2025:MHC:2743Arb.O.P.(Com.Div.) Nos.139

& 253 of 2021

1/23

In the High Court of Judicature at Madras

Reserved on

25.11.2025

Delivered on:

02.12.2025

Coram :

The Honourable Mr.Justice N.ANAND VENKATESH

Arbitration O.P.(Com.Div.) Nos.139 & 253 of 2021

Arb.O.P.(Com.Div) No.139 of 2021 :

Electronics Corporation of

Tamil Nadu Ltd., rep.by

its Managing Director,

692, Anna Salai, Nandanam,

Chennai-35. ...Petitioner

Vs

United Telecom Ltd.,

18A/19, Doddanekundi

Industrial Area,

Mahadevapura Post,

Bangalore-560048. ...Respondent

Arb.O.P. (Com.Div.) No.253 of 2021 :

United Telecom Ltd., rep.by its

Senior Manager (Marketing),

No.18A/19, Doddanekundi

Industrial Area, Mahadevapura Post,

Bangalore-560048. ...Petitioner

Vs

https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

Arb.O.P.(Com.Div.) Nos.139

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M/s.Electronics Corporation of

Tamil Nadu Ltd., rep.by

its Managing Director,

MHU Complex, II Floor,

692, Anna Salai, Nandanam,

Chennai-35. ...Respondent

PETITIONS under Section 34 of the Arbitration and Conciliation

Act, 1996 praying

(i) to set aside the award dated 10.3.2021 with respect to the

interest awarded by the Tribunal in the dispute arising out of contract

dated 23.1.2013 (Arb.O.P. (Com.Div.) No.139 of 2021); and

(ii) to set aside the impugned award dated 10.3.2021 with

respect to the findings of the sole Arbitrator in issues (ii), (iii), (v),

(vi), (viii) and (xiv) of the award (Arb.O.P.(Com.Div.)No.253 of 2021).

For Petitioner in

Arb.O.P.No.139 of 2021

& For Respondent in

Arb.O.P.No.253 of 2021 : Mr.V.Srikanth for

Mr.E.Ganesh

For Respondent in

Arb.O.P.No.139 of 2021

& For Petitioner in

Arb.O.P.No.253 of 2021 : Mr.M.S.Krishnan, SC for

Mr.J.James https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

Arb.O.P.(Com.Div.) Nos.139

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COMMON ORDER

M/s.Electronic Corporation of Tamil Nadu Limited (ELCOT) filed

Arb.O.P.(Com.Div.) No.139 of 2021 under Section 34 of the Arbitration

and Conciliation Act, 1996 (for short, the Act) against the claim

allowed by the learned Arbitrator pertaining to payment of interest

towards delayed payments vide award dated 10.3.2021.

2. M/s.United Telecom Limited (UTL) filed Arb.O.P.(Com.Div.) o.

253 of 2021 against those claims, which were rejected by the learned

Arbitrator by the very same award dated 10.3.2021.

3. Heard both.

4. The facts leading to filing of these petitions are as follows:

(a) The ELCOT floated a tender on 22.5.2012 for the supply and

commissioning of 7,84,000 laptops throughout the State of Tamil Nadu

for Phase II for the year 2012-2013. The UTL submitted their bid for

the supply of 2,00,000 laptop computers. Vide Letter of Acceptance

(LoA) dated 17.12.2012, the ELCOT decided to allot a quantity of https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

Arb.O.P.(Com.Div.) Nos.139

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2,50,000 laptop computers with back-ups to the UTL.

(b) In the said LoA, the ELCOT also provided details regarding

specification of the laptop computers as well as back-ups to be

supplied by the UTL. Through the said LoA, the UTL was also called

upon to submit a security deposit amounting to 3% of the purchase

order value and execute a supply agreement within one week from the

date of issuance of the LoA.

(c) The UTL submitted a security in the form of bank guarantee

on 29.12.2012 for a sum of Rs.12,59,21,250/-. Through a letter dated

07.1.2013, the UTL informed the ELCOT that there was a delay due to

various reasons beyond the control of the UTL and therefore,

requested for revision of the delivery schedule for the supply of laptop

computers. But, no response was received from the ELCOT.

