Delhi High Court
Voith Hydro Ltda. & Ors. vs Ntpc Limited on 19 March, 2021
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 19.03.2021
+ OMP (ENF.) (COMM.) 64/2018 & IA No. 5231/2018, EA
960/2019, EA 194/2020, EA 196/2020, EA 988/2020 & EA
1236/2020
VOITH HYDRO LTDA & ORS. .... Decree Holders
versus
NTPC LIMITED .... Judgment Debtor
Advocates who appeared in this case:
For the Decree Holders : Mr Ciccu Mukhopadhaya, Senior Advocate
with Mr Omar Ahmad, Mr Ishan Gaur, Mr
Vikram Shah, Mr Amol Gupta and Ms
Simran Khorana, Advocates.
For the Judgment Debtor: Ms Pinky Anand, Senior Advocate with Ms
Sangeeta Bharti, Mr Ashish Kumar and Ms
Saudamini Sharma, Advocates.
CORAM
HON'BLE MR JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J
1. By this order, this Court shall dispose of the application filed
by the Decree Holders - Ex. Appl. (OS) 988/2020 - whereby the
Decree Holders (hereafter collectively referred to as 'Voith') have,
inter alia, sought directions against the Judgment Debtor (hereafter
'NTPC') to pay a sum of ₹21,17,72,890.83/-. According to Voith, the
Signature Not Verified
By:DUSHYANT
RAWAL
said sum remains to be paid by NTPC to discharge the Arbitral Award
dated 23.08.2016 (hereafter 'the Award'), which is sought to be
enforced under Section 36 of the Arbitration and Conciliation Act,
1996 (hereafter the 'A&C Act') . In addition, Voith also prays that
directions be issued to NTPC to forthwith pay it ₹2,88,31,380/-, which
is the cost incurred by Voith to extend the Bank Guarantees furnished
to NTPC.
2. The Award was passed in the context of disputes that had arisen
between the parties in connection with an agreement for execution of
a Hydro Electric Project to be constructed on the river Bhagirathi
known as Loharinag Pala Hydro Electric Power Project (4x150MW).
3. In terms of the Award, Voith was awarded a total sum of USD
10,688,455.95; EUR 3,341,171.32; and ₹153,495,177.90. The
compensation awarded to Voith under various heads, as summarized
by the Arbitral Tribunal, is set out below:-
USD EUR INR
A. Engineering 325,871.38 926,789.53 95,356,757.96
B. Material 12,547,850.37 2,992,800.66 186,932,479.79
C. Model Test - 639,203.14 -
D. On-site - - 19,249,500.00
expenses
E. Off-site 871,962.20 915,069.97 259,235,689.53
expenses
F. Bank - 229,472,02 377,004.62
Guarantees
Less Advance (3,057,228.00) -(2,362,164.00) -(407,656,254.00)
Received
Total 10,688,455.95 3,341,171.32 153,495,177.90
Signature Not Verified
By:DUSHYANT
RAWAL
4. The Arbitral Tribunal awarded pre-award interest at the rate of
2.5% per annum, compounded annually, on the amount of USD
10,688,455.95 and EUR 3,341,171.32 from 08.05.2013 till the date of
the Award. The Arbitral Tribunal also awarded pre-award interest at
the rate 8.5% per annum, compounded annually, on the amount of INR
153,495,177,90 from 08.05.2013 till the date of the Award. The
Arbitral Tribunal also awarded post-award interest from the date of
the Award till the date of payment at the same rates. NTPC was further
directed to return all Advance Bank Guarantees furnished by Voith.
5. NTPC challenged the aforesaid Award under Section 34 of the
A&C Act, in OMP (COMM) 16/2017, which was dismissed by this
Court on 02.07.2019.
