KARNATAKA VIDYUTH KARKHANE LIMITED Vs. GEMINI POWER SYSTEMS

JUDGEMENT

(1.) This appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short) has been filed against the judgment dated 30.07.2013 passed by the trial court, by which the suit preferred by the appellant under Section 34 of the Act has been dismissed. In order to appreciate the appellant's challenge to the impugned order, few relevant facts need mention, which are stated infra:

(2.) The appellant is a public limited company incorporated under the Companies Act, 1956 and is an undertaking of Government of Karnataka. The appellant participated in the tenders of Accelerated Power Development Program Projects (hereinafter referred to as 'the APDP' for short) floated by Karnataka Power Transmission Corporation Ltd., (hereinafter referred to as 'the KPTCL' for short) pertaining to upgradation of distribution network including metering and energy auditing in Mysore, O and M and other divisions. The respondent approached the appellant on 08.06.2001 to discuss with regard to rendering technical and commercial consultations for execution of the project. The respondent offered its services at 2.5% of the value of the project. Thereafter, by a letter dated 09.06.2001, the appellant appointed the respondent as Consultant for all the Accelerated Power Development Program Projects floated by KPTCL. It was clearly mentioned in the aforesaid letter that a detailed order indicating the services and other conditions would be sent separately. On 09.08.2001, in the Board Meeting of the appellant, in which a representative of respondent was present, an offer was made to be a Consultant on service charges of 2% of the net value of the project subject to the acceptance of payment terms that may be decided by the Management.

(3.) The appellant thereafter floated tenders for appointment of consultants in accordance with Karnataka Transparency in Public Procurements Act, 1999 vide tender Notification dated 01.07.2001 and 03.07.2001. The respondent submitted a bid in response to the aforesaid tender notifications and was appointed as Techno Commercial Consultant vide letter of appointment dated 18.08.2001, which culminated into an agreement dated 30.08.2001. Under the terms of the agreement, the respondent was entirely responsible for the execution of all works relating to APDP projects under the supervision, coordination, assistance and control of the company. As per Clause 5 of the agreement, the respondent was entitled for total service charges of Rs. 1.75% of the net value of the project. Under Clause 6 of the agreement, the respondent was bound to ensure the quality of work and complete the project as per the schedule.