Delhi District Court
Perfetti Van Melle India Pvt. Ltd vs Haryana City Gas (Kapil Chopra ... on 5 December, 2020
THE COURT OF DISTRICT JUDGE
(COMMERCIAL COURT01),
SOUTHEAST, SAKET COURTS, NEW DELHI
Presiding Officer: Sh. Raj Kumar Chauhan DHJS
OMP (I) (Comm) No. 244/2020
In the matter of:
Perfetti Van Melle India Pvt. Ltd.
47th Milestone, DelhiJaipur Highway,
Manesar 122050, Gurgaon,
Haryana. ..........Petitioner.
Vs.
Haryana City Gas (Kapil Chopra Enterprises)
A Unit of Haryana City Gas Distribution Limited,
Having its Regd. Office : E71,
South Ex. 1, New Delhi - 110049
Also at :
A149, Sushant Lok, PhaseI,
Gurgaon 122002, Haryana .........Respondent.
Date of institution : 09.11.2020
Date on which argument was concluded : 05.12.2019
Date of pronouncement of the order : 05.12.2019
OMP (I) (Comm) No. 244/20
Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises
A Unit of Haryana City Gas Distribution Ltd.
Page 1 of 14
(RAJ KUMAR CHAUHAN)
District Judge (Commercial Court01)
/SE/Saket/ND/05.12.2020
ORDER
1. The petitioner has filed this petition u/s 9 of Arbitration and Conciliation Act (hereinafter referred as 'Arbitration Act') seeking the following prayer : "(a) Grant ex parte adinterim stay of the operation and effect of the Termination Notice dated 21st October, 2020 issued by the respondent; and
b) Direct the respondent not to stop supply of PNG as per the petitioner's current requirement; and
c) Direct respondent to provide security to the extent of INR 1,04,10,400/, being the value of the refundable security deposit furnished by the petitioner to the respondent; and
d) Grant such other remedies as it may deemed fit and proper in the facts of the instant case."
2. Petitioner's Case 2.1 The petitioner and respondent entered into Gas Supply OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 2 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 Agreement dated 30.05.2018 (herein after referred as 'agreement') wherein respondent agreed to supply to the petitioner plant Piped Natural Gas (PNG). A refundable security was deposited in the sum of Rs. 1,04,10,400/. The petitioner is an incorporated company having its plant at 47th Milestone, DelhiJaipur Highway,Manesar 122050, Gurgaon, Haryana for manufacturing confectionery products. The respondent is engaged in the business of supplying natural gas to domestic, commercial, industrial and automotive sectors and are authorized distributors of supply of Piped Natural Gas (PNG). 2.2 It is alleged that the objection of the respondent for delivery of the gas to the petitioner's plant is mentioned in Article 4 of the agreement as under : "Article 4 - Delivery of Gas 4.1 Gas shall be delivered to the buyer at the Gas Metering Station located at buyer's premises, the metering facilities shall be set up / constructed and maintained by the seller but the buyer will provide the refundable security deposit equivalent to cost of the said equipments including installation and labour charges. The title to Gas shall pass from the seller to the OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 3 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 buyer from downstream flange of the pipeline at the outlet of the Gas Metering Station hereinafter referred to as point of delivery and gas shall be transported there by means of pipeline to be provided and maintained by the buyer at his own risk and cost. The secondary pipeline shall be constructed by the buyer as per codes and standard of ASME/ANSI. The seller shall provide the piping, control, regulation and metering equipment in the aforesaid metering station and all other accessories upto Gas Metering Station against interest free refundable security deposit provided by the buyer equivalent to cost of the said equipments including installation and labour charges. The said equipment so installed by the seller shall remain the property of the seller."
2.3 As per Clause 4.5 of the agreement the buyer shall also pay to the seller interest free refundable gas consumption security of Rs. 89,30,400/ (considering the average monthly consumption). On OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 4 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 14.06.2018, the aforementioned refundable security deposit was made which included refundable security deposit of Rs. 14,80,000/ and refundable security deposit towards gas consumption security of Rs. 89,30,400/ thus totaling to Rs. 1,04,10,400/. 2.4 As per Article 5 of the agreement the quantity of gas which the respondent agreed to deliver was described in Annexure2 of the agreement. The nominated quantity of gas under the agreement is defined in Article 1 (xvii) of the agreement. The Annexure2 of the agreement was deliberately left blank by the parties because the petitioner and respondent does not desire to be bound down to purchase and sell a minimum guaranteed quantity of gas. 2.5 It is alleged that the respondent agreed to supply gas to the petitioner's plant within 02 weeks from the date of receipt of the refundable security deposit i.e. from 01.07.2018 till the end of the tenure of the agreement on 30.05.2021 without any agreement on the minimum monthly guaranteed quantity / daily nominated quantity of the PNG, to be supplied by the respondent and to be purchased by the petitioner.
