BEFORE THE HON’BLE ARBITRAL TRIBUNAL OF

THE HON’BLE MR. JUSTICE (RETD.) SHIV KIRTI SINGH, CHAIRMAN

MRS MADUHIRIMA MRIDUL, ADVOCATE
MR SAURAV AGARWAL. ADVOCATE
IN THE MATTER OF AN ARBITRATION PURSUANT TO THE ARBITRATION
AND CONCILIATION ACT, 1996
IN THE MATTER OF AN ARBITRATION PURSUANT TO THE ARBITRATION
AGREEMENT AS CONTAINED IN THE CONTRACT FOR ELECTRO-MECHANICAL
WORKS OF RONGNICHU HYDROELECTRIC PROJECT (2X48) MW
DATED 28 SEPTEMBER 2011
BETWEEN
VOITH HYDRO PRIVATE LIMITED
Claimant
And

MADHYA BHARAT POWER CORPORATION LIMITED

Respondent
_______________________________________
2nd Witness Statement of
Mr. Prakash Mishra
_ March 2018
_________________________________________
INDEX
KAS Para 9 to 11, 13 to 36
DPS Para 8 to 15
AR Para 15 to 22

I, Prakash Mishra, duly authorized by Madhya Bharat Power Corporation Limited

(MBPCL) do hereby state as follows:

1. I am the same Prakash Mishra who signed the Witness Statement in this matter on
January 31, 2018, and I reiterate the contents of my earlier Witness Statement dated
January 31, 2018 which I shall refer to as my 1 st Witness Statement hereinafter. This
witness statement contains further document evidence as set out in Exhibits RW-2/8 to
RW-2/_.

2. I say that, I have gone through the records of the case including the Witness
Statements and documents filed on behalf of Claimant VOITH on January 31, 2018 and
further shall say without prejudice to my earlier statement dated January 31, 2018. I
make this Second Witness Statement in response to the matters referred to in the
Witness Statements of Mr. KA Sundraraman, Mr. D.P. Singh and Mr. Abhijit Roy served
in support of VOITH'S Claim.

3. At the outset I deny the statements filed by the witnesses of VOITH, especially on
concocting new facts, distorting existing facts and based on surmises and conjectures.

4. I say that, Mr. KA Sundraraman in his 1 st Witness Statement at paragraph 10 has

stated that “From the subject Package calculations, the engineering content has been
established as 6% (as a conservative figure).” which is not correct and is based upon
assumption. MBPCL had requested for various documents to VOITH in document
discovery under head engineering in order to understand how 6% has been arrived at
but VOITH has failed to provide such documents. Since VOITH has not provided any
documents substantiating 6% engineering, the Statement made by Mr. KA
Sundraraman stating engineering at 6% does not hold ground. I say that, the
engineering percentage for such project would be 4% for supply & 2% for services. I
further, rely on the averments made in paragraph 7.139 and 7.141 of the SOD. I agree
that Hydro Power projects are unique but they are similar to other such projects such as
107 MW Gigel Gibe 2 and 100 MW Sainj projects of VOITH itself, which in turn would
reduce the engineering time on the project. VOITH had even given the Model Test
Report of Turbine based on another project (100 MW Sainj) which we had accepted
highlighting the similarity of projects.

5. I say that, the statement made by Mr. KA Sundraraman in paragraph 11 are incorrect
and unsubstantiated. Claimant has not provided basic working and calculations as to
how it arrived at 47% of engineering completed. I rely on averments made in paragraph
7.146 of SOD. I also state that the documents which have been marked high priority is
dubious as the number of hours spent on that particular document is not provided along
with the effort thereof. For example, the model test report of turbine which was
submitted and approved was of a similar project and not specific to this project thereby
reducing the number of hours spent on it resulting in value of engineering decreasing.

6. I say that, the statement made by Mr. KA Sundraraman in paragraphs 13 and 14 are
incorrect and unsubstantiated. The status of efforts of submitted category and their
percentage of completion in respective categories are misleading and based on
assumptions. I rely on averments made in paragraph 7.144 to 7.146. I also state that to
evaluate the progress of engineering, it is essential to consider the level of effort taken
to work on the engineering document and just the number of documents approved
along with their priority is not a pointer by itself to understanding the grade of progress.