6. In compliance with the order dated 06.02.2017 passed by this
Court in OMP (COMM) 16/2017, Voith had extended the Bank
Guarantees furnished by it to the Judgment Debtor against the advance
received by them during the term of the contract. Concededly, the said
advance was adjusted in determining the amounts awarded. The
details of the said Bank Guarantees (hereafter the 'Advance BGs') are
set out below:
Bank Bank/Date of Bank Expiry date
Guarantee No. issuance Guarantee
Amount
GO191148450 ANZ Bank USD 1,528,614 16 February
EUR 900,961 2020
Signature Not Verified
By:DUSHYANT
RAWAL
January2019
GO191128450 ANZ Bank INR 16 February
29 203,828,127 2020
January2019 EUR 280,121
GO191158450 ANZ Bank USD 1,528,614 16 February
24 EUR 900,961 2020
January2019
GO191138450 ANZ Bank INR 16 February
24 203,828,127 2020
January2019 EUR 280,121
7. The Advance BGs were valid till 16.02.2020. In the
proceedings pertaining to NTPC's challenge to the Award -
OMP(COMM) 16/2017 - a statement was made on behalf of NTPC
stating that it was willing to release 75% of the awarded amount
against an Unconditional Bank Guarantee in view of the Circular
issued by Niti Aayog (hereafter the 'Niti Aayog Circular'). This Court
noted the said statement and directed that NTPC would be bound to
comply with the same. In compliance with the aforesaid order, NTPC
paid a sum of ₹76,11,36,565/- to Voith. This was against the Bank
Guarantee (Reference No. IGT1803108 dated 05.10.2019) furnished
by BNP Paribas, whereby it guaranteed a sum of ₹9,86,74,263.87/-;
EUR 24,70,794.28/-; USD 85,67,414.33; and GBP 76,798.13 (The
said Bank Guarantee is referred to as the 'Niti Aayog BG').
8. As stated above, NTPC's petition to set aside the Award was
dismissed. Pursuant to the dismissal of the petition under Section 34
of the A&C Act (in O.M.P. (COMM) 16/3017), a Coordinate Bench
Signature Not Verified
By:DUSHYANT
RAWAL
of this Court, by orders dated 10.12.2019 and 17.10.2019 passed in
EX. APPL. (OS) 960/2019, directed NTPC to (i) deposit the set of the
Bank Guarantees which were issued during the performance of the
contract as well as the Niti Aayog BG; and (ii) deposit the balance
25% of the awarded amount alongwith upto date interest with the
Registrar General of this Court. The Judgement Debtor challenged the
aforesaid order in EFA (OS) (COMM) 21/2019. But, the Division
Bench of this Court dismissed the said appeal by an order dated
17.12.2019.
9. Thereafter, in part compliance with the orders of this Court,
NTPC deposited (i) both set of Bank Guarantees on 06.01.2020 and
05.02.2020; and (ii) a Demand Draft for a sum of ₹54,42,72,662 on
07.02.2020.
10. NTPC preferred an appeal - being FAO (OS)(COMM) No.
329/2019 - against the decision of this Court dismissing NTPC's
application for setting aside the Award - O.M.P. (COMM) 16/3017 -
under Section 34 of the A&C Act. The said appeal was dismissed by
the Division Bench of this Court by an order dated 02.03.2020. NTPC
challenged the said order before the Hon'ble Supreme Court by filing
a Special Leave Petition - SLP(C) No. 7312/2020. The said SLP was
dismissed by the Supreme Court by an order dated 22.09.2020.
11. Whilst NTPC was availing of its remedies against the Arbitral
Award, it insisted that the Bank Guarantees (Advance BGs as well as
the Niti Aayog BG) be extended.
Signature Not Verified
By:DUSHYANT
RAWAL
12. It is Voith's case that the amount paid by NTPC falls short of
the amount payable by it for discharge of the Arbitral Award.
13. Voith has filed a chart indicating the calculation of the amount
payable today (which is annexed as document No. 13 to the
application). According to the said chart, a sum of ₹21,17,72,890.83/-
is due and payable by NTPC.
14. Mr. Ciccu Mukhopadhaya, learned Senior Counsel appearing
on behalf of Voith submitted that NTPC had paid an amount
₹76,11,36,565 in terms of the Niti Ayog Circular, instead of
₹88,20,52,956.27, which was 75% of the awarded amount calculated
as on the date of payment. He submitted that the shortfall of
₹12,09,16,391.27 was primarily due two reasons. First, the Judgement
Debtor incorrectly relied upon the exchange rate as on 16.09.2017 and
not the exchange rate as on 06.11.2018, the date on which the 75%
payment was made to Voith. Thus, the difference in the exchange rate
while making the payment under the Niti Aayog Circular is
₹9,50,61,043. And second, he submitted that NTPC erroneously
deducted tax deducted at source (TDS) of ₹3,92,89,836. Out of which,
₹2,58,55,348 was deducted while making remittance made under the
Niti Aayog Circular and ₹1,34,34,488 was deducted on 07.02.2020
while making a deposit of the 25% balance of the awarded amount.
