Punjab-Haryana High Court

Talwandi Sabo Power Limited vs Punjab State Power Corporation Limited on 29 April, 2024

Author: Suvir Sehgal

Bench: Suvir Sehgal

                                Neutral Citation No:=2024:PHHC:057870
                                 2024:PHHC:057870


CWP-7950 of 2024                        -1-



      IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                     CHANDIGARH


131                              CWP-7950 of 2024
                                 Reserved on:08.04.2024
                                 Pronounced on:29.04.2024


Talwandi Sabo Power Limited                           ...Petitioner

                          Versus

Punjab State Power Corporation Limited                ...Respondent



CORAM: HON'BLE MR. JUSTICE SUVIR SEHGAL



Present:    Mr.Chetan Mittal, Senior Advocate with
            Mr. Kunal Mulwani, Advocate,
            Mr. Nitin Kaushal, Advocate and
            Mr. Ritvik Garg, Advocate for the petitioner.

            Mr. Gurminder Singh, Senior Advocate with
            Mr. Jatinder Singh Gill, Advocate for the caveator-respondent.

                   ****


SUVIR SEHGAL, J.

1. By way of present writ petition filed under Article 226/227 of

the Constitution of India, petitioner has approached this Court inter alia for

issuance of a writ in the nature of certiorari for quashing orders dated

11.02.2024, 29.02.2024 and 02.04.2024, Annexures P-1, P-2 and P-2/A,

respectively, passed by the learned Arbitral Tribunal, whereby amendment,

rectification as well as clarificatory/modification applications, Annexures P-

19, P-22 and P-26, respectively, have been disposed of.

2. Facts, leading to the filing of the petition, are that a Power

Purchase Agreement (PPA) dated 01.09.2008, Annexure P-3, was executed

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between the petitioner and the respondent for supply of 100% power from

petitioner's thermal power plant at District Mansa. A petition under Section

86 (1) (f) of the Electricity Act, 2003, was filed by the petitioner before the

Punjab State Electricity Regulatory Commission (for short "PSERC"),

Annexure P-5, raising some claims, which was contested by the respondent

by filing a reply. By reference order dated 06.11.2015, Annexure P-8,

PSERC referred the matter for arbitration and by order dated 17.12.2015,

Annexure P-9, it constituted an Arbitral Tribunal comprising of three

members. Petitioner appeared before the Tribunal and submitted its

statement of claim dated 19.02.2016, Annexure P-10, and the respondent

submitted its statement of defence and counter-claim, Annexure P-12.

Pleadings were completed before the Tribunal and by order dated

30.11.2016, Annexure P-15, the Tribunal framed issues for adjudication.

Since, the period for conclusion of the arbitration proceedings expired,

petitioner filed an application under Section 29-A (5) of the Arbitration and

Conciliation Act, 1996 (for short "the Act of 1996"), for extension of time,

which was rejected by the District Court. Petitioner approached this Court

by way of a revision petition and this Court by order dated 05.10.2023

remanded the matter to the District Court for fresh decision. A fresh order

dated 10.11.2023 was passed by the District Court allowing the application

and extending the time for conclusion of arbitration proceedings by six

months. Revision petition filed by respondent was dismissed by this Court

by order dated 14.12.2023, Annexure P-16. In SLP filed by the respondent,

Supreme Court by order dated 05.01.2024, Annexure P-17, re-constituted

the Arbitral Tribunal and extended the time schedule for conclusion of the

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arbitration proceedings till 31.07.2024. Petitioner filed an application dated

20.01.2024, Annexure P-19, for amendment of the statement of the claim,

which was contested by the respondent by filing a reply. Written

submissions were submitted by the parties and by impugned order dated

11.02.2024, Annexure P-1, application was disposed of. Another application

dated 21.02.2024, Annexure P-22, was filed by the petitioner for

rectification of the order before the Tribunal, which after contest by the

respondent, was disposed of by the Tribunal by impugned order dated

29.02.2024, Annexure P-2. Assailing both the orders, petitioner approached

this Court and by order dated 20.03.2024, Annexure P-25, writ petition was

permitted to be withdrawn with liberty to move an application before the

Tribunal seeking clarification. An application dated 24.03.2024, Annexure

P-26, was moved by the petitioner to which the respondent submitted reply

dated 30.03.2024, Annexure P-27, and by impugned order dated 02.04.2024,

Annexure P-2/A, Tribunal disposed of the applications by modifying its

order dated 29.02.2024, Annexure P-2. Petitioner is before this Court in the

above background.