(d) In order to fulfil the eligibility criteria specified under Clause

2 of the tender document, the UTL submitted its bid as a part of the

consortium of bidders. The consortium agreement was executed on

23.1.2013 and pursuant to the same, the UTL was appointed as the

prime bidder of the consortium. Thereafter, the parties executed a

supply agreement as required under Clause 3.27 of the tender https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

Arb.O.P.(Com.Div.) Nos.139

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document and the LoA on 23.1.2013.

(e) On 05.2.2013, the ELCOT issued the second LoA to the UTL

and allotted a further quantity of 1,10,000 laptop computers for

supply. The delivery of 2,50,000 laptops was supposed to be

completed by 12.5.2013. Since the time schedule was not adhered to

by the UTL, the ELCOT cancelled 1,20,000 laptops out of 2,50,000

allotted to the UTL and informed the UTL that its order was limited to

the supply of 1,30,000 laptop computers. In the light of partial

termination of the contract by the ELCOT, the UTL submitted a revised

security deposit for the revised quantity amounting to

Rs.6,54,79,100/-.

(f) The UTL completed the supply of laptop computers and the

ELCOT continued to withhold payments for the quantity supplied.

Hence, a dispute arose between the parties. Accordingly, the UTL

issued a letter dated 22.11.2017 invoking the arbitration clause.

Further, O.P.No.395 of 2018 and by order dated 06.8.2018, the

learned Arbitrator was appointed by this Court.

(g) Pursuant to that, the UTL filed the claim petition by making

the following claims: https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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“i. to declare that the levy of LD for

deviations in the delivery schedule with respect to

the contract is illegal;

ii. to direct the respondent to make payment

to the claimant of the sums amounting to

Rs.10,91,31,750/- illegally withheld by the

respondent as LD;

iii. to direct the respondent to make

payment to the claimant of the sums amounting to

Rs.90,982/- as being sums illegally withheld by the

respondent;

iv. to direct the respondent to pay a sum of

Rs.19,18,80,000/- being loss of profit due to

unlawful reduction by the respondent of the

ordered quantity of laptops and back packs;

v. to direct the respondent to pay a sum of

Rs.33,67,49,400/- towards the loss of opportunity

to the claimant;

vi. to direct the respondent to compensate

the claimant for the additional bank charges

incurred by the claimant for roll-over of its LCs due

to delay in payments by the respondent,

amounting to Rs.53,19,328/-;

vii. to direct the respondent to make

payment of interest from the date, on which, the

payments were due/cause of action arose till the

date of the filing the statement of claim, being an

amount of Rs.17,28,87,412/- and all interest https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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accruing from the date of filing of the statement of

claim till the date of payment of the money

pursuant to an award in favour of the claimant as

per the amounts indicated in Annexure 3; and

viii. to direct the respondent to pay costs of

the proceedings before the Tribunal.”

(h) The ELCOT filed a statement of defence and took a stand

that all sums due and payable to the petitioner had been cleared and

that they were not liable to make any payment. They also alleged that

the entire delay was attributable only to the UTL.

(i) The learned Arbitrator, on considering the pleadings, framed

the following issues:

“(1) Whether the claimant is entitled to

initiate the arbitration proceeding without

participation of its consortium partners?

(2) Whether there is a delay on the part of

the claimant in performing the contract and

whether the respondent has suffered any loss due

to any deviation in delivery schedule?

(3) Whether the levy of liquidated damages

by the respondent upon the claimant is

unreasonable, illegal or against the provisions of

the contract?

(4) Whether the claimant is entitled to claim

or raise disputes other than the claims made in the

notice dated 22.11.2017 invoking arbitration? https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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(5) Whether the recovery of liquidated

damage is valid?

(6) Whether the respondent is liable to pay

the claimant the sum of Rs.10,91,31,750/- stated

to have been recovered as liquidated damages?

(7) Whether the respondent is liable to make

payment of Rs.90,982/- to the claimant as claimed

in the claim statement?

(8) Whether the respondent is liable to pay a

sum of Rs.19,18,80,000/- to the claimant as loss of

profit as claimed in the claim statement?

(9) Whether the claimant is entitled to a sum

of Rs.33,67,49,400/- from the respondent as

claimed in the claim statement?

