Jharkhand High Court
Respondent/ vs Jamshedpur Waste Processing Company ... on 26 March, 2025
Author: Deepak Roshan
Bench: Deepak Roshan
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Commercial Appeal No. 16 of 2020
Special Officer, Jamshedpur Notified Area Committee-cum-Nodal
Officer, Jamshedpur Urban Agglomeration (JUA) having registered Office
at Kalimati Road, At, P.O. and P.S.-Sakchi, Jamshedpur
... Respondent/Applicant/Appellant
Versus
Jamshedpur Waste Processing Company Pvt. Ltd., now known as SMPL
Infrastructure Ltd., through Deepak Sethi, son of Anil Kumar Sethi,
resident of B-9, Epsilon Ventures, Yamlur Main Road, P.O.-Merathauli
Fort, P.S.-Hal, District-Banglore, having registered office at No-8 Floor,
80 H Main Road, P.O.-Indranagar, P.S.-Jeevan Bima Nigam, Indranagar,
Hal 3rd Stage, Banglore and Corporate Office at F-27/2, Okhla Industrial
Area, P.O.-Kaluaji, P.O.-Okhla Industrial Area, District-New Delhi.
... Claimant/Respondent/Respondent
---------
CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE DEEPAK ROSHAN
---------
For the Appellant: Mr. Krishna Kumar, Advocate
Mr. Vijay Kumar Roy, Advocate
For the Respondent: Mr. Arpan Mishra, Advocate
---------
Reserved on: 25.02.2025 Pronounced on: 26/03/2025
Per M.S. Ramachandra Rao, C.J.
1. This appeal has been filed under Section 13(1A) of the Commercial
Courts Act, 2015 challenging the judgment dt. 24.01.2020 of the District
Judge-I-cum-Commercial Court, East Singhbhum at Jamshedpur in
Revocation (Arbitration) Case No.10 of 2019.
Background facts
2. After a competitive bid process, a Letter of Acceptance was issued
on 02.07.2012 to the respondent and M/s. SPML Infra Ltd for setting up
an Integrated Solid Waste Management Facility under jurisdiction of
Jamshedpur Urban Agglomeration.
3. Thereafter a Concession Agreement dt. 08.08.2012 was entered
into by the appellant with the respondent M/s SPML Infra Limited.
4. Clause 3.1 of the said Agreement required the appellant to hand
over to the respondent and other members of the consortium within 30
days from the appointed date, vacant and peaceful physical possession of
the identified Project Site for the purpose of construction, operation and
maintenance of Transfer Stations, Workshop Facility for Vehicle
Maintenance, Integrated Solid Waste Management Facility site for
Development of Compost Plant, Brick Making Plant, RDF Plant and
Sanitary Landfill Facility and also Secondary Storage depots for all areas
under jurisdiction of Jamshedpur Urban Agglomeration.
5. As per sub clause (b) of Article 3.1, the total land identified at
Mouza Khairbani for development of Integrated Solid Waste Management
Facility is about 36 acres and the said clause also stated that additional
land, if required, would be provided by the appellant from time to time.
6. Sub clause (c) of Article 3.1 stated that upon the Project Site being
handed over pursuant to sub clause (a) of Article 3.1 of the Concession
Agreement, the Concessionaire shall, subject to provisions of Article 5,
have the right to enter upon, occupy and use the same and to make at its
own cost, charges and expenses such investigation, clearance of existing
waste, remediation, development and improvements in the Project Site as
may be necessary or appropriate to implement a project in accordance
with the provisions of the Agreement.
7. Sub clause (d) of Article 3.1 of the Agreement stated that in case of
any delay by the appellant in handing over the Project Sites to the
Concessionaire, the time period for COD-T&D will be adjusted
accordingly with mutual agreement between the parties.
8. Article 11.2 of the Concession Agreement contained the arbitration
clause.
9. After the disputes arose between the parties, it appears that one of
them filed an Arbitration Application No. 21 of 2014 before this High
Court under sections 11 (5) and (6) of the Act for appointment of an
Arbitrator and Justice Amareshwar Sahay (Retd. Judge) was appointed as
Sole Arbitrator to adjudicate the disputes between the appellant and the
respondent.
