Madras High Court
M/S.Mms Steel And Power (P) Ltd vs Ongc on 22 December, 2023
Author: J. Sathya Narayana Prasad
Bench: J. Sathya Narayana Prasad
1 C.R.P.(PD).No.913 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED:22.12.2023
CORAM:
THE HON'BLE MR.JUSTICE J. SATHYA NARAYANA PRASAD
C.R.P.(PD).No.913 of 2020
and CMP.No.4838 of 2020
M/s.MMS Steel and Power (P) Ltd.,
Rep.by its Authorised Representative
having office at 17/2D, ONGC Road,
Naramangalam, Nagore
Nagapattinam District and Munsif. ... Petitioner
Vs.
ONGC, Cauvery Asset Neravy,
Rep.by Deputy General Manager
(P) Marketing ONGC Ltd., having office at
Neravy Salai, Neravy
Karaikal District and Munsif. ... Respondent
This Civil Revision Petition is filed under Article 227 of the
Constitution of India praying to strike off the proceedings in E.P.No.1 of
2020, on the file of the learned District Court, Nagapattinam.
For Petitioner : Mr.Om Prakash
Senior Counsel
for Mr.S.Elambharathi
For Respondent : Mr.R.Sankaranarayanan
Senior Counsel for
M/s.Tamilarasi
ORDER
https://www.mhc.tn.gov.in/judis 2 C.R.P.(PD).No.913 of 2020 The civil revision petition is filed to strike off the proceedings in E.P.No.1 of 2020, on the file of the District Court, Nagapattinam.
2. The facts of the case in a nutshell:-
There was a Gas sale agreement dated 11.02.2005 between the petitioner-Gas supplier and the respondent-Gas Producer (ONGC). There was a settlement agreement entered at Karaikal dated 22.09.2016 between the petitioner/MMS Steel & Power Pvt. Ltd., and the respondent/Oil and Natural gas Corporation Ltd., Karaikal according to Clause “K” of the settlement agreement and the same is extracted as below:-
“K. The Parties have reconciled the accounts claims and counter claims and discussed the matter subsequently over series of discussions and decided to resolve the differences amicably to settle their disputes pertaining to the GSA dated 11.02.2005 and the subject matter of arbitration proceedings”.
and according to terms of the agreement Clause “5” and the same is extracted as below:-
“5. On execution of this Agreement, the Parties shall be deemed to have withdrawn all claims and counter claims before any Court of Arbitration proceedings or elsewhere against each other existing on the date of signing of the Settlement Agreement”.
Despite the above settlement agreement the respondent (ONGC) has filed https://www.mhc.tn.gov.in/judis 3 C.R.P.(PD).No.913 of 2020 E.P.No.1 of 2020 before the District Munsif Court, Nagapattinam against the petitioner herein for recovery of a sum of Rs.27,18,18,865.25/-.
(Rupees Twenty Seven Crores Eighteen Lakhs Eighteen Thousand Eight Hundred and Sixty Five and Twenty Five Paise). Aggrieved by the above E.P.No.1 of 2020 filed by the respondent (ONGC), the petitioner has preferred the present civil revision petition.
3. The learned Senior Counsel appearing for the petitioner submitted that the Gas Sale agreement was entered between the petitioner/MMS Steel & Power Pvt. Ltd., (Buyer) and respondent (ONGC) (Seller) and was executed at Karaikal dated 11.02.2005, according to which the respondent (ONGC) gas producer agreed to supply Gas to the petitioner who is the Gas supplier (seller) in terms of the payment of rates as prescribed in the agreement. Gas sale agreement which was entered on 11.02.2005 was subsequently renewed on 11.03.2010 up to 25.10.2014. There were claims by the petitioner as well as counter claims by the respondent. Thereafter, the parties entered into a settlement agreement dated 22.09.2016 and the important provisions and Clauses of the agreement read as follows:-
https://www.mhc.tn.gov.in/judis 4 C.R.P.(PD).No.913 of 2020 Clause E. Disputes arose between the Parties as regards, inter alia, the tenure of the GSA dated 11.02.2005 various petitions were filed in the Hon'ble Delhi High Court wherein interim orders were passed for continuation of supply of gas to MMS. The gas was being supplied at the price stipulated in the aforesaid GSA.
