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IN THE HIGH COURT OF DELHI
Sanjeev Narula, J.
India Power Corporation Limited - Appellant
Versus
Eastern Coalfields Limited - Respondent
O.M.P. (COMM) 83 of 2022 & I.As. 1974-75 of 2022
Decided On : 02-03-2022
A party in unauthorized possession cannot claim maintenance expenses for property they trespass upon; only lawful possessions can lead to claims for damages.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Award challenged on grounds of error in rejecting Petitioner's claim for expenses and allowing Respondent's counter-claim for rent. (Paras 1, 10, 20)
(B) Legal principles - Claimant cannot claim for maintenance of a plant while in unauthorized possession; rank trespassers are not entitled to damages for maintenance. (Paras 16, 20)
Facts of the case:
Dispute arose from a Lease Deed regarding a power Plant where Petitioner claimed additional expenses, and Respondent counter-claimed for rent after lease expiry. (Paras 5-9)
Findings of Court:
The Arbitrator found that the Petitioner's claim was unsupported by evidence and upheld the Respondent's counter-claim for rent due for unauthorized occupation. (Paras 16-20)
Issues: Whether the Claimant was a trespasser after lease expiry and entitled to maintenance expenses. (Paras 14-15)
Ratio Decidendi: The court ruled that without legal possession, the Claimant cannot seek damages; the award's findings were based on coherent reasoning and supported by established principles. (Paras 20-21)
Result: Petition dismissed.
| Table of Content |
|---|
| 1. summary of parties and background of the dispute (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. claims made during arbitration (Para 8 , 9) |
| 3. petitioner's and respondent's arguments on claims (Para 11 , 12 , 13) |
| 4. court's analysis on the arbitral award findings (Para 14 , 15 , 16 , 17 , 18 , 19) |
| 5. dismissal of petition with no merit found (Para 20) |
JUDGMENT
[VIA HYBRID MODE]
Sanjeev Narula, J. (Oral)--The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"] assails the award dated 15th February, 2021, in so far as the same (i) allows Respondent's counter-claim for rent due and (ii) rejects Petitioner's claim for Rs.25.81 Crores towards additional expenditure till 31st December, 2014.
2. Before adverting to the contentions urged by the counsel, it must be noted that challenge to the award, at the instance of the Respondent, stands rejected vide order dated 29th October, 2021 in O.M.P. (COMM) 328/2021.
PARTIES TO THE DISPUTE
3. The Petitioner-India Power Corporation Limited (formerly DPSC Ltd.) [hereinafter, "IPCL"] is a company engaged in the business of supply and distribution of electricity. IPCL was operating two power generation stations viz. Chinakuri and Dishergarh in West Bengal, India and supplied electricity generated from the said power plants to coalmines for the running and operation of mining activities, incidental to the mines.
4. The Respondent-Eastern Coalfields Limited [hereinafter, "ECL"] is a coal producing company and a wholly owned subsidiary of Coal India Limited.
BRIEF FACTS
5. The Parties entered into an Agreement dated 30th March, 1987 [hereinafter, the "Agreement"], and in terms thereof, IPCL designed, erected and commissioned 2x10 MW Thermal Power Plant at Chinakuri Mining Complex [hereinafter, "the Plant"]. Subsequently, and in furtherance thereof, parties executed a `Lease Deed' dated 31st March, 1993 [hereinafter, "Lease Deed"], with the intent and understanding that ECL would supply coal to IPCL, which would be used to run and operate the plant and generate electricity that was to be supplied to meet ECL's power requirements.
6. The terms of the Lease Deed stood determined by the efflux of time on 31st March, 2011. IPCL then, made request for renewal of the lease for a further period of twenty years, however, ECL extended the same only for a period of one year - up to 31st March, 2012.
7. Thereafter, disputes arose between the parties and the Supreme Court of India vide order dated 17th October, 2014 appointed a Sole Arbitrator for adjudication of the disputes in relation to the Agreement and Lease Deed.1
AT ARBITRATION
8. At arbitration, IPCL claimed that since ECL neither paid the written down value ("WDV") of the additions and alterations made to the Plant by IPCL, nor did it renew the lease for the Plant for a further period of twenty years; IPCL incurred an amount of Rs.25.81 crores till 31st December, 2014 towards additional expenditure for operating and maintaining the said Plant.
9. ECL, on the other hand, raised a counter-claim pertaining to the rent due from IPCL. Further, ECL claimed an amount of Rs.3,21,70,837/- as `rent due' for a period of ten months i.e., from July, 2010 to September, 2010; April, 2011; and October, 2011 to March, 2012. ECL also claimed an amount of Rs.15,45,15,684/- as `rent due' in lieu of `opportunity cost' for a period of forty-seven months after expiry of the Lease Deed i.e., from April, 2012 to March, 2016 on the ground that IPCL was in wrongful possession of the said Plant after determination of the Lease Deed on 31st March, 2012, having failed to handover the Plant, upon expiry of the lease.
10. Adjudicating the afore-noted claims, the learned Arbitrator passed an award, the operative portion whereof, reads as under:
"(a) The Respondent shall pay to the Claimant a sum of Rs.24.7256 Crores as WDV.
(b) The aforesaid amount shall be paid with Interest @ 9% with effect from 06.10.2016
