Transmission Corporation of A.P. Ltd. Vs. M/S Lanco Kondapalli Power Pvt. Ltd
 INSC 694 (15 December 2005)
Sinha & P.P. Naolekar
out of S.L.P. (Civil) No.24857 of 2004] S.B. SINHA, J :
facts The parties herein entered into a Power Purchase Agreement on 31.03.1997
for short gestation liquid fuel based power project of 355 MW.
agreement contained an arbitration clause in Article 14 thereof.
The Plant was commissioned. In terms of the said agreement, the power generated
in the Plant constructed by the Respondent herein was to be supplied to the
Appellant Corporation. The price to be paid therefor by the Appellant included
'capacity charges' and 'variable charges'. Upon commission of the Plant,
various tests as regard capacity of the plant to generate electricity were
carried out. The Appellant herein had been paying capacity charges on the
output of the Plant which was fixed at 368.144 MW from 08.11.2001. A notice,
however, was issued by the Appellant alleging that the capacity charges payable
by it with reference to the installed capacity should have been fixed at 334.75
MW x Rh (relative humidity) factor with tolerance limit of + or 5% as per the
agreement which works out at 351.49 MW and on that premise as to why future
payments should not be made accordingly and why the previous bills should not
be revised with reference thereto. The Respondent by a letter dated 17.12.2003
demanded withdrawal of the said notice from the Appellant.
In view of the threatened action on the part of the Appellant herein, an
application purported to be under Section 9 of the Arbitration and Conciliation
Act, 1996 (for short, 'the 1996 Act') was filed before the City Civil Court
praying for a permanent injunction restraining the Appellant herein from taking
any unilateral decision pursuant to the said show cause notice. Evidently, the
said application was filed relying on or on the basis of the arbitration clause
contained in the said Power Purchase Agreement.
Appellant, however, filed an application before the Andhra Pradesh Electricity
Regulatory Commission (for short, 'the Commission') originally constituted
under the Andhra Pradesh Electricity Reform Act, 1998 (for short, '1998 Act'),
praying, inter alia, for fixing the installed capacity of the Plant and for
application before the Commission was filed by the Appellant herein on the
premise that the Commission alone has the jurisdiction to arbitrate in respect
of disputes and differences arising between the parties or to nominate an
arbitrator there for in terms of Section 37(1) of the 1998 Act corresponding to
Section 86(1)(f) read with Section 174 of the Electricity Act, 2003 (for short,
'2003 Act'). However, in the meantime, as no arbitrator was appointed by the
Appellant in terms of the arbitration agreement contained in Article 14 of the
Power Purchase Agreement, an application purported to be under sub-sections (3)
and (4) of Section 11 of the 1996 Act was filed before the Chief Justice of the
Andhra Pradesh for appointment of an arbitrator. The said application is still
petition marked as Writ Petition No.7838 of 2004 was also filed by the
Respondent before the Andhra Pradesh High Court on or about 22.04.2004 praying
for issuance of a writ of prohibition against the Commission restraining it
from proceeding to adjudicate the dispute between the parties on the premise
that the constitution of the Commission was incomplete. In the said writ
petition, an interim order was passed by the High Court directing "interim
stay of the impugned proceedings purported to be taken by Respondent No.1
(Appellant herein) in terms of the impugned notice".
Respondent's application for grant of injunction in the proceedings initiated
before the City Civil Court in the meanwhile was taken up for hearing and by an
order dated 11.08.2004, the said Interlocutory Application was dismissed,
holding that having regard to the provisions of the 1998 Act and the 2003 Act,
the Commission alone had the jurisdiction to decide the dispute and not the
City Civil Court.
of the Appellant An appeal thereagainst was preferred by the Respondent before
the High Court which was marked as Appeal No.3269 of 2004, wherein by reason of
the impugned judgment and order dated 05.10.2004, the High Court while setting
aside the said order of the City Civil Court granted an injunction restraining
the Appellant herein from refixing the capacity of the Plant at 334.75 MW x Rh
Factor at the site till disposal of the OP by the City Civil Court.
