State Of Hp vs M/S Toss Mini Hydel Project on 13 July, 2018

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Himachal Pradesh High Court

State Of Hp vs M/S Toss Mini Hydel Project on 13 July, 2018

By way of instant application filed under Section 34(3) of the Arbitration and Conciliation Act, 1996, (in short "the Act"), permission has been sought from this Court to raise additional grounds of objections.

2. It is averred in the application that though impugned award dated 24.7.2015 has been laid challenge on several grounds/objections, but applicant objector has omitted to raise one substantial ground for laying challenge to the award and as such, it be permitted to raise additional grounds of objections. Applicant has averred that objections with regard to the grant of technical economic clearance and technical economic viability has not been correctly appreciated by the learned Arbitrator while passing the 1 Whether the reporters of the local papers may be allowed to see the judgment?

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impugned award, but inadvertently that ground/objection has not been raised in the instant case. Applicant has further averred in the .

application that respondent-non-applicant had technical economic clearance for setting up of 5 MW HEP, which was subsequently enhanced to 20 MW on its own accord by simply depositing the enhanced amount, whereas respondent was required to secure the technical economic clearance (TC) for enhanced capacity before executing any work for the enhanced capacity, but respondent non-

applicant failed to secure such technical economic clearance and proceeded with works on the basis of technical economic viability, which is distinct and separate from technical economic clearance and as such, it be allowed to add one additional ground after para-14 of the objection to be read as para No. 14 (a). Applicant has sought to raise following additional grounds of objections:-

"14 A.That the learned Arbitrator has gravely erred in partly allowing the claims of the respondent by restraining the petitioner/applicant by way of permanent prohibitory injunction from taking any steps to divert the waters of Toss stream at 3630 EL or any point below 3630 EL so as to impact power generation of 20MW HEP over Toss stream of the respondent during the operation of IA Exhibit CW-1/13 dated 12.3.2009 by misinterpreting and equating the Techno Economic Viability (TEV) with Techno Economic Clearance (TEC). It is submitted that the respondent had originally been granted TEC for generating 5MW power but subsequently the respondent deposited an enhanced sum for generating 20 MW power without there bring any Techno Economic Clearance for the same. However, Techno Economic Viability of generating 20MW power was accorded by the HPSEB. Further it may be clarified that Techno Economic Viability cannot be equated with the Techno Economic Clearance and does not, but itself in the absence of a Techno Economic Clearance, permit the respondent to have an installed capacity of 20 MW. Even as of today the respondent is ::: Downloaded on - 17/07/2018 23:01:42 :::HCHP 3 generating 10MW electricity without there being any Techno Economic Clearance which is paramount for generating the installed capacity in any hydro electric project. It is submitted that Techno Economic .

Clearance is a pre-requisite for establishing an unit for generation of electricity. Thus the impugned award is against the public policy of India and the same deserves to be set aside."

3. Applicant has averred that no prejudice shall be caused to the respondent non-applicant, in case it is permitted to raise an additional ground as detailed herein above.

4. Aforesaid, prayer made in the application has been opposed by the respondent applicant by way of reply, wherein it has been averred that additional grounds, which are now sought to be raised, are beyond the period of limitation and therefore, cannot be allowed. Mr. Aman Sood, learned counsel for the respondent-non-

applicant vehemently argued that present application is not maintainable under Section 34 (3) of the Act because provisions contained under Section 34(3) of the Act are applicable only in such situation, wherein petition challenging the award has been filed beyond the period of 90 days. He further argued that delay, if any, in filing objection under Section 34 can be condoned by the court while invoking Section 34 (3) of the Act, in case objections are filed beyond the period of three months. He further argued that petitioner had sufficient time for laying challenge to the impugned award and as such, explanation rendered on record for not raising additional ground, which is sought to be taken by way of present application, is ::: Downloaded on - 17/07/2018 23:01:42 :::HCHP 4 not at all plausible and as such application deserves to be rejected outrightly.

5. I have heard the learned counsel for the parties and gone through the records of the case.

6. Having carefully perused aforesaid objection taken by the non-applicant/respondent though this Court is of the view that issue with regard to the limitation, if any, to raise additional ground of objection, is purely legal one and can be raised during the course of the arguments, but even otherwise, Hon'ble Apex Court in State of Maharashtra v. Hindustan Construction Company Limited, (2010) 4 SCC 518 has held that the words in Clause (b) "the Court finds that" do enable the Court, where the application under Section 34 has been made within prescribed time, to grant leave to amend such application if the very peculiar circumstances of the case so warrant and it is so required in the interest of justice. Relevant paras are being reproduced herein below:-

29. There is no doubt that application for setting aside an arbitral award under Section 34 of 1996 Act has to be made within time prescribed under sub-section(3) i.e., within three months and a further period of thirty days on sufficient cause being shown and not thereafter. Whether incorporation of additional grounds by way of amendment in the application under Section 34 tantamounts to filing a fresh application in all situations and circumstances. If that were to be treated so, it would follow that no amendment in the application for setting aside the award howsoever material or relevant it may be for consideration by the Court can be added nor existing ground amended after the prescribed period of limitation has expired although application for setting aside the arbitral award has been made in time. This is not and could not have been the intention of Legislature while enacting Section 34.

