2023 Supreme(Guj) 199

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SONIA GOKANI, HEMANT M.PRACHCHHAK, JJ.
Daxin Gujarat Vij Company Ltd Through Executive Engineer – Appellant
Versus
Essar Steel India Ltd – Respondent
R/First Appeal No. 3659 of 2021 With Civil Application (For Stay) No. 1 of 2021
Decided on : 24-02-2023

Headnote:

The Court held that the appellant's claim would not be extinguished in terms of the Resolution Plan. The Court also held that the Commercial Court erred in dismissing the appellant's suit relying on Order XIII A of the Code of Civil Procedure and the matter ought to be remanded to the learned Commercial Court.

Fact of the Case:

The appellant, a company registered under the provisions of the Companies Act, 1956, undertook the business of supply and distribution of electricity in the certain region in the State of Gujarat. Essar Steel India Limited ('the Arcelor Mittal' hereinafter) sets up a plant for manufacture of hot rolled steel coil at Hazira in the year 1991. To cater to the needs of Essar Steel India Limited ('the Essar Steel' hereinafter) and other group of Companies, the appellant had set up a power plant of 515 megawatt at Hazira in the year 1995. Out of 515 megawatt of electricity generated/produced by the Essar Power Limited, 300 megawatt of electricity was to be supplied to Gujarat Electricity Board by entering into a power purchase agreement dated 30.05.1996. Remaining 215 megawatt of electricity generated/produced by the Essar Power Limited was to be consumed by the group companies of the Essar Steel India Limited only. Another group company of Essar Steel India Limited being Bhander Power Limited had been set up as an additional captive power plant of 505 megawatt exclusively for its captive use at Hazira in the year 2005. Electricity generated from power plant of Bhander Power Limited and Essar Power Limited 505 megawatt and 515 megawatt respectively was to be exclusively used by the group of the companies whereas the Essar Steel was to consume the electricity supplied by the present appellant. A dispute had been raised with respect to the wheeling charges on the ground that the Bus-bar vested in Gujarat Energy Transmission Corporation ('the GETCO' hereinafter), by virtue of that electricity flowed from one end of the Busbar to another. This issue of wheeling of power from Bhander Power Limited to Essar Steel India Limited was required to be resolved by the Essar Steel India Limited and for this purpose wanted to shift the Ichhapor-Sachin Electricity Line. The Essar Steel wanted to arrive at an amicable solution to ensure that the power from D.G.V.C.L. is supplied to only its consumer Essar Steel and not group companies of Essar Steel and necessary arrangement for the group companies would be made where electricity was to be received only from the internal power plants. A meeting was held on 01.02.2010 between Managing Director of Gujarat Urja Vikas Nigam Limited ('the GUVNL' hereinafter), Managing Director, GETCO, Chief Electrical Inspector and representatives of Essar Steel and Bhander Power Limited. Accordingly, the actions were undertaken by the respondents. The appellant and the GETCO conducted an inspection in the month of June-July 2011 and found that the electricity supplied by the appellant was solely to be used by the respondent No.1, power was being taken to the other units and also non-consumer units of the appellant. The notice was issued to the respondent No.1 on 26.07.2011 stating that the action was clearly in breach of agreement dated 01.02.2010 and rejected all representations of the respondent No.1. The appellant raised a bill of Rs.2311,02,43,968/- for the period between 15.06.2011 to 30.07.2011. The Government of Gujarat directed the appellant to take appropriate steps against the respondent No.1 by applying the provisions under Section 126(6) of the Electricity Act, pursuant to which the appellant raised supplementary bills amounting to Rs.192,58,53,664/-. An appeal was preferred under Section 127 of the Electricity Act before the appellate authority challenging the action of the appellant raising supplementary bills of Rs.192,58,53,664/-. The respondent No.1 deposited 50% of the amount of supplementary bill and the remaining 50% was to be paid in installments. Vide order dated 01.11.2013, the appellant authority adjudicated that only 25.23 MU of electricity could have been said to be supplied by the appellant. Against this finding of the appellate authority, Special Civil Application No.2859 of 2014 was preferred by the appellant and Special Civil Application No.5494 of 2014 was preferred by respondent No.1. By an order dated 22.01.2015, this Court allowed Special Civil Application No.5494 of 2014 filed at the behest of the respondent No.1 and remanded the matter back to the appellate authority. The appellant challenged the said order in Special Civil Application No.2859 of 2014 and Special Civil Application No.5494 of 2014 by way of Letters Patent Appeal Nos.465 and 466 of 2015 on the ground that the appeal filed by the respondent No.1 before the appellate authority is not maintainable and therefore, the order of the appellate authority dated 01.11.2013 to be quashed and set aside. The Letters Patent Appeal was allowed on 17.07.2015 where the Court held that the appeal filed by the respondent No.1 under Section 127 of the Electricity Act is not maintainable. Aggrieved by the said order of 17.07.2015 passed in Letters Patent Appeal, the respondent No.1 approached the Apex Court by way of Special Leave Petition (Civil) Nos.27920 and 27921 of 2015. They were admitted and pending as on date and no interim relief is granted by the Apex Court. After seeking the legal opinion, the appellant preferred a Special Civil Suit No.373 of 2016 against the present respondent for recovery of outstanding dues of Rs.2311,02,43,968/- for breach of agreement dated 01.02.2010 for an unauthorized use of electricity during the period between 15.06.2011 to 30.07.2011.

Finding of the Court:

The Court held that the appellant's claim would not be extinguished in terms of the Resolution Plan. The Court also held that the Commercial Court erred in dismissing the appellant's suit relying on Order XIII A of the Code of Civil Procedure and the matter ought to be remanded to the learned Commercial Court.

Issues: Whether the appellant's claim would be extinguished in terms of the Resolution Plan.

Ratio Decidendi: The Court held that the appellant's claim would not be extinguished in terms of the Resolution Plan. The Court also held that the Commercial Court erred in dismissing the appellant's suit relying on Order XIII A of the Code of Civil Procedure and the matter ought to be remanded to the learned Commercial Court. The Court held that the appellant's claim was not extinguished by the Resolution Plan, as the notional amount of INR 1/- was given to ensure the appellant's participation in the corporate insolvency resolution process, and not to adjudicate any amount. The Court also held that the Commercial Court erred in dismissing the appellant's suit relying on Order XIII A of the Code of Civil Procedure, as the application for direction filed by the respondent was not an application for summary judgment, and the appellant was not given sufficient opportunity to contest the application.

Final Decision: The Court allowed the appeal, quashed and set aside the judgment and order dated 28.09.2021 passed by the learned 2nd Additional Senior Civil Judge, Surat in Commercial Civil Suit No.4 of 2020 (Old Special Civil Suit No.373 of 2016), and restored the matter to the concerned Trial Court for re-hearing on merits.