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IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
M/s. Carbonaire Industries Madras Private Limited, Chennai - Appellant
Versus
M/s. Express Infrastructure Private Limited, Chennai - Respondent
Arb.O.P (Com.Div) No. 322 of 2022
Decided On : 18-07-2022
Arbitration - Force Majeure - Arbitration and Conciliation Act, 1996, Section 34 - 13 of Power Purchase Agreement - Summary
Fact of the Case:
The petitioner, CIMPL, and the respondent, EIPL, entered into a Power Purchase Agreement (PPA) for the supply of electricity. Due to the Covid-19 pandemic and subsequent lockdown, EIPL invoked the Force Majeure clause and terminated the PPA. CIMPL made claims before the Arbitral Tribunal (AT) under five heads, but the impugned award negatived all claims and allowed EIPL's counter claim. CIMPL challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.
Finding of the Court:
The Court found that the AT's view on the invocation of Force Majeure and economic hardship exclusion was plausible and did not warrant judicial intervention. The Court also discussed the grounds for challenging the award under Section 34 and concluded that the petition failed to pass muster and was dismissed.
Issues: Conflict with public policy, patent illegality, and contravention of the contract terms were raised as grounds for challenging the award.
Ratio Decidendi: The Court emphasized that Section 34 proceedings are a summary procedure and that judicial intervention is minimal. It also discussed the interpretation of the Force Majeure clause and the exclusion of economic hardship, highlighting the principles of public policy and the limitations of challenging an arbitral award.
Final Decision: The petition was dismissed, and no costs were awarded.
JUDGMENT
(Prayer: Petitioner filed under Section 34 (2)(b)(ii) and 34(2A) of Arbitration and Conciliation Act, 1996 to set aside the award passed by the Arbitral Tribunal dated 21.12.2021 passed by sole arbitrator.)
1. A unsuccessful claimant before an 'Arbitral Tribunal' ['AT' for the sake of brevity] constituted by a sole Arbitrator is the protagonist of the captioned 'Arbitration Original Petition' ('Arb.OP' for the sake of brevity), which has been presented in this Court on 17.03.2022 assailing an 'arbitral award dated 21.12.2021' [hereinafter 'impugned award' for the sake of convenience and clarity].
2. Mr.M.S.Krishnan, learned Senior Advocate instructed by Mr.Prasad Vijayakumar, counsel on record for the petitioner in the captioned Arb.OP is before this Court.
3. Short facts shorn of granular particulars will suffice as this is a Section 34 legal drill. Short facts are that the petitioner (hereinafter 'CIMPL' denoting 'Carbonaire Industries Madras Private Limited') and the respondent (hereinafter 'EIPL' denoting 'Express Infrastructure Private Limited') entered into a 'Power Purchase Agreement dated 13.06.2019' (hereinafter 'PPA' for the sake of brevity); that this PPA is the nucleus of the case on hand; that under PPA, CIMPL agreed to supply 12 MW of electricity to EIPL per annum. The term of the PPA was initially upto 31.03.2022; that the parties were at liberty to extend the term for such additional periods; that there is a lock in period of 12 months from the commencement date; that commencement date has been defined under Clause 2.10 of PPA as date on which the energy supply is commenced; that this Court is informed that the commencement date is 26.07.2019; that therefore the lock in period was upto 25.07.2020; that Corona virus pandemic unfurled in this part of the world on 23.03.2020; that none could portend or presage the Corona virus pandemic (hereinafter 'Covid-19' for the sake of convenience); that owing to Covid-19, the Government of Tamil Nadu issued an Executive Order i.e., G.O.Ms.No.152, Health and Family Welfare (P1) Department dated 23.03.2020 inter alia directing lock down of all shops, commercial establishments etc.,; that EIPL is running a Mall; that PPA and supply/purchase of electrical energy under PPA was for such Mall; that Mall suffered a shut down owing to lock down; that EIPL wrote to CIMPL on 10.05.2020 inter alia saying they are invoking Force Majeure clause from the date of lockdown announced by the Government of Tamil Nadu (this Court is able to gather from the impugned award that this communication was marked as Ex.C21 before the AT); that it has become necessary to cull out this from the impugned award as list of exhibits and list of witnesses have not been given at the tail end of the impugned award which is customarily done; that this Court is informed that oral evidence was also let in by one party, namely, EIPL and one finance personnel was examined as a witness on the side of EIPL; that in and by 10.05.2020 communication, EIPL made it clear that it is invoking the Force Majeure clause (as alluded to supra); that Clause 13 of PPA is Force Majeure clause; clause 13.3 is an adumbration of exclusions to Force Majeure clause; that Clause 13.5 (a) talks about invocation of Force Majeure by a party which intends to stake a claim under Force Majeure; that post Ex.C21 (10.05.2020) communication, EIPL sent a termination notice dated 23.06.2020 terminating PPA; that this termination notice was met with an elaborate reply from CIMPL i.e., a communication dated 06.07.2020; that this Court is informed that this termination notice dated 23.06.2020 and 06.07.2020 communication were all before the AT as exhibits and therefore, they form part of the records of AT; that therefore this Court is not embarking upon the cross reference of exhibit numbers by sifting through the impugned award; that CIMPL made claims before the AT under five heads and those five heads are a) Monies said to be used for energy sup
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