M/ S. ADANI AGRI LOGISTICS LTD. vs FOOD CORPORATION OF INDIA

2023-12-22 Information

* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: April 25, 2023
Pronounced on: December 22, 2023
+ FAO (OS) (COMM) 279/2022 & CM APPL. 42255/2022
M/ S ADANI AGRI LOGISTICS LTD. …… Appellant
Through: Mr. Rajiv Nayar & Mr. Saurabh Kripal, Senior Advocates with
Ms. Simran Brar, Ms. Kiran Devrani, Ms. Ambika, Mr. Karan Sharma, Advocates along with Mr. Puneet Mehndiratta & Ms. Annu Sharma, Authorized Representatives

Versus
FOOD CORPORATION OF INDIA …..Respondent
Through: Mr. Arvind Kumar Nigam, Senior Advocate, Mr. Manoj Standing Counsel for FCI & Ms. Aparna Sinha, Advocate

CORAM:

HON’BLE MR. JUSTICE SURESH KUMAR KAIT
HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA

JUDGMENT
SURESH KUMAR KAIT, J
1. The present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 read with Section 13(1A) of the Commercial Courts Act, 2015 has been preferred by the appellant – M/s Adani Agri Logistics Ltd. against the judgment dated 05.07.2022 passed by the learned Single Judge of this Court in O.M.P. (COMM) 82/2022, whereby the arbitral Award dated 02.10.2021 (as corrected vide orders dated 30.10.2021 and 12.11.2021) has been set aside.
2. The backdrop of the case, as narrated in the appeal, is that in June, 2000, the Government of India (GOI) announced National Policy for Bulk Handling, Storage and Transportation of foodgrains with a view to reduce loss of food grains during transit and storage and for modernization of system therefor. The aforesaid policy for storage of foodgrains procured from respondent-Food Corporation of India (FCI), proposed integrated bulk handling, with silos large capacity, along with testing facilities for quality control. Fifteen central locations, including producing, consuming and porting, were identified across the country. Since the cost of setting up infrastructure for handling the foodgrain including the transportation, was very high, the policy included private sector participation, under overall coordination with respondent-FCI.
3. M/s Adani Exports Ltd and M/s Adani Ports Ltd formed the appellant-company, namely, M/s Adani Agri Logistics Ltd. and submitted its proposal. The Rail India Technical Enterprises Ltd (RITES) was appointed as the Project Consultant to assist the bidding process. On the recommendation of RITES, the bids of appellant- M/s Adani Agri Logistics Ltd., was approved and Letter of Acceptance of Proposal dated 18.07.2005 was issued by the respondent-FCI. The parties thereafter entered into two Service Agreements dated 28.06.2005 for construction of Silos and Associated Works under the Build, Operate, Own (BOO) arrangement for Circuit-1 (Moga-Chennai- Coimbatore-Bangalore) and Circuit-2 (Kaithal-Navi Mumbai- Hooghly), whereunder the facilities for the two Circuits had to be completed within 36 months of execution of the Agreement i.e. by 28.06.2008. The Service Agreement incorporated the terms of services and its tenure provided by the appellant to the respondent, against payment of Storage-cum-Handling Charges, irrespective of level of usage of facilities by the respondent. The Agreement incorporated that the respondent shall pay 100% Annual Guaranteed Tonnage for the first 10 years; 75% from the 11th year till 20th years from the Operations Date i.e. the date on which the facilities in the circuits are commissioned. During the period of 36 months, the appellant was required to set up all facilities such as Base and Field Depots and special bulk food grain rail wagons.
4. The appellant has claimed that as per Annexure- 5 of the Service Agreement dated 28.06.2005, the project cost envisaged was Rs.305.31 Crores and Rs.259.57 Crores for Circuit-1 and Circuit-2 respectively. The total cost was thereby Rs.564.88 Crores. The appellant claims that there has been huge costs overturn and even though appellant could not establish the complete project within the time stipulated of 36 months but it established two of the largest facilities, namely, Base Depot in Moga (2,00,000 MT) and Base Depot in Kaithal (2,00,000 MT) in 2007 well before Stage-2 of targeted timeline of 36 months.
5. The appellant vide letter dated 14.03.2007 proposed the respondent to commence the pre-commissioning test with wheat from 26.03.2007 at both the Depots and further vide letter dated 11.04.2007 informed the respondent that the trials were successful. The senior representatives of respondent inspected the facilities of the appellant and submitted a report confirming that some facilities were ready for operation. The parties entered into an ad hoc arrangement vide letters dated 11.04.2007; 04.05.2007 and 09.05.2007 to use the completed Base Depots upon payment of Storage-cum-Handling Charges on actual utilization basis as against the Annual Guaranteed Tonnage basis. The appellant, therefore, was to receive payment of Storage-cum-Handling Charges on actual quantity of stock wheat stored in Silos on daily basis. However, other terms mentioned in Annexure-15 of the Service Agreement remained unaltered.
6. The claim of the appellant is that in none of the letters mentioned above i.e. 11.04.2007; 04.05.2007 and 09.05.2007 it was set out that inflation rate based upon the Wholesale Price Index, as has been mentioned in Annexure-15 of the Service Agreement, would not be paid. Also averred that respondent in its letter dated 09.05.2007 state that it would not pay inflation rate based upon Wholesale Price Index. The respondent from May, 2007 started paying the Storage-cum-Handling Charges without considering the Wholesale Price Index based escalation, which was contrary to the ad hoc arrangement. Therefore, the appellant vide letter dated 09.06.2008 informed the respondent that the Wholesale Price Index published in Annexure-15 of the Service Agreement, will be as per the latest rate published on the RBI website and also shared the calculation sheet to confirm the Storage cum-Handling Charges based on the Wholesale Price Index.
7. On 16.05.2011, the independent Expert jointly appointed by the parties, opined that both the Circuits were 100% complete. Thereafter, a senior level Monitoring Committee in its meeting dated 30.01.2012 held that liquidated damages were to be paid by the appellant due to delay in commissioning of the project in certain depots. The appellant vide letter dated 06.04.2012 intimated the respondent regarding payment of liquidated damages, procuring wagons and passing savings of Rs.29.01 crores to respondent. Vide another letter dated 09.05.2012, the appellant raised the issue of Wholesale Price Index and vide another letter of even date written to the Area Manager of respondent-FCI at Moga District, stated that appellant was entitled to Storage-cum Handling Charges based on the Wholesale Price Index to meet the rising operation cost and attached the invoices from the financial years 2008-09 along with Rate Chart published on the RBI website.
8. On 04.12.2012, in a senior level Monitoring Committee, the full guaranteed Storage-cum Handling Charges of Rs.2000 per MT Per annum for base depots and Rs.415 per MT per annum for field depots, were decided to be restored as per the original Service Agreement on due certification acceptance of balance 104 wagons by the Railways.
9. Vide letter dated 09.01.2013 the appellant informed the respondent that it had paid Rs.5.21 Crore to the respondent towards liquidated damages on account of delay in completion of project and also informed the respondent about the order placed for balance 104 wagons.
10. Based on the recommendations of the senior level Monitoring Committee held on 04.12.2012, a Supplementary Agreement dated 12.02.2013 was entered between the parties. The appellant claims to have complied with all the terms of the Supplementary Agreement dated 12.02.2013 i.e. made payment of Rs.5.21 crores to the respondent as liquidated charges for delay in completion of project; placed order for balance 104 number of wagons and till the acquisition of wagons, agreed to receive storage-cum-handling charges at the reduced rental rates. It was agreed that after procurement of the wagons and acceptance by Railways, full charges would be restored as per the original Service Agreement.
11. The appellant vide letter dated 26.02.2013 consented to store 25,000 MT over and above 2 Lac MT in silos and it was agreed that the charges for the same shall be 25% of the rate of storage i.e. Rs.500 per ton per year on actual utilization basis. The respondent vide its letter dated 26.04.2013 requested the appellant to store extra stocks at silos, though rates were yet to be confirmed by the respondents Headquarters. The senior level Committee of respondent vide minutes of meeting dated 20.05.2013 acknowledged that the letters dated 04.05.2007 and 09.05.2007 were the provisional arrangements, when the other components were not deliberated upon and it was decided that the enhanced payments shall be made as per WPI escalation for the period from 2007 to 2013. The respondent thereafter issued sanction letter dated 04.06.2013 in favour of the appellant to pay amount of Rs.3,16,02,248 on account of Storage-cum-Handling charges for the period from 01.05.2013 to 31.05.2015 for GT at reduced rental as per supplementary agreement and over and above actual utilization on day to day basis.
12. The appellant vide letter dated 30.08.2013 sent the calculation as per the WPI Escalation Chart in terms of rates published by the Ministry of Commerce and Industry. According to appellant, neither in May, 2007 nor in 2013 when the Supplementary Agreement was executed; no discussion with respect to WPI component of storage-cum-handling-charges was undertaken with the respondent; and in fact, vide letter dated 21.03.2013 the appellant had asked that the storage-cum-handling-charges paid by the respondent were not as per WPI and it was contrary to the terms of the Service Agreement.
13. According to appellant, in terms of Supplementary Agreement dated 12.02.2013, sum of Rs.5.21 crore was paid to the respondent. Also, the additional 104 wagons were put into service on 28.09.2013. So, the respondent has considered the date of 28.09.2013 as the operations date, from which the unit rates were restored to the original values, as contained in Schedule I of Annexure 15 to the Agreement. The respondent, vide letters dated 18.11.2013 and 19.11.2013 informed the appellant the date of 28.09.2013 shall be considered as operations date for determining the claim for escalations based upon WPI, as defined in the Service Agreement; and thereby, from the date of 28.09.2013 full guaranteed storage-cum-handling charges of Rs.2,000 per MT p.a. for Base Depots and Rs.415 per MT p.a. for Field Depots, would be restored on guaranteed tonnage, as envisaged in the Supplementary Agreement dated 12.02.2013.(Para-39)
14. The appellant, in response to aforesaid letters dated 18.11.2013 and 19.11.2013, vide letter dated 10.01.2014 written to the respondent, accepted the decision of the respondent considering the date of 28.09.2013 as operations date, which meant that the 20 years service period, as per clause 4.1 of the Agreement shall begin from 28.09.2013. The appellant vide letters dated 10.01.2014, 04.03.2014, 27.03.2014, 03.04.2014, 07.05.2014, 28.05.2014 and 30.09.2014 claims to have reiterated to the respondent regarding to wrong calculation in respect of over and above utilization of space and also that appellant was not bound to provide additional capacity to the respondent and also that the additional space of 25000 MT was subject to the terms mentioned in its letter dated 27.03.2014.
15. Having no response from the respondent, the appellant claims to have invoked the procedure for amicable resolution vide letter dated 30.09.2014 under Article 18.1 of the Service Agreement. The respondent vide belated response dated 21.10.2014 alleged that the operations date for the purpose of calculating the 20 years guaranteed period was to be computed from 11.05.2007, while the operations date for the purpose of calculating storage-cum-handling-charges including WPI escalation, was to be from 28.09.2013.
16. The appellant vide notice dated 15.01.2015, invoked arbitration in terms of Article 18.2 of the Settlement Agreement, however, since the amicable settlement failed, vide Notice dated 15.01.2015 the appellant invoked arbitration.
17. The respondent once again vide letter dated 30.01.2015 informed the appellant that the WPI escalation would be paid from 2014 onwards since 28.09.2013 was the Operations Date, though appellant vide letter dated 20.03.2015 objected to the recoveries on account of payment of towards over and above utilization of space by the respondent. Further, vide another letter dated 14.12.2015, the appellant offered two options to the respondent, one, to pay WPI based escalation from 2007 onwards if the service period was being counted from 2007 and second, the twenty years service period to start from 2013 if the operations date is 28.09.2013. The appellant, vide another letter dated 09.06.2016 reiterated its stand in its letter dated 14.12.2015, and attempted for amicable settlement.
18. The appellant vide another letter dated 15.03.2017 informed the respondent that the calculations of storage-cum-handling-charges were being wrongly done and the WPI escalation was to be calculated from the financial year and not the annual year.
19. The appellant vide letter dated 24.03.2017 nominated its Arbitrator. Vide letter dated 16.05.2017 appellant once again informed the respondent that the calculation of the storage-cum-handling-charges were being wrongly done and the WPI escalation was to be calculated from the financial year and annual year.
