of contract. The Claimant did not rescind the contract but only made a prayer in that regard in the statement of claim itself. 55. Learned Senior Counsel invited my attention to the minutes of the meeting of the arb....
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....party cannot be compensated for the loss of bargain and has to be placed in the position as if he had performed the contract. No evidence at all was led by the Claimant on the measure of damages under section 19 of the Indian Contract Act, 1872 which was to be concluded on the basis of what would have been the position if the contract was performed. 60. Learned Senior Counsel invited my attention to paragraphs 34.11.2 and 34.11.3 of the majority award and would submit that the arbitrator tribunal could not have used the reports of both the experts, to arrive at any definite conclusion. Though the arbitral tribunal in paragraphs 35.7, 35.10, 35.15, 35.23 and 35.24 has held that the expert examined by the Claimant was not an independent witness, the arbitral tribunal still considered the said opinion of the expert of the Claimant though there was no expert evidence on the basis of which the arbitral tribunal could come to any conclusion. He submits that the findings thus rendered by the arbitral tribunal in the majority award is based on no evidence and are ex-facie perverse. 61. It is submitted by the learned Senior Counsel that though the Respondent had not given any guarante....
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.... 19 of the Indian Contract Act, 1872. The arbitral tribunal has however, erroneously held that the Claimant was entitled to claim damages under section 19 and had not elected to either rescind the contract or to sue the performance and had requested the arbitral tribunal to do so. He submits that the award thus shows perversity and patent illegality on the basis of it. 65. Learned Senior Counsel for the Respondent invited my attention to paragraph 39.11(xiii) of the majority award and would submit that the finding of the arbitral tribunal that the Respondent had duty to disclose all the information on the basis that there was complete reliance on the Respondent by the Claimant shows perversity and irrationality in the impugned award. He submits that the findings of the arbitral tribunal are contrary to the principles laid down by the Hon'ble Supreme Court in case of Associate Builders (supra) and more particularly paragraphs 31 and 42 thereof . He submits that the arbitral tribunal has totally failed to appreciate that none of the actual statements made by the Respondent at the stage of negotiations of contract or even in the supply contract entered into between the parties ....
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....at several judgments relied upon by the Respondent before the arbitral tribunal have not been been even considered in the impugned award. Learned Senior Counsel placed reliance on the judgment of the Court of Appeal in case of Oscar Chess Ltd. vs. Williams (1957) 1 WLR 370 and in particular relevant paragraphs at pages 373 and 375. 69. Learned Senior Counsel invited my attention to the finding of the arbitral tribunal in paragraphs 49.5 and 49.6 of the majority award dealing with issue nos.4 and 5 and would submit that the arbitral tribunal had excluded the portion of clause 9.3 of the supply agreement executed by the parties. He also invited my attention to the finding of the arbitral tribunal on issue no.6 at pages 376 and 397 of the majority award. He also placed reliance on paragraphs 46.3, 46.5.1 and 46.5.2 of the majority award in support of the submission that the arbitral tribunal has relied upon part of clause 9.3 in those paragraphs and at the same time has nullified another part of clause 9.3 in the impugned award which is not permissible and shows perversity. The arbitral tribunal did not site any provision of law empowering the arbitral tribunal to declare any part ....
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....ercial contract. 73. Learned Senior Counsel distinguished the judgment of the Westlaw India in case of 1462 Schneider & Anr. vs. Health (1813) 3 Campbell 505 on the ground that the facts considered by that Court were totally different than the facts before the arbitral tribunal. In that case the sale was effected by description of the property. Learned Senior Counsel distinguished the judgment of the Queen's Bench in case of Curtis vs. Chemical leaning & Dyeing Co. 1 KB at page 80 5 in support of his submission that the said judgment relied upon by the arbitral tribunal was totally irrelevant. In the said judgment, the effect of the printed clause in a receipt was considered. He submits that the cases relating to exemption does not apply to clause 9.3. Clauses 9.1 to 9.3 of the supply agreement provided for different obligation of the parties. 74. Learned Senior Counsel for the Respondent distinguished the judgment of the Kerala High court in case of M. Alavi & Anr. vs. State, AIR 1960 Ker. 94 and would submit that the said judgment relied upon by the arbitral tribunal in paragraph 49.11 of the impugned award was based on estimate and not based on a guarantee. He invited ....
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....lly perverse. Learned Senior Counsel relied upon the findings rendered in the dissenting award at page 455 of the arbitration petition. He submits that since the Claimant herein was advised by the consultants, the question of the Respondent committing any fraud or misrepresentation upon the Claimant did not arise. 79. Learned Senior Counsel invited my attention to the finding rendered by the arbitral tribunal in paragraph 39.11 of the majority award and would submit that the finding rendered by the arbitral tribunal on the issue of misrepresentation, concealment and suppression of facts against the Respondent are contrary to the evidence on record. The arbitral tribunal has erroneously considered the letter of offer and not the concluded contract between the parties. Learned Senior Counsel placed reliance on section 17 of the Indian Contract Act, 1872 and more particularly the explanation to the definition of "fraud" and would submit that there was no silence on the part of the respondent. The Respondent had all through out refused to give all the details sought by the Claimant for various reasons. He relied upon the illustration (A) to section 17 of the Indian Contract Act, 187....
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....or Counsel for the Respondent distinguished the judgment of the Hon'ble Supreme Court in case of Mithoolal Nayak vs. Life Insurance Corporation of India, AIR 1962 SC 814 and would submit that the said judgment delivered by the Hon'ble Supreme Court was based on the interpretation of the insurance policy. The conditions considered by the Hon'ble Supreme Court in the said judgment were totally different with the conditions contained in this case. The principles laid down by the Hon'ble Supreme Court in the said judgment have no bearing on the commercial contract. Learned Senior Counsel placed reliance on a passage from Chitty on contract and would submit that in this case the Claimant had specifically given up its claim for rescission and had prayed for damages based on the breach of contract. 84. It is submitted that if the Claimant would have elected to claim damages and would have given up prayer (A) of the statement of claim at the thresh-hold, the Respondent could have decided to lead oral evidence on the issue of damages and breaches. Various submissions based on facts cannot be allowed to be urged before this Court for the first time while opposing the petit....
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....ad not led any foundation under section 18 of the Indian Contract Act, 1872. No opportunity was granted by the arbitral tribunal to the Respondent to deal with the said alleged alternate claim under section 19 of the Indian Contract Act, 1872. Learned Senior Counsel placed reliance on the judgment of the Hon'ble Supreme Court in case of Sarva Shramik Sangh vs. Indian Oil Corporation Limited & Ors. (2009) 11 SCC 609 and in particular paragraph 19 in support of the submission that the arbitral tribunal could not have allowed the Claimant to raise any inconsistent plea. The finding of the arbitral tribunal is contrary to the principles of law laid down by the Hon'ble Supreme Court in case of Sarva Shramik Sangh (supra). 89. Insofar as the quantification of the claim allowed by the arbitral tribunal is concerned, learned Senior Counsel placed reliance on paragraphs 34.11.2, 34.11.3, 35.24, 36.2, 36.9, 36.13 and 52 of the impugned award and would submit that the arbitral tribunal had already rejected the evidence of Mr.Richard Whiting. The evidence of the claimant's witness was already rejected. Though the evidence of the witness of the Respondent was not rejected by the ....
