Tata Motors Ltd VsDelhi Transport Corporation

Vibhu Bakhru, J

The petitioner (hereafter ‘TML’) has filed the present petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter ‘the

A&C Act’), inter alia, praying as under:

“(a) Stay of the impugned communication dated 05.02.2021 bearing no. CWS-I/DY.CGM(M)/Plng./ 2021/08 addressed by the Respondent to

Petitioner;

(b) Pass an order from restraining the Respondent acting upon and giving effect including adjusting/recovering of the alleged cost of excess CNG

(Rs.127.86 crores approx.) consumed as per Fuel Efficiency Norms in terms of the impugned communication dated 05.02.2021 bearing no. CWS-

I/DY.CGM(M)/Plng./ 2021/08 addressed by the Respondent to Petitioner, from the contractual quarterly payments towards AMC or from any other

payment due; or

(c) Pass ex-parte ad-interim orders in terms of aforementioned prayer (a) & (b) above and confirm the same upon notice pending final adjudication of

the present petition;

TML is a company engaged in the business of manufacturing and selling wide range of buses as well as light, medium and heavy commercial

vehicles. The respondent (hereafter ‘DTC’) is a statutory body and is the principal public transport operator in Delhi.

On 31.01.2008, DTC issued a Request for Proposal (RFP) inviting offers for supply of ‘CNG propelled bus chassis and fully built up CNG buses

for supply of Low Floor CNG propelled City type non AC and AC buses’. The bidders were also responsible for maintaining the said buses for a

length of 7,50,000 kms. TML participated in the said tender and was declared successful. Subsequently, the parties entered into an agreement dated

18.10.2008, whereby TML agreed to provide buses and maintain the same for 7,50,000 kms.

Certain disputes arose between the parties in connection with the contract in question. The said disputes were referred to arbitration. One of the

disputes raised in the arbitration related to the consumption norms of CNG. TML contended that the consumption norms are covered under Clause

24.4.1 of the General Conditions of Contract (GCC) issued along with the Request for Proposal. However, DTC contended that excess consumption

of CNG was required to be calculated and recovered in terms of Clause 46.16 of the Annual Maintenance Contract (AMC).

The said dispute was adjudicated in favour of TML in terms of the arbitral award dated 16.08.2017. DTC has not accepted the said award and has

impugned the same under Section 34 of the A&C Act [OMP(COMM) No.425/2017]. However, the said award has not been stayed.

Notwithstanding that TML has prevailed in the arbitration, DTC is insisting in making deductions on account of fuel efficiency norms from the

amounts payable to TML, as according to it, excess consumption is required to be computed and recovered under Clause 46.16 of the AMC.

Aggrieved by the said deductions, TML has filed the present petition.

This Court has pointedly asked Mr. Vashisht, learned senior counsel appearing for DTC, whether the controversy is covered in favour of TML in

terms of the arbitral award dated 16.08.2017. He fairly conceded in the affirmative. He also stated that there was no dispute that if the said arbitral

award is sustained, the deductions sought to be made pursuant to the letter dated 05.02.2021, would be impermissible. He, however, stated that since

the period covered under the arbitration (which culminated in the arbitral award dated 16.08.2017) was different, DTC was not precluded to deduct

the amount against excess consumption, according to its stand, till the matter is finally decided.

Mr. Vashisht further states that TML has invoked a fresh arbitration by issuing two notices under Section 21 of the A&C Act being notices dated

13.08.2020 and 09.10.2020. These notices are premised on the basis that a fresh dispute has arisen. He states that TML cannot be permitted to

contend that the issues are covered under the earlier arbitral award dated 16.08.2017 because it has sought a fresh reference to arbitration on the

basis that fresh disputes have arisen.

This Court is of the view that the act of TML in issuing a fresh notice under section 21 of the A&C Act, cannot be faulted. This is because DTC

has sought to make a deduction in terms of the fuel efficiency norms even though it is conceded that this matter is covered in favour of TML by the

arbitral award dated 16.08.2017. The fact that DTC has withheld amounts from the invoices raised by TML justifies raising of a dispute. It is material

to note that DTC’s stand is also inconsistent. On one hand, it is conceded that the matter is covered under the arbitral award dated 16.08.2017 and

yet, DTC has persisted to act contrary to the same, without obtaining any orders from the Court, merely on the basis that it has challenged the arbitral

award. Clearly, this cannot be countenanced.

In view of the above, TML is liable to succeed in the present petition. TML cannot be denied the fruits of the arbitration merely because DTC has

challenged the arbitral award. However, considering that the period involved in the earlier arbitration is different, a dispute to that extent may survive.

DTC is, accordingly, restrained from withholding any amount against the alleged excess consumption of CNG subject to TML furnishing the

unconditional Bank Guarantee for said amount in favour of DTC. The amount deposited by TML with the Registry of this Court pursuant to the orders

passed by this Court is directed to be released to TML against an unconditional Bank Guarantee of an equivalent amount in favour of DTC. The Bank

Guarantees shall be not be encashed except in terms of order(s)/ Arbitral Award passed by the Arbitral Tribunal, as and when constituted, or in terms

of the orders passed by this Court in OMP(COMM) No.425/2017.

The petition is disposed of in the aforesaid terms. All pending applications are also disposed of.