The stand of the respondent/claimant before the arbitrator
10. Before the Arbitrator, the main point of issue, according to the
respondent, was that out of six major land passages, that were required to
be handed over to the respondent, the appellant had failed to hand over 5
sites required for the establishment of the Transfer Stations; the land,
which was handed over for establishment of the Project of the Integrated
Solid Waste Management Facility, was also insufficient since out of total
36 acres of land, possession of which was required to be handed over, only
30.39 acres were provided; and even the said 30.39 acres of land was not
free from encumbrances as there were several encroachments and
structures standing thereon over an area of 5.00 acres.
11. The respondent also contended that there was a village road
passing through the Project Site, which was dividing the land into two
parts.
12. According to the respondent, it had attempted to start the
construction of boundary walls over the 25 acres of available land, but
even that work was forcibly stopped several times due to protest,
agitations and obstructions from the local villagers and even the police
support that was provided by the appellant on few occasions did not yield
any result.
13. The respondent contended that as per the Agreement, it was the
fundamental obligation of the appellant to provide peaceful physical
possession of the Project Site free from all hindrances, but since the
appellant had failed to hand over the sites as required, it was in serious
breach of the terms of the Agreement which forced the respondent to
terminate the said Agreement.
14. The respondent also contended that repeated correspondences
made by it for handing over of the Project Site, release of the termination
payments, performance and bank guarantee etc. and for appointment of
Arbitrator did not yield any result and so, they filed the application under
Section 11 of the Act. The respondent made the following claims before
the learned arbitrator :-
Claim Amount Interest Amount
@ 15%
Claim for payment of Rs.1,16,57,989/- Rs.31,50,960/-
Termination Payment (Rupees One Crore (Rupees Thirty One
Sixteen Lac Fifty Seven Lac Fifty Thousand
Thousand Nine Nine Hundred &
Hundred & Eighty Sixty)
Nine)
Claim for Loss of Rs.15,00,00,000/- NIL
Profit (Rupees Fifteen Crore)
Refund of Bank Rs.1,66,00,000/- Rs.14,66,201/-
Guarantee (Rupees One Crore (Rupees Fourteen Lac
Sixty Six Lac) Sixty Six Thousand
Two Hundred & One)
Claim for Rs.14,93,633/- (Rupees Rs.49,911/- (Rupees
Compensation for Fourteen Lac Ninety Forty Nine Thousand
bank charges Three Thousand Six Nine Hundred &
Hundred & Thirty Eleven)
Three)
Balance payments Rs.2,83,077/- (Rupees Rs.5,40,666/- (Rupees
towards capital grant Two Lac Eighty Three Five Lac Forty
Thousand Seventy Thousand Six Hundred
Seven) & Sixty Six)
Future Interest
Cost of Arbitration Rs.4,50,000/- (Rupees
Four Lac Fifty
Thousand)
The stand of the appellant before the arbitrator
15. Before the arbitrator, the appellant refuted the said contentions in
statement of defence.
16. It contended that the accusations made by the respondent with
regard to failure to provide total land or for the land being full of
encroachment etc., are things which are inevitable in the case of huge
projects; and if the respondent would have implemented the said project
work under the said agreement with strong will and intention to serve the
society apart from only attaining monetary benefits, then the project would
have been a great success.
17. The appellant in the statement of defence filed before the Arbitrator
had even admitted that they were in breach of the agreement, as they could
not hand over the land within 30 days from the appointed date as
envisaged in the agreement. They had contended that since vast
Government land was vacant for a long period of time, it was encroached
upon and the same was known to the respondent during the two years'
period of the agreement. The appellant admitted that out of 36 acres of
identified land for landfill site, 30.39 acres were handed over to the
respondent and that it was sufficient to set up plant for landfill site.
18. The appellant also contended that the land for Transfer Station and
Workshop Facility was also under process of acquisition and the same
would have been required by the respondent only in the event when they
would have started door-to-door collection activity and, therefore, the
issues made under such a head were baseless.
19. The appellant also blamed the respondent for not commencing
boundary work and contended that boundary work could not be completed
due to inefficiency of the respondent in handling any practical situation
every time as and when required.
