Bombay High Court
Gujarat Chemical Port Terminal Co. Ltd vs Indian Oil Corporation Of India on 6 May, 2016
Author: R.D. Dhanuka
Bench: R.D. Dhanuka
ppn 1 arbp-25.16(j).doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.25 OF 2016
Gujarat Chemical Port Terminal Co. Ltd. )
a company incorporated under the )
laws of India and having its registered )
office at 2nd floor, Gunjan Towers, )
Off. Alembic-Gorwa Road, Subhanpura, )
Vadodara - 390 023, Gujarat. ) .. Petitioner
Versus
Indian Oil Corporation of India )
A Government Company incorporated )
under the Companies Act, having its )
registered office at Indian Oil Bhavan )
G-9, Ali Yavar Jung Marg, Bandra )
Mumbai - 400 051. ) .. Respondent
---
Dr.Milind Sathe, Senior Advocate a/w Mr.Birendra Saraf a/w Mr.Amey
Nabar a/w Ms.Melanie D'Souza a/w Ms.Swati Jain a/w Mr.Rishit
Badiani i/by M/s.A.S. Dayal & Associates for the petitioner.
Mr.V.R. Dhond, Senior Advocate a/w Ms.Neeta Jain a/w Mr.Sunil
Gangan a/w Mr.Hemang Raythatta a/w Mr.Jayesh Mistry a/w
Mr.Shantanu Kalekar i/by M/s.RMG Law Associates for the respondent.
---
CORAM : R.D. DHANUKA, J.
RESERVED ON : 28th April 2016 PRONOUNCED ON : 6th May 2016 ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:37 ::: ppn 2 arbp-25.16(j).doc Judgment :-
. By this petition filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the said Act"), the petitioner has impugned the order dated 17th December 2015 passed by the arbitral tribunal in the application filed under Section 17 of the said Act thereby granting various interim measures in favour of the respondent (original claimant) i.e. (i) directing the petitioner to allow the respondent to export upto 300 TMT of naphtha for the duration of the contract subject to the respondent submitting its annual plan/quarterly plan/monthly plan as required from time to time within 15 days from the date of the order to enable the petitioner to accommodate the requirement of the respondent; (ii) granting liberty to the petitioner if berths are available to provide additional export purely within the discretion of the petitioner; (iii) temporary injunction in terms of prayer clauses (a) and (b) of the application under Section 17 is granted subject to the directions issued in clauses (i) and (ii) aforesaid for the duration of the contract and/or the arbitral proceedings if they are disposed of before the term of the contract comes to an end; and (iv) the petitioner is directed by a temporary injunction to provide port clearance in terms of the plan submitted by the respondent and approved by the petitioner pending the hearing and final disposal of the arbitral proceedings or the end of the contractual period, whichever is earlier. The petitioner herein is the original respondent whereas the respondent herein is the original claimant in the arbitral proceedings. Some of the relevant facts for the purpose of deciding this arbitration petition are as under :-::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:37 :::
ppn 3 arbp-25.16(j).doc
2. It is the case of the petitioner that the petitioner was
constructing Port Terminal facilities at Dahej, Village-Lakhigam, District- Bharuch. The petitioner was also constructing tanks for handling, storing and exporting/importing various chemical products including petroleum products while setting up the entire Port Terminal .
3. On or about 15th December 2006, the respondent approached the petitioner for obtaining four dedicated tanks at the said Port Terminal for storage and export of naphtha (white oil) from the said Port Terminal.
The parties accordingly executed an Agreement termed as "Terminalling Service Agreement" on various terms and conditions recorded therein. The tenure of the said document was for five years which could be extended by the parties on the terms to be agreed upon mutually. The respondent agreed to construct a pipeline from its refinery at Koyali to the Port Terminal at Dahej. The petitioner agreed to construct four dedicated tanks for storage of naphtha which was to be pumped by the respondent through its pipeline from refinery of the respondent to the said storage tanks.
4. It was agreed that the said naphtha stored in the dedicated tanks would be exported from the said Dahej Port Terminal to various places by using jetty and other facilities at the said Port Terminal at Dahej. The respondent agreed to provide in advance its annual plan and thereafter, quarterly and monthly plan of handling (export) of naphtha to enable the petitioner to plan jetty utilisation. The respondent agreed to pay consideration under the said agreement to the petitioner only on the basis of the quantity of actual export (throughput) of naphtha handled and not on the basis of storage of naphtha. In those four dedicated tanks, ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:37 ::: ppn 4 arbp-25.16(j).doc the respondent commenced activity under the said agreement from 2007 onwards and exported naphtha from the port of the petitioner.
5. On 9th March 2012, the negotiations were held between the parties and by Amendment/Extension of Agreement, the parties renewed the period of agreement for a further period of five years from 29 th December 2011 till 28th December 2016 on the revised terms and conditions set out therein. Under the said amended agreement, it was provided that the petitioner shall provide to the respondent maximum 40 TMT parcel at the jetty of the petitioner with the present vessel berthing criteria as per annexure-II to the said agreement and that all the conditions and relevant clauses related to handling of 50 TMT parcel including Articles 3, 5, 7, 9, 11, 13, 14 and all other relevant clauses in the original agreement including its Schedules shall henceforth stand corrected as 40 TMT for all purposes.
6. It was further agreed that the respondent shall henceforth not be liable to pay 'Minimum Guarantee Throughput' which was earlier agreed under Article 9 and other relevant clauses in the original agreement. The respondent agreed to provide regularly to the petitioner at least one month in advance its yearly & monthly plan of vessel/ quantity handling. The stock loss target as stated under Article 6 and other relevant clauses of the original agreement also stood amended. It was provided that the original agreement dated 15 th December 2006 shall henceforth be read and considered in line with the amendments recorded in the said agreement dated 9 th March 2012. Under the said agreement dated 9th March 2012, the throughput charges as stated ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 5 arbp-25.16(j).doc under Article 9 and other relevant clauses of the original agreement also stood amended by providing different rates.
7. It is the case of the petitioner that after execution of the said amendment/extension of agreement dated 9th March 2012, the respondent drastically reduced the quantum of export of naphtha and only used to pump naphtha in the designated storage tanks of the petitioner without any export being made. It is the case of the petitioner that the respondent neither provided any plan to the petitioner nor exported sufficient quantity of naphtha.
8. During the period from September 2013 to June 2014, the petitioner addressed various letters to the respondent calling upon the respondent to comply with its obligations under the said agreement. It is the case of the petitioner that in view of the substantial breach committed by the respondent by not evacuating certain/minimum throughput of the said naphtha and not paying the certain/minimum fee to the petitioner, the petitioner was constrained to terminate the said agreement by its notice dated 14th August 2014.
9. In the month of August 2014, the respondent filed an arbitration petition under Section 9 of the said Act being Arbitration Petition (L) No.1347 of 2014. By an order dated 11 th September 2014, this Court disposed of the said arbitration petition. This Court appointed a former Chief Justice of Allahabad High Court as a sole arbitrator to adjudicate upon the dispute. The respondent was directed to pump sufficient quantity of naphtha at the respondent's facilities to make an exportable parcel within a period of 8 weeks. This Court directed the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 6 arbp-25.16(j).doc parties to meet and endeavour to resolve the disputes mutually before commencement of the arbitral proceedings.
10. Further correspondence was exchanged between the parties in the month of September-October, 2014 in respect of the payments to be made by the respondent to the petitioner and in respect of the meeting to be held for resolution of the matter as directed by this Court in the order dated 11th September, 2014.
11. By an email dated 27th October, 2014, the respondent informed the petitioner that it was required to load four rakes of Naphtha from Koyali refinery to Kandla terminal of the respondent for ensuring timely refinery evacuation. By an email dated 28 th October, 2014, the respondent requested the petitioner for consenting for extension of one month for enabling the respondent to refloat the tender for export of Naphtha from two ports i.e. Kandla and Dahej.
12. On 30th October, 2014, the petitioner sent an email to the respondent thereby submitting its proposal for resolution of the disputes. The petitioner proposed that the respondent ought to indicate the quantity to be handled, to provide quarterly plan etc. The petitioner proposed that the tankage to be reduced to three tanks with storage capacity of 40,488 MT so that exportable parcel of 30 TMT can be accommodated.
13. On 18th November, 2014, a meeting was held by the parties in compliance with the said order dated 11th September, 2014 passed by this Court. In the said meeting, discussions were held between the parties. It is the case of the petitioner that the respondent agreed for reduction of ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 7 arbp-25.16(j).doc tankage from 4 to 3. The respondent did not agree to commit quantity of Naphtha of 300 TMT per annum but committed for a maximum quantity of 10 TMT per month i.e. 120 TMT per annum. The parties decided to amicably settle the dispute on the terms that was stated in the minutes of the said meeting dated 18th November, 2014. It is the case of the petitioner that the petitioner accordingly planned its future for Jetty and entered into an arrangement with other users.
14. On 10th February, 2015, the respondent submitted a proposal to the Contract Committee of the Board of the respondent for approval of the terms discussed during the meeting held on 18th November, 2014. In its email dated 19th March, 2015, the respondent forwarded the said proposal also to the petitioner along with approval of the Contract Committee thereon. According to the petitioner, the respondent in the said proposal committed that Naphtha volumes to be handled during the remaining months of "Terminalling Service Agreement" had been reduced. Maximum of 10 TMT per month of Naphtha shall be available ex. refinery for pumping to the petitioner. The respondent admitted that the respondent did not have adequate Naphtha to be pumped to the facility of the petitioner at Dahej and hence there was no question of Naphtha containment. It is the case of the petitioner that the respondent however, did not send monthly and quarterly plans to the petitioner. By emails dated 2nd May, 2015, 7th May, 2015 and 27th May, 2015, the petitioner requested the respondent to submit their monthly and quarterly plans for export of Naphtha.
15. Some time in the month of June, 2015, the petitioner informed the respondent that the respondent had failed to provide their ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 8 arbp-25.16(j).doc product handling plans and that as agreed quantity of 120 TMT of Naphtha per annum would be over within the first three months of the year, the petitioner would not be able to handle any further export parcel.
The petitioner clarified that it would be under no obligation to handle Naphtha export beyond the quantity committed or agreed by the respondent in the meeting held on 18th November, 2014. The respondent however, denied that the respondent had committed maximum of 120 TMT of Naphtha per annum.
16. By emails dated 25th June, 2015 and 4th July, 2015 the petitioner considered the request of the respondent to export Naphtha in the month of July, 2015 and August, 2015 respectively only on case to case basis and based on the availability of space of Jetty. On 21 st July, 2015, the petitioner addressed a letter to the respondent though reiterating its stand and informing the respondent that based on the commitment of handle 120 TMT per annum, the petitioner had lined up other business and therefore accommodating further volumes will depend upon availability of space at Jetty. In the month of August, 2015, further correspondence was exchanged between the parties. It is the case of the petitioner that the respondent wrongfully denied that the maximum of 120 TMT of Naphtha per annum was committed by the respondent. The petitioner reiterated its stand that it was the maximum quantity to be handled and that the petitioner was under no obligation to handle Naphtha export beyond the said quantity of 120 TMT.
17. On 26th August, 2015, the petitioner addressed a letter to the respondent reiterating its stand and informed that based on the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 9 arbp-25.16(j).doc confirmation projection given by the respondent, the available free space has been allotted to potential customer and the petitioner did not have any space left to meet the additional requirement of the respondent beyond the quantity handled till date.
18. The respondent vide their email dated 11 th September, 2015 requested the petitioner to handle export parcel schedule on 11 th to 13th October, 2015. On 14th September, 2015, the petitioner informed the respondent that due to pre-commitment with other customers of the petitioner, the petitioner will not be able to consider the request of the respondent. On 15th September, 2015 the respondent addressed an email to the petitioner once again requesting the petitioner to handle the export of Naphtha.
