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
1
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.”
2
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
3
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. 
4
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
5
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.  
6
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
7
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
8
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.” 
9
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.  
10
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
11
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.
12

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

Comments

Popular posts from this blog

संविधान की प्रमुख विशेषताओं का उल्लेख | Characteristics of the Constitution of India

100 Questions on Indian Constitution for UPSC 2020 Pre Exam

भारतीय संविधान से संबंधित 100 महत्वपूर्ण प्रश्न उतर