15. He relied upon the decision of the Supreme Court in All India
Reporter Ltd. vs. Ramchandra D. Datar, AIR 1961 SC 943, and
decisions of the High Court of Bombay in Islamic Investment Co. vs.
Signature Not Verified
By:DUSHYANT
RAWAL
Union of India; 2002 (3) Mah LJ 555; Sino Ocean Limited vs. Salvi
Chemicals Industries Ltd., (2017) SCC OnLine Bom 9401 and DSL
Enterprises Pvt. Ltd vs. Maharashtra State Electricity Distribution
Co. Ltd, Execution Application No. 422 of 2018 decided on 13
March 2018, in support of his contention that a deduction on account
of TDS could not be made on payments in discharge of judgement
debt.
16. He also submitted that interest had accrued on the shortfall
amount of ₹12,09,16,391.37 and thus, the applicable interest on this
amount which was due on 15.09.2017 till 17.10.2019, amounts to
₹2,24,57,027.11.
17. He submitted that against the balance amount, which was due
to be paid by NTPC in accordance with the order of this Court dated
17.10.2019, it had deposited only ₹56,42,71,662 on 06.01.2020
18. He submitted that the amount due to Voith on 17.10.2019 was
₹74,86,34,859.42. A detailed calculation of the balance amount is set
out as below:
Remaining 25% amount as on 15 INR 16,38,25,209.56; EUR
September 2017 15,71,300.52; USD
37,37,271.86; GBP
Signature Not Verified
By:DUSHYANT
RAWAL
Interest on this remaining 25% INR 3,04,26,207.19; EUR
amount 83,052.31; USD 1,97,536.42;
GBP 1,287.86
Shortfall in the payment under ₹ 12,09,16,391.27
the Niti Aayog Office
Memorandum
Interest on the Shortfall under the ₹ 2,24,57,027.11
Niti Aayog Office Memorandum
TOTAL AMOUNT IN INR ₹ 74,86,34,859.42
AFTER TAKING INTO
CONSIDERATION THE
EXCHANGE RATE AS ON
17.10.2019
19. In addition to the above, Mr Mukhopadhaya further submitted
that NTPC was also liable to pay Bank Guarantee Charges incurred
by Voith for extending the Bank Guarantees. He submitted that in
terms of the Award, the said Advance BGs were to be released.
However, Voith was compelled to keep the Bank Guarantees alive
and, therefore, Voith ought to be reimbursed for the cost incurred by
it in doing so.
Signature Not Verified
By:DUSHYANT
RAWAL
20. Ms Pinky Anand, learned senior counsel appearing for NTPC
countered the aforesaid submission. She submitted that NTPC had
correctly calculated 75% of the awarded amount and had paid the
same. She submitted that in terms of the Niti Aayog Circular, Voith
was required to open an Escrow Account and since the awarded
amount was in multiple currencies, Voith was required to obtain
specific approvals from the Reserve Bank of India (RBI). Voith took
considerable time to comply with the said requirement and NTPC
cannot be held liable for the fluctuation in exchange rate from
15.09.2017 till the date NTPC deposited the amount in the escrow
account.
21. She submitted that the chain of correspondence between Voith
and RBI also clearly indicated that the entire amount would be
received in the Escrow account in Indian currency. She submitted that
since the payments were made in Indian currency, there was a
requirement to fix the exchange rate and the parties had agreed that
the cut-off date for calculation would be 15.09.2017. She referred to
the Minutes of the Meeting dated 11.09.2017, in support of her
contention. She further contended that the correspondence exchanged
between the parties also clearly established that Voith had agreed to
this exchange rate. She referred to an email dated 14.11.2018,
indicating the breakup of 75% of the awarded amount and pointed out
that the said email clearly indicated the exchange rate as well as the
deductions made by NTPC on account of tax deducted at source
(TDS). She stated that, thereafter, by a letter dated 16.11.2018, the
Signature Not Verified
By:DUSHYANT
RAWAL
petitioner acknowledged the receipt of the remittances and requested
NTPC to issue a consent letter to enable withdrawal of amounts from
the escrow account. A draft of the said consent letter, which was
forwarded by Voith to NTPC, also indicated the exchange rate applied
for computing the amount deposited by NTPC.
