Jharkhand High Court
Respondent/ vs Jamshedpur Waste Processing Company ... on 26 March, 2025
Author: Deepak Roshan
Bench: Deepak Roshan
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Commercial Appeal No. 16 of 2020
Special Officer, Jamshedpur Notified Area Committee-cum-Nodal
Officer, Jamshedpur Urban Agglomeration (JUA) having registered Office
at Kalimati Road, At, P.O. and P.S.-Sakchi, Jamshedpur
... Respondent/Applicant/Appellant
Versus
Jamshedpur Waste Processing Company Pvt. Ltd., now known as SMPL
Infrastructure Ltd., through Deepak Sethi, son of Anil Kumar Sethi,
resident of B-9, Epsilon Ventures, Yamlur Main Road, P.O.-Merathauli
Fort, P.S.-Hal, District-Banglore, having registered office at No-8 Floor,
80 H Main Road, P.O.-Indranagar, P.S.-Jeevan Bima Nigam, Indranagar,
Hal 3rd Stage, Banglore and Corporate Office at F-27/2, Okhla Industrial
Area, P.O.-Kaluaji, P.O.-Okhla Industrial Area, District-New Delhi.
... Claimant/Respondent/Respondent
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CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE DEEPAK ROSHAN
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For the Appellant: Mr. Krishna Kumar, Advocate
Mr. Vijay Kumar Roy, Advocate
For the Respondent: Mr. Arpan Mishra, Advocate
---------
Reserved on: 25.02.2025 Pronounced on: 26/03/2025
Per M.S. Ramachandra Rao, C.J.
1. This appeal has been filed under Section 13(1A) of the Commercial Courts Act, 2015 challenging the judgment dt. 24.01.2020 of the District Judge-I-cum-Commercial Court, East Singhbhum at Jamshedpur in Revocation (Arbitration) Case No.10 of 2019.
Background facts
2. After a competitive bid process, a Letter of Acceptance was issued on 02.07.2012 to the respondent and M/s. SPML Infra Ltd for setting up an Integrated Solid Waste Management Facility under jurisdiction of Jamshedpur Urban Agglomeration.
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3. Thereafter a Concession Agreement dt. 08.08.2012 was entered into by the appellant with the respondent M/s SPML Infra Limited.
4. Clause 3.1 of the said Agreement required the appellant to hand over to the respondent and other members of the consortium within 30 days from the appointed date, vacant and peaceful physical possession of the identified Project Site for the purpose of construction, operation and maintenance of Transfer Stations, Workshop Facility for Vehicle Maintenance, Integrated Solid Waste Management Facility site for Development of Compost Plant, Brick Making Plant, RDF Plant and Sanitary Landfill Facility and also Secondary Storage depots for all areas under jurisdiction of Jamshedpur Urban Agglomeration.
5. As per sub clause (b) of Article 3.1, the total land identified at Mouza Khairbani for development of Integrated Solid Waste Management Facility is about 36 acres and the said clause also stated that additional land, if required, would be provided by the appellant from time to time.
6. Sub clause (c) of Article 3.1 stated that upon the Project Site being handed over pursuant to sub clause (a) of Article 3.1 of the Concession Agreement, the Concessionaire shall, subject to provisions of Article 5, have the right to enter upon, occupy and use the same and to make at its own cost, charges and expenses such investigation, clearance of existing waste, remediation, development and improvements in the Project Site as may be necessary or appropriate to implement a project in accordance with the provisions of the Agreement.
7. Sub clause (d) of Article 3.1 of the Agreement stated that in case of any delay by the appellant in handing over the Project Sites to the Page 2 of 15 Commercial Appeal No. 16 of 2020 Concessionaire, the time period for COD-T&D will be adjusted accordingly with mutual agreement between the parties.
8. Article 11.2 of the Concession Agreement contained the arbitration clause.
9. After the disputes arose between the parties, it appears that one of them filed an Arbitration Application No. 21 of 2014 before this High Court under sections 11 (5) and (6) of the Act for appointment of an Arbitrator and Justice Amareshwar Sahay (Retd. Judge) was appointed as Sole Arbitrator to adjudicate the disputes between the appellant and the respondent.