3. While making a reference to the orders, Annexures P-11 and

P-18, passed by the Appellate Tribunal under the Electricity Act, 2003, (for

short "the Appellate Tribunal"), learned senior counsel representing the

petitioner has urged that these orders, which have been passed during the

pendency of arbitration proceedings, have brought about a material change

in the circumstances. He contends that this has necessitated the amendment

of the claim statement, which being formal, should have been permitted by

the Arbitral Tribunal. Relying on Pankaja and another Versus Yellappa

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(Dead) By LRs and others (2004) 6 SCC 415, he submits that granting

amendment will subserve the ultimate cause of justice and avoid further

litigation.

4. Opposing the petition, learned senior counsel for the

respondent, who is on caveat, has asserted that as the matter was referred to

arbitration under Section 86 (1) (f) of the Electricity Act, 2003, by the

PSERC, the Arbitral Tribunal cannot go beyond the reference order. It is his

argument that allowing the amendment would enlarge the scope of

reference, which is impermissible. He has relied upon Gujarat Urja Vikas

Nigam Ltd. Versus Essar Power Ltd. (2008) 4 SCC 755 and MSK Projects

India (JV) Limited Versus State of Rajasthan and another (2011) 10 SCC

573.

5. I have heard counsel for the parties at length and considered

their respective submissions.

6. In order to appreciate the contentions of the parties, it is

necessary to examine the relief sought by the petitioner in its petition,

Annexure P-5, filed before the PSERC. The prayer made by the petitioner is

reproduced hereunder:-

"44. In the light of the aforesaid facts and circumstances, the Petitioner therefore most humbly and respectfully prays that this Hon'ble Commission be pleased to:-

(a) Declare that the floods at the plant site, non-

availability of domestic MCL linkage coal and continuing insufficiency of domestic MCL linkage coal are Force Majeure events in terms of the PPA;

(b) Direct the Respondent to release short payments of INR 179,26,10,153 (Rupees One seventy 4 of 9

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nine crores twenty six lacs ten thousand and one hundred fifty three only) for the period from 5 July 2014 to 31 October 2014 being withheld by the Respondent arbitrarily and without any legal and contractual basis along with applicable surcharge as per PPA terms and to which the Petitioner is entitled on account of Force Majeure events;

(c) Approve the claim of the Petitioner for Deemed capacity of 109.66 Million units and direct the Respondent to pay Capacity charges(approximately Rs.3,20,00,000/-) for the period from 3 December 2014 to 25 December 2014 for the said deemed capacity, and

(d) Allow the Petitioner to claim further Capacity charges (based on normative availability) for period after December 2014 on account of increased cumulative availability, subject to approval of above claims/prayers.

(e) Permanently restrain the Respondent from penalizing the Petitioner on account of availability of the Power Plant below 75% for reasons of Force Majeure events;

(f) Stay the imposition/levy of any penalty by Respondent on account of availability of the Petitioner being less than 75% during the FY 2014-15.

(g) Pass any such other and further reliefs as this Hon'ble Commission deems just and proper in the nature and circumstances of the present case."

7. By its order dated 06.11.2015, Annexure P-8, PSERC, found

that the decision can only be taken after considering the oral and

documentary evidence, which can be better carried out through the medium

of arbitration. It was, therefore, decided to refer the matter to arbitration and

by a subsequent order, Annexure P-9, it constituted an Arbitral Tribunal

comprising of three members. During the pendency of the arbitral

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proceedings, some appeals filed by petitioner came to be decided by the

Appellate Tribunal. By its judgment dated 07.04.2016, Annexure P-11, the

Appellate Tribunal held that respondent is under obligation to sign the Fuel

Supply Agreement with the supplier, namely, Mahanadi Coalfields Limited

and it cannot be absolved of its obligation to supply fuel to the petitioner for

its power generation agreement. By a subsequent decision dated 19.07.2021,

Annexure P-18, in a different set of appeals, Appellate Tribunal directed

respondent to make payment of differential amount as sought in Appeal

No.220 of 2019 alongwith late payment of surcharge from the date of billing

for the period from June, 2017 to September, 2017, and also directed it to

pay cost of alternate/imported coal incurred by the petitioner alongwith late

payment surcharge and deemed capacity charges from October, 2017

onwards. Petitioner moved an application, Annexure P-19, for amendment

of the statement of claim and sought additions in the statement of claim

pursuant to above judgments, as also to add additional paragraphs in the

prayer clause. The additional prayers sought to be included by the petitioner

are reproduced hereunder:-

"B. After prayer (c) in the SoC, the following prayers to be added:-

"(d) Direct the Respondent to pay Deemed Capacity Charges to the Claimant amounting to Rs.184.30 Crores for the period 06.07.2014 to 04.10.2014 and 03.12.2014 to 25.12.2014 as compensation/damages as claimed under paragraph 56A to 56N above;