20. The respondent vide its letter dated 23.05.2017, sought recovery of excess amount of Rs.8,12,580 paid towards storage-cum-handling-charges on escalated WPI for February, 2017 and March, 2017. In response thereto, the appellant vide letter dated 23.05.2017 reiterated that storage-cum-handling-charges in terms of WPI escalations were to be calculated from the financial year or the annual year, is to be submitted to the Arbitral Tribunal.
21. On 14.06.2017, the respondent appointed Mr. Madhav Lal as it s nominate Arbitrator. Vide letter dated 28.07.2017, Dr.Justice Arjit Pasayat, accepted to act as Presiding Member of the Arbitral Tribunal. In the statement of claims filed before the learned Arbitrator, the appellant claimed amount of Rs.198,80,08,884/- towards unpaid and wrongly calculated storage-cum-handling-charges on enhanced rates, based upon WPI for the period 2008 till 2017 and also additional amount of Rs.80,02,518 towards utilization of Additional storage capacity over and above the designated capacity at the depot, with pendent lite pre-claim and post claim interest, was sought.
22. However, during pendency of arbitral proceedings, the respondent while remitting payments to the appellant in May/ June 2018 deducted the amounts by considering 11.04.2007 as the Operations Date and the year 2017 as the 11th Year of the Service Period, thereby unilaterally reducing the Annual Guaranteed Tonnage (AGT) to 75% as per Annexure -2 of the Service Agreement. The appellant claims to have protested against the wrongful and unilateral recoveries made by the respondent from 11th year vide letter dated 28.06.2018 and also vide letter dated 05.07.2018 informed that the matter was sub-judice before the learned Arbitrator and so, no recoveries be made.
23. The respondent, in response, vide letter dated 24.08.2018 informed the appellant hat the 20 year programme started in 2007 and from the year 2017, 75% deduction was to be made. Also, respondent vide another letter dated 31.07.2018, sought recovery of Rs. 85,35,420/-, based on 100% AGT for Banglore Deport.
24. In the light of aforesaid stand of respondent, the appellant, filed alternative claims before the learned Tribunal, thereby claiming an amount of Rs. 38,36,19,390/- towards storage-cum-handling-charges based on WPI escalation for the financial year 2017-18 by treating 11.05.2007 as the Operations Date under the Service Agreement dated 28.06.2005 (Claims 3A & 3B) and if the tribunal holds 28.09.2013 as the Operations Date as claimed by the respondent (claims 3C & 3D), being the date on which project was completed, then the appellant shall be entitled to WPI based escalation as per formula of storage-cum-handling-charges from the financial year 2013-14 and reduction of Annual Guaranteed Tonnage (AGT) to 75% will be applicable from 28.09.2013 (11th year from 28.09.2013) which has been rejected by the learned Single Judge.
25. After examining various communications exchanged between the parties, the learned Arbitral Tribunal, comprising of two members and One Presiding Arbitrator, held as under:-
i. Claim No. 1, 3A, 3B: It was held that Article 55 of the Limitation Act would apply, thereby, claims relating to the period 2008-09, 2009-10, 2010-11 and 2011-12 part (upto 15.01.2012) were held to be barred by limitation, as the arbitration was invoked vide letter dated 15.01.2015 in terms of Article 18.2 of the Agreement.
ii. Claim No.2: It was held that the Appellant would be entitled to receive Rs.500 per MT on daily basis on actual utilization beyond the designated storage capacity of 2,00,000 MT post 15.01.2012 (Claim prior to this date being barred by limitation). The actual amount was to be worked out by the parties based on documents on the records of the Tribunal.
iii. Alternate Claim No. 3C & 3D: It was held that the Service Period in terms of Clause 4.1 of the Service Agreement (20 years) was to be reckoned from 28.09.2013. For the application of the parameters prescribed in Annexure 15 to the Service Agreement, the Financial Year 2013-14 would be reckoned for WPI escalation. In this context it was to be noted that under Clause 4.1 of the Service Agreement, both the terms Operations Date and Service Period are treated to be a part of the same transaction and there is no scope for any delinking as contended by the Respondent.
iv. Claim for Interest: The entitlement of the Appellant was to be in terms of the definition of Point No.ii. The actual amount was to be worked out by the parties within a period of two months by joint reconciliation. The amount so calculated would be paid by the respondent herein to the appellant herein within a period of one month from such computation. In case it is not paid, the amount would carry interest @ 8% from the date of Award. Similarly, the financial entitlement of the Appellant, if any, on the basis of the adjudication of Alternate Claim shall be worked out in the manner directed supra. They shall be applicable to this Claim also.
26. According to appellant, while passing the aforesaid impugned Arbitral Award dated 02.01.2021, the Arbitral Tribunal rightly relied upon Joint Stock Reconciliation Report prepared by the parties and observed in Para 8.2 that it is seen that the utilization of storage capacity over and above 2,00,000 MT at the Base Depots at Moga and Kaithal is established by the Joint Stock Reconciliation Report signed by the parties. There was no dispute raised about the quantity stored. Also, the Tribunal rightly considered the definition of AGT, (Annual Guaranteed Tonnage), Annual Receipt Tonnage and designated Storage Capacity and observed that the utilization of storage at a Base Depot over and above its designated storage capacity on a given day is conceptually different from the total quantity of food grains received by the appellant from the respondent during the financial year as Annual Receipt Tonnage.
27. Aggrieved against the arbitral award dated 02.01.2021, the respondent preferred a petition [O.M.P. (COMM) 82/2022] under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the same. The learned Single Judge vide impugned judgment dated 05.07.2022 held that the Arbitral Award is vitiated by patent illegality on the face of the Award, as there is no ambiguity in the contract terms of the parties and that the letters dated 11.04.2007 and 09.05.2007 as well as the Supplementary Agreement dated 12.02.2013 did not tantamount to amendment of the main Service Agreement and thereby, set aside the arbitral award to the extent that the guarantee period would commence from 28.09.2013 and not from May, 2007. The learned Single Judge further held that the escalated storage-cum-handling-charges were to be computed on the basis of the WPI of 28.09.2013, as the said finding was not challenged by either side. The learned Single Judge upheld that the appellant would be entitled to receive Rs.500/- per MT on daily basis on actual utilization beyond the designated storage.
28. Learned senior counsel, while challenging the decision rendered by the learned Single Judge, on behalf of appellant, submitted that the findings returned by the learned Single Judge are patently illegal, as scope of review under Section 34 of the Act is restricted whereas the learned Single Judge has re-appreciated the evidence as well as substituted Arbitral Tribunals view with its own view. To submit so, reliance was placed upon decision of Honble Supreme Court in Delhi Airport Metro Express Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd. 2022 1 SCC 131 and NTPC Ltd. Vs. Deconar Services Pvt. Ltd. 2021 SCC OnLine SC 498.
29. It was submitted that the learned Single Judge has not correctly interpreted the terms of agreement and introduced two operations date; one for commencement of service period and another for payment of WPI escalation, which is de hors the terms of agreement between the parties. It was submitted that in Para-9.16 of the Award the learned Arbitral Tribunal has returned a finding that the contentions of FCI are inconsistent with its own admissions, as FCI considered the operations date as 11.05.2007 for computing 20 years service period, whereas for the payment of WPI based escalation, FCI has taken as 28.09.2013 as the operations date. The learned Tribunal while considering that the appellant commenced provisions of service upon completion of service on a commercial basis only on 28.09.2013 and therefore, tribunal treated 28.09.2013 as the operations date and so, the service period in terms of Clause-4.1 of the Service Agreement must reckon from 28.09.2013.
30. It was further submitted that the learned Single Judge has failed to consider that if the date of 11.05.2007 is considered as operations date, then 2013 would be the 6th year for WPI based escalation in storage-cum-handling-charges and if 2013 is taken as the base year for WPI based escalation, then the interpretation of various clauses under the Service Agreement, letters exchanged between the parties and supplementary agreement, will lead to anomalous interpretation. Also, it has been erroneously held by the learned Single judge that none of the parties have challenged the finding that WPI based escalation shall apply from 2013, whereas the learned Arbitral Tribunal has very clearly held that Service Period in terms of Clause 4.1 of the Service Agreement (20 years) must reckon from 28.09.2013, which essentially meant that the financial year 2013-14 shall be the base year for WPI escalation.
31. It was next submitted that the learned Arbitral Tribunal in Para-9.16 of the Award held that as per the parameters prescribed in Annexure-15 to the Service Agreement, the financial year 2013-14 would reckon for WPI escalation, whereas the learned Single Judge has erroneously held that the arbitral award is passed outside the terms of the contract. (PDF-83) Thereby, the learned Single Judge failed to consider that the learned Tribunal examined all the correspondence exchanged between the parties, especially letters dated 11.04.2007, 04.05.2007, 09.05.2007; the Supplementary Agreement dated 12.02.2013 and also the admissions and contentions of respondent- FCI to allow the claim 3C and 3D in favour of AALL and it has infact failed to demonstrate as to how the Tribunal has materially altered the terms of the Agreement. Reliance placed upon decision in PSA SICAL Terminals Pvt. Ltd. Vs. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin(2021) SCC OnLine SC 50 by the learned Single Judge on the issue of re-writing of contract, is misplaced in the facts of the present case.
32. Learned Senior counsel submitted that the arbitral award nowhere stated that parties are not bound by the contract and by placing reliance upon decision in Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, wherein it is held that any contravention of a terms of contract by the Tribunal, should not ipso facto result in rendering the award capable of being setting aside; the learned Tribunal has proceeded because it was not bound by the contract between the parties.
33. Learned counsel further submitted that the primary dispute between the parties was with respect to non-payment of WPI based escalation since 2007 and the contents of the letters dated 11.04.2007 and 09.05.2007 make it clear that there was no discussion between the parties; either in May 2007 or during the execution of the Supplementary Agreement dated 12.02.2013 with respect to WPI component of SCHC, as set out in Annexure-15 of the Agreement. The provision for WPI base escalation is to compensate the appellant for inflationary costs of operations. The prices quoted in the year 2004 could not remain static for the agreed period of 20 years even in the case of negative WPI, which is an important component for consideration for all commercial purposes.
34. Lastly, it was submitted that if two different operations dates were to be considered, one for the 20 years service period and second, for the storage-cum-handling-charges inclusive of WPI based escalation, the intention under the Service Agreement; the appellant shall suffer irreparable loss. No reasons have been recorded in the impugned judgment by the learned Single Judge to hold that the Award dated 02.10.2021 passed by the learned Arbitral Tribunal suffers from patent illegality. Hence, setting aside of impugned order and judgment dated 05.07.2022 passed by the learned Single Judge in O.M.P. (COMM) 82/2022, is sought by the appellant.
35. Learned senior counsel appearing on behalf of respondent-FCI at variance submitted that for storage of huge quantity of wheat procured by FCI, the appellant was selected as the Developer-Cum-Operator and a letter of acceptance of proposal was issued and a service agreement dated 28.06.2005 was executed. Under the service agreement dated 28.06.2005, for development and operation of the bulk food grains, its handling, storage and transportation, the appellant has to prepare two depots having storage capacity of 2,00,000 MT, one depot at Moga (Punjab) based with field depots at Chennai, Coimbatore and Bengaluru and second, base depot at Kaithal, Haryana with field depots at Navi Mumbai and Hooghly.