Rao, the learned Senior Counsel appearing on behalf of the Appellant, would
submit that the Respondent herein, although not being a licensee within the
meaning of the 2003 Act, was required to have a licence as it supplied
electrical energy to the Appellant herein.
urged that in view of the provisions contained in the 1998 Act and the 2003
Act, not only the jurisdiction of the Civil Court is barred, any dispute and
difference between the two licensees and/or two generating companies can be
referred to an arbitration of the Commission only, as envisaged under Section
86(1)(f) of the 2003 Act and in that view of the matter, the High Court
committed a serious error in passing an order of injunction.
submitted that both under the 1998 Act as also under the 2003 Act, the
Commission had the requisite jurisdiction to pass an interim order also and,
thus, the said Acts are self-contained Codes.
contended that the High Court despite findings of the City Civil Court to the
effect that it had no jurisdiction to pass an interim order in terms of Section
9 of the 1996 Act, did not address itself to the said question, could not have
proceeded to allow the appeal preferred by the Respondent herein and granted ad
interim order of injunction only on the premise that the jurisdiction of the
Commission to proceed with the arbitration in terms of the reference made by
the Appellant herein is subjudice.
of the Respondent Mr. C.A. Sundaram, the learned Senior Counsel appearing on
behalf of the Respondent, on the other hand, submitted that Sections 37 and 50
of the 1998 Act have no application to the facts of the present case as it is
not a case where a dispute between the two licensees is involved. The dispute
between the parties being confined to the interpretation of the expression
'installed capacity' within the meaning of the provisions of the agreement, the
Commission which is primarily concerned with framing of tariffs and
adjudication of disputes between licensees and others as envisaged, inter alia,
under Section 9, 29 and 33 of the Act can be said to have no jurisdiction to
decide disputes and differences between the parties arising under an agreement.
In view of the fact that the parties were ad idem as regard construction of the
said agreement as payments of the bills had been made on the basis of the
installed capacity 368.144 MW from 08.11.2001 to 10.12.2003, and having regard
to the arbitration agreement contained in the contract; without resolution of
the dispute in terms thereof, the Appellant could not have taken an unilateral
action in changing the terms and conditions thereof for the purpose of the
payments of bills.
view of the matter, the Appellant itself having made the following prayers
before the Commission :
the aforesaid facts and circumstances, the Applicant prays that Hon'ble
Commission may pass appropriate orders in respect of the following:
a) To fix
the Installed Capacity of the plant, M/s Lanco Kondapalli Power Limited, as
334.75 MW x RH factor at the site Reference Conditions (as per PPA) with
tolerance limit of + 5%.
allow AP TRANSCO to pay all future power purchase bills (fixed charges,
variable charges, Incentive etc.) based on the capacity on 334.75 MW x RH
factor and as per all other provisions of PPA including tolerance limit.
allow APTRANSCO to revise all previous power purchase bills (fixed charges,
variable charges incentive etc.) from inception based on the capacity of 334.75
MW x RH factor and as per all other provisions of PPA including tolerance
cannot now turn round and contend that it would do so unilaterally without any
award made in that behalf. The Respondent, thus, not only has a prima facie
case keeping in view that that a sum of Rs.132 crores is due to the Respondent,
the balance of convenience also lies in its favour.
Clause 35 of Article 1 of the said agreement defines 'Installed Capacity' to
maximum electrical generating capacity of the Project or a Generating Unit, as
the case may be, in megawatts ("MW") as measured at the generator
terminals, determined from time to time pursuant to the tests given in Schedule
F, subject to adjustments for the Ambient Reference Conditions.
1 : Where the output of one or more Generating Units of the Project or of the
Project as a whole, in final tests to be specified by the Board is higher than
the output initially guaranteed by the manufacturer /supplier thereof, the
output initially guaranteed by the manufacturer/supplier will be the installed
capacity thereof, as from the date of such final tests. However, where the
output of one or more Generating Units of the Project or of the Project as a
whole, in final tests to be specified by the Board is lower than the output
initially guaranteed by the manufacturer/supplier thereof, that lower output
alone will be the installed capacity thereof.
2 : The installed Capacity furnished in the Bid is taken as the nominal
capacity and for installed Capacity as determined as per Explanation 1 above, a
tolerance limit of plus or minus 5% is permitted." The expression
'Project' has been defined in sub-clause 47 of the said agreement to mean :
combined cycle power station proposed to be established at Kondapally, Krishna
Dist., in Andhra Pradesh, India, consisting of 2 (two) Generating Units, which
are designed for poly-fuel-firing and 1 (one) steam Generating Unit, having a
nominal installed capacity of 355 Mega Watts (ISO) adjusted to Ambient Reference
Conditions." Schedule A appended to the said agreement provides for the
technical limits, clause 3 whereof defines 'Dynamic Parameters' to mean :
Dynamic Parameters The Dynamic Parameters are the essential operating
characteristics which will define the limits within which a Unit or the Project
is required to operate during normal operation.
