TMI Blog2019 (4) TMI 1927X X X X Extracts X X X X X X X X Extracts X X X X ..... Claimant. The Arbitral Tribunal, rendered a finding that the Cash Flow Statement and the Revenue Calculations could not be taken as representing true and correct situation/facts or representing a probability of generation, if not actual generation. Such misrepresentation was purposely made by the Respondent knowing that such representation was not true, only with a view to induce the Claimant to enter into the Supply Agreement. It is also held by the Arbitral Tribunal that such misrepresentation, concealment and suppression of facts were made by the Respondent knowing that they were not true, with an intention to induce the Claimant to enter into the Supply Agreement - Arbitral Tribunal summarised the reasons for arriving at the conclusions that the Respondent had not made negligent misrepresentations, but also committed fraud on the Claimant. It is proved that the misrepresentation made by the Respondent was fraudulent. The Arbitral Tribunal also rendered findings in 39.11(xii) that various necessary information and documents required for the purpose of wind energy generation were purposely not made available by the Respondent to the Claimant. The Arbitral Tribunal also cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by the Respondent on the Claimant with an intent to induce the Claimant to enter into the Supply Agreement. The case of the Claimant thus falls under Sections 17, 18 and 19 of the Indian Contract Act. The effect of fraud was not absolutely to avoid a contract induced by it, but to render it voidable at the option of the party defrauded and had selected to avoid it. Admittedly, in this case, the Respondent had not furnished all the requisite information to the Claimant when the Supply Agreement was executed. The Claimant had repeatedly called upon the Respondent to furnish copy of the said missing page, however, the Respondent refused to supply the said missing page. The learned Senior Counsel for the Respondent categorically urged before this Court during the course of argument that though the said page was missing in the Supply Agreement entered into between the parties, the Respondent had rightly refused to comply with the request of the Claimant for furnishing copy of the page No.9 of the Supply Agreement - the Arbitral Tribunal has rightly rendered a finding that the said page 9 of the Supply Agreement, which was admittedly missing from the said Agreement on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing in this case. Merely because it was urged by the Claimant in the Statement of Claim that it was entitled to the rescission of the contract, that would not mean that there was rescission of the contract, as sought to be canvassed by the learned Counsel for the Respondent - The Claimant had clearly exercised the option to press for Claim B on the basis of the ongoing contract, which election was clear, categorical and was conveyed to the Respondent during the course of arbitration proceedings. It is not the case of the Respondent that the Respondent had rescinded or terminated the contract with the Claimant. Since the Respondent had committed fraud upon the Claimant, the Respondent could not have even otherwise placed reliance on Clause 9.3 or other provisions of the contract in support of the submission that the claim made by the Claimant was contrary to the said provisions. A party who commits a fraud on another party to the contract, cannot seek reliance on a provision so as to take legal undue advantage of such provision. The parties before the Arbitral Tribunal sometimes may not be in a position to bargain with the Arbitral Tribunal about the fees demanded by the Arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing up of Wind Farm Projects at the locations situated in the States of Maharashtra and Tamil Nadu. The NEG Micon was globally acquired by the respondent's global holding company i.e. Vestas Wind System As. The Respondent i.e. Vestas Wind Technology (India) Private Limited took over the final negotiation with the Claimant and executed the contracts. 4. It was the case of the Claimant that business plan consisted of setting up around 1000 MW of capacity over the next three years. During the said period, the Claimant began the exercise of identifying an appropriate developer who could assist the Claimant in setting up Wind Farm Projects in accordance with the business plan of the claimant. The Respondent represented itself to be a part of the Respondent group which was a world leader in the wind energy business having extensive expertise and exposure in installation of WTGs across the globe. 5. It is the case of the Claimant that the Respondent further represented that it would offer Turnkey Solutions for Wind Farm Projects and that the Respondent group had one of the best Research and Development Centers in the world and also had widest range in terms of both technology ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Respondent itself. It is the case of the Claimant that the Respondent had repeatedly represented, persuaded and finally prevailed upon the Claimant to set up its Wind Farm Project at Gude-Panchgani site which according to the respondent, was the most ideal location to propose Wind Farm Project of the Claimant from amongst those available. 8. It is the case of the Claimant that the initial offer made by the Respondent included supply, erection and commissioning of 14 WTGs of 1.65 MW each aggregating to 23.1 MW, based on a design and technology which has an operational history of more than 4 years internationally and 2 years in India at a value of approximately ₹ 155 crore. The estimated average annual generation for the Wind Farm Project was projected by the Respondent at 49.71 lakh KWh per WTG (gross) at LCS corrected to park efficiency and air density. The Respondent was to carry out the operations and maintenance of Wind Farm Project to ensure that the Wind Farm Project operates in an efficient manner on a long term. The Respondent had also made various other suggestions in the said initial offer. 9. On 24th November 2006, the Respondent submitted its final of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimant that the Respondent had made specific and categorical representations regarding the estimated energy output and its global credentials and achievements, particularly its achievements in India etc. in the said offer letter dated 24th November 2006. 12. The relevant paragraph of the said offer letter is extracted as under : - Estimated Generation: The estimated average annual generation (Gross) at Local Control System (LCS) is 49.71 lakhs per WEG corrected to Park Efficiency and Air Density. 13. It is the case of the Claimant that the Respondent group being the global leader in Wind Power Energy and with its credentials, the specific representations made regarding the estimated generation by the Respondent were accepted by the Claimant as 'genuine and reliable estimation' and the Claimant proceeded to execute the contracts with the Respondent relying on and included by specific representations of the respondent. 14. It is the case of the Claimant that after receiving the cash flow projections of the respondent, the Claimant carried out its financial analysis and calculated its revenue projection on the basis of average generation output given by the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of such projects as well as contractual commitments. The Claimant was shocked and disappointed to discover that the actual generation levels of the WTGs consistently fell far short of the estimated annual average generation levels of 49.71 lakh Kwh per WTG per annum (gross) at LCS projected by the respondents. The respondents sought to clarify that the monthly generation profile of any site was not uniform and it would not be correct to compare the month to month generation with the pro-rata figure derived from annual energy generation estimates. The Claimant therefore asked for the monthly generation profile for the particular Wind Farm Project based on the wind resource assessment carried out by the respondents. 19. It is the case of the Claimant that even on the basis of comparison of the figures for the full year, the total average annual generation per WTG (gross) achieved by the project of the Claimant for the entire one year from 1st April 2007 to 31st March 2008 of operation was only 27.41 lakh Kwh against the projected generation of 49.71 lakh Kwh per WTG per annum (gross) at LCS. 20. It is the case of the Claimant that day-to-day estimated annual gross generation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject and was thereafter operating and maintaining the said Wind Farm Project. The Respondent represented that it had the experience and expertise at its disposal to make the generation estimate. 24. The Respondent vide its e-mail dated 14th May, 2007 claimed that it had carried out estimation of generation in a wind park by factoring in effective losses of 22% while other players in the industry considered only 7% losses so as to make the IRR figure more attractive on paper. The Respondent sought to convey that its generation estimates were safe conservative estimates. The Respondent proposed that the Claimant should engage M/s.Garrad Hassan and Partners Limited, an internationally reputed wind energy consultant to validate the projections. It was strongly recommended by the Respondent that the said consultants were having technical skill and experience in the field. The Claimant received the said report of the said M/s.Garrad Hassan and Partners Limited titled 'Assessment of Energy Production of the operating GudePanchgani Wind Farm' dated 28th September, 2007. 25. It is the case of the Claimant that it was sought to learn that the generation estimates of Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Farm Project. 29. The Claimant thereafter decided to get an independent expert opinion on the energy generation estimates and consulted another internationally well reputed wind energy consultant 'Tripod Wind Energy ApS, consulting Engineers' and assigned the work of independently verifying the energy generation estimates of the respondent. It is the case of the Claimant that the Claimant supplied the same set of data, which was made available by the Respondent to the Claimant for submission to M/s.Garrad Hassan and Partners Limited to Tripod Wind Energy ApS, consulting Engineers. 