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High Court of Delhi
VIPIN SANGHI, J.
Thiess Minecs India Pvt. Ltd.
Versus
NTPC Ltd.
O.M.P. No. 630 of 2014
Decided on: 01-07-2014
Petitioner sought a restraint against the respondent from giving effect to the termination of contract between the parties, in pursuance of the termination letter dated 07.05.2014. The petitioner also seeks other consequential ad interim injunctive reliefs. The Court held that the petitioner has failed to make out a prima-facie case for grant of any injunctive relief as sought for in the present petition and dismissed the petition with costs quantified at Rs.1 Lakh, to be paid by the petitioner to the respondent within three weeks.
Fact of the Case:
The parties entered into the contract, namely, the “Project Agreement” for development and operation of Pakri Barwadh Coal Block in the State of Jharkhand on 14.07.2011. The said contract contemplated two stages – the first stage was the development stage, and the second stage is the operations stage. Clause 4.4(a) of the contract provides that the development stage was to commence on the “commencement date” and end on 360th day immediately following the commencement date, unless such 360th day is extended by the parties in accordance with clause 8.3. The operations stage was to commence on the “coal production start date”. The “coal production start date” means the day immediately following the last day of the development stage. Consequently, the contract did not provide for any hiatus between the completion of the development stage, and the start of the operations stage.
Finding of the Court:
The Court held that the petitioner has failed to make out a prima-facie case for grant of any injunctive relief as sought for in the present petition and dismissed the petition with costs quantified at Rs.1 Lakh, to be paid by the petitioner to the respondent within three weeks.
Issues: Whether the petitioner has made out a prima-facie case for grant of any injunctive relief as sought for in the present petition.
Ratio Decidendi: The Court held that the petitioner has failed to make out a prima-facie case for grant of any injunctive relief as sought for in the present petition. The Court observed that the termination notice is not founded only upon the stand of the respondent that the contract had lapsed and/ or expired in accordance with the terms of clause 8.3(b). The termination notice, in para 35, goes on to state that: “Without prejudice to the aforesaid and in the alternative, in any event, NTPC hereby also intimates you of its decision to terminate the Project Agreement under clause 24.4(d), and accordingly the Project Agreement shall stand terminated on the expiry of the notice period of 45 days from the date of this letter, i.e. June 22, 2014. Any further actions, which may be taken by you to delay or prejudice, the Pakri Barwadih mining project any further shall be entirely at your own risk as to the costs and consequences thereof” (emphasis supplied). It would thus be seen that, prima-facie, the respondent has “without prejudice to … … … … and in the alternative” sought to intimate its decision to terminate the project agreement under clause 24.4(d) by giving 45 days notice to the petitioner. Even if it were to be assumed that there is some force in the submission of Mr. Sethi that the project agreement could not lapse and/ or expire under clause 8.3(b), the said submission of Mr. Sethi would be of no avail as the respondent has, in the alternative, sought to terminate the project agreement under clause 24.4(d) by giving the requisite notice.
Final Decision: The Court dismissed the petition with costs quantified at Rs.1 Lakh, to be paid by the petitioner to the respondent within three weeks.
Vipin Sanghi, J.
1. This petition has been preferred by the petitioner under Section 9 of the Arbitration & Conciliation Act, 1996 (the Act) primarily to seek a restraint against the respondent from giving effect to the termination of contract between the parties, in pursuance of the termination letter dated 07.05.2014. The petitioner also seeks other consequential ad interim injunctive reliefs.
2. Though no notice has been issued in the petition, the respondents have appeared and opposed the petition. I have heard detailed submissions of learned senior counsel on both sides.
3. The parties entered into the contract, namely, the “Project Agreement” for development and operation of Pakri Barwadh Coal Block in the State of Jharkhand on 14.07.2011. The said contract contemplated two stages – the first stage was the development stage, and the second stage is the operations stage. Clause 4.4(a) of the contract provides that the development stage was to commence on the “commencement date” and end on 360th day immediately following the commencement date, unless such 360th day is extended by the parties in accordance with clause 8.3. The operations stage was to commence on the “coal production start date”. The “coal production start date” means the day immediately following the last day of the development stage. Consequently, the contract did not provide for any hiatus between the completion of the development stage, and the start of the operations stage.
4. The notice of termination dated 07.05.2014 elaborately sets out the historical background in which the project agreement was executed and the developments which took place from time to time in relation to the said agreement. Though the petitioner has disputed the allegations made by the respondent in the said termination notice, there is hardly any dispute with regard to the narration of developments that have taken place since the execution of the project agreement. Therefore, the background facts are being narrated by reference to the statements contained in the termination notice.
5. In the notice of termination dated 07.05.2014, the respondent, inter alia, states that a letter of acceptance dated 30.11.2010, resulting in a concluding and binding contract was issued - by which a contract for development and operation of Pakri Barwadh Coal Block for a period of 27 years – effective from the date of letter of acceptance, was awarded to the petitioner. The project agreement was subsequently signed on 14.07.2011. The termination notice states that the Pakri Barwadh Coal Block was allotted to the respondent in 2004. It was a US$ 11 Billion project to develop and operate the green field project for the Pakri Barwadh Coal Block in Jharkhand. The coal block with reserves of 1.4 billion tonnes, is the largest amongst six acreages held by the respondent, and has national importance inasmuch, as, it is one of the largest coal mining projects for India over the next few years. The termination notice recites that a detailed bid process was initiated by the respondent to identify and appoint an internationally qualified mine developer and operator for timely, efficient and optimized mining operations by inviting bids in the year 2007 from financially strong and experienced mining operators. The Request for Proposal (RFP) issued on 08.02.2007 required the bidders to visit the site and satisfy themselves as to the adequacy of the local conditions, including approach roads to the site, adequacy of existing culverts/bridges/roads for bringing equipment and machinery to the site, water and power supply conditions and other relevant matters. Discussions between the parties for appointment of the petitioner as a mine operator and developer commenced in 2006, when a proposal of the petitioner was first discussed with the respondent. When the petitioner submitted its proposal in response to the RFP document on 12.04.2007, the petitioner stated that it would commence work immediately upon issuance
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