Dans Energy Pvt.Ltd v. Ge Power India Ltd

NAVIN CHAWLA, J August 06, 2018/rv

O.M.P. (COMM.) 264/2018 Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + O.M.P. (COMM) 264/2018 & IA No. 8453/2018 Reserved on: 6th July, 2018 Date of decision : 6th August, 2018 DANS ENERGY PVT.LTD ..... Petitioner Through: Mr.Gajendra Maheshwari, Ms.Prerna Chopra, Advs. versus GE POWER INDIA LTD. ..... Respondent Through: Mr.Anish Kapur,Ms.Divya Bhalla, Mr.Dhritiman Roy, Advs. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") has been filed by the petitioner challenging the Arbitral Award dated 30.04.2018 passed by the Arbitral Tribunal consisting of three Arbitrators adjudicating the disputes that have arisen between the parties in relation to the Contract dated 07.08.2009 executed between the parties, whereunder the respondent was to supply plants, Equipments and Mandatory Spares from abroad on CIF- India Port of Entry basis and from Ex-works (India) basis for Electro- Mechanical Package of Jorethang Loop Hydro Electric Project, Sikkim being set up by the petitioner. 2. Admittedly the Contract envisaged that the respondent should supply the goods and products manufactured by it or Bought Out Product (BOP). The BOP items/materials were those that were procured by the O.M.P. (COMM.) 264/2018 Page 2 respondent from the sub-contractor(s) approved by the petitioner and consigned directly to the petitioner. The dispute between the parties was as to whether the petitioner is liable to reimburse the Excise Duty/Central Sales Tax (CST) on such BOP items/materials. 3. It was admitted between the parties that the petitioner had paid an amount of Rs. 2,84,12,708/- to the respondent as reimbursement of taxes till 14.11.2016, when, on a legal advice received, it stopped making further payments and also sought to deduct the payment already made from the retention money payable by it to the respondent. 4. The Arbitral Tribunal, on the interpretation of the Contract has held that the respondent is entitled to shift the burden of Indirect Tax of BOP items to the petitioner and therefore, is entitled to claim a sum of Rs. 2,84,12,708/- from the petitioner alongwith interest at the rate of 9% per annum from December 2016, when such amount was deducted by the petitioner till the date of the Award. It has been further directed that incase the petitioner fails to pay the awarded amount to the respondent within one month from the date of the Award, the petitioner shall pay further interest at the rate of 12% per annum on the total amount awarded under the Impugned Award. The petitioner has further been directed to pay cost of Rs. 30 lakhs to the respondent. 5. As noted above, the dispute between the parties is in relation to the interpretation of the Contract dated 07.08.2009 executed between them. Clause 2.1 of the Agreement states the "Contract Price" and is reproduced hereinbelow:- O.M.P. (COMM.) 264/2018 Page 3 "Article 2. Contract 2.1 Price and Terms of Payment Contract Price (Reference GCC Clause 11) The Employer hereby agrees to pay to the Contractor the Contract Price in consideration of the performance by the Contractor of its obligation hereinunder. The Contract Price shall be the aggregate of:- I Plant, Equipment and Mandatory spares supplied from outside India mainly from Europe, USA & Canada on CIF basis:- CIF (India Port of Entry) price II Plant, Equipment and Mandatory spares supplied from India (Employer"s Country) on Ex- works basis:- Xxxxx Total xxxxx as per the Price Schedule annexed as Appendix 10 and/or such other sums as may be determined in accordance with the terms and conditions of the Contract. The above prices are excluding all applicable taxes and duties and levies. All taxes & duties and levies as applicable at the time of dispatch are to be paid / reimbursed by Employer to the Contractor at actuals as per the Contract (refer indicative taxes and duties annexed as Appendix 10, Schedule 7, Estimated Tax & Duti