19. In the month of August, 2015, the respondent herein filed arbitration petition in this Court [Arbitration Petition (L) No.1853 of 2015] inter-alia praying for various interim measures. By an order dated 15th October, 2015, this court permitted the respondent to convert the said arbitration petition into an application under section 17 of the Arbitration & Conciliation Act, 1996. This Court directed that the learned arbitrator shall make an endeavor to dispose of the said application under section 17 of the said Act expeditiously and not later than 15 th December, 2015 keeping all the contentions of both the parties open. This Court recorded the statement made by the respondent herein that during the pendency of the hearing of said application under section 17 of the said Act before the learned arbitrator, the respondent herein would furnish its plan for export for the year 2016 to the petitioner. The petitioner can consider such plan ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 10 arbp-25.16(j).doc and intimate the petitioner about the dates of availability of Jetty. This Court directed the respondent herein to submit plan for the month of December, 2015 and if the Jetty was available during the said period for the purpose of export, the petitioner shall communicate the same to the respondent in advance. The parties thereafter filed further pleadings before the learned arbitrator.
20. On 17th September, 2015, the petitioner addressed an email to the respondent informing that the petitioner had handled 120 TMT of Naphtha as agreed in the minutes of the meeting dated 18 th November, 2014. The petitioner informed that there was no space on Jetty to accommodate the request of the respondent up to December, 2015 due to pre-commitment.
21. By an order dated 17th December, 2015, the learned arbitrator allowed the arbitration application under section 17 partly and directed the petitioner to allow the respondent to export upto 300 TMT of Naphtha during the duration of the contract, granted mandatory injunction directing the petitioner to make available the facilities at the port of the petitioner for handling export of 300 TMT of Naphtha and granted mandatory injunction to provide the port clearance in terms of the plan submitted by the respondent and approved by the petitioner. This order of the learned arbitrator dated 17th December, 2015 has been impugned by the petitioner in this arbitration petition filed under section 37 of the Arbitration & Conciliation Act, 1996.
22. Dr.Sathe, learned senior counsel appearing for the petitioner invited my attention to some of the relevant clauses of the said ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 11 arbp-25.16(j).doc "Terminalling Service Agreement" dated 15th December, 2006 (for short the said "TSA")and more particularly articles 9.1, 9.8, 10.1, 10,2, 11.2, 11.6, 25 and 29 and also the provisions of the amendment/extension of "Terminalling Services Agreement" entered into by an agreement dated 9th March, 2012. It is submitted by the learned senior counsel for the petitioner that the respondent substantially reduced the quantum of export of Naphtha. He submits that the respondent did not provide yearly and monthly plan of vessel/quantity of handling nor exported sufficient quantity of Naphtha which resulted in the Jetty facilities of the petitioner being under utilized causing loss to the petitioner.
23. It is submitted that the respondent was not paying any consideration to the petitioner based on the quantity of Naphtha stored in the dedicated tanks made available by the petitioner to the respondent but consideration was payable on the basis of the actual quantity of export of Naphtha made by the respondent out of such quantities pumped in the designated storage tanks of the petitioner. Learned senior counsel also invited my attention to various correspondence referred to aforesaid and submits that in view of the volume of export of Naphtha declined by the respondent vital loss was caused to the petitioner. He submits that the respondent had committed fundamental breach of their obligation under the agreements entered into between the parties.
24. It is submitted that no other party could be allowed to use those four dedicated tanks by the petitioner. It is submitted that in view of the agreement recorded in the minutes of the meeting dated 18 th November, 2014, the respondent having agreed to export maximum 120 ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 12 arbp-25.16(j).doc TMT per year, the learned arbitrator could not have passed a mandatory order and injunction against the petitioner to permit the respondent to export 300 TMT of Naphtha. He submits that the proposal put up by the respondent before their Board would clearly indicate that the quantity agreed to be exported under the agreement dated 15th December, 2006 stood reduced to a maximum quantity of 120 TMT per year. He submits that the learned arbitrator by directing the petitioner to permit the respondent to export 300 TMT of Naphtha has decided contrary to the agreement arrived at between the parties. He submits that the learned arbitrator has re-written the contract between the parties which is not permissible in law. The proposal put up by the respondent before their Board was duly approved in terms of the minutes of the meeting dated 18th November, 2014. He submits that the stand taken by the respondent that there was no commitment of export of maximum 120 TMT of Naphtha and the said export commitment was for the minimum 120 TMT of Naphtha is ex-facie contrary to the agreement entered into between the parties and was after-thought.
25. Learned senior counsel invited my attention to prayer clauses (a) to (c) of the arbitration application filed by the respondent and would submit that the learned arbitrator has allowed those prayers substantially which are directly in the teeth of the provisions of Specific Relief Act and the Contract Act. He submits that on one hand the learned arbitrator has observed that the contentions raised by the parties whether the respondent had committed itself to export of only 120 TMT or not raises serious triable issue and it was not possible to decide the said issue only as they stood and on the other hand contrary to such observation ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 13 arbp-25.16(j).doc made by the learned arbitrator, the learned arbitrator directed the petitioner to permit the respondent to export 300 TMT during the contractual period. He submits that the order shows patent inconsistency and contradictions.
26. It is submitted that in any event the order passed by the learned arbitrator for allowing export of 300 TMT is without any basis. It is submitted that there was no contract between the parties to hand over 300 TMT of Naphtha nor the respondent had pleaded or claimed any such contract of handling 300 TMT of Naphtha.
27. It is submitted by learned senior counsel for the petitioner that the respondent had admitted that the port was available at Kandla and it was matter of record that the respondent had applied for extension of time to the petitioner for carrying out export of Naphtha from two ports, including Kandla. He submits that the respondent also had facility to transport Naphtha to their Panipat refinery. In support of this submission, learned senior counsel invited my attention to a letter dated 27th October, 2014 addressed by the respondent to the petitioner, letter dated 28th October, 2014 from respondent to the petitioner and a writing dated 24 th June, 2015. He submits that prima-facie observations of the learned arbitrator that if the respondent is not allowed to export surplus Naphtha, it will have ramifications of running of plant by the respondent is contrary to and over looking the admitted documents on record. He submits that export of agreed quantity of 120 TMT by the respondent is already exhausted.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 :::ppn 14 arbp-25.16(j).doc
28. It is submitted that by allowing the respondent to export 300 TMT of Naphtha at the stage of passing interim order, the learned arbitrator has virtually passed a final relief in favour of the respondent though various contentious issues were raised by the petitioner. He submits that the respondent could not have claimed any specific performance of the agreement against the petitioner in violation of section 14(1)(c) of the Specific Relief Act. No injunction in the teeth of the said provision could be granted by the learned arbitrator. He submits that the respondent could at the most make a claim for damages and if the respondent succeeds in the arbitral proceedings, the learned arbitrator can award damages in favour of the respondent. He submits that under Article 25 of the TSA, the said contract is determinable. He submits that since the contract is determinable, no specific performance of contract can be granted by the learned arbitrator. He submits that by granting interim measures the learned arbitrator has decided contrary to section 14(1)(c) of the Specific Relief Act. In support of this submission, learned senior counsel for the petitioner placed reliance on the judgment of this Court in case of Spice Digital Limited vs. Vistaas Digital Media Pvt. Ltd. reported in (2012) 114 Bombay Law Report, 3696 and more particularly paragraphs 14 to 20 thereof.
29. It is submitted by learned senior counsel for the petitioner that the learned arbitrator had no jurisdiction to pass any order which would hamper or disrupt working of the port of the petitioner. The petitioner is promoted by several companies, including the companies which were fully owned either by the Union of India or by the Government of Gujarat. He submits that the learned arbitrator has not only permitted the respondent to export arbitrary quantity of 300 TMT ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 15 arbp-25.16(j).doc contrary to the terms of the agreement but has also issued a mandatory directions to provide port clearance in terms of the plans submitted by the respondent and approved by the petitioner. He submits that there are large pending orders for export with the petitioner and thus such mandatory order for making the berth available to the respondent is contrary to the provisions of Specific Relief Act. He submits that this mandatory order passed by the learned arbitrator is contrary to the observations made by the learned arbitrator in paragraph 17 of the impugned award. He submits that though a prima-facie finding is rendered in favour of the petitioner about availability of berth which is exclusively within the purview of the petitioner, the learned arbitrator has passed such mandatory order contrary to and inconsistent with prima-
facie observations. He submits that the impugned order thus shows inconsistency and contraction and deserves to be set aside on that ground alone.
30. Mr.Dhond, learned senior counsel for the respondent on the other hand invited my attention to various provisions of the said TSA dated 15th December, 2006, amendment / extension of the said agreement dated 9th March, 2012 and various documents referred to aforesaid in support of his submission that the minutes of the meeting dated 18 th November, 2014 did not constitute a new contract in substitution of the agreement dated 15th December, 2006 or the amendment/extension dated 9th March, 2012. He submits that the Naphtha produced by the respondent in its refinery is a byproduct. He submits that the respondent had spent about Rs.90 crores in laying down the pipe line from its refinery to the port of the petitioner having the length of about 102 K.M. ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 16 arbp-25.16(j).doc
31. It is submitted that under the said TSA, the petitioner had dedicated four tanks for storage and export of Naphtha for the respondent which was subsequently reduced to 3 tanks. Reliance is placed on clause 7.3 of the TSA and it is submitted that the petitioner under the said provision had agreed to ensure berthing of ocean tankers of the respondent at the Jetty as per agreed laycans strictly on the basis of the confirmed schedule and on "First In First Out" basis subject to the vessels being in actual readiness in all respects for cargo loading. He submits that under the said provision it was agreed that the vessels of the respondent would berth in queue along with other vessels. The respondent did not make any claim that the vessels of the respondent will have to be given priority over the other vessels on the port of the petitioner for the purpose of export.
32. Reliance is placed on clause 9.1 of the TSA which originally provided for minimum guarantee throughput fee of Rs.9.25 crores per annum or pro-rata thereof if applicable being part of the accounting year. The said throughput fee was arrived at between the parties on the basis of the anticipated throughput of products and on the basis of the designated facilities being made available by the petitioner to the respondent. He submits that during the period between 2006 and 2012, there were no operational difficulties. He submits that during the period between 2007-2008 and 2015-2016, the petitioner has received the revenue of various amounts more than Rs.9.25 crores from the respondent.
33. Learned senior counsel for the respondent invited my attention to the amendment/extension of TSA dated 9th March, 2012 and ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 17 arbp-25.16(j).doc would submit that by the said amendment the petitioner had agreed to provide to the respondent maximum 40 TMT parcel at Jetty of the petitioner with present vessel berthing criteria and further agreed that all the conditions and relevant clauses related to handling of 50 TMT parcel including articles 5, 7, 9, 11, 13, 14 and all other relevant clauses in the original TSA, including its schedule stood corrected as 40 TMT for all purposes. He submits that by the said amendment, it was agreed that the respondent shall henceforth not be liable to pay any minimum guarantee throughput which was earlier agreed under Article 9 and other relevant clauses in the said original TSA.
34. The respondent also agreed to provide to the petitioner at least one month in advance its yearly and monthly plan of vessel/quantity handling. He submits that it was clearly provided in the said amended agreement that the original agreement dated 15th December, 2006 shall henceforth be read and considered in line with the said amendment. The throughput charges as set out under article 9 of the original agreement and other relevant clauses of the original agreement stood amended and new throughput charges were made available with effect from 29 th December, 2011 till 28th December, 2016. He submits that it is thus clear that the minimum guarantee throughput which was agreed under article 9 of the original agreement was deleted and was given a go-bye.
