The A. C. C. Limited vs Unknown on 17 February, 2012

[Cites 6, Cited by 0]

Punjab-Haryana High Court

The A. C. C. Limited vs Unknown on 17 February, 2012

1. The plaintiff is before this court challenging the order dated 15.6.2011, passed by the learned lower appellate court, whereby the prayer for interim relief in an application filed by it under Order 39 Rules 1 and 2 CPC was partially rejected.

2. Briefly, the facts of the case are that the petitioner-plaintiff filed a suit for permanent injunction restraining the respondent-defendant from disrupting in any manner supply of dry fly ash as per the terms and conditions of Memorandum of Understanding dated 5.12.2002 and 11.3.2003. Along with the suit, an application for interim injunction was filed restraining the respondent-defendant from disrupting the supply in terms of the aforesaid Memorandum of Understanding during the pendency of the suit. The learned trial court, vide order dated 30.4.2011, dismissed the prayer for grant of interim injunction. The petitioner-plaintiff preferred appeal against the order of the trial court before the learned lower appellate court. The learned District Judge, vide order dated Civil Revision No. 7868 of 2011 [2] 15.6.2011, opined that the alleged Memorandum of Understanding dated 5.12.2002 and 11.3.2003 are not prima facie enforceable, hence, no interim relief on the basis thereof can be granted. However, interim relief on the basis of agreement executed between the parties on 20.1.1995 was allowed, which though was not subject-matter of dispute before the court. It is the aforesaid order, which is impugned in the present petition.

3. It would be out of place if not mentioned here that in the suit filed by the petitioner-plaintiff, there was no relief claimed pertaining to agreement dated 20.1.1995, as the only relief claimed was on the basis of Memorandum of Understanding dated 5.12.2002 and 11.3.2003, hence, practically the interim relief was rejected and not partially accepted, as is sought to be claimed.

4. Learned counsel for the petitioner submitted that the petitioner is a public limited company duly registered under the Companies Act. It has plants for manufacture of cement at various places in the country including one at Gagal Cement Works, Post Office, Barmana, District Bilaspur (Himachal Pradesh). The respondent-defendant has its thermal plant known as Guru Gobind Singh Super Thermal Plant at Ropar (hereinafter, described as ` Ropar Thermal Plant'). As the respondent was unable to dispose of huge quantity of dry fly ash generated in its plant, which was becoming environmental hazard, the petitioner was asked by the then Chief Secretary of the Government of Punjab to help out in disposal of the dry fly ash way back in the year 1993. After detailed deliberations, an agreement was signed between the petitioner and the predecessor-in-interest of the respondent-defendant, i.e., Punjab State Electricity Board, on 20.1.1995. In terms of the aforesaid agreement, the petitioner agreed to lift about 3.50 lacs tonnes per annum (hereinafter described as 'LTPA') of dry fly ash from Ropar Thermal Plant and transport the same to its cement plants annually. One of the clause, which was referred to by learned counsel for the petitioner at the time of hearing, was that supply of dry fly ash to the petitioner was to be free for a period of 25 years.

5. He further submitted that as the capacity of Ropar Thermal Civil Revision No. 7868 of 2011 [3] Plant increased, a fresh Memorandum of Understanding was arrived at on 5.12.2002, though no formal agreement was signed, mentioning therein that in addition to the quantity already being lifted by the petitioner, it shall be entitled to another quantity of 2.3 LTPA. He further referred to a clause from the aforesaid Memorandum of Understanding stating that supply of dry fly ash shall be free of cost upto a period of 18 years from the date of availability of the enhanced quality. As there were certain anomalies, the petitioner proposed certain amendments in the aforesaid Memorandum of Understanding vide its communication dated 5.12.2002, which were incorporated and a fresh Memorandum of Understanding was signed between the parties on 11.3.2003 providing that upper limit of 2.3 LTPA was not fixed, rather, it was mentioned that the entire quantity over and above 11.50 LTPA, which had already been agreed to be given to Gujrat Ambuja Cement Ltd. (for short, `the GACL') and the petitioner (8.00 + 3.50 LTPA, respectively) shall be given to the petitioner on pro-rata basis. It was further submitted that in terms of the aforesaid Memorandum of Understanding, dry fly ash was being lifted by the petitioner free of cost till such time when in 2007-2008, it was forced to pay certain consideration therefor. From 7.12.2007 onwards, the petitioner had been paying consideration for the extra quantity of dry fly ash lifted from Ropar Thermal Plant, i.e., over and above 3.50 LTPA as agreed on 20.1.1995. The rates continued to be increased from time to time. Recently, when supplies of additional quantities were stopped arbitrarily, the suit had to be filed.