The stand of the respondent/claimant before the arbitrator
10. Before the Arbitrator, the main point of issue, according to the respondent, was that out of six major land passages, that were required to be handed over to the respondent, the appellant had failed to hand over 5 sites required for the establishment of the Transfer Stations; the land, which was handed over for establishment of the Project of the Integrated Solid Waste Management Facility, was also insufficient since out of total 36 acres of land, possession of which was required to be handed over, only 30.39 acres were provided; and even the said 30.39 acres of land was not free from encumbrances as there were several encroachments and structures standing thereon over an area of 5.00 acres.
11. The respondent also contended that there was a village road passing through the Project Site, which was dividing the land into two parts.
12. According to the respondent, it had attempted to start the construction of boundary walls over the 25 acres of available land, but Page 3 of 15 Commercial Appeal No. 16 of 2020 even that work was forcibly stopped several times due to protest, agitations and obstructions from the local villagers and even the police support that was provided by the appellant on few occasions did not yield any result.
13. The respondent contended that as per the Agreement, it was the fundamental obligation of the appellant to provide peaceful physical possession of the Project Site free from all hindrances, but since the appellant had failed to hand over the sites as required, it was in serious breach of the terms of the Agreement which forced the respondent to terminate the said Agreement.
14. The respondent also contended that repeated correspondences made by it for handing over of the Project Site, release of the termination payments, performance and bank guarantee etc. and for appointment of Arbitrator did not yield any result and so, they filed the application under Section 11 of the Act. The respondent made the following claims before the learned arbitrator :-
Claim Amount Interest Amount
@ 15%
Claim for payment of Rs.1,16,57,989/- Rs.31,50,960/-
Termination Payment (Rupees One Crore (Rupees Thirty One
Sixteen Lac Fifty Seven Lac Fifty Thousand
Thousand Nine Nine Hundred &
Hundred & Eighty Sixty)
Nine)
Claim for Loss of Rs.15,00,00,000/- NIL
Profit (Rupees Fifteen Crore)
Refund of Bank Rs.1,66,00,000/- Rs.14,66,201/-
Guarantee (Rupees One Crore (Rupees Fourteen Lac
Sixty Six Lac) Sixty Six Thousand
Two Hundred & One)
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Claim for Rs.14,93,633/- (Rupees Rs.49,911/- (Rupees
Compensation for Fourteen Lac Ninety Forty Nine Thousand
bank charges Three Thousand Six Nine Hundred &
Hundred & Thirty Eleven)
Three)
Balance payments Rs.2,83,077/- (Rupees Rs.5,40,666/- (Rupees
towards capital grant Two Lac Eighty Three Five Lac Forty
Thousand Seventy Thousand Six Hundred
Seven) & Sixty Six)
Future Interest
Cost of Arbitration Rs.4,50,000/- (Rupees
Four Lac Fifty
Thousand)
The stand of the appellant before the arbitrator
15. Before the arbitrator, the appellant refuted the said contentions in statement of defence.
16. It contended that the accusations made by the respondent with regard to failure to provide total land or for the land being full of encroachment etc., are things which are inevitable in the case of huge projects; and if the respondent would have implemented the said project work under the said agreement with strong will and intention to serve the society apart from only attaining monetary benefits, then the project would have been a great success.
17. The appellant in the statement of defence filed before the Arbitrator had even admitted that they were in breach of the agreement, as they could not hand over the land within 30 days from the appointed date as envisaged in the agreement. They had contended that since vast Government land was vacant for a long period of time, it was encroached upon and the same was known to the respondent during the two years' period of the agreement. The appellant admitted that out of 36 acres of Page 5 of 15 Commercial Appeal No. 16 of 2020 identified land for landfill site, 30.39 acres were handed over to the respondent and that it was sufficient to set up plant for landfill site.
18. The appellant also contended that the land for Transfer Station and Workshop Facility was also under process of acquisition and the same would have been required by the respondent only in the event when they would have started door-to-door collection activity and, therefore, the issues made under such a head were baseless.
19. The appellant also blamed the respondent for not commencing boundary work and contended that boundary work could not be completed due to inefficiency of the respondent in handling any practical situation every time as and when required.
