The main legal point established in the judgment is the limited scope of interference under the Arbitration and Conciliation Act, 1996, and the interpretation of specific clauses of the Gas Supply Agreements in determining the legality of tapping the gas supply facilities.

JUDGMENT

Vibhu Bakhru, J. - Indraprastha Gas Limited (hereafter “IGL”) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the “A&C Act”) impugning an arbitral award dated 18.12.2019 (hereafter “the impugned award”) passed by an Arbitral Tribunal comprising of a Sole Arbitrator.

2. The impugned award was rendered in respect of disputes that had arisen between the parties in relation to Gas Supply Agreements (GSAs) dated 22.03.2011 and 01.11.2014.

3. Briefly stated, the relevant facts that are necessary to address the controversy are as under:

4. IGL is a company registered under the Companies Act, 1956 and is, inter alia, engaged in the business of distribution of natural gas in the NCT of Delhi.

5. The respondent (hereafter “STU”) is a proprietorship concern of Sahil Gupta, having its office at Factory No. 90, Phase II, Badli Industrial Estate, Delhi and is, inter alia, engaged in the business of manufacturing Aluminium, Brass and Copper sheets and circles.

6. Mr Sahil Gupta (the proprietor of STU) had entered into two separate GSAs dated 22.03.2011 and 01.11.2014 with IGL, to purchase Piped Natural Gas (PNG). The GSA dated 22.03.2011 was entered by STU under the category of Large Industrial Customer and the GSA dated 01.11.2014 was entered into as a Small Industrial Customer.

7. On 28.11.2014, IGL confirmed the termination of the GSA dated 22.03.2011 and, continued to supply PNG to STU under the GSA dated 01.11.2014 8. Pursuant to the GSAs, IGL undertook to sell and deliver PNG at the delivery point and, the respondent agreed to receive PNG at the delivery point and pay for it at the contract price.

9. IGL claims that on 05.12.2014, during the course of a regular inspection by its authorised officials, it was found that STU had tampered with the facilities of IGL in the factory of M/s Swastik Aluminium, which is a proprietorship concern of one Mr Rajiv Gupta, the uncle of Mr Sahil Gupta (the brother of Sahil Gupta’s father).

10. It is the case of IGL that Mr Sahil Gupta in connivance with Mr Rajiv Gupta had unauthorisedly tapped the 32 mm MDPE with 4 bar pressured pipe before the Metering Regulation System (MRS) and diverted a part of the supply of PNG to the two furnaces in the factory premises of STU as well as the factory premises of M/s Ideeal Udyog, the proprietorship concern of Mr. Parveen Gupta, since deceased, who was the father of Sahil Gupta and the brother of Rajiv Gupta.

11. Consequently, on 05.12.2014, IGL registered an FIR bearing no 1426/2014 with PS Samaipur Badli, inter alia, against STU (Mr Sahil Gupta) under Sections 336 and 379 of the Indian Penal Code, 1860 (IPC) for theft of PNG by STU and M/s Swastik Aluminium.

12. On 11.12.2014, IGL terminated the GSA dated 01.11.2014 with effect from 05.12.2014. STU, M/s Swastik Aluminium and M/s Ideeal Udyog filed a joint reply dated 13.12.2014 denying the averments raised by IGL. They stated that they had not indulged in the alleged act of bypassing the gas connection meter and not consumed the gas supplied by IGL unauthorisedly or in any illegal manner.

13. In response to the joint reply, IGL issued a notice to STU on 09.01.2015 alleging that STU was involved in gas pilferage and further, asserted that the GSA had been terminated. It further alleged that the actions of STU has resulted into heavy monetary losses to IGL. STU, M/s Swastik Aluminium and M/s Ideeal Udyog sent a common response to this notice denying the allegations made by IGL.

14. Thereafter, a demand notice was issued by IGL on 05.02.2015 wherein IGL computed the total unauthorised quantity of PNG from July 2011 till November 2014 as 10.57 lacs SCM (approximately) and accordingly, raised a provisional supplementary estimated demand of ?5,36,01,330/- payable by STU within three working days with effect from 09.02.2015. In response to the demand notice, STU, M/s Swastik Aluminium and M/s Ideeal Udyog jointly sent a letter denying their liability.

15. Aggrieved by