36. The aforesaid service agreement dated 28.06.2005 stood modified vide letters dated 04.05.2007 and 09.05.2007. The appellant vide letter dated 04.05.2007 sought acceptance of base depots on actual utilization basis, as the project was not complete and respondent, vide letter dated 09.05.2007 accepted the offer of the appellant. The Moga Base depot was first utilized on 11.05.2007, however, the project was incomplete and a senior level management committee was set up by the appellant to monitor the project. A supplementary agreement dated 12.02.2013 was executed whereunder payment on the basis of actual storage-cum-handling-charges commenced on actual guaranteed tonnage basis. It was thus apparent that the project was incomplete and appellant was required to acquire additional wagons, after which the full rate of actual guaranteed tonnage was to be restored. Also, under the Supplementary Agreement, payment at reduced rate of Rs.1842/382 /MT was agreed, which was to be restored to Rs. 2000/415/MT after completion of the Project i.e. purchase of 104 wagons. The contractual obligations were completed by the appellant on 28.09.2013, when the actual guaranteed tonnage rates were fully restored. Vide letter dated 30.09.2013, the appellant submitted The Railway Inspection Certificate, on the basis of which the date of 28.09.2013 was taken as the operations date.
37. During the course of hearing, learned Senior counsel appearing on behalf of respondent submitted that it was on 10.01.2014 the appellant for the first time agitated its claim that in terms of Clause 4.1 of the Service Agreement, the operation date being 28.09.2013, the 20 year guarantee period be the reckon from the said date. It was submitted that vide its letter dated 04.05.2007, the appellant agreed that 2007 has to be considered as the first year of the 20 years guarantee period; which commenced from 11.05.2007 and the Guaranteed Tonnage and WPI base escalation as stipulated in the Service Agreement was 28.09.2013. Even thereafter, appellant vide letters dated 01.03.2014, 07.05.2014 & 28.05.2014 reiterated that 28.09.2013 be taken as the Operations Date provided the 20 years guarantee period reckons from 2013 onwards.
38. The respondent vide letter dated 21.10.2014 informed the appellant that the 20 years guarantee period commenced from 11.05.2007 and for applicability of full guaranteed tonnage as per Service Agreement, the date is 28.09.2013, which is also the operations date for determining the claim for escalation based on WPI.
39. According to respondent, the arbitral award dated 02.10.2021 rejected the claim for storage-cum-handling charges based on WPI escalation raised by the appellant but allowed the alternative claim for treating the commencement of 20 year guarantee period from 28.09.2013.
40. Learned senior counsel submitted that the respondent-FCI never had the intention to have two operations date, which means the date on which the facilities are commissioned. The commencement of 20 years period has to commence from which the facilities are commissioned. Since the services commenced on 20.09.2013, the period of 20 years has to commence from 20.09.2013 and not May, 2007. The Service Period of 20 years in terms of Clause 4.1 of the Service Agreement has to be reckoned from the Operations Date. It was submitted that the contention of appellant that the letters dated 04.05.2007 and 09.05.2007 modified the original Service Agreement is untenable. The service period in terms of Clause-4.1 of the Service Agreement (20 years) has to be reckoned from 28.09.2013 and also the terms operations date and service period are to be treated as part of the same transaction.
41. On the aspect of claim of interest raised by the appellant, the stand of respondent is that the interest payable by FCI shall depend upon the operations date and service period from which amount payable is to be determined and if the said amount is not paid within one month, the same shall carry interest @8% from the date of the award.
42. The respondent has further averred that the learned Arbitral Tribunal in Para-9.5 of the Award has taken note of the Supplementary Agreement dated 12.02.2013 to hold that appellant vide its letter dated 04.05.2007 and further by letter dated 05.06.2007 had accepted that the respondent will utilize its facilities and the guarantee period will start from 2007, however, in Para-9.13 has relied upon letter dated 11.04.2007 to hold that there was no mention of 20 years guarantee period. Further, in Para-9.16 the learned Arbitral Tribunal has held that the letters of 04.05.2007 and 09.05.2007 could not be called as a modification in terms of Article 19.7 of the Contract, which is contrary to its own finding returned in Para- 9.16 of the Award wherein it is held that the background in which the claimant requested for utilization of its facilities has been highlighted in detail and that the Supplementary Agreements were therefore intended to encompass post offers by the Claimant and the acceptance by the Respondent; and that the issue of currency of the 20 year period was not germane in the context.
43. Learned senior counsel appearing on behalf of respondent has averred that the impugned judgment dated 05.07.2022 passed by the Single Judge is well merited whereby the Arbitral Award has been set aside in exercise of powers vested under Section 34 of the Act, which permits to interfere in the arbitral Award. It was submitted that the observation of the learned Arbitral Tribunal that the letters dated 4.5.2007 and 9.5.2007 do not amend the Service Agreement of 2005 is incorrect on the face of record, as the appellant has even always acknowledged that the Service Agreement stood amended, which is apparent from letters dated 04.05.2007; 09.05.2007; 05.06.2007 and 30.10.2014 as well as the Supplementary Agreement dated 12.02.2013. Next submitted that the learned Arbitral Tribunal has ignored the vital piece of evidence i.e. letters dated 04.05.2007; 09.05.2007; 05.06.2007;30.10.2014 and the Supplementary Agreement dated 12.02.2013, which is patent illegality and has been set aside by the learned Single Judge. In support of above submission, reliance is placed upon decision of Honble Supreme Court in Airport Metro Express Vs. DMRC 2022 (1) SCC 131. Reliance was also placed upon decisions in BCCI Vs. Kochi Cricket (P) Ltd. (2018) 6 SCC 287; S.P. Singla Constructions (P) Ltd. Vs. State of H.P. (2019) 2 SCC 488; Associate Builders Vs. DDA (2015) 3 SCC 49; IOCL Vs. M/s Shree Ganesh Petroleum 2022 SCC Online SC 121; Antrix vs. Devas 2022 SCC Online DEL 2622 in support of respondents case.
44. Lastly, learned senior counsel submitted that the learned Arbitral Tribunal had failed to appreciate the documentary evidence placed on record, which manifest that the Service Period would commence from May, 2007 and thereby committed a patent illegality and thus, the Award has rightly been set aside by the learned Single Judge. Thus, the impugned judgment dated 05.07.2022 passed by the learned Single deserves to be upheld.
45. The submissions advanced by learned Senior Counsel representing both the sides were heard at length and the impugned judgment, arbitral award and the other material placed on record has been carefully perused by this Court.
46. The appellant- M/ S Adani Agri Logistics Ltd. and respondent- Food Corporation of India, for Bulk Handling, Storage and Transportation of foodgrains; including its producing, consuming and porting; entered into two Service Agreements dated 28.06.2005 for Circuit-1 (Moga-Chennai- Coimbatore-Bangalore) and Circuit-2 (Kaithal-Navi Mumbai- Hooghly) where-under the facilities for the two Circuits had to be completed within 36 months of execution of the Agreement i.e. by 28.06.2008. The terms of the Agreements incorporated in Article-4 stipulated that the Agreement would be for a period of twenty years from the Operations Date and for utilizing services of the appellant, the respondent shall pay 100% Annual Guaranteed Tonnage for the first 10 years; 75% from the 11th year till 20th years from the Operations Date.
47. While the project for establishment of the both the Circuits was in progress, the appellant vide letters dated 14.03.2007 and further vide letter dated 11.04.2007 informed the respondent that some facilities were ready for operation and so both the sides vide letters dated 11.04.2007; 04.05.2007 and 09.05.2007 decided to use the completed Base Depots upon payment of Storage-cum-Handling Charges on actual utilization basis. In terms of this settlement, though the appellant was to receive payments for actual utilization of the space, however, the other terms of Service Agreements dated 28.06.2008 remained unchanged. The appellant has claimed that the arrangement accepted vide letters 11.04.2007; 04.05.2007 and 09.05.2007, did not mention that the respondent shall, for utilizing the services even before completion of the project, pay as per inflation rate based upon Wholesale Price Index, as was agreed in Annexure-15 of the Service Agreement dated 28.06.2008; which is disputed by the respondent. Further, on 30.01.2012 both the circuits were completed by the appellant, however, for the delay occasioned, the appellant was to bear the damages. On 04.12.2012 the full guaranteed Storage-cum Handling Charges of Rs.2000 per MT Per annum for base depots and Rs.415 per MT per annum for field depots, were decided to be restored as per the original Service Agreement and a Supplementary Agreement dated 12.02.2013 was entered between the parties. In terms of Supplementary Agreement dated 12.02.2013, sum of Rs.5.21 crore was paid by the appellant to the respondent and also additional 104 wagons were put into service on 28.09.2013. Thereby, respondent considered the date of 28.09.2013 as the operations date, from which the full guaranteed storage-cum-handling charges of Rs.2,000 per MT p.a. for base depots and Rs.415 per MT p.a. for field depots, were restored on guaranteed tonnage, as was incorporated in the Supplementary Agreement dated 12.02.2013. However, the 20 years guaranteed period was to be computed from 11.05.2007, while the operations date for the purpose of calculating storage-cum-handling-charges including WPI escalation, was to be from 28.09.2013.
48. Being aggrieved, the appellant invoked arbitration and raised the following claims before the learned Arbitral Tribunal:-
It is, therefore, most respectfully prayed before this Honble Tribunal to pass an Award in favour of the Claimant and against the Respondent awarding the following:
a) An amount of Rs.198,80,08,884/- towards unpaid and wrongly calculated storage cum handling charges for the period April, 2008 to 31st March, 2017 along with interest @18% per annum for Rs.107,88,57,828 from April, 2008 to 31st March, 2017 on the said amount totaling to Rs.306,68,66,712.
OR
IN THE ALTERNATIVE, direct that both the duration of 20 years as envisaged under Article 4.1 of the Service Agreement as also the escalation based upon WPI for calculating storage cum handling charges, commence from 28.09.2013.
b) An amount of Rs.80,02,518/- for utilizing the Depots for storing more than the specified capacity along with interest on the said amount @18% per annum for Rs.37,92,510/- on the said amount for the period May, 2013 to 31st March, 2017 totaling to Rs.1,17,95,028/-
c) Pendente-Lite and Post Award interest @10% per annum on the amounts mentioned at (a) and (b) above.
d) A sum of Rs.38,36,19,390/- (Rupees Thirty-eight Crores Thirty six lakhs nineteen thousand three hundred and ninety) towards storage-cum-handling- charges based on WPI escalation for the financial year 2017-18 by treating 11.05.2007 as the Operations Date under the Service Agreement dated 28.06.2005 along with pendente-lite and future interest on the said amount @18% per annum as set out in Claim 3A above in favour of the Claimant and against the Respondent.
e) A declaration that 11.05.2007 is the Operations date under the Service Agreement dated 28.06.2005 and the Respondent is liable to pay Service cum Handling Charges to the Claimant under the service Agreement dated 28.06.2005 based on Wholesale Price Index (WPI) as published by the Reserve Bank of India by treating 11.05.2007 as the Operations Date during the pendency of the arbitration proceedings and till expiry of the Service Agreement dated 28.06.2005, and that the Respondent is further liable to be directed to pay the Claimant all such amounts as may be deducted by it on this account during the pendency of the present arbitration proceedings with pendente-lite and future interest thereon @18% p.a. as set out in Claim 3B above;
in the alternative to prayers (d) and (e) above, the following prayers (f) and (g) be awarded:
f) In the event of this Honble Tribunal holding 28.09.2013 to be the Operations Date under the Service Agreement dated 28.06.2005, to award a sum of Rs.19,75,92,265/- (Rupees Nineteen Crores Seventy Five Lakhs Ninety Two Thousand Two Hundred and Twenty-six) in favour of the Claimant and against the Respondent, along with any amounts which may be unilaterally deducted by the Respondent during the pendency of the arbitration proceedings by reducing AGT to 75% by treating 11.05.2007 as the Operations Date, together with pendente lite and future interest @18% per annum on the aforesaid amount of Rs.19,75,92,265/- (Rupees Nineteen Crores Seventy Five Lakhs Ninety Two Thousand Two Hundred and Twenty-six) and such other amounts as may be deducted by the Respondent by reducing AGT to 75% treating 11.05.2007 as the operations Date as set out in Claim 3C above.
g) In the event of this Honble Tribunal holding 28.09.2013 to be the Operations
Date under the Service Agreement dated 28.06.2005 for the purpose of calculating the escalation based on Wholesale Price Index, the Claimant is entitled to a declaration that for the purpose of Annexure-2 to the Service Agreement dated 28.06.2005, the reduction in the AGT to 75% will be applicable from 28.09.2013 as set out in Claim 3D above.
h) Costs of the proceedings.

