INDIA POWER CORPORATION LTD VS EASTERN COALFIELDS LIMITED

INDIA POWER CORPORATION LTD VS EASTERN COALFIELDS LIMITED

NON­REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

M.A. Diary No.20972 of 2021

In

Civil Appeal No.9847 of 2014

INDIA POWER CORPORATION LTD.                …APPELLANT

VERSUS

EASTERN COALFIELDS LIMITED        RESPONDENT/

APPLICANT

J U D G M E N T

VIKRAM NATH, J.

1 Civil   Appeal   No.9847   of   2014   was   allowed   vide   order   dated

17.10.2014 whereby Justice S.S. Nijjar, a former Judge of this Court

was   appointed   as   sole   Arbitrator   to   arbitrate   upon   the   disputes

between the parties. The said order is reproduced below: ­

“    Leave granted. 

Heard Mr. Kapil Sibal, learned senior counsel appearing

for the petitioner and Mr. Anupam Lal Das, learned counsel for

respondent no.1. 

In the course of hearing, learned counsel for the parties

very fairly submitted that they have no objection if a former

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Judge   of   this   Court   is   appointed   as   a   Sole   Arbitrator   to

arbitrate upon the disputes that have arisen in respect of the

contract. 

Regard   being   had   to   the   aforesaid   submission,   we

appoint Justice S.S. Nijjar, a former Judge of this Court as the

Sole Arbitrator to arbitrate upon the disputes. The learned

arbitrator   shall   decide   the   terms   and   conditions   after

deliberating with the parties. 

Registry is directed to forward a copy of this order to the

learned Arbitrator. 

The appeal is allowed on above terms. There shall be no

order as to costs.”

2. The   sole   Arbitrator   gave   the   award   dated   15.02.2021,   after

considering the claims and counter claims of the parties. The operative

portion of the award as contained in paragraph 162 is reproduced

below: ­

“162. In view of the aforesaid conclusions the following award

is made:

(a)   The   Respondent   shall   pay   to   the   Claimant   a   sum   of

Rs.24.7256 Crores as WDV.

(b) The aforesaid amount shall be paid with interest @9% with

effect from 06.10.2016 till payment of the amount. 

(c)   The   Claimant   shall   pay   to   the   Respondent   a   sum   of

Rs.18,66,86,521/­ 

(d) The aforesaid amount shall be paid with interest @9% with

effect from 06.10.2016 till payment of the amount. 

(e) All other Claims and Counter­Claims are hereby dismissed. 

COSTS:

In   the   peculiar   facts   and   circumstances   of   this

arbitration, both the parties shall bear their own costs. 

This Award is being issued on a stamp paper of Rs.200/­.

The   Claimant   shall   pay   the   differential   stamp   duty   in

accordance with law.”

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3. M.A.   No.   20972   of   2021   has   been   filed   by   the   respondent

‘Eastern Coalfields Limited’ (hereinafter referred to as the “ECL”) with

a prayer to appoint a sole arbitrator to examine the issue pertaining to

the report submitted by MECON as mentioned in paragraph 160 of the

award. The relief claimed by means of this application is reproduced

below: ­

“PRAYER

In   view   of   the   facts   and   circumstances   of   the   case,   your

Lordship may graciously be pleased to:

a) Appoint a Sole Arbitrator to examine the issue pertaining to

the report submitted by MECON more particularly mentioned

in paragraph No.160 of the Award which was not adjudicated

by the Hon’ble Tribunal;

b) Pass any other order/orders which this Hon’ble Court may

deem fit.”

4. The   only   ground   raised   for   seeking   a   fresh   appointment   of

Arbitrator is to the contents of paragraph 160 of the award.  It is for

this reason that the present application has been filed for appointment

of Sole Arbitrator.

5. According  to the respondent­applicant, the learned Arbitrator

could not adjudicate upon the MECON report, as it required further

evidence   to   be   recorded,   and   soon   after   delivering   the   award,   on

15.02.2021, the learned Arbitrator died on 26.03.2021. 

