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IN THE HIGH COURT OF DELHI AT NEW DELHI
Anup Jairam Bhambhani, J.
Gujarat Gas Limited - Appellant
Versus
Vedanta Limited & Ors. - Respondents
Original Miscellaneous Petition (I) (COMM) No. 125 of 2022, I.A. No. 6159 of 2022
Decided On : 12-05-2022
arbitration & Conciliation act - Interim Measures of Protection - article 9, 11 - The court discussed the provisions of article 9 of the Master Gas Sales Contract (MGSC) and the communications exchanged between the parties. The court concluded that the petitioner did not unequivocally exercise its Right of First Refusal (RoFR) and made a counter-offer, which was not an unqualified acceptance. The court found that the relief sought would amount to directing specific performance of the contract as an interim measure of protection, which is not permissible under section 9 of the a&C act. The court dismissed the petition at the pre-notice stage.
Fact of the Case:
The petitioner sought interim measures of protection against the respondents under section 9 of the arbitration & Conciliation act, 1996 ('a&C act') in the context of disputes arising from the Master Gas Sales Contract dated 30.05.2001 ('MGSC') and related agreements. The petitioner alleged that the respondents breached their obligations under the MGSC by not notifying the petitioner of the termination of a Gas Sales Contract and proceeded to offer the gas for sale to third parties.
Finding of the Court:
The court found that the petitioner did not unequivocally exercise its RoFR and made a counter-offer, which was not an unqualified acceptance. The court concluded that the relief sought would amount to directing specific performance of the contract as an interim measure of protection, which is not permissible under section 9 of the a&C act. The court dismissed the petition at the pre-notice stage.
Issues: The main issue was whether the petitioner was entitled to interim measures of protection under section 9 of the a&C act, and whether the relief sought would amount to directing specific performance of the contract as an interim measure of protection.
Ratio Decidendi: The court held that the petitioner's actions did not amount to an unqualified acceptance of the RoFR, and the relief sought would amount to directing specific performance of the contract as an interim measure of protection, which is not permissible under section 9 of the a&C act.
Final Decision: The court dismissed the petition at the pre-notice stage.
JUDGMENT
anup Jairam Bhambhani, J. - By way of the present petition under section 9 of the arbitration & Conciliation act, 1996 ('a&C act'), the petitioner seeks interim measures of protection against the respondents in the context of disputes that are stated to have arisen from Master Gas Sales Contract dated 30.05.2001 ('MGSC') and other related agreements as detailed hereinafter.
2. although several prayers have been made in the petition, in view of what has transpired in the interregnum, the petitioner has at this stage, pressed only prayer (a), which reads as under :
'a. Restrain the Respondent No. 1, Respondent No. 2 and Respondent No. 3 from any sale or delivery of gas from CB-OS/2 Block to any person other than the Petitioner till the dispute as to whether there was any valid and lawful termination of Gas Sales Contract dated 30.05.2001 with apraava Energy Private Limited (Respondent No. 4) (erstwhile Gujarat Powergen Energy Corporation Limited and CLP India), is decided by an arbitration tribunal or till earlier resolution by amicable settlement of the dispute between the Petitioner and the Respondents'
3. On the basis of the averments contained in the petition and submissions made by Mr. Parag Tripathi, learned senior counsel appearing for the petitioner, the essential case set-up by the petitioner is the following :
(a) Vide Master Gas Sales Contract dated 30.05.2001, the petitioner Gujarat Gas Ltd. ('Gujarat Gas') entered into a contract with a number of entities, some of whom are now respondents in the present petition. Since all contracting parties that are respondents, have since changed their names for one reason or another, the following table summarizes their change of the names :
Original name, as it appears in the MGSC and in other related correspondence along with acronyms used in the contracts and correspondence
Changed name, as appears in the petition
Oil and Natural Gas Corporation Ltd. / ONGC
Oil and Natural Gas Corporation Ltd.
Tata Petrodyne Ltd. / TPL
Invenire Petrodyne Ltd.
Cairn Energy Ltd. / Cairn / VL
Vedanta Ltd.
Gujarat Powergen Energy Corporation Ltd. / CLP India Pvt Ltd. / GPEC
apraava Energy Pvt Ltd.
Gujarat Gas Ltd. / GGL
Gujarat Gas Ltd. / GGL
Respondents Nos. 1 to 3 are being collectively referred to in the present proceedings as the 'Sellers', namely those who sold the natural gas that Gujarat Gas had contracted to purchase under the contractual arrangement.
(b) Simultaneously, Gujarat Gas also entered into a Gas Sales Contract dated 30.05.2001 ('Gujarat Gas GSC') with the Sellers for long term purchase of certain volumes of gas produced at the CB-OS/2 Block located in Suvali, Surat, Gujarat.
(c) Furthermore, respondent No. 4 apraava Energy Pvt. Ltd. ('apraava Energy') also entered into a Gas Sales Contract dated 30.05.2001 ('apraava Energy GSC') with the Sellers for purchase for certain volumes of gas produced at the CB-OS/2 Block.
(d) The MGSC, which was a tripartite agreement, was in the nature of an umbrella contract which served as a single operational interface for nomination and delivery of gas sold to Gujarat Gas under the Gujarat Gas GSC and to apraava Energy under the apraava Energy GSC; the intent and purpose being that in certain circumstances, Gujarat Gas had the right to acquire the gas allocated for sale to apraava Energy by way of a 'step-in' clause, as discussed in detail later.
(e) The essential dispute now, is between the petitioner, Gujarat Gas and respondent No. 1. Vedanta Ltd. ('Vedanta'), whereby it is Gujarat Gas's grievance that upon termination of the apraava Energy GSC by Vedanta, it was incumbent upon Vedanta to notify Gujarat Gas of such termination so that Gujarat Gas could 'step-in' into the rights of apraava Energy and elect to off-take the volume of gas that was being sold to apraava Energy under the apraava Energy GSC, which Gujarat Gas alleges Vedanta Ltd. did not do. It is Gujarat Gas's contention that as per article 9 of the MGSC, Gujarat Gas had a Right of First Refusa
The court clarified that the relief sought would amount to directing specific performance of the contract as an interim measure of protection, which is not permissible under section 9 of the a&C act.
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The court's decision emphasized the importance of prima facie case, balance of convenience, and irreparable loss and injury in determining the entitlement to mandatory interim relief.
The claim of the petitioner was ex-facie barred by limitation, and the dispute between the parties could not be referred to arbitration.
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 Ag....
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