M/S.China Datang Technologies vs M/S.Nlc India Limited

Headnote AI-drafted · Reviewed and approved

These two petitions under Section 34 of the Arbitration and Conciliation Act, 1996 arose out of a common arbitral award dated 09.11.2022 concerning a contract for installation of a Flue Gas Desulphurisation (FGD) system at the Neyveli New Thermal Power Project. M/s.China Datang Technologies and Engineering Company Limited (Claimant/Contractor) was awarded the contract by M/s.NLC India Limited for Rs.556,50,00,000/- vide Letter of Award dated 31.08.2019, with stipulated completion periods of 30 and 36 months for the two units. Following alleged delays, NLC terminated the contract on 07.09.2020 and encashed the contract performance guarantee of Rs.55.65 Crores. The Claimant sought to set aside the award and restoration of the encashed guarantee amount, while NLC challenged the award to the extent it granted claims IV and V in favour of the Claimant and rejected NLC's counter claims.

The disputes centered on whether the delays in execution were attributable to the Contractor or whether Force Majeure events, including the spread of COVID-19 and consequent lockdowns in China and India, excused the Contractor's non-performance. The Claimant also alleged delays attributable to NLC itself. The Arbitral Tribunal had passed an award on 09.11.2022 addressing these competing claims and counter claims arising from the termination of the contract.

Both petitions were heard together and disposed of by a common order, the court examining the scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996 with an arbitral award, including issues of patent illegality, public policy, and the extent to which the Tribunal's findings on Force Majeure, termination, and encashment of the performance guarantee could be revisited.

Catchwords: arbitration · section 34 · arbitral award · set aside · flue gas desulphurisation · contract termination · performance guarantee · force majeure · COVID-19 · delay · counter claim · lignite thermal power · NLC India · China Datang · Neyveli