Delhi High Court
Ptc India Limited vs Lanco Power Limited on 9 September, 2015
$~47
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 09.09.2015
+ O.M.P. 473/2015
PTC INDIA LIMITED ..... Petitioner
Through: Mr. A.K. Ganguli, Sr. Advocate with Mr. Vishrov
Mukerjee, Ms. Nishtha Kumar, Mr. Ravi Kishore
and Mr. Prashant Mathur, Advs.
Versus
LANCO POWER LIMITED ..... Respondent
Through: Mr. Akhil Sibal with Mr. Deepak Khurana and Ms.
Aditi Sharma and Mr. Jatin Mongia, Advs.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
NAJMI WAZIRI, J.(Open Court)
1. This is a petition under Section 34 of the Arbitration &
Conciliation Act, 1996 against the majority Arbitral Award and Order
dated 23.05.2015 (collectively "Impugned Award"). Justice (Retd.) K.
Ramamoorthy and Justice (Retd.) E. Padmanabham ruled against the
petitioner by dismissing their Section 16 application and also
dismissing their claim for setting aside of the termination of a 'Power
Purchase Agreement' dated 19.05.2005. The third Arbitrator, Justice
(Retd.) J.L. Gupta, however, decided in favour of the petitioner on both
of the above counts.
2. The petitioner is impugning this award on the ground that, inter-
alia, it is against public policy insofar as the Arbitral Tribunal ignored
O.M.P. 473 of 2015 Page 1 of 5
the relevant provisions of the Electricity Act, 2003. Moreover, the dicta
in various judgments of the Supreme Court, which state that disputes
such as the one between the petitioner and the respondent can only be
adjudicated by the appropriate Electricity Regulatory Commission or an
arbitral tribunal constituted by such commission were ignored.
3. In support of this argument, the petitioner relies on judgments of
the Hon'ble Supreme Court in the case of GUVNL v. Essar Power Ltd.
(2008) 4 SCC 755:
"However, since the Electricity Act, 2003 has come
into force w.e.f. 10-6-2003, after this date all
adjudication of disputes between licensees and
genedrating companies can only be done by the State
Commission or the arbitrator (or arbitrators) appointed
by it. After 10-6-2003 there can be no adjudication of
dispute between licensees and generating companies by
anyone other than the State Commission or the arbitrator
(or arbitrators) nominated by it ..."
And T.N. Generation & Distribution Corporation Ltd. Vs. PPN Power
Generation Co. Pvt. Ltd. (2014) 11 SCC 54:
"13. ...relying on the judgment of this Court in the
case of Guarat Urja Vikas Nigam Ltd. Vs. Essar Power
Ltd., it is held that the State Commission has the
discretion to decide as to whether the dispute should be
adjudicated by itself or it should be referred to an
arbitrator. The appellant cannot dictate that the State
Commission ought to have referred the dispute to an
arbitrator...
34. In our opinion, the issues raised by the appellant
with regard to the constitution of the State Commission
and its discretion to either adjudicate or refer a
particular dispute to arbitration is no longer res
integra."
O.M.P. 473 of 2015 Page 2 of 5
4. The petitioner argues that the Impugned Award proceeds on an
erroneous premise that having withdrawn the Section 16 application,
the petitioner had submitted to the jurisdiction of the Arbitral Tribunal
and that it is settled law that where no jurisdiction exists, none can be
vested by an agreement between the parties. To support this point, the
petitioner relies, inter alia, on the judgment of the Hon'ble Court in
Jagmittar Sain Bhagat & Others v. Director, Health Services, Haryana
and Others (2003) 10 SCC 136:
"if a court/tribunal inherently lacks jurisdiction,
acquiescence of party equally should not be permitted to
perpetrate and perpetuate defeating of the legislative
animation. The Court cannot derive jurisdiction apart
from the statute."
5. The petitioner in this instance was the claimant in the arbitration
proceedings and after invoking arbitration and filing its statement of
claim and complete pleadings, filed an application under Section 16
challenging the jurisdiction of the tribunal. This application was
withdrawn on 07.01.2012, wherein the Arbitral Tribunal recorded in its
order that:
"Mr Ravi Prakash, Ld. Counsel for the Claimant and
Mr. Anuj Berry, Ld. Counsel for the Respondent, on
instructions from their respective parties, submit that
both parties agree that this arbitral tribunal has
jurisdiction over the subject matter and the disputes
between the parties will be decided on the merits. The ld.
Counsel also submit that the pleadings filed by both the
parties in the application under S.16 stand withdrawn.
Therefore, the application under Sec. 16 of the
Arbitration and Conciliation Act, 1996 is closed."
O.M.P. 473 of 2015 Page 3 of 5
Subsequent to this, in the midst of final arguments, the claimant
filed an application dated 23.03.2015 for revival/restoration of the
Section 16 application.
6. Mr.Akhil Sibal, the learned counsel for the respondent would
contend that if the petitioner believed that the Tribunal lacked
jurisdiction, its remedy was to withdraw the claim, however, the
petitioner pursued an exercise in 'legal absurdity' by asking the
Tribunal to decide that the Tribunal had no jurisdiction; that the
'Doctrine of Election' required that a litigant elect a legal remedy when
faced with inconsistent remedies and that it was not legally permissible
for the claimant to on one hand maintain and refuse to withdraw the
same while at the same time contending that the Tribunal lacked
jurisdiction to adjudicate the same. In S.N. Malhotra & Sons v. Airport
Authority of India. 2008 (103) DRJ 196, a division bench of this Court,
relying on the dicta of the Hon'ble Supreme Court, has held that:
"The respondent was all along aware of this non
compliance and participated in the proceedings without
demur. The award in respect of the same is not to its
liking. The challenge now sought to be raised by the
respondent flies in the face of its tacit approval of the
matter being dealt with by the arbitrator. Allowing the
responded to resile from his position at this stage without
its laying any foundation for the challenge when it was
free to raise the same would be inequitable to say the
least"
7. This Court is of the opinion that when the petitioner first chose to
invoke arbitral proceedings and again when it chose to withdraw its
Section 16 application before the Tribunal, it acquiesced to the
Tribunal's jurisdiction and having done so, is now estopped from
O.M.P. 473 of 2015 Page 4 of 5
claiming otherwise. The petitioner is deemed to have waived any
objection to the jurisdiction of the Arbitral Tribunal when it participated
in its constitution and also when it withdrew its application under
Section 16 all the while it being fully aware of the provisions under the
relevant sections of the Electricity Act, 2003. The petitioner, having
waived its jurisdictional objection then, without reserving the right or
being granted the liberty to raise it at a later stage, cannot be permitted
to raise it now. To now allow the petitioner to raise the issue of
jurisdiction, after the order of the Arbitral Tribunal having gone against
it, would be wholly inequitable. It would deprive the respondent of the
benefit of the majority decision of the Tribunal after a long drawn-out
arbitral process and would render futile the time, money and energy
expended in the entire process.
8. The appeal is without merit and is accordingly dismissed.
NAJMI WAZIRI, J.
SEPTEMBER 09, 2015/r
