Haryana Vidyut Prasaran Nigam Limited (HVPNL) Vs Cobra Instalaciones Y. Services (Delhi High Court)
Facts- Haryana Vidyut Prasaran Nigam Limited (HVPNL) and M/s. Cobra had entered into some agreements. However, the works stipulated under the Agreements were not completed by the scheduled completion date, that is, on or before 27.06.2013.
On 24.09.2013, Cobra submitted the completion status for certain works as on 03.07.2013 and stated that the delay in completion of the Project works were caused, inter alia, due to non-availability of soil; delay in opening of LC; late vendor approval; late issuance of Dispatch Instructions; slow progress at site due to rainfall; late approval of civil and electrical drawings amongst others. And, requested HVPNL to grant extension of time for a period of seven months, that is, till 31.01.2014.
Thereafter, on 31.12.2013, HVPNL informed Cobra that since the works could not be completed within the said period, HVPNL deducted Liquidated Damages from the Running Bills of Cobra at the rate of 0.5% of the contract price per week, in terms of Clause 26.2 of the GCC, and charged interest on the deferred amount.
Cobra, by its letter dated 03.11.2014, stated that the delay was for various reasons beyond the control of either parties. And, since no loss had occurred to HVPNL, it requested HVPNL to grant extension of time without any financial implications. Cobra further requested for reimbursement of Sales Tax/VAT on bought out items.
After various communications between the parties, Cobra issued a notice dated 04.11.2016 invoking the agreement to refer the disputes to arbitration, as contained in Clause 46.5(b) of the GCC read with Clause 46.5 of the Particular Conditions and sought reference of the disputes to arbitration.
Finally, Cobra approached this Court by way of a petition under Section 11 of the A& C Act for the appointment of an arbitrator. This Court, by an order dated 25.10.2018, appointed the learned Sole Arbitrator to adjudicate the disputes between the parties.
The Arbitral Tribunal held that HVPNL was not liable to pay the Sales Tax amounting to ₹75,91,655/- and thus, no interest on the same could be awarded to Cobra on the aforesaid amount as well. The Arbitral Tribunal awarded pendente lite and future interest at the rate of 9% per annum. Aggrieved by the impugned award, the parties have filed these petitions.
Conclusion- The impugned award rests on interpretation of certain clauses of the Agreements executed between the parties. As noted above, the question of construction of a contract falls squarely within the jurisdiction of the Arbitral Tribunal. The same cannot be interfered with unless the same is found to be patently illegal or an interpretation that no reasonable person would accept. Clearly, the Arbitral Tribunal’s interpretation of the relevant clauses of the Agreements, is a plausible one. Thus, it would be impermissible for this Court to interfere with the same in these proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The parties have filed these cross petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the ‘A&C Act’) impugning an Arbitral Award dated 29.07.2020 (hereinafter the ‘impugned award’) rendered by the Arbitral Tribunal comprising of a former Judge of this Court as the Sole Arbitrator (hereinafter ‘the Arbitral Tribunal’).
Factual Context
2. Haryana Vidyut Prasaran Nigam Limited (hereinafter ‘HVPNL’), is a company, inter alia, engaged in the business of maintenance and supply of electricity within the state of Haryana.
3. M/s Cobra Instalaciones Y. Services, S.A. and M/s Shyam Indus Power Solution Pvt. Ltd. JV is a Joint Venture between the said entities (hereinafter ‘Cobra’) formed to supply materials and execute the works relating to erection of infrastructure and transmission of electricity
4. The Government of India received a loan from the International Bank for Reconstruction and Development (IBRD) for the Haryana Power System Improvement Project.
5. On 26.05.2011, HVPNL issued an Invitation for Bids (IFB) (being IFB no WB/2008/G-09) for the works regarding “procurement of plant, design, supply and installation of Package G-09” (hereinafter ‘the Project’), on the terms and conditions stipulated therein.
6. Pursuant to the said IFB, Cobra submitted its bid for executing the Project on 06.08.2011. Cobra’s bid was accepted and thereafter, HVPNL issued two Letters of Acceptance dated 29.02.2012 (hereinafter the ‘LoAs’) in relation to the two contracts, in favour of Cobra. In terms of the LoAs, Cobra was required to furnish Performance Security equivalent to 10% of the value of the contracts within a period of twenty eight days, in accordance with Clause 13.3.1 of the General Conditions of Contract (hereinafter the ‘GCC’).
7. Thereafter, on 26.03.2012, two Contract Agreements (hereinafter collectively referred as the ‘Agreements’) were signed between the parties. The details of the Agreements are set out below:-