6. Learned Counsel for the applicant, ECL during the course of the

arguments   not   only   requested   for   appointment   of   Arbitrator   with

respect to the contents of the paragraph 160 of the award but raised a

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further issue relating to Section 33 of the Arbitration and Conciliation

Act,   1996   (hereinafter   referred   to   as   ‘the   1996   Act’)   for   requiring

correction in the computation of the rent payable to the applicant ECL

for the period March 2016 till October 2016 which was inadvertently

left out by the learned Arbitrator while giving the award.   Reference

was made to paragraphs 126 to 130 and 132 of the award.  It is also

submitted that although limitation for moving an application under

Section 33 is 30 days but in the present case as the limitation has

stopped running and stood extended by the orders passed by this

Court in the  suo moto  petition, the applicant would have a right to

maintain an application under Section 33 for correction of the award

for which the present application has been filed on 2nd  September,

2021.

7. On   the   other   hand,   learned   counsel   for   the   appellant   ‘India

Power   Corporation   Limited’   (hereinafter   referred   to   as   the   “IPCL”)

vehemently   opposed   the   application   and   made   the   following

submissions:

i)   Paragraph   160   of   the   award   may   not   be   read   in

isolation.  The background for the same should also be

read   as   recorded   in   the   preceding   and   succeeding

paragraphs.  Paragraphs 157 to 161 of the award may be

read as a whole.   The same will completely clarify the

position. 

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ii)   In   the   part   covering   paragraphs   157   to   161,   the

learned   Arbitrator   was   dealing   with   amendment   of

counter claim filed by the respondent­applicant i.e. ECL.

After   considering   all   aspects   of   the   matter,   the

application for amendment was dismissed as it would not

serve any useful purpose in determining the real question

in controversy. Reference may be had to paragraph 161

of the award.

iii) The contents of paragraph 160 of the award records

the submission advanced by the counsel for the claimant

i.e. the  appellant IPCL. If paragraph 160  is examined

carefully, the submissions advanced by the counsel for

the respondent­applicant may not have much substance. 

iv)  Award dated 15.02.2021 was a final award and not

an  interim award;  The  learned  arbitrator  had  not left

anything   for   further   deliberation   but   had   settled   the

claim and the counter claim between the parties in toto.

v)  The remedy available to the respondent­applicant was

to file objections under Section 34 of the 1996 Act against

the award, if it had any grievance. 

vi) Further,   the   objection   under   Section   34   of   the

1996 Act were filed before the Delhi High Court which

was   registered   as  O.M.P.(COMM)   328/2021,   CAV

49/2021,   I.A.   Nos.   14204­14207/2021,   Eastern

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Coalfields   Limited   vs.   India   Power   Corporation

Limited. The said objection has since been decided by

the Delhi High Court vide judgment dated 29.10.2021

and   the   same   has   been   dismissed.   A   copy   of   the

judgment of Delhi High Court dated 29.10.2021 has been

filed   by   the   respondent­applicant   along   with

I.A.No.154735 of 2021.

vii) The issue relating to Section 33 of the 1996 Act

with respect to correct computation of rent cannot be

considered for several reasons. There is not a whisper in

the application for direction regarding the issue raised

under Section 33. Such a plea cannot be raised during

the course of the arguments by way of oral or written

submissions.  

viii) Even   otherwise   no   correction   as   raised   was

required inasmuch as no computation was undertaken

by the learned Arbitrator and the amount awarded as

rent  was  the   same  as   claimed   by  the  applicant  ECL.

Even on merits such plea was not tenable. 

8. Having considered the submissions, we now proceed to analyse

both the contentions of the applicant.  

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9. Paragraph 160 of the award cannot be read in isolation.  It was a

part of the award dealing with the “Application for  amendment  of

counter claim” filed by respondent­ECL.  The award carried the above

sub­title   before   paragraph   157.     Paragraph   160   contains   mere

submissions advanced on behalf of the appellant/claimant. MECON

report was called with respect to the amendment of the counter claim

regarding   expenses   required   for   putting   the   plant   into   running

condition. After deliberating upon the said amendment, at the end of

paragraph   161,   the   conclusion   was   that   the   application   for

amendment stood dismissed.  Thus, the paragraphs 157 to 161 will

have   to   be   read   as   a   whole   to   understand   as   to   how   the   award

proceeds   to   deal   with   the   amendment   to   the   counter   claim.

Paragraphs 157 to 161 of the award being relevant are reproduced

hereunder: ­

“157. At this stage it may be noticed that the Respondent filed

an application dated  20.11.2019  seeking  permission  of the

Tribunal   to   amend   the   Counter­claim.     Claimant   was

permitted to file reply to the same on or before 22.11.2019.