(10) Whether the claimant is entitled to a

sum of Rs.53,19,328/- from the respondent as

claimed in the claim statement?

(11) Whether the claimant is entitled to the

interest of Rs.17,28,87,412/- from the respondent

as claimed in the claim statement?

(12) Whether the respondent is liable to pay

interest if any, pendente lite and further interest?

(13) To what other reliefs the parties are

entitled to?

The following a dditional i ssue was framed as

issue No.14 on 20.12.2019:

(14) Whether the respondent is entitled to

appropriate the amount due to the claimant made https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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under invoices raised by them for supply of laptops

without filing any claim or counter claim?”

(j) On the side of the UTL, C.W.1 was examined and Ex.C.1 to

Ex.C.44 were marked. On the side of the ELCOT, R.W.1 was examined

and Ex.R.1 to Ex.R.30 were marked.

(k) The learned Arbitrator, on considering the facts and

circumstances of the case and the evidence that was let in by both

sides, passed an award in the following terms:

“1. The respondent shall be liable to make

payment of Rs.90,982/- to the claimant, towards

the amount withheld;

2. The claimant is entitled to the interest

amount of Rs.17,28,87,412/- from the respondent

for the delayed payments towards the bills, with

interest on the said amount at 9% per annum from

September 2018 till realization;

3. The deduction of Rs.10,91,31,750/- by

the respondent by way of recovery from the bill

amounts of the claimant as liquidated damages is

legal and as per the terms of contract between the

parties and the respondent is not liable to pay the

said amount to the claimant;

4. The respondent is not liable to pay

Rs.19,18,80,000/- to the claimant as loss of profit;

5. The claimant is not entitled for

Rs.33,67,49,400/- from the respondent towards https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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loss of opportunity;

6. The claimant is not entitled for

Rs.53,19,328/- from the respondent towards

rollover of Lcs;

7. The claims of the claimant are disposed in

the above terms;

8. The parties shall bear their own costs.”

(l) Both parties have questioned the award under Section 34 of

the Act by filing the above petitions.

5. This Court has carefully considered the submissions of the

learned counsel on either side and perused the materials available on

record and more particularly the impugned award.

6. The learned Senior Counsel appearing on behalf of the UTL

submitted that the learned Arbitrator went wrong in denying the claim

made by the UTL except granting the claim towards payments that

were withheld and the interest amount for the delayed payments.

7. On the contrary, the learned counsel appearing for the ELCOT

submitted that the learned Arbitrator assigned sufficient reasons for

denying all the other claims made by the UTL and the same do not https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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suffer from perversity or patent illegality.

8. The UTL had made a claim for the release of the sums

withheld as liquidated damages and had also claimed for the loss

towards unlawful reduction in the quantity that was originally ordered.

The UTL further claimed for the loss of opportunity and the loss

suffered due to roll over of the LCs. The learned Arbitrator, while

dealing with all the claims, had properly appreciated the relevant

clause in the agreement between the parties and also the evidence

that was let in by both sides and rejected those claims. This Court

finds that the reasoning assigned by the learned Arbitrator while

rejecting the other claims is a possible view taken by the learned

Arbitrator based on the relevant clauses in the agreement/tender

document and the documents that were marked by both sides. This

Court cannot sit on appeal against those findings since the findings did

not suffer from any perversity or patent illegality.

9. On a careful consideration of the submissions made on either

side, the only issue that has to be gone into by this Court pertains to https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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the interest portion that was awarded by the learned Arbitrator to the

tune of Rs.17,28,87,412/- towards delayed payment. In fact, the

learned counsel on either side mainly focused their arguments on this

issue.

10. The tender document provided for commissioning of the

laptop computers, which was defined as switching on the laptop

computers and testing its functions in the presence of the head of the

institutions. Clause 3.25 provided that the issuance of the LoA signified

beginning of the contract with the successful bidder. Clause 3.32 also

provided for the liquidated damages for non fulfilment of the delivery

schedule at the rate of 1% per week on the value of the undelivered

quantity subject to a maximum of 5% on the undelivered quantity. It

also provided that the liquidated damages would be automatically

deducted from the bills submitted by the supplier.

