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2017 Supreme(HP) 967
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
Tarlok Singh Chauhan, J.
Jai Parkash Power Ventures Ltd. now known as Himachal Baspa Company Power Limited - Petitioner
Versus
State of H.P. & Anr. - Respondents
Arb.C. No. 93 of 2016
Decided On : 29-11-2017
For the petitioner: Mr. R.L. Sood, Mr. Sunil Mohan Goel, Mr. Ashish Jamalta
For the Respondents: Mr. Neeraj K. Sharma, Mr. J.S. Bhogal, Mr. Suneet Goel
An arbitral award is valid and enforceable if the Arbitral Tribunal followed the proper procedure, had jurisdiction to decide the dispute, and the award is not against the fundamental principles of law.
Headnote:
The petitioner company challenged the arbitral award dated 20.05.2016, passed by the Arbitral Tribunal, on the grounds of procedural irregularities, lack of jurisdiction, and violation of fundamental principles of law. The dispute arose from a lease agreement between the petitioner and the government of Himachal Pradesh (Respondent No. 1) for the implementation of a hydroelectric project. The petitioner claimed that the lease rentals demanded by Respondent No. 2, Himachal Pradesh State Electricity Board (HPSEB), were excessive and not in accordance with the terms of the lease agreement.
Fact of the Case:
The petitioner company, Jaiparkash Industries Ltd., entered into an Implementation Agreement with the government of Himachal Pradesh for the implementation of a hydroelectric project. As per the agreement, the petitioner was granted the right to establish, own, operate, and maintain the project subject to the approval of the Central Electricity Authority. The agreement also provided for the acquisition of land for the project by the government and the payment of lease rent by the petitioner. Subsequently, the petitioner and HPSEB executed three lease deeds for different parcels of land. The petitioner claimed that the lease rentals demanded by HPSEB were excessive and not in accordance with the terms of the lease agreement.
Finding of the Court:
The Court held that the arbitral award was valid and enforceable. The Court found that the Arbitral Tribunal had followed the proper procedure and had jurisdiction to decide the dispute. The Court also found that the award was not against the fundamental principles of law. The Court rejected the petitioner's arguments that the lease rentals were excessive and that the Arbitral Tribunal had erred in relying on an undertaking given by the petitioner to HPSEB. The Court held that the petitioner had voluntarily entered into the undertaking and was bound by its terms.
Issues: 1. Whether the Arbitral Tribunal followed the proper procedure and had jurisdiction to decide the dispute. 2. Whether the arbitral award was against the fundamental principles of law. 3. Whether the lease rentals demanded by HPSEB were excessive. 4. Whether the Arbitral Tribunal erred in relying on an undertaking given by the petitioner to HPSEB.
Ratio Decidendi: 1. The Court held that the Arbitral Tribunal had followed the proper procedure and had jurisdiction to decide the dispute. The Court found that the Arbitral Tribunal had given both parties a fair opportunity to present their case and that the award was based on the evidence presented to the Tribunal. 2. The Court held that the arbitral award was not against the fundamental principles of law. The Court found that the award was not arbitrary, capricious, or irrational. The Court also found that the award did not violate any public policy of India. 3. The Court held that the lease rentals demanded by HPSEB were not excessive. The Court found that the lease rentals were based on the market value of the land and that the petitioner had agreed to pay those rentals in the undertaking given to HPSEB. 4. The Court held that the Arbitral Tribunal did not err in relying on the undertaking given by the petitioner to HPSEB. The Court found that the undertaking was valid and enforceable and that the petitioner was bound by its terms.
Final Decision: The Court dismissed the petition and upheld the arbitral award.
Tarlok Singh Chauhan, J.
This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short the Act) against the award dated 20.05.2016.
2. Brief facts necessary for the adjudication of this petition are that an Implementation Agreement (Annexure C-2) was entered into on 01.10.1992 between the petitioner Company with the government of Himachal Pradesh (Respondent No. 1 herein) for the implementation of 300 MW Baspa Hydro Electric Project, Stage-II (for short ‘Project’), in District Kinnaur Himachal Pradesh.
3. As per this Implementation Agreement (for short the ‘Agreement’), the petitioner being a generating Company was granted right to establish, own, operate and maintain this project subject to the approval of the Central Electricity Authority, including transmission system upto Jhakri Sub Station of Nathpa Jhakri Hydro Electric Project and permission to generate and sell power from the above mentioned project for an initial period of 40 years from the date of commissioning of project extendable for further period of 20 years.
4. As per Clauses 6 and 7 of the agreement, the government was to acquire land for the company, such private lands within the state of Himachal Pradesh as may be required by the Company for the construction, operation and maintenance of the project.
5. Clause 38 contained an arbitration clause wherein it was provided that all disputes or differences out of or relating to or in connection with the agreement, which could not be settled amicably by the parties were to be referred to and settle by arbitration.
6. Consequent upon the signing of the agreement, a meeting was held in the office of Chairman of Himachal Pradesh State Electricity Board (for short ‘HPSEB’) (Respondent No. 2) on 11.12.1992, wherein, as per para-3 of the record of discussion, it was mentioned that:
“It was pointed out that the case for transfer of 48 bighas of land in possession of Himachal Pradesh State Electricity Board to the claimant company had been submitted to the Government for approval and it was decided that 48 bighas of land in possession of HPSEB may be transferred to the petitioner Company w.e.f. 01.01.1993 on lease basis.”
7. As per record of discussion, the rate of lease and other formalities were to be worked out with respondent No. 1 and the rate of lease was to be applicable from the date when possession of the land would be handed over to the petitioner.
8. That pursuant to the above, the Chief Engineer (Projects), HPSEB vide his letter No. CEP/PBT-13/285/92-17974-75 dated 31.3.1993 (Annexure C-4) and letter No. CEP/PBT-13-285-93-7451 dated 14.10.1993 (Annexure C-5) informed that the lease charges shall be at the rate of 18% of the market rate per annum. However, since the market rate had not been determined, the petitioner deposited Rs. 50,000/- immediately which were to be adjusted as and when the market rates were determined by the Deputy Commissioner, Kinnaur.
9. Thereafter, a Status Review Committee meeting was held on 25.03.1998 in the office of the Chairman, HPSEB, (Respondent No. 2), which was attended to by the representatives of the claimant Company also. The minutes of the said meeting were circulated by the Chief Engineer (P&M) of the Himachal Pradesh State Electricity Board dated 17.04.1998. Para-3 of the said Minutes of the Meeting reads as under:-
“Land Acquisition:- Shri Aggarwal requested Government of Himachal Pradesh to help in expediting the lease agreement and 48.1 bighas land at Sholtu. In this regard, it was intimated that as the land belongs to the Department of MPP & Power, necessary formalities with regard to the signing of lease agreement will be done by Joint Secretary (Board). The Company is to provide necessary lease papers on standard format to the JS (P) through the concerned Deputy Commissioner.”
10. In the meanwhile, the petitioner company w
