ESAR PROCUREMENT SERVICES LTD Vs. PARAMOUNT CONSTRUCTIONS

JUDGEMENT

(1.) By this petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short "the said Act"), the petitioner has impugned the arbitral award dated 9 th August 2011 made by the arbitral tribunal allowing few claims made by the respondent and directing the petitioner to pay a total sum of Rs.16,55,733/- with interest @15% p.a. from the date of award till the date of payment to the respondent. Some of the relevant facts for the purpose of deciding this arbitration petition are under:-

(2.) On 30th April 1998, the petitioner invited tender for erection, testing and commissioning of chemical soar water treatment facility for Issar Oil Limited at Vadinar. The respondent submitted their bid pursuant to the said offer issued by the petitioner on 11 th May 1998. The petitioner accepted the final offer made by the respondent and issued a letter of intent on 29 th May 1998. The parties, thereafter, entered into a Contract on 29th May 1998 for erection, testing and commissioning of chemical soar water treating facility for a total sum of Rs.35 lacs. The respondent was required to commence the said work from 29 th May 1998 and was required to achieve mechanical completion as well as commissioning on or before 28th February 1999.

(3.) The respondent deposited the security deposit amount @ 5% p.a. of the contract amount in the form of a bank guarantee dated 2 nd June 1998 as per the terms of the contract with the petitioner. It was the case of the respondent that the petitioner, however, did not provide the work front within the contractual period though the respondent had finalized with different agencies or contractors for mechanical, electrical and instrument works as per the requirement of the subject work to achieve the mechanical completion within the contractual time period of 9 months. It was the case of the respondent that due to financial problem faced by the petitioner, work was required to be suspended.