11. As per the payment terms, Clause 5.3 provided that 97% of

the payment would be released after successful completion of supply

and acceptance by the respective institutions. As per Clause 5.4, the https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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balance 3% would be released after successful completion of the

warranty period of one year from the date of supply and acceptance by

the respective institutions. The tender itself provided for the model

form of the contract and the supply schedule was fixed as hereunder:

# Cumulative quantity to be

delivered

Supply schedule in

calendar days from

the date of LOA

1 15% of ordered quantity Within 60 days

2 45% of ordered quantity Within 90 days

3 80% of ordered quantity Within 135 days

4 100% of ordered quantity Within 150 days

12. It is not in dispute that since the UTL was not able to fulfil

the requirement, the ELCOT cancelled 1,20,000 laptops out of

2,50,000 allotted to the UTL and ultimately what was supplied by the

UTL was 1,30,000 laptops.

13. The learned Arbitrator had taken into consideration the fact

that there was, in fact, delay on the part of the UTL in making the

supply and hence, confirmed the levy of liquidated damages by the

ELCOT. For the limited purpose of looking into the findings of the

learned Arbitrator by allowing the claim towards interest on delayed

payment, it will suffice to take note of issue Nos.2, 3 and 11. https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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14. For issue No.2, which pertained to the delay in the

performance of the contract, the learned Arbitrator came to the

conclusion that the UTL could not justify the delay in the supply of

laptops only on the ground that there was delay in payment. Hence,

the learned Arbitrator rendered a finding that there was delay on the

part of the UTL.

15. Issue No.3 pertained to levy of liquidated damages. In the

light of the finding that there was delay on the part of the UTL in

supplying the laptop, the learned Arbitrator took into consideration the

relevant clause, which provided for the liquidated damages and

rendered a finding that the ELCOT was justified in deducting the

liquidated damages.

16. Issue No.11 was the important issue, which directly arises

for consideration in these petitions.

17. The learned Arbitrator rendered a finding that the UTL had

claimed interest under three heads namely https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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(i) Interest on delayed payment of 97%

of the invoice amount to the tune of

Rs.16,56,92,342/-;

(ii) Interest on delayed payment of 3%

retention amount to the tune of

Rs.59,26,686/-; and

(iii) Interest on delayed payment on the

earnest money deposit (EMD) amount of

Rs.12,68,384/-.

18. The learned Arbitrator had taken into consideration Clause

17(c), which provided for payment of 97% to be released by the

ELCOT after successful completion of the supply and acceptance by the

respective institutions. The UTL provided the particulars of delay by

means of annexure, which formed part of the Enterprise Resource

Planning (ERP) that is maintained by the ELCOT. Therefore, the

annexure was not actually prepared by the UTL. But, they had merely

shown the particulars that were available with the ELCOT in the ERP. https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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19. The learned Arbitrator rendered a finding that the amount

towards interest was payable if the payment was made beyond 3 days

after the supply. But, nowhere in the contract or in the tender

conditions, there was any reference to the three days’ time.

20. The learned counsel appearing for the ELCOT submitted that

such a finding rendered by the learned Arbitrator runs contrary to the

contract between the parties and is in violation of Section 28(3) of the

Act. To substantiate this submission, he relied upon the following two

judgments of the Hon’ble Apex Court:

“(i) ONGC Vs. Saw Pipes Ltd.

[reported in 2003 (5) SCC 705] ; and

(ii) OPG Power Generation (P) Ltd.

Vs. Enexio Power Cooling Solutions

(India) (P) Ltd. [reported in 2025 (2)

SCC 417].” https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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21. The Hon’ble Apex Court, in the above judgments, held that

the decision taken by the Arbitral Tribunal must be in accordance with

the terms of the contract and that the decision must be taken within

the bounds of its jurisdiction conferred under the Act or the contract. It

was further held that where the Arbitral Tribunal passed an award

against the terms of the contract, the award would be patently illegal.

