The Bombay High Court upheld the arbitral award, dismissing the petition filed by the Union of India. The Court found the Arbitral Tribunal’s interpretation of the contracts reasonable and commercially sensible, emphasizing the non-comparability of pricing terms.

Analysis of the Fall Clause and contract terms(Para 18–30 ) Consideration of potential adjustments and cost components (Para 31–38 ) Conclusion and upholding of the arbitral award (Para 39–45 )

Acts and Sections Discussed: a. Arbitration and Conciliation Act, 1996 — Section 34 — Setting Aside Arbitral Award

Subjects: Arbitration — Fall Clause — Commercial Common Sense — Non-Comparability — Freight Cost — Contract Interpretation — Public Policy — Patent Illegality

Nature of the Litigation: Arbitration Petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award dated February 1, 2020.

Relief Sought: Union of India sought to set aside the arbitral award allowing Emami Agrotech Ltd.’s claim.

Reason for Filing: Dispute over the application of the Fall Clause and adjustment of contract price for bio-diesel supply.

Previous Decisions: Arbitral Tribunal ruled in favor of Emami Agrotech Ltd., rejecting Central Railway’s interpretation of the Fall Clause.

Issues:

a. Whether the Fall Clause was applicable to the contracts between Central Railway and Emami Agrotech Ltd. b. Whether the price quoted under different contracts was comparable.

Submissions/Arguments:

a. Petitioner’s Arguments (Union of India): i. Claimed the price under the Purchase Order should be reduced based on the lower rate quoted to Eastern Railway. ii. Argued that freight cost was irrelevant and should not affect price comparison. b. Respondent’s Arguments (Emami Agrotech Ltd.): i. Asserted the contracts involved different pricing structures and terms. ii. Highlighted that the cost of freight was included in one contract but passed separately in another.

Ratio Decidendi:

a. The Court held that price comparisons must be like-for-like, requiring adjustments for differing contractual terms. b. Freight costs, being an essential component, rendered the two price points incomparable without proper adjustments. c. The award did not conflict with public policy or the fundamental policy of Indian law, nor did it exhibit patent illegality.