35. Learned senior counsel for the respondent placed reliance on article 25 of the TSA and would submit that under the said provision, the petitioner was not given any unilateral right to terminate the said agreement but the termination was permissible only in case of specific ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 18 arbp-25.16(j).doc breach or failure to comply with any material respect of any of the provisions of the said agreement and if such failure continued for more than 90 days after receipt of the notice of one party to another party in breach. He submits that the petitioner never received any notice for 90 days or in any event that alleged breach never continued beyond a period of 90 days. He submits that the termination notice issued by the petitioner was never acted upon and was given a go-bye in view of subsequent conduct of the petitioner. It is submitted by learned senior counsel that the right of either party to terminate the said agreement was contingent upon occurrence of one or other events described under Article 25 and the said power did not provide for unilateral termination without any reasons. He submits that the said contract was not terminable at the whims and wishes of the petitioner.
36. Insofar as the submission of learned senior counsel for the petitioner that the respondent had not complied with the provisions of TSA of submitting L-1/monthly plan to the petitioner is concerned, it is submitted by learned senior counsel for the respondent that the said provision was not acted upon by the parties. No grievance was made by the petitioner in respect of the alleged non-compliance of the said provision providing for submission of monthly/quarterly plan by the respondent to the petitioner.
37. It is submitted that the dispute arose between the parties also for the reason that the local demand of Naphtha produced by the respondent increased substantially as a result whereof the export turn over of the respondent came to be reduced. Learned senior counsel invited my ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 19 arbp-25.16(j).doc attention to the letters dated 8th November, 2013, 30th November, 2013, 7th January, 2014, 25th June, 2014 and 16th July, 2014 from the petitioner to the respondent alleging that the export of Naphtha by the respondent from the port of the petitioner had substantially reduced. He submits that the petitioner in the aforesaid letters had requested the respondent to increase the business volume on the ground that the reduction in export by the respondent was affecting the revenue of the petitioner. He submits that even in the correspondence exchanged between the parties the petitioner had never alleged the port operational difficulty alleged to have been faced by the petitioner in view of the respondent not having submitted quarterly/monthly plan to the petitioner.
38. It is submitted by learned senior counsel that since the petitioner had illegally terminated TSA by notice dated 14 th October, 2014, the respondent was required to file a petition for interim measures under section 9 of the Arbitration & Conciliation Act, 1996 (1347 of 2014) in this Court. He submits that even in the affidavit in reply filed by the petitioner herein in the said proceedings filed by the respondent, reliefs were opposed by the petitioner basically on the ground that there was revenue loss to the petitioner in view of the respondent not having exported Naphtha for quite some time. My attention is also invited to the order passed by this Court on 11th September, 2014 in the said arbitration petition. He submits that by the said order, without prejudice to the rights and contentions of both the parties, the respondent herein was directed to pump sufficient quantity of Naphtha to the petitioner's facilities at Dahej in order to make exportable parcel in order to export to its international buyer within a period of eight weeks from the date of the said order.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 :::ppn 20 arbp-25.16(j).doc
39. The petitioner herein was directed to make the facilities available to receive Naphtha so pumped there at and for the export of the same under the terms of the agreement. The respondent was directed to make payment for the use of the said facilities of the petitioner in terms of the agreements. Both the parties were granted liberty to make the application under section 17 of the Arbitration Act. Under clause 2(f) of the said minutes of order, it was provided that the parties shall make an endeavor to resolve the dispute amicably in terms of clause 29 of the agreement.
40. It is submitted by learned senior counsel that after the said order was passed by this Court on 11th September, 2014, the petitioner addressed an email to the respondent on 30 th October, 2014 and requested the respondent to intimate the annual quantity to be handled. It was suggested that at least one month advance intimation of the said planning should be issued by the respondent to the petitioner. The petitioner had proposed to keep three tanks with storage capacity of 57.84 TKL (40.488 TMT) for the respondent so that 30,000 TMT parcel could be accommodated. The petitioner suggested that storing of product for definite period as per export plan was encouraged however mere storage of products was not permitted.
41. Learned senior counsel for the petitioner placed reliance on the minutes of meeting dated 18th November, 2014 recording what transpired in the said meeting which was attended by the representatives of the petitioner as well as the respondent. He submits that in the said meeting, the petitioner had made a proposal to the respondent for ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 21 arbp-25.16(j).doc reduction in tankage from existing four tanks of total 76 TKL capacity to three tanks with total capacity of 57.84 TKL without any change in the Terminalling charges i.e. other terms and conditions of the agreement shall remain same till validity of the said agreement i.e. till 28 th December, 2016. He submits that the said meeting was held for discussing the modalities of the existing TSA agreement. The respondent in the said meeting had agreed that they will put forth the suggestion of the petitioner to appropriate authority and seek approval for operating the said TSA that suggested reduced tankage and export parcel size of 30 TKL. He submits that the respondent in the said meeting had only submitted that at that point of time the respondent had 10 TMT Naphtha available for pumping to the petitioner per month. He submits that what was recorded in the said minutes of meeting did not substitute existing TSA. It is submitted that no new agreement was arrived at in the said minutes of meeting. All other terms and conditions of TSA remain unaltered.
42. Learned senior counsel invited my attention to the note put up by the respondent dated 10th February, 2015 for approval of the higher authority. He submits that various proposals made by the respondent in the said note for approval of higher authority was only for the purpose of justifying the reduction of the quantity of four tanks to three tanks and the same did not suggest any fundamental alteration of the said TSA throughput by putting a cap as far as quantity of export is concerned. Learned senior counsel placed reliance on clause 21.1 of the TSA and would submit that under the said provision, the TSA could not be amended/changed/altered in any way except by written amendment ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 22 arbp-25.16(j).doc executed by the parties thereto. He submits that the said minutes of meeting, thus could not be considered as a new agreement in substitution of the said TSA. He submits that the alleged operational hazards of the petitioner was never an issue raised in the correspondence addressed by the petitioner to the respondent. It is submitted that the minutes of meeting dated 18th November, 2014 recorded only a modification in the operational throughput of the port of the petitioner.
43. Learned senior counsel for the respondent invited my attention to the letters dated 5th February, 2015 and 27th May, 2015 from the petitioner to the respondent and the letter dated 24th June, 2015 from the respondent to the petitioner. He submits that even under clause 6 of the minutes of meeting dated 18 th November 2014, what was agreed was that the respondent would pump the quantity of 120 TMT. He submits that the respondent did not agree that the respondent would export the quantity of 120 TMT as canvassed by the petitioner. He submits that the respondent rightly clarified their stand in the letter dated 24 th June 2015 that the term 10 TMT maximum Naphtha availability with the respondent was used under the context of what minimum Naphtha could be pumped from the refinery of the respondent to the petitioner for export and it did not connote maximum quantity that the petitioner would handle.
44. It is submitted by learned senior counsel that it is not in dispute that in the year 2015 itself the petitioner had allowed the respondent to export 210 TMT of Naphtha till September, 2015, which was much more than the said quantity of 120 TMT recorded in the minutes of meeting dated 18th November 2014. He submits that the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 23 arbp-25.16(j).doc petitioner themselves having permitted the respondent to export 210 TMT of Naphtha till September 2015, the petitioner cannot be allowed to urge that the respondent cannot be allowed to export beyond 120 TMT till expiry of the contract period. He submits that the petitioner had raised an issue that the petitioner has to plan Jetty operation is raised for the first time in the letter dated 21st July 2015 and was by way of after thought.
45. Reliance is placed on the letter dated 13th August, 2015 addressed by the petitioner to the respondent and it is submitted that the petitioner had stopped the respondent from exporting Naphtha in view of the fact that the respondent had not agreed to shift their Naphtha pipe line from the plot of the petitioner. He submits that this action on the part of the petitioner was with mala-fide intention and was with a view to create hurdle in the respondent exporting Naphtha from the port of the petitioner. He submits that the petitioner has started raising a false plea of there being problem of availability of Jetty for the purpose of export of Naphtha of the respondent.
46. It is submitted by the learned senior counsel for the respondent that 90 days cure period contemplated under Article 25 of the agreement in a notice for termination of the said agreement had not expired when the so called notice of termination was issued by the petitioner. He submits that it is not the case of the petitioner that the petitioner had issued a fresh termination notice to the respondent after minutes of the meeting dated 18th November, 2014 was recorded by the parties. He submits that the contract under Article 25 of the said agreement could be terminated only if the substantial breach of the said ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 24 arbp-25.16(j).doc agreement would have continued beyond the period of 90 days after such notice of termination was issued by any of the parties. He submits that since there was non compliance of the said mandatory condition under Article 25 (b), there could not be any termination of the contract.
47. It is submitted by the learned senior counsel that merely because there is a provision in the agreement for termination of the contract, unless conditions mentioned in the agreement for making such termination effective are complied with, such agreement would not be considered as determinable. He submits that section 14(1)(c) of the Specific Relief Act thus would not be attracted to the agreement in question. My attention is invited to paragraph (20) of the impugned order passed by the learned arbitrator and it is submitted that the learned arbitrator has rendered a prima facie finding that the said agreement was not determinable at the whims of the petitioner with a notice of termination unless substantive breach or failure on the part of the respondent would have continued for more than 90 days after issuance of such notice. He submits that merely because clause of termination exist, it cannot be terminated unless breach is committed in accordance with the terms of the agreement.
48. Learned senior counsel for the respondent distinguished the judgment of Supreme Court in case of Indian Oil Corporation Ltd. vs. Amritsar Gas Service and others (supra). Reliance is placed on paragraphs 12 to 14 of the said judgment. It is submitted that the clause interpreted by the Supreme Court in the said judgment were totally different than the Article 25 of the said agreement entered into between the parties hereto.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 :::ppn 25 arbp-25.16(j).doc
49. Learned senior counsel also distinguished the judgment of this court in case of Spice Digital Ltd. (supra) on the similar grounds. He submits that in the said judgment this court has held that if the interpretation of the contract by the learned arbitrator was a possible interpretation, this court cannot substitute such possible interpretation of the learned arbitrator by another interpretation and thus on that ground this court could not interfere with the impugned award rendered by the learned arbitrator.
50. Learned senior counsel for the respondent placed reliance on the judgment of Delhi High Court in case of KSL & Industries Ltd. (supra) and in particular paragraphs 69 and 77 thereof. It is submitted that Delhi High Court in the said judgment after adverting to the judgment of Supreme Court in case of Amritsar Gas Service and others (supra) has held that unless conditions in the termination clause are proved, contract cannot be terminated. He submits that the court or the arbitrator has to consider whether damages are an adequate remedy in case of the illegal termination. He submits that if this court interferes with the order passed by the learned arbitrator, refinery of the respondent would be shut down which would not be compensated in terms of the money. He submits that the public at large would be affected if the impugned order is set aside by this court.
51. It is submitted by the learned senior counsel that the learned arbitrator has passed the impugned order after considering the facts of this case, after interpreting the provisions of the agreement and has passed an equitable order with a view to do complete justice in this matter which cannot be interfered with by this court.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 :::ppn 26 arbp-25.16(j).doc
52. Learned senior counsel for the respondent placed reliance upon the statement prepared by the respondent and would submit that the said statement would indicate that during the period between July 2015 and October 2015, the jetty of the petitioner was lying vacant for about 15-16 days in each of those months. He submits that the submission of the petitioner that there were backlog orders and jetty was not available or vacant during that period is contrary to the actual position on site. He submits that the excuses given by the petitioner that the jetty was not available or was not vacant for the entire period is with a view to harass the respondent with an ulterior motive. He submits that the respondent had called upon the petitioner to produce their register to show as to when and for what period, the jetty was hired and was not available for export of naphtha produced by the respondent. The petitioner, however, did not produce any such register before the learned arbitrator. He submits that the act of the petitioner is high handed and arbitrary. He submits that the balance of convenience is in favour of the respondent and not in favour of the petitioner and thus the learned arbitrator has rightly passed the order in favour of the respondent and against the petitioner.
