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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S. KULKARNI, J.
Pravara Renewable Energy Ltd. – Appellant
Versus
Padmashri Dr. Vitthalrao Vikhe Patil Sahakari Sakhar Karkhana Ltd. - Respondent
Commercial Arbitration Petition (L.) No.23525 of 2021, Interim Application (L.) No.4446, 4443, 4426, 3343 of 2022
Decided on : 11-04-2022
Arbitration and Conciliation Act, 1996 - Section 9 - Maharashtra Co-operative Societies Act, 1960 - Specific Relief Act, 1963 - Section 41, (ha), 42 - Securitisation And Reconstruction Of Financial Assets and Enforcement Of Security Interest Act, 2002 - Section 17 - Recovery of Debts and Bankruptcy Act, 1993 - Section 19 - Code of Civil Procedure, 1908 - Order 39, Rules 1 and 2, Section 151 - Co-generation Plant - Coercive Actions - Whether respondent has any legal right under contractual scheme - Whether petitioner is entitled for an injunction as prayed for in prayer clause (b) of restraining respondent from in any manner entering premises of petitioner’s co-generation plaint and from carrying out any work/activity for repairs/maintenance/operation of petitioner’s co-gen plant - Whether respondent has any legal right under contractual scheme as parties stand, to interfere in petitioner’s managing and operating its Co-generation plant and make an attempt to lock, stock and barrel, oust petitioner from operating and managing its own Co-generation power plant - Whether it was permissible for respondent to act in such manner and takeover management and operation of co-gen plant under any of conditions in PDA - Whether plaintiff has a prima facie case - Whether balance of convenience is in favour of plaintiff - Whether plaintiff would suffer an irreparable injury if his prayer for interlocutory injunction is disallowed – Held, Interveners cannot be oblivious to independent rights of parties to agreement (PDA), and contend that dehors such rights of parties under PDA, co-gen plant ought to be kept operational and that too by respondent and not by petitioner - Such a plea as urged by these interveners is totally untenable - In fact, such plea militates against express terms and conditions of PDA as also Land Lease Agreement as entered between petitioner and respondent - They have no privity with petitioner - They also do not appear to have any privity touching PDA between petitioner and respondent - In any event, plea as urged in Intervention Application apart from being merely on apprehension is too remote to be considered as any substantive plea to admit of any intervention of these applicants - It also needs to be observed that it is eminent that interveners have been put up at behest of respondent so as to advance an argument of equity and fortify position that running of co-gen plant by respondent is more effective than petitioner conducting its own plant - These are basic arguments which are urged by Dr. Saraf in supporting contentions of respondent - In Court opinion, it would be too far-fetched for Court adjudicating proceedings under section 9 of Act to consider interventions by persons who are not only alien to contractual dispute between petitioner and respondent but also remote to present proceedings between contracting parties - For such reasons, none of Intervention Applications can be held to be maintainable - In view of above discussion, Dr. Saraf’s reliance on decision of a learned Single Judge of this Court in Prabhat Steel Traders Pvt. Ltd. Vs. Excel Metal Processors Pvt. Ltd. is not well founded - Present case is not such where any interim order passed in arbitral proceedings is prejudicially affecting any third parties like intervenors - It is also not case that these third parties are likely to be directly affected if reliefs as prayed for are granted by Court - It is also not a case that Court is passing any order against these parties – Petition allowed.
JUDGMENT :
The Judgment is divided into the following parts:
| Sr.no. | Particulars | Paragraph Nos. |
| I | Prelude | 1 to 9 |
| II | Pleadings | 10 to 52 |
| III | Submissions | 53 to 54 |
| IV | Interim Applications | 55 to 58 |
| V | Analysis and Conclusion | 59 to 145 |
(I) Prelude
1. This is a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’), whereby, the petitioner has prayed for interim measures pending the arbitral proceedings.
2. An interesting question, which has arisen for consideration in the present case before the initiation of arbitral proceedings, is as to whether the respondent has any legal right under the contractual scheme the parties stand, to interfere in the petitioner’s managing and operating its Co-generation plant and attempt to lock, stock and barrel, oust the petitioner from operating and managing its own Co-generation Power Plant.
3. The petitioner’s case, is of coercive actions having taken place to outs the petitioner from the Co-generation plant by the respondent after the present petition was filed on 12 October 2021. The respondent using its dominating position as a powerful sugar factory.
4. The petitioner company was incorporated as a special purpose vehicle by its parent company Gammon Infrastructure Project Limited, to undertake installation and running of the Co-generation plant at the respondent’s sugar factory. The respondent is a well-established cooperative sugar factory situated at Pravara Nagar, District Ahmednagar, and is registered under the Maharashtra Co-operative Societies Act, 1960.
5. Disputes and differences have arisen between the parties under the Project Development Agreement dated 12 July 2010 (for short “the PDA”) whereunder the petitioner had agreed to set up a co-generation power plant (for short the “Co-gen plant”) on a Built-Own-Operate-Transfer basis (BOOT) basis, on land to be provided by the respondent to the petitioner on a lease for a term of 28 years and 6 months. Under the PDA, the petitioner was to utilize the agreed quantity of bagasse fuel and bio-gas to be supplied by the respondent being generated by the respondent’s sugar factory, which were the primary raw materials, to produce power and steam. The power/electricity and the steam so generated by the petitioner’s Co-gen plant was to be utilised/consumed by the respondent’s sugar factory in its operations. Any excess power to be generated could be sold in the open market by the petitioner. The assets of the plant were to be transferred to the respondent on the “Assets Transfer Date” being twenty five years from the date the co-gen plant commences commercial operation.
6. The Co-gen plant was accordingly, set up on land as provided by the respondent, for which a separate lease deed dated 12 July, 2010 was executed between the parties. There is no dispute between the parties in regard to the execution of the PDA and the land lease agreement. The arbitration agreement between the parties is contained in clause 33.2 of the PDA.
7. The case of the petitioner is that in accordance with the terms and conditions of the PDA, the petitioner at a cost of about Rs.274 crores has set up a Co-gen plant after undertaking substantial borrowings from the banks. This was as agreed between the parties. To be discussed in some detail, hereafter, the PDA contemplated minimum quantity of bagasse as also biogas to be supplied by the respondent to the petitioner in the specific manner as agreed in the PDA. It, however, appears that friction started mounting between the parties from the crushing season 2015-16, as according to the petitioner, the respondent was not supplying the requisite agreed quantity of bagasse and biogas, so that the agreed quantity of power generation can be achieved by the co-gen plant. The petitioner had to depend on raw materials (coal etc
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