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....meetings, such gross delay in pronouncing the arbitral aware has vitiated the entire arbitral proceedings and has defeated the purpose of discharging the arbitral proceedings expeditiously. He submits that the arguments were concluded by both the parties finally before the arbitral tribunal on 19th Deceased, 2011 and the matter was reserved for pronouncement of the award, whereas the award was rendered only on 28th January, 2015. He submits that on this ground alone, the award deserves to be set aside. 94. Learned Senior Counsel for the Respondent invited my attention to some of the minutes of the arbitral tribunal and would submit that the arbitral tribunal had revised fees three times even after conclusion of the arguments and had charged very exorbitant amount of fees. He submits that the arbitral tribunal had collected a sum of approximately Rs. 4.35 crores from both the parties towards the sitting fees, has collected approximately Rs. 1.35 crores towards, reading, discussion and award writing fees and a sum of Rs. 4.05 lacs towards secretarial charges from the parties. Though the arbitral tribunal had exorbitantly fixed the fees of Rs. 22,50,000/- towards preparing of award....
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....ce filed by the Respondent in support of the submission that the Respondent had admitted that cash flow statement offered by the Respondent was most crucial factor for the Claimant to determine commercial viability of the project. Reliance is also placed on the answer to question no.54 given by the Director, Sales of the Respondent (RW - 1) who admitted during the course of his cross-examination that anticipated Internal Rate of Return (IRR) was one of very important factors taken into consideration by the company to decide as to whether to accept the said project or not. The said estimated generation of 49.71 KWh/WTG/annum (gross) was reiterated by the Respondent in its email dated 6th December, 2006. 99. It is submitted that since the Respondent was the world leader in energy sector, the Claimant relied on the genuineness and fairness of the figure of 49.71 lakhs KWh and various cash flow and revenue projection provided by the Respondent on its space available and executed various contracts with the respondent. The Claimant invested about Rs. 155 crores in the said wind farm project. Three contracts were entered into between the parties i.e. Supply Agreement dated 4th January,....
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.... issues framed by the arbitral tribunal including two additional issues. The submissions of the Claimant on the issue of fraud allegedly committed by the Respondent :- 103. It is submitted that only after execution of the contract between the Claimant and the respondent, the Claimant realized that it had been induced by the Respondent for entering into a contract on the basis of the representation made by the Respondent which were fraudulent and were known to be so by the respondent. The Respondent fraudulently misrepresented to the Claimant in its final offer as well as in the supply agreement that the energy difference put forth from the WTG's was 49.71 lakhs KWh/WTG/annum (gross) with an intent to induce the Claimant to enter into a supply agreement. 104. It is submitted that the Respondent had forwarded its Production Estimate dated 19th September, 2006 along with its final offer dated 24th November, 2006. Page no.9 of the said Production Estimate was however, deliberately suppressed by the respondent. Learned Senior Counsel invited my attention to the correspondence exchanged between the Claimant and the Respondent in this regard by which the Claimant had called u....
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....he out come of all the negotiations and agreed points between the parties. 107. Learned Senior Counsel placed reliance on the Production Estimate produced by the Respondent dated 19^th September, 2006 stating that the estimated park production was 119.3 GWH / year i.e. 49.71 lakhs KWH / years per WEG. Page no.9 of the Production Estimate however was missing at the relevant time and was furnished only after execution of the supply agreement by the Respondent though the Claimant called upon the Respondent to furnish various details and the copy of page no.9 for quite some time. 108. Learned Senior Counsel for the Claimant placed reliance on clause 9.1 of the supply agreement dated 4th January, 2007 executed between the parties in respect of 14 WEGs. He submits that clause 9.1 thereof clearly reiterated specific representation of the Respondent that the estimated average annual generation (gross) was 49.71 lakhs KWh per WEG. Clause 9.2 provided that the generation estimate had been carried out using WASP and Wind Pro Software. The calculations were based on the wind data for the period September, 2005 to August, 2006. It was further stated that the long term data had not been av....
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....lso placed reliance on paragraph 16 of the statement of defence and would submit that the Respondent had clearly admitted in the said paragraph that the projected cash flow and energy generation estimate was the most crucial and decisive factor for the Claimant to assess and determine the commercial viability of the wind farm project in terms of returns on investment. The said witness (RW - 1) also admitted in reply to question 54 that when a company envisages setting up a project, the IRR is one of the very important factor that is taken into account by the company to decide as to whether to go in for that project or not. He submits that the submission of the Respondent that providing page no.9 was meaningless is totally baseless. According to the claimant, it was admitted position that the balance 10 WTG had been already sold on the date of execution of the supply agreement between the Claimant and the respondent. In support of this submission, learned Senior Counsel placed reliance on reply of the RW - 1 to question no.216. 112. It is submitted by the learned Senior Counsel that even if exceptionally high wind period from 1st September, 2005 to 31st August, 2006 from amongst ....
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....e submits that the Respondent had deliberately inflated the cash flow statement so as to induce the Claimant to execute the agreement with the respondent. The cash flow statement was an important factor to decide upon whether to make an investment or not. The Respondent did not take into consideration all the deductions while preparing the cash flow statement only with a view to make it more attractive and to influence the Claimant to enter into the agreements. 115. Learned Senior Counsel submits that all these aspects have been rightly taken into consideration by the arbitral tribunal in the majority award in various paragraphs and more particularly paragraphs 39.11, 41 and 42.5 of the majority award. It is submitted by the learned Senior Counsel that the Respondent failed to lead any evidence or to prove that estimate generation of 49.71 lakhs KWh/WEG/annum made by it was fair and genuine. This crucial aspect also has been considered by the arbitral tribunal in paragraph 42.6 of the majority award while deciding issue no.1(b) by the arbitral tribunal. 116. It is submitted by the learned Senior Counsel that the arbitral tribunal has also considered and more particularly in p....
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....ons 17 to 19 of the Indian Contract Act, 1872 which cannot be permitted. No person can validly contract that he will not be responsible for his own fraud. He submits that the said figure 49.71 lakhs repeatedly expressed by the Respondent all through out constituted a warranty. In case of conflict, the clause is liable to read down to give effect to the object of the agreement. 120. It is submitted by the learned Senior Counsel that since the Respondent had committed fraud which was established by the Claimant before the arbitral tribunal, the Respondent could not be permitted to rely upon the contractual stipulations including with regard to the estimate, no guarantee, limitation of liability, consequential losses etc. The acts of the Respondent would squarely fall to the definition of "fraud" under section 17 of the Indian Contract Act, 1872. The consequences thereof is stipulated in section 19 of the Indian Contract Act, 1872. The contentions of the Respondent if accepted, would amount to contracting out of statue i.e. sections 17 to 19 of the Indian Contract Act, 1872 which cannot be permitted in law. 121. Learned Senior Counsel for the Claimant placed reliance on the judg....
