INDIAN ELECTRICITY SUPPLY AND TRANSMISSION PRIVATE LIMITED Vs. HARYANA POWER GENERATION CORPORATION LIMITED

JUDGEMENT

(1.) This judgment will dispose of FAO No. 5737 of 2002 also as both these appeals are directed against the same judgment. For the sake of convenience, facts are taken from FAO No. 4676 of 2002. The Haryana State Electricity Board (in short HSEB) now known as Haryana Power Generation Corporation Limited (respondent No. 1) (in short the respondent-Corporation) floated tenders on 9.6.1995 calling for proposals for the completion of 1x210 MW Unit-6 Panipat Thermal Power Project at Panipat, where 4 units of 110 MW and one unit of 210 MW were already in operation. The proposals were to be submitted on or before 3.8.1995. M/s. Indian Electricity Supply and Transmission Private Limited (in short appellant-Company) submitted the proposal and was one of the candidates. The proposal submitted by the appellant-Company was accepted and the Memo of Understanding ( in short MoU) was executed between the parties on 11.6.1997, valid for a period of three months. In pursuance thereof, the appellant-Company furnished Bank guarantee to the tune of Rs. 50 lacs for a period of 30 months. Foreign collaborator was also to be associated by the appellant-Company. However, the parties processed and negotiated in the matter which continued till December, 1998, but with no concrete result. Thereafter, the respondent-Corporation abrogated the MoU dated 11.6.1997. Thereafter the respondent issued notice to the appellant vide letter dated 17.1.2000 for the recovery of Rs. 25,31,750/- followed by a reminder dated 21.2.2000. The appellant- Company denied its liability. As a result, the dispute was referred by the respondent-Corporation to the Law Secretary, Government of Haryana (respondent No. 2) for arbitration as per clause 14 of the MoU dated 11.6.1997. The appellant also made a counter claim. The Arbitrator vide his award dated 27.4.2001 held the appellant liable to make payment of Rs. 25,31,750/- with interest at the rate of 15% per annum compounded annually with effect from 17.1.2000 to the respondent-Corporation. The respondent-Corporation was also held entitled to forfeit and encash the Bank guarantee of Rs. 50 lacs and the counter claim was declined.

(2.) In the meantime, the respondent-Corporation was in the process of getting the Bank guarantee encashed on which the appellant filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (in short the Act of 1996) in the Court of District Judge, Ambala on 15.5.1999. The said petition was dismissed by the Court of District Judge, Ambala vide order dated 31.5.1999. Thereafter the appellant filed an appeal (FAO No. 1358 of 1999) in this Court against the said judgment which is pending consideration in this Court.

(3.) After the passing of the award dated 27.4.2001, the appellant filed objection petition under Section 34 of the Act of 1996 which was heard and decided by the Court of Additional District Judge (1), Panchkula vide judgment dated 7.8.2002. Vide this judgment, the learned Additional District Judge, Panchkula held that the respondent- Corporation was entitled to recover a sum of Rs. 25,31,750/- and the said amount with interest could be recovered out of the amount of Bank guarantee but it has no right to forfeit the Bank guarantee to the tune of Rs. 50 lacs.