MAHARASHTRA STATE ELECTRICITY DISTRIBUTION COMPANY LTD. versus M/S. DATAR SWITCHGEAR LIMITED & ORS.

Citation: [2018] 1 S.C.R. 733 · Decided: 18-01-2018 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Dismissed

Cited by 3 judgment(s) · cites 5 · see the full citation network in Lexace

Judgment (excerpt)

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MAHARASHTRA STATE ELECTRICITY DISTRIBUTION
COMPANY LTD.
v.
M/S. DATAR SWITCHGEAR LIMITED & ORS.
(Civil Appeal No. 10466 of 2017)
JANUARY 18, 2018
[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]
Arbitration and Conciliation Act, 1996 – s.34 – Contract
between parties – Termination of, on ground of fundamental
breach – Propriety of – Respondent no.2 awarded tender/contract
by appellant, in 1993-1994, for installation of Low Tension Load
Management Systems (LTLMS) at various locations – Another tender
by appellant in 1996 which was for installation of 23000 numbers
of LTLMS – Respondent no.2 participated in this tender also,
wherein work order for installation of 11760 numbers of LTLMS
was awarded to Respondent no.2 and balance quantities were
awarded to other tenderers – In view of large scale complaints and
issue of defective equipments supplied against 1993-1994 tender,
Respondent no.2 offered to not only supply 11760 LTLMS against
the 1996 tender but also to replace all the defective Low Tension
Switched Capacitators (LTSCs) supplied against the contract of
1993-1994, with new technology LTLMS at the old lease rentals–
Appellant issued Letter of Intent– However, issues arose between
the parties during the execution of said contract– Contract
terminated  by respondent no.2 – Arbitration Tribunal passed arbitral
award in favour of respondent no.2 – Challenged by appellant u/
s.34, dismissed by High Court – On appeal, held: Findings of facts
were arrived at by Arbitral Tribunal after appreciating the evidence
and documents on record – From these findings it stands established
that there was a fundamental breach on the part of appellant in
failing to furnish the list of locations where the contract objects
had to be installed, with no fault of Respondent no.2 – Such
fundamental breach pervaded the entire contract and once
committed, the whole contract stood abrogated – Respondent No.2
was always ready and willing to perform its contractual obligations,
but was prevented by appellant from such performance –
Termination of contract by respondent No.2 was valid and justified
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[2018] 1 S.C.R. 733
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SUPREME COURT REPORTS
[2018] 1 S.C.R.
– No question of law is involved in the present appeal and the only
attempt of appellant was to re-argue the matter afresh, which is
impermissible – Costs imposed –Constitution of India – Art. 136 –
Contract Act, 1872 – ss. 55, 63 – UNIDROIT Convention on
International Lease – Art.13(2) – Waiver.
Practice and Procedure – Findings of facts by Arbitral
Tribunal – Held: Arbitral Tribunal is the master of evidence –
Findings of fact arrived at by the arbitrators on the basis of evidence
on record are not to be scrutinised as if the Court was sitting in
appeal.
Contract – Claim for damages – Entitlement to – Held: Once
it is established that the party was justified in terminating the
contract on account of fundamental breach thereof, then the said
innocent party is entitled to claim damages for the entire contract,
i.e. for the part which is performed and also for the part of the
contract which it was prevented from performing.
Contract – Award of damages – Principle for – Held: Injured
party should be placed in as good a position as money could do as
if the contract had been performed – In the instant case, applying
the said principle, the Arbitral Tribunal rightly awarded almost the
same amount as was invested by respondent No.2 for the project –
Thus, there is no question of interdicting with the same.
Dismissing the appeal, the Court
HELD:
TERMINATION OF CONTRACT WAS VALID AND
JUSTIFIED :
1. Categorical findings were arrived at by the Arbitral
Tribunal to the effect that insofar as respondent No.2 was
concerned, it was always ready and willing to perform its
contractual obligations, but was prevented by the appellant from
such performance.  Another specific finding which was returned
by the Arbitral Tribunal was that the appellant had not given the
list of locations and, therefore, its submission that respondent
No.2 had adequate lists of locations available but still failed to
install the contract objects was not acceptable.  In fact, on this
count, the Arbitral Tribunal has commented upon the working of
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the appellant itself and expressed its dismay about lack of control
by the Head Office of the appellant over the field offices which
led to the failure of the contract.  These are findings of facts which
were arrived at by the Arbitral Tribuna

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