MANMOHAN SINGH, J. - (1.) By way of this order, I propose to decide the above mentioned appeal filed by the appellant (who is the respondent in the arbitration proceedings) under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") against the interim order dated 4th August, 2016 passed by the Arbitral Tribunal under Section 17 of the Act. The respondent herein is the claimant in the arbitration proceedings. The appellant has also raised a counter-claim in the arbitration proceedings which is pending adjudication. By the impugned order, the Arbitral Tribunal has directed the release of the Advance Bank Guarantee ('ABG') as well as the Performance Bank Guarantee ('PBG'), as the contract was terminated by the respondent.
(2.) The brief facts of the case as pleaded by the appellant are as under:- (i) The appellant had engaged the services of the respondent for setting up of a Thermal Power Plant at Nasik, Maharashtra. The respondent was to make the supplies and was also to erect and commission the power plant. The power plant project was divided into two phases i.e. Phase-I which was for 1350 MW and Phase-II which was for 5 X 270 MW. (ii) A Letter of Award ('LOA') was issued by the appellant in favour of the respondent on 8th October, 2010, as amended on 26th April, 2011, for Design, Engineering, Manufacturing, Shop Inspection and Testing, Supply, Transportation, Erection, Commissioning and demonstration of Performance Guarantees along with comprehensive Marine-cum-Erection insurance of 5 X 270 MW Thermal Power Plant Project at Nasik, Maharashtra (Phase-II). In terms of Clause 4.1 of the LOA, 5% of the contract price had to be paid by the appellant to the respondent as advance against security of Advance Bank Guarantee of equal amount to be provided by the respondent to the appellant. The Advance Bank Guarantee was to remain valid till recovery of advance or successful completion of commissioning, whichever was earlier. (iii) In addition to the Advance Bank Guarantee, the respondent was also to furnish a Contract Performance Guarantee for 10% of the contract price and which was to remain valid till the expiry of warranty period. (iv) The works were divided under two contracts namely, supply contract and the services contract. In furtherance of the LOA, a supply contract was executed on 26th May, 2011 (as amended on 3rd August, 2011 and on 2nd May, 2012) ('Supply Contract') and the services contract was executed on 26th May, 2011 (as amended on 2nd May, 2012) between the appellant and the respondent. (v) The total value of the Supply Contract was Rs. 17,12,09,14,280/-; USD 52,056,000 and Euro 8,27,24,000. (vi) In terms of Clause 5.1, 6 and 8.1 of the Supply Contract, the appellant paid a sum of Rs. 123 Crores to the respondent towards advance payment. The receipt of this payment is admitted and cannot be disputed by the respondent. (vii) The appellant has also submitted that the appellant in addition to advance amount has further paid a sum of Rs. 29.22 crores against supplies made by the respondent and the said amount is more than the actual sequential supplies, as required in the contract, made by the respondent. (viii) The total value of the Services Contract was Rs. 413 Crores. In terms of Clauses 5.1, 6 and 8.1 of the Services Contract, the appellant paid a sum of Rs. 17 Crores to the respondent towards advance payment. The receipt of this payment is admitted and cannot be disputed by the respondent.
(3.) On receipt of the advance payment from the appellant and to secure the same in terms of the Supply Contract and Services Contract, the respondent furnished the following Bank Guarantees in favour of the appellant: (a) Bank Guarantee bearing No. IBG23533 dated 8th November, 2010 for Rs. 123,02,94,778/- in favour of the appellant issued by Federal Bank Ltd. for securing the advance under the Supply Contract. (b) Bank Guarantee bearing No. IBG25702 dated 28th February, 2011 for Rs. 17 Crores in favour of the appellant issued by Federal Bank Ltd. for securing the advance under the Services Contract. (c) Bank Guarantee bearing No. IBG23534 dated 8th November, 2010 for Rs. 246,05,89,556/- in favour of the appellant issued by Federal Bank Ltd. for securing performance under the Supply Contract being 10% of the value of the Supply Contract. (d) Bank Guarantee bearing No. IBG25703 dated 28th February, 2011 for Rs. 40.8 Crores in favour of the appellant issued by Federal Bank Ltd. for securing performance under the Services Contract being 10% of the value of the Services Contract. ;