Wind Power Limited vs Goyal Mg Gases Limited
2003 Latest Caselaw 269 Del

JUDGMENT

R.C. Jain, J.

1. The respondent M/s. Goyal MG Gases Limited has filed this application under Section 151 CPC praying for a direction on the Tamil Nadu Electricity Board (TNEB) to start paying to the respondent the sums standing in its account after deducting a sum of Rs.2,67,44,336/-.

2. The relevant facts to be noticed for the disposal of the present application are that the respondent purchased a wind mill Project from the petitioner on turnkey basis by a purchase order dated 1st February, 1996. The wind mill was to generate electricity and the same was to be purchased by the TNEB and for that purpose TNEB and the respondent entered into a power purchase agreement dated 27th March, 1996. Dispute arose between the petitioner and the respondent as the project was not as per the contract and generation of electricity was much low. On a petition, being AA No. 133/96, filed by the petitioner for appointment of an arbitrator and interim relief, this Court vide order dated 30th April, 1997 made the following order:-

"Therefore, there shall be an injunction restraining the respondent from receiving any money from the Tamil Nadu Electricity Board with reference to the electricity supplied from the project pending the adjudication of the disputes by the Hon'ble Arbitrator.

11. The Tamil Nadu Electricity Board shall keep the money in deposit and shall abide by the directions of the Hon'ble Arbitrator regarding the disbursement of the same at the time of passing of the award.

12. The petitioner shall issue notice through the Hon'ble Arbitrator to the Tamil Nadu Electricity Board and also the Indian Bank directing them to furnish all particulars to the Hon'ble Arbitrator with reference to the disputes between the parties. The Indian Bank and the Tamil Nadu Electricity Board shall appear before the Hon'ble Arbitrator.

13. There shall be an injunction restraining the respondent from receiving the amount from the Tamil Nadu Electricity Board for the supply of electricity from the project till the award is passed by the Hon'ble Arbitrator."

3. The said order/directions became final as the appeal and SLP filed against the said order were dismissed. The sole arbitrator Justice P.K. Bahri (Retd.) entered the reference and published his award dated 7th January, 2002, the operative portion of which reads as under:-

"In the result, I make the award as follows:

i. That the respondent shall pay to the claimant Rs.3,93,64,862 Rs.1,26,20,526 = Rs.2,67,44,336 (Rs. Two crores, sixty seven lakhs, forty four thousands three hundred thirty six only).

ii. That the Tamil Nadu Electricity Board shall release amount mentioned above at S. No. (1) to the claimant M/s. Wind Power Limited from the amount kept in fixed deposits and release the balance amount to the respondent M/s. Goel M.G. Gases Limited and as the project belongs to the respondent, TNEB would deal with the respondent in future.

iii. That all other claims and counter claims stand rejected.

iv. That in view of the peculiar facts and circumstances, the parties are left to bear their own costs."

4. The award of the arbitrator has been challenged and is sought to be set aside by the petitioner through a petition under Section 34 of the Act which is being contested by the respondent and a reply has been filed.

5. The application states that on 4th December, 1998, the Indian Bank had filed an original application before the Debt Recovery Tribunal, Chennai for recovery of its dues against the petitioner and its guarantors, the respondent having also been made a party to those proceedings though no amount was claimed from them. The Indian Bank, however, claimed an interim relief against the respondent for restraining the TNEB from paying the amount to the petitioner in the event of arbitrator passing an award against the fifth defendant (the respondent herein). By an order dated 9th December, 1998, the Debt Recovery Tribunal granted interim relief to the Indian Bank and restrained the respondent from paying the amount found to be due and payable by it to the petitioner in terms of the award of the arbitrator. Immediately after the passing of the award by the arbitrator, the Indian Bank filed a number of applications before the Debt Recovery Tribunal demanding that the TNEB be barred from paying the sums due to the respondent. Vide an order dated 18th February, 2002, the Debt Recovery Tribunal vacated the said order with the following observations:-

a) The respondents 6 and 7 (TNEB) is at liberty to act and in pursuant to the award dated 7.1.2002 passed by the learned Sole Arbitrator in Arbitration Case No. 61/1997 between M/s. Wind Power Ltd. and M/s. Goyal Gases Ltd. However, TNEB is further directed that the amount payable to the claimant M/s. Goyal Gases Ltd., i.e. Rs.2,67,44,336/- shall be deposited with the applicant bank towards the loan liability of the claimant (D1 company) subject to the order passed, if any, by the Delhi High Court in Arbitration Appeal filed by the parties. In case, if there is no such stay from the Hon'ble Delhi High Court, or any other competent Court of law, the above said money shall be paid by R-6 and R-7 to the applicant bank pursuant to the Order of this Court, within four weeks from the date of communication of the Order."

b) However, the operation of this Order is kept in abeyance for further four weeks from the date of passing of this Order, in order to enable both the parties to approach the Appellate Court against the impugned award, i.e. the Hon'ble High Court of Delhi and to get appropriate Order in respect of the payment of the Arbitral amount. Meanwhile the status-quo order passed by this Court dated 15.1.2002 shall continue till further four weeks and thereafter it will automatically stands vacated without further hearing, in case if there is no stay from Debt Recovery Appellate Tribunal or from the Hon'ble Delhi High Court."

