LAWS(BOM)-2005-8-193

MAHARASHTRA STATE ELECTRICITY BOARD Vs. DATAR SWITCHGEAR LIMITED

Decided On August 03, 2005
MAHARASHTRA STATE ELECTRICITY BOARD Appellant
V/S
Datar Switchgear Limited Respondents

JUDGEMENT

(1.) BY this Petition filed under Section 34 of the Arbitration & Conciliation Act ( hereinafter referred to as the "Act" for the sake of brevity), the Petitioner challenges the award made by the Arbitral Tribunal dated 18-6-2004. By that award, the Arbitral Tribunal has directed the Petitioner No.1 Maharashtra State Electricity Board to pay to the Respondent No.1/ Datar Switchgears Ltd. a sum of Rs.185,97,86,399.00 as damages in respect of work order dated 27th March, 1997. The Petitioner No.1 MSEB has also been directed to pay interest at the rate of 10% p.a. on the sum of Rs.179,15,87,009.00. The Arbitral Tribunal has also directed the Petitioner No.1 to pay to the Respondent No.1 Datar Switchgear an amount of Rs.1,00,00,000.00 towards costs of the proceedings.

(2.) THE facts that are relevant and material for deciding this petition are: the Petitioner No.1/ MSEB is incorporated pursuant to the provisions of Electricity (Supply) Act, 1948. When the petition was filed, there was only one Petitioner namely the M.S.E.B. However, due to the provisions of the Electricity Act, 2003 the Petitioner No.2 was constituted and the assets and liabilities of the Petitioner No.1/ M.S.E.B. were taken over by the Petitioner No.2/ Maharashtra State Distribution Company Ltd., and therefore, the Petitioner No.2 was added as the Petitioner and the Respondent No.2 State of Maharashtra was added as the Respondent. The Respondent No.1 (hereinafter referred to as the "Datar" for the sake of brevity) manufacture Low Tension Load Management Systems ("LTLMS" or "the contract objects"). These contract objects by supply of reactive power reduce the consumption of electricity and consequently reduce the transmission and distribution losses of electricity. The M.S.E.B. had awarded a contract in the year 1993-94 to Datar for installation of 12,555 Low Tension System Capacitors (LTSC). The M.S.E.B. invited tender for supply of LTLMS, which were technologically better than the earlier LTSC. Initially, Datar was awarded contract for installation of 11,760 LTLMS (hereinafter referred to as the contract objects) (These 11,760 contract objects shall hereinafter refer to as "B-1"). This contract was awarded by letter of intent dated 15-1-1997. Subsequently, Datar by letter dated 24-1-1997 offered to replace the existing 12,555 LTSC by the contract objects and therefore a letter of intent was issued by MSEB to Datar on 18-2-1997 for replacement. These replacement contract objects shall hereinafter be referred to as "B-2". MSEB offered additional quantities of 23,672 contract objects to be installed by Datar. This offer was accepted by Datar. These additional quantities of contract object shall hereinafter refer to as "B-3". The work order dated 27-3-1997 was issued by MSEB to Datar for 11,760 contract object (B-1), 12,555 replacement contract object (B-2) and 23672 contract object (B-3), i.e. totalling 47,987 contract objects. Detail instructions were contained in the work order for installation of these contract objects. The work order provided that the M.S.E.B. would supply to Datar a list of location where these contract objects were to be installed. It appears that by February, 1999 Datar could install only 17,294 contract objects. By letter dated 19-2-1999, Datar terminated the contract for the uninstalled 30693 contract objects. It was noted in the letter dated 19-2-1999 that 17294 contract objects have been installed and offer was made to maintain those contract objects as per the terms of the contract, if the rate for the same is paid without demur or dispute. However, subsequently, it appears that the contract in relation to 17294 contract objects was also terminated by letter dated 21-4-1999. It may be pointed out here that according to the terms of the Work Order, after these contract objects were installed, they were to be leased to the MSEB for a period of 10 years from the date of their installation on payment of rent which was mentioned in the Work Order and after expiry of period of 10 years the contract objects were to continue with the MSEB, but the amount of rent was Rs.1.00 per contract object.

(3.) THE learned Counsel appearing for the Petitioner/ MSEB submits that -