Decided on July 27,2007



- (1.) The respondent invited tenders for installation of Aerial Ropeway System at Gandhamardan Bauxite Project on turn key basis in Orissa by issuing Notice Inviting Tender (NIT) dated 30.9.1982. Pursuant to the invitation of tender, petitioner submitted its bid to the respondent at Delhi. A letter of intent dated 13.10.1983 (Ex. P-3) was issued by respondent to the petitioner accepting offer of the petitioner for rope way on turn key basis for a value of Rs. 5,27,32,500/-. This letter provided that the date of contract will start when Balco (respondent) pays 10% advance after issuance of letter of intent and the contract was to be completed within a period of 22 months from the date when 10% advance was paid. The petitioner was supposed to submit a bank guarantee for this advance of 10% of the contract value in the Balco's prescribed format within 10 days of issuance of letter. The contract was to be governed by the terms and conditions as per Notice Inviting Tender (NIT).
(2.) The petitioner's case is that the work on the project could not take off and was kept on hold. 10% advance was not paid by the respondent. The reason for hold up, as can be found out from the pleadings and correspondence between the parties being that the final environmental clearance was denied by the Central Government. There was also an agitation by the local tribal people against the project. The correspondence between the parties and pleading also reveal that when the NIT was issued, the State Government had provisional environment clearance with it and it was quite hopeful of getting final environment clearance. However, the project could have commenced only if the final environment clearance was granted by the Central Government. The environment clearance was ultimately denied by the Central Government.
(3.) The respondent's case is that the project was kept on hold by it hoping that the tribal upsurge against the project would subside and the final environment clearance would be granted by the Central Government. The correspondence on this account continued between the parties from October 1983 onwards, when the initial letter of intent was issued. Ultimately, in July 1988 the petitioner wrote a letter dated 12.7.1988 to the respondent that the project has been held up on various accounts inter alia tribal agitation and non grant of environmental clearance due to fault of respondent. The factor contributing to the delay also affected design parameters for which also the petitioner held respondent responsible. The petitioner wrote to the respondent that due to change in the project as first contemplated and awarded in 1983, the original terms and conditions can no longer apply and the differences and disputes have to be resolved in equitable and just manner . petitioner enumerated various issues which needed resolution as under:- i. Payment for goods inspected and supplied at site. ii. Payment and acceptance for goods and supplies ordered on account of Balco project ready and awaiting dispatch. iii. Liability on account of cancellation of orders or compensation to Suppliers for placing them " On Hold". iv. Relief and reimbursement of overheads, establishment and other direct/indirect costs incurred by petitioner consequent upon the "Hold" placed by Balco for the period of involvement. v. revision of contractual price and conditions of contract or in case Balco chooses to abandon the work to assess and pay for loss of profits and damages after deducting the advance payments. vi. Immediate interim relief in terms of paras 1 to 4 to enable to meet pressing commitments / liabilities. Petitioner stated in its letter that in the event of not receiving any positive response within a fortnight from notice date, it shall presume that respondent was not inclined to make a reference to arbitration. In that event, respondent may suggest the names of the arbitrators who would be acceptable to petitioner and if desired by respondent, petitioner could also suggest such suitable name/ names.;

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