J. There are claims and counter claims by and between the Parties against each other before the Arbitration and as on 30.09.2015, MMS has to pay outstanding dues including interest as on 30.09.2015 amounting of Rs.20,93,44,973/- (Rupees Twenty Crore Ninety Three Lakhs Forty Four Thousand Nine Hundred and Seventy Three Only) on account of supply of gas made by ONGC to MMS as per the price stipulated in the GSA dated 11.02.2005 for NRM field and 11.03.2010 for KVK field.
K. The Parties have reconciled the accounts claims and counter claims and discussed the matter subsequently over series of discussions and decided to resolve the differences amicably to settle their entire disputes pertaining to the GSA dated 11.02.2005 and the subject matter of arbitration proceedings. Terms
2. On execution of this Agreement and on receipt of Rs.4 crore and irrevocable rolling LC as payment security to cover sixty days cost of gas for both the fields and irrevocable LC towards balance outstanding dues along with interest from MMS, ONGC shall forthwith resume the supply of gas https://www.mhc.tn.gov.in/judis 5 C.R.P.(PD).No.913 of 2020 to MMS from above fields. Apart from paying arrears/outstanding dues as agreed, MMS also agrees to pay gas price for gas consumed every day and in case of any default, ONGC has right to invoke LC towards gas price along with interest as agreed herein above and ONGC also has right to stop the gas forthwith without giving any notice to MMS and terminate the Contract by giving 30 days notice to MMS.
5. On execution of this Agreement, the Parties shall be deemed to have withdrawn all claims and counter claims before any Court or Arbitration proceedings or elsewhere against each other existing on the date of signing of the Settlement Agreement.
10. The parties agree to submit this agreement before the Arbitrator to pass consent award in terms of this agreement.
4. The learned Senior Counsel further submitted that as per the award dated 20.11.2019 the claimant has filed an application under Section 15(1) (b) of the Arbitration and Conciliation Act, 1996 to terminate the present arbitration proceedings between the parties for the claims as well as counter claims arising out of the gas supply agreement dated 11.02.2005 and according to the learned Senior Counsel, the award is not executable and it is not an award in terms of the arbitration https://www.mhc.tn.gov.in/judis 6 C.R.P.(PD).No.913 of 2020 proceedings.
5. Despite the above settlement agreement dated 22.09.2016 entered between the parties, the respondent (ONGC) has filed an Execution Petition before the District Court, Karaikal under Order Rule 2 (C) of CPC r/w 36 of the Arbitration and Conciliation Act, 1996. In column 5 of the Execution Petition it is stated as follows:-
05 Whether any appeal No. The arbitral award is based on the preferred settlement agreement dated 22.09.2016 entered at Karaikal between the parties.
6. The learned Senior Counsel drew the attention of this Court to Section 15 of the Arbitration and Conciliation Act, 1996 and the same is extracted as below:-
“15. Termination of mandate and substitution of arbitrator (1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate
(b) by or pursuant to agreement of the parties (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
(3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously https://www.mhc.tn.gov.in/judis 7 C.R.P.(PD).No.913 of 2020 held may be repeated at the discretion of the arbitral Tribunal.
(4) Unless otherwise agreed by the parties, an order or ruling of the arbitral Tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral Tribunal”.
7. He further contended that Sections 30 (2) (3), 31, 32, (2) (a) 5 of the Arbitration and Conciliation Act, 1996 are not applicable to the instant case on hand since the application is filed under Section 15(1) (b) of the Arbitration and Conciliation Act, 1996. There is no fresh agreement/fresh rate after the settlement agreement dated 22.09.2016. The learned Senior Counsel further submitted that application was filed under Section 9 of the Arbitration and Conciliation Act, 1996 before the Hon'ble Delhi High Court and an interim order was obtained for supply of Gas and according to that order, the respondent must pay the enhanced rate of the Gas. Hence he prays that the above EP.No.1 of 2020 filed by the respondent (ONGC) on the file of District Court, Nagapattinam may be struck off by allowing the civil revision petition.