49. In the Amended Statement of Defence dated 27.06.2019, the respondent before the learned Arbitral Tribunal asserted as under:-
24. Reading the original service agreement read with the subsequent modification dated 04.05.2007 and 09.05.2007 as also 12.02.2013, the following position emerges:
a. That guarantee period of 20 years would start from the year 2007 and it will remain in force till year 2027.
b. The concept of SCHC based on AGT is not applicable till completion of project i.e. 28.09.2013 and storage charges based on Actual Utilization Basis is applicable till such date.
c. Since, SCHC in terms of Annexure-15 stands modified in favour of AUB, therefore, WPI based escalation is not applicable for the period from May 2007 to September 2013.
d. For the purpose of WPI escalation (escalation of rate), year 2013 (commercial operations date) would be treated as is at initial rate of Rs.2,000 per MT/year (for base depots) and Rs.415 per MT/year (for field depots) and for subsequent years i.e. 2014 onwards only WPI escalation would be made applicable to be paid as SCHC in terms of Annexure-15 i.e. for applying the formula contained in Annexure-15, year 2014 would be taken as I1, 2015 as I2 and so on.
50. Accordingly, the learned Arbitral Tribunal, vide impugned Arbitral Award dated 02.10.2021 (further corrected vide orders dated 30.10.2021 and 12.11.2021) decided the claims of the parties holding as under:-
9.5 A conjoint reading of the original bargain as contained in the service Agreement dated 28.06.2005, modifications vide letters dated 04.05.2007 and 09.05.2007, Supplementary Agreement date 04.02.2013 would be necessary to deal with the rival stands about the Operations Date.