6. Learned counsel further submitted that in terms of the Memorandum of Understanding signed by the parties on 11.3.2003, the petitioner expanded its capacity in the cement plant set up at Gagal (Himachal Pradesh) so that the same could be utilised. It would be totally arbitrary on the part of the respondent to stop the supplies without there being any reason once the terms of Memorandum of Understanding provide for free supplies for a period of 18 years from March, 2003. The action of the respondent is violative of principles of promissory estoppel. In fact, the case set up by the petitioner in the plaint was clearly admitted Civil Revision No. 7868 of 2011 [4] by the respondent in the written statement stating that dry fly ash is being supplied to the petitioner in terms of the agreement dated 20.1.1995 and Memorandum of Understanding dated 11.3.2003. In support of his arguments, learned counsel for the petitioner placed reliance upon a judgment of Madras High Court in M/s Associated Cement Companies Limited v. The Chief Engineer/Civil Designs/TNEB and others, W.A. No. 745 of 2007, decided on 6.8.2008.

7. In response to the contentions raised by learned counsel for the petitioner, learned counsel for the respondent submitted that the present petition filed by the petitioner in this court on 19.12.2011 impugning the order dated 15.6.2011 is highly belated. Availing of remedy by way of challenging an order under Article 227 of the Constitution of India does not mean that the petition could be filed at any time. Limitation for filing of a revision petition under Section 115 CPC is 90 days, hence on account of delay and laches, the petition deserves to be dismissed.

8. As far as merits of the controversy are concerned, it was submitted that it is misnomer to claim that the petitioner is helping to save environment by lifting dry fly ash. In fact, it is making a margin of about 200% while manufacturing and selling cement. Dry fly ash is about 30% to 40% of its component. It is just being picked up and mixed with other material. The petitioner is making huge profits out of it at the cost of public exchequer. One unit cannot be allowed to have undue advantage of the situation by getting supply of dry fly ash free of cost, whereas other cement manufacturers are paying for that. The petitioner has not kept the prices of its cement lower than the rates of other companies. Even the Government of India vide amendment in Environment (Protection) Act read with Environment (Protection) Rules, 1986 carried out on 27.8.2003 had made provision for sale of dry fly ash besides providing for its various different uses. He further submitted that Memorandum of Understanding dated 11.3.2003 was not culminated into an agreement. It was simply the process of discussions which were going on. It was a proposal of the petitioner to lift 2.3 LTPA of dry fly ash on account of increased availability with the connection of 192 hoppers of all the six units at Ropar Civil Revision No. 7868 of 2011 [5] Thermal Plant. It was connected with the advancement of loan of ` 5 crores to the respondent by the petitioner, but it failed to advance. Even though in the Memorandum of Understanding dated 5.12.2002, the quantity was fixed as 2.3 LTPA, however, there was no quantity as such fixed in the Memorandum of Understanding dated 11.3.2003. With the establishment of aforesaid connection, additional quality of dry fly ash generated was 72,000 tonnes per annum. This is to be shared on pro-rata between GACL and the petitioner and entitlement of the petitioner would be about 20,000 tonnes per annum. Supply to that extent by the defendant is not denied during the pendency of the suit, though the stand is that Memorandum of Understanding dated 11.3.2003 is not an agreement enforceable.

9. He further referred to letter dated 22.3.2011 (Annexure R5) whereby a cement manufacturer had agreed to lift 2.0 LTPA of dry fly ash from Thermal Plant at Lehra Mohabbat @ ` 315/- per metric ton. He further referred to documents (Annexures R6 and R7) annexed with his application, whereby M/s Jai Prakash Associate Ltd. had agreed to lift dry fly ash @ ` 450/- per metric ton from Yamuna Nagar Thermal Plant during the year 2008-2009 and the petitioner had agreed to lift the dry fly ash from Hissar Thermal Plant during the year 2010-2011 @ ` 350/- per metric ton.