53. In so far as the submission of the learned senior counsel for the petitioner that in view of the minutes of meeting dated 18 th November 2014, there was a commitment to export 120 TMT of naphtha is concerned, it is submitted by the learned senior counsel for the respondent that there was no such commitment of 120 TMT of naphtha to be exported by the respondent under any agreement entered into between the parties. It is submitted by the learned senior counsel that the learned arbitrator had not re-written the contract as canvassed by the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 27 arbp-25.16(j).doc petitioner. Learned arbitrator while directing the petitioner to permit the respondent to export 300 TMT of naphtha has dealt with the suggestion of the petitioner itself in the correspondence suggesting quantity of 300 TMT of naphtha for the purpose of pumping and for export.
54. In so far as the submission of the learned senior counsel for the petitioner that the respondent has alternate plant available for the purpose of export of naphtha is concerned, it is submitted by the learned senior counsel for the respondent that the amount of naphtha produced by the respondent fluctuates from time to time. Panipat Cracker plant is not a full proof plant and is not a substitute of the port of the petitioner for the purpose of export of naphtha. He submits that the alternate plant as alleged by the petitioner has to be equally convenient. He submit that the respondent had already laid pipelines by incurring costs of Rs.90 crores which pipelines were laid as a special need and had special value and purpose.
55. In so far as the submission of the learned senior counsel for the petitioner that the learned arbitrator could not have granted any mandatory injunction under Section 17 of the Arbitration Act is concerned, it is submitted by the learned senior counsel for the respondent that there was no absolute bar under Section 17 against the learned arbitrator for granting mandatory interim injunction. He submits that in any event, the respondent had not prayed for any mandatory injunction, nor the same had been granted by the learned arbitrator. In support of this submission, learned senior counsel placed reliance on the judgment of this Court in the case of Gulamali Amrullah Babul & ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 28 arbp-25.16(j).doc Ors. Vs. Shabbir Salebhai Mahimwala decided on 29th October 2015 in Arbitration Petition No.410 of 2015 and Arbitration Petition (L) No.1435 of 2015 and more particularly paragraphs 43 and 64 thereof.
56. It is submitted that the learned arbitrator is empowered to grant mandatory order to protect the subject matter of the dispute. It is submitted that right of the respondent to export naphtha by using jetty of the petitioner under the agreement entered into between the parties is a subject matter of the arbitral proceedings and thus the learned arbitrator has rightly granted such order so as to protect the subject matter of the dispute. He submits that the learned arbitrator has rightly considered the obstructive attitude of the petitioner while granting such relief in favour of the respondent.
57. Learned senior counsel invited my attention to the relief claimed by the respondent in the application filed under Section 9 of the Arbitration Act which was thereafter converted into an application under Section 17 in support of the submission that the relief prayed by the respondent was not in the nature of mandatory injunction. He submits that three tanks dedicated by the petitioner for exclusive use of the respondent are full of naphtha pumped by the respondent. The petitioner deliberately did not allow the respondent to emptying those tanks and to evacuate or to remove the same by export. He submits that since the contract admittedly is not terminated by the petitioner, learned arbitrator, in these circumstances with a view to do complete justice in the matter, has rightly granted interim measures. He submits that the learned arbitrator has granted relief against the petitioner not to interfere with ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 29 arbp-25.16(j).doc the process of evacuation of naphtha by allowing the respondent to bring vessel therein.
58. It is submitted by the learned senior counsel that the learned arbitrator having exercised his powers under Section 17 of the Arbitration Act and having passed an interim order which is balance and equitable order by rendering detailed reasons, this Court under Section 37 of the Arbitration Act cannot take a different view and cannot interfere with such order. He submits that the view taken by the learned arbitrator is a possible view based on the interpretation of the contract and correspondence exchanged between the parties and thus no interference is permissible with the said order under Section 37 of the Arbitration Act. Learned senior counsel placed reliance on the judgment of the Supreme Court in the case of Wander Ltd. and Anr. Vs. Antox India P. Ltd., reported in 1990 (Supp) SCC 727 and in particular paragraphs 9 and 14 in support of this submission.
59. Dr.Sathe, learned senior counsel for the petitioner in rejoinder invited my attention to the two emails dated 23 rd December 2015 and 13th April 2016 from the respondent to the petitioner by which the respondent has alleged to have submitted monthly plan to the petitioner and would submit that there were no specific dates given by the respondent when the respondent sought to export naphtha by using the jetty of the petitioner. He submits that such type of vague plan given by the respondent is contrary to the terms and conditions of the agreement. He placed reliance on prima facie finding rendered by the learned arbitrator in paragraph 23 of the impugned order and would ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 30 arbp-25.16(j).doc submit that even the learned arbitrator has held that the issue of availability of berth is exclusively within the domain of the petitioner herein. He submits that though the learned arbitrator rendered a prima facie finding in favour of the petitioner, learned arbitrator has issued interim order against the petitioner which is contrary to such finding recorded by the learned arbitrator.
60. Learned senior counsel for the petitioner invited my attention to various paragraphs of the affidavit filed by the petitioner in the arbitral proceedings and would submit that the learned arbitrator has not considered the strategic function of port of the petitioner while granting interim measures against the petitioner. He submits that the naphtha produced by the petitioner is not a bye-product but a specific independent product. He submits that the port of the petitioner admittedly came into existence in the year 2000 whereas the refinery of the respondent came into existence about 60 years back. He submits that the respondent was already using another alternate jetty for export of naphtha prior to 2006 when the agreement was entered into between the parties.
61. Learned senior counsel for the petitioner placed reliance on Article 12 and would submit that the contract entered into between the parties was for a period of five years only. The said contract was not extendable unless both the parties on the terms and conditions mutually would agree for such extension. He submits that the respondent was fully aware that whatever amount has been spent by the respondent on laying underground pipelines till jetty of the petitioner was to be ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 31 arbp-25.16(j).doc recovered within a period of five years. He submits that in any event, laying of pipelines of the respondent is irrelevant for the purpose of granting any interim measures and the same was a business decision taken by the respondent. It is submitted that the respondent has already recovered a substantial amount on carrying export by using the said pipelines in last five years.
62. Learned senior counsel also placed reliance on the affidavit, filed by the petitioner before the learned arbitrator on the issue whether the port of the petitioner was lying vacant or was busy all throughout.
Learned senior counsel invited my attention to some of the paragraphs of the affidavit in support of the submission to demonstrate as to how the port of the petitioner operates during the high tide/low tide and how berthing and un-berthing operation are made by the petitioner and the manner in which the export of various customers are effected. He submits that all customers of the petitioner have to file their yearly, monthly or quarterly plan to enable the petitioner to organise the port in such a way that all the customers do their export on the appointed day.
63. Learned senior counsel for the petitioner placed reliance on Section 14 (1) (d) of the Specific Reliefs Act, 1963 and would submit that the respondent could not even seek any specific performance in the agreement entered into between the parties which requires continuous duty and supervision of the learned arbitrator. He submits that there was no arm twisting by the petitioner as alleged by the respondent. It is submitted by the learned senior counsel that the learned arbitrator has already rejected the submission of the respondent that since the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 32 arbp-25.16(j).doc respondent did not agree to shift their pipelines, the petitioner had created obstacles against the respondent. He submits that the termination of the contract was based on non-compliance of the obligations of the respondent in submitting the plan and on committing various other breaches.
64. Learned senior counsel for the petitioner placed reliance on paragraph 18 of the judgment of this Court in the case of Spice Digital Ltd. (supra) and also paragraph 26 of the judgment of Cox and Kings Ltd. Vs. Indian Rly. Catering and Tourism Corporation Ltd. & Anr., reported in AIR 2012 SC 526 and would submit that investment of Rs.90 crores in laying the pipelines is irrelevant since the respondent was aware that the contract entered into between the parties was a five years contract. He submits that the learned arbitrator had not considered the provisions of Section 14(1)(d) of the Specific Reliefs Act, 1963 while granting the relief to the respondent. He submits that the respondent had already used the pipelines for nine years as against five years contract.
65. In so far as the submission of the learned senior counsel for the respondent that there was no substitution of the contract by minutes of meeting dated 18th November 2014 is concerned, learned senior counsel invited my attention to the provisions of the agreement dated 15th December 2006 and modified contract dated 9 th March 2012. He submits that in the first agreement entered into between the parties, the provision for minimum throughput was admittedly made by the parties. He submits that however in the modified contract dated 9 th March 2012, ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 33 arbp-25.16(j).doc the provision for minimum throughput was deleted. He submits that during the period between January 2014 and September 2014, the respondent had no problem of running refinery by pumping naphtha through the said pipelines and to export the same. The respondent neither pumped any quantity of naphtha nor exported any quantity during the month of January 2014 to September 2014. He submits that the meetings between the parties were held on 18 th November 2014 pursuant to the order passed by this Court.
66. In so far as the submission of the learned senior counsel for the respondent that the jetty of the petitioner was vacant for 14 days in the month of July 2015, 16 days in the month of August 2015, 15 days in the month of September 2015 and thus the petitioner could not have refused the respondent to export naphtha from the port/jetty of the petitioner on the ground that the same was not lying vacant is concerned, it is submitted by the learned senior counsel that though for few days, the port/jetty of the petitioner was shown as vacant, the fact remains that the jetty was all throughout booked. He submits that there may be a situation where the jetty was booked for four days, the vessel of the parties of the petitioner may leave the jetty one day early but that would not conclude that the jetty was vacant for number of days as alleged by the respondent. Learned senior counsel invited my attention to a chart annexed at page 274 of the petition and would submit that this chart would clearly indicate that the jetty was not vacant and in any event could not be made available to the respondent with a short notice. He submits that the learned arbitrator had already dealt with the issue of working of the port/jetty of the petitioner.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 :::ppn 34 arbp-25.16(j).doc
67. In so far as the submission of the learned senior counsel for the respondent that there was an alleged arm twisting on the part of the petitioner or that the petitioner had acted unreasonably or arbitrarily is concerned, it is submitted by the learned senior counsel for the petitioner that neither there was any such arm twisting nor unreasonableness or arbitrary action on the part of the petitioner against the respondent nor any such allegations can be gone into in the arbitral proceedings when the rights and obligations of the parties are governed by the contract.
He submits that the petitioner had not committed any breach of the provisions of the contract but it was the respondent who had committed breach. He submits that in any event, learned arbitrator had rejected the plea of arm twisting or alleged arbitrary action on the part of the petitioner in paragraph 23 of the impugned order. The respondent has not challenged any part of the impugned order.
68. In so far as the issue of balance of convenience raised by the respondent is concerned, it is submitted by the learned senior counsel for the petitioner that the respondent has been operating their refinery since 1965 whereas the port of the petitioner came into existence in the year 2000. He submits that first agreement was executed between the parties admittedly in the year 2006 which was for a period of five years and could be extended only by mutual consent of the parties in the mutually agreed terms. He submits that by an agreement dated 9 th March 2012, the original contract was extended till 28 th December 2016 when the said agreement would come to an end.