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....d that the contract entered into between the parties contained a co-lateral warranty by the Respondent to the Claimant on the actual quantity of power to be generated from WEGs. 124. Insofar as the reliance placed on clause 9.1 of the contract by the Respondent which refers to "estimate" is concerned, it is submitted by the learned Senior Counsel for the Claimant that the contract must be construed with business efficacy to further the intendment of the parties. He submits that the number stated in clause 9.1 was not real estimate without anything more. After the parties act on the said figure 49.71 lakhs and had entered into the contract, it would not be open for the Respondent to contend that the same had no meaning as it was only an estimate or that it was not a guarantee. He submits that clause 9.1 had stipulated a specific figure of 49.71, and not a rounded figure and thus the said odd figure must be given some significance. 125. Learned Senior Counsel for the Claimant strongly placed reliance on the judgment of the Supreme Court in case of Nabha Power Limited (NPL) vs. Punjab State Power Corporation Limited (PSPCL) & Anr., (2018) 11 SCC 508 and more particularly paragra....
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....d by the respondent, who admitted in his evidence that the gross figure could only be 43.40 KWh/WTG/annum outstanding of net figure of 29.73 KWh/WTG/annum. 128. It is submitted by the learned Senior Counsel that the contract entered into between the parties contained a co-lateral warranty by the Respondent to the Claimant on actual quantity of actual power to be generated from WEGs. Learned Senior Counsel strongly placed reliance on the judgment of the Court of Appeal in case of Esso Petroleum Company Limited vs. Mardon, (1976) 1 QB (Court of Appeal) and would submit that even where the estimate or forecast was given by a party to another party and if however, already entered into a contract with such party which had given such estimate / forecast of estimated annual consumption, although it was not a guarantee but it was forecast by other party, who had special knowledge and skill and such representation which inducing the person to enter into a contract constituted a warranty sounding in damages that thus judgment was rightly relied by the arbitral tribunal in the majority award while accepting the plea of the Claimant that the representation made by the Respondent to the Clai....
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....cessors) now The Gujarat Housing Board, AIR 1973 Guj. 34 (DB) and more particularly paragraphs 15, 39, 50 to 55, 77, 84, 85, 90, 94, 97 and 100. He submits that Gujarat High Court in the said judgment had awarded the claim for damages in favour of the plaintiff in view of the estimated cost suggested by other side having been found to be inaccurate. The Gujarat High Court has held that the documents clearly established that the Respondent though knew that the representation made with regard to the cost estimated for the work was false and misleading had given such estimate. It is submitted that under section 19 of the Indian Contract Act, 1872, the plaintiff is entitled to insist upon carrying out the contract and to claim loss or damages in terms of that section. 133. Learned Senior Counsel for the Claimant distinguished the judgment of the Kerala High Court in case of M. Alavi & Anr. (supra) on the ground that the said judgment is not applicable to the facts of this case since in this case the plea of misrepresentation put forth by the plaintiff was given up and change to one of "mistake". The said judgment is also distinguished on the ground that the notice to tender expressl....
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....f the latter clause stating that there would be no guarantee, stating about the limitation of liability and consequential losses. In support of this submission, learned Senior Counsel placed reliance on paragraphs 46.5.1 to 46.6.2 of the majority award. 136. It is submitted by the learned Senior Counsel that an opportunity has been granted to a party in an earlier part of the contract cannot be taken away by latter part of the contract. The numbering of the clause is therefore, irrelevant. He submits that there is no repugnancy since clauses 9.1 to 9.3 can be read harmoniously. 137. Insofar as the submission of the learned Senior Counsel for the Respondent that the arbitral tribunal does not have power to hold that an earlier clause is repugnant to latter is concerned, it is submitted by the learned Senior Counsel for the Claimant that the repugnancy as referred to in the arbitral award is not in the nature of as is referred to by the constitutional courts but is in the nature of construction of contract which is within the sole domain of the arbitral tribunal. It is submitted that it is the duty of the arbitral tribunal to interpret the terms of the contract by applying esta....
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....lhi High Court in case of HUDCO Limited (supra). He submits that the view taken by the arbitral tribunal in the majority award being plausable view and not perverse, no interference is warranted in the petition filed under section 34 of the Arbitration & Conciliation Act, 1996. 141. Insofar as the submission of the learned Senior Counsel for the Respondent that the impugned award is in violation of the principles of natural justice contending that there being no arguments on the basis of which the claim could be awarded by the arbitral tribunal, no sufficient pleading or opportunity was given to the Respondent to adduce evidence and the arguments is concerned, it is submitted by the learned Senior Counsel for the Claimant that the purpose of the pleadings is to enable the defendant to know the case that it is required to meet. He submits that the pleadings have to be construed liberally. The Respondent had clearly understood the case of the Claimant viz. that it had made to an alternate claim for damages based on the second part of section 19 of the Indian Contract Act, 1872. The Respondent had clearly understood that the case was contractual in nature and not tortuous. 142. ....
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....ondent before the arbitral tribunal that the Claimant was not entitled to make an alternate claim on the basis of performance clearly indicated that the Respondent had all times understood that the claim - B of the Claimant to be on the basis of performance i.e. under the second part of section 19 of the Indian Contract Act, 1872. There was no question of performance in case of the claim for damages for the tort of deceit. He submits that the claim - B refers to "fraudulent misrepresentation". It expressly states that based on "alternate claim of damages". 146. It is submitted that the said alternate claim - B makes it explicitly clear that the said claim was on the basis that the contract was on going. It was clearly pleaded by the Claimant that actual generation of the project, during the first year of operations, was far lower than the projected estimated generation and had resulted in and is likely to keep resulting in colossal recurring loss of revenue to the Claimant even in the future. It was specifically pleaded that the Respondent is liable to compensate the Claimant for the loss suffered by it due to performance of wind farm project set up by the Respondent and the hug....
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....contract was genuine and proper. 150. Insofar as the claim - B made by the Claimant in the statement of claim is concerned, the Respondent in the statement of defence had simplicitor vaguely denied the said claim stating that the Claimant was not entitled to any of the reliefs either under the heads of the claim indicated or delivered. Rest of its pleadings adverted only to claim - A. It is submitted that the Respondent thus cannot be allowed to urge that he did not have any opportunity to lead evidence in this regard. Learned Senior Counsel submits that it was no where pleaded by the Respondent in the statement of defence that there was any lack of clarity as to the basis of claim - B or that the claim - B was not maintainable in an alternate to claim - A. 151. Insofar as the submission of the learned Senior Counsel for the Respondent that the Respondent did not have sufficient opportunity to lead evidence on claim - B is concerned, it is submitted by the learned Senior Counsel for the Claimant that in the arbitration proceedings, it is no where alleged by the Respondent that it did not have sufficient opportunity to lead evidence insofar as claim - B is concerned. He submit....
