TMI Blog2005 (12) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard capacity of the plant to generate electricity were carried out. The Appellant herein had been paying capacity charges on the output of the Plant which was fixed at 368.144 MW from 08.11.2001. A notice, however, was issued by the Appellant alleging that the capacity charges payable by it with reference to the installed capacity should have been fixed at 334.75 MW x Rh (relative humidity) factor with tolerance limit of + or \026 5% as per the agreement which works out at 351.49 MW and on that premise as to why future payments should not be made accordingly and why the previous bills should not be revised with reference thereto. The Respondent by a letter dated 17.12.2003 demanded withdrawal of the said notice from the Appellant. Proceedings In view of the threatened action on the part of the Appellant herein, an application purported to be under Section 9 of the Arbitration and Conciliation Act, 1996 (for short, the 1996 Act ) was filed before the City Civil Court praying for a permanent injunction restraining the Appellant herein from taking any unilateral decision pursuant to the said show cause notice. Evidently, the said application was filed relying on or on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned judgment and order dated 05.10.2004, the High Court while setting aside the said order of the City Civil Court granted an injunction restraining the Appellant herein from refixing the capacity of the Plant at 334.75 MW x Rh Factor at the site till disposal of the OP by the City Civil Court. Mr. P.P. Rao, the learned Senior Counsel appearing on behalf of the Appellant, would submit that the Respondent herein, although not being a licensee within the meaning of the 2003 Act, was required to have a licence as it supplied electrical energy to the Appellant herein. It was urged that in view of the provisions contained in the 1998 Act and the 2003 Act, not only the jurisdiction of the Civil Court is barred, any dispute and difference between the two licensees and/or two generating companies can be referred to an arbitration of the Commission only, as envisaged under Section 86(1)(f) of the 2003 Act and in that view of the matter, the High Court committed a serious error in passing an order of injunction. It was submitted that both under the 1998 Act as also under the 2003 Act, the Commission had the requisite jurisdiction to pass an interim order also and, thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capacity on 334.75 MW x RH factor and as per all other provisions of PPA including tolerance limit. c) To allow APTRANSCO to revise all previous power purchase bills (fixed charges, variable charges incentive etc.) from inception based on the capacity of 334.75 MW x RH factor and as per all other provisions of PPA including tolerance limit; and thus cannot now turn round and contend that it would do so unilaterally without any award made in that behalf. The Respondent, thus, not only has a prima facie case keeping in view that that a sum of ₹ 132 crores is due to the Respondent, the balance of convenience also lies in its favour. Agreement Clause 35 of Article 1 of the said agreement defines Installed Capacity to mean : the maximum electrical generating capacity of the Project or a Generating Unit, as the case may be, in megawatts ( MW ) as measured at the generator terminals, determined from time to time pursuant to the tests given in Schedule F, subject to adjustments for the Ambient Reference Conditions. Explanation 1 : Where the output of one or more Generating Units of the Project or of the Project as a whole, in final tests to be specified by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representatives are unable to resolve a dispute under this Agreement within fifteen (15) days, such dispute shall be referred by such representatives to a senior officer designated by the Company and a senior officer designated by the Board, respectively, who shall attempt to resolve the dispute within a further period of fifteen (15) days. (c) The parties hereto agree to use their best efforts to attempt to resolve all disputes arising hereunder promptly, equitably and in good faith, and further agree to provide each other within reasonable access during normal business hours to any and all non-privileged records, information and data pertaining to any such dispute. 14.2 Arbitration (a) In the event that any dispute is not resolved between the Parties pursuant to Article 14.1, then such dispute shall be settled exclusively and finally by arbitration. It is specifically understood and agreed that any dispute that cannot be resolved between the parties, including any matter relating to the interpretation of this Agreement, shall be submitted to arbitration irrespective of the magnitude thereof, and the amount in dispute or whether such dispute would otherwise be consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh enacted the Andhra Pradesh. Electricity Reforms Act, 1998, for providing the constitution of an Electricity Regulatory Commission, restructuring of the electricity industry, rationalization of the generation, transmission, distribution and supply of electricity avenues for participation of private sector in the electricity industry and generally for taking measures conducive to the development and management of the electricity industry in an