6. The said order of the Debt Recovery Tribunal was challenged before the Debt Recovery Appellate Tribunal, Chennai and the Appellate Tribunal vide order dated 14th March, 2002 restrained the TNEB from making the payment to the respondent herein as per award dated 7th January, 2002 passed by Justice P.K. Bahri (Retd.) pending the disposal of the appeal. Aggrieved by the said order, the respondent filed a SLP and the Hon'ble Supreme Court vide an order dated 15th July, 2002 has called upon the petitioner herein to file its counter. The said SLP is still pending.

7. According to the respondent/applicant, it has received no funds from the TNEB since 1996 though it has been running the project by itself and has incurred an expenditure of Rs.3 crores and, therefore, it has become very onerous for the respondent to continue the operation and maintenance of the project and supply electricity to TNEB without receiving any payment. It is claimed that approximately a sum of Rs.7.5 crores of the respondent/applicant is lying with the TNEB and even after deducting the awarded amount of Rs.2,67,44,336/- due to the petitioner, the balance amount of Rs.4.83 crores approximately is in excess with the TNEB which the respondent requires urgently to carry out the maintenance and operation of the project. The respondent has also volunteered to furnish security for the amount to be received by it from TNEB in the form of a bank guarantee or in any other manner as may be directed by the Court.

8. The application is contested by the petitioner by filing reply raising preliminary objections about the maintainability of the application; the application having been filed with a view to bye-pass the procedure laid down under the 1996 Act; the application being abuse of the process of Court in as much as the award of the sole arbitrator has not attained finality as the petition under Section 34 challenging the award is pending. On merits, the factum of the filing of proceedings by the Indian Bank against the petitioner and respondent before the Debt Recovery Tribunal and Debt Recovery Appellate Tribunal, Chennai having made certain orders are not denied. However, it is pleaded that the proceedings before the Debt Recovery Tribunal or the Appellate Tribunal are not relevant and ought not to have been addressed before this Court as the same is the subject matter of the SLP pending before the Supreme Court. The relief claimed by the respondent is also stated to be unfair and unreasonable because the claim of the petitioner against the respondent was much higher than the awarded amount in its favor.

9. I have heard Mr. A.S. Chandhiok, learned senior counsel for the respondent/applicant and Mr. Rajiv Nayar, learned senior counsel for the petitioner/non-applicant and have given my thoughtful consideration to their respective submissions.

10. So far as the first contention of Mr. Nayar is concerned, suffice it would be to observe that after the passing of the award and in terms of the order dated 30th July, 1997 passed by this Court in AA No. 133/96, the respondent has become entitled to the balance amount from the TNEB because the restraint order passed in AA No. 133/96 was made subject to the directions given by the arbitrator in the award. Once the arbitrator has itself directed the TNEB to pay the awarded amount to the petitioner and release the balance amount in favor of the respondent/applicant, the factum of filing of the petition under Section 34 of the Act challenging the award of the arbitrator should not come in the way of the TNEB in making compliance thereof. I, therefore, see no merits in this contention that till the disposal of petitioner's petition under Section 34 of the Act, the respondent/applicant cannot seek the compliance of the direction with regard to the release of the balance amount in its favor.

11. As noticed above, the case has a chequered history as a result of which has become somewhat complex on account of orders passed by this Court, the Debt Recovery Tribunal and the Appellate Tribunal in different proceedings touching the subject matter of the present proceedings. Therefore, what is required to be seen is the effect of those proceedings and orders and more importantly the effect of the pendency of the SLP filed by the respondent in the Supreme Court against the order of the Debt Recovery Appellate Tribunal dated 14th March, 2002. If we go strictly by the order of this Court dated 30th April, 1997 passed in AA No. 133/96 (supra) and the award of the sole arbitrator dated 7th January, 2002, the inescapable conclusion would be that the respondent is entitled to receive the payment due to it from TNEB minus the amount of Rs.2,67,44,336/-, awarded in favor of the petitioner because the directions of this Court were in force only until the time of passing of the award by the arbitrator. The directions were obviously given with a view to safeguard the interest of the petitioner so that it may have no difficulty in realisation of the awarded amount from the respondent. Now, since the award has been rendered for a sum of Rs.2,67,44,336/- only and a much larger sum due to the respondent is lying with the TNEB, in all fairness, the balance amount should be released in its favor. However, Mr. Nayar, has emphatically urged that this cannot be done firstly because the award of the arbitrator is under challenge in the petition under Section 34 of the Act and, therefore, the direction contained in the award about the release of the balance amount in favor of the respondent cannot be enforced and secondly that the Hon'ble Supreme Court is seizened of this very question and, therefore, this Court should lay off its hands in making any order/direction on this application on the prayer of the respondent/applicant contained in this application.

12. It is pertinent to note that though in the SLP filed by the respondent against the order of the Debt Recovery Appellate Tribunal, Chennai dated 14th March, 2002, the Hon'ble Supreme Court has called upon the petitioner herein and the Bank to file its counter reply, yet the Hon'ble Supreme Court did not chose to stay the operation of the impugned order of Debt Recovery Appellate Tribunal, Chennai. This would clearly mean that the order of Debt Recovery Appellate Tribunal restraining the TNEB from making the payment to the respondent/applicant in terms of the award dated 7th January, 2002 is still in force. On the face of this position, it does not seem to be desirable nay permissible to pass any order or give any direction to the TNEB to release the balance amount to the respondent/applicant at this stage as it would clearly amount to disposal of an issue which is pending before and receiving the consideration of the Supreme Court though in connection with certain collateral proceedings instituted by the Indian Bank. It is, therefore, imperative that the parties should await the outcome of the SLP pending in the Supreme Court. With these observations, the application stands disposed of.