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2007 Supreme(Del) 1409
High Court Of Delhi
SHIV NARAYAN DHINGRA
RAJ ELECTRICALS (REGD.) - Appellant
Versus
BSES RAJDHANI POWER LTD - Respondents
OMP 327 Of 2007
Decided On : 07/16/2007
A.LAL, GUNITIA PAHWA, MANOJ K.SINGH, MANSOOR ALI, Rahul Dhawan, Vijay K.Singh
The main legal point established in the judgment is that the termination of a contractual relationship, governed by commercial laws, does not warrant an interim injunction under the Arbitration and Conciliation Act.
Headnote:
Arbitration and Conciliation Act - License Agreement - Indian Electricity Act, 1910 - Delhi Electricity Reforms Act, 2000 - [SUMMARY OF ACT SECTIONS: Section 9 of Arbitration and Conciliation Act, Section 185 of The Electricity Act, 2003, Part VI of Delhi Electricity Reforms Act, 2000, Section 3 of The Indian Electricity Act, 1910, Section 20 of the Delhi Electricity Reforms Act, 2000] - The court discussed the termination of a license agreement under the Indian Electricity Act, 1910 and the relevance of the Delhi Electricity Reforms Act, 2000 in determining the validity of the termination. The court analyzed the contractual relationship between the parties and the applicability of statutory provisions in governing the agreement. The interpretation of relevant sections influenced the court's decision to dismiss the application.
Fact of the Case:
The petitioner sought an interim injunction against the respondent to maintain the status quo in an agreement for electricity distribution. The respondent served a notice terminating the agreement, citing violations and outstanding dues. The petitioner claimed to be authorized to distribute electricity and invoked arbitration for settlement.
Finding of the Court:
The court found that the relationship between the parties was contractual, not statutory. It concluded that the respondent had the right to terminate the contract and that damages could be claimed in case of wrongful termination.
Issues: The main issue was whether the petitioner was a licensee under the Indian Electricity Act, 1910 or the Delhi Electricity Reforms Act, 2000.
Ratio Decidendi: The court held that the petitioner did not meet the criteria to be considered a licensee under the relevant acts and that the relationship between the parties was purely contractual.
Final Decision: The court dismissed the application for an interim injunction.
( 2 ) THE brief facts relevant for the purpose of deciding this application are that Delhi Vidyut Board (DVB), the earlier body responsible for supply and distribution of electricity in the city, had entered into an agreement with the petitioner under a scheme whereunder the unauthorized colonies were provided electricity through contractors. DVB was supplying electricity to the petitioner at single point and the petitioner contractor was supplying electricity to the cluster of houses in unauthorized colony. The petitioner contractor was called Single Point Delivery Contractor. The agreement was entered into for a period of seven years and could be renewed for further period by mutual consent. The agreement was terminable by either party in case of certain eventualities. The relevant clauses of the agreement providing for termination of the agreement are as under: payment TERM (Clause 14) payment of the fees shall be made monthly against certificate from the ?officer? about the work performed. If the agreement is terminated early by one party, the party in default will pay suitable liquidated damages to compensate for the loss suffered by the other party on the account of such termination. TERMINATION OF DEFAULT (Clause 7 of Additional Terms and Conditions of Contract) specific events of default will entitle the DVB to terminate the agreement, the party committing an even of default which is.- if the agreement is terminated early by one party, the party in default will pay suitable liquidated damages to compensate for the loss suffered by the other party on account of such termination. The agreement can however otherwise be terminated by either party by giving six months notice. Agency shall indemnify DVB against any claims, demands, costs and expenses whatsoever which may be made against it, because of failure of the agency or its any representative in the performance of their duties and negligence, any accident or injury to any person or untimely payment to any employee. FALL BACK AGREEMENT (Clause 8 of Additional Terms and Conditions of Contract) in the event of failure of the agency to fulfill its obligations, duties and responsibilities as per the agreement terms, DVB shall have all the rights, at any time to resort to fall back agreement. Under this plan, DVB shall take charge after giving suitable notice and can recover from the security deposit the losses suffered due to Page 2 of 6 such failure, if the security deposit is insufficient the agency shall pay the difference to DVB failing which DVB shall have right to recover the same through legal or other means. The DVB shall have the right in such circumstances to mange the system itself after taken charges of the facilities as above or through any other agency as it may deem fit and no claim of agency for compensation in this aspect shall be entertained.
( 3 ) CLAUSE 11 of the additional terms and conditions of the contract provided that in case of disputes, the same shall be settled by mutual discussion. Failing the same, the disputes will be referred to arbitration.
( 4 ) THE respondent, who is successor of DVB served a notice dated 6th June, 2007 upon the petitioner intimating the petitioner that the agreement between the petitioner and respondent would stand terminated after expiry of 15 days from the date of the legal notice and the company shall take the distribution itself. The reasons for termination of agreement given in the notice are that the petitioner failed to lay insulated low vo
