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IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR. J.
OPG Energy Pvt. Ltd., Currently at “KNOWLEDGE TOWER”, Chennai – Appellant
Versus
M/s. Precot Meridian Industries Ltd., Coimbatore & Others – Respondent
Case No : O.P. No. 103 of 2016 & 611 of 2016
Decided On : 05-02-2021
ARBITRATION - Award - Challenge - Grounds - Patent illegality - Conflict with public policy - Basis not set out - Whether impugned award vitiated.
Fact of the Case:
OPG and Precot entered into a Power Sharing Agreement (PSA) and a Memorandum of Understanding (MOU) constituting the contractual relationship between them. Precot claimed compensation for additional amount incurred owing to short supply and stoppage of power supply. AT made an impugned award by 2:1 majority awarding compensation for additional amount incurred in respect of HTSC 230 alone for a specified period with interest at the rate of 7.5%. Both parties challenged the impugned award.
Finding of the Court:
1. The impugned award was made by a three-member AT by a 2:1 majority. The divergent views were not with regard to the entirety of the impugned award but only some parts of it. 2. The impugned award has been challenged only in respect of those parts/portions which have gone against the petitioners in the respective OPs. 3. The challenge to the impugned award is predicated on Section 34(2A) and 34(2)(b)(ii) read with clauses (ii) and (iii) of Explanation 1 of the Arbitration and Conciliation Act, 1996. 4. The submissions were restricted to damages aspect of the matter and the limiting factors thereto, namely causation, remoteness and mitigation. 5. The AT vide the impugned award has made lack of evidence as basis qua criticals. 6. The manner in which evidence has been appreciated is beyond the ken of Section 34 for two reasons. First is, this Court is not sitting on appeal qua impugned award i.e., not reviewing the impugned award and the second is, reappreciation of evidence is specifically forbidden with regard to one of the grounds urged i.e., patent illegality. 7. The Ssangyong principle makes it clear that post 23.10.2015, an award cannot be examined on merits. 8. The majority view of the impugned award has effectively said that it does not accept the contention of OPG that there was no short supply as it had not accepted the case that there was excess supply as shown in Tables A and B. 9. The majority view is that in all these periods, the unutilized quota from TNEB source is far in excess of the short supply. 10. The basis of award is not proper as it is not a flaw in the decision making process owing to the facts of this case i.e., flaw within the legal landscape of Section 34. 11. The majority view which is effectively the impugned award is not being dislodged and as this Court is not judicially interfering qua the impugned award, the plea of learned counsel for Precot that the quantum awarded by the minority view ought not have been reduced by the majority view axiomatically fails.
Issues: 1. Whether the impugned award is vitiated by patent illegality? 2. Whether the impugned award is in conflict with public policy of India owing to being in conflict with most basic notions of justice and / or whether impugned award sets out the basis?
Ratio Decidendi: 1. The impugned award has been made by a three-member AT by a 2:1 majority. The divergent views were not with regard to the entirety of the impugned award but only some parts of it. 2. The impugned award has been challenged only in respect of those parts/portions which have gone against the petitioners in the respective OPs. 3. The challenge to the impugned award is predicated on Section 34(2A) and 34(2)(b)(ii) read with clauses (ii) and (iii) of Explanation 1 of the Arbitration and Conciliation Act, 1996. 4. The submissions were restricted to damages aspect of the matter and the limiting factors thereto, namely causation, remoteness and mitigation. 5. The AT vide the impugned award has made lack of evidence as basis qua criticals. 6. The manner in which evidence has been appreciated is beyond the ken of Section 34 for two reasons. First is, this Court is not sitting on appeal qua impugned award i.e., not reviewing the impugned award and the second is, reappreciation of evidence is specifically forbidden with regard to one of the grounds urged i.e., patent illegality. 7. The Ssangyong principle makes it clear that post 23.10.2015, an award cannot be examined on merits. 8. The majority view of the impugned award has effectively said that it does not accept the contention of OPG that there was no short supply as it had not accepted the case that there was excess supply as shown in Tables A and B. 9. The majority view is that in all these periods, the unutilized quota from TNEB source is far in excess of the short supply. 10. The basis of award is not proper as it is not a flaw in the decision making process owing to the facts of this case i.e., flaw within the legal landscape of Section 34. 11. The majority view which is effectively the impugned award is not being dislodged and as this Court is not judicially interfering qua the impugned award, the plea of learned counsel for Precot that the quantum awarded by the minority view ought not have been reduced by the majority view axiomatically fails.
