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Bharat Heavy Electricals Ltd v. Tata Projects Ltd

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 8373 of 2014)Decided 1 Sept 2014
Civil Appeal No. 8373 of 2014
Justice F.M. Ibrahim Kalifulla · Justice Shiva Kirti Singh

Background

Tata Projects undertook boiler installation work for BHEL, and disputes led to an arbitral award in its favour. BHEL contested interest and crane-hire charges, saying the agreement supplied a high-capacity crane free only for specified work on the first unit. The High Court appellate bench restored award components that BHEL challenged in this appeal.

Decision Breakdown

The Supreme Court allowed BHEL's appeal on the two issues. The contract barred interest on money due to the contractor, so pre-award interest could not be awarded; the tribunal's specified post-award rate of 10.5 percent remained applicable to any net amount due. BHEL was also entitled to deduct crane-hire charges for use on the other unit, and the contractor had not proved an agreement permitting free substituted use. The award was adjusted accordingly rather than annulled in its entirety.

Lesson Learnt

Arbitrators must respect agreed limits on free equipment use and interest. Contractors should document any variation in those arrangements, since an asserted informal understanding may not defeat the written charging terms.

Official source (sci.gov.in)View Judgment (PDF)

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