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9.16 In the factual scenario of the present case, as elaborately stated above, it is clear that there could not have been and has not been any intention of the Claimant to have two Operation Periods. On one hand, the Respondent accepts that the Operations Date as defined means the date on which the facilities are commissioned and the DCO commences provision of services on a commercial basis. At the same time, it wants to introduce the 20 years period from an earlier Operation Date. Great emphasis has been made by the Respondent on the letters of May 2007 and the Supplementary Agreement. The background in which the Claimant requested for utilization of its facilities has been highlighted in detail supra. The Supplementary Agreements were therefore intended to encompass post offers by the Claimant and the acceptance by the Respondent. The issue of currency of the 20 year period was not germane in that context. Therefore, the penta Test as noticed by the Honble Supreme Court in Nabha Power Ltd supras has to be applied, more particularly, the firs implied term condition i.e. reasonable and equitable. The Officious Bystander Test has also significance in the peculiar facts situation of this case. The inevitable conclusion is that 20 year period (Service Period) has to commence from 20.09.20136 and not from May 2007. The service Period of 20 years in terms of Clause 4.1 of the Service Agreement has to be reckoned from the Operation Date. The stand of the Respondent that the letter of the Claimant dated 04.05.2007 and / or letter of the Respondent dated 09.05.2007 modified the original Service Agreement is untenable. A conjoint reading of the Service Agreement dated 28.06.2005 and the aforesaid letters dated 04.05.2007 and 09.05.2007 clearly shows that there was no modification of the service Agreement, more particularly, Annexure 15, Clause 4.1 read with Clauses 3.1(1), 3.1(2) and 3.2(1). The two letters cannot be called as modification in terms of Clause 19.7 of the Service Agreement. It also need to be noted that the stand of the Respondent is not consistent. For one particular aspect, it is seeking 2007 to be the Operations Date while for the computation of Service Period it is treating 28.09.2013 as the Operations Date. In this regard, it has to be seen that the Respondent has accepted that the DCO commenced provision of services on a commercial basis by levy of SCHC while it is treating 28.09.2013 as the Operations Date. Therefore, the Tribunal concludes that treating 28.09.2013 as the Operations Date as canvassed by the Respondent. The Service Period in terms of Clause 4.1 of the Service Agreement (20 years) has to be reckoned from 28.09.2013. The application of the parameters prescribed in Annexure 15 to the Service Agreement, the Financial Year 2013-14 would be reckoned for WPI escalation. In this context it needs to be noted that in Clause 4.1 of the Service Agreement, both the terms Operations Date and Service period are treated to be a part of the same transaction and there is no scope for any delinking as contended by the Respondent. The point for determination is accordingly decided.
51. Being aggrieved with the decision of learned Arbitral Tribunal holding that the service period of twenty years would commence from 28.09.2013, which shall also be treated as the operations date for the purpose of computing 20 years service period; the respondent-FCI preferred an appeal under Section 34 of the Act before the learned Single Judge on the ground that in view of Service Agreement dated 28.06.2005 and also Supplementary Agreement dated 12.02.2013,which was a part of original Service Agreement dated 28.06.2005; the twenty years period is to be computed from 11.05.2007 and not 28.09.2013.
52. The learned Single Judge of this Court vide impugned judgment dated 05.07.2022 observed and held as under:-
49. One of the reasons that had persuaded the Arbitral Tribunal to hold that the period of twenty years will commence from 28.09.2013 is that two different dates were not possible. One to calculate the escalation in SCH charges and the other for calculating the service period. The Arbitral Tribunal held that since it was clear that the escalation would be calculated on the basis of WPI as on 28.09.2013 as the base date being the date on which the facilities were fully commissioned; it would necessary follow that the Service Period of twenty years would also commence from the said date. This Court is unable to accept the said rationale. The parties are at liberty to choose different dates for different purposes. The fact that the escalation has to be calculated from the base date, that is 28.09.2013, would not necessarily lead to the conclusion that the Service Period must commence from the same date. The question as to the date from which the guarantee period of twenty years (Service Period) commences is required to be examined on the basis of agreement arrived at between the parties. In this regard, there is no ambiguity that the parties had agreed that the guarantee period would commence from the year 2007. Thus, notwithstanding that the escalation may be payable with 28.09.2013 being the base date, the guarantee period of twenty years would commence from the year 2007. This is what the parties in their commercial wisdom agreed.
50. In view of the above, the impugned award to the extent it accepts that the guarantee period would commence from 28.09.2013 and not from May, 2007, is set aside. Accordingly, Claim nos. 3C and 3D are rejected.
51. This Court finds no infirmity with the findings of the Arbitral Tribunal that the escalation in SCH charges is to be computed on the basis of the WPI of 28.09.2013 as the base. None of the parties have challenged the said decision. Merely because the decision of the Arbitral Tribunal to allow alternate claims is set aside, is no ground to set aside its findings on the issue of escalation.
53. The appellant in the present appeal has challenged the decision of the learned Single Judge on the ground that the learned Single Judge has transgressed its jurisdiction under Section 34 of the Arbitration and Conciliation Act while setting aside the Arbitral Award by interfering and re-appreciating the evidence placed before the Arbitral Tribunal and by substituting its own view, which in fact is contrary to the terms of the agreement entered between the parties.
54. Appellant has relied upon decision in Ssangyong Engg. (Supra), Airport Metro Express (Supra), NTPC Ltd. (Supra) and PSA SICAL Terminals Pvt. Ltd. (Supra).
55. In Ssangyong Engg. (Supra), the Supreme Court has held that a party to the Agreement cannot be made liable to perform something for which it has not entered into a contract. It is held that re-writing a contract for the parties would be breach of the fundamental principles of justice entitling a court to interfere since such a case would be one which shocks the conscience of the Court.
56. The Honble Supreme Court in Airport Metro Express (Supra) has observed that in several judgments scope of Section 34 of the Act has been interpreted to stress on the restrain upon the Court to examine the validity of the Arbitral Awards, after dissecting or reassessing the factual aspects of the cases. It has been observed as under:-
29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression patent illegality. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression patent illegality. What is prohibited is for Courts to reappreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as Courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression patent illegality.