69. Learned senior counsel invited my attention to some correspondence exchanged between the parties and more particularly the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 35 arbp-25.16(j).doc letters of the respondent dated 7th November 2014, 27th October 2014 and email of the respondent dated 28th October 2014 for seeking extension of time to export naphtha. He submits that the petitioner had repeatedly brought to the notice of the respondent about their breaches of the terms of the contract. It was brought on record by the petitioner that the respondent was not being an exporter of naphtha from the port/jetty of the petitioner during the entire period of 2014. The respondent was, on the other hand, carrying out export through Kandla port or through Panipat Cracker Plant. The petitioner accordingly made a suggestion that the petitioner not having generated any revenue from those four tanks which was made for the respondent and could not have given those tanks to their other customers, quantity of those tanks be reduced from four tanks to three tanks.
70. The petitioner had accordingly terminated the contract for committing various breaches by the respondent. He submits that meetings were held by and between the parties pursuant to the interim order passed by this Court on 11th September 2014. He submits that though by the said order, the respondent herein was directed to pump sufficient quantity of naphtha (white oil) through the facilities of the petitioner in Dahej in order to make an exportable parcel in order to export to its International buyers within a period of 8 weeks from the date of the said order, the respondent could not comply with the said order and requested for extension of time from time to time. He submits that this Court had directed the parties to meet and endeavour to resolve the disputes mutually in terms of clause 29 of the agreement.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 :::ppn 36 arbp-25.16(j).doc
71. It is submitted by the learned senior counsel that during the year 2014, it was not the case of the respondent that the petitioner was not permitting the respondent to export naphtha though the respondent had evacuated naphtha through the pipelines of the respondent to the jetty of the petitioner. He submits that since the respondent had already an alternate arrangement with the respondent to export sufficient quantity of naphtha produced by them, there was no inconvenience caused to the respondent during the substantial period of contract. He submits that balance of convenience is thus in favour of the petitioner and not in favour of the respondent.
72. The petitioner could not generate any income in view of the respondent not having exported naphtha in the year 2015. Learned senior counsel also invited my attention to an averment made in the affidavit-in-reply filed in the month of September 2014 before the learned arbitrator by the petitioner and more particularly paragraph 5(xii) thereof and would submit that it is an admitted position that the respondent herein was using the said pipelines as a feeder for their Hazira facilities. He submits that the respondent thus cannot be allowed to urge that the pipeline laid by the respondent was a dedicated pipeline only for the purpose of transporting naphtha from their refinery at Vadodara to the port of the petitioner at Dahej.
73. In so far as the submission of the learned senior counsel that the respondent had spent a sum of about Rs.90 crores on laying pipelines from their refinery to the jetty of the petitioner and if the respondent is not allowed to export naphtha which is pumped by the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 37 arbp-25.16(j).doc respondent through the said pipeline, the said investment of the respondent would become redundant is concerned, it is submitted by the learned senior counsel that admittedly the contract was only for a period of five years. Even during the said period of five years, which was further extended mutually, the respondent had already generated the income much more than what they had alleged to have incurred i.e. an amount of Rs.90 crores spent by the respondent. He submits that the respondent had paid more than Rs.200 crores to the petitioner as fee and charges for using the port of the petitioner for last 9 years.
74. It is submitted that it was not pleaded by the respondent before the learned arbitrator that if the export was not allowed, the refinery of the respondent would be shut down or that there was no alternate facility available with the respondent. He invited my attention to the averments made by the respondent in paragraph 17 of the affidavit-
in-rejoinder dated 9th October 2015 filed by the respondent before the learned arbitrator and also to the averments made in paragraph 19 of the further affidavit filed by the petitioner before the learned arbitrator. He submits that it was the case of the respondent themselves that they did not have adequate surplus naphtha to pump to the port of the petitioner and hence there was no question of any naphtha containment issue at Gujarat Refinery due to decrease in naphtha storage tankage of the petitioner/surrender of tank no.14A back to the petitioner.
75. It is submitted that the alleged fault in the motor of Methane Refrigeration Compressor at Panipat Naphtha Crackers was for a temporary period. He submits that the respondent was admittedly selling ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 38 arbp-25.16(j).doc naphtha in the local market and thus the export was not required to be made for a substantial period of time.
76. In so far as the submission of the learned senior counsel for the respondent about legal status of minutes of meeting/contract dated 18th November 2014 is concerned, it is submitted that admittedly the said meeting was held pursuant to the order passed by this Court on 11th September 2014 in Arbitration Petition (L) No.1347 of 2014. He invited my attention to the attendance of the Officer shown in the said minutes of meeting. It is submitted that in the said meeting, it was clearly recorded that the respondent had submitted that maximum of 10 TMT naphtha was available for pumping to the petitioner per month i.e. 120 TMT per year and the respondent shall submit the quarterly pumping plan and would give one month advance intimation for the same as requested by the petitioner. He submits that the said minutes of meeting in which the said agreement was arrived at were duly signed by both the parties through their authorised representatives.
77. Learned senior counsel also invited my attention to the note dated 10th February 2015 submitted by the respondent under the signature of Shri K.S.Rao, DGM (O) IOC HO who had attended the said meeting dated 18th November 2014. Emphasis is laid on paragraphs 3, 4, 5, 6 and 8. He submits that in the said note, the respondent themselves had referred to the correspondence exchanged between the parties, the proposal made by the petitioner and the approval sought by the respondent from the higher authority. He submits that the respondent has admitted in the said proposal that as suggested by the petitioner, the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 39 arbp-25.16(j).doc respondent had surrendered the tank no.14 A of 13.5 TKL storage capacity. All other terms and conditions of TSA including the applicable per MT rate payable to the petitioner after export shall remain same and unaffected.
78. The respondent also recorded that the respondent vide their email dated 29th September 2014 had indicated that the maximum of 10 TMT of naphtha shall be available ex Gujarat Refinery for pumping to the port of the petitioner at Dahej. The respondent once again recorded that it did not have sufficient quantity of naphtha for pumping to the port of the petitioner and that the petitioner was paid only when naphtha was exported ex its tanks terminal and not for storage of naphtha in tanks. The respondent also recorded that the Court during the course of hearing had opined that the respondent could not use the services of its tanks for mere storage of naphtha for months together without any revenue being generated for the petitioner and thus the respondent was advised to re-negotiate with party before actually proceeding for arbitration. The respondent recorded that there was no additional financial outgo getting incurred to the respondent in spite of surrender of one tank to the petitioner during the balance 24 months period of the said existing agreement which was valid till 28th December 2016 as the rate, as per agreement, was on Rs./MT basis.
79. The respondent also recorded that they did not have adequate surplus naphtha to pump to the petitioner and hence there was no question of any naphtha containment issue at Gujarat Refinery due to decrease in naphtha storage tankage of the petitioner/surrender of tank no.14 A back to the petitioner. My attention is also invited to the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 40 arbp-25.16(j).doc approval on the said proposal recorded in the said meeting. The said approval was also signed by Shri. K.S. Rao who had signed the minutes of meeting dated 18th November 2014. The Chairman and the Director recorded that full powers had been sub-delegated to the Functional Director for changes in terms and conditions/scope of contract in case of concluded contracts except for variations in rates. It was recorded that since in the instant case, the surrender of one tank with no financial implication fell under the powers delegated to the Director, the same did not require approval of the Director.
80. It is submitted by the learned senior counsel for the petitioner that the stand subsequently taken by the respondent that the respondent had agreed to export minimum 120 TMT of naphtha at that time is ex-facie incorrect and contrary to minutes of meeting dated 18th November 2014 and the note put up by the respondent themselves for approval. He submits that though the earlier agreements were amended by the said minutes of meeting dated 18 th November 2014 which had to be read with the note put up by the respondent, some of the clauses in the earlier agreements which remained unaffected have to be read with minutes of meeting dated 18 th November 2014 which was a new contract arrived at between the parties.
81. It is submitted that the proposal put up by the respondent before the higher authority also referred to the proposal dated 30 th October 2014 made by the petitioner by which the petitioner had requested the respondent to indicate the annual quantity of export. He submits that accordingly the respondent had indicated the maximum quantity of 120 TMT per year categorically.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 :::ppn 41 arbp-25.16(j).doc
82. In so far as the submission of the learned senior counsel for the respondent that the contract was not determinable and thus specific performance of contract could be awarded in the arbitral proceedings is concerned, it is submitted by the learned senior counsel for the petitioner that in this case, Article 25 of the contract specifically provided for termination of the contract. He submits that under Article 12 of the said contract, the contract period of 5 years was agreed. He submits that the contract was admittedly thus not for indefinite period but was for a specific period. He submits that on expiry of period of 5 yeas, unless the contract is mutually extended on mutual agreed terms, the contract would have expired by efflux of time and is thus in its nature determinable as contemplated under Section 14(1)(c) of the Specific Relief Act, 1963. No specific performance of such determinable contract can be granted in the arbitral proceedings and thus no interim measures in the claim for specific performance could be granted under Section 9 of the Arbitration Act.
83. Learned senior counsel for the petitioner relied upon paragraph 20 of the judgment of this Court in the case of Spice Digital Ltd. (supra) and would submit that this Court has considered this issue and has held that the contract which is determinable or is terminated, no interim measures can be granted by the learned arbitrator.
Learned senior counsel distinguishes the judgment of the Delhi High Court in the case of KSL & Industries Ltd. (supra) relied upon by the learned senior counsel for the respondent. My attention is invited to paragraphs 69 and 77 of the said judgment and it is submitted that in the said matter, the Court had come to the conclusion that items which ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 42 arbp-25.16(j).doc were subject matter of the dispute were not ordinary articles and were of special value and thus the specific performance thereof could have been granted. He submits that the facts of this case are totally different.
Delhi High Court has not considered the provisions of Section 14(1)(c) of the Specific Relief Act, 1963 in the said judgment.
84. In so far as the judgment of this Court in the case of Gulamali Amrullah Babul & Ors. (supra) relied upon by Mr.Dhond, learned senior counsel for the respondent is concerned, it is submitted by the learned senior counsel for the petitioner that the facts of the said judgment are totally different and clearly distinguishable. In so far as the judgment of the Supreme Court in the case of Wander Ltd. and Anr.
(supra) relied upon by the learned senior counsel for the respondent is concerned, it is submitted that the facts of the said judgment are totally different. In this case, though the learned arbitrator had made various prima facie observations in favour of the petitioner, interim measures are granted contrary to such prima facie findings rendered by him. He submits that in such circumstances, principles of law laid down by the Supreme Court in the case of Wander Ltd. and Anr. (supra) cannot be extended to the facts of this case.
85. Mr.Dhond, learned senior counsel for the respondent submits that merely because a contract makes a provision for fixed period, that would not make the contract determinable under Section 14(1)(d) of the Specific Relief Act, 1963. He submits that by the impugned order, the learned arbitrator has permitted the respondent to export 300 TMT of naphtha during the contractual period. He submits that admittedly parcel size was 30 KTM. The respondent has already exported 120 ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 43 arbp-25.16(j).doc TMT in 4 trips. It is submitted that during the balance period of 8 months of contractual period, the respondent will only require 10 trips for the purpose of export of balance quantity of 180 TMT.
86. It is submitted that it is not the case of the respondent that no sooner the vessel of the respondent is brought to the port of the petitioner, the petitioner has to give permission to use the port to the respondent. The respondent can stand in queue. As and when the parties standing ahead in queue of the respondent are cleared, the respondent can be permitted to export. He submits that the ground of functioning of port raised by the petitioner in various affidavits is only a false excuse raised with a view to cause hardship to the respondent.