10. Another letter dated 7.12.2011 (Annexure R8) written by the petitioner to the respondent offering to lift 8,000 metric tonnes per month of dry fly ash from Thermal Plant at Lehra Mohabbat at the prevailing sale price was referred to, which was responded to by the respondent vide letter dated 22.12.2011 (Annexure R9) stating that the petitioner is at liberty to lift dry fly ash from Ropar Thermal Plant @ ` 558/- per metric ton (based on cement price index). In response thereto, the petitioner vide communication dated 3.1.2012 (Annexure R10) stated that the petitioner is ready and willing to lift dry fly ash from Ropar Thermal Plant @ ` 155/- per metric ton.

11. Mr. Atul Gupta, Chief Engineer of the respondent-Punjab State Power Corporation Ltd. , who was also present in court, sought to Civil Revision No. 7868 of 2011 [6] explain certain technical aspects. He submitted that increase in the availability of dry fly ash during the periods was not on account of connection of 192 hoppers only, rather, it was on account of improvement in the system, which entailed huge capital expenditure. Earlier some part of fly ash used to be wet during the process and removed as sludge, which is now recovered in dry form. He further stated that at present more than 90% of the fly ash available with the Thermal Plant is being disposed of. With the improvement in the system and the quality of coal being used in the Thermal Plant, the availability of fly ash has also reduced as compared to the earlier period. He has handed over a chart of the availability and disposal of dry fly ash for the period from April to December, 2011, which provides details pertaining to fly ash available and the quantities lifted by the petitioner, GACL and other small scale consumers and the quantity ultimately left. The over-all average utilisation in the period of nine months is stated to be 93.12%. He submitted that it is on account of the fact that GACL had been lifting extra quantity while committing to pay the price thereof @ ` 558/- per metric ton. However, actual payment is yet to be received.

12. In response to the contentions raised by learned counsel for the respondent, learned counsel for the petitioner submitted that it is totally wrong to state that the petitioner ever refused to advance ` 5 crores to the respondent. It is further wrong to claim that Memorandum of Understanding dated 11.3.2003 is not settling the terms between the parties. In fact, it was duly signed by both the parties having understood the contents thereof. It was being understood so by both the parties as the quantity of dry fly ash over and above 3.50 LTPA was being lifted by the petitioner only in terms thereof. The aforesaid Memorandum of Understanding was even approved by the erstwhile Punjab State Electricity Board. The only proposal the Board made was that in view of certain more consumers of dry fly ash being there, though in small quantities, they be also offered the same to which the petitioner does not have any objection as it is only upto 10% of the total quantity available with the respondent. In fact, the respondent by not disposing of the entire quantity of dry fly ash Civil Revision No. 7868 of 2011 [7] is now collecting the same in ponds by wetting, substantially reducing its value and also creating environmental problem. The entire problem was created as the respondent was mis-guided. It called for the tenders, though offer was received @ ` 558/- per metric ton but no one had lifted the same at that rate. He further submitted that the stand that with the connection of 192 hoppers, additional quantity of dry fly ash available being 72,000 tonnes per annum has not been pleaded before the courts below. He further submitted that the petition filed by the petitioner is not belated. Even if there is some small delay in filing thereof, in fact, the petitioner is sufferer because of non-receipt of quantity of dry fly ash as on account thereof it is not able to use its plants at its full capacity.

13. Learned counsel for the petitioner further objected to the documents produced on record by the respondent along with application which were not part of the record of the courts below.

14. Heard learned counsel for the parties and perused the relevant referred records.

15. The issue under consideration before this court to be decided at the interim stage is as to whether the petitioner is entitled to receive supply of dry fly ash in unlimited quantity free of cost or at a price which the petitioner had subsequently been paying in terms of the Memorandum of Understanding dated 11.3.2003, as an interim measure. The main relief claimed in the suit is also that the respondent should be restrained from disrupting supply of dry fly ash in terms of the aforesaid Memorandum of Understanding.

