Pipavav Energy Pvt Ltd v. Madhavi Procon Pvt Ltd

NAVIN CHAWLA, J DECEMBER 21, 2018/rv/Arya

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 17.09.2018 Date of Decision : 21.12.2018 + O.M.P. (COMM) 258/2016 PIPAVAV ENERGY PVT LTD ..... Petitioner Through: Mr. Shamik Sanjanwala and Mr. Sunil Kumar Kaundal, Advocates. versus MADHAVI PROCON PVT LTD ..... Respondent Through: Mr.A.K.Verma, Sr.Adv. with Mr.A.K.Sharma, Mr.Ashish Joshi, Mr.Akashdeep, Advs. O.M.P. (COMM) 47/2017 & IAs 1614, 1616/2017 MADHAVI PROCON PVT LTD ..... Petitioner Through: Mr.A.K.Verma, Sr.Adv. with Mr.A.K.Sharma, Mr.Ashish Joshi, Mr.Akashdeep, Advs. versus PIPAVAV ENERGY PVT LTD. ..... Respondent Through: Mr. Shamik Sanjanwala and Mr. Sunil Kumar Kaundal, Advocates. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. These petitions have been filed by the parties to the arbitration proceedings challenging the Arbitral Award dated 10.01.2015 passed by the Sole Arbitrator adjudicating the disputes that have arisen between the parties in relation to the Letter of Award dated 03.05.2010 placed by Pipavav Energy Pvt. Ltd. (hereinafter referred to as the "petitioner") on Madhavi Procon Pvt. Ltd. (hereinafter referred to as the "respondent") for work of Enabling Works for the petitioner's Thermal Power Project at Pipavav, Gujarat. While the petitioner is aggrieved of the amount of Page 2 Rs.7,57,17,173/- awarded in favour of the respondent towards loss of anticipated profits, and the direction of the Arbitrator to release and give back to the respondent the Bank Guarantees submitted by it under the Claim no. 7, the respondent has challenged the Arbitral Award insofar as it rejects respondent's Claim no. 3 (cost of bidding), Claim no. 4 (cost of mobilization), Claim no. 5 (Idle charges), Claim no. 6 (overhead expenses) and allows Counter Claim of Rs.30,39,189/- in favour of the petitioner. 2. The petitioner vide its advertisement dated 19.03.2010 had invited bids for Site Enabling Work for Thermal Power Project at Pipavav, Gujarat. The respondent participated in the said bid and a Letter of Award was issued in its favor by the petitioner on 03.05.2010. The respondent submitted a Bank Guarantee in favour of the petitioner in terms of the Notice Inviting Bids. The respondent also carried out certain works in terms of the Letter of Award. 3. By a letter dated 17.06.2010, the petitioner called upon the respondent to hold all activities on the work except Ch.0.00 to Ch. 2400 on approach road. The petitioner, vide its e-mail dated 22.06.2010 reiterated the factum of stoppage of work. 4. The petitioner thereafter released mobilization advance of Rs.5,37,59,742/- in favour of the respondent. The respondent in turn raised the Running Bill nos. 1 and 2 for the work done by them. 5. The petitioner finally by its letter dated 24.11.2011, relying upon Article 29.1 of the Conditions of Contract, terminated the Contract with Page 3 immediate effect and called upon the respondent to refund a sum of Rs.5,14,04,076/- to the petitioner. 6. The relevant extract from the letter is as under: "We write to inform you that in terms of Article 29.1 of Part-III of Volume-1 of the Bid Tender Documents, we hereby terminate the contract with immediate effect. This communication may please be treated as the cancellation of the LOA /termination of the contract referred above. You are requested to please refund us a sum of Rs.5,14,04,076/- (Rs. Five crores fourteen lakhs four thousand seventy six Only) within seven days from the date of receipt of this letter and treat the said contract as closed. Non-receipt of the excess monies paid by us shall compel us to en-cash the Bank Guarantee." 7. In response to the above letter, the respondent vide its letter dated 30.11.2011, while protesting the grant of only 7 days for return of mobilization advance, further submitted that a notice of termination should have been issued by the petitioner to the respondent under Clause 29.1.1 of the Agreement and upon payment of amounts in terms of Clause 29.1.3 (a) and (b) of the Agreement. The relevant e