Dynamic Parameters of each Unit and the Project will initially be those
projected in the EPC Contract. During testing under the EPC Contract, the Company
will establish Dynamic Parameters and it will supply details of these to the
Board. Subject to the Dynamic Parameters being adjusted and verified prior to
the COD of each Unit and the Project COD, the Dynamic Parameters established by
the Company shall replace those projected in the EPC Contract and shall be
deemed incorporated into this Schedule." Relevant parts of Article 14
containing the arbitration agreement between the parties read as under:
Information Dispute Resolution (a) Each party shall designate in writing to the
other party is a representative who shall be authorized to resolve any dispute
arising under this Agreement in an equitable manner.
the designated representatives are unable to resolve a dispute under this
Agreement within fifteen (15) days, such dispute shall be referred by such
representatives to a senior officer designated by the Company and a senior
officer designated by the Board, respectively, who shall attempt to resolve the
dispute within a further period of fifteen (15) days.
parties hereto agree to use their best efforts to attempt to resolve all
disputes arising hereunder promptly, equitably and in good faith, and further
agree to provide each other within reasonable access during normal business
hours to any and all non-privileged records, information and data pertaining to
any such dispute.
Arbitration (a) In the event that any dispute is not resolved between the
Parties pursuant to Article 14.1, then such dispute shall be settled
exclusively and finally by arbitration. It is specifically understood and
agreed that any dispute that cannot be resolved between the parties, including
any matter relating to the interpretation of this Agreement, shall be submitted
to arbitration irrespective of the magnitude thereof, and the amount in dispute
or whether such dispute would otherwise be considered justiciable or ripe for
resolution by any court or arbitral tribunal. This Agreement and the rights and
obligations of the Parties hereunder shall remain in full force and effect
pending the award in such arbitration proceedings, which award shall determine
whether and when termination of this Agreement if relevant shall become
xxx (f) Any decision or award of an arbitral tribunal appointed pursuant to
this Article 14.2 shall be final and binding upon the Parties and shall be the
sole and exclusive remedy between the Parties regarding any claims,
counterclaims, issues or accountings presented or pled to the arbitrators.
waive any rights to appeal or any review of such award by any court or tribunal
of the competent jurisdiction. The Parties agree that any arbitration made may
be enforced by the Parties against assets of the relevant Party wherever those
assets are located or may be found, and judgment upon any arbitration award may
be entered by any court of competent jurisdiction thereof. The Parties
expressly submit to the jurisdiction of any such court.
arbitration awards shall be denominated in Indian Rupees. If the arbitration
award (or part thereof) consists of any currency other than Indian Rupees, then
award (or part thereof) shall be converted to Indian Rupees based on the
applicable market rate(s) of foreign exchange, not exceeding such TT selling rate(s)
as published by the State Bank of India on the date of such payment. Interest
at a rate equal to the Working Capital Rate plus two percent (2%) shall be due
and payable to the Party on receipt of an arbitration award from the date
thirty (30) days after the date such award is made pursuant to this Article
14.2 through the date of payment.
arbitration proceedings or award rendered hereunder and the validity, effect
and interpretation of this Article 14 shall be governed by the laws of India and
(to the extent applicable) the New York Convention on the Recognition and
Enforcement of Arbitral Awards, June, 10, 1958, to which England and India are
Parties agree that any amount due under this Article 14.2 shall be due as a
separate debt and shall not be affected by or merged into any judgment being
obtained for any other sum due under or in respect of this Agreement."
Statutory provisions :
of Andhra Pradesh enacted the Andhra Pradesh. Electricity Reforms Act, 1998,
for providing the constitution of an Electricity Regulatory Commission,
restructuring of the electricity industry, rationalization of the generation,
transmission, distribution and supply of electricity avenues for participation
of private sector in the electricity industry and generally for taking measures
conducive to the development and management of the electricity industry in an
efficient, economic and competitive manner and for matters connected therewith
or incidental thereto.
has been defined in Section 2(e) of the 1998 Act as under :
or "licence holder" means a person licensed under section 14 of the
Act to transmit or supply energy including APTRANSCO;" It is not in
dispute that the Commission was constituted in terms of the Act. Section 37 of
the said Act contains a non-obstante clause stating that notwithstanding
anything contained in the 1996 Act, any dispute arising between the licensees
shall be referred to the Commission. The Commission may proceed to act as
arbitrator or nominate arbitrator or arbitrators to adjudicate and settle such
disputes. Section 28 of the 1998 Act empowers the Commission to issue an
interim order as it deems proper for securing compliance if it is satisfied
that a licensee is contravening or is likely to contravene any relevant
condition or requirement of the licence.
