TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1927
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....jority 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 Ltd. for setting up of Wind Farm Projects at ....
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.... 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 carried out by the Respondent itself. It is the cas....
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....ent 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 of the Claimant that the Respondent had made specific and ca....
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....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 operation of such projects as well as contractual commitments. The Claimant was....
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.... 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 Project and was thereafter operating and maintaining the said Wind Farm Project. The Respondent ....
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....rogramme 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 Farm Project. 29. The Claimant thereafter decided to get an independent expert opinion on the energy ....
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....#39;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 recurring loss of revenue to the Claimant even in the future for 20 years. It was contended that the Respondent was li....
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....m 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 Respondent did not guarantee the wind. On 7th August, 2006, the Claimant replied that since the supply by September was not p....
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....7, 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 ambiguity can be resolved by resorting to the "business common sense approach". It is submitted that the business common sense cannot ....
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....tral 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 by the Claimant in violation of principles of natural justice. The arbitral award thus lacked a judicial approach. The Respondent was not given....
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....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 arbitral tribunal dated 17th December, 2011 on page 44 of Volume-II clearly recording that on 18th December, 2011 the Claimant had not pressed the reliefs in t....
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....mant 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 guarantee to the Claimant and had made it clear in various correspondence exchanged between the parties before execution of formal contract and also in the meetings held betwee....
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.... 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 were false. The finding of the arbitral tribunal that the Respondent failed to provide the information which would amount to misrepresentation is ex-facie perverse and irration....
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....e 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 of the contract and more particularly clause 9.3 in this case as invalid. 70. Learned Senior Counsel placed reliance on clause 71 of the supply agreement and would submit that clause ....
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....nsidered 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 my attention to paragraphs 8, 9 and 12 to 14 of the said judgment and would submit that the said judgment can not assist the case of the Claimant at all. 75. Learned Senior Counsel placed relia....
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....ltants, 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, 1872. 80. Insofar as the issue whether section 18 of the Indian Contact Act, 1872 was at all applicable to the facts of this case or not is concerned, it is submitted that no case was made out by the Claima....
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....t 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 petition under section 34 of the Arbitration & Conciliation Act, 1996 which submissions were not advanced before the arbitral tribunal. The arbitral tribunal at their own have decided the claim by invoking section 19 of....
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....n 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 arbitral tribunal, the same has been discarded. The arbitral tribunal has rejected the reports of the Consultants of both sides. The calculations made by the arbitral tribunal at page 418 of the arbitration petition forming ....
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....ed 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, vide proceedings dated 20th April, 2008, the same was unilaterally revised to Rs. 97,50,000 by the arbitral tribunal. 95. It is submitted that though the arbitral tribunal had tried to suggest such exorbitant fees on account of mee....
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....lso 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, 2007, Agreement for Erection and Commissioning dated 6th January, 2007 and the Agreement for Maintenance, Service and Availability dated 8th January, 2007. He submits that all operations, including supply, erection, commissioning, maintenance an....
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....t 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 upon the Respondent to furnish a copy of page no.9. The Respondent however, though reconfirmed the figure of 49.71 lakhs Kwh/WTG/annum, refused to furnish any further details including a copy of page no.9 of the supply agreement. He submits that only after ex....
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....ar 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 available. The said page no.9 which was furnished subsequently by the Respondent had set out a table listing the coordinates and the individual production for each of the 24 turbines in the farm. It is submitted that the contents of page no.9 clearly proved that the es....
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....nd 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 the available wind data of 23 months was taken into consideration to compound the average, energy estimate figure of 49.71 lakhs KWh/WEG/annum could never had been achieved. Reliance is placed on reply given to question no.168 by RW - 2 admitting that even that high wind per....
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....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 paragraph 55.2, admissions of the Respondent that 49.71 lakhs KWh/WEG/annum could never be achieved. It is held by the arbitral tribunal that the Claimant was entitled to rely upon on the lowest of such admissions being item no.9 mentioned in the tabulated statement in the award and ....
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....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 judgment of the Court of Common Pleas in Schneider & Anr. vs. Health (1803) - 13 All England Report 473 which judgment has been considered by the arbitral tribunal in paragraph 48.2 of the majority award. He submits that if the faults were known to the seller, but such faults were not disclosed t....
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....erned, 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 paragraphs 33, 34, 38, 44 and 49. It is submitted that implied term can be contemplated if considered necessary to lend efficacy to the term of a contract, having regard to main purpose of the contract. It is necessary to give business efficacy to the contract. It is submitted that when clause 9.1 gives a n....