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....duction estimate, the said witness examined by the Respondent had carried out the calculation before the arbitral tribunal which clearly showed that with regard to 14 (WTGs) of the claimant's gross annual generation, after applying the wind direction shift was only 43.40 KWh/WTG/annum. He submits that the said evidence of the Respondent was rightly considered by the arbitral tribunal on pages 257 to 343 of the majority award annexed to the arbitration petition. 155. It is submitted that after tabulating various items with regard to the gross and annual general figures in a chart prepared by the arbitral tribunal at page 418 of the arbitration petition, the arbitral tribunal held that the Claimant was entitled to rely upon all the lowest admission made by the Respondent in its Exhibit C-35 of 43.40 gross which worked out to 29.73 net as referred to in the 9th item in the said chart. The arbitral award had earlier evaluated and considered Exhibit C- 35 of the RW - 2 at pages 291 to 295. The arbitral tribunal thereafter took average of the figures in the said chart and reduced the figure to 31 which was detrimental to the Claimant and not the respondent. 156. In so far as th....
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....nsel for the Claimant that paragraph 45 of the majority award clearly indicates that the Respondent had understood that claim - B was under the second part of section 19 of the Indian Contract Act, 1872. The arbitral tribunal itself had recorded the case of the Respondent that the claimants were not entitled to claim - B on the basis of the performance, once the contract was rescinded. He submits that the Respondent had thus clearly understood that claim - B of the Claimant was on the basis of performance i.e. under the second part of section 19 of the Indian Contract Act, 1872. 160. Learned Senior Counsel for the Claimant submits that the submission of the learned Senior Counsel for the Respondent that claim - A was dropped by the Claimant only in the rejoinder is concerned, there is no substance in this submission of the learned Senior Counsel for the respondent. He submits that the Respondent was obliged to deal with and in fact had dealt with claim - A well as claim - B even before stage of rejoinder and the same was not dependent on the Claimant dropping claim - A. He submits that even after claim - A was dropped by the claimant, the Respondent had availed off an opportunit....
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.... The Claimant claimed the difference / loss in revenue at Rs. 97.17 crores i.e. the difference between Rs. 225.25 crores and Rs. 128.09 crores. 163. Learned Senior Counsel for the Claimant placed reliance on various paragraphs of the written submissions filed by the Respondent before the arbitral tribunal and would submit that the Respondent had dealt with claim - B under various heads comprising of not only the preliminary objections but also on merits of the case. The Respondent thus had fill opportunity to deal with claim - B and had in fact dealt with claim - B also in the written submissions. It is submitted that the Claimant had led evidence on all the issues. Insofar as claim - B is concerned, the evidence was common on claims - A and B. Claim - B was on the basis of contractual damages. No arguments were advanced by the Respondent before the arbitral tribunal contending that the Respondent did not have an opportunity to lead evidence on the claim for damages under second part of section 19 of the Indian Contract Act, 1872. 164. It is submitted that it was not the case of the Respondent even in the written submissions filed before the arbitral tribunal that the claim -....
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....ract Act, 1872 is not a suit or claim for specific performance under the provisions of the Specific Relief Act, 1963. He submits that section 19 of the Indian Contract Act, 1872 is selfcontained which clearly provides that (a) a party avoids a contract i.e. rescind the contract which in this case was claim - A and (b) under the second part - party can insist that contract be performed on the basis that the contract is on going i.e. in this case claim - B. Substantive rights are conferred under section 19 of the Indian Contract Act, 1872 where there is a fraud or misrepresentation or coercion. 167. It is submitted that the principles to sections 27 and 29 of the Specific Relief Act, 1963 will not be attracted. Bar imposed in Specific Relief Act cannot operate against the specific substantive rights under section 19 of the Indian Contract Act, 1872. It is submitted by the learned Senior Counsel that section 73 of the Indian Contract Act, 1872 cannot be invoked, once such contract has been rescinded. Section 73 of the Indian Contract Act, 1872 has no application to the second part of section 19 of the Indian Contract Act, 1872. He submits that there is no substance in the submissio....
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....agraph 16 of the statement of claim were admitted by the Respondent in the written statement. The arbitral tribunal in the majority award had given a categorical finding of fact that the Respondent had made a false statement and had suppressed various material information. The intendment of the parties should be considered by the Court. 171. It is submitted that the true intention of the parties in this case was that the estimate given to the Claimant by the Respondent clearly induced the Claimant to enter into the contract with the respondent. He submits that interpretation sought to be advanced by the Respondent is contrary to the business efficacy. 172. It is submitted that it is exclusively within the domain of the arbitral tribunal to interpret and construe the terms of the contract. Interpretation of the contract by the arbitral tribunal is the correct interpretation of the contract. Even if the interpretation of the contract by the arbitral tribunal is a possible interpretation, such interpretation of contract by the arbitral tribunal cannot be substituted by this Court by another possible interpretation. 173. It is submitted by the learned Senior Counsel that when ....
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....L continued to issue its Meter Reading in respect of the entire farm along with the Energy Breakup in respect of the Claimant and others in the farm. The Respondent continued to issue its Monthly Summary Generation Report and continued to raise invoices. The Respondent continued to forward the invoices of the Claimant to MSEDCL. The Claimant continued to make payment. Learned Senior Counsel placed reliance on various receipts and payments. 177. Learned Senior Counsel for the Claimant distinguishes the judgments in the cases of (i) Johnson Vs. Angew (1980) A.C. 367, (ii)Hanumant Bhimrao Kalghatgi Vs. Gururao Swamirao Kulkarni & Anr. (1942) 44 Bom LR 880, (iii)R. Samudra Vijayam Chettiar Vs. Srinivasa Alwar & Ors., 1955 SCC Online Mad 186 and (iv)Umabai & Anr. Vs.Nilkanth Dhondiba Chavan (Dead) by Lrs. & Anr. (2005) 6 SCC 243 on the ground that none of these judgments would be applicable to the facts of this case. The facts before various Courts in those matters were totally different. 178. In so far as the submission of the learned Senior Counsel for the Respondent that in view of explanation to Section 17 of the Contract Act, the Respondent had no duty to speak in a commercia....
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..... 181. Reliance is placed on the Judgment of Chancery Division in the case of Carlish Vs. Salt (supra) by the Claimant on the ground that in that case, the contract for sale of land was having latent defect, and accordingly it was held that there was a duty to speak. He also relied upon the judgment in the case of Horsfall Vs. Thomas wherein the case of a sale of a chattel, it was held that if there be a defect known to the manufacturer and which cannot be discovered on inspection, he was bound to point out such defect to the either party. 182. In so far as the submission of the Respondent that the Claimant had the advantage of expert advice engaged by it is concerned, learned Senior Counsel for the Claimant submits that M/s.Power and Energy Consultants and M/s.McKinsey & Company Inc. had not been engaged by the Claimant to enable it to judge the merits and demerits of the proposals made by the Respondent nor the said consultants were engaged to evaluate the wind data and wind energy production pertaining to the said Wind Farm Project. He submits that the Respondent also failed to prove in its evidence that Mr.C.M. Jain had undergone any training to qualify himself in analysi....