8. Per contra, the learned Senior Counsel appearing for the respondent submitted that the respondent / ONGC filed OMP.No.337 of https://www.mhc.tn.gov.in/judis 8 C.R.P.(PD).No.913 of 2020 2009 before the Hon'ble High Court of Delhi to vacate the interim stay granted on 22.06.2009 and the stay was vacated by order dated 22.12.2009 and the relevant portion of the order reads as follows:-
18. I therefore do not find any prima facie case in favour of the petitioner. The balance of convenience is in favour of the respondent who will be caused grave and irreparable injury if the interim orders as prayed for in this petition are granted. In fact the provisions of law bar the grant of relief as prayed for in this petition and as already dilated upon earlier.
20. In view of the aforesaid, the present petition is wholly misconceived and is an abuse of the process of law. The same is therefore dismissed with costs of Rs.1 lakh. The interim orders dated 22.06.2009 are vacated”.
9. The learned Senior Counsel drew the attention of this Court to the interim order dated 11.11.2010 of the arbitrator in the arbitration proceedings between the petitioner and the respondent and the relevant portions are extracted hereunder:-
1) The interim arrangements as indicated by the respondent in its letter dated 31.03.2010 shall continue till passing of the award in the case.
2) It will be open to the respondent to open the sealed tender and ascertain the highest price offered.
3. Gas shall be supplied by the respondent to the claimant at the highest price offered in the tender and subject to the price fixation https://www.mhc.tn.gov.in/judis 9 C.R.P.(PD).No.913 of 2020 formula contained in the agreement dated 11.02.2005.
10. The learned Senior Counsel further drew the attention of this Court to the letter and the discussion between the petitioner and the respondent dated 07.04.2016 with respect to entering into settlement agreement (draft settle agreement) in which it is mentioned as follows:-
This is with reference to letters referred above from M/s.MMS Steel & Power Pvt.Ltd., requesting meeting for amicable settlement of all pending issues related with sour gas supply from KVK & NRM fields and payment of outstanding dues. This is further reference to various meetings held at New Delhi on the subject.
In this regard, I am directed to convey the following for resolving issues and commencement of gas supplies:
1. M/s.MMS Steel & Power Pvt.Ltd., will execute “Settlement Agreement” on non-judicial stamp paper of value of Rs.100/-
appended at Annexure -1 and file the same before 'Sole' Arbitrator at Chennai stating that this is full and final settlement of all disputes between the parties as on date of Settlement Agreement.
3. As agreed by M/s.MMS Steel & Power Pvt. Ltd., M/s.MMS Steel & Power Pvt. Ltd., shall make an initial upfront payment of Rs.4 crore at the time of execution of the settlement agreement. The remaining outstanding amount along with interest on reducing balance basis shall be paid by M/s.MMS Steel & Power Pvt. Ltd., in 12 equal monthly installments along with regular gas supply invoices. The applicable interest rate on outstanding amount would be @ SBI Base Rate plus 6% per annum compounded https://www.mhc.tn.gov.in/judis 10 C.R.P.(PD).No.913 of 2020 quarterly.
5. ONGC will supply gas to M/s.MMS Steel & Power Pvt. Ltd., subject to availability and accordingly a Gas Supply Agreement (GSA) would be concluded covering supplies from both KVK & NRM fields. Initial validity of GSA will be kept as five years and this would be extended further subject to gas availability on the same terms and conditions.
11. Thereafter, the petitioner sent a reply dated 25.04.2016 to the respondent's letter dated 07.04.2016 and in that it is mentioned as follows:-
We are in the process of paying Rs.4.00 crores to ONGC as an initial upfront payment and execute the settlement agreement. We will be submitting the LC as a payment security to cover Sixty days gas supply before the gas supply commences.
