1998 Supreme(Ori) 44

High Court Of Orissa
S. N. PHUKAN
GRID CORPORATION OF ORISSA LIMITED - Appellant
Versus
INDIAN CHARGE CHROME LTD. - Respondent
Misc. Appeal 599  Of  1997
Decided On : 02/10/1998

THE PROVISIONS OF SECTION 7 OF THE ARBITRATION ACT, 1996 WOULD APPLY TO THE PRESENT CASE IN VIEW OF THE FACT THAT THE SCOPE OF THE ARBITRATION ACT IS VERY WIDE AND IT NOT ONLY CONTAINS ARBITRATION AGREEMENT IN WRITING BUT ALSO OTHER ARBITRATION AGREEMENTS AS MENTIONED IN SUB-SECTION (4).

Headnote:

ARBITRATION - DISPUTE BETWEEN GRID CORPORATION OF ORISSA LTD. AND INDIAN CHARGE CHROMES LTD. - ARBITRABILITY - JURISDICTION OF ORISSA ELECTRICITY REGULATORY COMMISSION - APPOINTMENT OF ARBITRATOR - HELD, DISPUTE IS ARBITRABLE AND WITHIN THE JURISDICTION OF THE REGULATORY COMMISSION - REGULATORY COMMISSION FAILED TO ARBITRATE IN THE MATTER AND/OR FAILED TO APPOINT AN ARBITRATOR - HON'BLE MR. JUSTICE AZIZ MUSHABBER AHMADI, FORMER CHIEF JUSTICE OF INDIA, NOMINATED AS ARBITRATOR.

Fact of the Case:

GRID CORPORATION OF ORISSA LTD. (GRIDCO) ISSUED A NOTICE TO INDIAN CHARGE CHROMES LTD. (ICCL) FOR DISCONNECTION OF POWER SUPPLY DUE TO NON-PAYMENT OF CHARGES. ICCL FILED APPLICATIONS UNDER SECTION 9 OF THE ARBITRATION AND CONCILIATION ACT, 1996 BEFORE THE SECOND ADDITIONAL DISTRICT JUDGE, BHUBANESWAR, WHICH WERE ALLOWED RESTRAINING DISCONNECTION OF POWER SUPPLY TILL DISPOSAL OF CASE NO. 15 OF 1997, PENDING BEFORE THE REGULATORY COMMISSION. THE COURT BELOW PASSED EX PARTE AD INTERIM INJUNCTION RESTRAINING THE GRIDCO FROM DISCONNECTING THE POWER SUPPLY. AGAINST THAT ORDER, A SPECIAL LEAVE PETITION WAS FILED, WHICH WAS MODIFIED BY THE APEX COURT TO THE EXTENT THAT INSTEAD OF DEPOSITING RS. 5 CRORES ON DEPOSITING RS. 2. 5 CRORES, THE ELECTRICITY SUPPLY SHOULD BE RECONNECTED IMMEDIATELY AND THAT THE REST RS. 2. 5 CRORES WOULD BE DEPOSITED SUBSEQUENTLY. ICCL ALLEGED THAT GRIDCO, CONTRARY TO ALL KNOWN PRACTICES OF BILLING AND CONTRARY TO THE AGREEMENT BETWEEN THE PARTIES, BEGAN TO MAKE HALF-AN-HOUR ADJUSTMENTS AND BILLS BEGAN TO BE RAISED ON HALF-AN-HOUR SETTLEMENT BASIS. ICCL FURTHER ALLEGED THAT GRIDCO IS DUTY BOUND UNDER THE INDIAN ELECTRICITY ACT, 1910 AND THE ELECTRICITY (SUPPLY) ACT, 1948 TO MAINTAIN GRID DISCIPLINE AT THE STATUTORY LIMITATIONS, BUT IT STARTED DEFAULTING, AND SINCE JULY, 1996, THE FREQUENCY OF THE GRID HAS BEEN FLUCTUATING BEYOND THE UPPER LIMITS OF THE STATUTORY LEVEL OBSTRUCTING THE STABLE POWER GENERATION BESIDES CAUSING SEVERE DAMAGE TO THE POWER PLANT OF ICCL AT CHOUDWAR. ICCL FILED A PETITION UNDER SECTION 9 OF THE ARBITRATION ACT, 1996 BEFORE THE DISTRICT JUDGE, PURI AND OBTAINED AN EX PARTE AD INTERIM INJUNCTION AGAINST GRIDCO RESTRAINING IT FROM DISCONNECTING BACK-UP POWER SUPPLY TO ICCL, IMFA AND PPL AND GRIDCO WS ACCORDINGLY INFORMED ON 30-4-1997. IT WAS ALLEGED THAT EVEN AFTER RECEIPT OF THE ORDER, POWER SUPPLY TO PPL WAS DISCONNECTED ON 1-5-1997. THERE WERE FURTHER PROCEEDINGS BEFORE THIS COURT AS WELL AS THE APEX COURT, AND ON PAYMENT OF RS. 5 CRORES, AS ORDERED BY THE APEX COURT, ELECTRICITY WAS RECONNECTED. GRIDCO ALSO FILED REPLY BEFORE THE REGULATORY COMMISSION ON 15-4-1997 WITHOUT RAISING ANY OBJECTION AS TO ARBITRATION REFERENCE.