57. With afore-noted observations, the Supreme Court in Airport Metro Express (Supra) has thus held that if an award shocks the conscience of the Court, it can be set aside as being in conflict with the most basic notion of justice.
58. In NTPC Ltd. Vs. Deconar Services Pvt. Ltd. (Supra), the Honble Supreme Court has held that any decision regarding the issue of whether an arbitrator can award a particular claim or not, will revolve on the construction of the contract in that case, the evidence placed before the arbitrator and other facts and circumstances of the case. It was further observed that merely showing that there is another reasonable interpretation or possible view on the basis of the material on the record, is insufficient to allow for interference by the Court and that objector/appellant, in order to succeed in the challenge, must show that the award of the arbitrator suffered from perversity or an error of law or that the arbitrator has otherwise mis-conducted himself.
59. In PSA SICAL Terminals Pvt. Ltd. Vs. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin (2021) SCC OnLine SC 50 the Supreme Court has observed as under:-
87….In our view, re-writing a contract for the parties would be breach of fundamental principles of justice entitling a Court to interfere since such case would be one which shocks the conscience of the Court and as such, would fall in the exceptional category.

60. Respondent has also placed reliance upon decision in Airport Metro Express (Supra) to demonstrate what is patent illegality and under what circumstances and Award can be set aside under Section 34(2A) of the Act.
61. So far as reliance placed by respondent upon decision in BCCI Vs. Kochi Cricket (P) Ltd. (Supra) is concerned, in the said decision, applicability of amended of Arbitration & Conciliation (Amendment) Act, 2015 have been dealt with and it has been observed that these have not been given retrospective effect. In the present case, the arbitration commenced on 15.01.2015 and so, this decision is of no help to the case of respondent.
62. The decision in S.P. Singla Constructions (P) Ltd. (Supra), relates to challenge to appointment of Arbitrator in the facts of the said case, and hence, not applicable to the case in hand.
63. In IOCL (Supra), on the scope of interference by the Court, the Honble Supreme Court has held as under:-
43. An Arbitral Tribunal being a creature of contract, is bound to act in terms of the contract under which it is constituted. An award can be said to be patently illegal where the Arbitral Tribunal has failed to act in terms of the contract or has ignored the specific terms of a contract.
44. However, a distinction has to be drawn between failure to act in terms of a contract and an erroneous interpretation of the terms of a contract. An Arbitral Tribunal is entitled to interpret the terms and conditions of a contract, while adjudicating a dispute. An error in interpretation of a contract in a case where there is valid and lawful submission of arbitral disputes to an Arbitral Tribunal is an error within jurisdiction.
45. The Court does not sit in appeal over the award made by an Arbitral Tribunal. The Court does not ordinarily interfere with interpretation made by the Arbitral Tribunal of a contractual provision, unless such interpretation is patently unreasonable or perverse. Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one.