2.6 It is further alleged that the respondent illegally stopped supply of the PNG to the petitioner's plant and has issued termination notice illegally in an arbitrary manner in order to forfeit the refundable OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 5 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 security deposit. The respondent started supplying gas after 1.5 years delay i.e. 01.12.2019. Due to inordinate delay caused by the respondent in supply of PNG and in order to meet its then prevalent usage of fuel for its plant, the petitioner opted to use alternate source of fuel in its plant which was allowed in terms of nonexclusive arrangements recorded in Clause 5.7 of the agreement. Since December 2019, the petitioner has procured PNG as per its requirements in its plant and the respondent has supplied the said quantity of PNG without any issue on the quantity of consumption of PNG being raised by the respondent. At no point of time there was any discussion or issues in respect of offtakes of nominated quantity of gas by the petitioner. In the month of March 2020 the respondent for the first time and in the absence of any signed and agreed daily consumption quantity of gas (DCQ) sought that the petitioner's offtakes an allegedly committed quantity of gas from the respondent as per Article 5 of the agreement without specifying any amount therein.
2.7 The petitioner vide email dated 05.06.2020 informed the respondent that it will be consuming 12000 - 14000 SCM of PNG per month. The respondent, however, vide email dated 15.09.2020 unilaterally and contrary to the agreement, claimed that petitioner is in breach of Article 20, Clause 19.2 (B) of the agreement and asked OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 6 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 petitioner to take steps for offtakes of huge quantity of gas. 2.8 On 25.09.2020, the petitioner sent an email to the respondent stating that Annexure2 of the agreement has been purposely, consciously and mutually left blank with no commitment on the part of either party. Therefore, petitioner was under no obligation to offtake any minimum quantity of gas. The respondent deliberately ignored the email dated 25.09.2020 and in their email dated 19.10.2020 wrongly relied upon an old correspondence exchanged before the execution of the agreement thereby wrongfully claiming that petitioner had agreed to offtake 8000 SCMD per day. 2.9 The petitioner, therefore, unlawfully and arbitrarily manner issued a termination notice dated 21.10.2020 on the ground that the petitioner did not take alleged corrective steps to offtake a huge minimum quantity of gas amounting to 8000 SCMD per day and also threatened the petitioner to terminate the agreement and to forfeit the refundable security deposit. The termination notice is allegedly against the agreed terms and conditions as there was no guaranteed minimum supply of the gas to be purchased by the petitioner in all correspondence with the respondent; the petitioner has not accepted and agreed upon any particular quantity of consumption as being the Daily Contracted Quantity or the Nominated Quantity for the purposes OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 7 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 of the agreement. Therefore, the respondent cannot unilaterally impose a Daily Contracted Quantity or Nominated Quantity upon the petitioner. There is no basis of justification to seek consumption of quantity of 8000 SCMD per day as alleged in the termination notice. On the basis of above averments the petitioner has sought the relief claimed in the prayer clause mentioned in the beginning of the order.
3. Respondent's Case 3.1 The respondent contested the petition by filing a reply and controverted and denied all the averments made in the petition stating that petitioner had asked the respondent to make calculation on the basis of usage of approximately 8000 SCMD per day and accordingly agreed to deposit the refundable security amount. The figure of Rs. 89,30,400/ in Clause 4.5 of the Gas Sale Agreement is commensurate with the minimum guaranteed quantity committed by the petitioner in its mail dated 29.05.2018 i.e. 8000 SCM per day alongwith taxes. 3.2 It is further stated that depositing interest free refundable Gas Consumption Security of Rs. 89,30,400/, considering the average monthly consumption, the petitioner impliedly agreed to the minimum guaranteed quantity of approximately 8000 SCM gas per day. Therefore, the omission of the quantity in Annexure2 referred in OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 8 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 Clause 5.2 of the GSA dated 30.05.2020 is inconsequential. 3.3 Since, the petitioner was not taking the gas as per agreed terms, therefore, the respondent vide letter dated 21.10.2020 issued a notice of termination of Gas Supply Agreement. It is further stated that the GAIL (India) Ltd. who is the bulk supplier of natural gas to gas distribution companies like the respondent vide letter dated 11.08.2020 has invoked the take or pay clause against the respondent and raised a demand of Rs. 30.75 Crore. The said charges are levied on respondent for not taking minimum guaranteed quantity of gas which the respondent had calculated based on the minimum guaranteed quantity of gas by its customers including the petitioner. 3.4 It is further alleged that since take or pay clause was invoked against the respondent, the same was also invoked on the petitioner as per the terms of the GSA dated 30.05.2018 and letter dated 30.05.2018 of the respondent. Accordingly, a debit note was raised against the petitioner on 23.11.2020 for payment of Rs. 8,71,73,430.80/.
3.5 Since the petitioner is already having arrangement for alternative fuel, no prejudice is caused to the petitioner. The respondent has to recover sum of Rs. 8,71,73,430.80/, therefore, the petitioner is not entitled to any reliefs under section 9 of the Arbitration Act.
OMP (I) (Comm) No. 244/20Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 9 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 3.6 On merit, all the averments in the petition has been controverted and denied.
4. In the rejoinder to the reply, the petitioner has reiterated its stand taken in the petition and controverted and denied the averments in the reply.