30. It is the case of the Claimant that the said report further reconfirmed the fact that the energy generation estimates given by the Respondent for the Wind Farm Project were grossly overstated. The average annual energy generation level projected by Tripod per WTG was very close to the average annual energy generation level projected by M/s.Garrad Hassan and Partners Limited. It is the case of the Claimant that the said Tripod report not only re-confirmed the stand of Claimant and M/s.Garrad Hassan and Partners Limited but also confirmed the fact that there were glaring discrepancies in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n colossal recurring loss of revenue to the Claimant even in the future for 20 years. It was contended that the Respondent was liable to pay the compensation to the Claimant for the loss suffered by it due to the under performance of the Wind Farm Project set up by the Respondent and huge capital investment being locked up for 20 years. The Claimant craved leave to lead appropriate evidence for assessment of such loss/damages. The Claimant has also prayed for the legal cost. 34. On 27th July, 2008, the Respondent filed a counter statement before the arbitral tribunal denying the claims made by the claimant. It was contended by the Respondent that the project had already been completed and handed over to the Claimant and that the Claimant had unconditionally accepted the performance by taking over the wind farm and it was not entitled to rescind the contract and seek the wheel to be put back in the position prior to the agreement. The Claimant filed rejoinder to the said claimant's statement filed by the Respondent on 11th September, 2006. Both the parties led oral evidence before the arbitral tribunal and also filed written submissions before the arbitral tribunal. 35. Tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot accepted and the Respondent did not guarantee the wind. On 7th August, 2006, the Claimant replied that since the supply by September was not possible and since the gap in expectations was too high, the Claimant called off on going negotiations. 40. On 24th November, 2006, the Respondent made final offer which according to the Respondent included that no long term data for wind was available. The Respondent had not taken into account seasonal variation between different years and thus there would be variation from year to year estimated generation would be 44.86 KwH per WTG after applying various correction factors. The said figure did not include line loss of 4% (assumed but not guaranteed) and also did not constitute any guarantee. It was made clear by the Respondent that various benefits which would accrue to the Claimant by setting up the wind farm were set out in the offer. 41. It is submitted by the learned Senior Counsel that in spite of various qualifications and disclaimers made by the respondent, the Claimant vide its letter dated 27th November, 2006 informed the Respondent of their desire to proceed with the contract. On 29th November, 2006, the Claimant sent an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he document and only ambiguity can be resolved by resorting to the business common sense approach . It is submitted that the business common sense cannot be used to ignore the express terms of the contract, especially when the surrounding circumstances at the time of entering into the contract clearly establishes that the Claimant had voluntarily assumed the risk of the terms with the knowledge that the Respondent did not guarantee regarding generation of wind energy. There was an inherent uncertainty in wind generation. 45. Learned Senior Counsel for the Respondent placed reliance on an email dated 7th March, 2007 from the Respondent to the Claimant suggesting M/s.Garrage Hassain and presently as an independent consultant for validating generation figures in view of the fact that the Claimant was unhappy with the energy generation. ON 28th September, 2007, the said consultant submitted a report. The Respondent also placed reliance on the report prepared by RISO in the month of February, 2009. 46. Learned Senior Counsel placed reliance on clauses 7.1, 8, 9.2, 9.3 and 10 of the supply agreement entered into between the parties. He submits that the Respondent had only given an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternate claim made by the Claimant in violation of principles of natural justice. The arbitral award thus lacked a judicial approach. The Respondent was not given any opportunity to address the case under section 19 of the Indian Contract Act, 1872 at all. 50. It is submitted by the learned Senior Counsel that the written submissions filed by the Respondent before the arbitral tribunal would clearly indicate that it was specially contended by the Respondent that the Claimant had not made any legal basis of its alternate claim cleared even at the stage of final arguments and that alternate claim was being treated as the claim of contractual damages. He submits that the arbitral tribunal had directed both the parties to submit the written submission simultaneously. Only in its written arguments, the Claimant had come out with a case that the alternate claim was on the basis of Tort of deceit. In support of this submission the learned Senior Counsel relied upon above referred paragraphs of the majority award and would submit that those paragraphs would also clearly indicate that the damages were sought for by the Claimant under the head of loss suffered and not on the basis st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he meeting of the arbitral tribunal dated 17th December, 2011 on page 44 of Volume-II clearly recording that on 18th December, 2011 the Claimant had not pressed the reliefs in terms of prayer clause (A). He submits that the Respondent thus could not have dealt with any submissions in the rejoinder on applicability of section 19 of the Indian Contract Act, 1872 at the stage of sur-rejoinder. He submits that in any event even if section 19 of the Indian Contract Act, 1872 would have been attracted, for the purpose of considering and allowing the claim for damages, the principles of section 73 of the Indian Contract Act, 1872 would still apply. 56. Learned Senior Counsel placed reliance on the judgment delivered by House of Lords in case of Johnson Anr. vs. Agnew (1980) A.C. 367 and in particular at page 298 in support of the submission that alternate claim could not be pressed at the stage of rejoinder arguments by the claimant. 57. Learned Senior Counsel distinguished the judgment of the Queen's Bench reported in (1976) QB 801 which was relied upon by the Claimant before the arbitral tribunal. He also placed reliance on the statement of claim filed by the Claimant and wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot given any guarantee to the Claimant and had made it clear in various correspondence exchanged between the parties before execution of formal contract and also in the meetings held between the parties, the arbitral tribunal erroneously proceeded on the premise that the Respondent had issued a guarantee in favour of the Claimant for a particular generation of the guaranteed energy. The award shows patent illegality on this ground. In support of this submission, learned Senior Counsel placed reliance on paragraphs 46.3, 46.4, 46.5.1, 46.6 and 48.7 of the majority award. He also relied upon clauses 9.1 to 9.3 of the supply agreement and would submit that the last line of clause 9.3 could not become repugnant to the earlier portion of the said clause or even clause 9.1. Clause 9.3 had elaborated clause 9.1 and was part of the whole system. He led emphasis on clauses 9.3 (b) to (d) of the supply contract. 62. Learned Senior Counsel placed reliance on clauses 9 and 10 of the supply agreement and condition no.81 of Orgalime S.E. 94 of supply contract and also various paragraphs i.e. from 46 to 48.7 of the majority award and would submit that the arbitral tribunal has erroneously held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the parties were false. The finding of the arbitral tribunal that the Respondent failed to provide the information which would amount to misrepresentation is ex-facie perverse and irrational. 66. Learned Senior Counsel placed reliance on paragraph 32.1.5 of the majority award and would submit that though the Claimant had not examined Mr.Richard Whiting, who had allegedly checked the report dated 28th September, 2007 submitted by M/s.Garrage Hassain, the arbitral tribunal considered the said report dated 28th September, 2007 erroneously and has awarded the claim for damages also based on the said report, which was not substantiated or proved. Learned Senior Counsel placed reliance on the judgment delivered by Lord Clarke in case of Rainy Sky S.A. Ors. vs. Kookmin Bank, (2011) UKSC 50 and more particularly paragraph 16 on the issue as to how a contract has to be interpreted by a Court or the arbitral tribunal. 67. Learned Senior Counsel strongly placed reliance on clause 18of the supply contract in support of his submission that the said clause clearly provided that the said contract superseded all the past correspondence. He also placed reliance on the judgment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to declare any part of the contract and more particularly clause 9.3 in this case as invalid. 70. Learned Senior Counsel placed reliance on clause 71 of the supply agreement and would submit that clause 9.3 of the supply contract could not be clubbed with clause 71 and clause 10 of the supply contract. Clause 9.3 qualify clauses 9.1 and 9.2 and thus could not be repugnant to clauses 9.1 and 9.2. It is submitted that the correspondence exchanged between the parties clearly indicated that the Claimant had demanded guaranty from the Respondent which was refused by the Respondent specifically. 71. Learned Senior Counsel distinguished the judgment of the Privy Council in case of Forbes vs. Git Ors. (1921) SCC OnLine PC 102 which was relied upon by the Claimant and considered by the arbitral tribunal on the ground that the clauses under consideration of the Privy Council in the said judgment were totally different. Learned Senior Counsel distinguished the judgment of the Supreme Court in case of Radha Sundar Dutta vs. Mohd. Jahadur Rahim Ors., AIR 1959 SC 24 which was relied upon by the Claimant and followed by the arbitral tribunal on the ground that clause 9.3 in this case i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarantee. He invited my attention to paragraphs 8, 9 and 12 to 14 of the said judgment and would submit that the said judgment can not assist the case of the Claimant at all. 75. Learned Senior Counsel placed reliance on the judgment of the Chancery Division in case of Mills vs. United Counties Bank Limited (1910) 1 Ch. 281 in support of the submission that in that case, there was express indemnity. Learned Senior Counsel for the Respondent placed reliance on the judgment of the Hon'ble Supreme Court in case of Rajasthan State Mines Minerals Ltd. vs. Eastern Engineering Enterprises Anr. (1999) 9 SCC 283 and in particular paragraph 44(h) and (i) in support of the submission that the arbitral tribunal cannot disregard the terms of reference or terms of contract and cannot act arbitrarily, irrationally, capriciously or independently of the contract. 