22. She further submitted that insofar as the TDS is concerned, the
same was deducted as Voith had agreed to receive the payments in
Indian currency. She stated that directions to pay the TDS amount
would unfairly prejudice NTPC, as it would amount to requiring
NTPC to pay the said amount twice. She submitted that it is not
disputed that the amounts were to be paid to foreign companies, but
Voith had consciously opened the Escrow Account and accepted that
the money be paid in Indian currency.
23. Lastly, she submitted that NTPC cannot be called upon to pay
the cost of the Bank Guarantees. She submitted that the Advance Bank
Guarantees were given by Voith to NTPC in terms of the contractual
provisions and against advances made by NTPC. The said Bank
Guarantees had been kept alive in view of NTPC's challenge to the
Award. The Award did not contemplate payment of any charges for
the bank guarantees till the same were returned. She submitted that
the charges for the Niti Aayog BG would necessarily have to be borne
by Voith as it had volunteered to furnish the said guarantees to avail
the benefit of the Niti Aayog Circular. She submitted that in terms of
the Niti Aayog Circular, Voith was required to furnish the Bank
Guarantees against which 75% of the awarded amount could be
Signature Not Verified
By:DUSHYANT
RAWAL
released. She stated that Voith complied with the said condition by
also accounting for the Advance BGs and furnished the Niti Aayog
BG for the remaining amount. She contended that in the
circumstances, the Advance BGs were, essentially, kept alive to
secure NTPC against the amount disbursed in terms of the Niti Aayog
Circular. Thus, Voith was not entitled for reimbursement of any cost
for the said Bank Guarantee.
Reasons and Conclusion
24. As is apparent from the above, the following three principal
questions fall for consideration before this Court:
(i) Whether there is any binding agreement between the parties
whereby they have agreed that the amounts awarded in
foreign currency would be computed at the exchange rate as
prevalent on 15.09.2017? If not, the exchange rate to be
applied for discharge of the amounts awarded in foreign
currency.
(ii) Whether it was open for NTPC to deduct TDS on the
awarded amounts and whether the deduction of the said
amount and deposit of the same with the Income Tax
Authorities constitutes a discharge of the amounts awarded
to the aforesaid extent?
(iii) Whether Voith is entitled to charges for extending the Bank
Guarantees, as claimed?
Signature Not Verified
By:DUSHYANT
RAWAL
Re: Exchange Rate
25. The question as to which is the exchange rate applicable for
determining the amounts payable in Indian currency in execution of
an award made in foreign currencies, is no longer res integra.
Concededly, the said issue is covered by the decision of the Supreme
Court in Forasol v. Oil and Natural Gas Commission: 1984 (Supp)
SCC 263, as followed by the Supreme Court in Renusagar Power Co.
Ltd. v. General Electric Co. Ltd.: 1994 Supp (1) SCC 644.
26. In Forasol v. Oil and Natural Gas Commission (supra), the
Supreme Court had held that the exchange rate prevalent on the date
on which the decree is passed would be the applicable exchange rate.
It further clarified that if the decree is challenged in an appeal and such
appeal is decided wholly or in part, the exchange rate prevailing on
the date on which the decree or order is passed, would be applicable.
Insofar as the arbitral awards are concerned, the date on which the
challenge to the arbitral award is finally rejected, would be the date
for determining the foreign exchange applicable to an award made in
foreign currency. In Furest Day Lawson Limited v. Jindal Exports
Limited: (2012) 194 DLT 439 and Progetto Grano S.P.A. v. Shri Lal
Mahal Limited: Ex.P. No. 52/2012, decided on 29.05.2014, this
Court had considered the date on which the Special Leave Petition
against the order rejecting objections to recognition and enforcement
of a foreign award was dismissed as the relevant date for determining
the exchange rate to be applied for enforcing the awards made in
foreign currency.