We are not operating the plant since last 18 months and revenues reduced drastically. In view of this, our bankers are not able to support us for enhancing any additional limits. In view of this, providing of irrevocable LC as a security to cover balance outstanding dues is difficult. We request to waive off providing LC for the outstanding amount. We agree to pay the outstanding in 18 installments and we will submit an LC equivalent to two installments of outstanding amount.
12. Thereafter, a letter was sent by the respondent ONGC dated 28.04.2016 seeking consent from the petitioner to the terms of settlement https://www.mhc.tn.gov.in/judis 11 C.R.P.(PD).No.913 of 2020 in which it is stated as follows:-
Please note that no alterations contrary to the Board’s approval can be considered. In case acceptance letter as requested vide letter dated 07.04.2016 is not received by ONGC within 15 days of issue of this letter, i.e., latest by 14.05.2016, we may withdraw the terms for settlement reached after protracted deliberations & conveyed vide letter dated 07.04.2016.
13. An acceptance letter dated 14.05.2016 was sent by the petitioner, accepting the conditions to be stipulated in the settlement agreement which reads as follows:-
We are already in the process for releasing of Rs.4.00 crores to you. With respect to the letter received from ONGC dated 28.04.2016, we will pay the upfront payment and execute the settlement agreement at the earliest before end of this month.
14. According to the settlement agreement dated 22.09.2016 Clause (10) the parties agree to submit this agreement before the Arbitrator to pass consent award in terms of this agreement. The learned Senior Counsel further submitted that the award was passed by the arbitrator dated 20.11.2016 and the same is extracted hereunder:-
An affidavit , in support of the Petition has been filed sworn to by Dr.A.M.S. Raju, Director of the Claimant Company. The petition also encloses the settlement agreement dated https://www.mhc.tn.gov.in/judis 12 C.R.P.(PD).No.913 of 2020 22.09.2016 wherein under Clause No.5 of the said agreement it is mentioned that both the parties shall be deemed to have withdrawn all claims and counter claims before any court or arbitration proceedings or elsewhere against each other on the date of signing of the agreement. There are other clauses also in the said agreement.
A memo dated 20.11.2016 has also been filed by the Respondent duly signed by Mr.S.Prabhakaran, Chief Engineer (Production), Incharge – Marketing and also by the Learned Counsel for the Respondent for passing an award in terms of the Settlement dated 22.09.2016 arrived at between the Claimant and the Respondent.
Accordingly, an award is passed in respect of claims of the Claimant as well as the counter claim of the Respondent which are the subject matter of the present arbitration proceedings in terms of the Settlement dated 22.09.2016 arrived at between Claimant and the Respondent and the Settlement shall form part of the award. The arbitration proceedings stand terminated.
15. Then a letter dated 23.02.2017 of the petitioner was sent to the respondent (ONGC) in which it is stated that as per the Annexure of settlement agreement dated 22.09.2016, the balance outstanding amount calculated at Rs.19,25,87,232/-. For this amount two months EMI works https://www.mhc.tn.gov.in/judis 13 C.R.P.(PD).No.913 of 2020 out to Rs.3,20,97,872/- considering 12 equal installments. Hence the 2nd letter of credit to be submitted for Rs.3.21 crores. A reply mail dated 01.03.2017 was sent by the respondent (ONGC) to the petitioner to the letter dated 23.02.2017 stating that there is a shortfall of Rs.1.22 crores against two months EMI and hence the petitioner was requested to comply in-line with the communications of the respondent and submit letter of Credit (LC) for the balance amount of Rs.1.22 crores instead of Rs.89 lakhs so as to enable to proceed further. A letter dated 14.06.2017 was sent by the respondent/ONGC to the petitioner informing that the request for commencement of sour gas supply from Narimanam field of Cauvery Asset, ONGC was not agreed by the management as the letter of Credit (s) submitted by the petitioner is not as per the standard format communicated to the petitioner vide earlier correspondence and the value of the letter of credit submitted towards the outstanding dues is falling short of Rs.1,21,26,614/-. Then a letter dated 11.01.2018 was sent by the respondent ONGC to the petitioner in regard to restoration of sour gas supply from Kovilkalappai field and the commencement would be only after the receipt of shortfall LC towards outstanding dues and LC towards payment security for 16 years of gas supply from Kovilkalappai field. https://www.mhc.tn.gov.in/judis 14 C.R.P.(PD).No.913 of 2020
16. The learned Senior Counsel further submitted that Gas supply agreement dated 16.02.2018 was entered into between the petitioner and the respondent with respect to the Narimanam field in which according to Article – 2 Term 2.01 “2.01 This Agreement shall commence and be effective from date of signing or date of gas commencement, whichever is earlier and the term of this Agreement shall be initially for five years from such date, unless terminated earlier. The gas price would be as set forth in Schedule B of the Agreement”.