5. I have heard the learned counsels for parties at length and also perused the written arguments.
6. During arguments both the parties supported and relied their averments in the petition and the reply therein. Both the parties have referred to various clauses of the Gas Supply Agreement. The petitioner has reiterated the point that Annexure2 was consciously left blank regarding the minimum supply of gas per day and there was no commitment of nominated quantity any time agreed by the petitioner as is being claimed by the respondent. The learned counsel for the respondent on the other hand argued that there was an implied agreement or commitment on behalf of petitioner to receive atleast 8000 SCMD per day which is commensurate with the refundable security deposit of Rs. Rs. 89,30,400/ made by the petitioner. It was OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 10 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 further argued that keeping the Annexure2 blank is of no consequence. It is being argued on behalf of petitioner that since the respondent has failed to make the supply for 1.5 years as a result the petitioner has made arrangements of the alternative fuel, the termination notice issued is malafide and the same has been issued to compel the petitioner so that it may no claim the refundable security amount of Rs 1,04,10,400/. It is further argued on behalf of petitioner that petitioner is ready to take the supply as per its need but it cannot be compelled to receive supply of 8000 SCMD per day. The respondent counsel on the other hand submitted that the respondent has made arrangements with the Gas Authority of India Ltd. on the basis of assurance and per day consumption by the petitioner and a huge amount has been asked by the GAIL Authority of India on principle of take or pay basis as a result the petitioner is liable to make a payment of Rs. 8 Crores for non consumption of gas during the agreement period. Learned counsel for respondent during arguments submitted that if petitioner is ready to take supply of gas of 8000 SCMD per day it will not terminate the agreement at all. Learned counsel for petitioner on the other hand submitted that petitioner can take the supply of only 12000 - 14000 SCM per month.
OMP (I) (Comm) No. 244/20Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 11 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020
7. The averments made in the pleadings and the arguments advanced at bar by both the parties shows that there are disputed questions involved in this petition which can be adjudicated only by the Learned Arbitrator. Article 14 of the Gas Agreement provides dispute resolution as under : "Article 14 - Arbitration 14.1 Provisions of the Arbitration and Conciliation, 1996 and the rules made there under and any statutory modification thereof, shall be applicable to this Agreement.
14.2 All disputes or differences whatsoever, arising out of this agreement which is not settled by mutual consultation shall be settled by Arbitration under the Arbitration and Conciliation Act, 1996 and the venue of arbitration shall be Delhi......"
8. The Hon'ble High Court of Delhi in Avantha Holding Ltd. vs. Vistara ITCL India Ltd., OMP (I) (Comm) No. 177/2020 judgment dated 14.08.2020 was pleased to hold as under : OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 12 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 "While passing orders under Section 9, therefore, the Court is required to satisfy itself that (i) the applicant, before it, manifestly intends to initiate arbitral proceedings, (ii) the criteria for grant of interim injunction, which apply to Order 39 of the CPC, stands satisfied, and (iii) circumstances also exist, which renders the requirement of ordering interim measures an emergent necessity, which cannot await a Section 17 proceeding, before the arbitrator, or arbitral tribunal. In assessing whether such an emergent necessity exists, or not, the Court would, essentially, have to satisfy itself that failure to order interim measures, under Section 9, would frustrate, or would render the recourse, to arbitration which is yet to take place a futility."
9. As per stand of the petitioner in the pleadings as well as during arguments, the petitioner need small quantity of PNG for its present demand. Admittedly, the petitioner has already made alternative fuel arrangement and nothing is brought on record to show that the plaint of the petitioner would close down for nonsupply of gas OMP (I) (Comm) No. 244/20 Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 13 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020 by the respondent. The respective stand of parties shows that there are disputed questions, which need adjudication by the Arbitral Tribunal. There is no emergent necessity noticed which may require exercising jurisdiction u/s 9 of the Arbitration Act or that the relief sought in this application cannot await to be adjudicated by the Learned Arbitral Tribunal u/s 17 of the Arbitration Act. The facts and circumstances of the case are squarely covered by the ratio of Avantha Holding Ltd. vs. Vistara ITCL India Ltd., (supra).
10. From the above discussion, I am of the considered opinion that petitioner has failed to show any emergent necessity for indulgence of this Court u/s 9 of the Arbitration Act or that the relief sought by the petitioner cannot await the adjudication of the said relief by the Learned Arbitrator u/s 17 of the Arbitration Act. For the above reasons, the petition filed before this Court is not maintainable and is therefore dismissed. Digitally signed RAJ by RAJ KUMAR CHAUHAN Announced through Video Conferencing KUMAR Date:
on 05.12.2020. CHAUHAN 2020.12.05
15:08:14 +0530
(RAJ KUMAR CHAUHAN)
District Judge (Commercial Court01)
South East/Saket Courts
New Delhi.
OMP (I) (Comm) No. 244/20
Perfetti Van Melle India Pvt. Ltd. vs. Haryana City Gas Kapil Chopra Enterprises A Unit of Haryana City Gas Distribution Ltd.
Page 14 of 14(RAJ KUMAR CHAUHAN) District Judge (Commercial Court01) /SE/Saket/ND/05.12.2020