64. In Antrix (Supra), relied upon by the respondent, the Supreme Court has dealt with the powers of Chief Justice under Section 11(6) of the Act, and is distinguishable on facts and law, and hence, not applicable to the facts of the present case.
65. Having regard to Supreme Courts decisions in Ssangyong Engg. (Supra), Airport Metro Express (Supra), NTPC Ltd. (Supra) and PSA SICAL Terminals Pvt. Ltd. (Supra), the settled position of law is that under Section 34 of the Act, if the Court is of the opinion that the decisions rendered by the Arbitral Tribunal is in conflict with the material placed and the appellant challenging the Arbitral Award, has been able to persuade the Court that interference is not unjust, the Courts are well within its scope to interfere in the Award to meet the ends of justice.
66. Adjudicating the present appeal on the basis of decisions rendered by the learned Single Judge, the Arbitral Award and the material placed before the learned Arbitral Tribunal, this Court finds that the stand of appellant is that the learned Arbitral Tribunal has held that the date of 28.09.2013 shall be treated as the operation date and in terms of Clause 4.1 of the Service Agreement, 20 years has to be reckoned from 28.09.2013; whereas the learned Single Judge has erred in holding that 11.05.2007 shall be treated as Operations Date and the guarantee period of 20 years shall commence from 11.05.2007 but 29.05.2013 shall be treated as the base year for calculation of WPI based escalation rates.
67. For the purpose, it would be worth to first go through Annexure-4 to the Service Agreement dated 28.06.2005, which reads as under:-
Operations Date means, the date on which the Facilities in the Circuit are commissioned and the DCO commences provision of Services on a commercial basis by levy of Storage-cum-Handling Charges on FCI.
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Services Period means the period as determined under Section 4.1 of this Agreement.
Services mean the bulk handling and storage services and Works provided by the DCO to FCI, including the transportation of Foodgrains in Special bulk foodgrains Wagons from Base Depots to Field Depots in the circuit and auxiliary, ancillary, additional and incidental services, operations and duties as set out in Annexure 13.
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Storage-cum-Handling Charge means the amount of money charged, collected, retained and appropriated by the DCO from FCI for providing the services under the terms of this Agreement at the rates set out in Annexure 15.