20. The appellant also contended that as regards the issue of village road through the Project Site, a meeting with the Deputy Commissioner was held, and it was decided that the road would be diverted outside the Project Site. It contended that the decision on the part of the respondent to terminate the agreement was one-sided and the respondent did not follow the rules regarding the same and so the termination was not accepted by the appellant.
21. The appellant also contended by filing a counter claim that for the purpose of initiating the project, yet again, it has become necessary to revise the DPR; as per the revised DPR, there was an inflation in the entire project cost leading to huge losses to the appellant amounting to Rs.5,83,24,100/- approximately; and the appellant was also entitled for hire charges of vehicles which had not been returned by the respondent, amounting to Rs.37,57,224/-. It therefore, made a counter claim of Rs.4,54,81,324/- after adjusting the bank guarantee of Rs.1,66,00,000/-. Page 6 of 15 Commercial Appeal No. 16 of 2020 Award of the Arbitrator
22. After noting the contentions of the parties, the learned Arbitrator referred to Article 3 and Article 6 of the Concession Agreement and stated that these Articles indicate the important and crucial responsibilities of the appellant which can be said to be the backbone of the entire project involved. He then held that the appellant had three basic and fundamental obligations to perform:-
(i) Handing over the entire land required for different purposes for the said project within 30 days from the date of the said Agreement;
(ii) Should hand over the vacant and peaceful physical possession of the said required lands for the said project; and
(iii) Removal of all the encroachments over the land required for the said Project.
23. The Arbitrator held that it was an admitted fact that the appellant had failed to provide the required land to the respondent within the time stipulated in the agreement and it had delivered only Ac. 30.39 instead of Ac.36 and even the said land was having encumbrances.
24. He also held that so far as the site for four Transfer Stations is concerned, the appellant had admitted that the acquisition of land for these sites were under process and the said acquisition was not even finalised and in such a situation, the appellant cannot hand over physical possession of the said land for setting up the four Transfer Stations.
25. He therefore, concluded that the appellant committed breach of Article 3.1, Article 6.1(a) and Article 6.1(b) of the Agreement. Page 7 of 15 Commercial Appeal No. 16 of 2020
26. He thereafter concluded that the respondent was willing to execute his part of the contract but due to non-performance of the fundamental obligations on the part of the appellant, it was simply impossible for the respondent to proceed any further with the work.
27. The Arbitrator also held that the termination initiated by the respondent was in accordance with the terms and conditions of the agreement between the parties and such termination was valid.
28. He then discussed the claims made by the respondent. The Arbitrator held that the respondent was entitled for compensation equal to the money spent by him for construction/upgradation of the project facility which was not paid by the appellant as per the project milestones estimated by the TA Cum PMC (Transaction Advisor Cum Project Management Consultant).
29. He, therefore, awarded Rs.1,16,57,989/- along with interest upon the same @ 15% per annum to be calculated from 25.09.2014, i.e., the date of termination of the agreement till the date of the Award.
30. The Arbitrator declined to award any amount to the respondent towards loss or profit because he found the said claim to be uncertain and hypothetical. He also awarded to the respondent the amount covered by the bank guarantee amount of Rs.1,66,00,000/-, but without interest. He rejected the claim made by the respondent for balance payment towards capital grants of Rs.2,83,077/-. The Arbitrator then awarded a cost of Rs.4,50,000/- to the respondent but without any interest.
31. In para 59 of the Award, the Arbitrator rejected the separate claim raised by the respondent regarding pendente lite and future interest on the Page 8 of 15 Commercial Appeal No. 16 of 2020 ground that interest upon awarded amount was already decided and that the said issue did not require separate adjudication.
32. The counter claim made by the appellant towards increase in project cost was rejected.
33. He also rejected the claim of the appellant for hire charges of vehicles, which were not returned by the respondent but he granted cost of the vehicle of Rs.20,25,000/- with interest @ 15% per annum upon it to be calculated from the date of termination of the Agreement till the date of the Award.
The Section 33 application filed by the respondent after passing of award
34. After the award was pronounced by the Arbitrator, an application under Section 33 of the Arbitration and Conciliation Act, 1996 was filed by the respondent/Claimant contending that the Arbitrator has to pass an additional award with regard to future interest on the already awarded amount in exercise of power conferred under Section 33(4) of the Act.