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....ground 'Z' and ground 'AA' of the arbitration petition filed by the Respondent and would submit that the contention of the Respondent that the evidence of RW-2 was rejected by the arbitral tribunal is contrary to the grounds raised in those two paragraphs and asserting that the evidence of RW-2 was accepted by the arbitral tribunal and the evidence of CW-2 had been rejected. 187. In so far as the contention of the Respondent that there was delay of over 3 years in making the award after conclusion of the arguments on 19th December 2011 which constituted misconduct on the part of the arbitral tribunal is concerned, learned Senior Counsel for the Claimant disputed the statement made by the Respondent that the arguments were concluded on 19th November 2011. He submits that after the hearing on 19^th November 2011, the proceedings were thereafter held on 20/12/11, 5/1/2012, 6/2/2012, 12/2/2012, 14/2/2012, 1/9/2012, 12/9/2012, 19/10/2012, 16/11/2012, 31/12/2012, 1/1/2013, 3/1/2013, 10/1/2013, 2/2/2013, 30/4/2013, 3/12/2014 and 4/12/2014, including for the purpose of (i) correction of the earlier minutes, (ii) proceedings in respect of exhibit C 24, (iii) for extension....
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.... of Kerala High Court in the case of M.Alavi & Anr. Vs. State, AIR 1960 Ker 94 on the ground that the facts before the Kerala High Court were totally different. He invited my attention to paragraphs 4, 5, 7, 9, 11 and 13 of the said judgment and would submit that the specific figures were mentioned in the contract in this case. 192. Learned Senior Counsel for the Claimant distinguished the judgment in the case of Oscar Chess Ltd. Vs. Williams, (1956) Weekly Law Reports 370. He invited my attention to 3rd paragraph thereof and would submit that the said judgment was on the issue of warranty and would assist the case of the Claimant and not the respondent. Learned Senior Counsel for the Claimant strongly placed reliance on the judgment in the case of Esso Petroleum Co. Ltd. Vs. Mardon (supra) and more particularly on pages 814 and 817 thereof and would submit that the said judgment would squarely apply to the facts of this case. 193. In so far as the judgment of Queen's Bench Division Commercial Court in the case of Raiffeisen Zentralbank Osterreich AG Vs. The Royal Bank of Scotland Plc., 2010 EWHC 1392 (Comm) relied upon by the learned Senior Counsel for the Respondent is ....
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.... justice. The award is also overlooking the Section 73 of the Indian Contract Act, 1872. 196. Learned Senior Counsel placed reliance on Section 29 of the Specific Reliefs Act, 1963 and would submit that the party cannot claim rescission and also at the same time seek performance of the same contract. He placed reliance on the judgment of the Supreme Court in the case of Prem Raj Vs. D.L.F. Housing and Construction Private Limited (supra) and in particular paragraph 1 in support of this submission. 197. Learned Senior Counsel placed reliance on the judgment in the case of 23 Cawley Vs. Poole, 1863 Westlaw India 71 E.R.23 in support of the submission that the claim for damages is limb of performance. Since the Claimant had already claimed rescission of contract, there was no question of simultaneously claiming the performance of contract. Learned Senior Counsel placed reliance on the judgment of the Andhra Pradesh High Court at Hyderabad in the case of Kilaru Venkatasubbayya Vs. Kalluri Padmalayamba and Anr., 1968 SCC OnLine AP 290 and in particular paragraph 15 thereof. He submits that since the Claimant had affirmed the contract, the Claimant could not ask for rescission of c....
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....ned Senior Counsel for the Claimant and submits that there was no propositions of law in the said judgment of the Gujarat High Court. He distinguishes the judgment of the Hon'ble Supreme Court in the case of Mcdermott International INC. Vs. Burn Standard Co. Ltd. (supra) on the ground that in the statement of claim filed by the claimant, the Claimant had specifically stated that quantification of claim of the damages has to be quantified. He placed reliance on paragraphs 9, 14, 96 and 100 of the said judgment in the case of Mcdermott International INC. Vs. Burn Standard Co. Ltd. (supra). 204. Learned Senior Counsel for the Respondent distinguishes the judgment of this Court in the case of Karsondas Kalidas Ghia Vs. Chhotalal Motichand (supra) on the ground that the arbitral tribunal could not have permitted the rescission and thereafter performance of the contract. Learned Senior Counsel placed reliance on Law Lexicon, 15th Edn. Submissions of the learned Senior Counsel in Arbitration Petition No.599 of 2015 filed by M/s.Inox Renewables Ltd. & Ors. against Vestas Technology India Pvt. Ltd. :- 205. The original Claimant has filed this petition impugning the findin....
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....representative of MSEDCL. Based on the said joint metering report, the Claimant was raising its invoices upon MSEDCL in terms of Power Purchase Agreement. There was concealment and suppression of the facts by the Respondent knowing that they were not true with an intention to induce the Claimant to enter into Supply Agreement. The arbitral tribunal in the majority award rejected the claims made by the Claimant for a period of 20 years on erroneous grounds. 209. It is submitted that though the basis of claim for 20 years was proved, the arbitral tribunal rejected the claim on the ground that the Claimant could not provide a basis for predicting long term energy estimate for 20 years. Learned Senior Counsel for the Claimant placed reliance on page 55 of the majority award and would submit that the arbitral tribunal has rendered a finding that the deficit of energy flows from the misrepresentation or fraud practiced by the Respondent on the Claimant as per second part of Section 19 of the Contract Act, 1872 and that it would be just and appropriate to make the aforesaid determination effective from 1st April 2008 onwards. However, the arbitral tribunal, without citing any reasons o....
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....it that even in those judgments, the Hon'ble Supreme Court had categorically held that the Court has power to modify the offending part of the award in case it is severable from the balance part of the award. Learned Senior Counsel invited my attention to the findings rendered by the arbitral tribunal in paragraphs 37.12, 39.2, 39.6, 39.7, 39.10, 39.11, 55.3, 55.4, 55.5, 55.6, 55.8 in respect of the submission that the conclusion drawn by the arbitral tribunal in the majority award is contrary to the findings rendered by the arbitral tribunal. 214. It is submitted that the part of the award rejecting the claim for compensation for a period of 20 years is clearly severable from the other part of the award and can be thus modified by this Court and can be granted for balance period. She submits that the agreement entered into between the parties is still in force till 2020. The Respondent has been maintaining plant of the claimant. The Respondent is bound to make defence to the Claimant between average 31 lakh KWH/WEG/ annum and the average actual energy production. The invoices are already forwarded by the Respondent to MSEDCL. 215. Mr.Sarkar, learned Senior Counsel for th....
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....ents before the Arbitral Tribunal challenged part of the majority Award, along with part of the claims made by the Claimant which is the subject-matter of Arbitration Petition No.1088/2015. The Claimant has also filed Arbitration Petition No. 599/2015 inter alia, impugning part of the majority Award thereby rejecting part of the claim made by the Claimant before the Arbitral Tribunal. The Arbitral Tribunal framed eight issues in the proceedings held on 11 October 2008. The Arbitral Tribunal subsequently framed two additional issues, which are extracted as under : (a) Whether the Claimant proves that as per the datafurnished to them by the Respondent the energy output from each WEG/annum could not be more than 37.12 lakhs KWH/WEG/annum and can never be 49.71 lakhs KHW/WEG/annum as represented and stated in the agreement dated 04.01.2007 ? (b) Whether the Respondent proves that the estimatedgeneration of 49.71 lakhs KWH/WEG/annum made by it, is fair and genuine in terms of Clause 9 of the agreement dated 04.01.2007 ? 220. Both the parties led documentary and also oral evidence before the Arbitral Tribunal. Clause 9 of the Supply Agreement, which is the main claus....
