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IN THE HIGH COURT OF DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
Eastern Coalfields Limited - Appellant
Versus
India Power Corporation Ltd. - Respondent
FAO(OS) (COMM) 143 of 2022 & CM Appl. 26216 of 2022, CM Appl. 26217 of 2022, CM Appl. 26218 of 2022, CM Appl. 26219 of 2022 and CM Appl. 26220 of 2022
Decided On : 06-07-2022
The court affirmed that arbitral awards are final regarding factual findings, and grounds for setting them aside under the Arbitration Act are strictly limited to significant legal infractions.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34(1)(c) - Challenge to arbitral award - The High Court upheld the validity of an arbitral award and found the claims substantiated by adequate material, stating that the Arbitrator is the ultimate judge of evidence and factual findings - ECL's application to set aside the award was denied as the grounds were unmerited. (Paras 10, 11, 26, 27)
(B) Judicial review standards - The court emphasized that an arbitral award can only be interfered with on limited grounds and cannot re-evaluate evidence presented to the Arbitrator - Findings based on the Arbitrator's evaluation are final unless a severe illegality is proven. (Paras 22, 24)
Facts of the case:
ECL and IPCL entered into agreements regarding the operation and maintenance of a thermal power plant, which led to disputes about asset valuation upon lease expiration - ECL's claims regarding a lack of material to substantiate IPCL's claim for Written Down Value (WDV) were contested in court.
Findings of Court:
The learned Single Judge upheld the arbitral decision affirming ECL's obligation to fulfill claims supported by the evaluative reports presented during arbitration.
Issues: The primary issues revolved around whether the quantification of WDV was adequately substantiated and if the arbitral award was legally valid.
Ratio Decidendi: The court ruled that the assessment and quantification of WDV by the Arbitrator were supported by sufficient evidence and thus not subject to judicial review unless a manifest illegality was shown.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. details on the lease and disputes over wdv. (Para 2 , 3 , 4 , 5 , 6 , 7) |
| 2. claims and counter-claims in arbitration. (Para 8 , 9) |
| 3. ecl's challenges against arbitral award. (Para 11 , 12) |
| 4. evaluation of claims and evidence by the tribunal. (Para 15 , 16 , 17 , 18 , 19 , 20 , 21) |
| 5. judicial review principles concerning arbitral awards. (Para 22 , 23 , 24) |
| 6. final conclusion upholding tribunal's award. (Para 26 , 27) |
JUDGMENT
Vibhu Bakhru, J. (Oral)--Eastern Coalfields Limited (hereinafter `ECL') has filed the present appeal under Section 37(1)(c) of the Arbitration and Conciliation Act (hereinafter `the A&C Act') impugning an order dated 29.10.2021 (hereinafter `the impugned order') passed by the learned Single Judge, whereby ECL's application under Section 34 of the A&C Act, seeking to set aside an arbitral award dated 15.02.2021 (hereinafter `the impugned award'), was rejected
FACTUAL BACKGROUND
2. On 30.03.1987, ECL entered into an agreement (hereinafter `the Agreement') with the respondent (hereinafter `IPCL'), for construction, erection and successful commissioning of a 2x10 MW Thermal Power Plant at Chinakuri Mining Complex (hereinafter `the Power Plant'). Subsequently, on 31.03.1993, the parties entered into a lease deed (hereinafter `the Lease Deed') for a period of twenty years commencing from 01.04.1991 for lease of the Power Plant along with land, buildings and quarters, plant and machinery. In terms of the Agreement, IPCL was entitled to the written down value (hereinafter `WDV') of the assets upon handing over the Power Plant in a good running condition to ECL on expiry of the Lease Deed.
3. After execution of the Lease Deed, IPCL commissioned an additional power plant of 1x10 MW capacity.
4. On 31.03.2011, as the Lease Deed expired by efflux of time, IPCL made a request for renewal of the said Lease Deed for a further period of twenty years, however, ECL extended the Lease Deed for a period of one year, that is, till 31.03.2012.
5. On expiry of the Lease Deed on 31.03.2012, IPCL claimed that it was entitled to the WDV of the assets including additions and alterations made by it to the Power Plant, quantified at Rs.24.7256 crores. ECL requested IPCL for possession of the Power Plant and claimed that handing over possession of the Power Plant was not conditional upon payment of the WDV. Further, ECL also requested IPCL to supply corroborative material to substantiate its claim against the WDV.
6. Disputes arose between the parties in connection with the Agreement dated 30.03.1987. IPCL filed a Writ Petition under Article 226 of the Constitution of India seeking directions be passed to ECL to pay the WDV. The said petition was disposed of by the Calcutta High Court on 19.03.2013.
7. Thereafter, IPCL filed a Special Leave Petition before the Supreme Court against the aforesaid order. The Supreme Court, by an order dated 17.10.2014, appointed the learned Sole Arbitrator to adjudicate the said disputes between the parties.
ARBITRATION
8. Before the Arbitral Tribunal, IPCL claimed an amount of Rs.24.7256 crores on account of the WDV; and, an amount of Rs.25.81 crores towards additional expenditure for operating and maintaining the Power Plant. IPCL further claimed interest on the aforesaid amounts at the rate of 18% per annum from 01.04.2012 till the date of payment.
9. ECL contested the claims raised by IPCL. ECL claimed that payment of the WDV was not a pre-condition to deliver peaceful possession of the Power Plant. ECL further claimed that IPCL had not submitted sufficient proof for the WDV, as actual receipts regarding the purchase of plant and machinery were not produced. ECL also raised several counter-claims. It claimed an amount of Rs.26,11,94,323/- on account of the rent due; an amount of Rs.57.32 crores on account of illegal enhanced tariff towards the coal price; an amount of Rs.2,49,56,138.95/- towards the outstanding coal bill; an amount of Rs.305.38 crores towards compens
