Air Liquide North India Pvt. Limited & Anr v. Indian Oil Corporation Ltd

NAVIN CHAWLA, J JULY 03, 2019/vp

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + Reserved on: 26.04.2019 Date of Decision: 03.07.2019 AIR LIQUIDE NORTH INDIA PVT. LTD. & ANR ...... Petitioners Through: Mr.Gopal Subramanium, Sr. Adv. with Mr.Percival Billimoria, Mr.Ankur Kashyap, Mr.S.P. Singh, Mr.Atul Kumar, Ms.Komal Jain and Ms.Mansi Jain, Advs. versus INDIAN OIL CORPORATION LTD. ..... Respondent Through: Mr.V.N. Koura, Ms.Mona Aneja and Mr.Nikil Mundeja, 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 petitioners challenging the Arbitral Award dated 27.03.2017 read with order dated 25.05.2017 making certain corrections therein, passed by the Arbitral Tribunal adjudicating the disputes that have arisen between the parties in relation to the agreement executed between the parties for installation of Oxygen and Nitrogen Plant on Build-Own-Operate (BOO) basis by the petitioners for the Panipat Naphtha Cracker Project (PNCP) of the respondent at Panipat (Haryana). Page 2 2. The respondent had invited bids for the above project by a letter inviting bid on 30.09.2005. Clause 2 of the letter described the scope of work as under: "2. BRIEF SCOPE OF WORK The scope of work shall include installation of Cryogenic Oxygen and Nitrogen (N2O2) plant on a site licensed by IOCL within Naphtha Cracker Complex, as per the requirement, conditions and specifications mentioned in the technical volume enclosed elsewhere in Bidding Document. The seller shall install the facilities own and operate the same under the terminology and conditions commonly known as BUILD-OWN-OPERATE (BOO)." 3. The letter inviting bid contained annexed therewith, certain other documents including Instructions to Bidders (ITB) as also the Conditions of Agreement (COA). 4. On 21.01.2006 the respondent issued Amendment No.1 to the bidding document. An amendment was made to Clause 7.4 in Section V (i)(a) of the ITB which reads as under: "7.4 Section V Para 7.4, Section-V (i)(a) stand replaced by the following: a) Design capacity of the proposed Plant including intended Merchant Sale (Separate figures to be furnished for gaseous oxygen, gaseous nitrogen, liquid oxygen and liquid nitrogen for each of Buyer's consumption and for Merchant sale)." 5. The said amendment also introduced Sub-Article 17.2.8 to the COA in the following words: Page 3 "17.2.8 (New Sub-Article) Following is added as sub-article 17.2.8 to Conditions of Agreement: "17.2.8 Seller has the option to source power from Buyer's captive power plant (Maximum 20 MW) under open access policy after obtaining permission from Haryana Electricity Regulatory Commission (HERC). Buyer will provide electrical power at 33KV voltage level through two 33 KV feeders up to battery limit of N2/O2 substation. Power Tariff shall be equivalent of prevailing tariff of 132 KV level of Haryana State Electricity Board (UHBVNL) for Industrial use plus surcharge. Cost of Power at above rate shall be adjusted from Seller's invoice by the Buyer. While surcharge shall be paid by Buyer directly to UHBVNL. Measurement of Power shall be done at Buyer's Source end. However, bidders presently may prepare their price bid considering the cost of electrical power as Rs. 3.95 per unit which is equivalent to UHBVNL HT power tariff (132 KV power factor 0.90) for industrial loads as on date." 6. On 01.09.2006 the respondent made a second amendment to the bidding document. Sub-Article 2.7 was added in the COA in the following terms: "2.7 (New) Following is added as new sub-Article 2.7: Sellers shall be allowed to sell to Merchant Market the Product at any rate to be decided by the Seller, subject to meeting the maximum hourly instantaneous demand specified by the Buyer for each month. The Seller shall also have the option of disposing off the Product rejected by the Buyer for any reason, in the Merchant Market at any rate decided by the Seller." Pag