(e) Award to the Claimant pre-suit interest at the rate of 18% per annum on the aforesaid amounts or at the rate of Late Payment Surcharge prescribed under the

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PPA, from the date on which the respective causes of action arose;

(f) Award to the Claimant pendente lite and future interest @ 18% per annum or at the rate of Late Payment Surcharge prescribed under the PPA, from the date of filing of the Statement of Claim until the passing if the award;

(g) Direct the Respondent to pay the costs of the present arbitration;

(h) Direct the Respondent to refund the amount of rebate illegally availed while making part payment of the Invoices for the since July 2014 and/or"

8. The application was disposed of by the Arbitral Tribunal vide

order, Annexure P-1, by permitting the petitioner to introduce additional

grounds, however, the additional reliefs sought to be introduced were

declined holding that they were already covered in the reliefs prayed.

Tribunal was of the view that it was not necessary for the petitioner to seek

introduction of any new relief and it did not have the jurisdiction to

alter/amend the reference made by the PSERC.

9. As noticed above, the dispute was referred to the Arbitral

Tribunal by the PSERC under Section 86 (1)(f) of the Electricity Act, 2003,

which came up for interpretation before the Supreme Court in Gujarat Urja

Vikas Nigam's Case Limited (supra). On a harmonious construction of the

provisions of the Electricity Act and the Act of 1996, Supreme Court held

that whenever there is a dispute between a licensee and a generating

company, only the Electricity Regulatory Commission or Arbitrator(s)

nominated by it can resolve such a dispute, whereas all other disputes would

be decided in accordance with Section 11 of the Act of 1996. It was clarified

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by the Supreme Court that all disputes, not merely those pertaining to the

matters referred to in Section 86 (1) between the licensee and generating

company, can be resolved by the Commission or an Arbitrator appointed by

it as there is no restriction in this Section regarding the nature of the

disputes. Supreme Court has held that the word "and" in Section 86 (1) (f)

has to be read as "or" since the Electricity Commission cannot resolve the

dispute itself as also refer it to Arbitration.

10. An examination of the reliefs sought by the petitioner in its

petition, Annexure P-5, before the PSERC, reproduced above, shows that

there was a dispute between the parties and the petitioner had demanded

payments withheld by the respondent alongwith applicable surcharge as per

the PPA and also claimed Deemed Capacity Charges. This dispute was

referred by the PSERC to the Arbitrator vide order, Annexure P-8. Now by

moving an application for amendment, Annexure P-19, the petitioner is

seeking to broaden the scope of the relief sought by it. An Arbitral Tribunal

is bound to act and decide the dispute within the terms of the reference made

to it. It can neither add nor incorporate a new prayer in the claim, without

reference by the PSERC.

11. An Arbitral Tribunal cannot go outside the reference order and

cannot widen its jurisdiction by dealing with disputes not referred to it. It has

been held by the Supreme Court in MSK Project's case (supra) that Arbitral

Tribunal being a special Tribunal, gets its jurisdiction to proceed with the

case only from the reference made to it and it is impermissible for it to

surpass the terms of the reference. Supreme Court observed that if the

dispute is not within the scope of the arbitration clause, it is not within in the

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jurisdiction of the Tribunal to entertain it. By the addition of the new

prayers, petitioner is seeking to enlarge and change the reference made to the

Arbitral Tribunal, which is not permissible. This Court is, therefore, of the

view that the orders, Annexures P-1, P-2 and P-2/A, passed by the learned

Arbitral Tribunal do not call for any interference.

12. Finding no merit in the writ petition, it is hereby dismissed.




29.04.2024                                       (SUVIR SEHGAL)
sheetal                                               JUDGE

          Whether Speaking/reasoned        Yes/No
          Whether Reportable               Yes/No




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