Signature Not Verified
By:DUSHYANT
RAWAL
27. Ms Anand did not dispute the above. She, however, rested
NTPC's case on the ground that the parties had arrived at a settlement
and Voith was bound by the same. According to NTPC, the parties
had agreed that 15.09.2017 would be the cut-off date for determining
the exchange rate. Ms Anand relied on the Minutes of the Meeting
dated 11.09.2017 and Voith's letter dated 16.11.2018, in support of
her contention that the parties had agreed to the exchange rate as
prevailing on 15.09.2017. The said contention is unmerited. A plain
reading of the Minutes of the Meeting dated 11.09.2017 indicates that
it does not record any agreement regarding the applicable exchange
rate. The said minutes relate to the amounts that were required to be
released in terms of the Office Memorandum of Niti Aayog dated
05.09.2016 (Niti Aayog's Circular).
28. More importantly, the Niti Aayog Circular was issued by Niti
Aayog to provide measures for revival of the construction sector. The
Niti Aayog Circular contemplates release of 75% of the arbitral award
against the Bank Guarantees. This was only an ad hoc measure to
elevate stress in the construction sector. The amounts released in
terms of the Niti Aayog Circular cannot be considered as amounts
disbursed in discharge of an arbitral award. The Standing Operating
Procedure (SOP) issued on 24.11.2016 for release of the payments in
terms of Niti Aayog's Circular also makes it amply clear that the
payments released under the said Circular would be without prejudice
to the rights to the Departments/PSUs. Furthermore, the same would
be required to be secured by bank guarantees and in the event the
Signature Not Verified
By:DUSHYANT
RAWAL
departments/ PSUs prevail in their challenge to the arbitral award, the
amount disbursed would be liable to be recovered with interest.
29. Thus, in the present case, the exchange rate as applicable on the
date when the NTPC's Special Leave Petition was dismissed by the
Supreme Court - that is, 22.09.2020 - will be the relevant date for
ascertaining the exchange rate applicable for determining the INR
equivalent to the amounts awarded in foreign currency. However,
according to Voith, as part payment had been received on 06.11.2018,
the exchange rate applicable on that date may be considered for
determining the awarded amounts paid by NTPC. Since the value of
foreign currencies as on 22.09.2020 was higher than on 06.11.2018,
this Court considers it apposite to bind Voith to its concession in this
regard.
30. In view of the above, the exchange rate as applicable on
06.09.2018 would be considered relevant for the amounts released on
06.11.2018 being the part payment released by NTPC in terms of the
Niti Aayog Circular and the exchange rate as applicable on 22.09.2020
would be considered for discharging the remaining amount awarded
in foreign currency.
Re: TDS
31. The next question to be addressed is whether NTPC is entitled
to credit for the TDS deducted from the payments made to Voith.
Signature Not Verified
By:DUSHYANT
RAWAL
32. Mr Mukhopadhaya had referred to the decision of the Supreme
Court in All India Reporter Ltd. v. Ramchandra D. Datar (supra),
wherein the Supreme Court had held that once a claim - in that case,
a claim for compensation to an employee for wrongful termination of
an employment - is decreed, "the claim assumes the character of a
judgment-debt by a Civil Court and must be executed subject to
deductions and adjustments permissible under the Code of Civil
Procedure". The Court further observed as under:
"The rule that the decree must be executed according
to its tenor may be modified by a statutory provision.
But there is nothing in the Income Tax Act which
supports the plea that in respect of the amount
payable under a judgment-debt of the nature sought
to be enforced, the debtor is entitled to deduct
income tax which may become due and payable by
the judgment-creditor on the plea that the cause of
action on which the decree was passed was the
contract of employment and a part of the claim
decreed represented amount due to the employee as
salary or damages in lieu of salary".