Act came into force with effect from 26.05.2003. Sub- section (64) of Section 2
of the said Act defines the State Commission to mean, inter alia, the State
Electricity Regulatory Commission constituted under sub-section (1) of Section
82 thereof. In terms of Section 82, a State Government is enjoined with a duty
to constitute a commission within six months from the appointed day. The
proviso appended to sub-section (1) of Section 82, however, postulates that the
commission earlier constituted shall continue and its Chairperson, Members,
Secretary and officers and other employees shall continue to function for the
purpose of the said Act.
86 provides for functions of the State Commission. Clause (f) of sub-section
(1) thereof empowers the State Commission to adjudicate upon the disputes
between the licensees and generating companies and to refer any dispute for
arbitration. Section 158 of the said Act occurring in Part XVI deals with
dispute resolution, which reads as under :
Arbitration.-Where any matter is, by or under this Act, directed to be
determined by arbitration, the matter shall, unless it is otherwise expressly
provided in the licence of a licensee, be determined by such person or persons
as the Appropriate Commission may nominate in that behalf on the application of
either party; but in all other respects the arbitration shall be subject to the
provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996)"
Sub-section (2) of Section 94 of the Act empowers the State Commission to pass
an interim order in any proceeding before it. The Civil Court's jurisdiction is
barred under Section 145 of the said Act which reads as under :
Civil court not to have jurisdiction.-No civil court shall have jurisdiction to
entertain any suit or proceeding in respect of any matter which an assessing
officer referred to in section 126 or on appellate authority referred to in
section 127 or the adjudicating officer appointed under this Act is empowered
by or under this Act to determine and no injunction shall be granted by any
court or other authority in respect of any action taken or to be taken in
pursuance of any power conferred by or under this Act." In terms of the
Section 185, the Electricity Regulatory Commissions Act, 1998 was repealed but in terms of
sub-section (3) thereof the provisions of the enactments specified in the
Schedule, not inconsistent therewith shall apply to the States in which such
enactments are applicable.
of the Schedule refers to the Andhra Pradesh Electricity Reform Act, 1998.
of the agreement and the statutory provisions The Appellant is a licensee within
the meaning of both the 1998 Act and the 2003 Act.
question as to whether the Respondent should have taken a licence or permit
under the 2003 Act or not is not a matter which requires our immediate
attention. The Appellant is a licensee and the Respondent is a generating
company in terms of the provisions of the 2003 Act. Section 37 of the 1998 Act
deals with disputes between the licensees.
facie Section 50 of the 1998 Act, which bars the jurisdiction of the Civil
Court keeping in view the language employed therein, is required to be read
with Section 37 thereof. The resolution of the disputes between the parties
rests upon the proper interpretation of the said Power Purchase Agreement and
in particular the definition of 'installed capacity'. Who would arbitrate in
respect of the said dispute is the principal question. It is no doubt true that
in the event if it ultimately be held that the arbitration clause contained in
the contract between the parties dated 31.03.1997 stood superseded in view of
the provisions of the 1998 Act and the 2003 Act, arguably, the question of
Civil Court's granting of an order of injunction in terms of Section 9 or the
High Court to determine the question as to who should be appointed as an
arbitrator, may not arise. As to whether Section 86(1)(f) of the 2003 Act
confers an exclusive jurisdiction to decide all disputes and differences
between a licensee and a generating company is open to question. It may or may
not be that the said provision may have to be read with other provisions
contained in the power of the Commission to resolve disputes between various
parties as for example Sections 9, 20 or 29 thereof. But it would be matter of
construction of the relevant provisions as to whether by reason of Section 86(1)(f)
of the 2003 Act, the Commission derives a power so as to enable it to arbitrate
also in relation to a dispute arising out an agreement although the Commission
may not have any role to play whatsoever in respect thereof.
