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High Court Of Calcutta
SABYASACHI MUKHERJI
BAREILLY ELECTRICITY SUPPLY CO.LTD. - Appellant
Versus
STATE OF UTTAR PRADESH - Respondent
Suit 149 Of 1976
Decided On : 03/22/1977
ELECTRICITY (SUPPLY) ACT, 1948 - S. 16, SCH. VI, PARA XIII(3) - ARBITRATION - AWARD - CHALLENGE - ERROR OF LAW ON THE FACE OF THE AWARD - SPECIFIC QUESTION OF LAW REFERRED TO ARBITRATORS - CONSTRUCTION OF STATUTORY PROVISION - OFFICE ALLOWANCE TO MANAGING AGENTS - WHETHER LIMITED TO ACTUAL EXPENDITURE OR BASED ON A PERCENTAGE OF OPERATING AND CAPITAL EXPENDITURE - INTERPRETATION OF PARA XIII(3) OF SCH. VI.
Fact of the Case:
Dispute arose between the petitioner, Bareilly Electricity Supply Co. Ltd., and the State of Uttar Pradesh regarding the office allowance payable to the petitioner's Managing Agents, M/s. Martin Burn Ltd., during the period 1965-66 to 1969-70. The dispute was referred to arbitration under para. XVI of the Sixth Schedule to the Electricity (Supply) Act, 1948. The arbitrators awarded that the Managing Agents' claim for office allowance should be limited to the actual expenditure incurred and should not exceed the ceiling specified in para. XIII(3) of the Sixth Schedule.
Finding of the Court:
The court held that the arbitrators had committed an error of law on the face of the award by limiting the office allowance to the actual expenditure incurred, as para. XIII(3) of the Sixth Schedule directed that the office allowance 'shall be a percentage' of the operating and capital expenditure, subject to a ceiling. However, the court also held that the petitioner was not entitled to challenge the award on this ground, as a specific question of law had been referred to the arbitrators, namely, whether the Managing Agents were entitled to draw the expenses claimed or only the actual expenditure incurred on office allowance subject to the ceiling laid down in para. XIII(3) of the Sixth Schedule.
Issues: 1. Whether the arbitrators erred in law by limiting the office allowance to the actual expenditure incurred, contrary to the provisions of para. XIII(3) of the Sixth Schedule to the Electricity (Supply) Act, 1948? 2. Whether the petitioner was entitled to challenge the award on the ground of error of law, given that a specific question of law had been referred to the arbitrators.
Ratio Decidendi: 1. The court interpreted para. XIII(3) of the Sixth Schedule to the Electricity (Supply) Act, 1948, and held that the office allowance payable to the Managing Agents should be based on a percentage of the operating and capital expenditure, subject to a ceiling. The court found that the arbitrators had erred in law by limiting the office allowance to the actual expenditure incurred, as this was contrary to the plain meaning of the statutory provision. 2. However, the court also held that the petitioner was not entitled to challenge the award on the ground of error of law, as a specific question of law had been referred to the arbitrators. The court noted that the parties had agreed to submit the dispute to arbitration, and that the arbitrators had been tasked with deciding the specific question of whether the Managing Agents were entitled to draw the expenses claimed or only the actual expenditure incurred on office allowance subject to the ceiling laid down in para. XIII(3) of the Sixth Schedule. The court held that, in these circumstances, the petitioner was bound by the arbitrators' decision, even if it was erroneous.
Final Decision: The court dismissed the petitioner's application to challenge the award.
( 1 ) THIS is an application by Bareilly Electricity Supply Co. Ltd. , filed on the 18th January, 1977, challenging the award dated the 28th September, 1974.
( 2 ) BEFORE I go to the merits of the rival contentions of the parties it has to be mentioned that a preliminary objection was taken as to the maintainability of this application. It was contended that on the 19th January, 1977, the name of the petitioner Company was changed into Bareilly Holdings Limited. Therefore, the petitioner, it was urged, was not entitled to continue the present proceeding in this form and name. As would appear from what is stated above, when the application was made it was a competent application because the change in the name had not taken place at that time. The change took place subsequently. Therefore, in view of the provisions of Section 23 (3) of the Companies Act, 1956 and the facts and circumstances of this case, in my opinion, it would be proper to allow the prayer, on the oral application of Counsel for the petitioner, to change the name of the petitioner to Bareilly Holdings Limited. I, therefore, direct that the name of the petitioner be changed in the records of this case to Bareilly Holdings Limited.
( 3 ) THE petitioner Company is registered under the Indian Companies Act and during the period 1965-66 to 1969-70 M/s. Martin Burn Ltd. were the Secretaries and Treasurers of the petitioner company under an agreement dated the 30th August, 1965. Ag such Secretaries and Treasurers, M/s. Martin Burn Ltd. were paid certain amounts as and by way of office allowances. The payment of such office allowance was duly approved, according to the petitioner company, by the Central Government under the provisions of the Companies Act, 1956. The agreement dated the 30th August, 1965, inter alia, provided as follows :"5. The Secretaries and Treasurers shall be entitled to receive from the Company by way of remuneration for their services in relation to such management, in respect of each financial year (as defined in Section 2 (17) of the Act) of the Company or part thereof; (a) Ordinary remuneration as and to the maximum extent specified in sub-para. (1) of para. XIII of the Sixth Schedule to the Electricity (Supply) Act, 1948 subject to the minimum payment specified in sub-para. (2) of the said para. XIII. (b) An Office allowance as and to the maximum extent specified in sub-para. (3) of the said para. XIII to cover wages and salaries. "it appears that dispute arose between the petitioner and the State of Uttar Pradesh represented by the Secretary of the Government of Uttar Pradesh, Irrigation and Power Department with regard to the amounts which M/s. Martin Burn Ltd. were entitled to draw as office allowances during the aforesaid period. It is not in dispute that the payment of office allowance in this case is governed by the provisions of para. XIII (3) of the Sixth Schedule of the Electricity (Supply) Act, 1948. It was the case of the petitioner that on an interpretation of the said clause of para. XIII (3), the amounts paid to M/s. Martin Burn Ltd. , during the relevant year, which were within the ceiling provided by the Clause XIII (3), were permitted by the said clause. The petitioner contended that the office allowance had to be calculated as a percentage of the operating expenditure and the expenditure on capital works as laid down in the said Schedule of the Act. On the other hand, the respondent's case was that M/s. Martin Burn Ltd. were entitled to draw only the 'actual expenditure' incurred on office allowance. It is the case of the petitioner that there was no question of 'actual expenditure' involved and therefore, the petitioner contended the concept of 'actual expenditure' was foreign to the said paragraph XIII (3) of the said Schedule. It was further the case of the petitioner that it was not possible or practically feasible to calculate such actual expenditure nor was any guideline laid down for calcula
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