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....ent 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 Claimant was constituted a warranty and thus the Claimant was entitled to claim damages for the breach of such warranty by the respondent. 129. Reliance is strongly placed on the relevant paragraph at page 818 of the said judgment delivered by Lord Denning with regard to "collateral warranty". It is submitted....
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.... 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 expressly provided that the buyer had " duty to inspect" quality and quantity roughly estimated by the state. He submits that in this case though the Claimant had asked the Respondent to furnish missing page no.9, the Respondent blatantly refused to share the said document which was found crucial for the purpose of taking a....
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....nity 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 established principles with regard to the interpretation of the contract or evidence. In support of this submission, the learned Senior Counsel placed reliance on the judgment of the Hon'ble Supreme Court reported in case of National Highway Authority of India Vs ITD Cementation India Ltd. (2015) 14 SCC 21 and more particul....
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....r 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. Insofar as the pleading on the issue of misrepresentation amounting to fraud is concerned, the Claimant had specifically pleaded about the fraudulent misrepresentation of 49.71 KWh/WTG/annum and the difference between the estimate and the actual generation. In support of this submission, learned Senior Counsel placed reliance on para....
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....s 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 huge capital investment being locked up for 20 years. 147. It is submitted by the learned Senior Counsel that the alternate claim - B was thus on the basis that the contract was on going i.e. on the basis of performance and thus it was not the claim in Tort nor was it a claim on the basis of rescission of contract as sought to be canvassed by ....
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....s 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 submits that the Claimant had not only led documentary evidence but had also led oral evidence to show that 49.71 repeatedly mentioned by the Respondent in the correspondence as well as in the supply contract was fraudulent representation made by the Respondent to the claimant. 152. Learned Senior Counsel submits that in the affidavit of evidence of CW -1 ....
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....idered 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 the question as to whether any evidence of actual generation was produced by the Claimant or not is concerned, it is submitted by the learned Senior Counsel for the Claimant that the actual generation was known to both the parties. The Respondent had full control over the actual metering by the Respondent and Maharashtra State Electricity Board. The witness exami....
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....ract 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 opportunity and had dealt with claim - B. In support of this submission, learned Senior Counsel placed reliance on the minutes of hearing before the arbitral tribunal held on 17th to 19th December, 2011 to show that at paragraph 2 that during the course of argument on 17th and 18th December, 2011, the Counsel for the Claimant had submitted that the Claimant was not pressing the ....
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.... 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 - B made by the Claimant was on the basis of Tort of deceit only and not for the contractual damages. The Respondent also had clearly understood that claim - B was for the contractual damages and did not plead that claim - B was not clear and thus could not be dealt with by the Respondent on that ground. Learned Senior Counsel for the Claimant invited my attention to paragraph ....
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....rmed 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 submissions made by the learned Senior Counsel for the Respondent that the second part of section 19 of the Indian Contract Act, 1872 is also based on the breach of contract / rescission of contract or that the principles of section 73 of the Indian Contract Act, 1872 are attracted to section 19 of the Indian Contract Act, 1872. He submits that second part of section 19 is based on the perfo....
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.... 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 the Claimant did not press claim A before the arbitral tribunal, the Respondent did not raise any objection or even did not apply or seek any opportunity to lead evidence in so far as the claim B is concerned. The Respondent cannot be allowed to contend that the evidence on claim A cannot be relied upon by the Claimant in support of claim B. 174. In so far as the judgment in the case of Lakshm....
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....liance 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 commercial contract which arises only in insurance or indemnity contracts is concerned, it is submitted by the learned Senior Counsel for the Claimant that explanation to Section 17 of the Contract Act refers to "silence" as to the facts likely to affect the willingness of a person, which may not be fraud, unless the circumstances of the case is such that there was a duty to speak or where his silence is itself e....
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....fect 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 analysing wind data and tender advice. He submits that the arbitral tribunal in paragraph 13(d) of the impugned award has recorded a finding that there was no evidence to prove that the Claimant had the benefit of experience in renewable energy and as such it had full knowledge and knowhow of wind energy. 183. In so far as the submission of the Respondent on the issue of mitigation of damages is concerned, it is submi....
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....tion 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 19th 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 of time for filing the written submissions, (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 (iv) for discussing and the finalising the arbitral award. 188. It is submitted by the learned Senior Counsel that the Respondent in fact opposed the application of the Claimant for substitution of its name as the claim....
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.... 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 concerned, it is submitted by the learned Senior Counsel for the Claimant that the said judgment has dealt with a case of misrepresentation and not the case of warranty and would not apply to the facts of this case. 194. Mr.Sarkar, learned Senior Counsel for the Respondent in his rejoinder arguments would submit that the supply of contract, erection, maintenance and operation contract has already been worked out. The subsequent maint....