ARTICLE 4
TERM OF AGREEMENT
4.1 Duration
This Agreement shall come into effect as of the date of its execution (Effective Date) and shall continue in force for a period of twenty years from the Operation Date (Service Period) unless terminated earlier in accordance with the terms hereof or extended by the Parties by mutual agreement.
4.1 Duration
This Agreement shall come into effect as of the date of its execution (Effective Date) and shall continue in force for a period of twenty years from the Operation date (Service Period) unless terminated earlier in accordance with the terms hereof or extended by the Parties by mutual agreement.
68. Relevantly, the appellant vide letter dated 11.04.2007 proposed the respondent about readiness of Base Depots for partial use on actual utilization basis. The letter dated 11.04.2007 reads as under:-
11.04.07
AKK/FCI/IEAS

Sh.Alok Sinha, IAS,
Chairman cum Managing Director,
M/s.Food Corporation of India,
16-20, Barakhamba Lane,
New Delhi-110 001

Sub:- Readiness to receive Food grains at Moga&Kaithal

Dear Sir,

This has reference to our earlier letter no.KS/GK/FCIdt.27.02.07, regarding schedule of commissioning of the Base depots of Moga & Kaithal in Circuit I & Circuit II respectively.
We take please in forming you, that the commissioning trials have been successful. Further the Independent Engineer cum Auditor, M/s. GVC India have also visited the sites, & have submitted their report, certifying the readiness of receipt of food grains at both the base depots. (copy of their report is enclosed).
Thus it is hereby submitted that we are now ready to receive the food grains at both the locations.
We solicit your support & co-operation for successful operations.
69. Thereafter, vide letter dated 04.05.2007 the appellant further informed the respondent that Base Depots could be used upon payment of Storage-cum-Handling Charges on actual utilization basis as against the Annual Guaranteed Tonnage. The letter dated 04.05.2007 reads as under:-
The Chairman cum Managing Director,
M/s. Food Corporation of India,
16-20, Barakhamba Lane,
New Delhi-110 001.

Sub:- Discussions during meeting held on 3rd May 07
Dear Sir,
This has reference to the meeting held on 3rd May 07, at your headquarters, regarding readiness of our Base depots. It was requested that AALL submit a letter for acceptance of depots on actual utilization basis. We would like to state as under:
1. The Committee consisting of the Independent Engineer & top officials of FCI had visited both the sites on 20th April 07, & have acknowledged that the sites are ready for receipt of foodgrains.
2. AALL Base depots of Moga & Kaithal shall accept the wheat, for storage from FCI, with immediate effect. We agree that FCI shall make payments to AALL on actual utilization basis, till the project is complete. However FCI shall put its best efforts to see that the maximum capacity of the depots is utilized.
3. We agree that the Operations for the year 2007 shall be considered as part of the 20 year guarantee period as per the Service Agreement between FCI & AALL.
4. The depots shall be ready for shipment of food grains by 1st July 07.
We are grateful for all the support extended to AALL, to enable us to start Operations of the Base Depots.

70. The aforesaid letters dated 11.04.2007 and 04.05.2007 show that the appellant had informed the respondent that the Base Depots were ready for storage of wheat and till completion of the project, the same could be used on payment of Actual Utilization Basis. The respondent, vide letter dated 09.05.2007, accepted the proposal of the appellant, stating as under:-
No.E.2(31)/2005/BulkProject/Stg.III/S&C/QP/01
Dt: 9.5.2007

Shri S.K. Srivastava,
Joint Secretary (Stg. & Admn), Ministry of CAF&PD
Deptt. of F&PD Krishi Bhavan, New Delhi

Sub:- Development & Operation of Bulk Food grains handling, Storage & Transportation facilities under BOO arrangement for circuit-I & II by M/s. Adani Agri Logistics Ltd.

Ref:- FCI Hqrs. Letter of even number dated 30.04.2007

Sir
You may kindly recall discussions in the Senior Level Monitoring Committee held on 11.4.2007 wherein M/S AALL had informed that the silos at Moga and Kaithal are ready for the receipt of the stocks and requested FCI to divert stocks of wheat, both in bulk and bag to the said locations.

In view of the inadequacies pointed out by GM (Regions), Punjab and Haryana. It was decided that a team consisting of S/Sh.
S.P. Kar, GM (A/Cs), R.N. Bhargava, GM (Engg.), GM (Punjab), GM (Hr) and Shri Ashok Kumar, Dy. Director (TFC) from Ministry may inspect both the base depots at Moga (Pb) and Kaithal (Hr) and submit factual report.

The team visited these Silos on 19th & 20th April 2007 along with the representatives of M/s AALL and the IE&A (GVC Energy Services Pvt. Ltd.), Dr. Ashok Kumar, Dy. Director (TFC), however, could not accompany the team due to his preoccupation in the Ministry.

The report of the team so received was circulated along with the meeting notice vide our letter dated 30.04.2007 (referred above). The Senior Level Monitoring Committee held its meeting on 3.5.2007 at FCI, HQRS. Copy of the minutes of the meeting is enclosed.

CMD, FCI desired to have the view of Ministrys representatives, ED (Engg), GM (Engg), CGM (A/Cs) and other participants and a common view was that we may start using the silos from the current season subject to the following conditions:-

1. M/s AALL will accept bagged cargo and debagging of stocks at silos will be done at their own cost.
2. Rent will be paid by FCI only on actual utilization basis.
3. The guarantee period of 20 years will begin from the date of deposition of wheat stocks during the current season.
M/s AALL have agreed to accept the above conditions. Copy of the letter dt. 4.5.07, containing undertakings of M/s AALL in this regard is also enclosed. Accordingly, the GM (Region) Punjab and Haryana will make requisite arrangements and dispatch stocks of wheat from mandies where procurement of FCI and State Agencies is on to the silos from the current season on the terms and conditions mentioned above. However, from next season, FCI will deliver the stocks both the bulk and bagged condition as per service agreement.

This is for your kind information and further directions if any from the Ministry.

71. The aforesaid letters dated 11.04.2007, 04.05.2007 and 09.05.2007 depict that in the light of circumstances that emerged when the Agreement was put into execution, the parties mutually agreed to adjustment of Dates. The appellant had informed the respondent that the Base Depots were ready for storage of wheat and till completion of the project, the same could be used on payment of Actual Utilization Basis. In addition, it specified that year 2007 shall be considered as part of the 20 years guarantee period. Thus, so far as aspect of component of WPI based escalation in the storage-cum-