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2024 Supreme(Del) 507

IN THE HIGH COURT OF DELHI AT NEW DELHI
Manoj Kumar Ohri, J.
Tata Motor Limited & Ors. - Appellants
Versus
Delhi Transport Corporation & Ors. - Respondents
ARB. A. (COMM.) No. 9 of 2023 and ARB. A. (COMM.) No. 27 of 2023, I.A. No. 10998 of 2023 and I.A. No. 10999 of 2023
Decided On : 04-03-2024

Advocates appeared:
Mr. Rajiv Nayar, Sr. Advocate, Mr. Gopal Jain, Sr. Advocate with Ms. Meera Mathur, Ms. Nandini Gore, Ms. Aditi Bhatt, Mr. Rajat Dasgupta, Mr. Sarthak Gaur and Ms. Manvi Rastogi, Advocates, for the Petitioners; Mr. Manish Vashisht, Sr. Advocate with Mr. Rikky Gupta, Standing Counsel with Ms. Ananya Singh, Ms. Harshita N., Mr. Vedansh, Mr. Vanshay Kaul and Mr. Aman Singh, Advocates, for the Respondent.

IMPORTANT POINT
The main legal point established in the judgment is the power of the Arbitral Tribunal to grant interim mandatory injunction orders under Section 17 and the limitations of constructive res judicata.

Headnote:

Arbitration and Conciliation Act - Dispute over KMPKG penalty - Section 17, 37(2)(B) - The court discussed the Arbitration and Conciliation Act, particularly Section 17, and the legal principles established in Kanchan Kapoor v. Swaran Kumar, Arcelor Mittal Nippon Steel India Ltd v. Essar Bulk Terminal Ltd., and Kirtikumar Futarmal Jain v. Valencia Corporation. The court emphasized the power of the Arbitral Tribunal to grant interim mandatory injunction orders under Section 17 and the limitations of constructive res judicata.

Fact of the Case:

The case involved a dispute between Delhi Transport Corporation (DTC) and Tata Motors Ltd. (TML) regarding the recovery of penalties for not meeting the guaranteed minimum average fuel efficiency target. TML invoked arbitration and challenged DTC's demand for penalties. The Arbitral Tribunal passed multiple orders restraining DTC from recovering penalties from TML's Annual Maintenance Charges (AMC) dues.

Finding of the Court:

The court found that TML's withdrawal of a previous petition did not operate as res judicata, and DTC's actions were in violation of the arbitral award. The court emphasized the power of the Arbitral Tribunal to grant interim mandatory injunction orders under Section 17 and the limitations of constructive res judicata.

Issues: The main issues included the applicability of res judicata, the power of the Arbitral Tribunal under Section 17, and the legality of DTC's actions in recovering penalties from TML's AMC dues.

Ratio Decidendi: The court held that TML's withdrawal of a previous petition did not operate as res judicata, and DTC's actions were in violation of the arbitral award. The court emphasized the power of the Arbitral Tribunal to grant interim mandatory injunction orders under Section 17 and the limitations of constructive res judicata.

Final Decision: Both appeals were dismissed, and pending applications were disposed of as infructuous.

JUDGMENT

Manoj Kumar Ohri, J. - These appeals have been filed under Section 37(2)(B) of the Arbitration and Conciliation Act (hereinafter, 'A&C Act') against the order dated 17.03.2023 passed by the Arbitral Tribunal on an application under Section 17 of the A&C Act filed by Tata Motors Ltd. (hereinafter, 'TML'). Both the parties are aggrieved of the separate parts of the order for which they have filed their respective appeals.

2. The facts necessary for disposal of the present case are as under:-

    a. Delhi Transport Corporation (hereinafter, 'DTC') purchased 650 AC and 975 non- AC low floor CNG fueled buses from TML under a contract dated 18.10.2018, to be operated as part of its fleet in Delhi. Besides selling the buses, TML also undertook to maintain the buses against Annual Maintenance Charges ('AMC') payable by DTC.

    b. Disputes arose between the parties in relation to Clause 24.4 and 46.16 of the General Conditions of Contract ( 'GCC'). DTC alleged that TML became liable to pay penalty under Clause 24 of the GCC for not meeting the guaranteed minimum average fuel efficiency target measured in terms of Kilometers operated per Kilogram of CNG fuel consumed (KMPKG) which it could recover from the AMC dues of TML under Clause 46 of GCC.

    c. DTC calculated the KMPKG penalty amount payable under Clause 24.4 of the GCC and adjusted the same from the AMC bills of the TML. The KMPKG was calculated by the DTC on the basis of meterage recorded in the drivers' memo maintained by it for calculation of AMC.

    d. This was disputed by TML, who contended that the "kilometers operated" as specified in Clause 24.4 could be the only basis for calculation of KMPKG and not the metreage recorded in the drivers' memo which was made the basis for calculation of AMC under Clause 46.16.

    e. DTC raised a demand for payment of KMPKG penalty for the period 2011-12 and 2012-13 and sought to deduct the same from the AMC dues of TML. This prompted TML to invoke arbitration and challenge the demand. By way of an interim orders dated 05.04.2013 and 15.06.2013, the then Arbitral Tribunal stayed the demand and restrained DTC from recovering the penalty from the AMC dues.

    f. Eventually an arbitral award was passed on 16.08.2017 ('First Arbitral Award'). The majority award held that DTC could not use the meterage recorded in the drivers' memo maintained for calculating AMC under Clause 46.16, and consequently declared the said action as illegal, including the recoveries made by them from the AMC dues of TML.

    g. DTC filed objections against the First Arbitral Award under Section 34 of the A&C being OMP(COMM.) 425/2017. On the other hand, TML filed an enforcement petition being OMP (ENF.)(COMM.) 137/2018 for enforcing the award wherein vide orders dated 26.09.2018, 29.03.2019, 13.03.2020 and 20.07.2020, the Court directed DTC to deposit Rs.100 crores, Rs.140 crores and Rs.100 crores in the Registry and allowed TML to withdraw the said amounts on furnishing of affidavit of undertaking and bank guarantees.

    h. During the pendency of its objections, DTC issued an Office Memorandum dated 05.02.2021 raising a demand of Rs.127 Crores (approx.) from TML pertaining to the period between 2009 to 2020, excluding the periods 2011-2012 and 2012-13 already covered by the First Arbitral Award and held to be illegal.

    i. TML filed a post award Section 9 petition being OMP(I)(COMM.) 62/2021 to restrain DTC from recovering the said amount from its AMC dues. TML contended that DTC's action was in violation of the First Arbitral Award and the contractual provisions.

    j. Apparently, on 15.02.2021 and 18.02.2021, DTC deducted a sum of Rs.15,00,59,200/- and Rs.4,11,01,700/-respectively aggregating to a total of Rs.19,11,60,900/-, from the AMC dues of TML. However, later vide order dated 18.02.2021 passed in the aforementioned Section 9 petition, DTC gave an undertaking that it shall not make deductions from the AMC dues of TML till the next date of hearing.

    k. Later, vide order dated 15.11.2021, the cou

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