76. Learned Senior Counsel for the Respondent placed reliance on the judgment of the Hon'ble Supreme court in case of Security Printing Minting Corporation of India Limited Anr. vs. Gandhi Industrial Corporation, (2007) 13 SCC 236 and in particular paragraphs 14 and 16 thereof in support of the submission that the wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian Contract Act, 1872. 80. Insofar as the issue whether section 18 of the Indian Contact Act, 1872 was at all applicable to the facts of this case or not is concerned, it is submitted that no case was made out by the Claimant under section 18 of the Indian Contract Act, 1872. The conditions thereof were not at all satisfied by the claimant. Learned Senior Counsel placed reliance on the finding rendered by the arbitral tribunal in paragraph 39.11(xiii)(d) of the majority award and would submit that the finding of the arbitral tribunal that both the parties were not equals in the field of wind energy is also perverse. The Claimant had already engaged several advisors and thus could not contend that the parties were not equals in the field of wind energy. The Respondent had sold the entire lot to the claimant. The finding of the arbitral tribunal that there was complete silence on the part of the Respondent is also ex-facie perverse. 81. Learned Senior Counsel placed reliance on the judgment of the Court of Queen's Bench in case of Smith vs. Hughes, Vol. VI 597 and more particularly at page 606 and would submit that since in this case the Respondent had categorically refuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le opposing the petition under section 34 of the Arbitration Conciliation Act, 1996 which submissions were not advanced before the arbitral tribunal. The arbitral tribunal at their own have decided the claim by invoking section 19 of the Indian Contract Act, 1872 which is not permissible. 85. Learned Senior Counsel placed reliance on the judgment of this Court in case of Hemant Bhimrao Kalghatgi vs. Gururao Swamirao Kulkarni Anr. (1943) ILR Bombay 55 and more particularly relevant pages at pages 67 to 70 in support of the submission that if a party has claimed inconsistent rights, he must elect which of them he is going to rely and having elected one right he is not allowed to retract his election. Learned Senior Counsel for the Respondent placed reliance on the judgment of the Madras High Court in case of R. Samudra Vijayam Chettiar vs. Srinivasa Alwar Ors., (1969) L.W. 62 in support of the submission that if the contract survives for both the parties, both the parties have to perform their part of contract. 86. Learned Senior Counsel placed reliance on the judgment of the Hon'ble Supreme Court in case of Umabai Anr. vs. Nilkanth Dhondiba Chavan Anr. (2005) 6 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not rejected by the arbitral tribunal, the same has been discarded. The arbitral tribunal has rejected the reports of the Consultants of both sides. The calculations made by the arbitral tribunal at page 418 of the arbitration petition forming part of the award is made by the arbitral tribunal on its own without any assistance from any party. Though the arbitral tribunal has rejected the evidence produced by the claimant, contrary to that, the arbitral tribunal has still awarded the claim for damages made by the claimant. 90. Learned Senior Counsel placed reliance on the judgment of the Hon'ble Supreme Court in case of Draupadi Devi Ors. vs. Union of India Ors. (2004) 11 SCC 425 and in particular paragraphs 76 and 77 in support of the submission that though the Claimant had not furnished any proof of the alleged damages suffered by the claimant, the arbitral tribunal contrary to the principles laid down by the Hon'ble Supreme Court in case of Draupadi Devi Ors. (supra) has allowed the substantial claim of damages in favour of the claimant. 91. Learned Senior Counsel for the Respondent placed reliance on paragraph 56.2 of the majority award holding that the dama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,50,000/- towards preparing of award, vide proceedings dated 20th April, 2008, the same was unilaterally revised to ₹ 97,50,000 by the arbitral tribunal. 95. It is submitted that though the arbitral tribunal had tried to suggest such exorbitant fees on account of meeting for discussion on five occasions, however, in realty, the arbitral tribunal had actually convened the discussion only on three occasions. The additional sum of ₹ 37.5 lacs has been thus levied and collected by the arbitral tribunal vide the proceedings dated 3rd December, 2014 for pronouncing the award after having finalized the same. Huge amount of fees had been exploited from the parties by the arbitral tribunal which has resulted in the Respondent loosing complete confidence in the arbitral tribunal to justify the dispute. The entire majority award thus deserves to be set aside on this ground itself. 96. On the issue of rescission of contract, learned Senior Counsel placed reliance on the judgment of the Andhra Pradesh in case of Kilaru Venkatasubbayya vs. Kalluri Padmalayamba Anr. (1968) SCC OnLine AP 290 and in particular paragraph 15 and would submit that rescission must be express and un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties i.e. Supply Agreement dated 4th January, 2007, Agreement for Erection and Commissioning dated 6th January, 2007 and the Agreement for Maintenance, Service and Availability dated 8th January, 2007. He submits that all operations, including supply, erection, commissioning, maintenance and service of the said WTG's was the sole responsibility of the respondent. 100. It is submitted that the role of the Claimant was onlythat of an investor. The Respondent reiterated the supply agreement with estimate generation of 49.71 lakhs KWh/WTG/annum. The entire scope of the work included without limitation, evaluation of location potential based on wind resource assessment and energy production estimate ; site acquisition and transfer of land to the claimant, contour survey and micrositing, engineering, designing, manufacture, testing and supply of WTG's, foundation construction, etc. 101. It is submitted that the figure of 49.71 lakhs Kwh/WTG/annum estimated by the Respondent was a very perfect figure and was not approximately 49 or not approximately 50. It was the case of the Respondent itself that the estimate given by the Respondent was fair, reasonable and genuine. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mant and the Respondent in this regard by which the Claimant had called upon the Respondent to furnish a copy of page no.9. The Respondent however, though reconfirmed the figure of 49.71 lakhs Kwh/WTG/annum, refused to furnish any further details including a copy of page no.9 of the supply agreement. He submits that only after execution of the supply agreement on 4th January, 2007, the Production Estimate dated 8th February, 2007 was furnished by the Respondent to the Claimant which it contained the said page no.9 which clearly showed that neither 14 WTGs, nor WEGs of the entire field could achieve the estimate of 49.71 lakhs. It is the case of the Claimant that the average of 14 WEGs was far less than farm average. 105. Learned Senior Counsel placed reliance on the cross examination of RW 2, the witness examined by the Respondent and would submit that the said witness of the Respondent admitted that the average of 14 WEG the entire farm was only 49.29 lakhs KWh/WTG/annum. He submits that the said witness admitted that the gross annual energy generation of 14 turbines of the claimant, after taking into account wind direction shift, could only be 43.40 lakhs KWh/WTG/annum as ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugust, 2006. It was further stated that the long term data had not been available. The said page no.9 which was furnished subsequently by the Respondent had set out a table listing the coordinates and the individual production for each of the 24 turbines in the farm. It is submitted that the contents of page no.9 clearly proved that the estimate of 49.71 lacs Kwh/WTG per annum was false to the knowledge of the Respondent and was thus deliberately given by the Respondent only after the execution of the supply agreement between the parties. 109. It is submitted that on perusal of page no.9 of the supply agreement, it clearly showed that neither 14 WEGs nor the WEGs of the entire field could achieve the estimate of 49.71. Reliance is also placed on the reply to question nos.215, 216 and 222 of the witness (RW 1) examined by the Respondent admitting that the average production estimate of 14 WTG's of the Claimant was about 5% lower than the average of the 24 WTG's in the wind farm. On the date of execution of the contract with the Claimant by the respondent, the balance 10 WTG's had already been sold by the respondent. The said table showed that the energy result of 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh wind period from 1st September, 2005 to 31st August, 2006 from amongst the available wind data of 23 months was taken into consideration to compound the average, energy estimate figure of 49.71 lakhs KWh/WEG/annum could never had been achieved. Reliance is placed on reply given to question no.168 by RW 2 admitting that even that high wind period energy generation of the farm was only 45.29 lakhs KWh/WEG/annum. 113. Learned Senior Counsel for the Claimant submits that wind data of only a period of one year from 1st September, 2005 to 31st August, 2006 was used, whereas the witness examined by the Respondent (RW 2) admitted in response to question no.320 that admittedly the period must be 4- 5 years to 10 years to make a long term estimate. He submits that though the Respondent had long term government wind data available with the Respondent from the year 1948, the Respondent refused to furnish such data to the Claimant though the Claimant had called upon the Respondent to furnish the same. Though the Respondent had itself installed a wind mast at the site in the year 2004, the mast installation report was not made available to the claimant. The Respondent made a false stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the arbitral tribunal has also considered and more particularly in paragraph 55.2, admissions of the Respondent that 49.71 lakhs KWh/WEG/annum could never be achieved. It is held by the arbitral tribunal that the Claimant was entitled to rely upon on the lowest of such admissions being item no.9 mentioned in the tabulated statement in the award and more particularly in paragraph 55.2. After deducting the correction factors as per clause 9.3 of the supply agreement, net annual production worked out by the Claimant at 29.73 lakhs KWh/WEG/annum. It is submitted that the average of various items mentioned in the table was rounded off by the arbitral tribunal to 31 lakhs Kwh/WEG/annum which is detrimental to the interest of the claimant. The Respondent thus could not challenge the said computation being beneficiary of the said finding of the arbitral tribunal. He submits that sections 17 and 19 of the Indian Contract Act, 1872 attracted to the facts of this case clearly. 