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....mmunication and the meetings between the parties before the execution of the agreements entered into by and between them, in support of their rival contentions about the applicability of the clauses 9.1 to 9.3 of the Supply Agreement and on the issue whether the Respondent had issued any guarantee on generation of energy during the contractual period or not. It was the case of the Respondent before the Arbitral Tribunal and also it was urged before this Court, that in view of the Clause 9.3, there was no guarantee given by the Respondent on generation of the energy by the Respondent to the Claimant at any point of time before execution of the Supply Agreement or otherwise. It was the case of the Respondent that the Respondent was not responsible, as alleged, for the shortfall in generation of the energy under various clauses of the agreement entered into between the parties. 222. A perusal of the majority Award on this issue indicates that after considering the pleadings, oral and documentary evidence led by both the parties and on interpretation of Clause 9 of the Supply Agreement, the Arbitral Tribunal, in the majority Award, has rendered various findings which are highlighted....
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....e Arbitral Tribunal noticed material difference in the final offer dated 24.11.2006 and the Supply Agreement dated 4.1.2007. The Arbitral Tribunal held that a close analysis of the Clause 9.3 of the Supply Agreement shows that the various corrections were to be applied to/or to be deduced from the gross general of 49.71 lakh KWh/WEG/annum. 225. It is held by the Arbitral Tribunal that as a deduction thereof, the resultant figure of generation would be 37.04 lakh/KWh/WEG/annum. The Arbitral Tribunal, also considered the oral evidence led by both the parties. In paragraph 32.3.1, and 32.3.2 , it is held by the Arbitral Tribunal that on a comparison of the estimated energy generated in the final offer, with Clauses 9, 9.1, 9.2 and 9.3, the picture that emerges is that actual energy generated per WEG per annum would be far less than 44.86 lakh KWh per WEG per annum as per the estimated general clause in CW.1/3. The Arbitral Tribunal further held that as per the analysis made in paragraph 32 of Clause 9.3 and further quantification of the loss in generation of energy due to other factors, resulting in lower generation, total put together it had been concluded in paragraphs 32 and 32.....
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....ndividual energy was shown for 14 turbines. Out of 24 turbines, it was not in dispute that turbines at serial numbers 2 to 8, 11, 13, 15, 17, 20, 22 and 23 formed part of the wind farm sold to the Claimant. The Arbitral Tribunal rendered finding in paragraph 34.5.7 that the energy result of the 14 WEGs was 66.95 GWH/Annum. The average production of energy by each WEG sold to the Claimant was arrived at by dividing 66.95 GWH/Annum by 14 = 4.78 GWH/WEG/Annum; whereas the offer document of NEG Micon stated 49.71 lakh KWH/WEG/Annum - gross at Local Control System. The average gross production of each WTG was only 47.80 lakh KWh/WEG/Annum; where as the Offer document of NEG Micon stated 49.71 lakh KWh/WEG/Annum. The Arbitral Tribunal held that it was fully known to the Respondent that the estimated energy generation of 49.71 lakh KWH/WEG/Annum (Gross) was not true and correct statement. The Respondent had misrepresented the Claimant knowing that it was not true and correct with a view to induce the Claimant to enter into Supply Agreement. 229. In so far as evidence of Mr. Richard Whiting is concerned, the Arbitral Tribunal while dealing with his evidence, held that he cannot be consi....
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....he Respondent specifically stated that it could not supply any further information. The Respondent misrepresented the Claimant on essential factors, affecting the generation of wind energy. The Claimant became aware only when the production of energy started as it was nowhere near the estimated generation made in the Exhibit CW.1/3 and the Cash Flow statement. After considering the evidence of Mr. Deepek Asher, the Arbitral Tribunal held that the inference was unavoidable that the Claimant agreed to the Supply Agreement on the faith in the Respondent and on the representation made by it. 232. After considering the evidence of Mr. Arvind Prasad,(RW.1) who was examined by the Respondent, in paragraphs 38 to 38.9, the Arbitral Tribunal rendered findings that the Respondent had withheld or suppressed the material records and information, and thereby kept the Claimant in dark on these aspects which were very material for the Claimant to decide upon about the viability of the project. The Arbitral Tribunal considered the Cash Flow Statement and the evidence of RW.1 on that aspect and rendered findings that the said witness had admitted that the Claimant was not informed that the Cash ....
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....e Respondent had not made negligent misrepresentations, but also committed fraud on the Claimant. It is proved that the misrepresentation made by the Respondent was fraudulent. The Arbitral Tribunal also rendered findings in 39.11(xii) that various necessary information and documents required for the purpose of wind energy generation were purposely not made available by the Respondent to the Claimant. 237. The Arbitral Tribunal also considered the submissions made by the parties based on Explanation to Section 17 of the Indian Contract Act and rejected the contention of the Respondent that the Respondent was not duty bound to disclose every thing to the Claimant and held that the present case was one of active representations by the Respondent and thus would clearly fall under Section 17 i.e. "Fraud" as defined under the said provision. The Arbitral Tribunal interpreted Clause 9.2 also, which provided that the generation estimate had been carried out using Wasp and Windpro Software and the calculations were based on the wind data for the period September 2005 to August 2006 within the applicable reference mast installed by the Supplier in close proximity to the site and the site....
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....nevertheless represented without any qualification that it was 49.71 lakh KWH/WEG/Annum in the final offer and the Supply Agreement. The representation made by the Respondent was not qualified in any manner. Nothing prevented the Respondent to state the estimated Average Annual Generation (Gross) at LCS at 47.80 lakh KWH/WEG/Annum or at least 49.71 lakh KWH/WEG/Annum; whereas it was specifically stated that it was 49.71 lakh KWH/WEG/Annum. The Respondent thus could not have urged that there was no guarantee given by the Respondent for the Average Annual General (Gross) at 49.71 lakh KWH/WEG/ Annum. 242. In paragraph 42 of the majority Award, the ArbitralTribunal held that the Supply Agreement was vitiated by fraud and misrepresentation committed by the Respondent on the Claimant with an intent to induce the Claimant to enter into the Supply Agreement. The case of the Claimant thus falls under Sections 17, 18 and 19 of the Indian Contract Act. The effect of fraud was not absolutely to avoid a contract induced by it, but to render it voidable at the option of the party defrauded and had selected to avoid it. 243. In so far as the submission of the learned Senior Counsel for the....
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.... more particularly, in view of the fact that the Claimant was fully dependent on the expertise of the Respondent, the Claimant being new in the field and the Respondent being renowned and expert in the field as already represented by the Respondent to the Claimant. 246. There is, thus, no substance in the submission of the learned Senior Counsel for the Respondent that the Claimant was well informed about the surrounding circumstances and pros and cons of the terms of the contract. The Respondent not having given the material data and the information to the Claimant deliberately, though called upon, which were crucial and material for the purpose of taking decision by the Claimant to enter into the contract or not, cannot be allowed to urge that it was for the Claimant to have found out such data itself or that the Claimant having entered into the Supply Agreement with open eyes, cannot be allowed to seek the data after execution of the Agreement. 247. In my view, the material information and the data which had bearing on the decision of the Claimant to enter into the agreement, and which was within the knowledge of the Respondent, the Respondent was bound and had a duty to d....