A legal notice dated 13.08.2018 was sent by the respondent (ONGC) to the petitioner-gas supplier in which Clause 3, 4 & 5 of the notice is extracted as below:-
3) That on the basis of the above settlement agreement dated 22.09.2016 a compromise award was passed by the sole Arbitrator on 20.11.2016. Therefore the award is final and binding both parties. That inspite of the several repeated demand you failed to discharge the dues under the Award to my client ONGC.
4) That as on 07.08.2018 you are liable to pay Rs.23,01,09,784/- to my client.
5) Hence I hereby call upon you to pay the above due amount with subsequent accrued interest amount in 2 weeks time https://www.mhc.tn.gov.in/judis 15 C.R.P.(PD).No.913 of 2020 from the date of the receipt of this notice. In case of yur failure to pay the due as above, my client will take appropriate court proceedings to attach your plants at Kovilkalappal and Narimanam plant and also to freeze your bank account by attaching it.
Then a reply letter dated 10.09.2018 was sent by the petitioner to the respondent and the relevant portion of the reply is extracted as below:-
“17) Due to delay in supply of gas and due to reduced market prices of Power and with a supply of low gas the required revenue was not possible in the present market conditions.”
21. In view of the above, we request you to kindly consider the following concessions:
a. as we are unable to bear the additional cost and the interest charges, we request ONGC to adjust the payments made by us towards the Principal amount and waive off all interest charges. b. request ONGC to restore gas supply to MMS Steel C. The balance principal outstanding would be repaid out of the proceeds of the generation from ONGC gas.
17. The learned Senior Counsel relied upon the judgment of the Hon'ble High Court of Delhi in E.A.No.677 of 2011 (batch case) decided on 06.07.2012 in the case of Atul Chopra and others Vs Technotree Corporation and others. He further submitted that there is no denial by the petitioner in their reply dated 10.09.2018 to the legal notice dated https://www.mhc.tn.gov.in/judis 16 C.R.P.(PD).No.913 of 2020 13.08.2018. The petitioner has not preferred any application before this Court challenging the award passed by the arbitrator dated 20.11.2016 under Section 34 of Arbitration and Conciliation Act, 1996 and the award has reached its finality. Hence the Execution Petition No.1 of 2020 on the file of District Court, Nagapattinam is maintainable / executable by the respondent (ONGC) and prays for dismissal of the above civil revision petition.
18. Heard both sides and perused the materials available on record.
19. The issue to be decided in the case on hand is whether the E.P.No.1 of 2020 filed by the respondent (ONGC) is to execute the arbitration award dated 20.11.2016, which has been passed based on the settlement agreement entered at Karaikal dated 22.09.2016 arrived between the petitioner (Gas supplier) and the respondent (ONGC) (Gas producer) is executable/maintainable or not. The Provisions and Clauses of the settlement agreement dated 22.09.2016 read as follows:-
Clause E. Disputes arose between the Parties as regards, inter alia, the tenure of the GSA dated 11.02.2005 various petitions were filed https://www.mhc.tn.gov.in/judis 17 C.R.P.(PD).No.913 of 2020 in the Hon'ble Delhi High Court wherein interim orders were passed for continuation of supply of gas to MMS. The gas was being supplied at the price stipulated in the aforesaid GSA.
