Full Judgment Text
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.
Signature Not Verified
Digitally signed by
Chetan Kumar
Date: 2022.03.15
16:48:21 IST
Reason:
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
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for which the present application has been filed on 2 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 Counter
Claims.
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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