Authority: High Court at Calcutta, Commercial Appellate Division

Order Date: July 9, 2026

Case Overview

  • Parties: Steel Authority of India Limited – IISCO Steel Plant (appellant) vs Balaji Industrial Products Limited (respondent).
  • Contract Background: Tender dated 12 Jan 2005 for 60,000 metric tonnes of run‑of‑mine iron ore in two tranches of 30,000 MT each at Rs 807/MT. Letter of Intent dated 26 Feb 2005 required payment of the first tranche within 14 days, second tranche within 45 days of the first delivery order, and a 90‑day delivery period from the first delivery order. Security deposit of Rs 24,21,000 (Rs 19,21,000 security + Rs 5,00,000 earnest money) was to be retained until contract completion.
  • Payments & Delivery: Respondent deposited the security on 5 Mar 2005 and paid Rs 2,52,26,760 for the first tranche on 9 Mar 2005. The first delivery order was issued on 16 Mar 2005, starting the 90‑day period. Due to labour unrest, only 28,435.220 MT were lifted by 29 Aug 2005; 1,564.780 MT remained undelivered.
  • Extensions & Correspondence: Delivery period was extended twice, the final extension to 29 Aug 2005 (letter 24 Aug 2005). Subsequent requests for further extensions, interest, and refund of security were denied. The appellant terminated the contract on 24 Oct 2005, forfeiting the security deposit.
  • Arbitration: A sole arbitrator rendered an award on 19 Jun 2013. The respondent filed seven heads of claim; the arbitrator allowed three:
  • (b) Rs 13,19,329 for the undelivered 1,564.780 MT.
  • (c) Rs 24,21,000 for wrongful forfeiture of the security deposit.
  • (e) Rs 1,67,56,163 for excess cost incurred in purchasing 31,564.780 MT from the market.

The remaining claims and the appellant’s counter‑claims were rejected.

  • Appeal: The appellant filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (AO COM/21/2026) challenging the award, alleging the respondent’s failure to pay for the second tranche and arguing that the arbitrator ignored Sections 51, 53, 54 of the Contract Act, 1872. The Single Judge dismissed the petition on 8 Aug 2023; the appellant appealed (AP/1097/2013).
  • Court Findings: The High Court examined the contract terms, the extensive correspondence, and the labour unrest at the appellant’s Gua mines. It held that:
  • Labour disputes existed prior to contract execution and were suppressed by the appellant.
  • The appellant failed to have the contracted 60,000 MT of iron ore ready for delivery, breaching the reciprocal obligations under Sections 51, 53, 54 of the Contract Act.
  • The force‑majeure clause was rendered inoperative; the termination on 24 Oct 2005 was illegal and made in haste.
  • The arbitrator’s award was based on a plausible factual matrix and was not perverse or patently illegal.
  • The court’s jurisdiction under Section 37 is limited to reviewing whether the Section 34 court exceeded its jurisdiction; it found no such excess.
  • Bank Guarantee: The appellant had furnished a bank guarantee of Rs 5.83 crore on 10 Sep 2024 and sought its refund, but the appeal was dismissed without addressing this request.

Final Outcome

  • The Calcutta High Court upheld the arbitration award dated 19 Jun 2013.
  • The appeal (AO COM 21 of 2026) was dismissed without any order as to costs; the award amounts of Rs 13,19,329, Rs 24,21,000 and Rs 1,67,56,163 remain enforceable.

Topics: Arbitration Award, Contract Breach, Court Judgment