Claimant   has   filed   the   reply   on   20.11.2019.     Thereafter

arguments   in   Rejoinder   were   heard   on   27.11.2019   and

02.12.2019.  However, no oral submissions were made on the

application by either party.  I have considered the application

on the basis of the pleadings.  It has been noticed earlier that

Respondent had issued a Notice inviting Tender on 16.01.2012

for “…(a) Replacement of Existing twenty (20 year old 3X10

MW   stoker­fired   boilers   by   3X10   MW   Fluidised   bed

combustion (FBC) boilers, wherein the successful bidder will

made his own investment for replacement of existing stoker

fired boilers by FBC Boilers and associated other plant and

machineries including the civil works and enter into Lease

Agreement   with   ECL   for   running   of   the   power   plant….”.

Therefore,   it   appears   that   the   run   down   condition   of   the

existing   stoker­fires   boilers   had   become   irrelevant.     The

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application   for   amendment   of   the   counter­claim   can   be

dismissed at this stage only.

158. Even from the evidence on record it is evident that the

plant was in running condition at the time when the lease

expired by efflux of time. The Respondent was fully aware that

the plant being in running condition was wholly irrelevant, yet

the controversy continued even after the issuance of the NIT.

The NIT clearly indicates in clause 1(b) that the Power Plant is

offered for lease "on as is where is basis''. Clause 1(c) further

makes   it   clear   that   "the   existing   plant   is   in   operating

condition. The plant is to be operated as a Captive Power Plant

of ECL”. In view of the above clauses, the Respondent cannot

now be permitted to raise a further Claim on the ground that

the Power Plant had to be put into running condition.

159. Had the possession been taken before issuing the NIT,

undoubtedly,  the  Plant was  operating and  therefore  clearly

cannot be said to be not in running condition. It appears that

the deterioration, if any, occurred when the Claimant failed to

handover the possession as there was no agreement on the

determination of WDV of the Plant. It has come in evidence

that   in   four   year's   time   the   Plant   and   machinery   had

deteriorated considerably as the Plant was lying idle. In view of

the detailed submissions made in this regard, on behalf of the

Claimant, which are noted at paragraphs 84 to 99 and the

reply thereto on behalf of the Respondent, which are noted in

paragraphs 104 till 112, it would not be possible to hold that

the Claimant is solely responsible for the delayed delivery of

possession to the Respondent.  On the one hand Claimant was

insisting on the basis of the Clause III(a) for the determination

and   payment   of   the   WDV   simultaneously   to   delivery   of

possession. On the other hand, Respondent had demanded

delivery of possession much prior to the determination of the

WDV.   Even   when   the   WDV   was   determined   by   the

Respondent,   it   was   at   such   a   variance   to   the   amount

determined   by   the   Claimant,   making   it   impossible   for   the

parties to reach a consensus on the WDV to be paid. In fact, as

noticed earlier the Claimant had filed a Writ Petition No.20948

of 2012.  In the Calcutta High Court seeking payment of WDV

and handing over possession of the Plant. This Petition was

disposed of by the High Court on 19.03.2013.   The Learned

Single Judge noticed “…that there is a subsisting dispute as

regards computation of written down value in respect of the

additions   and   alterations   made   by   the   writ   petitioners   in

relation to the said generating station. It is for this reason the

dispute still remains unresolved. The petitioners continue to

remain   in   possession   of   the   generating   station   and   the

respondent coal company has also not taken any legal step to

recover   possession   of   the   station…”.   It   is   noticed   by   the

Learned Single Judge that the main prayer in the Writ Petition

is   “to   prevent   the   respondents   from   obtaining   recovery   of

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possession   of   the   generating   station   without   releasing   the

written down value of the added assets, as per computation of

the   petitioners.”     It   is   also   noticed   that   in   spite   of   orders

passed by the Court on 12.10.2012 that “…steps ought to be

taken by the committee to not only physically verify the plant

and   machinery   but   also   other   assets   of   the   plant   by

ascertaining the book value thereof…”. no steps were taken.

This exercise was to be completed by 12.12.2012.  Since, the

exercise   was   not   completed   by   that   time,   the   time   was

extended till 08.01.2013.  At the time of final disposal of the

Writ   Petition   the   Learned   Single   Judge   observed   that   the

dispute does not seem to be resolvable by the committee set

up by the respondent. It is noticed that the issues involved are

also highly disputed factual issues. The matter was therefore

referred to arbitration under the relevant clause of the lease

deed. In appeal the Division Bench upheld the order of the

Learned Single Judge on 19.03.2014. As noticed earlier the

Supreme Court referred the matter to the Sole Arbitrator by

order October 17, 2014, with the observation that the Sole

Arbitrator is “to arbitrate upon the disputes”. From the above,

it   seems   apparent   that   the   reference   to   arbitration   is   not

limited to disputes that existed prior to the passing of the

order by the Supreme Court. Therefore, it cannot be accepted

that the reference to arbitration would not cover the CounterClaims.

