- (1.) The appellant is aggrieved of the impugned order dated 04.08.2007, whereby the objections under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called 'the 1996 Act') for setting aside the Award dated 27.07.2005, have been dismissed. Mr. Rajiv Atma Ram, learned Senior Counsel assisted by Mr. Rajat Khanna, learned counsel appearing on behalf of the appellant submits that the appellant had a caustic soda plant at Yamuna Nagar, Haryana and Hydrogen gas was one of its by-products of the said plant. Respondent No.1-M/s Arjun Gases Ltd. approached the appellant with a proposal for bottling the said gas and accordingly, an agreement dated 03.01.1996 for supply and bottling of Hydrogen gas was entered into between the parties on various terms and conditions. He submits that the supplier i.e. the appellant agreed to provide, on lease hold basis land, approximately 1320 square metres adjacent to factory premises to respondent No.1-buyer on the mutually agreed terms and conditions. As per the aforementioned agreement, both the parties were required to enter into a lease deed and the buyer i.e. the respondent was required to construct the building and install plant and machinery for its compressing and bottling plant at its own costs.
(2.) It was also mutually agreed between the parties that agreement for bottling of the gas was valid for 10 years and lease agreement was executed in respect of land for a period of 15 years. It was also mutually agreed upon between the parties to pay the cost of constructed building, boundary walls, various foundations and also electrical installations thereon and the gasholder constructed/built over the demised premises, to respondent No.1- buyer and the necessary documents were to be executed by the buyerrespondent at its own costs in favour of the appellant-supplier, but plant and machinery equipments including the generator, compressor, cylinder manifolds, cylinders etc. shall be of respondent No.1-buyer. Clause 14 of the agreement provided, that the buyer shall have full responsibility for maintenance and safe operation of piping and other installation for Hydrogen Gas supply within its premises and Clause 15 provided that the responsibility of installation/operation of the Hydrogen compressing and bottling plant was, as per the agreement, entirely that of the respondent No.1-buyer. The agreement could be terminated after giving three months' notice, in case of any contravention on the part of respondent No.1. Clause 21 contained, the resolution of dispute through arbitration. On 10.01.1996, the lease deed, was executed between the parties containing various terms and conditions and as per condition No.(iii), the lesseerespondent was mandatorily required to comply with and bound by building, health, drainage and other by-laws for the time being in force in the said premises and the lessee shall construct the building and factory at its own costs. The lessee was also required for arrange for appropriate insurance cover for the building constructed, plant and machinery installed on the lease-hold premises. Clause X provided, that the lessee for its use and occupation of the demised premises shall have its own separate "Entry and Exit" and Clause XI dealt with the indemnification of the lessor on behalf of the lessee. The supply continued approximately close to 5 years, however, on 14.11.2000, an explosion took place in the bottling plant, wherein three workers died and others were injured, resultantly the plant became nonfunctional as the supply of the gas to the plant was stopped by the appellant.
(3.) The incident report dated 30.11.2000 is the part and parcel of the record as Annexure A-7. He submits that respondent No.1 did not take any effective steps to repair the plant and make it functional, much less, did not renew the explosive licence or necessary permission from the office of Chief Inspector of Factories was ever sought. These facts are evident from the letters dated 10.01.2001 written by the Additional Chief Inspector of Factories to the respondent No.1-buyer, 21.08.2001 (Annexure-A12) written by Chief Controller of Explosive and reply dated 05.09.2001 of respondent No.1 to the Chief Controller of Explosive. The factum of having not taken any effective steps to repair the plant is also evident from the letter dated 16.06.2001 addressed by respondent No.1 to the Insurance Company and as well as letter dated 30.03.2001 of respondent No.1 to the appellant, wherein an undertaking with regard to the installation of various safety measures and as well as the additional fire-fighting, and only thereafter, would seek permission to operate. All these factors have not been into consideration by the Arbitrator yet the Arbitrator attributed the contributory negligence. He further submits that since, respondent No.1-buyer had not taken any steps, the agreement dated 03.01.1996 was terminated on 31.07.2002. The Arbitrator has erroneously awarded the compensation and also interest @ 18% in the absence of any evidence viz-a-viz the damages.;