J. There are claims and counter claims by and between the Parties against each other before the Arbitration and as on 30.09.2015, MMS has to pay outstanding dues including interest as on 30.09.2015 amounting of Rs.20,93,44,973/- (Rupees Twenty Crore Ninety Three Lakhs Forty Four Thousand Nine Hundred and Seventy Three Only) on account of supply of gas made by ONGC to MMS as per the price stipulated in the GSA dated 11.02.2005 for NRM field and 11.03.2010 for KVK field.
K. The Parties have reconciled the accounts claims and counter claims and discussed the matter subsequently over series of discussions and decided to resolve the differences amicably to settle their entire disputes pertaining to the GSA dated 11.02.2005 and the subject matter of arbitration proceedings. Terms
2. On execution of this Agreement and on receipt of Rs.4 crore and irrevocable rolling LC as payment security to cover sixty days cost of gas for both the fields and irrevocable LC towards balance outstanding dues along with interest from MMS, ONGC shall forthwith resume the supply of gas to MMS from above fields. Apart from paying arrears/outstanding dues as agreed, MMS also agrees to pay https://www.mhc.tn.gov.in/judis 18 C.R.P.(PD).No.913 of 2020 gas price for gas consumed every day and in case of any default, ONGC has right to invoke LC towards gas price along with interest as agreed herein above and ONGC also has right to stop the gas forthwith without giving any notice to MMS and terminate the Contract by giving 30 days notice to MMS.
5. On execution of this Agreement, the Parties shall be deemed to have withdrawn all claims and counter claims before any Court or Arbitration proceedings or elsewhere against each other existing on the date of signing of the Settlement Agreement.
10. The parties agree to submit this agreement before the Arbitrator to pass consent award in terms of this agreement.
20. The relevant portion of the award dated 20.11.2016 is extracted hereunder:-
An affidavit , in support of the Petition has been filed sworn to by Dr.A.M.S. Raju, Director of the Claimant Company. The petition also encloses the settlement agreement dated 22.09.2016 wherein under Clause No.5 of the said agreement it is mentioned that both the parties shall be deemed to have withdrawn all claims and counter claims before any court or arbitration proceedings or elsewhere against each other on the date of signing of the agreement. There are other clauses also https://www.mhc.tn.gov.in/judis 19 C.R.P.(PD).No.913 of 2020 in the said agreement.
A memo dated 20.11.2016 has also been filed by the Respondent duly signed by Mr.S.Prabhakaran, Chief Engineer (Production), Incharge – Marketing and also by the Learned Counsel for the Respondent for passing an award in terms of the Settlement dated 22.09.2016 arrived at between the Claimant and the Respondent.
Accordingly, an award is passed in respect of claims of the Claimant as well as the counter claim of the Respondent which are the subject matter of the present arbitration proceedings in terms of the Settlement dated 22.09.2016 arrived at between Claimant and the Respondent and the Settlement shall form part of the award. The arbitration proceedings stand terminated.
21. As per clauses 5 & 10 of the above settlement agreement dated 22.09.2016, the parties have decided to withdraw all claims and counter claims before any Court or arbitration proceedings and agreed to submit before the arbitrator to pass consent award in terms of this agreement. Award dated 20.11.2016 passed by the arbitrator by which the subject matter of the present arbitration proceedings in terms of the Settlement dated 22.09.2016 arrived at https://www.mhc.tn.gov.in/judis 20 C.R.P.(PD).No.913 of 2020 between Claimant and the Respondent and the Settlement shall form part of the award and the arbitration proceedings shall stand terminated. According to the terms of the award the petitioner-gas supplier shall pay to respondent (ONGC) (Gas Producer) the outstanding amount of Rs.20,93,44,973/- (Rupees Twenty Crores Ninety Three Lakhs Forty Four Thousand Nine Hundred and Seventy Three Only) as on 30.09.2015 and Terms 1, 5 and 10 are extracted as below:-
1. MMS shall pay to ONGC the outstanding amount of Rs.20,93,44,973/- (Rupees Twenty Crore Ninety Three Lakh Forty Four Thousand Nine Hundred and Seventy Three Only) as on 30.09.2015 (Details outstanding amount is placed at Annexure-A) towards the supply of gas made by ONGC for the period from 01.04.2009 to 25.10.2014 and from 01.04.2010 to 30.12.2014 for both KVK and NRM respectively as per GSA dated 11.02.2005 for NRM field and 11.03.2010 for KVK field. MMS agrees to pay an interest @ SBI Base rate plus 6% as ONGC charges from other PSUs on the said amount of Rs.20,93,44,973/- (as on 30.09.2015) on reducing balance basis. MMS shall pay an initial payment of Rs.4 (four) crore at the time of execution of this agreement.