160. It must also be noticed here that the Claimant has raised

a preliminary objection on the ground that the application for

amendment suffers from delay and laches. Therefore, seeks it’s

dismissal on this short ground. It is submitted that Claimant

has already filed its objection to the MECON report and also

filed a report submitted by M/s AKB Power Consultants Pvt.

Ltd. For consideration of these two reports, further evidence

will have to be recorded on behalf of both the parties.

161. It is matter of record that the application for amendment

was filed at the time when the Respondent was to commence

its arguments. In my opinion that the application cannot be

allowed at this stage. The amendment must be necessary for

the purpose of determining the real question in controversy. As

noticed above, the issuance of the NIT clearly demonstrates

the   intention   of   the   respondent   was   to   replace   the   old

machinery and plant to Stoker Fired Boilers by Fluidised bed

Combustion   Boilers.   Therefore,   the   condition   of   the   old

machinery as well as the question of plant being in a running

condition had become irrelevant. For the reasons stated above,

the application for amendment is dismissed as it will serve no

useful   purpose   in   determining   the   real   questions   in

controversy between the parties.” 

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10. By means of the said amendment, the ECL had claimed that the

power plant should be put into running condition before handing over

its possession.  The learned Arbitrator deals with the issue in detail

and after considering the pleadings of the parties as also the order

passed   by   the   Calcutta   High   Court   found   that   the   counter  claim

sought to be raised by the said amendment regarding the plant being

in a running condition was irrelevant in view of the dispute raised. 

11. The MECON report and the M/s AKB Power Consultants Pvt.

Ltd. report, both related to the expenses sought to be incurred in

bringing back the plant into running condition.  Parties had filed their

objections to both the reports as there was substantial difference in

the figures indicated in the two reports.  But once the Arbitrator found

that the amendment in the Counter­claim itself was not relevant for

the adjudication, there was no question of proceeding any further in

inviting evidence etc. with respect to the reports.   The submission

therefore, that there is requirement of the appointment of Arbitrator to

carry out the exercise as per paragraph 160 of the award is therefore

completely untenable.  The submission is based upon the misreading

and misrepresentation of the said paragraph, in isolation bereft of

preceding   and   succeeding   paragraphs.   The   same   is   accordingly

rejected.  

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12. A bare perusal of the award, in particular paragraph 162, which

is the operative portion, does not in any manner indicate any kind of it

being an interim award or that any aspect of the matter was to be

further considered. In any case, the learned arbitrator did not record

any further observation that for leading of further evidence any date

has to be fixed or the parties were given opportunity to produce their

evidence. It was a mere submission that consideration of MECON

report   would   require   further   evidence   but   was   not   found   to   be

necessary by implication. 

13. The next submission relating to the applicability of Section 33 of

the 1996 Act also has to fail for two reasons.  Firstly, that the same is

neither pleaded nor prayed in the application and secondly, once the

Arbitrator, while awarding rent as counter claim had accepted the

figures as quoted by the ECL, no issue of any error on the part of the

Arbitrator in not correctly calculating the rent could be raised.  The

figure as claimed by the ECL is quoted in paragraph 73(1)(ii) of the

award which has been accepted by the Arbitrator in the award.

14. There   is   another   aspect   of   the   matter   which   disentitles   the

applicant   from   any   relief   in   this   application.     A   perusal   of   the

judgment of the Delhi High  Court in  Section  34 of the  1996  Act

proceedings clearly reveals that the point which is being raised here

was raised before the Delhi High Court. The Delhi High Court also did

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not   agree   with   the   submission   of   the   respondent­applicant   after

considering paragraphs 157 to 161 and proceeded to hold that the

observations made in paragraph 160 do not render the impugned

order to be interim in nature, and that the award finally decided the

dispute which was subject matter of the reference.  

15. For all the reasons recorded above, the application deserves to

be rejected and is accordingly rejected.

………….........................J.

[VIKRAM NATH]

…………..........................J.

[M.M. SUNDRESH]

NEW DELHI

MARCH  15, 2022.

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