GAIL (INDIA) LTD. Vs. OSRAM INDIA PVT LTD.

JUDGEMENT

(1.) The challenge by GAIL (India) Ltd. ('GAIL') in this petition under section 34 of the Arbitration and Conciliation Act, 1996 is to an Award dated 25th September 2014 passed by the Arbitral Tribunal ('AT') in the disputes between GAIL and Osram India Pvt. Ltd. ('OIPL') in the disputes arising out of a gas transmission agreement ('GTA') dated 1st May 2000.

(2.) The GTA was for a period of 15 years i.e. up to 31st December 2022. In the GTA, OIPL is described as the 'Shipper' and GAIL as the 'Transporter'. In terms of Clause 2.2 of the GTA, the Shipper and the Transporter were to enter into transactions in relation to 'redelivery point' whereby the Shipper was to contract for "specified capacity for a specified duration for transportation of the gas through the Transporter's facilities and the Transporter shall provide Gas Transmission services for such duration." Such transaction was to be governed by the GTA and by other terms agreed between the parties confirming the transaction.

(3.) In terms of Clause 2.7(iii) of the GTA, the gas supplied was subject to Shipper's 'termination security' as per Clause 13.3 of the GTA. The GTA could be terminated prior to 31st December 2022 on limited grounds as stated in Clause 5.5 thereof. The grounds were detailed in Clause 13 and/or 11.8. The GTA required the Shipper to provide a bank guarantee ('BG') covering 60% of its agreed liability in case of earlier termination of the GTA and a letter of credit ('LC') under Clause 8.10 of the GTA covering regular payment for use of facilities. It is stated that a 'termination' BG was submitted by OIPL to GAIL on 1st November 2007 for a sum of Rs. 3,34,34,568. On 8th November 2007, the gas transportation commenced after the 'Spur Line' (pipeline) came to be connected to OIPL's delivery point.