7. I say that, the statement made by Mr. KA Sundraraman in paragraph 15 to 27 are

incorrect and unsubstantiated. VOITH had done all the basic engineering, design and
drawing for similar type of Turbine, Generator and its Automation and Plant
Engineering. MBPCL had accepted transposition report of model test of similar type of
prototype Turbine i.e for Sainj HEP. VOITH has basically done some changes in the
design and drawing suiting the project location and requirement of MBPCL. VOITH has
arbitrarily assumed the weightage of drawings as High Priority and Low Priority. VOITH
has failed to provide basis for such categorization and percentage of completion of
engineering on weighted average basis. Therefore, without basis no such conclusion
can be drawn, quantified and claimed for percentage of engineering and percentage of
completion of work by VOITH. Further, VOITH also did not provide the average
engineering manhours per month for specifically engaged persons in Rongnichu HEP
engineering works. I also deny the claim of VOITH for per manhour rate for engineering
works. VOITH had taken Rs.1,500/- per manhour which is on a very higher side (It is not
on average basis). Therefore, VOITH had taken 6% for engineering as well as
completion of works at 47.04% which is on assumption basis and on higher side only to
exaggerate and inflate their claim.

8. I say that, the statement made by Mr. KA Sundraraman in paragraphs 34 to 36

including Annexure KAS - 1 are distorted and unsubstantiated and therefore denied. I
say that, Price Variation (PV) is applicable only for manufactured and ready material
and during contractual period (please refer Sub heading Conditions applicable to price
adjustment in Clause (b) of Appendix 2 Price Adjustment to the Contract). It is also
stated in Clause (a) of Appendix 2 Price Adjustment to the Contract that price
adjustment will be applied only if the resulting increase or decrease is more that 2% of
the Contract price of the ready material. I would like to mention here that PV is not
applicable to the material undergoing manufacture, 0% readiness and in material under
planning and engineering as mid-point in such categories cannot be ascertained. I also
state that the mid-point of manufacture must be before the date manufacturing was
suspended i.e. December 2013 pursuant to fraudulent suspension of Contract by the
Claimant in December 2013.

9. I say that, MBPCL requested in document discovery to provide under heading Price
Adjustment Formula serial no. “1(a) Fully transparent detailed working calculations in
native original software of all values, including those selected from any indices used in
the evaluation of the price adjustment calculation.” MBPCL further provided clarification
on what it required under such head that: “The Respondent requests disclosure of:
a) Fully transparent, detailed working calculations in native original software.
b) Excel sheet with formulas used for calculation of PV.
c) The indices of which month is used for calculation of PV. This is because, as per
PV formula on page-567 of Bundle-2 – the base price for price adjustment shall
be calculated from 4-5-2010 and the final date will be midpoint of the period of
manufacture of the component for supply of material and midpoint of the period
of installation of the component for services.
- Substantiation of all the values claimed or used to claim PV so that each base
value can be individually verified based on contemporaneous purchase orders,
or some other independently verifiable basis.”

10. VOITH has failed to provide the requested documents against the claimed PV of
manufactured materials as well as material in which engineering and planning has been
done and order placed, whereby VOITH has restricted MBPCL to quantify the actual
values of PV claimed. I also state that the Appendix 2 under the “Conditions applicable
to Price Adjustment” provided for price adjustment to a limit of 20% for main equipment
and 15% for auxiliary equipment. Thereby VOITH taking 20% for all the equipment “on
a conservative basis” is entirely wrong as this is the highest limit provided for by the
Contract under Appendix 2 under the heading “Conditions applicable to Price
Adjustment”.

11. I say that, the Annexure KAS – 1 is distorted and un-substantiated. As per the
calculation of MBPCL taking example of a material ready and manufactured and
applicable for PV, the Inspection Platform was ready on August 2013 and for that mid-
point would be June 2013

It is stated that, VOITH did not provide documents to substantiate the mid-point of all
ready manufactured items for PV calculations and also for claim of 20% PV on each
and every manufactured material whereas Contract states that, maximum PV would be
15% of all the auxiliaries and 20% for main equipments during the contractual
completion period. It is also stated that, in any case the mid-point as taken by VOITH to
be 30 May 2016 or based thereon cannot be correct as it is much beyond the
Contractual Period. Therefore the calculations provided by VOITH are distorted,
incorrect and un-substantiated.