20. The appellant also contended that as regards the issue of village
road through the Project Site, a meeting with the Deputy Commissioner
was held, and it was decided that the road would be diverted outside the
Project Site. It contended that the decision on the part of the respondent to
terminate the agreement was one-sided and the respondent did not follow
the rules regarding the same and so the termination was not accepted by
the appellant.
21. The appellant also contended by filing a counter claim that for the
purpose of initiating the project, yet again, it has become necessary to
revise the DPR; as per the revised DPR, there was an inflation in the entire
project cost leading to huge losses to the appellant amounting to
Rs.5,83,24,100/- approximately; and the appellant was also entitled for
hire charges of vehicles which had not been returned by the respondent,
amounting to Rs.37,57,224/-. It therefore, made a counter claim of
Rs.4,54,81,324/- after adjusting the bank guarantee of Rs.1,66,00,000/-.
Award of the Arbitrator
22. After noting the contentions of the parties, the learned Arbitrator
referred to Article 3 and Article 6 of the Concession Agreement and stated
that these Articles indicate the important and crucial responsibilities of the
appellant which can be said to be the backbone of the entire project
involved. He then held that the appellant had three basic and fundamental
obligations to perform:-
(i) Handing over the entire land required for different purposes
for the said project within 30 days from the date of the said
Agreement;
(ii) Should hand over the vacant and peaceful physical
possession of the said required lands for the said project; and
(iii) Removal of all the encroachments over the land required for
the said Project.
23. The Arbitrator held that it was an admitted fact that the appellant
had failed to provide the required land to the respondent within the time
stipulated in the agreement and it had delivered only Ac. 30.39 instead of
Ac.36 and even the said land was having encumbrances.
24. He also held that so far as the site for four Transfer Stations is
concerned, the appellant had admitted that the acquisition of land for these
sites were under process and the said acquisition was not even finalised
and in such a situation, the appellant cannot hand over physical possession
of the said land for setting up the four Transfer Stations.
25. He therefore, concluded that the appellant committed breach of
Article 3.1, Article 6.1(a) and Article 6.1(b) of the Agreement.
26. He thereafter concluded that the respondent was willing to execute
his part of the contract but due to non-performance of the fundamental
obligations on the part of the appellant, it was simply impossible for the
respondent to proceed any further with the work.
27. The Arbitrator also held that the termination initiated by the
respondent was in accordance with the terms and conditions of the
agreement between the parties and such termination was valid.
28. He then discussed the claims made by the respondent. The
Arbitrator held that the respondent was entitled for compensation equal to
the money spent by him for construction/upgradation of the project facility
which was not paid by the appellant as per the project milestones
estimated by the TA Cum PMC (Transaction Advisor Cum Project
Management Consultant).
29. He, therefore, awarded Rs.1,16,57,989/- along with interest upon
the same @ 15% per annum to be calculated from 25.09.2014, i.e., the
date of termination of the agreement till the date of the Award.
30. The Arbitrator declined to award any amount to the respondent
towards loss or profit because he found the said claim to be uncertain and
hypothetical. He also awarded to the respondent the amount covered by
the bank guarantee amount of Rs.1,66,00,000/-, but without interest. He
rejected the claim made by the respondent for balance payment towards
capital grants of Rs.2,83,077/-. The Arbitrator then awarded a cost of
Rs.4,50,000/- to the respondent but without any interest.
31. In para 59 of the Award, the Arbitrator rejected the separate claim
raised by the respondent regarding pendente lite and future interest on the
ground that interest upon awarded amount was already decided and that
the said issue did not require separate adjudication.
32. The counter claim made by the appellant towards increase in
project cost was rejected.
33. He also rejected the claim of the appellant for hire charges of
vehicles, which were not returned by the respondent but he granted cost of
the vehicle of Rs.20,25,000/- with interest @ 15% per annum upon it to be
calculated from the date of termination of the Agreement till the date of
the Award.
The Section 33 application filed by the respondent after passing of
award
34. After the award was pronounced by the Arbitrator, an application
under Section 33 of the Arbitration and Conciliation Act, 1996 was filed
by the respondent/Claimant contending that the Arbitrator has to pass an
additional award with regard to future interest on the already awarded
amount in exercise of power conferred under Section 33(4) of the Act.