117. It is submitted by the learned Senior Counsel that the arbitral tribunal has after appreciating the oral and documentary evidence, the pleadings and the provisions of the contract have allowed the claims m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 121. Learned Senior Counsel for the Claimant placed reliance on the judgment of the Court of Common Pleas in Schneider Anr. vs. Health (1803) 13 All England Report 473 which judgment has been considered by the arbitral tribunal in paragraph 48.2 of the majority award. He submits that if the faults were known to the seller, but such faults were not disclosed to the buyer and if it was found that the ship had defects and was not sea worthy, the seller cannot avail of stipulation that ship was sold on as is where is basis. He submits that the arbitral tribunal rightly placed reliance on the said judgment as the same was clearly applicable to the facts of this case. He submits that the learned Senior Counsel for the Respondent could not distinguish the said judgment which was relied upon by the Claimant and was considered by the arbitral tribunal. 122. Learned Senior Counsel for the Claimant placed reliance on the judgment of the Chancery Division in case of Carlish vs. Salt (1906) Ch 335 at 340 in which it was held that the fraud apart, even where there was only concealment of a known fact by the defendant, it would be unconscientious for the defendant to insist upon availing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Limited (PSPCL) Anr., (2018) 11 SCC 508 and more particularly paragraphs 33, 34, 38, 44 and 49. It is submitted that implied term can be contemplated if considered necessary to lend efficacy to the term of a contract, having regard to main purpose of the contract. It is necessary to give business efficacy to the contract. It is submitted that when clause 9.1 gives a number, the same cannot be discarded by placing reliance upon clause 9.3 or use of word estimate . Clause 9.1 cannot be rendered entirely meaningless. The Respondent had clearly assured generation of 49.71, the Respondent cannot be allowed to contend that they would not be liable for generation of 49.71 or that the same was not a guaranteed generation. It is submitted by the learned Senior Counsel that though the figure of 49.71 may not be guarantee, it is definitely a warranty. 126. Learned Senior Counsel placed reliance on the judgment of the Hon'ble Supreme Court in case of Transmission Corporation of Andhra Pradesh Limited Ors. vs. GMR Vemagiri Power Generation Limited Anr. (2018) 3 SCC 716 and in particular paragraph 26 and would submit that a commercial document cannot be interpreted in a manner t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Claimant that the representation made by the Respondent to the Claimant was constituted a warranty and thus the Claimant was entitled to claim damages for the breach of such warranty by the respondent. 129. Reliance is strongly placed on the relevant paragraph at page 818 of the said judgment delivered by Lord Denning with regard to collateral warranty . It is submitted that the Claimant had made its investment based on such collateral warranty furnished by the respondent. In this case, it was the case of deliberate misrepresentation to the knowledge of the Respondent made to the claimant. The Respondent was fully aware that the figure 49.71 was not achievable. 130. It is submitted by the learned Senior Counsel that Section 19 gives option to a party to either rescind or to perform the contract on the basis of representation made. The provisions of sections 17, 18 and 19 of the Indian Contract Act, 1872 are strongly relied upon by the learned Senior Counsel for the claimant. Insofar as the judgment in case of Oscar Chess Limited (supra) relied upon by the learned Senior Counsel for the Respondent is concerned, it is submitted by the learned Senior Counsel for the Clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is also distinguished on the ground that the notice to tender expressly provided that the buyer had duty to inspect quality and quantity roughly estimated by the state. He submits that in this case though the Claimant had asked the Respondent to furnish missing page no.9, the Respondent blatantly refused to share the said document which was found crucial for the purpose of taking any decision by the Claimant whether to enter into any such contract with the Respondent or not. He submits that the arbitral tribunal has rightly distinguished the said judgment in case of M/s.Alavi Anr. (supra) in paragraph 49.11 of the majority award. 134. Insofar as the submission of the learned Senior Counsel for the Respondent that though the Respondent had cited the judgment in case of Riaffeisen Zentralbank Osterreich AG (supra) the same, been cited, has not been considered by the arbitral tribunal is concerned, it is submitted by the learned Senior Counsel for the Claimant that the arbitral tribunal rightly did not refer to the said judgment since the said judgment only contained general proposition with regard to misrepresentation and not with regard to estimate. He submits that in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitral tribunal to interpret the terms of the contract by applying established principles with regard to the interpretation of the contract or evidence. In support of this submission, the learned Senior Counsel placed reliance on the judgment of the Hon'ble Supreme Court reported in case of National Highway Authority of India Vs ITD Cementation India Ltd. (2015) 14 SCC 21 and more particularly paragraphs 21 to 25 and the judgment reported in case of Swan Gold Mining Ltd Vs. Hindustan Copper Ltd. (2015) 5 SCC 739 and in particular paragraph 19. 138. It is submitted by the learned Senior Counsel that even if the clauses of the contract cannot be rejected for conflict, they were liable to be read down so as to give effect to the object and purpose of clauses 9.1, 9.2 and 9.3 of the supply agreement. In support of this submission, learned Senior Counsel placed reliance on the judgment of the Hon'ble Supreme Court in case of Skandia Insurance Company Limited vs. Kokilaben Chandravardan, AIR 1987 SC 1184 and in case of B.V. Nagaraju vs. Oriental Insurance Company, (1996) 4 SCC 647 which are dealt with by the arbitral tribunal in paragraph 47 of the majority award. 139. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstood that the case was contractual in nature and not tortuous. 142. Insofar as the pleading on the issue of misrepresentation amounting to fraud is concerned, the Claimant had specifically pleaded about the fraudulent misrepresentation of 49.71 KWh/WTG/annum and the difference between the estimate and the actual generation. In support of this submission, learned Senior Counsel placed reliance on paragraphs 13, 22, 24, 25, 28 to 32, 35 and 38 to 41 of the statement of claim filed by the claimant. He submits that the difference between the estimate and actual generation is a point that is common to both i.e. fact as to whether there was misrepresentation amounting to fraud as well as with regard to the quantum of damages under the second part of section 19 of the Indian Contract Act, 1872. It is submitted that the pleadings filed by the Claimant made it clear that the case of the Claimant was that of fraud under section 17 of the Indian Contract Act, 1872. 143. Insofar as the quantum of damages is concerned, learned Senior Counsel for the Claimant placed reliance on paragraph 42 of the statement of claim in support of his submission that the said paragraph makes it clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to performance of wind farm project set up by the Respondent and the huge capital investment being locked up for 20 years. 147. It is submitted by the learned Senior Counsel that the alternate claim B was thus on the basis that the contract was on going i.e. on the basis of performance and thus it was not the claim in Tort nor was it a claim on the basis of rescission of contract as sought to be canvassed by the respondent. He submits that the said paragraph further refers to loss suffered by it due to the under performance of wind farm project set up by the Respondent and thus the said claim was under section 19 of the Indian Contract Act, 1872 being the difference between the estimate and actual generation. It is submitted by the learned Senior Counsel that though the quantum of such damages had not particularised in figures in the statement of claim while claiming damages, the amount is not required to be quantified as the quantification of claim is merely a matter of proof. In support of this submission, learned Senior Counsel placed reliance on paragraph 100 of the judgment of the Hon'ble Supreme Court in case of McDermott International Inc. vs. Burn Standard Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity to lead evidence insofar as claim B is concerned. He submits that the Claimant had not only led documentary evidence but had also led oral evidence to show that 49.71 repeatedly mentioned by the Respondent in the correspondence as well as in the supply contract was fraudulent representation made by the Respondent to the claimant. 152. Learned Senior Counsel submits that in the affidavit of evidence of CW -1 i.e. Mr.Deepak Asher, Director and Group Head (Corporate Finance) of the Claimant and more particularly paragraph 22-30 had clearly set out the proof of difference between actual and estimated generation. The said affidavit and more particularly paragraph 37 thereof had made the basis of claim B explicitly and clearly. It was stated that in the alternate, the Claimant was entitled for damages that was suffered by it due to fraudulent, reckless / negligent misrepresentations and that the same was of recurring in nature. He submits that it was thus beyond the reasonable doubt hat the claim B was made on the basis that the contract was on going and not on the basis of rescission. 153. Learned Senior Counsel submits that the said witness (CW 1) examined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrimental to the Claimant and not the respondent. 