33. In Islamic Investment Company v. Union of India and Anr.:
(supra), the Bombay High Court following the decision in All India
Reporter Ltd. v. Ramchandra D. Datar (supra) rejected the
contention that the Judgment Debtor (in that case, the Food
Corporation of India) must be allowed to deduct TDS on the interest
payable to a non-resident. The Court observed that:
"when such amounts becomes part of a judgment-
debt, they lose their original character and assume
the character of a judgment debt. Once such an
Signature Not Verified
By:DUSHYANT
RAWAL
amount assumes the character of judgment debt, the
decree passed by the civil court must be executed
subject only to the deductions and adjustments
permissible under the Code of Civil Procedure".
34. The Court further observed that there was no provision under
the Income Tax Act or under the Code of Civil Procedure, 1908 where
an amount of interest payable under a decree would be subject to TDS.
35. In Glencore International AG v. Dalmia Cement (Bharat)
Limited: Ex. P. 75/2015 dated 31.07.2019, this Court, inter alia,
referred to the following decisions:
(i) All India Reporter v. Ramachandra D. Datar, (1961) 2 SCR
(ii) V.K. Dewan v. DDA, Execution Petition No. 194/2005, Delhi
High Court.
(iii) Sino Ocean Limited v. Salvi Chemical Industries Limite,
Chamber Summons No. 76/2013 in Execution Application
(Lodg.) No. 263/2012.
(iv) American Home Products Corporation v. MAC Laboratories
Pvt. Ltd. and Anr., (1986) 1 SCC 465.
(v) Islamic Investment Company v. Union of India (UOI) and Anr.,
2002 (4) BOMCR 685.
(vi) S.S. Miranda Ltd. v. Shyam Bahadur Singh, (1985) 154 ITR
Signature Not Verified
By:DUSHYANT
RAWAL
36. After referring to the aforesaid decision, this Court observed as
under:
"I may, however, note that these judgments do enunciate
the principle, which is, that once a claim merges into a
decree of the Court it transcends into a judgment-debt
and, therefore, only those adjustments and deductions
can be made which are permissible under the Code of
Civil Procedure, 1908. The judgments encapsulate the
theme that a decree should be executed according to its
tenor unless modified by a statute such as the 1962 Act."
37. Ms Anand also did not dispute that TDS was not liable to be
deducted on judgment debts. However, she contended that the
payments had been made in Indian currency and therefore, were
subjected to TDS and that the same had been accepted by Voith
without any protest.
38. Mr Mukhopadhaya submitted that Decree Holder nos. 2 and 3
state that they are not assessees under the Income Tax Act, 1961 and
are not required to file their Income Tax return in India. He also
contended that Decree Holder nos. 2 and 3 are not liable to pay any
tax in India. This Court is not required to examine whether Decree
Holder nos. 2 and 3 are liable to pay tax in India. However, it is clear
that tax was not required to be deducted at source since the payments
made by NTPC were in discharge of the Award or as ad hoc payments
under a mechanism evolved under the Niti Aayog Circular.
39. The contention that Voith had agreed to such deduction is also
unmerited. Decree Holder no.1 had accepted the said payments not
only on its behalf but also on behalf of other Decree Holders and
Signature Not Verified
By:DUSHYANT
RAWAL
therefore, this Court finds it difficult to accept that the Decree Holder
no.1 had accepted and agreed to NTPC deducting tax at source.
However, there is merit in the contention that Voith knew, as way back
in 2018, that NTPC had deducted TDS and it does not appear that
Voith had raised any objection to the same at the material time.
40. This Court is of the view that failure of Voith to object at the
material time would not amount to accepting deduction and deposit of
TDS as payment towards the awarded amount.
41. It is relevant to note that NTPC had deducted TDS in two
tranches. It had deducted ₹2,58,55,348/- (₹1,32,10,961/- on the
principal and ₹1,26,44,387/- on the interest) and had deposited the
same on 07.12.2018. This amount was deducted at the time of
remission of money in terms of the Niti Aayog Circular. The second
tranche of ₹1,34,488/- was deducted by NTPC while depositing the
balance amount. Out of the aforesaid amount ₹1,10,84,032/- was
deducted on account of the principal amount and ₹23,50,456/- on
account of interest. The said TDS was deposited on 07.01.2020.
During the course of arguments, Mr Mukhopadhaya submitted that a
sum of ₹1,06,42,438/- could be absorbed by Decree Holder No.1
against the TDS of ₹2,58,55,138/- deducted and deposited by NTPC.
