Madras High Court
M/S. Visaka Industries Limited vs M/S. Bhadreshwar Vidyut Private ... on 18 March, 2019
Author: R. Suresh Kumar
Bench: R. Suresh Kumar
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 25.02.2019
Pronounced on : 18.03.2019
CORAM
THE HONOURABLE Mr.JUSTICE R. SURESH KUMAR
O.P. No.44 of 2019
M/s. Visaka Industries Limited
Registered Office at "Visaka Towers"
1-8-303/69/3 S.P.Road,
Secunderabad - 500 003. .. Petitioner
-vs-
M/s. Bhadreshwar Vidyut Private Limited
formerly known as
M/s. OPGS Power Gujarat Private Limited,
Rep. by its Chairman Executive Officer and
Chief Financial Officer, Mr.Ravi Gupta,
6, Sardar Patel Road,
Guindy, Chennai - 600 032.
.. Respondent
Prayer: Petition filed under Section 11(6) of the Arbitration & Conciliation Act,
1996 to appoint a Sole Arbitrator to decide the disputes that have arisen
between the petitioner and the respondent under the Power Supply
Agreement, dated 09.11.2015 and share purchase and shareholders agreement
dated 09.11.2015.
For Petitioner : Mr.S.Dakshayani Reddy
For Respondent : Mr.Abishek Jenasenan
http://www.judis.nic.in
2
ORDER
This Original Petition has been filed for appointment of Arbitrator / Arbitral Tribunal, by invoking Section 11(6) of the Arbitration and Conciliation Act, 1996.
2. The petitioner is a company registered under the provisions of the Companies Act, 1956 and operates a textile manufacturing unit at Maharashtra (herein after called as "Consumer"). The respondent is running a Thermal power plant of 2 x 150 MW at Kutch, Gujarat (herein after called as "Generator").
3. In order to meet the power requirement of the Consumer, the Generator claimed to have approached the Consumer for supply of power through Group Captive Model. Accordingly the power supply agreement was entered into between the Consumer and Generator on 09.11.2015, hereby called as Arbitration Agreement.
4. According to the Consumer, though a power supply agreement had been entered into, the Generator has not supplied the power as agreed, with the result, there had been short supply of power, consequently, the Consumer had to approach the Maharashtra State Electricity Distribution Company Ltd., http://www.judis.nic.in 3 (MSEDCL) and had to consume power under temporary tariff rate, thereby incurred an additional sum of Rs.3,84,65,493/- and also the Consumer claimed to have sustained loss due to non availment of load factor incentive and due to cross subsidy surcharge and additional surcharge.
5. In these circumstances, the petitioner / Consumer had terminated the Power Supply Agreement in July 2016 by giving four months time to the Generator to continue the supply till October 2016 and thereafter to stop.
6. In view of the above factors, a dispute have arisen between the Consumer and the Generator under the Power Supply Agreement, wherein there is an Arbitration Clause under Clause 12, which reads thus :
12.1 This Agreement shall be governed by and constructed in accordance with the laws of India. 12.2 All disputes and differences between the parties arising out or in connection with this Agreement ("Disputes") shall first be tried to be settled through mutual negotiation.
12.3 In the event that any Dispute could not be resolved between the parties pursuant to Clause 12.2, then such dispute shall be referred to arbitration under the Arbitration & Conciliation Act, 1996 to a panel of arbitrators comprising two arbitrators, each to be appointed by the GENERATOR and the Member Consumer. The two arbitrators so http://www.judis.nic.in 4 appointed will mutually elect one arbitrator to be designated as umpire.
12.4. The arbitral proceedings shall be in Chennai.
Not withstanding the existence of any disputes referred to arbitration, the parties shall continue to perform their respective obligations under this Agreement and the Member Consumer shall not withhold, for any reason whatsoever including the pendency of arbitration proceedings, payment of any monthly bill and / or supplementary bill presented.
7. Invoking the said Arbitration clause of the power supply agreement, the Consumer issued a notice on 21.07.2018, whereby nominated an Arbitrator on their behalf and called upon the Generator to nominate the Arbitrator within 30 days.
