TATA CONSULTANCY SERVICES LTD v. INSPIRA IT PRODUCTS PVT. LTD
Upholding Arbitral Award: Bombay High Court Affirms TCS's Liability for Undelivered Servers, Rejecting Challenges of Patent Illegality and Efflux of Time, Emphasizing Conduct of Parties.
Court: Bombay High Court
Citation: 2025:BHC-OS:23148
Decision Date: 02-12-2025
List of Laws
The Arbitration and Conciliation Act, 1996; Section 34 of the Arbitration and Conciliation Act, 1996; The Indian Contract Act, 1872; The Sale of Goods Act, 1930; Section 54(2) of the Sale of Goods Act, 1930; The Indian Evidence Act, 1872; Section 65B of the Indian Evidence Act, 1872
Case Brief
- Facts: Tata Consultancy Services (TCS) and Inspira IT Products Pvt. Ltd. were in a contractual agreement where Inspira was to supply 207 HP Proliant Tower ML 350 Servers and 207 HP ProDisplay 191-18.5" TFT Monitors to TCS. TCS issued three Purchase Orders to Inspira, one of which, Purchase Order No.3, is the subject of the dispute. The delivery date was 20 July 2013. Inspira claimed it purchased the servers from Avnet but could not deliver them as TCS did not provide delivery locations promptly. Eventually, Inspira sold the servers to Comprint at a reduced price. Inspira initiated arbitration claiming the difference between the purchase price and the sale price, along with warehousing charges. The Arbitral Tribunal awarded Inspira Rs. 96,20,515/- along with interest, deducting amounts for non-provision of support and reversal of monitors. TCS challenged the award, while Inspira challenged the deduction of Rs. 75,60,785/-.
- Procedural Posture: TCS filed Commercial Arbitration Petition No.415 of 2024 challenging the entire arbitral award. Inspira filed Arbitration Petition No.372 of 2024 challenging the deduction of Rs.75,60,785/-. The Bombay High Court heard both petitions together.
- Issue: Did the Arbitral Tribunal err in awarding damages to Inspira and deducting certain amounts, considering the arguments of patent illegality, perversity, and breach of contract? Specifically, did the contract end by efflux of time, and was Inspira obligated to mitigate losses?
- Holding: The Bombay High Court dismissed both arbitration petitions, upholding the arbitral award. The Court found no perversity or patent illegality in the Arbitral Tribunal's decision.
- Reasoning: The Court reasoned that TCS's conduct indicated that it did not treat the contract as having ended by efflux of time, as it continued to engage with Inspira and HP regarding the delivery and reversal of the servers. TCS never terminated the Purchase Order. The Court also found that Inspira took adequate steps to mitigate losses by selling the servers to Comprint. The Arbitral Tribunal's deduction of Rs.75,60,785/- for non-provision of support was also upheld, as the servers were never delivered. The Court emphasized that the Arbitral Tribunal's findings were based on contractual clauses and evidence on record and were plausible. The court cited McDermott International Inc. vs. Burn Standard Co. Ltd. And Ors to support the view that correspondence exchanged by parties is required to be taken into consideration for the purpose of construction of a contract.