Contract Law - The Legal Chamber

Supreme Court Rules: Tender Conditions Must Be Clear, Can’t Reject Bids on Unstated Requirements

16Oct

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Rules: Tender Conditions Must Be Clear, Can’t Reject Bids on Unstated Requirements

The Supreme Court ruled that tender conditions must be explicit and unambiguous. A bidder cannot be disqualified for non-submission of a document not expressly mandated by the tender. The tendering authority must act fairly and cannot impose hidden requirements, especially when a submitted certificate adequately demonstrates compliance with the stated criteria. Facts Of The Case: The case involved a tender issued by Madhya Pradesh Power Generating Co. Ltd. (MPPGCL) for coal beneficiation work. Maha Mineral, the appellant, submitted its bid relying on its past experience as a 45% partner in a Joint Venture (JV) named Hind Maha Mineral LLP. To prove this, it submitted a work execution certificate from the Maharashtra State Mining Corporation (MSMC), which explicitly stated its 45% share an...

No Interest on Delayed Payment Clause: Supreme Court Explains Its Limits

9Oct

By The Legal ChamberNo Comments

Supreme Court

No Interest on Delayed Payment Clause: Supreme Court Explains Its Limits

This Supreme Court judgment clarifies that a contractual clause merely barring interest on delayed or disputed payments does not, by itself, expressly or by necessary implication prohibit an arbitral tribunal from awarding pendente lite interest. The power to award such interest under Section 31(7)(a) of the Arbitration and Conciliation Act, 1996, is only denuded if the agreement contains a clear and comprehensive bar. Facts Of The Case: The dispute arose from an arbitral award dated 21.11.2004, which directed the appellant, Oil and Natural Gas Corporation Ltd. (ONGC), to pay a total sum of USD 6,56,272.34 to the respondent, M/s G & T Beckfield Drilling Services Pvt. Ltd., for outstanding invoices and other claims. The arbitral tribunal rejected ONGC's preliminary objection to the ma...

Supreme Court Settles Decade-Long Hydel Power Tariff Battle, Explains Limits of Private PPA Changes

1Oct

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Settles Decade-Long Hydel Power Tariff Battle, Explains Limits of Private PPA Changes

The Supreme Court affirmed that the electricity tariff and Power Purchase Agreements (PPAs) are not purely private contracts. Under Section 86(1)(b) of the Electricity Act, 2003, they must be reviewed and approved by the State Electricity Regulatory Commission. A generating company and distribution licensee cannot unilaterally set or modify tariffs without the regulatory commission's mandatory approval. Facts Of The Case: The case originated from a dispute over the tariff payable for electricity supplied by M/s. KKK Hydro Power Limited. The company initially established a 3 MW hydro plant under a 2000 Power Purchase Agreement (PPA) with a fixed tariff of ₹2.50/kWh. In 2007, it augmented the project's capacity to 4.90 MW. A new PPA was executed in 2008 for the revised capacity, but it ret...

Supreme Court Ruling : Businesses Take Note ,Email Exchanges Can Create a Binding Arbitration Agreement

29Sep

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Ruling : Businesses Take Note ,Email Exchanges Can Create a Binding Arbitration Agreement

This Supreme Court judgment reaffirms that a valid arbitration agreement can be constituted through conduct and correspondence, without a signed contract. The Supreme Court held that if parties have demonstrably acted upon the terms of an unsigned agreement, they are bound by its arbitration clause, and a referral court need only conduct a prima facie review of the agreement's existence. Facts Of The Case: The dispute arose from a proposed contract for the sale of 6,000 metric tons of zinc metal between Glencore International AG (Appellant) and Shree Ganesh Metals (Respondent No.1). The terms were negotiated via email, and Glencore sent a formal contract (No. 061-16-12115-S) incorporating an arbitration clause, which it signed. The Respondent, however, never signed this document. Despite...

Supreme Court Backs Discom: Upholds Right to Encash Bank Guarantee in Delayed Solar Project

29Sep

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Backs Discom: Upholds Right to Encash Bank Guarantee in Delayed Solar Project

The Supreme Court held that the Power Purchase Agreement's explicit terms govern the parties' rights. The encashment of the performance bank guarantee was valid as the developer failed to seek an extension under the contractual mechanism or issue a mandatory Force Majeure notice. Regulatory commissions cannot rewrite the contractual risk allocation or grant remedies outside the agreed framework. Facts Of The Case: The dispute arose from a Power Purchase Agreement (PPA) executed between Chamundeshwari Electricity Supply Company Ltd. (CESC) and Saisudhir Energy Pvt. Ltd. for a 10 MW solar power project. The PPA stipulated that the developer was to achieve the Commercial Operation Date (COD) within 12 months, preceded by fulfilling certain Conditions Precedent within 240 days. A critical pr...