12. I say that, the statement made by Mr. D P Singh in paragraph 8 of his 1st Witness
Statement are un-tenable as VOITH started manufacturing without approval of MTS,
BBU, design and drawing as well as approval of sub-vendors / sub-suppliers. VOITH
resorted to malpractice of engineering and manufacturing in order to gain unlawful
benefits and advantages.

13. I say that, the statement made by Mr. D P Singh in paragraph 9 are incorrect.
MBPCL always requested to VOITH for submission of sequential dispatch of
manufactured items as per the site requirement / MTS.

14. I say that, the statements made by Mr. D P Singh in paragraph 10 are incorrect. I
say that, only four items / sub-components were eligible for manufacturing out of the 26
items / sub-components as claimed by VOITH into seven categories as stated in my 1st
Witness Statement. Further, I had in my earlier Witness Statement also stated that,
discrepancies pointed out in design and engineering related with materials
manufactured, inspection and status of manufactured equipments and discrepancies in
claims raised from time to time.

15. I say that, the statements made by Mr. D P Singh in paragraph 11 are incorrect.
MBPCL requested to VOITH in document discovery to provide all the correspondences
with sub-supplier especially in 8(c) as under:
“All records of all test reports or other technical verification related to stage payment
(including contemporaneous correspondence and between Claimant and the relevant
supplier or subcontractor, and relevant records of actual cost incurred by Claimant and
the relevant supplier or subcontractor).”
To this further explanation was also offered as:
“The Respondent requests the disclosure of:
- The Claimant’s own contemporaneous test reports, or inspection reports, or
other contemporaneous records which support or certify that manufacturing
progress was made to the level of completion, or part completion claimed.
- Independent reports (if any) of tests conducted which evidence actual progress
- Contemporaneous record of actual ‘readiness’ at date of latest assessment by
Claimant, or at the time of ‘diversion’, or the decision made to scrap.
- Where ‘part’ manufacture is claimed, the method used to assess how much of
the manufacturing had been done at the relevant time(s).
- Where ‘completion’ ready for delivery is claimed, the certification or record of this
after the Claimant’s own inspection at the supplier’s or subcontractor’s place of
manufacture.”
Which the Claimant has failed to provide and thereby VOITH has restricted MBPCL to
quantify the raised claim.

16. I say that, the statements made by Mr. D P Singh in paragraph 12 to 15 are
incorrect. VOITH has taken 6% of engineering portion and 94% of material portion on
arbitrary and without basis for preparation of Claim. As per my and MBPCL’s view it
may vary for engineering from 2 to 4% and for material 96 to 98%. Material portion may
consist with cost of material, overhead cost, manufacturing cost, packaging cost, test
and inspection cost and profit. I further say that, BBU was not finalized by MBPCL for
Turbine Housing and it is also not mentioned in the Break-up of Prices, Annexure A of
the Supply Contract. I hereby say that, the quoted BBU for Turbine Housing is prepared
for Claim purpose only. Since BBU was not approved neither given by VOITH for
approval to MBPCL therefore MBPCL cannot quantify BBU value, PV value and related
Claims.

17. I say that, the statements made by Mr. D P Singh in paragraph 15 to 22 are
distorted, incorrect and prepared for justifying the frivolous Claim of VOITH. I had in my
1st Witness Statement in paragraph 4.3 stated that, BBU was a pre-condition for the
payment subsequent to advance payment in the Contract. I further say that, stage for
opening of Letter of Credit (LC) has not arisen as BBU was not finalized. Like I had said
in my earlier Witness Statement in paragraph 4.5 that, BBU is an essential requirement
for every engineering contract and same may be further evidenced from the documents
annexed and exhibited herewith as RW-2/_ Colly.

18. I reiterate that, the claim of the Claimant be disallowed as being un-substantiated.

Prakash Mishra.
Signed on this _ day of March, 2018