87. It is submitted that there is no prejudice caused to the petitioner due to the impugned order passed by the learned arbitrator. He submits that there is no provision in the contract for submitting any annual plan. There is a provision for intimation of annual quantity. He submits that on one hand, the petitioner had alleged that there was no revenue generated in view of the export not having effected by the respondent and when the respondent had agreed to export through the port of the petitioner, the petitioner has caused obstructive attitude and has refused to permit the respondent to carry out export and to accept the revenue from the respondent. He submits that no interference is thus warranted with the order passed by the learned arbitrator, the same being balanced and equitable order.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 44 arbp-25.16(j).doc
REASONS AND CONCLUSIONS :-
88. There is no dispute that the parties had entered into a TSA on 15th December, 2006 by which the respondent agreed to utilize the port and terminal facilities at Village Lakhigam, Dahej, District Bharuch inclusive of jetty facility, storage tanks and tank farm and pipelines connecting the tank farm/storage tank to the jetty on the terms and conditions recorded in the said TSA. Article 10 of the said TSA provided the definition of 'Designated Tank' allotted to the respondent within the Battery Limit viz. Tank nos. 14-A, 14-B, 14-E and 14-F with pumpable capacity of 30,380 MTs and the additional tanks to be installed in accordance with Article 5.2 and 5.3 of the said TSA so that the aggregate pumpable capacity becomes minimum of 50,000 MTs.
89. Article 7.3 provided that the petitioner shall ensure berthing of Ocean Tankers of the respondent at the jetty as per agreed laycans.
The respondent agreed to communicate for Exports during the contract period as per the operational methodology provided in Article 11 of the said TSA. It was provided that the berthing of the vessels at the jetty of the petitioner shall be strictly on the basis of the confirmed schedule on the first in first out basis subject to vessels being in actual readiness in all respects for cargo loading. It was provided that all delay/demurrage due to berthing will be to the account of the respondent.
90. Under Article 9.1 of the said TSA, the respondent had agreed to pay fees and rates for use of all the facilities provided therein to the petitioner. It was provided that notwithstanding the rates of fee as payable by the respondent to the petitioner as stated in (a) and (b), the respondent ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 45 arbp-25.16(j).doc shall ensure to the petitioner a Minimum Guaranteed Throughput fee of Rs.9.25 crores per annum or pro-rata thereof if applicable for part of the Accounting Year. Under Article 9.8, the respondent had agreed to provide at the beginning of each year break-up of estimated annual quantities of the products they planned to Export through the facilities of the petitioner during the period of the said TSA. It was further agreed that the petitioner would be free to explore utilization of their facilities as per Article 10.4 and for that purpose the respondent shall have the first right of refusal to reserve any additional capacity of the jetty and the jetty facilities.
91. Under Article 10.2, it was provided that the respondent had a right to receive product through Koyali Dahej pipeline and use their Marketing Terminal as they wish and from their Marketing Terminal, the respondent shall have right to Export through the pipeline laid by the respondent upto the petitioner's jetty and thereafter use jetty of the petitioner and the loading arms for the purpose of loading Ocean Tankers with white oils (naphtha) stored in their Marketing Terminal by use of Pipeline Corridor on the route of the petitioner upto the jetty of the petitioner and by the use of the said pipeline installed by the respondent within the battery limit of the petitioner.
92. Under Article 11.2 of the said TSA, it was provided that the respondent shall indicate the plan in writing to the petitioner for the white oils to be handled at the facilities of the petitioner by first week of every month after finalization of the receipts and evacuation schedule. Under Article 11.3, the respondent agreed to indicate the pipeline pumping schedule for the month and to advise any modifications in the schedule ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 46 arbp-25.16(j).doc towards advancement/deferment of the parcel to the petitioner with a minimum 24 hours notice of any change in the receipt schedule.
93. Under Article 11.6, it was provided that berthing of vessels of the jetty of the petitioner will be on first come first out basis. However, efforts would be made by the petitioner to minimize demurrage to the Ocean Tankers of the respondent if any, even by way of requesting the other charterers of waiting tankers/vessels. Article 12.1 of the said TSA provided that the contract period would be initially for five years from the start up date and further extendable based on mutually agreed terms and conditions. It was provided that either party shall be entitled to give three month notice prior to the expiration of the initial term in case they desired to extend the initial terms on such mutually agreed terms and conditions.
94. Article 14.1 provided for minimum guaranteed throughput fee. It was made clear that if the aggregate of the fees as payable in terms of the rates as provided in the said TSA did not meet the minimum guaranteed throughput fees of Rs.9.25 crores per annum then and in such an event a sum of Rs.9.25 crores per annum shall be payable by the respondent to the petitioner. This provision for minimum guarantee throughput was subsequently deleted.
95. Article 21 of the said TSA provided that the said agreement may not be amended, changed or modified in any way except by a written amendment executed by the parties to the said TSA. Clause 25 of the said agreement provided that for grounds of termination. Article 25(a) ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 47 arbp-25.16(j).doc and 25(b) which are relevant for the purpose of deciding this petition are as under :-
"(a) Non-compliance by the Service Provider of the provisions of Sections I, Section II and Section III this Agreement.
(b) substantial breach or failure to comply in any material respect to any provision of this Agreement and such failure continues for more than ninety (90) days following written notice thereof by the other Party to the Party in breaches."
96. Clause 29 of the said TSA provided for arbitration. There is no dispute that on 9th March, 2012, the parties executed another Terminalling Services Agreement for amendment/extension of the earlier TSA dated 15th December, 2006. By the said agreement, the earlier TSA was renewed for a further period of five years i.e. 29 th December, 2011 to 28th December 2016 on the revised terms and conditions mentioned in the said extension agreement. It was provided that the other terms and conditions mentioned in the agreement dated 15th December 2006 would remain the same and shall be the part of the said amendment agreement.
It was agreed that the petitioner shall provide to the respondent maximum 40 TMT parcel at the jetty of the petitioner with the present vessel berthing criteria and that all the conditions and relevant clauses related to handling of 50 TMT parcel including Articles 3, 5, 7, 9, 11, 13, 14 and all the other relevant clauses in the original agreement including its schedules shall stand corrected as 50 TMT for all purposes. The parties agreed that the respondent shall not be liable to pay 'Minimum Guarantee Throughput' which was earlier agreed under Article 9 and other relevant clauses in the original TSA.
97. It was further agreed that the respondent shall regularly provide to the petitioner atleast one month in advance, its yearly and ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 48 arbp-25.16(j).doc monthly plan of vessel/quantity handling. The parties agreed that the original agreement dated 15th December, 2006 shall be read and considered in line with the said agreement. The parties also amended the throughput charges as stated under Article 9 and other relevant clauses of the original TSA w.e.f. 29th December, 2011 till 28th December, 2016.
98. A perusal of the letters dated 8th November 2013, 30th November 2013, 7th January 2014, 25th June 2014 and 16th July 2014 addressed by the petitioner to the respondent indicates that the petitioner placed on record that the volumes of export by the respondent under the said TSA had substantially reduced and the facilities dedicated for the respondent by the petitioner remained underutilized. It was recorded that during the period 2007-2012, the petitioner had handled naphtha export of 10 lac metric tones MT on average. During the year 2012-2013 the petitioner had handled about 6.0 lac MT and during the period 2013- 2014, in last seven months in that year, the naphtha export was only 2.14 lacs MT. The petitioner made it clear that if the same situation continued, the petitioner shall be constrained to look for other facility user. The petitioner informed the respondent that with the facilities offered to the respondent, the petitioner would not be able to handle parcel size below 35,000 MT and requested the respondent to improve the export value and suggested for a meeting. There was however no response to the above referred correspondence.
99. The petitioner also made representation to the Executive Director-Operation of the respondent to intervene in the matter. The petitioner requested the respondent to provide a firm plan for usage of said facility or consider fix monthly storage rental to protect the revenue ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 49 arbp-25.16(j).doc of the petitioner. The petitioner placed on record that four tanks of the petitioner with total capacity of 71,440 KL were occupied by the respondent without any business resulting in heavy loss to the petitioner.
The petitioner accordingly vide their letter dated 16th July, 2004 placed on record the total volumes of export carried out by the respondent by utilizing the facilities of the petitioner and revenue generating from such export by the petitioner.
100. The petitioner placed on record that since February 2014 respondent had exported nil quantity of the product and consequently there had been zero revenue earned by the petitioner. No vessel or quantity had been handled by the respondent during the financial year 2014-15 causing frustration to the said TSA and since almost last six months, no product had been exported by the respondent. The petitioner recorded that the substantial breach of the agreement dated 15th December 2006 as revised on 9th March 2012 had been committed by the respondent by their failure to execute/perform their part of the contract by exporting white oil. The petitioner requested the respondent to guarantee an export of minimum 1 MMTPA from the financial year 2014-2015 onwards within 10 days from receipt of the said letter or to evacuate their product from the storage tanks to enable the petitioner to offer the said tanks to some other genuine user.
101. The respondent in response to the said letter dated 16 th July, 2014 by their letter dated 25th July 2014 advised the petitioner that whatever surplus naphtha was generated from Gujarat Refinery after meeting the domestic demand was being exported through the petitioner ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 50 arbp-25.16(j).doc in view of the pipeline connectivity from Gujarat Refinery and the same shall continue in the future also. The respondent purported to clarify that the terms and conditions agreed between the parties shall prevail during the validity of the contract.
102. The petitioner vide their letter dated 14 th August 2014 recorded various breaches alleged to have been committed by the respondent, more particularly under Article 25(b) of the TSA and terminated the said TSA dated 15th December, 2006 as renewed on 9th March, 2012. The petitioner clarified that from the date of the said letter, the parties shall stand absolved from performance of their respective obligations under the said agreement except the obligations which were due to be performed prior to termination of agreement. The petitioner requested the respondent to evacuate naphtha stored in designated tanks as well as pipelines within one month from the date of receipt of the said letter of termination and threatened to take the suitable action for utilization of designated storage tanks and associated facility in the event of the respondent failing to comply with the said requisition.
103. The respondent vide their letter dated 19th August, 2014 vaguely denied all the allegations, statements and the assertions made out in the said letter dated 14th August, 2014. The respondent informed the petitioner that if any further act or omission would be committed by the petitioner against the interest of the respondent, the same would be entirely at the risk as to the cost and consequences of the petitioner.
104. A perusal of the correspondence referred to aforesaid prima facie indicates that after amendment to the original TSA executed ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 51 arbp-25.16(j).doc between the parties, the export of naphtha effected by the respondent by using the facilities of the petitioner substantially reduced. It is not in dispute that under the agreement arrived at between the parties, the fees and charges payable to the petitioner were not for storing the naphtha in the tanks ear-marked for the respondent by the petitioner but were payable only upon the respondent carrying out export of naphtha by utilizing the facilities of the port of the petitioner. A perusal of the correspondence and also the minutes of the meeting dated 18 th November, 2014 alongwith the note dated 10th February, 2015 submitted by the respondent to its higher authority for approval also clearly indicates that it was an admitted position that the respondent did not have surplus quantity of naphtha available for pumping through pipelines laid by the respondent and for export. It was the case of the respondent themselves in the correspondence and also in the minutes of the meeting dated 18 th November, 2014 and the note submitted by them that the respondent did not have sufficient quantity of naphtha for carrying out export for using the facilities of the port of the petitioner.