16. In brief, the stand of the petitioner is that the Memorandum of Understanding is an agreement duly signed by both the parties. The terms thereof were being adhered to and implemented ever since the same was executed. The petitioner had been lifting additional quantity of dry fly ash and had even started paying cost thereof from December, 2007 onwards when it was forced to do so and the action of the respondent to stop the supply was arbitrary, whereas the stand of the respondent is that the alleged Memorandum of Understanding dated 11.3.2003 is not an agreement, which could be enforced. It was just a step in the discussions Civil Revision No. 7868 of 2011 [8] between the parties where certain offers were made by the petitioner for lifting extra quantity available. Even in terms thereof, the petitioner would be entitled to lift the extra quantity available with the connection of 192 hoppers and not beyond that. The extra quantity available on that account being only 72,000 tonnes per annum, the pro-rata entitlement of the petitioner out of that would be 20,000 tonnes per annum, which can be lifted by it. The petitioner does not have any right to lift extra quantity of dry fly ash being available on account of improvement in the system at Thermal Plant on account of which certain fly ash, which was earlier used to be wet during the process is recovered in dry form, as the issue has not been referred to in the Memorandum of Understanding.

17. To record a definite or even a prima-facie finding on the respective contentions raised by learned counsel for the parties, in my opinion, certain evidence would be required. The petitioner has filed the suit for permanent injunction and the respondent is disputing Memorandum of Understanding dated 5.12.2002 and 11.3.2003. It cannot be denied that what is claimed as an interim relief in the present case is the ultimate relief as well. In such eventuality, the contentions of both the parties are to be weighed.

18. Certain documents were referred to by learned counsel for the respondent at the time of hearing. One set of documents bearing Annxures R8 to R10 is the correspondence between the petitioner and the respondent. Vide Annxure-R8 dated 7.12.2011, the petitioner offered to lift 8,000 metric tonnes per month of dry fly ash from Thermal Plant at Lehra Mohabbat at the prevailing sale price there. The same was responded to by the respondent by stating that the petitioner is at liberty to lift the same from Ropar Thermal Plant @ ` 558/- per metric ton. However, the same was responded to by the petitioner stating that it can lift dry fly ash from Ropar Thermal Plant @ ` 155/- per metric ton. There is another document placed on record as Annexure-R7 vide which Haryana Power Generation Corporation Ltd. allocated 5.0 lacs tonnes per annum of dry fly ash from Thermal Plant at Hissar for use in the manufacturing unit of the petitioner at Gagal Cement Works @ ` 350/- per metric ton for the Civil Revision No. 7868 of 2011 [9] financial year 2010-2011. The rate is to be increased every financial year based upon wholesale cement price indexation on the basis of a formula, which is as under:

"Minimum rate at which the Wholesale cement price index of order has been placed. one month prior to the month of next year of allotment applicable.

Wholesale cement price index of February 2010 (base year)."

19. No doubt, the aforesaid correspondence had taken place between the parties after the passing of order by the learned lower appellate court, one option could be to refer the matter back to the learned court below for re-consideration of the matter, but I do not deem it appropriate to adopt that procedure as the correspondence is between the parties, which is not denied. It can very well be considered as the petitioner has invoked extra-ordinary jurisdiction of this Court under Article 227 of the Constitution of India. Documents (Annexures R3 to R5) have been placed on record by the respondent along with application to show that the rate per metric ton for dry fly ash to be lifted from Thermal Plant, Lehra Mohabbat was ` 315/- per metric ton. The rate was to be applicable from 1.4.2010 to 30.9.2010. For the period subsequent thereto, the rate was to be increased every six months, on the basis of a formula, which is as under:

"The above rates per MT shall be increased from Ist April and Ist October of each financial year based on the whole sale cement price index with base as whole sale cement price index of March 2010, as per the formula given below:

a) Rate for the period from Ist April to 30th September of each financial year Rate at which the order has X Wholesale cement price index been placed of March prior to each financial year.

Wholesale cement price index of March 2010 (base year).

b) Rate for the period from Ist October to 31st March of each Civil Revision No. 7868 of 2011 [10] financial year.

             Rate at which the order has                                     X            Wholesale cement price index
             been placed                                                                  of September of each
                                                                                          financial year.
                                                                                          Wholesale cement price index
                                                                                          of March 2010 (base year)."

20. It was claimed that presently after indexation, the revised rate is ` 338/- per metric ton. Documents (Annexures R3 to R5) were also not on record before the courts below.