156. In so far as the question as to whether any evidence of actual generation was produced by the Claimant or not is concerned, it is submitted by the learned Senior Counsel for the Claimant that the actual generation was known to both the parties. The Respondent had full control over the actual metering by the Respondent and Maharashtra State Electricity Board. The witness examined by the Claimant i.e. CW 1, at paragraph 16 of his affidavit in lieu of examination in chief had produced various documents evidencing actual metering of generation as Exhibit CW -1/9 collectively. Those documents included joint meter readings which were signed by the Respondent and also the Maharashtra State Electricity Board. The invoices were raised by the Claimant on the basis of the meter reading, the documents from the Respondent forwarding invoices of the Claimant to the Maharashtra State Electricity Board etc. 157. It is submitted that the samples of such joint meter reading reports, meter readings and energy break up, statement of MSEDCL, invoices of the claimant, letters of the Respondent forwarding invoices of the Claimant to the MSED ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was dropped by the claimant, the Respondent had availed off an opportunity and had dealt with claim B. In support of this submission, learned Senior Counsel placed reliance on the minutes of hearing before the arbitral tribunal held on 17th to 19th December, 2011 to show that at paragraph 2 that during the course of argument on 17th and 18th December, 2011, the Counsel for the Claimant had submitted that the Claimant was not pressing the relief under claim A. 161. Learned Senior Counsel placed reliance on paragraph 3 of the minutes of hearing and would submit that the said paragraph would clearly show that thereafter the Counsel for the Respondent made his arguments in response and had completed the same on 19th December, 2011. He submits that thus even after claim A was dropped, the Respondent had an opportunity and in fact did avail of the said opportunity to advance the arguments to oppose claim B. Learned Senior Counsel placed reliance on paragraph 4 of the minutes of hearing and would submit that even the said paragraph would clearly show that at the end of day on 19th December 2011, the Counsel for the Respondent submitted that he had concluded his arguments. Both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent even in the written submissions filed before the arbitral tribunal that the claim B made by the Claimant was on the basis of Tort of deceit only and not for the contractual damages. The Respondent also had clearly understood that claim B was for the contractual damages and did not plead that claim B was not clear and thus could not be dealt with by the Respondent on that ground. Learned Senior Counsel for the Claimant invited my attention to paragraph 53 of the majority award and also paragraphs 45.2 and 45.3 and would submit that paragraph 53 of the majority award cannot be read in isolation but also has to be read with paragraphs 45.2 and 45.3 of the majority award holding that the Claimant had pleaded the case under second part of section 19 of the Indian Contract Act, 1872 and that the Respondent had sufficient opportunity to put forth its defence and lead evidence. 165. In so far as the quantification of the claim is concerned, it is submitted by the learned Senior Counsel that the basis of determination of damages under second part of section 19 of the Indian Contract Act, 1872 was nothing but a computation of difference between the estimate and the actual gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of the Indian Contract Act, 1872. He submits that there is no substance in the submissions made by the learned Senior Counsel for the Respondent that the second part of section 19 of the Indian Contract Act, 1872 is also based on the breach of contract / rescission of contract or that the principles of section 73 of the Indian Contract Act, 1872 are attracted to section 19 of the Indian Contract Act, 1872. He submits that second part of section 19 is based on the performance of the contract and not on rescission of a contract. 168. Learned Senior Counsel for the Claimant invited my attention to various paragraphs of the statement of claim filed by his client and would submit that the Claimant had not rescinded the contract. It was only the averment in the statement of claim that the Claimant was entitled to rescission of contract. Till the arbitral tribunal would have decided to be rescinded, the contract remained in force. For a rescission of a contract to operate, there has to be express and unequivocal act of rescission. In this case, there was no rescission of contract. The contract was all through out on going contract. The Claimant had made an alternate claim on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible interpretation. 173. It is submitted by the learned Senior Counsel that when the Claimant did not press claim A before the arbitral tribunal, the Respondent did not raise any objection or even did not apply or seek any opportunity to lead evidence in so far as the claim B is concerned. The Respondent cannot be allowed to contend that the evidence on claim A cannot be relied upon by the Claimant in support of claim B. 174. In so far as the judgment in the case of Lakshmijit Bhai Suchit Vs.Faiz Mohammed Khan Sherani (supra) relied upon by the Respondent is concerned, the said judgment is distinguished by the learned Senior Counsel for the Claimant on the ground that since the Claimant had not exercised right to elect till such rejoinder, the Respondent cannot be allowed to contend that the Claimant having prayed for claims A and B, the Claimant could not have been permitted to give up claim A at the belated stage. 175. In so far as the judgment of the Hon'ble Supreme Court in the case of Pt. Prem Raj Vs. DLF Housing and Construction Ltd. (supra) relied by the learned Senior Counsel for the Respondent is concerned, learned Senior Counsel for the Claimant disting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to Section 17 of the Contract Act, the Respondent had no duty to speak in a commercial contract which arises only in insurance or indemnity contracts is concerned, it is submitted by the learned Senior Counsel for the Claimant that explanation to Section 17 of the Contract Act refers to silence as to the facts likely to affect the willingness of a person, which may not be fraud, unless the circumstances of the case is such that there was a duty to speak or where his silence is itself equivalent to speech. He submits that where there is a mere silence and there is no duty to speak, it could be said that there is no fraud. However, in the facts of this case, the Respondent categorically and clearly stated that the estimated generation is 49.71 lakh KWH/WTG/annum and that the said estimate was fair, genuine and reasonable thereby inducing the Claimant to execute the agreement with the respondent. 179. It is submitted that the Respondent could not establish before the arbitral tribunal that the estimate of the Respondent was fair. These submissions have been dealt with by the arbitral tribunal in paragraphs 39.11(xiii) (a) to (f) and has rightly held that this case was a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its evidence that Mr.C.M. Jain had undergone any training to qualify himself in analysing wind data and tender advice. He submits that the arbitral tribunal in paragraph 13(d) of the impugned award has recorded a finding that there was no evidence to prove that the Claimant had the benefit of experience in renewable energy and as such it had full knowledge and knowhow of wind energy. 183. In so far as the submission of the Respondent on the issue of mitigation of damages is concerned, it is submitted by the learned Senior Counsel for the Claimant that there was no question of mitigation of damages in this case. The second part of Section 19 of the Contract Act is based on performance of contract and not rescission of the contract and thus the principles of Sections 73 and 74 of the Indian Contract Act, 1872 have no application. The arbitral tribunal has only awarded the difference between the actual generation and estimated generation which benefit even otherwise the Claimant was entitled to. 184. In so far as the submission of the Respondent that the arbitral tribunal could not have relied upon the evidence of RW.2 and CW.2 which evidence had been rejected by the arbitral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the earlier minutes, (ii) proceedings in respect of exhibit C 24, (iii) for extension of time for filing the written submissions, (iv) for substituting Inox as the Claimant since the erstwhile Claimant (GFL) had sold, transferred, assigned and conveyed its wind energy business to Inox, and (iv) for discussing and the finalising the arbitral award. 188. It is submitted by the learned Senior Counsel that the Respondent in fact opposed the application of the Claimant for substitution of its name as the claimant. The order for substitution of the claim of the Claimant was ultimately passed only on 1st July 2014 whereas the arbitral award came to be passed in little over one month thereafter. There was delay in publication of the award in view of the Respondent opposing the application of the Claimant for substitution of its name as the claimant. The Respondent did not raise any such objection during the course of the arguments of the proceedings. He submits that it was the Claimant which requested the arbitral tribunal to expedite the matter from time to time. He relied upon various documents in Volume 2 in support of this submission. The Respondent however, took chance to see whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010 EWHC 1392 (Comm) relied upon by the learned Senior Counsel for the Respondent is concerned, it is submitted by the learned Senior Counsel for the Claimant that the said judgment has dealt with a case of misrepresentation and not the case of warranty and would not apply to the facts of this case. 194. Mr.Sarkar, learned Senior Counsel for the Respondent in his rejoinder arguments would submit that the supply of contract, erection, maintenance and operation contract has already been worked out. The subsequent maintenance contract is still in operation. He submits that the contract is kept alive since the Respondent has agreed to keep the contract alive. He placed reliance on the Anglo Indian Course and would submit that Section 19 of the Indian Contract Act, 1872 is identical and is pari materia with the case of the Anglo Indian Course. He submits that it was the duty of the claimant, let the Respondent must know that the payment was insisting for performance of contract which the Claimant is failed in this case. He placed reliance on pages 81 to 84 of the statement of claim and would submit that it was the alternate claim of the Claimant that the Claimant was not exercised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Claimant had affirmed the contract, the Claimant could not ask for rescission of contract. 