FAO(OS)(COMM) No.4/2022

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$~2

*

IN THE HIGH COURT OF DELHI AT NEW DELHI

%

+

FAO(OS)

(COMM)

4/2022

&

CM

Nos.

770/2022,

771/2022 and 772/2022

CEMENT CORPORATION OF INDIA LTD.

..... Petitioner

Through:

Mr Sanjiv Ralli, Senior

Advocate withMr Shankar K

Jha, Mr ManuMonga and Mr S.

Sharma, Advocates.

Versus

STEEL AUTHORITY OF INDIA LTD.

..... Respondent

Through:

Mr Samakash Goyal, Adv.

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRU

HON'BLE MR. JUSTICE AMIT MAHAJAN

VIBHU BAKHRU, J. (ORAL)

1.

Cement Corporation of India Limited (hereafter ‘CCIL’) has

filed the present appeal under Section 37(1)(c) of the Arbitration and

Conciliation Act, 1996 (hereafter ‘the A&C Act’) impugning an order

dated 16.10.2018 (hereafter ‘the impugned order’) passed by the

learned Single Judge in OMP(COMM) 438/2018captioned “Cement

Corporation of India Limited v. Steel Authority of India Limited”.

2.

By the impugned order, the learned Single Judge rejected

CCIL’s application under Section 34 of the A&C Act seeking to set

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aside the arbitral award dated 17.05.2018 (hereafter ‘the impugned

award’).

3.

The impugned award was rendered in the context of the

monetary claim preferred by the respondent (hereafter ‘SAIL’).

4.

CCIL and SAIL had entered into a long-term contract dated

26.06.1991 for the sale of granulated slag for a period of ten years.

SAIL claimed that prior to that, CCIL was regular in making its

payment till the month of June, 1991, however, thereafter, its

payments became irregular. Admittedly, CCIL’s financial condition

had deteriorated at the material time, and it expressed its inability to

immediately pay the dues. SAIL claimed that the parties reconciled

their accounts and a sum of ₹3,65,91,609/- inclusive of interest was

outstanding as on 31.03.1996.

5.

CCIL’s net worth was eroded, rendering it a sick industrial

company within the meaning of Section 3(1)(o) of the Sick Industrial

Companies (Special Provisions) Act, 1985 (hereafter ‘the SICA’).

Accordingly, reference under the SICA was made to the Board of

Industrial and Financial Reconstruction (hereafter ‘the BIFR’). It is

stated that the said reference culminated in the BIFR sanctioning a

rehabilitation scheme on 21.03.2006 (the Sanctioned Scheme).

According to CCIL, it is liable to pay an amount of ₹442.06 lacs in

terms of the Sanctioned Scheme and any further amount due to SAIL

stood waived.

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6.

The dispute between the parties, essentially, arises in respect of

SAIL’s claim for interest payable in respect of the amounts due to it.

SAIL claimed an amount of ₹3,65,91,609/- along with interest at the

rate of 18%per annum with effect from 31.03.1996

7.

CCIL disputed its liability to pay any interest and also failed to

pay the amount, which was admittedly due to SAIL. In the

circumstances, on 11.06.2011, SAIL made a request to commence

arbitration proceedings before the Permanent Machinery of

Arbitration (PMA).

8.

The Arbitrator rendered her decision on 17.04.2013 holding that

CCIL was liable to pay an amount of ₹1,81,22,564/- to SAIL without

any interest.

9.

Aggrieved by the said decision dated 17.04.2013, SAIL

preferred a writ petition being W.P.(C)6228/2013 before this Court

challenging the said decision (termed as ‘an award’). This Court

accepted the said challenge and found that in view of the decision of

the Supreme Court in M/s Northern Coalfield Ltd. v. Heavy

Engineering Corporation Ltd. and Anr.: 2016 (6) SCALE 820,the

said decision rendered pursuant to a reference under the PMA, was not

binding on the parties. By an order d