Jayaswal Neco Industries Ltd v. Goyal Mg Gases Pvt Ltd

NAVIN CHAWLA, J DECEMBER 21, 2017/vp

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + OMP(COMM) 404/2017 & IA 13518/2017 Reserved on: 20th November, 2017 Date of decision: 21st December, 2017 JAYASWAL NECO INDUSTRIES LTD ..... Petitioner Through: Mr.Sidharth Luthra and Mr.Sachin Datta, Sr. Advs. with Mr.Devashish Bharuka and Mr.Ravi Bharuka, Advs. versus GOYAL MG GASES PVT LTD ..... Respondent Through: Mr.Parag Tripathi, Sr.Adv. with Mr.Simran Mehta, Ms.Mishika Bajpai and Ms.Jyoti Sagar, Advs. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition under Section 34 of the Arbitration and Conciliation Act,1996 (hereinafter referred to as the 'Act') has been filed by the petitioner namely Jayaswal Neco Industries Ltd. challenging the Arbitral Award dated 04.08.2017 along with the correction made thereto on 15.09.2017 by the Sole Arbitrator. 2. The parties had entered into an "Agreement for leasing of 70 TPD Air Separation Plant/Equipment" dated 14.03.2003 (hereinafter referred to as the "Agreement") where under 70 TPD Air Separation plant/equipment was taken by the petitioner on lease for its factory located at Siltara Growth Centre, Siltara, Raipur, Chhattisgarh for a Page 2 period of 10 years from the date of commissioning of the Plant at a maximum lease charges of Rs. 30 lacs per month plus taxes. Article 14 of the Agreement provides for the date of "Commissioning of the Plant" and is reproduced herein below: "ARTICLE – 14 DATE OF COMMISSIONING OF THE PLANT a. On completion of erection of the Plant/Equipment including utilities and auxiliaries, preliminary cold test shall be taken up by Lessor for commissioning test of the Plant/Equipment. Lessor shall give notice in advance to Lessee for witnessing the commissioning test of the plant and equipment. The duration of commissioning test shall be for 24 hrs. on a continuous basis. Joint report will be prepared on the commissioning test of the plant and equipment, which shall be signed, by both the Lessor and the Lessee as acceptance of the Commissioning Test. b. Commissioning of the Plant/Equipment shall be deemed to be complete when the plant/equipment gives output more than 80% of the production parameters. Subsequently, Lessor shall do adjustments in Plant/Equipment to increase the output to meet production parameters as specified in Annexure-I. c. The date of commissioning of the Plant/Equipment shall be the date on which Lessor shall notify to Lessee that the Plant/Equipment is commissioned as defined above." 3. Article 15 of the Agreement provides for "Performance Test Schedule" and is reproduced herein below: "ARTICLE 15 PERFORMANCE TEST OF THE PLANT Page 3 A. PRODUCTION PARAMETERS Product Quantity Produced Delivery Pressure Purity of Product Gaseous Oxygen 2040 Nm3 /Hr 30Kg/Cm2 (g) 99.5% Gaseous Nitrogen 2500 Nm3 /Hr 30Kg/Cm2(g) 99.9% Specific Power Requirement: 0.82KWH/Nm3 calculated for above rated capacity of Oxygen [includes O2 compression upt 30 Kg/Cm2 (g) and excludes the power consumption for compression of Nitrogen]. Specific Power (N2 Compression upto 30 Kg/Cm2 (g)): 0.2 KWH/Nm3 Above production parameters are based on following ambient conditions & utilities parameters: Ambient temperature : 35oC Relative humidity : 55% Power supply a) Voltage : 6.6 kv b) Frequency : 50 Hz For any change in ambient conditions and utility parameters, necessary corrections as per the machinery supplier recommendations shall be taken into consideration for demonstration of performance test. B. PERFORMANCE TEST SCHEDULE Page 4 (a) within 6 months from the date of commissioning of the Plant/Equipment, performance test of the Plant/Equipment shall be taken up by Lessor with prior notice to the Lessee to achieve the production parameters of the Plant/Equipment as stated in A above. (b) Performance test of the Plant/Equipment shall be deemed to be complete when Plant/Equipment achieves the production parameters as per Annexure-I to this Agreement on a continuous basis for a period of 72 hours. (c) If during the performa