198. Learned Senior Counsel for the Respondent distinguishes the judgment of Privy Council in the case of Forbes Vs. Git and Ors., AIR 1921 PC 209 relied upon by the learned Senior Counsel before the arbitral tribunal. Reliance is placed on paragraph 8 thereof in support of the submission that in the said judgment, later clause has qualified the earlier clause and thus the earlier clause would not prevail over the later clause. 199. Learned Senior Counsel for the Claimant distinguishes the judgment of the Hon'ble Supreme Court in the case of Nabha Power Limited (NPL) Vs.Punjab State Power Corporation Limited (PSPCL) Anr. (supra). He invited my attention to paragraph 49(5) in support of the submission that if the terms and conditions of the contract are expressed and clear, no other interpretation by the Court or arbitral tribunal is permissible. 200. Learned Senior Counsel for the Respondent distinguishes the judgment of the Hon'ble Supreme Cort in the case of Transmission Corporation of Andhra Pradesh Limited Ors., (2018) 3 SCC 716 in support of the submission that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. :- 205. The original Claimant has filed this petition impugning the findings of the arbitral tribunal in paragraphs 55.7 and 55.8 of the majority award to the extent they restrict the period for which the Claimant was entitled to compensation in terms of Section 19(2) of the Indian Contract Act, 1872 till the date of the award. 206. Ms.Arora, learned Senior Counsel for the Claimant invited my attention to some of the paragraphs in the statement of claim and findings rendered by the arbitral tribunal in the impugned majority award. She placed reliance on the final offer letter dated 24th November 2006 issued by the Predecssor-in-Interest of the Respondent in support of the submission that the estimated average annual generation (gross) at the Local Control System would be 49.71 lakh per WEG corrected to Park Efficiency and Air Density. She submits that according to the said representation, the correction factors to be applied was 44.86 lakhs per WEG per annum. 207. Learned Senior Counsel placed reliance on the final offer letter which included the Technical Specifications and Cash Flow Statements and would submit that the said technical specifications categorically n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st April 2008 onwards. However, the arbitral tribunal, without citing any reasons or justification at paragraphs 55.7 and 55.8 has curtailed the period for awarding the compensation only upto the date of the award i.e. 28th January 2015. 210. It is submitted by the learned Senior Counsel that the arbitral tribunal ought to have granted compensation to the Claimant for a period of 20 years as a natural corollary to various findings rendered by the arbitral tribunal. It is submitted that the conclusion drawn by the arbitral tribunal is contrary to the findings rendered by the arbitral tribunal in so far as the rejection of claim for compensation for a period of 20 years is concerned. The arbitral tribunal has restricted the claim for compensation only for a period of approximately 6.5 years though the Claimant had suffered losses and would operate and incur the loss for the entire period of 20 years. The impugned award to that extent is grossly unfair and unreasonable. 211. Learned Senior Counsel for the Claimant submits that the impugned findings rendered by the arbitral tribunal while rejecting the claim for compensation for a period of 20 years deserves to be modified to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warded by the Respondent to MSEDCL. 215. Mr.Sarkar, learned Senior Counsel for the respondent, on the other hand, would submit that the agreement between the parties had been discharged by performance in its entirety by the time disputes arose between the parties as supply of all WEGs under the contract has been completed and consideration for the same has been paid. The question of terminating the agreement thus does not arise. It is submitted that the other agreements between the parties i.e. Erection, Installation and Commissioning Agreement dated 6th January 2007 and the Service and Availability Agreement dated 8th January 2007 which expired 60 months from the date of commissioning i.e.25th March 2006 have all expired/been discharged event at the time the impugned award rendered by the arbitral tribunal. 216. It is submitted by the learned Senior Counsel for the Respondent that claim of compensation made by the Claimant was only the one claim and was not sevarable. He submits that all the judgments relied upon by the learned Senior Counsel for the Claimant in support of the submission that the Court has power to modify the part of the award rejecting the claim made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Tribunal. Clause 9 of the Supply Agreement, which is the main clause on which both the parties had made their submissions, in great detail, before the Arbitral Tribunal and before this Court, and had bearing on the claims made by the Claimant, are extracted as under : Clause 9: General Estimate: 9.1 The estimated average annual generation (Gross) atLocal Control System (LCS) is 49.71 Lakhs KWh per WEG corrected to Park Efficiency and air Density. 9.2 The generation estimate has been carried out usingWAsP and Wind Pro Software. The calculations are based on wind data (for the period from September 2005 to August 2006) from applicable reference mast installed by the SUPPLIER in close proximity to the Site and the Site Specific Power Curve of the wind turbine. Long term data has not been available. Therefore, the seasonal variations between different years have not been taken into account. Accordingly, there could be variations in generation from year to year. Further, the annual generation of each individual WEG might vary within the wind farm. 9.3 The estimated annual average generation of the park is arrived at by applying following correction factors to the esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lighted in the later part of this Judgment. The Arbitral Tribunal also considered various correspondence on this issue and also various proposal exchanged between the parties. In the beginning, a short profile of NEG-Micon was given. It was claimed in the profile that the Respondent was a 100 % subsidiary of MEG-Micon A/S Denmark, world leaders in wind turbine generators and installed more than 14,000 WTGs, totalling to 7000 MW across 42 countries worldwide, and one out of 5 turbines in the world is a NEG-Micon. 223. The Respondent further stated its achievements and range of turbines etc. In the proposal, estimated average annual generation at Local Control System (LCS) was shown at 49.71 lakhs per WEG, corrected to Park Efficiency and Air Density. The Arbitral Tribunal further highlighted that the Estimated Annual Generation for the park was arrived at after applying the correction factors at 44.86 lakhs per WEG per annum. The Arbitral Tribunal also considered the Minutes of the Meetings held between the parties which were held by various authorised representatives of both the parties, in paragraph 23.2 and 23.4. The parties, thereafter, entered into Supply Agreement on 4/1/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 32.2 that 31.5% had to be deduced from 49.71 lakh KWH/WEG/annum. As a result, the generation figure obtained under Clause 9.3 of CW.1/6 is 34:06 lakh KWH/WEG/annum and, as such, there was vast variation between the final offer and the Supply Agreement. 226. The Arbitral Tribunal, thereafter, considered the effect of the missing page 9 of the Supply Agreement, which was admittedly not furnished to the Claimant by the Respondent at the stage of execution of the said Supply Agreement. The Arbitral Tribunal, after considering the contents of the missing page no.9, held that the energy result of the 14 WEGs is 66.95 GWH/Annum. The average production of energy by each WEG sold to the Claimant was arrived at dividing 66.95 by 14 = 4.78 GWH/WEG/Annum which, on conversion into KWH, would become 47.80 Lakh KWH/ WEG/annum; where as the offer document made by NEG Micon stated 49.71 lakh KWH/WEG/annum gross at Local Control System. The Arbitral Tribunal, accordingly rendered a finding that knowing fully well that the average gross production at the LCS from each of the 14 WTGs was 47.80 Lakh KWH/WEG/annum, and the Respondent mentioned it as 49.71 lakh KWH/WEG/annum, which was a clear m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered to be an independent expert witness. In paragraph 34.11.2, the Arbitral Tribunal held that Mr. Richard Whiting (CW.2) and Mr. Sven Eric (RW.1) expert witnesses examined by the Claimant and the Respondent respectively, each one in their reports and also in the evidence, had tried to support the case of the Claimant and the Respondent, respectively, as a result, the Tribunal was left with no definite conclusion from the reports made by the experts to come to a definite conclusion. 230. In so far as evidence of Mr. Sven Erik (RW.2) is concerned, the Arbitral Tribunal considered such evidence in paragraph 36.13. It is held by the Arbitral Tribunal that 31.5% of 44.80 lakh KWH/WEG/Annum would have to be deducted. In paragraph 36.9.3, the Arbitral Tribunal considered the Gross Average Annual Generation of 14 turbines of the Claimant. From the evidence of the witnesses examined by both the parties, as per Exhibit 35 and also energy generation after deducting the several factors in the said chart, as per Clause 9.3 of the Supply Agreement, the Arbitral Tribunal took average of all 9 figures mentioned in the said paragraphs and held that the Gross Average Annual Generation L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Cash Flow Statement was only a sample cash flow and thus, it was clear that the Respondent was fully aware that the Cash Flow contained several assumptions which were not communicated to the Claimant. 233. In paragraph 39.2 of the majority Award, the Arbitral Tribunal recorded a finding that the Cash Flow Statement did not take into consideration various crucial aspects which would have bearing on the decision to be taken by the Claimant, whether the project proposed was profitable to go ahead with it or not. The Arbitral Tribunal considered various admissions on the part of the Witness RW.1 examined by the Respondent on this issue. The Arbitral Tribunal has rendered a finding that the Supply Agreement and the Cash Flow Statement had not given true and correct picture to the Claimant though the same was within the knowledge of the Respondent. 