The learned Counsel for the parties, as noticed hereinbefore, have argued
before us on the interpretation of the provisions of the relevant statutes and
agreement for determining the effect and purport thereof.
present advised, however, we refrain ourselves from expressing any opinion one
way or the other having regard to the fact that the matter ultimately must
receive a detailed consideration at the hands of the High Court both in the
writ petition as also in the application filed by the Respondent under Section
11 of the 1996 Act.
We do so
for the reason that recently a 7-Judge Bench of this Court in M/s S.B.P. &
Co. v. Patel Engineering Ltd. & Anr. [(2005) 9 SCALE 1] overruling an
earlier Constitution Bench Judgment of this Court in Konkan Railway Corporation
Ltd. & Anr. v. Rani Constructions Pvt. Ltd. [2002) 2 SCC 388], held that
the power of the Chief Justice or his nominee under the 1996 Act is a judicial
power as opposed to the administrative power. The contention of the Appellant
that the City Civil Court or for that matter the High Court have no
jurisdiction in terms of the 1996 Act, therefore, must finally be determined by
the High Court itself. Such a question indisputably will also be a
subject-matter of determination by the High Court in the writ proceedings
pending before it.
it is not a case where any dispute has arisen in respect of a statutory
function of the Commission to frame tariff and in that view of the matter the
decision of this Court in West Bengal Electricity Regulatory Commission v. CESC
Ltd. [(2002) 8 SCC 715] cannot be said to have any application whatsoever.
laid down in Grid Corporation of Orissa Ltd. v. Indian Charge Chrome Ltd.
[(1998) 5 SCC 438] whereupon Mr. Rao placed strong reliance is not applicable
in this case as therein it was found that the High Court erroneously assumed
that the Regulatory Commission had failed to arbitrate under Section 37(1) of
the 1998 Act, which was found to be factually incorrect.
Gas Power Corporation Ltd. etc. v. A.P. State Regulatory Commission and Another
etc. [(2004) 10 SCC 511], the question was as to whether the Appellant therein
was required to take, under the law, a licence for utilization/sale or supply
of power generated by it to the participating/shareholding industries or to
their sister concerns or the industries to whom the shares of A.P. GPCL have
been transferred by the participating industries. It was held that such licence
was necessary, stating "It would surely be a supply to a non-participating
industry and in that event it would be necessary to have a licence under the
relevant provisions of law. If there is such a legal requirement, merely an
agreement amongst certain parties would not exclude the application of law.
of law regulating the situation, would prevail over any kind of agreement
amongst some individuals as a group or otherwise. We are, therefore, of the
view that such a clause in the Memorandum of Understanding would not do away
with the requirement of having a licence for supply of electricity generated by
A.P. GPCL to such concerns which may be under the same group as the
participating industries but not the participating industries themselves."
The Respondent, therefore, has raised triable issues. What would constitute
triable issues has succinctly been dealt with by the House of Lords in its
well-known decision in American Cyanamid Co v. Ethicon Ltd. [(1975) 1 AER 504],
Lordships should in my view take this opportunity of declaring that there is no
such rule. The use of such expression as 'a probability', 'a prima facie case',
or 'a strong prima facie case' in the context of the exercise of a
discretionary power to grant an interlocutory injunction leads to confusion as
to the object sought to be achieved by this form of temporary relief. The court
no doubt must be satisfied that the claim is not frivolous or vexatious; in
other words, that there is a serious question to be tried." It was further
other factors appear to be evenly balanced it is a counsel of prudence to take
such measures as are calculated to preserve the status quo. If the defendant is
enjoined temporarily from doing something that he has not done before, the only
effect of the interlocutory injunction in the event of his succeeding at the
trial is to postpone the date at which he is able to embark on a course of
action which he has not previously found it necessary to undertake; whereas to
interrupt him in the conduct of an established enterprise would cause much
greater inconvenience to him since he would have to start again to establish it
in the event of his succeeding at the trial.
* * * The
factors which he took into consideration, and in my view properly, were that
Ethicon's sutures XLG were not yet on the market; so that had no business which
would be brought to a stop by the injunction; no factories would be closed and
no workpeople would be thrown out of work. They held a dominant position in the
United Kingdom market for absorbable surgical sutures and adopted an aggressive
sales policy." We are, however, not oblivious of the subsequent
development of law both in England as well as in this jurisdiction. The
Chancery Division in Series 5 Software v. Clarke [(1996) 1 All ER 853] opined:
many cases before American Cyanamid the prospect of success was one of the
important factors taken into account in assessing the balance of convenience.