He further stated that a further sum of ₹55,29,831/- could be absorbed
by Decree Holder No.1 out of the sum of ₹1,34,488/- deducted and
deposited by NTPC on 07.01.2020.
Signature Not Verified
By:DUSHYANT
RAWAL
42. In view of the above, this Court considers it apposite to direct
that NTPC be credited to the extent of TDS amounting to
₹1,61,72,269/- (₹1,06,42,438/- plus ₹55,29,831/-) against TDS
deducted and deposited by NTPC. The said amount would be
considered as discharged by NTPC on the dates when these amounts
were deposited to the credit of Decree Holder No.1.
43. Insofar as the remaining amount of TDS is concerned, NTPC is
entitled to apply to the Income Tax Authorities for refund of the same.
It is further directed that the Income Tax Authorities shall process
NTPC's request for refunding of the TDS incorrectly deposited on the
strength of this order.
Re: Bank Guarantee Charges
44. The third question to be addressed is whether Voith is entitled
to cost allegedly incurred by it for extending the bank guarantees
(Arbitration BGs and Niti Aayog BGs).
45. Insofar as the Advance BGs are concerned, the same had been
extended in terms of the orders passed by this Court pending
consideration of NTPC's challenge to the Arbitral Award.
Indisputably, NTPC's challenge to the Arbitral Award cannot be
stated to be insubstantial. In the circumstances, this Court does not
consider it apposite to entertain Voith's prayer for such charges. It is
also relevant to mention that Voith had voluntarily furnished Bank
Guarantees for release of the part of the awarded amount in terms of
the Niti Aayog Circular. The Niti Aayog Circular does not provide
Signature Not Verified
By:DUSHYANT
RAWAL
for payment of any charges for furnishing Bank Guarantees. Voith had
elected to receive payments in terms of the Niti Aayog Circular and
therefore, this Court does not consider it apposite to accede to its
prayer for Bank Guarantee Charges which were incurred by Voith for
furnishing the Bank Guarantees against payments in terms of the Niti
Aayog Circular. It was also pointed out that NTPC had released the
payment under the Niti Aayog Circular while accepting the Advance
BGs to cover part of the amount so released. It was submitted that in
this view, the Advance BGs should also be considered as Bank
Guarantees furnished in terms of the Niti Aayog Circular. This
contention is merited.
46. In any view of the matter, as stated above, given the facts and
circumstances of the case, this Court does not consider it apposite to
accede to the prayers for reimbursement of bank charges. The prayer
made by Voith in this regard, is rejected.
47. In addition to the questions as discussed above, NTPC had also
raised an objection regarding the calculation of the shortfall as claimed
by Voith. It was submitted that Voith has also calculated interest on
the interest component by adjusting the advances against the amount
due against the interest awarded. According to NTPC, Voith had
added the advances which were directed to be adjusted under the
Arbitral Award to the amount awarded. It had calculated the interest
on the resultant amount by considering the same as the awarded
amount. It had thereafter, adjusted the advance from the said amounts.
Signature Not Verified
By:DUSHYANT
RAWAL
48. In this regard, this Court considers it necessary to clarify that
the calculations for discharge of the amount would be in accordance
with the tabular statement in the Arbitral Award setting out the
amounts awarded in different currencies. It is seen that the Arbitral
Tribunal had deducted the advances and had computed the total
amount payable after such deduction. Thus, the total amount as
awarded after deduction of the advances would necessarily have to be
considered as the awarded amount and the amounts paid by NTPC
would be adjusted against the awarded amounts and the interest
thereon. The amounts paid by NTPC are required to be first
appropriated towards interest and the remaining against principal.
49. NTPC shall recompute the shortfall payable by NTPC and shall
pay the shortfall as computed.
50. The parties shall file their respective calculations made in view
of the above within a period of one week from today.
51. List on 26.03.2021 for reconciliation of the amount and for
consideration of any further issues that arises in connection with the
aforesaid calculations.
VIBHU BAKHRU, J
MARCH 19, 2021
RK
Signature Not Verified
By:DUSHYANT
RAWAL