Finding of the Court:

THE COURT HELD THAT THE DISPUTE BETWEEN THE PARTIES IS ARBITRABLE AND IT IS WITHIN THE JURISDICTION OF THE REGULATORY COMMISSION. THE REGULATORY COMMISSION FAILED TO ARBITRATE IN THE MATTER AND/OR FAILED TO APPOINT AN ARBITRATOR. THE COURT FURTHER HELD THAT THE PROVISIONS OF SECTION 7 OF THE ARBITRATION ACT, 1996 WOULD APPLY TO THE PRESENT CASE IN VIEW OF THE FACT THAT THE SCOPE OF THE ARBITRATION ACT IS VERY WIDE AND IT NOT ONLY CONTAINS ARBITRATION AGREEMENT IN WRITING BUT ALSO OTHER ARBITRATION AGREEMENTS AS MENTIONED IN SUB-SECTION (4). IT IS ALSO HELD THAT IF THERE IS ANY ARBITRATION AGREEMENT IN ANY OTHER ENACTMENT FOR THE TIME BEING IN FORCE I.E. STATUTORY AGREEMENT, PROVISIONS OF ARBITRATION ACT, 1996 SHALL APPLY EXCEPT SUB-SECTION (1) OF SECTION 40 AND SECTIONS 41 AND 43.

Issues: 1. WHETHER THE DISPUTE BETWEEN THE PARTIES IS ARBITRABLE? 2. IF ARBITRABLE, WHETHER IT IS WITHIN THE JURISDICTION OF THE REGULATORY COMMISSION? 3. WHETHER THE REGULATORY COMMISSION HAS NEGLECTED TO ARBITRATE INTO THE MATTER/TO APPOINT AN ARBITRATOR?

Ratio Decidendi: 1. SECTION 7 OF THE ARBITRATION ACT, 1996 WOULD APPLY TO THE PRESENT CASE IN VIEW OF THE FACT THAT THE SCOPE OF THE ARBITRATION ACT IS VERY WIDE AND IT NOT ONLY CONTAINS ARBITRATION AGREEMENT IN WRITING BUT ALSO OTHER ARBITRATION AGREEMENTS AS MENTIONED IN SUB-SECTION (4). 2. IF THERE IS ANY ARBITRATION AGREEMENT IN ANY OTHER ENACTMENT FOR THE TIME BEING IN FORCE I.E. STATUTORY AGREEMENT, PROVISIONS OF ARBITRATION ACT, 1996 SHALL APPLY EXCEPT SUB-SECTION (1) OF SECTION 40 AND SECTIONS 41 AND 43. 3. ICCL IS A LICENSEE UNDER THE INDIAN ELECTRICITY ACT, 1910 AND IT CONTINUED TO BE A LICENSEE EVEN AFTER THE REFORMS ACT, 1995 CAME INTO FORCE. 4. SECTION 37 OF THE REFORMS ACT, 1995 PROVIDES THAT ANY DISPUTE ARISING BETWEEN LICENSEES OR IN RESPECT OF MATTERS PROVIDED UNDER S. 33 OF THE ACT SHALL BE REFERRED TO THE COMMISSION, AND THE COMMISSION MAY PROCEED TO ACT AS ARBITRATOR OR NOMINATE ARBITRATORS TO ADJUDICATE AND SETTLE THE DISPUTE. 5. THE REGULATORY COMMISSION IS A QUASI JUDICIAL BODY AND BEFORE INFORMING THE ICCL THAT THE APPLICATION WAS NOT MAINTAINABLE, BOTH THE PARTIES SHOULD HAVE BEEN HEARD.

Final Decision: THE COURT HELD THAT THE DISPUTE BETWEEN THE PARTIES IS ARBITRABLE AND IT IS WITHIN THE JURISDICTION OF THE REGULATORY COMMISSION. THE REGULATORY COMMISSION FAILED TO ARBITRATE IN THE MATTER AND/OR FAILED TO APPOINT AN ARBITRATOR. THE COURT FURTHER HELD THAT THE PROVISIONS OF SECTION 7 OF THE ARBITRATION ACT, 1996 WOULD APPLY TO THE PRESENT CASE IN VIEW OF THE FACT THAT THE SCOPE OF THE ARBITRATION ACT IS VERY WIDE AND IT NOT ONLY CONTAINS ARBITRATION AGREEMENT IN WRITING BUT ALSO OTHER ARBITRATION AGREEMENTS AS MENTIONED IN SUB-SECTION (4). IT IS ALSO HELD THAT IF THERE IS ANY ARBITRATION AGREEMENT IN ANY OTHER ENACTMENT FOR THE TIME BEING IN FORCE I.E. STATUTORY AGREEMENT, PROVISIONS OF ARBITRATION ACT, 1996 SHALL APPLY EXCEPT SUB-SECTION (1) OF SECTION 40 AND SECTIONS 41 AND 43. THE COURT NOMINATED HON'BLE MR. JUSTICE AZIZ MUSHABBER AHMADI, FORMER CHIEF JUSTICE OF INDIA, AS ARBITRATOR TO DECIDE THE DISPUTE.