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.... 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 contract. 198. Learned Senior Counsel for the Respondent distinguishes the judgment of Privy Council in the case of Forbes Vs. Git and Ors., AIR 1921 PC 209 relied upon by the learned Senior Counsel before the arbitral tribunal. Reliance is placed on paragraph 8 thereof in support of the submission that in the said judgment, later clause has qualified the earlier clause and thus the earlier clause would not prevail over the later clause. 199....
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....eliance 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 findings of the arbitral tribunal in paragraphs 55.7 and 55.8 of the majority award to the extent they restrict the period for which the Claimant was entitled to compensation in terms of Section 19(2) of the Indian Contract Act, 1872 till the date of the award. 206. Ms.Arora, learned Senior Counsel for the Claimant invited my attention to some of the paragraphs in the statement of claim and findings rendered by the arbitral tribunal in the impugned majority award. She ....
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....ubmitted 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 or justification at paragraphs 55.7 and 55.8 has curtailed the period for awarding the compensation only upto the date of the award i.e. 28th January 2015. 210. It is submitted by the learned Senior Counsel that the arbitral tribunal ought to have granted compensation to the Claimant for a period of 20 years as a natural corollary to various findings rendered by the arbitral tribunal. It is submitted that the conclusion drawn by the arbitral tribunal is contrary to the fi....
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.... 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 the respondent, on the other hand, would submit that the agreement between the parties had been discharged by performance in its entirety by the time disputes arose between the parties as supply of all WEGs under the contract has been completed and consideration for the same has been paid. The question of terminating the agreement thus does not arise. It is submitted that the other agreements between the parties i.e. Erection, Installation and Commissioning Agreement dated 6th January ....
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....bsequently 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 clause on which both the parties had made their submissions, in great detail, before the Arbitral Tribunal and before this Court, and had bearing on the claims made by the Claimant, are extracted as under : " Clause 9: General Estimate: 9.1 The estimated average annual generation (Gross) atLocal Control System (LCS) is 49.71 Lakhs KWh per WEG corrected to Park Efficiency and air Density. 9.2 The generation estimate has been carried out usingWAsP and Wind Pro Software. The calculations are based on wind data ....
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....ent 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 in the later part of this Judgment. The Arbitral Tribunal also considered various correspondence on this issue and also various proposal exchanged between the parties. In the beginning, a short profile of NEG-Micon was given. It was claimed in the profile that the Respondent was a 100 % subsidiary of MEG-Micon A/S Denmark, world leaders in wind turbine generators and installed more than 14,000 WTGs, totalling to 7000 MW across 42 countries worldwide, and one out of 5 turbines in the world is a NEG-Micon. 223. The Respondent further stated its achievements and range of turbines et....
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.....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 32.2 that 31.5% had to be deduced from 49.71 lakh KWH/WEG/annum. As a result, the generation figure obtained under Clause 9.3 of CW.1/6 is 34:06 lakh KWH/WEG/annum and, as such, there was vast variation between the final offer and the Supply Agreement. 226. The Arbitral Tribunal, thereafter, considered the effect of the missing page 9 of the Supply Agreement, which was admittedly not furnished to the Claimant by the Respondent at the stage of execution of the said Supply Agreement. The Arbitral Tribunal, after considering the contents of the missing page no.9, held that the energy result o....
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.... 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 considered to be an independent expert witness. In paragraph 34.11.2, the Arbitral Tribunal held that Mr. Richard Whiting (CW.2) and Mr. Sven Eric (RW.1) expert witnesses examined by the Claimant and the Respondent respectively, each one in their reports and also in the evidence, had tried to support the case of the Claimant and the Respondent, respectively, as a result, the Tribunal was left with no definite conclusion from the reports made by the experts to come to a definite conclusion. 230. In so far as evidence of Mr. Sven Erik (RW.2) is concerned, the Arbitral Tribunal considered such eviden....
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....er 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 Flow Statement was only a sample cash flow and thus, it was clear that the Respondent was fully aware that the Cash Flow contained several assumptions which were not communicated to the Claimant. 233. In paragraph 39.2 of the majority Award, the Arbitral Tribunal recorded a finding that the Cash Flow Statement did not take into consideration various crucial aspects which would have bearing on the decision to be taken by the Claimant, whether the project proposed was profitable to go ahead with it or not. The Arbitral Tribunal considered various admissions on the part of the Witness RW.1 examined by....
