Ashis Kumar Chakraborty, J. - (1.) In this application under Section 34 of the Arbitration & Conciliation Act, 1996, as amended by the Act 3 of 2016 (hereinafter referred to as "the Act") the petitioner has prayed for setting aside of the award made and published by the sole arbitrator, a former Judge of this Court on April 16, 2018. The respondent herein was the claimant and the present petitioner was the respondent in the arbitral proceeding. By the impugned award the arbitrator directed the petitioner to pay Rs.1,13,51,880/- to the respondent within eight weeks, failing which the said amount shall carry further interest at the rate of 10%, per annum till realisation.
(2.) The brief facts, which are relevant for deciding this application, are that the petitioner is involved in the activity of Roll Foundry and has his factory at Pailan, Diamond Harbour Road, West Bengal (hereinafter referred to as "the said factory"). For the purpose of its manufacturing activity at the said factory the petitioner requires supply of Liquefied Petroleum Gas (hereinafter referred to as "LPG"). The respondent carries on business, inter alia, of import, storage, filling, sales distribution of LPG and other ancillary work. The parties herein entered into a Commercial Bulk Gas Supply Services agreement dated April 30, 2003 and an addendum agreement dated July 1, 2010 (hereinafter collectively referred to as "the principal agreement") whereby the respondent agreed to supply Bulk LPG at the said factory of the petitioner for utilisation in its manufacturing unit, inter alia, on the terms and conditions mentioned therein. Under the principal agreement, the respondent was to instal two 10 MT LPG Gas Bullets which are metallic tanks together with other equipments (hereinafter referred to as "the Gas System") for storage of LPG at the said factory to be supplied by the respondent. As per the principal agreement the petitioner would procure at least 80 MTs of LPG per month, exclusively from the respondent by paying monthly facility charges of Rs.27,000 plus taxes for the Gas System. The parties further agreed that in the event of any failure on the part of the petitioner to procure the guaranteed lifting of 80 MTs of LPG quantity from the respondent, the petitioner shall pay an amount of Rs.1,500 per MT to the respondent. The principal agreement further provided that the petitioner, as the customer would furnish security to the respondent, the supplier by way of bank guarantee of Rs.60,00,000 which could be encashed by the respondent in case of any outstanding dues of the petitioner. Clause 8 of the principal agreement contemplated that in the event of any failure of the petitioner to make any payment falling due to the respondent the latter might, without prejudice to any other rights available to itself, after service of thirty days notice, suspend further delivery of LPG till clearance of payment in full by the former and/or claim interest at the rate of 8% on all outstanding dues. It was also a term of the principal agreement that the composite value of the Gas System is Rs 60,00,000 and the petitioner would have an option to buy the Gas System after completion of ten years or in between the tenure of the agreement at a price based on the rate of depreciation of 5% on tanks and 10% on other machineries per year (calculated on WDV method).
(3.) The respondent alleged that in discharge of its obligation under the principal agreement it installed and commissioned the Gas System at the said factory. The petitioner initially made payment for the LPG procured from the respondent. Subsequently, however, the petitioner defaulted in making payment for the LPG procured by it. It was further alleged that based on business relationship and subsequent meeting held with the petitioner on March 9, 2015 it supplied LPG to the petitioner who continued to fails to make payment for the LPG supplied. The respondent further claimed that contrary to the understanding between the parties, the petitioner violated the principal agreement and purchased LPG from third parties but used the Gas System. By a notice dated October 27, 2014 the respondent called upon the petitioner to pay the outstanding amount of Rs.2,16,32,465/ which, among other outstanding things, included outstanding amount towards LPG supplied to the petitioner amounting to Rs.2,09,64.756/-, outstanding Gas System rentals of Rs.77,288.00/- and interest on account of delayed payment at the rate of 18% amounting to Rs.5,90,421.00/-. By an electronic mail dated May 18, 2015 the petitioner assured the respondent that it shall clear the entire outstanding dues by December, 2015 by issuing a Letter of Credit. The petitioner also assured to clear the entire rental and interest component by May, 2015. By an electronic mail dated June 22, 2015 the respondent informed the petitioner that as on that date there outstanding due was Rs.73,71,578.40/- and out of the said outstanding the petitioner was to pay Rs.12,28,770/- within June 15, 2015. According to the respondent, the petitioner did not live up to its representation and did not pay the entire outstanding dues of the respondent. The petitioner, however, denied its liability to pay any amount to the respondent and further claimed that it is entitled to Rs.80,26,000/- from the respondent on account of loss of production due to irregular supply of LPG. Thereafter, the parties invoked the arbitration agreement between them as contained in the principal agreement and by an order dated August 30, 2016 passed in an application under Section 11(6) of the Act, a learned Single Judge of this Court appointed the arbitrator to adjudicate the disputes between the parties.;