More Stories

Informist, Thursday, Nov. 14, 2024

NEW DELHI – The Delhi High Court has upheld an arbitral award of $7.2 million in favour of Saw Pipes Ltd., now Jindal Saw Ltd., in a case of delayed delivery of pipes to GAIL (India) Ltd. GAIL had challenged a single judge's order in 2010 upholding the arbitral award along with interest. "...the arbitral tribunal also found that GAIL was responsible for part of the delay during the initial period as well," said the high court. "We concur with the decision of the learned single judge as articulated in the impugned order," said the court.

In 1994, GAIL had issued a notice inviting tenders internationally for procurement of line pipes and coating of pipes pertaining to upgradation of the pipeline system from Hazira to Babrala and Jagdishpur. Saw Pipes was awarded the contract for supply of polyethylene coated line pipe of 36-inch diameter for the project.

GAIL was obligated under the contract to lift the finished or coated pipes from the stack yard of Saw Pipes and for this purpose it engaged the services Shiv Hare Roadlines. The contract was a "Free on Trailer" contract which obligated GAIL to take delivery of the pipes at the factory gate of Saw Pipes after the required inspection or tests were conducted by GAIL. 

A dispute arose between the parties as GAIL withheld the payment due to Saw Pipes under the contract. GAIL said the amount was withheld towards damages for delay in delivery of the pipes. 

Saw Pipes said it had made all necessary arrangements and complied with all its obligations as per the contract. However, the delivery of coated pipes was not completed within the stipulated period, that is, by October 1995. Saw Pipes attributed the reasons of non-delivery to GAIL and on account of force majeure events beyond control of the parties, including unprecedented rains, floods, humidity, and onslaught of insects.

In 2002, the arbitral tribunal awarded a sum of $7.2 million along with interest at 6% per annum with effect from Apr. 1, 1997 till the date of the award. Further, the tribunal awarded interest at the rate of 12% per annum on the amount converted into Indian rupees from the date of award till the date of payment. The tribunal also awarded a sum of INR 1.8 million along with interest at the rate of 12% per annum with effect from Apr. 1, 1997 till its payment in favour of Saw Pipes.

The tribunal had held that GAIL was responsible for the delay by not taking the delivery of the goods even when large quantities of finished and coated pipes were available with Saw Pipes. Therefore, GAIL was not entitled to reduce the price payable for the pipes, on account of delay on the part of Saw Pipes, the tribunal said. Accordingly, the tribunal allowed Saw Pipes' claim for the amount withheld by GAIL and awarded the given amount along with the interest.

The name of Saw Pipes was changed to Jindal Saw with effect from Jan. 11, 2005. At 1432 IST, shares of Jindal Saw were up 2.2% at INR 294.75 on the National Stock Exchange and those of GAIL were marginally down at INR 189.16.  End

US$1 = INR 84.40

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Surya Tripathi

Edited by Ashish Shirke

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.