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The custom duty which is applicable for telecom sector is 0%: High Court Of New Delhi

The present petition under Section 34 of the Arbitration and Conciliation Act, 1996, impugning an Arbitral Award dated 13.06.2019 and the same issue was held in the judgement passed by a single bench judge comprising HON’BLE MR JUSTICE VIBHU BAKHRU, in the matter, BHARAT SANCHAR NIGAM LTD V. M/S VINDHYA TELELINKS PVT. LTD. dealt with an issue mentioned above

The context of disputes which had arisen between the parties in respect of the contract for supply and purchase of Polyethylene Insulated Jelly Filled Cables (PIJF Cables).

In terms of the contract between the parties, M/s Vindhya Telelinks Pvt. Ltd. had agreed to supply PIJF Cables to BSNL. Since the element of copper constitutes the main raw material for the manufacture of the PIJF Cables, the parties had agreed that the prices of the PIJF Cables to be supplied, would be suitably adjusted to accommodate the increase or decrease in the price of copper wire rods. BSNL had agreed to issue monthly circulars regarding the price of copper for calculation of the price variation.

BSNL had issued a Notice Inviting Tender (NIT) dated 12.01.2005 inviting O.M.P. (COMM) 503/2019 inquiries for the procurement of “120 LCKM PIJF Cables” The Instructions to Bidders required the bidders to quote composite prices inclusive of all the levies and taxes but excluding entry tax, based on the copper wire prices. Clause 9.8 of the Instructions to Bidders expressly provided that the prices would be quoted considering the price of copper wire as ₹1,83,366/, Whereas BSNL issued monthly circulars indicating the provisional price of copper wire rod and specifying that the same would be subject to finalization. Based on the provisional prices of copper wire rods, VTPL effected supplies and raised its invoices and also they issued a circular dated 21.08.2006 finalizing the copper rod price for each month commencing April 2005 to August 2006.

VTPL requested BSNL to correct the circular to enable it to furnish invoices for the differential amount, which is quantified at ₹4,50,48,097/-. Thereafter, on 20.04.2007, VTPL issued a notice calling upon BSNL to pay the differential amount of ₹4,50,48,097/- together with interest at the rate of 18% per annum, failing which to appoint an arbitrator in terms of the arbitration agreement (Clause 20 of Section III of the bid documents). But BSNL did not accede to the said request for the appointment of an arbitrator. VTPL claims that thereafter the parties exchanged correspondence for settlement of its claims but the same remained unresolved. They also claimed that even according to BSNL, a sum of ₹59,97,504/- was payable based on the final circular dated 21.08.2006. However, the said amount was also withheld by BSNL.

Ms Narula, learned counsel appearing for BSNL contended that the impugned award was vitiated by patent illegality as the Arbitral O.M.P. (COMM) 503/2019) Tribunal had proceeded based on the Advanced Purchase Order dated 10.06.2005, which was not accepted. Thus, the impugned award is based on a non-existent contract. Later she submitted that the Arbitral Tribunal has held that BSNL had violated the terms of the Agreement and thus, VTPL was entitled to higher amounts as claimed by it, and also she submitted that the Arbitral Tribunal had erred in proceeding on the basis that since BSNL had issued price circulars in line with the price circulars issued by HCL in the past.

Lastly, she relied on the arbitral award rendered by another arbitral tribunal in a similar matter – an award dated 07.05.2018 in Sterlite Technologies Ltd. v. Bharat Sanchar Nigam Ltd.

Mr Sharma, learned counsel appearing for VTPL countered the aforesaid submissions advanced by Ms Narula. He submitted that none of the contentions advanced on behalf of BSNL fall within the grounds as set out in Section 34(2) or Section 34(2A) of the A&C Act. He also submitted that none of the contentions as advanced were pleaded. Thus, no interference with the Arbitral Award was warranted. He pointed out that BSNL had not challenged the quantification of the claim and the decision of the Arbitral Tribunal on the construction of the contract by the Arbitral Tribunal requires no interference.

The court perused the facts and argument’s presented, it believed that- “The Arbitral Tribunal had also considered the aforesaid aspect and noted that BSNL’s witness (RW1) had in his cross-examination accepted that the provisional price of copper was inclusive of the O.M.P. (COMM) 503/2019 Page 19 of 19 customs duty. Question no. 20 put to the said witness and his response to the same are unambiguous. Because of the above, the present petition is unmerited and, accordingly, dismissed”.

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Judgment Reviewed by: Mandira BS

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