234. In paragraph 39.3, it was held by the Arbitral Tribunal that it could be stated that there was not only misrepresentation, but also suppression of true and correct facts as were revealed from Clauses 9.1 to 9.3 of the Supply Agreement. In paragraph 39.6 of the majority Award, the Arbitral Tribunal held that various documents menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he site specific power curve of the wind turbine. It is held that the Respondent was bound to disclose necessary facts as stated by it in the Estimated Generation contained in the Supply Agreement. 238. The Arbitral Tribunal held that the contract is a commercial contract. The Respondent was an experienced expert and claimed to be the world leader in the field of wind energy and had full knowledge of the wind data of Gude Panchgani; whereas the Claimant was entering the wind energy business and had no knowledge about the wind data pertaining to the Gude Panchgani site which was very very necessary. Both the parties were not equals in the field of wind energy. It was the duty of the Respondent to bring to the notice of the Claimant all the facts that went in determining the proposed estimation of energy. The Claimant was vocal and was demanding the necessary information; whereas the Respondent declined to furnish the same deliberately. 239. The Arbitral Tribunal interpreted Clause 9.2 of the Supply Agreement and held that the said provision casts duty on the Respondent to furnish all the details of wind data for the period September 2005 to August 2006, which naturally inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Petitioner (original Respondent) that the parties had discussed each and every clause of the Supply Agreement threadbare before entering into the Supply Agreement with equal bargaining power as a bilateral document with full knowledge of all consequences is concerned, in my view the Arbitral Tribunal, after considering the pleadings, documents and the oral evidence of the parties, has rightly come to the conclusion that the Claimant was new in the business of generation of energy and was totally dependent upon the expertise of the Respondent. The Respondent was bound to provide all requisite information and data to the Claimant before execution of the Supply Agreement. 244. Admittedly, in this case, the Respondent had not furnished all the requisite information to the Claimant when the Supply Agreement was executed. The Claimant had repeatedly called upon the Respondent to furnish copy of the said missing page, however, the Respondent refused to supply the said missing page. The learned Senior Counsel for the Respondent categorically urged before this Court during the course of argument that though the said page was missing in the Supply Agreement entered into between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to disclose such information and data to the Claimant before execution of the agreement. I do not find any infirmity with the findings rendered by the Arbitral Tribunal that it was the duty of the Respondent to disclose all these material, data, information and the extent of the energy to be generated in future and deliberately having suppressed this data with an intention to induce the Claimant to enter into the agreement with the Respondent, amounted to frustrate the contract under Section 17 of the Indian Contract Act, 1982. 248. In so far as the submission of the learned Senior Counsel for the Respondent that the Claimant could not have depended upon the Cash Flow Statement offered by the Respondent is concerned, in my view, the Arbitral Tribunal has rightly rendered a finding that the Cash Flow Statement relied upon by the Respondent was a crucial factor for the Claimant to determine the commercial viability of the project. The witness examined by the Respondent (RW.1) also admitted during the course of his cross examination that the anticipated rate of return was one of the important factors to be taken into consideration by the Claimant to decide as to whether to go ah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Senior Counsel for the Respondent that the Arbitral Tribunal could not have considered the report of Mr. Richard Whiting, who had allegedly checked the report submitted by M/s. Garrage Hassain, is concerned, there is no merit in this submission of the learned Senior Counsel . The Arbitral Tribunal has interpreted Clause 18 and also Clause 19 of the Supply Agreement, which interpretation of the Arbitral Tribunal is not only a possible interpretation, but a correct interpretation and thus cannot be substituted by another interpretation by this Court under Section 34 of the Act. The reliance placed by the learned Senior Counsel for the Respondent on the Judgment in the case of Rainy Sky S.A. ors. vs. Kookmin Bank, (supra) is clearly distinguishable in the facts of this case and would not assist the case of the Respondent. 252. Similarly, the Judgment in the case of Raiffeisen Zentralbank Osterreich AG (Supra) and the Judgment of the Court of Appeal in case of Oscar Chess Ltd. (supra) are also clearly distinguishable in the facts of this case and will not assist the case of the Respondent. 253. There is no merit in the submission of the learned Senior Counsel for the Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1872 were clearly applicable to the facts of this case. The Claimant has made out a case for invoking the said provisions by satisfying the conditions provided therein. 256. In my view, the Arbitral Tribunal has rightly held that the material information and the data which ought to have been furnished by the Respondent to the Claimant, were suppressed and fraud was committed by the Respondent upon the Claimant. The reliance placed on the Judgment of the Court of Queen's Bench in the case of Smith vs Hughes (supra) would be of no assistance to the Respondent. A perusal of Clause 9.1 of the Supply Agreement indicates that the said clause clearly reflected specific representation of the Respondent that the estimated average annual general (gross) at Local Control System (LCS) was 49.71 lakhs KWh per WEG per annum. Clause 9.2 clearly provided that the generation estimate had been carried out using WAsP and Wind Pro Software. The calculations were based on wind data for the period from September 2005 to August 2006. 257. In my view, Mr. Chagla, the learned Senior Counsel for the Claimant is right in placing reliance on paragraph 16 of the Statement of Defence in support of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troleum Co. Ltd. (supra) which would be clearly applicable to the facts of this case, in view of the fact that though the Respondent had special knowledge and skill about the project and also about the energy generation, such material information has been suppressed by the Respondent from the Claimant. 260. In my view the learned Senior Counsel for the Claimant rightly placed reliance upon the relevant portion of the Judgment in the case of Oscar Chess Limited (supra) which was also relied upon by the Respondent. In the said Judgment, it was clearly held that when the seller states a fact which is or should be within his own knowledge and of which the buyer is ignorant and the buyer acts upon such fact alleged by the seller, it is easy to infer warranty on the part of the seller. 261. Gujarat High Court in the case of M/s. R.C. Thakkar (supra) had awarded claim for damages in favour of the Plaintiff in view of the estimated cost suggested by other side having been found to be inaccurate and false. The Gujarat High Court in the said Judgment, the facts of which were identical to the facts of this case, considered the documents, which included the representation made with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lauses of the agreement. The Judgment in the case of B.V. Nagaraju (supra) would clearly apply to the facts of this case and would assist the case of the Claimant. The learned Senior Counsel for the Respondent could not distinguish these Judgments. In my view, reading down any part of an agreement is part of interpretation of a contract, which is within the sole domain of the Arbitral Tribunal, based on the established principles with regard to interpretation of the contract, after considering the purpose and intent of the parties by considering the evidence on record. Similar view has been taken by the Delhi High Court in HUDCO Limited (supra). 266. In my view, the Respondent having committed a fraud upon the Claimant, which has been established before the Arbitral Tribunal, the Respondent cannot be allowed to urge that Clause 9.3 of the Supply Agreement, was in any manner repugnant to Clause 9.1 in support of the submission that Respondent had not issued any guarantee in favour of the Claimant in respect of the energy generation. 267. In so far as the submission of the learned Senior Counsel for the Respondent that though the Claimant had not pressed the prayer for refund o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal indicates that the Respondent had dealt with both the claims i.e. Claim A and Claim B even before the stage of rejoinder. Even after dropping of the Claim A by the Claimant, the Respondent had availed of an opportunity and had dealt with Claim B. The minutes of meeting of the Arbitral Tribunal held on 17.12.2011 would indicate that during the course of arguments on 17.12.2011, the Counsel for the Respondent had submitted that the Claimant was not pressing relief under Claim A. The Respondent, through its Counsel , thereafter made its arguments in response and had completed the arguments on 19.12.2011. The Respondent had also availed off an opportunity to deal with Claim B. 272. In the minutes of hearing held on 19.12.2011, the Arbitral Tribunal recorded the statement made by the learned Counsel for the Respondent that he had concluded his arguments. Both the parties, thereafter, filed written submissions before the Arbitral Tribunal. Even in the written submissions, both the parties dealt with Claim B made by the Claimant. It was the case of the Claimant that in view of the actual energy figure available to the parties, the Claimant was entitled to damages as a difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continued to issue its meter readings in respect of the entire farm, along with energy break up in respect of the Claimant and others in the Farm. The Respondent continued to issues its Monthly Summary Generation Report and continued to raise invoices which were forwarded by the Respondent to MSEDCL. 