The courts would be less willing to subject the plaintiff to the risk of
irrecoverable loss which would befall him if an interlocutory injunction was
refused in those cases where it thought he was likely to win at the trial than
in those cases where it thought he was likely to lose. The assessment of the
prospects of success therefore was an important factor in deciding whether the
court should exercise its discretion to grant interlocutory relief. It is this
consideration which American Cyanamid is said to have prohibited in all but the
most exceptional case. So it is necessary to consider with some care what was
said in the House of Lords on this issue." In Colgate Palmolive (India)
Ltd. v. Hindustan Lever Ltd. [(1999) 7 SCC 1], this Court observed that Laddie,
J. in Series 5 Software (supra) had been able to resolve the issue without any
departure from the true perspective of the judgment in American Cyanamid. In
that case, however, this Court was considering a matter under Monopolies and Restrictive Trade
Practices Act, 1969.
Dyechem Ltd. v. Cadbury (India) Ltd. [(2000) 5 SCC 573], Jagannadha Rao, J. in
a case arising under Trade and Merchandise Marks Act, 1958 reiterated the same principle
stating that even the comparative strength and weaknesses of the parties may be
a subject matter of consideration for the purpose of grant of injunction in
trade mark matters stating :
in trademark matters, it is now necessary to go into the question of
"comparable strength" of the cases of either party, apart from
balance of convenience. Point 4 is decided accordingly." The said
decisions were noticed yet again in a case involving infringement of trade mark
in Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. [(2001) 5 SCC 73].
however, herein concerned with a different type of case.
standard would be applicable in a case involving Section 9 of the 1996 Act.
connection, we may notice a decision of this Court in Firm Ashok Traders and
Another v. Gurumukh Das Saluja and Others [(2004) 3 SCC 155]. Although therein
the applicability of the arbitration agreement was in question having regard to
a Constitution Bench decision of this Court in Jagdish Chandra Gupta v. Kajaria
Traders (India) Ltd. [AIR 1964 SC 1882], this Court maintained an order
appointing a Receiver albeit with certain modifications on the premise that the
right arising from the partnership deed or conferred by the Partnership Act is
being enforced in the Arbitral Tribunal; the court under Section 9 is only
formulating interim measures so as to protect the right under adjudication
before the Arbitral Tribunal from being frustrated.
referred to Firm Ashok Traders (supra) not because we agree with the principle
laid down therein but only to suggest that Section 9 of the 1996 Act should be
applied so that status quo may be directed to be maintained having regard to
the fact that the parties understood the workability of the agreement in a
court can also grant injunction in exercise of its power under Article 226 of
the Constitution of India. If injunction is refused in this proceeding, the
interim order passed in the writ proceedings shall continue.
give rise to a stalemate. It may violate the well-known rule of judicial
Treatise on The Law Governing Injunctions' by Spelling and Lewis' it is stated
8. Conflict and Loss of Jurisdiction.
court having general jurisdiction and having acquired jurisdiction of the subject-matter
has issued an injunction, a court of concurrent jurisdiction will usually
refuse to interfere by issuance of a second injunction.
no established rule of exclusion which would deprive a court of jurisdiction to
issue an injunction because of the issuance of an injunction between the same
parties appertaining to the same subject-matter, but there is what may properly
be termed a judicial comity on the subject. And even where it is a case of one
court having refused to grant an injunction, while such refusal does not
exclude another coordinate court or judge from jurisdiction, yet the granting
of the injunction by a second judge may lead to complications and retaliatory
action" The High Court, therefore, while noticing the interim order passed
in the writ proceedings may have the said principle in mind.
Ltd. and Another v. Antox India P. Ltd. [(1990) Supp. SCC 727], it is stated :
interlocutory remedy is intended to preserve in status quo, the rights of
parties which may appear on a prima facie case. The court also, in restraining
a defendant from exercising what he considers his legal right but what the
plaintiff would like to be prevented, puts into the scales, as a relevant
consideration whether the defendant has yet to commence his enterprise or
whether he has already been doing so in which latter case considerations
somewhat different from those that apply to a case where the defendant is yet
to commence his enterprise, are attracted." [See also M/s Power Control
Appliances and Others v. Sumeet Machines Pvt. Ltd. [(1994) 2 SCC448 ].