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...., including the expert witnesses being not perverse, cannot be reappreciated by this court under Section 34 of the Arbitration and Conciliation Act, 1996. 250. In so far as the submission of the learned Senior Counsel for the Respondent that though the Respondent had not executed any guarantee in favour of the Claimant, the Arbitral Tribunal has rendered a finding in respect of the guarantee by the Respondent in favour of the Respondent is concerned, this submission of the learned Senior Counsel is devoid of any merit and contrary to the record. The Arbitral Tribunal has interpreted Clauses 9.1 to 9.3 of the Supply Agreement and has rightly held that all the three provisions had to be read together and the effect of the earlier clauses cannot be allowed to be taken away by the subsequent clauses. There is no substance in the submission of the learned Senior Counsel for the Respondent that the Arbitral Tribunal has read estimate energy as guaranteed energy. There is also no substance in the submission of the learned Senior Counsel for the Respondent that the exemption clause would not operate in case of damages, fraud, etc. 251. In so far as the submission of the learned Senio....
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....y Printing & Minting Corporation of India Ltd. (supra) would not assist the case of the Respondent. Similarly, the Judgment of the House of Lords in the case of Photo Production Ltd. (supra) also would not assist the case of the Respondent in view of the Respondent having committed a fraud upon the Claimant and had deliberately not furnished the crucial material data and information, which would have bearing upon the decision of the Claimant whether to enter into the agreement with the Respondent or not. 255. I am not inclined to accept the submission of the learned Senior Counsel for the Respondent that the findings rendered by the Arbitral Tribunal in paragraph 39.11 of the majority Award on the issue of misrepresentation, concealment and suppression of facts against the Respondent are contrary to the evidence on record, or that the Arbitral Tribunal has erroneously considered the letter of offer and not the concluded contract between the parties. In my view, the Arbitral Tribunal has considered the entire pleadings, documents, oral evidence and the provisions of the contract while rendering such findings of fact. The provisions of Section 18 of the Indian Contract Act, 1872 w....
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.... 9.1 gives a specific percentage and the same cannot be discarded by placing reliance upon Clause 9.3 or use of the word "estimate'. Clause 9 cannot be rendered entirely meaningless. The witness examined by the Respondent clearly admitted in the cross examination that the Respondent had clearly assured generation of 49.71 and thus cannot be allowed to urge that the said amount was not a guaranteed generation. 259. The Hon'ble Supreme Court in the case of Transmission Corporation of Andhra Pradesh Limited and ors. (supra) has held that a commercial document cannot be interpreted in a manner to arrive at a result which is at a complete variance with what may originally have been the intendment of the parties. The intention of the parties has to be ascertained by conjoint reading of Clause 9.1, 9.2 and 9.3 of the Supply Agreement and not by reading each clause in isolation. The RW.2, examined by the Respondent, admitted in his evidence that the gross figure could only be 43.40 Kwh/WTC/ annum; whereas the outstanding of net figure was 29.73 Kwh/WTC/annum. The learned Senior Counsel for the Claimant has rightly relied upon the Judgment of the Court of Appeal in Esso Petroleum....
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.... limitation of liability and consequential losses. These Judgments would clearly assist the case of the Claimant. In my view, the opportunity granted to the Claimant in earlier part of Clause 9.1 could not be taken away by latter part of the agreement i.e. by Clause 9.3. 264. Be that as it may, in my view, there was no repugnancy between Clauses 9.1 and 9.3 and, thus, they have been rightly read conjointly by the Arbitral Tribunal for rendering a finding in the Arbitral Award in favour of the Claimant and by interpreting the terms of those Clauses. The Hon'ble Supreme Court in the cases of National Highway Authority of India (supra) and Swan Gold Mining Ltd. (supra) has held the nature of construction of contract, which is within the sole domain of the Arbitral Tribunal, by applying established principles with regard to interpretation of the contract or evidence, cannot be interfered with by the Court. 265. The Hon'ble Supreme Court in the case of Skandia Insurance Co. Ltd. (supra), has held that even if clauses of the contract cannot be rejected in view of the the conflict, they are liable to be read down so as to give effect to the object and purpose of the clauses ....
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....low Claim A, an inquiry may be made into the amount of damages suffered by the Claimant and award the damages of such quantum as may be assessed by the Arbitral Tribunal. The Claimant prayed that the Respondent was liable to compensate the Claimant for the loss suffered by it due to the under performance of the Wind Far Project set up by the Respondent and huge capital investment being locked up for 20 years. 270. It is thus clear on plain reading of the statement of claim that Claim B was in alternate to Claim A. It is the case of the Respondent that the Claimant had given up Claim A before the Arbitral Tribunal. A perusal of the statement of defence filed by the Respondent indicates that the Respondent had denied the Claim B vaguely, stating that the Claimant was not entitled to any of those reliefs under the Heads of Claims. In paragraphs 9, 15, 16, and 20 of the Statement of Defence it was specifically pleaded by the Respondent that the said estimate provided in the contract was genuine and proper. 271. In so far as the submission that the Claimant had dropped Claim A only in rejoinder is concerned, a perusal of the Minutes of the Meeting of the Arbitral Tribunal indicate....
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....understood that Claim B was for the contractual damages and had not urged before the Arbitral Tribunal that the said Claim was not clear to the Respondent or that the Respondent could not deal with the said Claim on that ground. 275. In so far as submission of the learned Senior Counsel for the Respondent that the Claim was neither pleaded, nor argued by the Claimant before the Arbitral Tribunal is concerned, a perusal of the record indicates that when the Claimant did not press Claim A before the Arbitral Tribunal, the Respondent did not raise any objection or even did not seek any specific opportunity to lead any evidence. 276. In so far as Claim B is concerned, the Claimant relied upon oral as well as documentary evidence already led on both the claims i.e. Claim A and Claim B before the Arbitral Tribunal in respect of Claim B which was pressed by the Claimant. The Claimant has specifically made a claim for damages in prayer for Claim B. The Arbitral Tribunal has considered the documentary, as well as oral evidence. The learned Senior Counsel for the Respondent did not dispute that the joint meter readings were signed by the Respondent and MSEDCL. The MSEDCL continued to i....
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....f the representation made. The claim under Section 19 of the Indian Contract Act, is not a claim for specific performance under the provisions of the Specific Relief Act. The provision of Section 19 of the Indian Contract Act is self contained. 280. A plain reading of Section 19 of the Indian Contract Act clearly indicates that under the first part thereof, when a party avoids a contract i.e. when there is rescission of contract, he can claim compensation under the said provision based on rescission of the contract. Under the second part, the party can insist that the contract be performed on the basis of the contract on going. The party can base its claim on performance of the contract and at the same time, claim compensation. In my view, neither the principles of proof for claim of damages under Section 73, nor under Section 74 of the Indian Contract Act can apply to a claim made under second part of Section 19 of the Indian Contract Act which claim is based on performance of contract and not based on rescission of the contract. 281. Be that as it may, the Claimant in this case had led oral and documentary evidence on Claim A and Claim B which evidence was common to Claim A....