35. It contended that in the award passed by the Arbitral Tribunal on
08.11.2017, issue regarding No.(v) for future and pendente lite interest
was not adjudicated and was omitted from consideration. It contended that
as per the award, the appellant had been directed to pay the awarded
amount within two months from the date of award, but the award does not
speak of the consequences if the appellant fails to comply with the
directions contained in the Award dt. 08.11.2017. It was further contended
that in the event of non-compliance of the directions of the Arbitral
Tribunal, the appellant should be held responsible for payment of interest
as per Section 31(7)(b) of the Act of 1996.
36. The appellant opposed the said application filed by the
respondent/Claimant contending that once the Award is declared after a
full-fledged hearing, there is no scope for passing additional award, since
the Arbitral Tribunal had not omitted to entertain the claim of the
respondent; and if the respondent was aggrieved in any manner, it should
challenge the award under Section 34 of the Act. It was also contended
that the appellant was not liable to pay any interest towards future interest.
37. The Arbitrator then passed an additional award on 27.01.2018
holding that under Section 33(4) of the Act, there is a power given to the
Arbitral Tribunal to pass an additional arbitral award; and the condition
precedent for passing such award was that when the claim was made in the
Statement of Claim during the arbitral proceeding but the Arbitral
Tribunal had omitted to pass an award in that regard.
38. The Arbitrator then observed that the consequences of non-payment
of the awarded amount by the appellant to the respondent after the
completion of two months' period from the date of award has not been
stated and appears to have been left out.
39. He, therefore, directed the appellant to pay the awarded amount as
stated in the Arbitral Award on 08.11.2017 within two months from the
date of the additional arbitral award, failing which the appellant would be
liable to pay interest @15% p.a. till the payment is made or the same is
realized in accordance with law.
The Judgment of the Commercial Court
40. Challenging both the original award dt. 08.11.2017 and the
additional award dt. 27.01.2018, the appellant filed an application under
Section 34 of the Arbitration and Conciliation Act, 1996 before the
District Judge-1-cum-Commercial Court, East Singhbhum at Jamshedpur.
It was number as Revocation (Arbitration) Case No.10 of 2019.
41. By judgment dt. 24.01.2020, the said application filed by the
appellant was dismissed by the Commercial Court.
42. The Commercial Court noted the contentions of the parties and the
findings of the Arbitrator and also the scope of Section 34 of the
Arbitration and Conciliation Act, 1996.
43. It held that the appellant failed to bring the case within the ambit of
34 of the Act and that only a bald statement has been made that the arbitral
award is against the public policy of India but no effort was made to show
as to how the award was against the public policy of India.
44. The Commercial Court also held that there is no allegation made by
the appellant that the award was induced by fraud and corruption; that the
arbitral award as well as the additional arbitral award was not in any way
contrary to substantial provisions of law or the provisions of Act.
45. It observed that in the entire pleadings, there was not a single
pleading alleging therein that the arbitral award is patently illegal or
prejudicial to the rights of the parties.
46. It held that the arbitral award and the additional arbitral award were
both reasoned orders and there was no need to interfere with the said
awards.
47. It also held that there was no cogent reason or material available on
record to set aside the original or the additional arbitral award; that there
was no error apparent on the face of the record and it also cannot be said
that the Arbitrator had not followed the statutory legal position. The
Commercial Court further held that there is no material available to prove
that the Arbitrator had mis-conducted himself or the proceedings or the
award had been improperly procured or is otherwise invalid.
Argument on behalf of the appellant
48. Challenging the said decision of the Commercial Court, the instant
appeal has been preferred by the appellant under Section 13(1A) of the
Commercial Courts Act, 2015.
49. Counsel for the appellant contended that the Arbitrator did not
consider the documents submitted by the appellant in the course of
proceedings in the right perspective; that the Commercial Court failed to
appreciate that the arbitral award and the additional award were contrary
to the facts of the agreement; that the judgment of the Commercial Court
is erroneous; Commercial Court failed to appreciate that a fraudulent act
was made by the respondent after raising false planning for termination of
the agreement; the Arbitrator and the Presiding Officer failed to consider
that 30.36 acres of land was handed over for the purpose of the project in
place of 36 acres and it was sufficient for the purpose; they failed to
consider that the appellant had requested several times by way of letters to
the respondent to continue the work but the respondent was never ready;
that the intention of the respondent from the beginning was to grab money
only; that they both acted in a one-sided manner in favour of the
respondent; and the respondent had not acted fairly as it did not wait for
amicable settlement.