21. The aforesaid set of documents establish that the petitioner is ready and willing to buy dry fly ash from a Thermal Plant at Lehra Mohabbat located at a distance of about 150 kilometers from Ropar Thermal Plant at a higher rate but was not agreeable to pay even that rate for dry fly ash available at Ropar.

22. The chart of availability and disposal of dry fly ash for the period from April to December, 2011, as produced by the Chief Engineer of the respondent in court, is as under:

"Month DFA DFA lifted by DFA lifted DFA lifted DFA DFA %age 2011 generated M/s ACC by M/s ACL by small utilized unutilized utilization in MT Allocation Allocation scale in in MT in MT of DFA 29167MT/ 66667/month MT month ......................................................................................................................................................... .

April         142499               65971                      59848                 12290               138109             4390              96.91

May           158865               76903                      63624                 10017               150544              8321             94.76

June          135403.34            60767                      70778                  3858.34            135403.34              -            100

July          133857.34            36762                      75338                  2990.54            115090.54 18767                       85.98

August 137999.66                   35510                       71620                  4782.66           111912.66 26087                        81.09

Sep.          107381.96            30455                       69372                  6549.96           106376.96             1005            99.064

Oct.           126823              27750                       80659                  7523.8             115932.8            10891             91.43

Nov.         112979.64            28633                        74809                  9103.64            112545.64              434           99.61

Dec.          134650.96            29166                        84393                 9107.96            122666.96 11984                      91.1
 Civil Revision No. 7868 of 2011                                                                                         [11]

......................................................................................................................................................... .

Total: 1190450.1 391917 650441 66223.9 1108581.9 81849 93.12 ........................................................................................................................................................"

23. The contents stated in the said chart are presumed to be true for the time being as the same has been produced by a senior functionary of a public sector undertaking.

24. A perusal of the aforesaid chart shows that there is some variation in the available quantity of dry fly ash during different months. The average quantity of dry fly ash available per month would be 1.32 lacs tonnes, i.e., 15.87 lacs tonnes during the year 2011-12. The respondent has already tied up for supply of 11.50 LTPA of dry fly ash with GACL and the petitioner. On an average, 88,297 metric tonnes of dry fly ash will be lifted by small scale units during the year. The extra quantity available would be 3.49 lacs tonnes. It was claimed by the respondent that some extra quantity is being lifted by GACL with an understanding that it will pay ` 558/- per metric ton as the price but actual payment has not been made. The average utilisation for the period of nine months is given as 93.12% and the total unutilised quantity of dry fly ash is claimed to be 81,849 tonnes. If this process continues, the unutilised quantity will continue to accumulate, which will create problem of storage and may create problem of environment as well, which will not be in the interest of any of the parties.

25. At this stage, the court is refraining from commenting upon the maintainability of the suit. The primary grouse of the petitioner seems to be about the rates for lifting dry fly ash. Earlier the petitioner used to lift additional quantity of dry fly ash free of cost. However, for whatever reasons, it started paying consideration for the extra quantity of dry fly ash from 7.12.2007 onwards. The petitioner had even offered to purchase the same from Thermal Plant at Lehra Mohabbat @ ` 338/- per metric ton but offered to pay only ` 155/- per metric ton from Ropar Thermal Plant, which is located more closer to the factory of the petitioner.

26. To balance the equities in the present set of circumstances, in my opinion, considering the fact that on account of non-availability of the Civil Revision No. 7868 of 2011 [12] requisite quantity of dry fly ash from Ropar Thermal Plant, the petitioner had even offered to purchase the same from Thermal Plant at Lehra Mohabbat @ ` 338/- per metric ton and is lifting the same from Hissar Thermal Plant @ ` 350/- per metric ton, the petitioner is permitted to lift the available quantity of dry fly ash by paying a tentative price of ` 400/- per metric ton subject to the final decision in the suit regarding its entitlement and the rates. In case it is found that the petitioner is liable to pay more amount for the dry fly ash lifted by it, in addition to its entitlement, the same shall be payable by it in terms of the final judgment in the civil suit.

27. The petition stands disposed of in the manner indicated above.

( Rajesh Bindal ) Judge February 17, 2012.

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