interim direction ordinarily would precede finding of a prima facie case. When
existence of a prima facie case is established, the court shall consider the
other relevant factors, namely, balance of convenience and irreparable
injuries. The High Court in its impugned judgment although not directly but
indirectly has considered this aspect of the matter when on merit it noticed
that the Appellant has raised a dispute as regard payment of an excess amount
of Rs.35 crores although according to the Respondent a sum of Rs.132 crores is
due to it from the Appellant and the Appellant had been paying the amount for
the last two years as per the contract.
of the parties is also a relevant factor. If the parties had been acting in a
particular manner for a long time upon interpreting the terms and conditions of
the contract, if pending determination of the lis, an order is passed that the
parties would continue to do so, the same would not render the decision as an
arbitrary one, as was contended by Mr. Rao. Even the Appellant had prayed for
adjudication at the hands of the Commission in the same manner. Thus, it itself
thought that the final relief would be granted only by the Arbitrator.
Commission is yet to apply its mind. Even before the Commission, the Appellant
has not made any application for a direction in terms of sub-section (2) of
Section 94 of the Act.
Respondent has installed the Power Generation Plant. It has continuously been
supplying electrical energy to the Appellant.
it has to discharge its contractual obligation. The Appellant being the only
consumer, the Respondent has no other option but to supply electrical energy to
it. In the event, the dispute is referred to the arbitrator, the equity between
the parties can be adjusted. Without going into the correctness or otherwise of
the claim of the Respondent, we may notice, that according to it, the Appellant
owes a hefty sum of Rs.132 crores to it.
to the Appellant, in the event, the disputes and differences between the
parties are determined in its favour, it may be held, that it has paid an
excess sum of Rs.35 crores only.
of Article 14 postulates that pending arbitration, the rights and obligations
of the parties shall remain in full force and effect pending the award in such
arbitration proceedings, which award shall determine whether and when
termination of the said agreement if irrelevant shall become effective.
It is now
well-settled that this Court would not interfere with an order of the High
Court only because it will be lawful to do so. Article 136 of the Constitution
vests this Court with a discretionary jurisdiction. In a given case, it may or
may not exercise its power. The question came up for consideration before this
Court in Chandra Singh and Others v. State of Rajasthan and Another [(2003) 6
SCC 545] wherein it was observed:
In any event, even assuming that there is some force in the contention of the
appellants, this Court will be justified in following Taherakhatoon v. Salambin
this Court declared that even if the appellants' contention is right in law
having regard to the overall circumstances of the case, this Court would be
justified in declining to grant relief under Article 136 while declaring the
law in favour of the appellants." [See also State of Punjab v. Savinderjit
Kaur, (2004) 4 SCC 58] The said principle was reiterated in N.K. Prasada v.
Government of India and Others [(2004) 6 SCC 299] stating:
is trite that in a given case, the Court may refuse to exercise its
discretionary jurisdiction under Article 136 of the Constitution." In
Inder Parkash Gupta v. State of J&K and Others [(2004) 6 SCC 786], it was
In ordinary course we would have allowed the appeal but we cannot lose sight of
the fact that the selections had been made in the year 1994. A valuable period
of 10 years has elapsed. The private respondents have been working in their
posts for the last 10 years. It is trite that with a view to do complete
justice between the parties, this Court in a given case may not exercise its
jurisdiction under Article 136 of the Constitution of India." The same
principle has been reiterated in State of Uttaranchal Through Collector,
Dehradun and Another v. Ajit Singh Bhola and Another [(2004) 6 SCC 800] wherein
it was stated:
regard to the manner in which the District Magistrate took over possession of
the premises, which appears to us as at present advised, to be high-handed,
arbitrary and without any legal sanction we are not persuaded to exercise our
discretion under Article 136 of the Constitution of India to set aside the
interim order passed by the High Court. It is well settled that this Court will
not exercise its discretion and quash an order which appears to be illegal, if
its effect is to revive another illegal order." We, therefore, are of the
opinion that it is not a fit case where interference with the High Court's
judgment would be a proper exercise of jurisdiction under Article 136 of the
Constitution of India.
however, request the High Court to consider the desirability of hearing both
the writ petition as also the petition under Section 11 of the 1996 Act filed
by the Respondent herein as expeditiously as possible and preferably within a
period of six weeks from the date of communication of this order.
without saying that all the contentions of the parties shall remain open and
any observation made by the High Court in the impugned order or by us herein
must be considered to have been made for the purpose of disposal of the interim
appeal is dismissed. No costs.