Delhi High Court Telecommunication Consultants India ... vs Next Generation Business Power Systems ... on 22 January, 2019 * + O.M.P. (COMM) 17/2017 Reserved on: 12.10.2018 Date of decision : 22.01.2019 TELECOMMUNICATION CONSULTANTS INDIA LTD ..... Petitioner Through: Mr.Ratan Kumar Singh, Ms.Priyanka Solanki & Mr.Suraj Prakash, Advs. versus NEXT GENERATION BUSINESS POWER SYSTEMS LTD ..... Respondent Through: Mr.T.S. Ahuja & Mr.Varun S. Ahuja, Advs. HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the „Act‟) challenging the Arbitral Award dated 23.08.2014 passed by the Sole Arbitrator (hereinafter referred to as „Impugned Award‟). 2. The Impugned Award allowed the claims of the respondent inter alia towards amounts withheld by the petitioner as deductions, unpaid amount for the last quarter of the Contract period, dues for duration after the contractually stipulated date of completion as well as reimbursement for Bank Guarantee encashed and release of Assured Bank Guarantee, with interest @ 15.5% p.a. OMP (Comm.) No.17/2017 Page 1 3. The disputes between the parties are in relation to the Agreement dated 18.04.2002 for providing subconsultancy to the petitioner for Third Party Inspection of the Gujarat State Wide Area Network („GSWAN‟) including Performance Level Monitoring and Reporting. 4. The Government of Gujarat (GoG), to set up a State Wide Area Network so as to modernise the communication system of the Government as well as to improve IntraGovernment and Government Citizen interfaces, entered into a Concession Agreement dated 01.03.2001 with „Gujarat Online Pvt. Ltd‟. Clause 4.2 of the Concession Agreement provides for appointment of a Third Party Agency by the GoG to monitor the GSWAN during implementation, commissioning and operation. 5. In terms of the aforesaid Clause 4.2, the GoG entered into an Agreement dated 15.03.2002 with the petitioner for providing Third Party Inspection for its GSWAN Project. The petitioner thereafter, appointed the respondent as a subconsultant for the Third Party Inspection of GSWAN vide Letter of Intent dated 11.04.2002 and formal Agreement dated 18.04.2002 (hereinafter referred to as „Agreement‟). The term of the Agreement was 8 years, till 14.04.2010. 6. In terms of the aforesaid Letter of Intent, the respondent furnished Performance Bank Guarantee dated 30.04.2002 for Rs. 14,00,000/ as well as an Assurance Bank Guarantee dated 09.05.2002 towards advance payment made to the respondent. OMP (Comm.) No.17/2017 Page 2 7. The Agreement provided for payment in form of Equal Quarterly Payment Charges of Rs. 35,00,000/ to be made for 32 quarters over the period of 8 years. 10% of the payment was payable to the respondent as advance, and was deductible on prorata basis every quarter, with 12% interest on reducing balance of advance. 8. Schedule 1 (Schedule of Remuneration) of the Agreement between the parties reads as under: "SCHEDULEI : SCHEDULE OF REMUNERATION M/s NGBPSL SERVICE CHARGES M/s NGBPSL will charge the following as the subconsultancy fee for Third Party Inspection of the Gujarat State Wide Area Network.‟ A) Equal Quarterly payment charges (for a period of 8 years or 32 quarters) Amount in Figure (Rs.) Amount in words (Rs.) Rupees 35,00,000.00 Rupees thirty five lakhs only Terms and Conditions  10% advance payment to be adjusted on pro rata basis every quarter.  TCIL will provide service Tax numbers and other details to NGBPSL.  Payment will be governed as per clause 11 (payment terms) of this agreement.  NGBPSL will commence the project with in 30 days from signing of the agreement." OMP (Comm.) No.17/2017 Page 3 9. Clause 11 of the Schedule IV (General Terms and Conditions) of the said Agreement pertains to the payment terms and is reproduced hereinbelow: "11. PAYMENT TERMS Guaranteed Revenue Payment as per schedule I Bills shall be raised and sent to GGM (NW&TC), TCIL for certification and payments. As consideration for implementing the terms of this agreement and providing satisfactory service to TCIL and its user organisatio