Remaining outstanding amount along with interest (for Rs.19,25,87,232/- as on 11.07.2016 as details at Annexure – A, after deducting the upfront payment of Rs.4.0 crore made on 11.07.2016) shall be made in 12 (twelve) equal monthly instalments along with regular gas supply invoices. MMS further https://www.mhc.tn.gov.in/judis 21 C.R.P.(PD).No.913 of 2020 agrees to provide irrevocable letter of credit towards remaining outstanding amount of Rs.19,25,87,232/- along with interest as on 11.07.2016.
5. On execution of this Agreement, the Parties shall be deemed to have withdrawn all claims and counter claims before any Court or Arbitration proceedings or elsewhere against each other existing on the date of signing of the Settlement Agreement.
10. The parties agree to submit this agreement before the Arbitrator to pass consent award in terms of this agreement.
23. In view of the above Terms 1, 5 and 10, the EP No.1 of 2020 filed by the respondent (ONGC) claiming an outstanding amount of Rs.19,25,87,232 along with interest as on 11.07.2016 and thereafter the outstanding amount and interest after 11.07.2018 to 07.09.2019 is a total sum of Rs.27,18,80,365.25 (Rupees Twenty Seven Crores Eighteen Lakhs Eighty Thousand Three Hundred and Sixty Five and Twenty Five Paise) but according to the settlement agreement dated 22.09.2016 Term No.1 Execution Petition can be filed only for recovery of the outstanding amount of Rs.19,25,87,232 along with interest as on 11.07.2016. Term 5 in the settlement agreement dated 22.09.2016 will not preclude the respondent ONGC from initiating the execution proceedings to recover the dues from the petitioner, since as per the Term 1 of the agreement, the petitioner Company shall pay the outstanding amount of Rs.19,25,87,232/- (Rupees Nineteen Crores https://www.mhc.tn.gov.in/judis 22 C.R.P.(PD).No.913 of 2020 Twenty Five Lakhs Eighty Seven Thousand Two Hundred and Thirty Two Only) and the execution petition filed by the respondent ONGC is maintainable and the same is executable against the petitioner company. The outstanding interest after 11.07.2016 to 07.09.2019 is a sum of Rs.7,92,93,133.25 (Rupees Seven Crores Ninety Two Lakhs Ninety Three Thousand One Hundred and Thirty Three and Twenty Five Paise) and the respondent ONGC is also entitled for the same since the outstanding dues for a sum of Rs.19,25,87,232/- as on 11.07.2016 as agreed by Term 1 of the settlement agreement dated 22.09.2016 was not paid by the petitioner company. At this juncture, it is pertinent to extract Section 15 of the Arbitration and Conciliation Act, 1996 and the same is as follows:-
“15. Termination of mandate and substitution of arbitrator (1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate
(b) by or pursuant to agreement of the parties (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
(3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral Tribunal.
(4) Unless otherwise agreed by the parties, an order or ruling of the arbitral Tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there https://www.mhc.tn.gov.in/judis 23 C.R.P.(PD).No.913 of 2020 has been a change in the composition of the arbitral Tribunal”.