22. Ordinarily, the terms of the contract should be understood

in the way the parties wanted and intended them to be. However, the

Arbitral Tribunal can read an unexpressed term in the agreement

where there is a basis to come to the conclusion that such a term was

always and obviously intended by the parties thereto. In the absence

of the same, the terms of the contract will have to be understood in

the way, in which, the parties have expressed their intention in the

agreement and if any interpretation is given beyond such intention of

the parties, it cannot even be held to be a possible view. Under such

circumstances, the award will suffer from perversity. https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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23. In the case in hand, the learned Arbitrator rendered a finding

that 97% amount to be released towards the respective invoice had to

be released within a period of 3 days. This finding has no basis.

24. The learned Arbitrator rendered a finding that Clause 17(c)

provided that 97% payment would be released by the ELCOT after

successful completion of the supply and acceptance by the respective

institutions.

25. On carefully going through the annexure, this Court is the

considered view that the learned Arbitrator was able to find that there

was substantial delay in releasing the payments. The delay, which

originally started with 16 days, at one stage even reached 336 days.

Therefore, interest can be awarded where there was delay in releasing

the amount within a reasonable time. Even though the contract does

not anywhere provide the time limit for the release of the payment, it

cannot be a reason to deny the claim for interest when the amount

was not released within a reasonable time. https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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26. If the ELCOT was in a position to levy liquidated damages

wherever there was a delay in the supply of materials from the bills

that were raised by the UTL, the same concept of delay must also

befall whenever there was a delay in releasing the payment. As per

the relevant clause, the payment had to be released immediately after

the successful completion of the supply and acceptance by the

respective institutions and those particulars were available in the

annexure. Therefore, there had been consistent delay in releasing 97%

payment of the invoice amount. Even if the learned Arbitrator was not

justified in fixing three days’ time, which was nowhere found in the

contract, the intention between the parties to get the amount released

within a reasonable time can always be read into the contract as an

unexpressed term in the contract. Hence, the learned Arbitrator was

justified in awarding interest on the delayed payment of 97% of the

invoice amount.

27. In so far as the interest awarded on the delayed payment of

3% retention amount was concerned, the learned Arbitrator took into

consideration Clause 17(d) of the contract. On the facts of the present https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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case, the learned Arbitrator found that there was no issue of any

breach of warranty. Those particulars were available in Annexure II of

the statement of claim.

28. The last issue pertained to interest on delayed payment of

the EMD amount.

29. The learned Arbitrator took into consideration the return of

the EMD amount of Rs.20 lakhs paid by the UTL only on 19.7.2016

under Ex.C.28 and for that delay, the learned Arbitrator granted

payment of interest. Hence, the learned Arbitrator rendered a finding

that the UTL would be entitled to interest of Rs.17,28,87,412/- from

the date of entering into the award till the date of payment at the rate

of 9% per annum. This finding does not suffer from any perversity or

patent illegality warranting the interference of this Court.

30. The particulars that were provided by the UTL, while claiming

interest, were based on the ERP that was maintained by the ELCOT. If

really the ELCOT wanted to contest the claim, they could have resisted https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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the claim. However, it is seen that the ELCOT had casually denied this

claim in their statement of defence. Apart from that, they have not let

in any evidence to disprove the facts contained in the annexure. Even

during the cross examination of C.W.1, no questions have been put to

the witness regarding the interest claim.

31. Apart from that, even in the proof affidavit filed by the

ELCOT, there was absolutely no mention about the interest

component. When R.W.1 was cross examined, several questions were

put vide question Nos.52 to 55 on the side of the UTL regarding the

release of payment. Thus, the ELCOT had not effectively questioned or

disproved the claim made by the UTL for interest on the particulars

that were available in the ERP maintained by the ELCOT. In fact, such

a finding has been rendered on appreciation of evidence and it is a

factual finding rendered by the learned Arbitrator.

32. In the light of the above discussions, this Court does not find

any ground to interfere with the award dated 10.3.2021 passed by the

learned Arbitrator. https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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33. Accordingly, both the above original petitions stand

dismissed. No costs.

02.12.2025

Index : Yes

Neutral Citation : Yes

RS https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )

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N.ANAND VENKATESH,J

RS

Arb.O.P.(Com.Div.) Nos.139 &

253 of 2021

02.12.2025 https://www.mhc.tn.gov.in/judis ( Uploaded on: 02/12/2025 03:54:11 pm )