8. Having receipt of the said notice issued by the Consumer, dated 21.07.2018, the Generator responded on 24.08.2018, whereby it ultimately stated that, the issuance of notice for reference to Arbitration is a premature one and therefore it should be withdrawn. Therefore the stand of the Consumer is that, even after the lapse of 30 days, since the Generator has not come forward to nominate an Arbitrator on its part, the Consumer is constrained to approach this Court by invoking Section 11(6) of the Act for appointment of sole Arbitrator for hearing and deciding the Arbitral disputes http://www.judis.nic.in 5 between the parties in terms of the Arbitration Agreement contained in the Power Supply Agreement, dated 09.11.2015.
9. However the respondent / Generator in response to the said objection has filed a counter affidavit and stated that, already the Consumer approached the Nagpur Bench of the High Court of Bombay, where a conditional order of Rs.1 crore was directed to be deposited by the Consumer and also the Maharashtra Electricity Regulatory Commission (MERC) granted an order preventing the Maharashtra State Electricity Distribution Company Limited (MSEDCL) from taking any coercive action for recovering the amount for the financial year 2016-17.
10. The counter further stated that, the Generator further approached the MERC in Petition No.324 of 2018, where the matter is presently under adjudication in MERC.
11. In view of the said factors, the counter of Generator says that, the invocation of Section 11(6) of the Act may not arise at this juncture to refer the matter to the Arbitrator.
12. I have heard the learned counsel appearing for both sides and have gone through the materials placed before this Court. http://www.judis.nic.in 6
13. It is an uncontroverted fact that there has been a Power Supply Agreement between the parties on 09.11.2015, where under Clause 12, an Arbitration clause is available, whereby if any dispute arises between the parties, which could not be resolved between them, such dispute shall be referred to Arbitration under the Arbitration and Conciliation Act, 1996 to a panel of Arbitrators comprising two Arbitrators, each to be appointed by the Generator and the Member Consumer. The two Arbitrators so appointed will mutually elect one Arbitrator to be designated as Umpire.
14. The said Power Supply Agreement, dated 09.11.2015 was terminated in July 2016 due to various issues between the parties.
15. As there has been an Arbitration Agreement in writing admittedly, whereunder if any dispute arises, which could not be resolved between the parties amicably, the same shall be referred to the Arbitral Tribunal consisting of one Presiding Arbitrator (Umpire) and two Arbitrators, each one will be nominated by the parties.
16. Invoking the said Clause 12 of the Agreement, notice had been issued by the Consumer to the Generator on 21.07.2018 for nomination of Arbitrator. However the same has not been conceded by the Generator through its reply, dated 24.08.2018. According to the Generator, the referral http://www.judis.nic.in 7 to the Arbitral Tribunal of any issues, as claimed by the Consumer, is a premature one.
17. Be that as it may, whether the issue raised by one of the party can be referred to the Arbitral Tribunal or not is the only issue which can be safely answered affirmatively. In view of Sub-clause (3) under Clause 12 of the Agreement referred to above either party has got every right to refer the matter / dispute to the Arbitral Tribunal, if the dispute arises between the parties could not be resolved between them amicably.
18. Since such a situation is very well available here, there is no fault on the part of the Consumer to invoke Section 11(6) of the Act, as the request made by the Consumer to nominate an Arbitrator has not been positively accepted by the Generator.
19. In that view of the matter, this Court is inclined to pass the following order :
(1) Hon'ble Mr.Justice K.Venkataraman, Former Judge of the Madras High Court, is nominated as Presiding Arbitrator (Umpire).
(2) Mr.N.R.Chandran, Senior Advocate and Mr.S.Parthasarathy, Senior Advocate are appointed as Arbitrators.
http://www.judis.nic.in 8 R. SURESH KUMAR, J.
tsvn (3) They would constitute an Arbitral Tribunal, before whom the issues raised by the Consumer are referred for adjudication.
(4) The Arbitral Tribunal headed by the Presiding Arbitrator (Umpire) shall enter into the reference and to proceed in accordance with law.
(5) The learned Arbitrators are at liberty to fix their remuneration and other incidental expenses, which shall be borne by both the parties equally.
With these order of appointment of Arbitrators, this Original Petition is allowed.
18.03.2019 tsvn Order in O.P. No.44 of 2019 http://www.judis.nic.in