105. A perusal of the note dated 10th February, 2015 submitted by the respondent to the higher authority clearly indicates that the respondent had admitted in the said note that there was no additional financial outgo getting incurred to the respondent inspite of surrender of one tank to the petitioner during the balance 24 months period. The respondent has also admitted in the said note that since the respondent did not have adequate surplus naphtha to pump to the petitioner, there was no question of any naphtha containment issued at Gujarat Refinery due to decease in naphtha storage tankage if the respondent surrender tank no.14A back to the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:38 ::: ppn 52 arbp-25.16(j).doc petitioner. The respondent also recorded what transpired in the court during the course of the hearing of the arbitration petition filed by the respondent for interim measures. According to the said note, it was suggested by this court that irrespective of the existing TSA and revenue earned by the petitioner in past, the respondent could not use the services of its tanks for mere storage of naphtha for months together, without any revenue being generated for the petitioner. It is recorded that in line with court directive for negotiating and to ensure a win-win situation for business, it was felt prudent to surrender the tank no.14A of 13.5 TKL storage capacity to the petitioner. It is not in dispute that the copy of the said note duly approved by the management of the respondent was forwarded to the petitioner by the respondent.
106. A perusal of the said note alongwith the minutes of the meeting dated 18th November, 2014 and the TSA dated 15th December, 2006 and also the amendment agreement dated 9th March, 2012 would prima facie indicate that the minimum guarantee throughput which was part of the first TSA was substituted in the subsequent agreement. In my prima facie view the parties had agreed in the minutes of the meeting dated 18th November, 2014 that the respondent would pump and export maximum quantity of TMT per month i.e. 120 TMT per year and would submit that the quarterly pumping plan and one month advance intimation to the petitioner. Clause 4 of the note dated 10 th February, 2015 submitted by the respondent for approval also refers to the mail dated 29th September, 2014 and reiterates that the respondent had indicated that the maximum of 10 TMT naphtha shall be available ex Gujarat Refinery for pumping to the port of the petitioner at Dahej.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 :::ppn 53 arbp-25.16(j).doc
107. In my view, the subsequent stand of the respondent in the correspondence and across the bar that the only commitment made by the respondent in their e-mail dated 29th September, 2014 was that 10 TMT per month of naphtha that was available at that time or that the said quantity mentioned was only for pumping and not for export is contrary to their correspondence and the note dated 10th February, 2015. It is not in dispute that as against the said quantity of 120 TMT agreed in the said minutes of the meeting, the petitioner has already permitted the respondent to export 240 TMT of naphtha. I am thus not inclined to accept the submission of the learned senior counsel for the respondent that there was no commitment of the respondent to export only maximum 120 TMT of naphtha under the said minutes of the meeting dated 18 th November, 2014 and in the correspondence exchanged between the parties or that the quantity of 120 TMT of naphtha mentioned in the said minutes of the meeting dated 18 th November,2014 was not a maximum quantity but was a minimum quantity as canvassed by the respondent.
108. Insofar as submission of the learned senior counsel for the respondent that as against the quantity of 120 TMT of naphtha, the petitioner had already having allowed the respondent to export 240 TMT of naphtha thus cannot stop the respondent from exporting naphtha over and above 120 TMT is concerned, a perusal of the record prima facie indicates that the petitioner has permitted the respondent to export naphtha beyond 120 TMT on case to case basis and subject to the availability of the jetty of the petitioner. In my view, merely because the petitioner has permitted the respondent to export 240 TMT of naphtha, i.e. in excess of 120 TMT as agreed in the minutes of the meeting dated ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 54 arbp-25.16(j).doc 18th November, 2014, that would not amount to the amendment to the terms of the agreement entered into between the parties or would not create any bar against the petitioner from enforcing the terms and conditions of the agreement by not permitting the respondent to carry out export of naphtha over and above 120 quantity of TMT.
109. A perusal of the impugned order passed by the learned arbitrator on this issue clearly indicates that after referring to the minutes of the meeting and the correspondence exchanged between the parties, the learned arbitrator though made observation that there may be some substance in the contentions raised by the petitioner herein about the quantity agreed, the learned arbitrator on the other hand observed that there were two versions as to what clause 6 of the minutes of the meeting would mean and what parties had intended which raised serious triable issue and it was not possible to decide such issue only on the documents as they stood. The learned arbitrator in my view has erroneously observed that clause 6 of the minutes of the meeting was not amendment to the contract on the ground that the concerned authority of the respondent had approved only surrender of one tank. In my view this observation of the learned arbitrator is contrary to the case of the respondent itself.
110. Though the learned arbitrator on one hand has observed that the issue regarding quantity alleged to have been agreed at 120 TMT per year in the minutes of the meeting dated 18th November, 2014 is serious triable issue and it was not possible to decide only on the documents as they stood, the learned arbitrator however contrary to such prima facie findings has directed the petitioner to allow the export upto 300 TMT of naphtha for the duration of contract. In my view, the reliefs granted by ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 55 arbp-25.16(j).doc the learned arbitrator is contrary to the prima facie finding rendered by the learned arbitrator which shows patent illegality on the face of the order passed by the learned arbitrator.
111. A perusal of the impugned order passed by the learned arbitrator clearly indicates that the learned arbitrator has directed the petitioner to allow the respondent to export 300 TMT of naphtha which order is without any basis and even without any pleadings of the respondent in that regard. In my prima facie view there was no agreement between the parties permitting the respondent to export 300 TMT of naphtha. In my view the learned arbitrator has re-written the contract while passing order under section 17 of the Arbitration and Conciliation Act, 1996 which is not permissible in law.
112. A perusal of the statement of claim indicates that the respondent had applied for specific performance of TSA dated 15 th December, 2006 read with amendment agreement dated 9 th March, 2012 alongwith minutes of the meeting dated 18th November, 2014 (wherein the only alleged change was the number of the tanks reduced to 3) and for other reliefs including the claims for damages. The learned arbitrator, in my view by directing the petitioner to permit the respondent to export 300 TMT of naphtha at the stage of granting interim measures, has virtually granted the final reliefs which were prayed in the statement of claim. In my view the learned arbitrator could not have granted such final relief in the application under section 17 and that also after rendering various prima facie findings in favour of the petitioner and more particularly that various issues raised by the petitioner were triable ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 56 arbp-25.16(j).doc issue which could not be decided at the stage of passing the said order.
The impugned order passed by the learned arbitrator granting such mandatory relief at this stage thus deserves to be set aside being without jurisdiction.
113. Insofar as judgment of this court in case of Gulamali Amrullah Babul & Ors.(supra) relied upon by Mr.Dhond, learned senior counsel for the respondent is concerned, this court has held that the learned arbitrator in appropriate case for the purpose of protecting the subject matter of the dispute before the learned arbitrator has ample power to pass a mandatory order. There was a gross breach of the order passed by the arbitrator committed by the respondent in the said matter before the learned arbitrator. The facts in the said matter were totally different and are clearly distinguishable in the facts of this case. In the facts of this case, the respondent has not made out any case for grant of any mandatory injunction by the learned arbitrator. In that matter before this court, the learned arbitrator had granted an opportunity to both the parties to participate in the bid for the purpose of agency for running the partnership business.
114. A perusal of the minutes of meeting dated 18th November, 2014 read with note dated 10th February, 2015 submitted by the respondent for seeking approval prima-facie indicates that the said TSA dated 15th December, 2006 and the amendment agreement dated 9th March, 2012 were amended by the agreement recorded in the said minuets of meeting to the extent specifically recorded in the said minutes of meeting and more particularly in respect of the quantity agreed to be ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 57 arbp-25.16(j).doc exported by the respondent by using the facilities of port of the petitioner.
I am not inclined to accept the submission of the learned senior counsel for the respondent that the only amendment of the earlier two agreement was to the extent that the quantity of four tanks which were earmarked for the respondent was reduced to three and no other amendment to the earlier agreements was carried out or agreed by the parties under the said minutes of meeting dated 18th November, 2014.
115. Insofar as the submission of learned senior counsel for the respondent that though the jetty of the petitioner was vacant for 15 days in the month of July, 2015, 16 days in the month of August, 2015, 15 days in the month of September, 2015, the petitioner refused to permit the respondent to export Naphtha from the port of the petitioner as and by way of arm twisting is concerned, this submission of the learned senior counsel is strongly denied by the petitioner by placing reliance on another chart annexed to one of the affidavit filed by the petitioner before the learned arbitrator. Dr.Sathe, learned senior counsel for the petitioner explained the said chart in detail and also various averments made in the affidavit filed by the petitioner before the learned arbitrator forming part of record and proceedings in support of his submission that though in a given case jetty may have been booked for four days however, vessel of the parties, who had booked the said jetty may leave one or two day earlier.
116. In my view, learned senior counsel for the petitioner is right in his submission that even if the jetty becomes vacant for a day or two in these circumstances, the petitioner could not make the said jetty available at the last minute to the respondent to carry out export by using the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 58 arbp-25.16(j).doc facilities on the jetty/port of the petitioner as any export requires compliance of several formalities. I am thus not inclined to accept the submission of learned senior counsel that though the jetty of the petitioner was alleged to be lying vacant for some part of period, the petitioner played any arm twisting with the respondent and/or deliberately did not allow the respondent to carry out any export by using jetty of the petitioner. The learned arbitrator has already rendered a prima-facie finding in the impugned order that the management of the port facilities was within the exclusive purview of the petitioner and it was the petitioner only who could plan export plan.
117. It is also held by the learned arbitrator that it was not as if the respondent alone was the exporter from the berth. Though the learned arbitrator has rendered a prima-facie finding that terminalling was dedicated to meet the requirements of its promoter companies and other customers of the petitioner as was pointed out by the petitioner in para 5 of its affidavit, the learned arbitrator has directed the petitioner by temporary injunction to provide port clearance in terms of the plans submitted by the respondent and the approval of the petitioner during the pendency of the arbitral proceedings or at the end of the contractual period whichever was earlier. In my view, the relief of this nature granted by the learned arbitrator is contrary to the prima-facie findings rendered by the learned arbitrator in favour of the petitioner.
118. Though in paragraph 17 of the impugned order, the learned arbitrator recorded a prima-facie finding that the submission of quarterly pumping plan and one month advance intimation by the respondent to the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 59 arbp-25.16(j).doc petitioner was no empty formality as that would enable the petitioner to plan its export and making available to its promoters and other customers to berth, the learned arbitrator contrary to such finding passed a mandatory order against the petitioner to provide the port clearance in terms of the plans submitted by the respondent. In my view, the impugned order shows patent illegality and contradictions.
119. Insofar as the submission of learned senior counsel for the respondent that there was an alleged arm twisting in view of the fact the petitioner taking a stand that it was not bound to allow more than 120 TMT p.a. in view of the respondent not shifting the pipelines is concerned or that the petitioner had acted unreasonably or arbitrary is concerned, a perusal of the impugned order passed by the learned arbitrator and more particularly paragraph 23 indicates that the learned arbitrator did not agree with this allegation of the respondent for not allowing the respondent to export more than 120 TMP p.a. I am thus not inclined to accept this submission of the learned senior counsel for the respondent. In my view, enforcement of a contractual right by a party cannot amount to arm twisting as canvassed by the respondent.
120. A perusal of the record clearly indicates that during the period between January, 2014 and September, 2014, admittedly the respondent did not pump any quantity of Naphtha in the tank earmarked for the respondent. The justification sought to be given by the respondent for not pumping Naphtha through their pipelines to their tanks and for export was that there was no surplus Naphtha available in view of the demand in the local market. In my view, if there was no surplus Naphtha ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 60 arbp-25.16(j).doc available with the respondent for substantial part of 2014, the respondent could not make any grievance against the petitioner of any alleged arm twisting or arbitrariness and/or unreasonable obstructive attitude. In my view, the respondent could not have insisted the petitioner to permit the respondent to export Naphtha as and when surplus quantity of Naphtha was available for export and that also without submitting any plan in advance as contemplated under the agreement which was rightly found as not empty formality by the learned arbitrator.
