Delhi High Court M/S Hindustan Steelworks Construction ... vs M/S Ntpc Ltd. Kahalgaon Super Thermal ... on 30 May, 2017 * + FAO (OS)(COMM) 19/2017 Reserved on: 18.05.2017 Date of decision: 30.05.2017 IN THE MATTER OF: M/S HINDUSTAN STEELWORKS CONSTRUCTION LIMITED ..... Appellant Through: Mr. Paramjit S. Patwalia, ASG with Mr. G. Umapathy, Mr. Leo D. Rozario and Mr. Aditya Singh, Advocates versus M/S NTPC LTD. KAHALGAON SUPER THERMAL POWER STATION ..... Respondent Through: Mr. I.S. Alag, Sr. Advocate with Mr. J.S. Lamba, Advocates with Mr. P. Vishvanathan, DGM, Law for NTPC Kahalgaon. CORAM HON'BLE MS.JUSTICE HIMA KOHLI HON'BLE MS.JUSTICE SANGITA DHINGRA SEHGAL HIMA KOHLI, J. 1. The appellant/Hindustan Steelworks Constructions Limited (in short, 'the appellant/HSCL'), a Public Sector Company, has filed the present appeal under Section 37 of the Arbitration & Conciliation Act, 1996 (in short, 'the A&C Act') against the judgment and order dated 7.2.2016 passed by the learned Single Judge in OMP (COMM) No.411/2016, FAO(OS)(COMM) 19/2017 Page 1 of 25 dismissing its petition under Section 34 of the A&C Act, praying inter alia for setting aside an order dated 11.2.2015 passed by the Appellate Authority in an appeal preferred by the respondent/NTPC against Awards dated 10.4.2012 and 10.5.2012 made by the learned Arbitrator appointed under the Permanent Machinery for Arbitration (in short 'the PMA'), an alternate dispute redressal mechanism devised by the Government. 2. Several rounds of litigations have taken place between the parties before the impugned order came to be passed. For gaining a proper perspective on the issues raised by learned counsels for the parties, it is considered necessary to briefly narrate the relevant facts. In the years 2003 2004, two contracts in connection with the construction of the Kahalgaon Super Thermal Power Project situated in District Bhagalpur, Bihar were awarded by the respondent/NTPC to the appellant/HSCL under two separate Letters of Award, one dated 31.7.2003 and the other dated 3.2.2004 (in short 'the LOA'). The first LOA provided for settlement of disputes between the parties in para 22.1.0, as below : "22.0.0 SETTLEMENT OF DISPUTES 22.1.0 It is specifically agreed that all differences and disputes between the parties arising out of the contract shall be settled by the process of settlement and arbitration as specified in clause 56.0 of General Conditions of Contract for Civil Works. The provisions of Arbitration & Conciliation Act, 1996 shall apply to the arbitration proceedings." FAO(OS)(COMM) 19/2017 Page 2 of 25 3. The second LOA dated 3.2.2004 provided for settlement of disputes in the following manner : "22.0.0 SETTLEMENT OF DISPUTES 22.1.0 It is specifically agreed that all disputes or differences whatsoever arising out of this Contract between the parties whether during the progress of the work or after its completion, shall be settled in accordance with the stipulations of Memorandum No. 3/5/93PMA dated 30/06/93 of Govt. of India, Ministry of Industry, Deptt. of Public Enterprises." 4. In the course of undertaking the construction work, disputes and differences arose between the parties and the respondent/NTPC cancelled the contract awarded to the appellant/HSCL in part on seven occasions and finally on 24.11.2010, on the ground that it had failed to complete the work within the contractual period. The said disputes were referred to the Joint Secretary, Government of India appointed as an Arbitrator under the PMA, who pronounced two Awards dated 10.4.2012 and 10.5.2012, partly allowing the claims raised by the appellant/HSCL and dismissing the counter claims of the respondent/NTPC in entirety. 5. During the pendency of the arbitration proceedings, the respondent/NTPC invoked the bank guarantee furnished by the appellant/HSCL. Aggrieved by the said invocation, the appellant/HSCL filed a petition on the original side of this Court under Section 9 of the A&C Act for restraining the respondent from encashing the bank guarantee (OMP 567/2010). Vide order dated 28.09.2010, an ex parte ad interim FAO(OS)(COMM) 19/2017 Page 3 of 25 injunction was granted in favour of the appellant, restraining the respondent from encashing the bank guarantees in respect of the LOA's date