35. It contended that in the award passed by the Arbitral Tribunal on 08.11.2017, issue regarding No.(v) for future and pendente lite interest was not adjudicated and was omitted from consideration. It contended that as per the award, the appellant had been directed to pay the awarded amount within two months from the date of award, but the award does not speak of the consequences if the appellant fails to comply with the directions contained in the Award dt. 08.11.2017. It was further contended that in the event of non-compliance of the directions of the Arbitral Tribunal, the appellant should be held responsible for payment of interest as per Section 31(7)(b) of the Act of 1996.
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36. The appellant opposed the said application filed by the respondent/Claimant contending that once the Award is declared after a full-fledged hearing, there is no scope for passing additional award, since the Arbitral Tribunal had not omitted to entertain the claim of the respondent; and if the respondent was aggrieved in any manner, it should challenge the award under Section 34 of the Act. It was also contended that the appellant was not liable to pay any interest towards future interest.
37. The Arbitrator then passed an additional award on 27.01.2018 holding that under Section 33(4) of the Act, there is a power given to the Arbitral Tribunal to pass an additional arbitral award; and the condition precedent for passing such award was that when the claim was made in the Statement of Claim during the arbitral proceeding but the Arbitral Tribunal had omitted to pass an award in that regard.
38. The Arbitrator then observed that the consequences of non-payment of the awarded amount by the appellant to the respondent after the completion of two months' period from the date of award has not been stated and appears to have been left out.
39. He, therefore, directed the appellant to pay the awarded amount as stated in the Arbitral Award on 08.11.2017 within two months from the date of the additional arbitral award, failing which the appellant would be liable to pay interest @15% p.a. till the payment is made or the same is realized in accordance with law.
The Judgment of the Commercial Court
40. Challenging both the original award dt. 08.11.2017 and the additional award dt. 27.01.2018, the appellant filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 before the Page 10 of 15 Commercial Appeal No. 16 of 2020 District Judge-1-cum-Commercial Court, East Singhbhum at Jamshedpur. It was number as Revocation (Arbitration) Case No.10 of 2019.
41. By judgment dt. 24.01.2020, the said application filed by the appellant was dismissed by the Commercial Court.
42. The Commercial Court noted the contentions of the parties and the findings of the Arbitrator and also the scope of Section 34 of the Arbitration and Conciliation Act, 1996.
43. It held that the appellant failed to bring the case within the ambit of 34 of the Act and that only a bald statement has been made that the arbitral award is against the public policy of India but no effort was made to show as to how the award was against the public policy of India.
44. The Commercial Court also held that there is no allegation made by the appellant that the award was induced by fraud and corruption; that the arbitral award as well as the additional arbitral award was not in any way contrary to substantial provisions of law or the provisions of Act.
45. It observed that in the entire pleadings, there was not a single pleading alleging therein that the arbitral award is patently illegal or prejudicial to the rights of the parties.
46. It held that the arbitral award and the additional arbitral award were both reasoned orders and there was no need to interfere with the said awards.
47. It also held that there was no cogent reason or material available on record to set aside the original or the additional arbitral award; that there was no error apparent on the face of the record and it also cannot be said that the Arbitrator had not followed the statutory legal position. The Commercial Court further held that there is no material available to prove Page 11 of 15 Commercial Appeal No. 16 of 2020 that the Arbitrator had mis-conducted himself or the proceedings or the award had been improperly procured or is otherwise invalid. Argument on behalf of the appellant
48. Challenging the said decision of the Commercial Court, the instant appeal has been preferred by the appellant under Section 13(1A) of the Commercial Courts Act, 2015.
49. Counsel for the appellant contended that the Arbitrator did not consider the documents submitted by the appellant in the course of proceedings in the right perspective; that the Commercial Court failed to appreciate that the arbitral award and the additional award were contrary to the facts of the agreement; that the judgment of the Commercial Court is erroneous; Commercial Court failed to appreciate that a fraudulent act was made by the respondent after raising false planning for termination of the agreement; the Arbitrator and the Presiding Officer failed to consider that 30.36 acres of land was handed over for the purpose of the project in place of 36 acres and it was sufficient for the purpose; they failed to consider that the appellant had requested several times by way of letters to the respondent to continue the work but the respondent was never ready; that the intention of the respondent from the beginning was to grab money only; that they both acted in a one-sided manner in favour of the respondent; and the respondent had not acted fairly as it did not wait for amicable settlement.