Supreme Court Quashes FIR in Loan Case, Says Mere Default Doesn’t Make It a Crime

13Sep

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Quashes FIR in Loan Case, Says Mere Default Doesn’t Make It a Crime

The Supreme Court held that a loan transaction creates a debtor-creditor relationship, and a mere breach of its terms does not automatically constitute criminal breach of trust under Section 405 IPC without evidence of dishonest intention. The Court clarified that such disputes, arising from commercial transactions, are primarily civil in nature and a preliminary inquiry is permissible before registering an FIR. Facts Of The Case: The appellant, a director of M/s Benlon India Ltd., availed three loans from the first respondent, Hero Fincorp, for purchasing machinery. While the first two loans were used for the intended purpose, a fire destroyed the plant shortly after the disbursement of the third loan. Consequently, this third loan was converted into an unsecured corporate loan. Benlon ...

Promises Must Be Kept: Supreme Court Protects Industry from Unexpected Tariff Hikes by State Board

9Sep

By The Legal ChamberNo Comments

Supreme Court

Promises Must Be Kept: Supreme Court Protects Industry from Unexpected Tariff Hikes by State Board

The Supreme Court held that the electricity board was estopped from resiling from its contractual obligation to provide a concessional tariff after having sanctioned, agreed, and partially implemented it. The board's unilateral withdrawal of the concession after over two years was deemed arbitrary, illegal, and unsustainable in law. Facts Of The Case: The appellant, an existing industrial unit with a Low Tension (LT) power connection, underwent significant expansion by installing a large induction furnace, which necessitated a High Tension (HT) or bulk power supply. It applied for this new connection in 1998. The respondent electricity board, after inspection, sanctioned the HT connection via a memo that explicitly stipulated the appellant’s eligibility for a 25% concessional tarif...

Supreme Court Rules on Loan Disguised as Property Deal, Protects Homeowner from Forced Sale

6Sep

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Rules on Loan Disguised as Property Deal, Protects Homeowner from Forced Sale

The Supreme Court held that the plaintiff failed to prove the existence of a valid sale agreement, a prerequisite for specific performance under Man Kaur v. Hartar Singh Sangha. The burden of proof was not discharged as the sole evidence was self-serving and key witnesses were not examined. The High Court's reversal of concurrent factual findings was erroneous. Facts Of The Case: The respondents (original plaintiffs) filed a suit for specific performance of an alleged sale agreement dated 12.02.1999, claiming the appellant (defendant) had agreed to sell his house for Rs. 70,000. They asserted having paid Rs. 55,000 as advance and taken possession, subsequently renting the property back to the appellant. The appellant contested the suit, denying any agreement to sell. His defense was that...

Supreme Court Ruling: Courts Must Appoint Arbitrator Even If Serious Fraud is Alleged

5Sep

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Ruling: Courts Must Appoint Arbitrator Even If Serious Fraud is Alleged

The Supreme Court reaffirmed that under Section 11(6A) of the Arbitration Act, a court's role is prima facie confined to examining the existence of an arbitration agreement. All other contentious issues, including allegations of serious fraud and non-arbitrability, are jurisdictional matters that must be decided by the arbitral tribunal under Section 16. Facts Of The Case: The appellant, Bihar State Food and Civil Supplies Corporation, entered into agreements with various rice millers for the custom milling of paddy procured from farmers. The agreements contained an arbitration clause. When the millers allegedly failed to deliver the stipulated quantity of rice, the Corporation initiated recovery proceedings under the Bihar and Orissa Public Demands Recovery Act, 1914. The millers challe...

Supreme Court Rules: Private Schools Can Sue in Civil Court to Recover Unpaid Fees

5Sep

By The Legal ChamberNo Comments

Supreme Court

Supreme Court Rules: Private Schools Can Sue in Civil Court to Recover Unpaid Fees

The Supreme Court held that the civil courts retain jurisdiction to adjudicate fee recovery suits filed by unaided private schools, as there is no express or implied ouster of jurisdiction under the Haryana School Education Act and Rules. The statutory remedy before the Fee and Fund Regulatory Committee is available only to parents/students to challenge excessive fees, not to schools for recovery. Facts Of The Case: The appellant, Apeejay School, an unaided private institution, filed suits for recovery of fees against students and their parents. The dispute arose from a fee hike implemented by the school for the academic year 2009-10, which the respondents refused to pay, continuing instead to remit only the pre-hike amount. The school's suits were initially decreed by the trial court. W...