Final Decision: Both OPs fail and the same are dismissed. There shall be no order as to costs.
JUDGMENT :`
(Prayer: Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the award dated 15.10.2015 passed by the learned Arbitral Tribunal in so far as it awards a sum of Rs.1,60,13,416/- with interest at 7.5% in favour of the First Respondent.
Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, to declare the award amount of Rs.2,17,79,971 passed under the minority award is correct and the same is enforceable and reduction of the claim amount under majority award is not correct, to declare that the award granting interest only 7 ½ % per annum is not correct, to declare that the Petitioner is entitled to 18% per annum from the date of cause of action /demand i.e., 08.03.2010 till the date of payment and to pay the costs to the petitioner and to pass such further or other orders as this Hon’ble Court may deem fit and thus render justice.)
1. At the outset, this Court deems it appropriate to extract / reproduce the common proceedings / orders made in captioned two matters in two earlier listings, on 23.07.2020 and the other on 13.10.2020, which read as follows:
For the sake of convenience and clarity, ‘O.P.No.103 of 2016’ shall be referred to as ‘Senior OP’ and ‘O.P.No.611 of 2016’ shall be referred to as ‘Junior OP’.
2. Mr.Vinod Kumar of M/s.J Sagar associates (Law Firm) on behalf of sole petitioner in senior OP and Mr.D.Balaraman, learned counsel on record for the contesting first respondent in the senior OP are before me in this web-hearing on a video-conferencing platform. To be noted, the two counsel stand swapped in the junior OP. This Court is informed that senior and junior OPs are directed against the same arbitral award and are in the nature of cross-OPs as Senior OP has been preferred by the respondent before the Arbitral Tribunal and Junior OP has been preferred by the Claimant before the Arbitral Tribunal.
3. Both learned counsel agree that main OPs can be taken up for final disposal if the matter is re-scheduled.
List this matter under the same caption on 24.08.2020.’
‘Proceedings dated 13.10.2020
Captioned ‘Original Petitions’ (‘Ops’ in plural and ‘OP’ in singular for the sake of convenience and clarity) are applications under section 34 of ‘The Arbitration and Conciliation Act, 1996 (Act 26 of 1996)’, which shall hereinafter be referred to as ‘A and C Act’ for the sake of brevity.
2 ‘O.P.No.103 of 2016’ shall be referred to as ‘Senior OP’ and ‘O.P.No.611 of 2016’ shall be referred to as ‘Junior OP’. This is based on the sequence of numbers assigned and it is for the sake of convenience.
3 Both senior and junior OPs are directed against the same arbitral award, namely, arbitral award dated 15.10.2015 made by a ‘three member Arbital Tribunal’ (‘AT for the sake of brevity) by a 2 : 1 majority. Therefore, senior and junior OPs are for all practical purposes cross OPs.
4 Be that as it may, today in this web hearing by a video conferencing platform, Mr.Satish Parasaran, learned senior counsel instructed by Mr.P.Vinod Kumar, learned counsel of M/s.J Sagar Associates (Law Firm) on record for petitioner in senior OP and Mr.D.Balaraman, learned counsel on record for Precot Meridian Industries Ltd. are before me.
5 To be noted, the parties and their respective counsel stand swapped in junior OP.
6. In senior OP, three noblemen who constituted the AT have been arrayed as respondents 2, 3 and 4. Today, learned senior counsel and learned counsel, i.e., learned counsel on both sides submit in unison without any disputation or disagreement that the presence of these three noblemen in the array of parties in senior OP is not necessary owing to the nature of challenge to the award in both senior and junior OPs. Therefore, this court following the procedure adopted by Hon’ble Supreme Court in Vinay Heavy Equipments case [Zonal General Manager, Ircon International Limited Vs. Vinay Heavy Equipments reported in (2015) 13 SCC 680], de
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