Argument on behalf of the respondent
50. The counsel for the respondent refuted the said contentions and
supported the award as well as additional award of the Arbitrator and also
the judgment of the Commercial Court.
Findings of this Court
51. We shall first consider the plea of the appellant that the Arbitrator
had not waited for amicable settlement of dispute as per the provision of
the agreement before proceeding with the arbitration and pronouncing the
award.
52. Admittedly, the Arbitrator had been appointed by this Court in an
application under Section 11(5) and (6) of the Arbitration and Conciliation
Act, 1996 through an order dt. 07.04.2016 in Arbitration Application
No.21 of 2014.
53. The contention now raised by the appellant should have been raised
in the said Arbitration Application No.21 of 2014 when it was pending
before this Court. Without raising it at that time and having allowed the
appointment of Arbitrator to happen, it is not open to the appellant to raise
the said plea at this stage.
54. We have already noticed Article 3.1 of the Concession Agreement
which mandated the appellant to deliver the respondent within 30 days
from the appointed date fully vacant and peaceful physical possession of
the identified project site for implementation of the project and this was
also reiterated in Article 6.1.
55. As noted by the Arbitrator, though the appellant in Article 3 had
promised to handover land of about 36 acres to the respondent, it had
delivered only 30.39 acres of land; and even in that area, there were
encroachments to the extent of 5 acres and there was also a village road
passing through the project site.
56. In addition, there were protests, agitations and obstructions from the
local villagers.
57. The defence of the appellant was that such things are inevitable in
the case of huge projects and where there is vast government land vacant
for a long period of time, it could be encroached upon and this was known
to the respondent during the two years' period of the agreement. It was
also admitted that land for Transfer Station and Workshop Facility was not
even acquired.
58. Thus, it is clearly admitted by the appellant that it could not
handover the entire 36 acres of land within the 30 days' period from the
appointed date and even the land handed over by it was not fully vacant
nor was peaceful physical possession given as mandated in Article 3.1.
Therefore, the learned Arbitrator did not commit any error in giving a
finding that the appellant committed clear breach of Article 3.1, Article
6.1(a) and Article 6.1(b) of the Concession Agreement and this was rightly
upheld by the Commercial Court.
59. The appellant is not correct in contending that the Arbitrator or the
Commercial Court had acted contrary to the Concession agreement, that
there was a fraudulent act on the part of the respondent or that the
respondent was intent to only in making money and they had acted in a
one-sided manner.
60. The awards of the Arbitrator of the claims in the Award dt.
08.11.2017 are based on a proper appreciation of the materials on the
record and do not suffer from infirmity warranting interference by this
Court in exercise of its appellate jurisdiction.
61. But we may point out that in paragraph 59 of the arbitral award
passed on 08.11.2017, the Arbitrator had considered the claim regarding
pendente lite and future interest and specifically rejected the same on the
ground that the interest to be paid on the awarded amount had already
been decided in the earlier paragraphs and therefore did not require afresh
adjudication.
62. Having specifically rejected the same in the original award passed
by him on 08.11.2017, it was therefore not open to the Arbitrator to
entertain the application under Section 33 of the Act for the same relief on
the pretext that he had omitted to deal with this aspect in the original
award. To this extent, the additional arbitral award passed by the
Arbitrator on 27.01.2018 cannot be sustained.
63. For the aforesaid reasons, the appeal is allowed in part to the extent
of setting aside the additional arbitral award dt. 27.01.2018 passed by the
learned Arbitrator only, and the appeal is dismissed as regards challenge
to the final award dt. 08.11.2017 of the Arbitrator as confirmed by the
Commercial Court is concerned. No costs.
64. Pending Interlocutory Applications, if any, stand disposed of.
(M.S. Ramachandra Rao, C.J.)
(Deepak Roshan, J.)
N.F.R.
Manoj/-