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....as 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 specific power curve of the wind turbine. It is held that the Respondent was bound to disclose necessary facts as stated by it in the "Estimated Generation" contained in the Supply Agreement. 238. The Arbitral Tribunal held that the contract is a commercial contract. The Respondent was an experienced expert and claimed to be the world leader in the field of wind energy and had full knowledge of the wind data of Gude Panchgani; whereas the Claimant was entering the wind energy business and had no knowledge about the wind data pertaining to the Gude Panchgani site which was very very necessary. Both the parti....
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.... 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 Petitioner (original Respondent) that the parties had discussed each and every clause of the Supply Agreement threadbare before entering into the Supply Agreement with equal bargaining power as a bilateral document with full knowledge of all consequences is concerned, in my view the Arbitral Tribunal, after considering the pleadings, documents and the oral evidence of the parties, has rightly come to the conclusion that the Claimant was new in the business of generation of energy and was totally dependent upon the expertise of the Respondent. The Respondent was bound to provide all requisite information and data to the ....
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....aterial 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 disclose such information and data to the Claimant before execution of the agreement. I do not find any infirmity with the findings rendered by the Arbitral Tribunal that it was the duty of the Respondent to disclose all these material, data, information and the extent of the energy to be generated in future and deliberately having suppressed this data with an intention to induce the Claimant to enter into the agreement with the Respondent, amounted to frustrate the contract under Section 17 of the Indian Contract Act, 1982. 248. In so far as the submission of the learned Senior Counsel for the Respondent that the Claimant could....
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....s 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 Senior Counsel for the Respondent that the Arbitral Tribunal could not have considered the report of Mr. Richard Whiting, who had allegedly checked the report submitted by M/s. Garrage Hassain, is concerned, there is no merit in this submission of the learned Senior Counsel . The Arbitral Tribunal has interpreted Clause 18 and also Clause 19 of the Supply Agreement, which interpretation of the Arbitral Tribunal is not only a possible interpretation, but a correct interpretation and thus cannot be substituted by another interpretation by this Court under Section 34 of the Act. The reliance placed by the learned Senior Counsel for the Responde....
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.... 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 were clearly applicable to the facts of this case. The Claimant has made out a case for invoking the said provisions by satisfying the conditions provided therein. 256. In my view, the Arbitral Tribunal has rightly held that the material information and the data which ought to have been furnished by the Respondent to the Claimant, were suppressed and fraud was committed by the Respondent upon the Claimant. The reliance placed on the Judgment of the Court of Queen's Bench in the case of Smith vs Hughes (supra) would be of no assistance to the Respondent. A perusal of Clause 9.1 of the Supply Agreement indicates that the said clause clearly r....
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....e 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 Co. Ltd. (supra) which would be clearly applicable to the facts of this case, in view of the fact that though the Respondent had special knowledge and skill about the project and also about the energy generation, such material information has been suppressed by the Respondent from the Claimant. 260. In my view the learned Senior Counsel for the Claimant rightly placed reliance upon the relevant portion of the Judgment in the case of Oscar Chess Limited (supra) which was also relied upon by the Respondent. In the said Judgment, it was clearly held that when the seller states a fact which is or should be within his own knowledge and of which the buyer ....
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....td. (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 of the agreement. The Judgment in the case of B.V. Nagaraju (supra) would clearly apply to the facts of this case and would assist the case of the Claimant. The learned Senior Counsel for the Respondent could not distinguish these Judgments. In my view, reading down any part of an agreement is part of interpretation of a contract, which is within the sole domain of the Arbitral Tribunal, based on the established principles with regard to interpretation of the contract, after considering the purpose and intent of the parties by considering the evidence on record. Similar view has been taken by the Delhi High Court in HUDCO Limited (supra). 266. In my view, the Res....
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....dent 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 indicates that the Respondent had dealt with both the claims i.e. Claim A and Claim B even before the stage of rejoinder. Even after dropping of the Claim A by the Claimant, the Respondent had availed of an opportunity and had dealt with Claim B. The minutes of meeting of the Arbitral Tribunal held on 17.12.2011 would indicate that during the course of arguments on 17.12.2011, the Counsel for the Respondent had submitted that the Claimant was not pressing relief under Claim A. The Respondent, through its Counsel , thereafter made its arguments in response and had completed the arguments on 19.12.2011. The Respondent had also availed off an opportunity to deal with Claim B. 272. In t....
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....lied 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 issue its meter readings in respect of the entire farm, along with energy break up in respect of the Claimant and others in the Farm. The Respondent continued to issues its Monthly Summary Generation Report and continued to raise invoices which were forwarded by the Respondent to MSEDCL. 277. The Arbitral Tribunal considered the quantification of claim for damages in paragraphs 34.7.4, 34.9, 34.11.2, 34.11.3, 35.7, 35.15, 36 and 55.5 of the impugned Award and has rendered various findings of fact. I am thus not inclined to accept the submission of the learned Senior Counsel for the Respondent that the Claim for damages was neither pleaded, nor argued, nor proved before the Arbitral Tri....