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....ion of the learned Senior Counsel for the Respondent that Sections 27 and 29 of the Specific Relief Act wold be attracted to the facts of this case. In my view, though the Specific Relief Act imposes certain bar upon the Claimant in a suit for specific performance, such a bar cannot operate in case of the claims made under second part of Section 19 of the Indian Contract Act, which creates a substantive right in favour of a party who seeks to claim compensation under that part. 285. It is an admitted position that and even according to the Respondent, the agreement entered into between the Claimant and the Respondent is in force, at least for the maintenance purposes, even today. In my view, for a rescission to operate, has to be express and unequivocal, which is missing in this case. Merely because it was urged by the Claimant in the Statement of Claim that it was entitled to the rescission of the contract, that would not mean that there was rescission of the contract, as sought to be canvassed by the learned Counsel for the Respondent. A perusal of the Statement of Claim clearly indicates that Claim B was made on the basis of on going contract and not on the basis of the resci....
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....aimant. The said Judgment, thus, would not assist the case of the Respondent or is not an authority on the second part of Section 19 of the Indian Contract Act. 289. In my view, since the Claimant did not exercise the right of rescission of the contract, and the contract between the parties continued, the Claimant could make a claim under the second part of Section 19 of the Indian Contract Act. The fact that the Joint Meter Reading Reports are continued to be signed by the Respondent and MSEDCL and various further steps have been taken even today based on such Joint Meter Reading Reports, would clearly indicate that the contract between the parties is ongoing and is not rescinded or determined. The Arbitral Tribunal has considered this issue, at length, in the impugned Award and has rightly allowed the part of the Claim B pressed by the Claimant before the Arbitral Tribunal. 290. A plain reading of the averments made in respect of Claim B, clearly indicates that it was averred by the Claimant that the Claimant would nevertheless be entitled for its alternate claim and damages suffered by it due to fraudulent and reckless/grossly negligent misrepresentation made by the Respon....
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....the Arbitral Tribunal. The Respondent had also dealt with both the claims before the Arbitral Tribunal and had also made various admissions in the evidence of the witnesses examined by it before the Arbitral Tribunal. 294. The pleadings and the evidence of the parties, followed by written submissions filed by both the parties before the Arbitral Tribunal, clearly indicated that the Respondent was fully aware of both the claims of the Claimant and had not only dealt with Claim B, but had also availed of the opportunity to deal with the said claim. The purpose of filing pleadings is to make aware of the case of the Claimant to the Opponent which, in this case, clearly suggests that the Respondent had fully understood the case of the Claimant and had dealt with the said claim throughout. The Arbitral Tribunal has rightly rendered a finding that the contract entered into between the parties continued and the collateral warranty by the Respondent to the Claimant was actual quantity of energy to be generated from the WEGs. 295. In Clause 9.1 of the Supply Agreement and various other correspondence, an odd figure of energy generation was mentioned and not an estimate. The witnesses ....
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....h vs. Salt (supra) would assist the case of the Claimant. In my view, there is no substance in the submission of the learned Senior Counsel for the Respondent that the Claimant had advantage of expert advice engaged by it. In my view, Mr. Chagla, learned Senior Counsel for the Claimant is right in his submission that M/s. Power & Energy Consultants and M/s. McKinsey & Company Inc. had not been engaged by the Claimant so as to enable it to judge the merits and demerits of the proposals made by the Respondent nor the said Consultants were engaged to evaluate the wind data and wind energy projection pertaining to the said wind farm project. 298. In my view, since the Respondent had committed fraud upon the Claimant, the Respondent could not have even otherwise placed reliance on Clause 9.3 or other provisions of the contract in support of the submission that the claim made by the Claimant was contrary to the said provisions. A party who commits a fraud on another party to the contract, cannot seek reliance on a provision so as to take legal undue advantage of such provision. 299. In so far as the reliance placed on Clause 9.1 of the Supply Agreement by the Respondent which refer....
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....s, (iv) for substituting Inox as the Claimant since the erstwhile Claimant (GFL) had sold, transferred, assigned and conveyed its wind energy business to Inox, and (v) for discussing and finalising the Arbitral Award. 302. The Respondent had also opposed the application of the Claimant for substitution of its name as the Claimant. Order for substitution of the name of Inox Renewables Ltd. as the Claimant could be passed by the Arbitral Tribunal only on 3.12.2014; whereas the Award came to be passed within one month thereafter. 303. In my view, there is, thus, no substance in the submission of the Respondent that the Award was declared by the Arbitral Tribunal after 37 months from the date of closure of the arguments on 19.12.2011. Reliance thus placed by the learned Senior Counsel for the Respondent on the Judgment of this Court in the case of Bhogilal Shah (supra) and the Judgment of the Hon'ble Supreme Court in Anil Rai (supra) is misplaced. Facts in both those matters were totally different and are clearly distinguishable. 304. It is the submission of the learned Senior Counsel for the Respondent that the Arbitral Tribunal has charged very exorbitant amount of fees ....
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.... any other proceedings between the parties where an arbitration agreement is arrived at for the first time, or Arbitral Tribunal appointed by Institutions. Unless uniform fees in the aforesaid proceedings are prescribed and the Rules under Section 11(14) are framed, the problem of exorbitant fees and other charges in the arbitration proceedings, would continue. In my view, till arbitration Rules under Section 11(14) are framed by this Court, fee structure provided in Fourth Schedule would not be binding on the Arbitral Tribunal. In view of the Respondent not having raised any issue about the quantum of arbitral fees demanded by the Arbitral Tribunal, at the relevant time, I am not inclined to accept this objection at this stage. REASONS AND CONCLUSION IN ARBITRATION PETITION NO.599 OF 2015 307. I shall now deal with the submissions made by the parties in Arbitration Petition No.599/2015. The Claimant has impugned part of the Award rejecting part of the Claim made by the Claimant, thereby restricting the part for which it was entitled to compensation in terms of second part of Section 19 of the Indian Contract Act, 1872 till the date of Award. It was the case of the Claiman....
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....aimed compensation for the entire period, though such period has not yet expired. In my view, Mr.Sarkar, learned Senior Counsel for the Respondent is right in his submission that the claim for compensation made by the Claimant could not be severed periodwise. 311. In so far as the Judgment of the Hon'ble Supreme Court in the cases of Tata Hydro-Electric Power Supply Co. Ltd. and another (supra), Oil and Natural Gas Corporation Limited (supra), Krishna Bhagya Jala Nigam Ltd, (supra) and M.P. Power Generation Co. Ltd. and anr. (supra), relied upon by the learned Senior Counsel for the Claimant, in support of her submission that this Court has ample power to modify part of the award rendered by the Arbitral Tribunal, rejecting part of the claim, to allow those claims based on the evidence already led by the Claimant is concerned, a perusal of those four Judgments clearly indicates that the Hon'ble Supreme Court had reduced the claim already awarded by the Arbitral Tribunal and had not enhanced the claim or did not allow any claim which was rejected by the Arbitral Tribunal. 312. Hon'ble Supreme Court in McDermott International Inc. (supra) has already held that a Cou....