121. Insofar as the submission of learned senior counsel for the respondent that if the respondent is not allowed to export Naphtha from the tanks earmarked for the respondent, the refinery of the respondent would be closed and public at large would be affected or that the pipelines laid by the respondent if were not allowed to be used for pumping surplus quantity of Naphtha and thereafter by export is concerned, a perusal of the record indicates that there was no such averments made by the respondent in any of the pleadings before the learned arbitrator. On the contrary, a perusal of the record would indicate that the respondent themselves have admittedly used the facilities of two other ports viz. Kandla port and Panipat Cracker plant for the purpose of carrying out export of Naphtha.
122. I am not inclined to accept the submission of learned senior counsel for the respondent that since the petitioner was not allowing the respondent to carry out export by using facilities of jetty of the petitioner, the respondent had used the facilities of Kandla port and Panipat Cracker plant out of frustration or due to any other reason. This is also undisputed ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 61 arbp-25.16(j).doc position that the pipelines laid by the respondent were used by the respondent as feeder in their Hazira facility. In my view, there is thus no substance in the submission of the learned senior counsel for the respondent that the pipelines laid by the respondent were exclusively dedicated for the purpose of pumping Naphtha from the refinery of the respondent to the tanks earmarked by the respondent to the petitioner.
123. In my view, if the respondent had no surplus quantity of Naphtha for pumping and for export, the petitioner could not be blamed for the same. If the petitioner had earmarked initially four tanks exclusively for the respondent which was by agreement reduced to three subsequently and was not able to generate any revenue in view of the respondent not carrying out any export, the petitioner was justified in enforcing their rights under the agreements entered into between the parties. A perusal of the record further indicates that the alleged fault in the motor Methane refrigerator compression at Panipat Naphtha Cracker plant was for a temporary period. The respondent has not disputed that the respondent had utilized the facilities of Panipat Naphtha Cracker plant and Kandla port for the purpose of export of Naphtha during the subsistence of the agreement with the petitioner.
124. Insofar as the issue as to whether the agreement entered into between the parties were in its nature determinable or not and whether the learned arbitrator could grant relief for specific performance of an agreement which in its nature determinable is concerned, it is the case of the petitioner that under clause 25 of the TSA, the said TSA is determinable upon the occurrence of one or more of event mentioned in ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 62 arbp-25.16(j).doc Articles 25, 25(a), 25(b) or 25(c). It is however the submission of the respondent that since there was no 90 days notice issued by the petitioner for curing the alleged substantial breach in terms of Article 25(b) of the TSA and such alleged breach did not continue beyond a period of 90 days from the date of receipt of the written notice by the petitioner, the contract cannot be considered as determinable. It is not in dispute that the petitioner had earlier issued a notice of termination on 14 th August, 2014. The parties thereafter recorded minutes of meeting dated 18 th November, 2014 which was held as directed by this court in the order dated 11 th September, 2014. It is not in dispute that the petitioner thereafter did not take any action against the respondent pursuant to the said notice dated 14th August, 2014 in view of the subsequent development.
125. A perusal of Article 25 of the said TSA clearly indicates that both the parties are permitted to terminate the said agreement upon the occurrence of one or more events setout in the said article. I am thus not inclined to accept the submission of the learned senior counsel for the respondent that the said contract is not determinable or the said contract is such which is in its nature nor determinable as contemplated under section 14(1)(c) of the Specific Relief Act, 1963. This court has considered this issue in the judgment of this court in case of Spice Digital Ltd. (supra) and has held that the injunction under section 17 of the Arbitration Act in case of a contract which is determinable or is terminated is statutorily prohibited. This court has held that the learned arbitrator while deciding the application under section 17 and this court while deciding under section 9 of the Arbitration Act cannot continue operation of such determinable contract,otherwise it would amount to re-
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 :::ppn 63 arbp-25.16(j).doc writing the contract. This court while taking such view has adverted to the judgment of Supreme Court in case of Cox and Kings India Limited (supra), judgment of Supreme Court in case of Indian Oil Corporation Ltd. vs. Amritsar Gas Service and others (supra) and judgment of Delhi High Court in case of Rajasthan Breweries Limited vs. Stroh Brewery Company, reported in AIR 2000 Delhi 450. In my view, the judgment of this court in case of Spice Digital Ltd. (supra) squarely applies to the facts of this case. I am respectfully bound by the said judgment.
126. Supreme Court in case of Cox and Kings India Limited (supra) has held that by seeking interim relief so as to restore the lease agreement which had been terminated, the party had applied for creating a fresh agreement which is not permissible. Supreme Court also held that merely because the party had invested large sum of money in the project was not entitled to a mandatory order of injunction once the lease agreement had been terminated. It is held that remedy of such party would lie in an action for damages against the other party for breach of any of the terms and conditions of the agreement. In my view merely because the respondent had alleged to have spent a sum of Rs.90 crores on laying pipelines from its refinery to the port of the petitioner for pumping naphtha for the purpose of export, that cannot be a ground for granting a mandatory order against the petitioner to permit the respondent to export naphtha under section 17 of the Arbitration Act.
127. Be the case as it may, a perusal of Article 12 of the TSA clearly provided that the said contract was initially for a period of five years and could be extended based on mutually agreed terms and ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 64 arbp-25.16(j).doc conditions. There is no dispute that the said agreement was extended for a period of five years on the mutually agreed terms and conditions and was in force till 28th December, 2016. In any event, the said decision of the respondent to spent Rs.90 crores for laying the pipelines was a commercial decision and the said pipeline having been already used for more than 9 years, that could not be a ground for granting interim measures of a mandatory nature by the learned arbitrator.
128. There is no dispute that the petitioner company had started its port in the year 2000. The agreement was entered into between the parties for the first time in the year 2006. The refinery of the respondent is more than 50 years old. The respondent has also carried out export through Kandla Port and through Panipat Cracker Plant. It is not the case of the respondent that when the respondent had not pumped any quantity of naphtha during the substantial part of the year 2014 due to their being no surplus naphtha available in view of the local demand, there was any breach on the part of the petitioner in not allowing the respondent to export naphtha. I am thus not inclined to accept the submission of the learned senior counsel for the respondent that the balance of convenience was in favour of the respondent and not in favour of the petitioner.
129. The respondent could have called upon the petitioner to permit the respondent to carry out export of naphtha provided, the respondent would have complied with their obligations under the terms of the agreement and not whenever they desired without first complying with their obligations under the said agreement. I am thus not inclined to accept the submission of the learned senior counsel for the respondent ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 65 arbp-25.16(j).doc that the respondent was fully depended upon the petitioner for carrying out export of naphtha which was pumped through the said pipeline or otherwise.
130. In my view there is no substance in the submission of the learned senior counsel that the requirement of submitting monthly or quarterly plan under the agreement entered into between the parties was never acted upon or was given a go-bye. The petitioner had terminated the earlier TSA also on the ground that the respondent had not submitted monthly or quarterly plan. Be that as it may, the learned arbitrator had already rendered a finding in favour of the petitioner that submission of plan as contemplated under the agreement and also forming part of the interim order passed by this court was not an empty formation. In my view there is no substance in the submission of the learned senior counsel for the respondent that the learned arbitrator has passed a balanced and equitable order. In my view the learned arbitrator has virtually allowed the final relief while deciding the application under section 17 of the Arbitration Act for interim measures though having held that various triable issues were raised by the petitioner which could only be decided in the final award.
131. Insofar as submission of the learned senior counsel for the respondent that since no fresh 90 days for curing the alleged breach is issued and since no fresh termination order is issued by the petitioner, section 14(1) (c) of the Specific Relief Act is not attracted is concerned since the said TSA is prima facie determinable, in my prima facie view no specific performance of such agreement can be granted by the arbitrator ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 66 arbp-25.16(j).doc and consequently no interim measures of this nature as prayed by the respondent and granted by the learned arbitrator could be granted under section 17 of the Arbitration Act.
132. Under section 14(1) (a) of the Specific Relief Act, specific relief can be granted in respect of the contract for non performance of which compensation in money is an adequate relief. A perusal of the agreement entered into between the parties prima facie indicates that even if the respondent is able to prove the breach on the part of the respondent in not allowing the respondent to export naphtha, the remedy of the respondent would be in terms of the money by way of compensation which would be an adequate relief in favour of the respondent. In my prima facie view the respondent cannot seek specific performance of such agreement. I am not inclined to accept the submission of the learned senior counsel for the respondent that the agreement entered into between the parties is of any special value and thus specific performance thereof has to be granted. The respondent themselves have used the facilities of the Kandla Port as well as Panipat Cracker Plant and thus cannot be allowed to urge that the remedy of compensation would not be adequate even if the respondent is able to prove the alleged breaches on the part of the petitioner.
133. In my prima facie view Dr.Sathe, learned senior counsel for the petitioner is right in his submission that the specific performance of such contract cannot be granted in view of section 14(1) (d) since the performance of such contract would involve the performance of a continuous duty which the learned arbitrator in this case or the Court as the case may be cannot supervise. A perusal of the order passed by the ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 67 arbp-25.16(j).doc learned arbitrator indicates that the learned arbitrator has not only directed the petitioner to permit the respondent to export 300 TMT of naphtha but has also directed the petitioner to provide port clearance in terms of the plan submitted by the respondent. A perusal of the agreements entered into between the parties and the material produced on record by the petitioner in support of the plea that various activities and planning are required to be carried out before effecting any export from the port of the petitioner clearly indicates that if the order as passed by the learned arbitrator is required to be implemented, it would require continuous duty and supervision on the part of the learned arbitrator or the court if any application for execution of the order is made before the court. The learned arbitrator has not considered this important issue in the impugned order including the effect of section 14(1)(d) of the Specific Relief Act, 1963.
134. Insofar as judgment of Delhi High Court in case of KSL & Industries Ltd. (supra) relied upon by Mr.Dhond, learned senior counsel for the respondent is concerned, the facts before the Delhi High Court are totally different and are clearly distinguishable in the facts of this case. Be that as it may, the judgment of this court in case of Spice Digital Ltd. (supra) would squarely apply to the facts of this case and is binding on this court.
135. Insofar as judgment of this court in case of Wander Ltd. and another (supra) relied upon by the learned senior counsel for the respondent in support of the plea that the learned arbitrator having exercised his power under section 17 of the Arbitration Act and has granted interim measures after considering the pleadings and documents ::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 ::: ppn 68 arbp-25.16(j).doc and thus this court shall not interfere with the interim measures granted by the learned arbitrator while hearing an appeal under section 37 of the Arbitration Act is concerned, in my view the facts before the Supreme Court in the said judgment are totally different and thus the said judgment would not assist the case of the respondent. In my view the learned arbitrator in this case has not exercised its discretion judicially and reasonably and has decided contrary to the provisions of the agreement entered into between the parties and also contrary to the law and thus this court has ample power to interfere with such interim order passed by the learned arbitrator under section 17. The judgment of Supreme Court in case of Wander Ltd. and another (supra) is thus clearly distinguishable in the facts of this case.
136. In my view since the impugned order passed by the learned arbitrator shows patent illegality, is prima facie contrary to the provisions of the agreement entered into between the parties, contrary to the principles of law laid down by the Supreme Court and this court and shows several contradictions, the petitioner has made out a case for interference with the impugned order in this appeal filed under section 37 of the Arbitration and Conciliation Act, 1996.
137. I, therefore, pass the following order :-
(a) The impugned order dated 17th December 2015 passed by the learned arbitrator is set aside; Application filed by the respondent for interim measures is dismissed. Arbitration Petition No.25 of 2016 filed by the petitioner is allowed in the aforesaid terms. There shall be no order as to costs.
R.D. DHANUKA, J.
::: Uploaded on - 06/05/2016 ::: Downloaded on - 07/05/2016 00:02:39 :::