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....t 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 and Claim B. The Claimant could rely upon that evidence also in respect of Claim B which was ultimately pressed by the Claimant. There is no substance in the submission of the learned Senior Counsel for the Respondent that the principles of proof of damages under Section 73 or under Section 74 of the Indian Contract Act were applicable to the claim made under second part of Section 19 of the Indian Contract Act, or that the said claim for damages was not proved by the Claimant. 282. A perusal of the statement of claim indicates that though the Claimant had pleaded that the Claimant was entitled to rescission of the contract, and to be put back in position, before the arguments were concluded, th....
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....ission 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 rescission of the contract. Since the Claimant had given up Claim A, the submission in the Statement of Claim that the Claimant was entitled to rescission of the contract, would also go along with the prayer A, not having been pressed. The Claimant had clearly exercised the option to press for Claim B on the basis of the ongoing contract, which election was clear, categorical and was conveyed to the Respondent during the course of arbitration proceedings. It is not the case of the Respondent that the Respondent had rescinded or terminated the contract with the Claimant. 286. In so far as the Judgment in the case of Sargent (supra), relied upon by the learned Senior Counsel for the Respondent is concerned, it ....
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....ribunal 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 Respondent, as may be assessed by the Arbitral Tribunal. In the said paragraph, the Claimant also strongly placed reliance on the entire cash flow and revenue structure of the Respondent's business on the basis of the generation based on the said misrepresentation. Claim of the Claimant was also on the basis of the difference between the energy generated and the estimated generation represented by the Respondent. The findings of fact rendered by the Arbitral Tribunal on this issue, being not perverse, cannot be interfered with by this Court. 291. In so far as the submission of the learned Senior Counsel for the Respondent that there was no foundation laid by the Claimant under Section 18 of the Indian Contract Act i....
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....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 examined by the Respondent categorically admitted in their cross examination about the correctness of the said figure mentioned in Clause 9.1 of the Supply Agreement. The Court of Appeal in the case of Esso Petroleum Co. Ltd. (supra), has held that even if forecast is given by a party to another party and if a party has already entered into a contract with such party which had given such estimate or forecast of estate of annual consumption although it was not a guarantee, but it was a forecast by other party who has special knowledge and skill and such representation inducing the person to enter into a contract, constitute a warranty. The principles of law laid down by the Court of Appeal in case of Esso Petroleum Co. Ltd. (....
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.... 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 refers "estimate" is concerned, the contract must be construed for more business efficacy to further the intentment of the party. It was established beyond reasonable doubt before the Arbitral Tribunal that percentage with figure of 49.71 which was not a rounded figure mentioned in Clause 9.1 was not a real estimate and was a fraud on the part of the Respondent to induce the Claimant to enter into the agreement with the Respondent. Hon'ble Supreme Court in Nabha Power Limited (NPL) (supra) has held that the implied term can be contemplated if considered necessary to lend efficacy to a term of contract, having regard to the main purpose of the contract. It is necessary to give business efficacy to the contract. The principles laid dow....
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....iance 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 i.e. Rs. 4.35 crores collected from both the parties towards sitting fees; approximately Rs. 1.35 crores towards reading, discussion and Award writing; and a sum of Rs. 4.05 lacs towards secretarial charges from the parties. He submits that though the Arbitral Tribunal had exorbitantly fixed the fees of Rs. 22,50,000/- towards preparing of award, vide proceedings dated 20th April, 2008, the same was unilaterally revised to Rs. 97,50,000/by the Arbitral Tribunal. Thus, the Award deserves to be set aside on this ground also. A perusal of the records indicates that the Claimant had opposed the exorbitant fees demanded by the Arbitral Tribunal. The Respondent did not oppose such fees demanded by the Arbitral Tribunal at any point of time and has ....
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....LUSION 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 Claimant that the Claimant was entitled to such compensation for the entire period of 20 years and, thus, the Arbitral Tribunal having rendered various findings in favour of the Claimant, ought to have allowed the claim for the entire period of 20 years. The Claimant has impugned findings of the Arbitral Tribunal in paragraphs 55.7 and 55.8 of the majority Award. 308. It was the case of the Claimant that the final offer letter which included the technical specifications and the cash flow statement, clearly indicated that the life time of WEGs would be 20 years and based on such representation made by the Respondent, the Claimant entered into the Supply Agreement dated 4.1.2007. The Claimant also placed reliance upon the fact that the Respondent was operating....