277. The Arbitral Tribunal considered the quantification of claim for damages in paragraphs 34.7.4, 34.9, 34.11.2, 34.11.3, 35.7, 35.15, 36 and 55.5 of the impugned Award and has rendered various findings of fact. I am thus not inclined to accept the submission of the learned Senior Counsel for the Respondent that the Claim for damages was neither pleaded, nor argued, nor proved before the Arbitral Tribunal by the Claimant. 278. In so far as the Judgment of the Hon'ble Supreme Court in the case of Draupadi Devi Ors. (supra), relied upon by the learned Senior Counsel for the Respondent, in support of the submission that there were neither any pleadings on the claim for damages, nor there was any evidence led by the Claimant to prove the claim for damages is concerned, in my view, there is no substance in this submission of the learned Senior Counsel for Respondent. The Clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmon to Claim A and Claim B. The Claimant could rely upon that evidence also in respect of Claim B which was ultimately pressed by the Claimant. There is no substance in the submission of the learned Senior Counsel for the Respondent that the principles of proof of damages under Section 73 or under Section 74 of the Indian Contract Act were applicable to the claim made under second part of Section 19 of the Indian Contract Act, or that the said claim for damages was not proved by the Claimant. 282. A perusal of the statement of claim indicates that though the Claimant had pleaded that the Claimant was entitled to rescission of the contract, and to be put back in position, before the arguments were concluded, the Claimant did not press the said submission or the prayer. In my view, the Claimant rightly exercised the second option under the second part of Section 19 of the Indian Contract Act on the basis of ongoing contract and claim for the damages suffered by the Claimant on the basis of the performance of the contract. It is not the case of the Respondent that the Claimant had pressed for prayer for rescission of the contract or that the same was granted by the Arbitral Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the rescission of the contract. Since the Claimant had given up Claim A, the submission in the Statement of Claim that the Claimant was entitled to rescission of the contract, would also go along with the prayer A, not having been pressed. The Claimant had clearly exercised the option to press for Claim B on the basis of the ongoing contract, which election was clear, categorical and was conveyed to the Respondent during the course of arbitration proceedings. It is not the case of the Respondent that the Respondent had rescinded or terminated the contract with the Claimant. 286. In so far as the Judgment in the case of Sargent (supra), relied upon by the learned Senior Counsel for the Respondent is concerned, it is held that the words or conduct ordinarily required to constitute election must be unequivocal. The conduct of a party to continue the contract will be consisting only with his right under the contract and inconsistent with his right to determine the contract. In this case, neither the Claimant nor the Respondent had determined or rescinded the contract. The conduct of the Claimant was sufficient to indicate that the Claimant had elected to proceed with the ong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the Respondent, as may be assessed by the Arbitral Tribunal. In the said paragraph, the Claimant also strongly placed reliance on the entire cash flow and revenue structure of the Respondent's business on the basis of the generation based on the said misrepresentation. Claim of the Claimant was also on the basis of the difference between the energy generated and the estimated generation represented by the Respondent. The findings of fact rendered by the Arbitral Tribunal on this issue, being not perverse, cannot be interfered with by this Court. 291. In so far as the submission of the learned Senior Counsel for the Respondent that there was no foundation laid by the Claimant under Section 18 of the Indian Contract Act is concerned, there is no substance in this submission of the learned Senior Counsel for the Respondent at all. In my view, there was no inconsistent plea raised by the Claimant in the statement of claim. The Claimant was entitled to make an alternate claim in the statement of claim. Reliance thus placed by the learned Senior Counsel for the Respondent on the Judgment of the Hon'ble Supreme Court in the case of Sarva Sangh (supra) is thus misplaced. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The witnesses examined by the Respondent categorically admitted in their cross examination about the correctness of the said figure mentioned in Clause 9.1 of the Supply Agreement. The Court of Appeal in the case of Esso Petroleum Co. Ltd. (supra), has held that even if forecast is given by a party to another party and if a party has already entered into a contract with such party which had given such estimate or forecast of estate of annual consumption although it was not a guarantee, but it was a forecast by other party who has special knowledge and skill and such representation inducing the person to enter into a contract, constitute a warranty. The principles of law laid down by the Court of Appeal in case of Esso Petroleum Co. Ltd. (supra) would clearly apply to the facts of this case. The Arbitral Tribunal has rightly applied the said principles to the facts of this case. I am in respectful agreement with the view expressed by the Court of Appeal in the said Judgment. 296. In so far as the submission of the learned Senior Counselfor the Respondent that in view of Explanation to Section 17 of the Contract Act the Respondent had no duty to speak in a commercial contract whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent which refers estimate is concerned, the contract must be construed for more business efficacy to further the intentment of the party. It was established beyond reasonable doubt before the Arbitral Tribunal that percentage with figure of 49.71 which was not a rounded figure mentioned in Clause 9.1 was not a real estimate and was a fraud on the part of the Respondent to induce the Claimant to enter into the agreement with the Respondent. Hon'ble Supreme Court in Nabha Power Limited (NPL) (supra) has held that the implied term can be contemplated if considered necessary to lend efficacy to a term of contract, having regard to the main purpose of the contract. It is necessary to give business efficacy to the contract. The principles laid down by the Hon'ble Supreme Court in the said Judgment would apply to the facts of this case. I am respectfully bound by the said Judgment. 300. In so far as the issue raised by the learned Counsel for the Respondent that the Arbitral Tribunal could not have considered the earlier clause prevailing over the later clause is concerned, in my view, the Arbitral Tribunal has rightly applied the principles for interpretation of contract tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of fees i.e. ₹ 4.35 crores collected from both the parties towards sitting fees; approximately ₹ 1.35 crores towards reading, discussion and Award writing; and a sum of ₹ 4.05 lacs towards secretarial charges from the parties. He submits that though the Arbitral Tribunal had exorbitantly fixed the fees of ₹ 22,50,000/- towards preparing of award, vide proceedings dated 20th April, 2008, the same was unilaterally revised to ₹ 97,50,000/by the Arbitral Tribunal. Thus, the Award deserves to be set aside on this ground also. A perusal of the records indicates that the Claimant had opposed the exorbitant fees demanded by the Arbitral Tribunal. The Respondent did not oppose such fees demanded by the Arbitral Tribunal at any point of time and has waited for the outcome of the Arbitral Award, expecting that the same would be in favour of the Respondent and thereafter to raise this ground in the Arbitration Petition. The Respondent cannot be allowed to raise this issue for the first time in this Petition. 305. Be that as it may, considering the factum of exorbitant fees being charged by various Arbitral Tribunals under different heads, sub-Section (14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Award. It was the case of the Claimant that the Claimant was entitled to such compensation for the entire period of 20 years and, thus, the Arbitral Tribunal having rendered various findings in favour of the Claimant, ought to have allowed the claim for the entire period of 20 years. The Claimant has impugned findings of the Arbitral Tribunal in paragraphs 55.7 and 55.8 of the majority Award. 308. It was the case of the Claimant that the final offer letter which included the technical specifications and the cash flow statement, clearly indicated that the life time of WEGs would be 20 years and based on such representation made by the Respondent, the Claimant entered into the Supply Agreement dated 4.1.2007. The Claimant also placed reliance upon the fact that the Respondent was operating WEGs on behalf of the Claimant pursuant to agreements and had signed various Joint Meter Readings reports, acting as authorised representative of the Claimant, which was also countersigned by the authorised representatives of MSEDCL. 309. It is the case of the Claimant that since the Respondent had committed fraud upon the Claimant and the Arbitral Tribunal has rendered a finding of fraud a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nc. (supra) has already held that a Court can either set aside or upheld that award or modify, if any part of the Award is severable and cannot make an award by allowing any claim which is already rejected by the Arbitral Tribunal. In my view, reliance placed by the learned Senior Counsel for the Claimant in the cases of Tata Hydro-Electric Power Supply Co. Ltd. and another (supra), Oil and Natural Gas Corporation Limited (supra), Krishna Bhagya Jala Nigam Ltd, (supra) and M.P. Power Generation Co. Ltd. and anr. (supra), is totally misplaced. The principles laid down by the Hon'ble Supreme Court in the case of McDermott International Inc. (supra) would clearly apply to the facts of this case. I am respectfully bound by the said Judgment. 313. A perusal of the impugned Award rendered by the Arbitral Tribunal clearly indicates that the Arbitral Tribunal has rendered various findings of fact, after considering oral and documentary evidence, pleadings and the submissions made by both the parties which findings are not perverse. This Court, while deciding a petition under Section 34 of the Arbitration and Conciliation Act, 1996 cannot reappreciate the findings of fact which are n ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