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30.Moreso,Section 34(2)(b) enables the Court to set aside the arbitral award if it finds that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force or the arbitral award is in conflict with the .

public policy of India. The words in Clause (b) "the Court finds that" do enable the Court, where the application under Section 34 has been made within prescribed time, to grant leave to amend such application if the very peculiar circumstances of the case so warrant and it is so required in the interest of justice.

31.L.J. Leach and Company Ltd.1 and Pirgonda Hongonda Patil2, seem to enshrine clearly that courts would, as a rule, decline to allow amendments, if a fresh claim on the proposed amendments would be barred by limitation on the date of application but that would be a factor for consideration in exercise of the discretion as to whether leave to amend should be granted but that does not affect the power of the court to order it, if that is required in the interest of justice. There is no reason why the same rule should not be applied when the Court is called upon to consider the application for amendment of grounds in the application for setting aside the arbitral award or the amendment in the grounds of appeal under Section 37 of 1996 Act.

32. It is true that, the Division Bench of Bombay High Court in Vastu Invest and Holdings Pvt. Ltd.4 held that independent ground of challenge to the arbitral award cannot be entertained after the period of three months plus the grace period of thirty days as provided in the proviso of sub-section (3) of Section 34, but, in our view, by `an independent ground' the Division Bench meant a ground amounting to a fresh application for setting aside an arbitral award. The dictum in the aforesaid decision was not intended to lay down an absolute rule that in no case an amendment in the application for setting aside the arbitral award can be made after expiry of period of limitation provided therein.

33. Insofar as Bijendra Nath Srivastava8 is concerned, this Court did not agree with the view of the High Court that the trial court did not act on any wrong principle while allowing the amendments to the objections for setting aside award under 1940 Act. This Court highlighted the distinction between `material facts' and `material particulars' and observed that amendments sought related to material facts which could not have been allowed after expiry of limitation. Having held so, this Court even then went into the merits of objection introduced by way of amendment. In our view, a fine distinction between what is permissible amendment and what may be impermissible, in sound exercise of judicial discretion, must be kept in mind. Every amendment in the application for setting aside an arbitral award cannot be taken as fresh application."

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7. Reliance is also placed on judgment rendered by the Hon'ble Apex Court in Venture Global Engineering v. Satyam .

Computer Service Limited and Anr. (2010) 8 SCC 660, wherein it has been held that normally courts while dealing with prayer for amendment, should prefer substance to form and techniques and the interest of justice is one of most relevant considerations. Hon'ble Apex Court in aforesaid judgment has held that if parties are entitled to amend its pleadings, having regard to the justice of the case, the right of the party to amend cannot be defeated on mere technicalities. Relevant paras of the aforesaid judgment are reproduced herein below:-

"14. In M/s. Hindustan Construction (supra) this Court considered the provision in Section 34(2)(b) of ABC, 1996 and while considering the ambit of the expression "the Court finds that" in Section 34(2)(b), this Court opined that where application under Section 34 has been made within the prescribed time, leave to amend grounds, in such an application, if the peculiar circumstances of the case and the interest of justice so warrant, can be granted. In saying so, this Court in paragraph 25 of the report, relied on the decisions of this Court in the case of L.J. Leach and Company Ltd. and another Vs. Jardine Skinner and Co. - AIR 1957 SC 357 and Pirgonda Hongonda Patil Vs. Kalgonda Shidgonda Patil and ors. - AIR 1957 SC 363 and held where it is required in the interest of justice, the Court always has the power to grant leave to amend and this power to grant an amendment is not affected under Section 34.

15. We are of the opinion that in dealing with a prayer for amendment, Courts normally prefer substance to form and techniques and the interest of justice is one of most relevant considerations. Therefore, if a party is entitled to amend its pleadings, having regard to the justice of the case, the right of the party to amend ::: Downloaded on - 17/07/2018 23:01:42 :::HCHP 7 cannot be defeated just because a wrong Section or a wrong provision has been quoted in the amendment petition. The approach of the High Court in this case, in rejecting the appellant's prayer for amendment, inter .

alia, on the ground that a wrong provision has been quoted in the amendment petition, is obviously a very hyper technical one. Mr. Salve rightly did not even try to defend the impugned order on the aforesaid technical ground adopted by the High Court."

8. It is quite apparent from the aforesaid exposition of law laid down by the Hon'ble Apex Court that an independent ground of challenge to the arbitral award cannot be entertained after the period of three months plus the grace period of 30 days as provided in the proviso to sub section 3 of Section 34, but "an independent ground" would only mean a ground amounting to fresh application for setting aside an arbitral award. In case, objection to the award passed by the arbitrator under Section 34 is filed within the prescribed period of three months plus grace period of 30 days, an application for raising the additional issue can be made by the party concerned and in this event, limitation as provided under Section 34(3) shall not come in the way of applicant for amendment in the grounds of objection.

9. Consequently, in view of the above, present application is allowed and applicant is permitted to raise additional ground of objections as detailed in para 14-a of the application. The application stands disposed of in view of the aforesaid terms leaving the parties to bear their own costs. Consequent to passing of aforesaid order, applicant-objector may file amended objections under Section 34(3) within a period of two weeks from today, copy whereof shall be made ::: Downloaded on - 17/07/2018 23:01:42 :::HCHP 8 available in advance to the learned counsel representing the non-

applicant-respondent so that reply, if any, to the same is filed within a .

period of two weeks thereafter.

    13th July, 2018                               (Sandeep Sharma),





    manjit                                            Judge




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Himachal Pradesh High Court