The court confirmed that arbitration awards can only be set aside on specific grounds under the Arbitration and Conciliation Act, typically requiring a demonstration of public policy conflict or patent illegality.

Order :

Bibhu Datta Guru, J.

1. This arbitration appeal has been preferred against the impugned order dated 18/10/2019 passed by the Commercial Court (District Level), Raipur in M.J.C. No. 44/2018, whereby the award dated 09/09/2018 passed by Hon’ble Shri Justice L.C. Bhadoo (Retd.), Sole Arbitrator, in the matter of M/s Anjani Steels Ltd. vs. State of Chhattisgarh & Ors., was upheld.

facts of the case :

2. (i) For establishing a Steel and Power Plant in the State of Chhattisgarh, the respondent, M/s Anjani Steel Limited, entered into a Memorandum of Understanding (MoU) with the State of Chhattisgarh in 2003, proposing to invest Rs. 185 crores in the State for setting up the aforesaid plants. Subsequently, in 2007, a second updated MoU was executed between the parties with a proposal to invest Rs. 410 crores in the State. Pursuant to the aforesaid MoUs, the respondent company set up a Sponge Iron Plant and a 12 MW Power Plant in Ujalpur, District Raigarh, Chhattisgarh. The respondent was also in the process of expanding its unit by establishing a 60 MW Power Plant. Since the respondent company required a large quantity of water for its plants, it moved an application on 10.09.2007 before the appellant’s department, seeking allotment of 33.3 Cu. Mtr./Hour of water. As the Government did not take any action on the said application, the respondent company again filed a second application on 12.06.2009 before the appellant’s department, referring to its earlier pending application, and further informed that its present water requirement was 0.29 Million Cu. Mtr./Year. It was also stated that the requirement would increase once the 60 MW Power Plant expansion became operational. The appellants/State accepted the respondent’s proposal and agreed to meet the requirement of 0.29 Million Cu. Mtr./Year as well as the additional requirement of 1.52 Million Cu. Mtr./Year in the future for the 60 MW Power Plant and the integrated Steel Plant, after construction of the Kelo Dam on the Kelo River.

(ii) As per direction of the appellants department vide their letter dated 16.10.2009, the respondent company deposited the commitment charges of Rs.45,250/- with the appellants Department for supply of water. Thereafter, the appellants Department vide order dated 12.11.2009 allotted 1.81 Million Cubic Meter (MCM) Water annually in favour of the respondent company to be drawn from the Kelo River. Subsequently, the respondent company had deposited an amount of Rs.13,57,500/- as security deposit with the appellants Department. On the basis of the same, on 11.12.2009, an agreement regarding supply of water to the respondent's plants was entered between the parties.

(iii) The respondent vide letter dated 23.12.2009, made a representation to the appellant No. 4 to raise the bill of water as per the present requirement i.e. 0.29 MCM water/ year of respondent. Thereafter the respondent started drawing water from Kelo River as per its requirement of 0.29 Million Cubic Meter/ year only for the Steel Plant, instead of the total allotted quantity of 1.81 Million Cubic Meter/year. The appellant department vide letter dated 05.07.2010 issued the bill for water usage in respect of the entire 1.81 Million Cubic Meter for the period 12.12.2009 to 30.06.2010. After that the respondent made repeated request and made several representations before the appellant department seeking rectification of bills on the basis of its present requirement of 0.29 Million Cu. Meter/year but the appellant department reiterated their direction to pay water charges and warned them else the agreement of the respondent would be termina