2020 Supreme(Del) 506

IN THE HIGH COURT OF DELHI AT NEW DELHI
V. KAMESWAR RAO, J.
Hero Wind Energy Private Limited - Petitioner
Versus
Inox Renewables Limited & Anr. - Respondents
O.M.P.(I) (Comm.) 429 of 2019
Decided On : 16-03-2020

Headnote:

ARBITRATION - Section 9 - Maintainability of petition - Shared Services Agreement - Wrap Agreement - Operation and Maintenance Agreement - Disconnection of Feeder No.14 - Petitioner's right to use shared services - Payment of charges for operation and maintenance - Dispute pending before Arbitral Tribunal - Section 9(3) of the Arbitration and Conciliation Act, 1996.

Fact of the Case:

Petitioner, a company involved in the generation of renewable energy, entered into various agreements with respondent No.1 and its group entities, including respondent No.2, for the supply, erection, commissioning, operation & maintenance of WTGs and shared services relating to them. As per the Shared Services Agreement, the petitioner was entitled to use shared services pertaining to the Dangri Project for the operational life of 20 years from the date of commissioning upon payment of a fixed price. Petitioner paid an amount of Rs.7,00,00,000/- for 20 WTGs, towards the right to use shared services for the operational life of the WTGs, to respondent No.1. Petitioner and respondents along with certain other group entities of respondent No.2 also entered into a Wrap Agreement in view of which, respondent No.2 assumed upon itself, the obligation to ensure performance of the obligations envisaged in the Share Services Agreement. On November 11, 2019, respondent No.1 malafidely and in blatant violation of its obligations under the Shared Services Agreement, stopped/ switched off Feeder No.14 from the pooling substations situated at the wind farm, connected to 16 WTGs of the petitioner. Petitioner claimed that due to this wrongful and arbitrary act of respondent No.1, all the petitioner’s WTGs connected to Feeder No.14 have stopped, resulting in huge loss to the petitioner. Petitioner stated that as per Article 5 (iii) of the Wrap Agreement, respondent No.2 had assumed the responsibility to ensure performance under the Shared Services Agreement and that it shall be jointly and severally liable for the acts / omissions of respondent No.1. Petitioner also stated that even after several rounds of meetings with the respondents, requesting them to start Feeder No.14 to avoid further losses as well as to undertake/fulfill their obligations under the Shared Services Agreement and Wrap Agreement, respondents have refused to perform their obligations on an illegal, vexatious and unconnected premise that arbitration proceedings pertaining to Operations & Maintenance Agreement dated July 31, 2014, entered into between the petitioner and M/s. Inox Wind Infrastructure Services LTD. (‘M/s. IWISL’, for short) , (‘O & M Agreement’, for short), is still pending and till such time the dispute is resolved, Feeder No.14 could not be restarted. Petitioner contended that O & M Agreement and arbitration proceedings pending there have no bearing and nexus to the Shared Services Agreement and shared services that are mandated to be provided under it. Petitioner further stated that respondents are merely coercing the petitioner to withdraw its claims which are pending under arbitration proceedings by switching off Feeder No.14. Respondents raised a preliminary objection to the maintainability of the petition in terms of Section 9(3) of the Act, which mandates that once an Arbitral Tribunal has been duly constituted, the Court shall not entertain an application / petition under Section 9(1) of the Act, unless the Court finds that circumstances exist which may not render the remedy provided under Section 17 of the Act, efficacious. Respondents stated that dispute arising out of the obligations set out under the Shared Services Agreement as well as the Wrap Agreement and other agreements executed between the parties are already pending adjudication before the learned Arbitral Tribunal comprising of Hon’ble Mr. Justice (Retd.) Dr. Arijit Pasayat (Presiding Arbitrator), Hon’ble Mr. Justice (Retd.) Vijender Jain and Hon’ble Ms. Justice (Retd.) Manju Goel. Respondents stated that the petitioner has deliberately, deceitfully and illegally averred in the petition that the subject matter of the said ongoing / pending arbitration proceedings are different from the present petition, whereas the facts remains that the alleged grievance of the petitioner raised in the petition based on the Shared Services Agreement as well as the Wrap Agreement pertains to, forms part and touches upon the four corners of the ongoing arbitration.

Finding of the Court:

The Court held that the subject matter of this dispute is relatable to the O & M Agreement, and a dispute connected therewith is also pending before the Arbitral Tribunal. The Court further held that the disconnection of Feeder No.14 relates to operation and maintenance of shared services and therefore, the impugned action is related to O & M Agreement. The Court also held that the right to use the shared services under the Shared Services Agreement and payment for the operation and maintenance charges under the O & M Agreement being inter linked, this issue also needs to be adjudicated by the same Tribunal which is seized of the dispute under O & M Agreement.

Issues: 1. Whether the petition is maintainable in view of the ongoing arbitration proceedings between the parties before the Ld. Arbitral Tribunal? 2. Whether the dispute between the parties arises out of the Shared Services Agreement and that switching off of Feeder No. 14 is owing to the failure of the petitioner to pay for maintenance of shared services after termination of the O&M Agreement?

Ratio Decidendi: 1. The Court held that the present petition is not maintainable as an Arbitral Tribunal is already in place adjudicating upon the disputes between the parties arising out of the various Agreements. 2. The Court held that the dispute between the parties does not arise out of the Shared Services Agreement and that switching off of Feeder No. 14 is owing to the failure of the petitioner to pay for maintenance of shared services after termination of the O&M Agreement.

Final Decision: The petition is dismissed. Liberty is with the petitioner to file appropriate application before the Arbitral Tribunal already in place for the reliefs prayed for in this petition.