Argument on behalf of the respondent
50. The counsel for the respondent refuted the said contentions and supported the award as well as additional award of the Arbitrator and also the judgment of the Commercial Court.
Page 12 of 15 Commercial Appeal No. 16 of 2020 Findings of this Court
51. We shall first consider the plea of the appellant that the Arbitrator had not waited for amicable settlement of dispute as per the provision of the agreement before proceeding with the arbitration and pronouncing the award.
52. Admittedly, the Arbitrator had been appointed by this Court in an application under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996 through an order dt. 07.04.2016 in Arbitration Application No.21 of 2014.
53. The contention now raised by the appellant should have been raised in the said Arbitration Application No.21 of 2014 when it was pending before this Court. Without raising it at that time and having allowed the appointment of Arbitrator to happen, it is not open to the appellant to raise the said plea at this stage.
54. We have already noticed Article 3.1 of the Concession Agreement which mandated the appellant to deliver the respondent within 30 days from the appointed date fully vacant and peaceful physical possession of the identified project site for implementation of the project and this was also reiterated in Article 6.1.
55. As noted by the Arbitrator, though the appellant in Article 3 had promised to handover land of about 36 acres to the respondent, it had delivered only 30.39 acres of land; and even in that area, there were encroachments to the extent of 5 acres and there was also a village road passing through the project site.
56. In addition, there were protests, agitations and obstructions from the local villagers.
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57. The defence of the appellant was that such things are inevitable in the case of huge projects and where there is vast government land vacant for a long period of time, it could be encroached upon and this was known to the respondent during the two years' period of the agreement. It was also admitted that land for Transfer Station and Workshop Facility was not even acquired.
58. Thus, it is clearly admitted by the appellant that it could not handover the entire 36 acres of land within the 30 days' period from the appointed date and even the land handed over by it was not fully vacant nor was peaceful physical possession given as mandated in Article 3.1. Therefore, the learned Arbitrator did not commit any error in giving a finding that the appellant committed clear breach of Article 3.1, Article 6.1(a) and Article 6.1(b) of the Concession Agreement and this was rightly upheld by the Commercial Court.
59. The appellant is not correct in contending that the Arbitrator or the Commercial Court had acted contrary to the Concession agreement, that there was a fraudulent act on the part of the respondent or that the respondent was intent to only in making money and they had acted in a one-sided manner.
60. The awards of the Arbitrator of the claims in the Award dt. 08.11.2017 are based on a proper appreciation of the materials on the record and do not suffer from infirmity warranting interference by this Court in exercise of its appellate jurisdiction.
61. But we may point out that in paragraph 59 of the arbitral award passed on 08.11.2017, the Arbitrator had considered the claim regarding pendente lite and future interest and specifically rejected the same on the Page 14 of 15 Commercial Appeal No. 16 of 2020 ground that the interest to be paid on the awarded amount had already been decided in the earlier paragraphs and therefore did not require afresh adjudication.
62. Having specifically rejected the same in the original award passed by him on 08.11.2017, it was therefore not open to the Arbitrator to entertain the application under Section 33 of the Act for the same relief on the pretext that he had omitted to deal with this aspect in the original award. To this extent, the additional arbitral award passed by the Arbitrator on 27.01.2018 cannot be sustained.
63. For the aforesaid reasons, the appeal is allowed in part to the extent of setting aside the additional arbitral award dt. 27.01.2018 passed by the learned Arbitrator only, and the appeal is dismissed as regards challenge to the final award dt. 08.11.2017 of the Arbitrator as confirmed by the Commercial Court is concerned. No costs.
64. Pending Interlocutory Applications, if any, stand disposed of.
(M.S. Ramachandra Rao, C.J.) (Deepak Roshan, J.) N.F.R. Manoj/-
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