24. It is crystal clear and evident from the above that subsequent to the settlement agreement dated 22.09.2016 between the petitioner and the respondent there were various correspondence between the petitioner and the respondent wherein the petitioner has agreed to pay the balance outstanding dues as per the settlement agreement dated 22.09.2016.
25. Since the application was filed by the petitioner under Section 15(1) (b) of the Arbitration and Conciliation Act, 1996 to terminate the present arbitration proceedings between the parties for the claims as well as the counter claims arising out of the gas supplier agreement dated 11.02.2005, the learned arbitrator has passed an award dated 20.11.2016, according to which the settlement agreement shall form part of the award and the arbitration proceedings stand terminated. As per Term No.1 of the award it is clearly stated that the petitioner (gas supplier) has to pay the outstanding amount for a sum of Rs.19,25,87,232/- (Rupees Nineteen Crores Twenty Five Lakhs Eighty Seven Thousand Two Hundred and Thirty Two Only) along https://www.mhc.tn.gov.in/judis 24 C.R.P.(PD).No.913 of 2020 with interest as on 11.07.2016 and according to Term 10 of the settlement agreement it was agreed by the parties to submit this agreement before the learned arbitrator to pass consent award in terms of the agreement.
Though the application was filed by the petitioner under Section 15(1)(b) of the Arbitration and Conciliation Act, 1996 the arbitral Award dated 20.11.2016 is executable since the settlement agreement dated 22.09.2016 form part of the award and the Arbitration proceedings started. Hence the contention of the learned Senior Counsel appearing for the petitioner is unsustainable in law.
26. In view of the above Terms 1 & 10 of the settlement agreement dated 22.09.2016 between the petitioner-gas supplier and the respondent-gas producer (ONGC) EP was filed by the respondent (ONGC) in EP.No.1 of 2020 on the file of the District Court, Nagapattinam is maintainable as per law in force. The learned senior counsel for the petitioner relied upon the judgment of the Hon'ble High Court of Delhi in E.A.No.677 of 2011 (batch case) decided on 06.07.2012 in the case of Atul Chopra and others Vs Technotree Corporation and others and the same is not applicable to the case on https://www.mhc.tn.gov.in/judis 25 C.R.P.(PD).No.913 of 2020 hand for the reason that as per Term 1 of the settlement agreement dated 22.09.2016 the petitioner has agreed to pay the outstanding dues for a sum of Rs.19,25,87,232 as on 11.07.2016. Hence it is crystal clear and evident that the petitioner company has agreed to pay the above outstanding dues to the respondent ONGC (Gas Producer) as per the settlement agreement dated 22.09.2016.
27. Since the petitioner company failed to comply the Term 1 of the settlement agreement the respondent ONGC (Gas producer) can initiate the Execution Proceedings to recover the same from the petitioner Company. This Court is of the considered view that the Execution Petition filed by the respondent ONGC to execute the Arbitral Award which is passed on the basis of the settlement agreement dated 22.09.2016 between the party and it also forms a part of the award the same is maintainable and executable by the respondent ONGC and the issue of the maintainability of the Execution Petition is answered accordingly by this Court.
28. In view of the above factual matrix of the case and for the foregoing reasons, this Court is not inclined to strike off the E.P.No.1 of 2020 on the file of District Court, Nagapattinam since the Execution https://www.mhc.tn.gov.in/judis 26 C.R.P.(PD).No.913 of 2020 Proceedings in E.P.No.1 of 2020 on the file of the District Court, Nagappattinam is maintainable according to the terms of the settlement agreement dated 22.09.2016 and as per the law in force.
29. In the result, the civil revision petition stands dismissed. No costs. Consequently connected miscellaneous petition is also closed.
22.12.2023 Index : No Internet : Yes dpq To
1.The District Court, Nagapattinam.
J. SATHYA NARAYANA PRASAD, J.
dpq https://www.mhc.tn.gov.in/judis 27 C.R.P.(PD).No.913 of 2020 C.R.P.(PD).No.913 of 2020 and CMP.No.4838 of 2020 22.12.2023 https://www.mhc.tn.gov.in/judis