efficient, economic and competitive manner and for matters connected therewith or incidental thereto. Licensee has been defined in Section 2(e) of the 1998 Act as under : Licensee or licence holder means a person licensed under section 14 of the Act to transmit or supply energy including APTRANSCO; It is not in dispute that the Commission was constituted in terms of the Act. Section 37 of the said Act contains a non-obstante clause stating that notwithstanding anything contained in the 1996 Act, any dispute arising between the licensees shall be referred to the Commission. The Commission may proceed to act as arbitrator or nominate arbitrator or arbitrators to adjudicate and settle such disputes. Section 28 of the 1998 Act empow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any power conferred by or under this Act. In terms of the Section 185, the Electricity Regulatory Commissions Act, 1998 was repealed but in terms of sub-section (3) thereof the provisions of the enactments specified in the Schedule, not inconsistent therewith shall apply to the States in which such enactments are applicable. Item No.3 of the Schedule refers to the Andhra Pradesh Electricity Reform Act, 1998. Analysis of the agreement and the statutory provisions The Appellant is a licensee within the meaning of both the 1998 Act and the 2003 Act. The question as to whether the Respondent should have taken a licence or permit under the 2003 Act or not is not a matter which requires our immediate attention. The Appellant is a licensee and the Respondent is a generating company in terms of the provisions of the 2003 Act. Section 37 of the 1998 Act deals with disputes between the licensees. Prima facie Section 50 of the 1998 Act, which bars the jurisdiction of the Civil Court keeping in view the language employed therein, is required to be read with Section 37 thereof. The resolution of the disputes between the parties rests upon the proper interpretation of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat matter the High Court have no jurisdiction in terms of the 1996 Act, therefore, must finally be determined by the High Court itself. Such a question indisputably will also be a subject-matter of determination by the High Court in the writ proceedings pending before it. However, it is not a case where any dispute has arisen in respect of a statutory function of the Commission to frame tariff and in that view of the matter the decision of this Court in West Bengal Electricity Regulatory Commission v. CESC Ltd. [(2002) 8 SCC 715] cannot be said to have any application whatsoever. The ratio laid down in Grid Corporation of Orissa Ltd. v. Indian Charge Chrome Ltd. [(1998) 5 SCC 438] whereupon Mr. Rao placed strong reliance is not applicable in this case as therein it was found that the High Court erroneously assumed that the Regulatory Commission had failed to arbitrate under Section 37(1) of the 1998 Act, which was found to be factually incorrect. In A.P. Gas Power Corporation Ltd. etc. v. A.P. State Regulatory Commission and Another etc. [(2004) 10 SCC 511], the question was as to whether the Appellant therein was required to take, under the law, a licence for utilization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o him since he would have to start again to establish it in the event of his succeeding at the trial. * * * The factors which he took into consideration, and in my view properly, were that Ethicon s sutures XLG were not yet on the market; so that had no business which would be brought to a stop by the injunction; no factories would be closed and no workpeople would be thrown out of work. They held a dominant position in the United Kingdom market for absorbable surgical sutures and adopted an aggressive sales policy. We are, however, not oblivious of the subsequent development of law both in England as well as in this jurisdiction. The Chancery Division in Series 5 Software v. Clarke [(1996) 1 All ER 853] opined: In many cases before American Cyanamid the prospect of success was one of the important factors taken into account in assessing the balance of convenience. The courts would be less willing to subject the plaintiff to the risk of irrecoverable loss which would befall him if an interlocutory injunction was refused in those cases where it thought he was likely to win at the trial than in those cases where it thought he was likely to lose. The assessment of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave referred to Firm Ashok Traders (supra) not because we agree with the principle laid down therein but only to suggest that Section 9 of the 1996 Act should be applied so that status quo may be directed to be maintained having regard to the fact that the parties understood the workability of the agreement in a particular manner. A writ court can also grant injunction in exercise of its power under Article 226 of the Constitution of India. If injunction is refused in this proceeding, the interim order passed in the writ proceedings shall continue. It may give rise to a stalemate. It may violate the well-known rule of judicial comity. In A Treatise on The Law Governing Injunctions by Spelling and Lewis it is stated : Sec. 8. Conflict and Loss of Jurisdiction. Where a court having general jurisdiction and having acquired jurisdiction of the subject-matter has issued an injunction, a court of concurrent jurisdiction will usually refuse to interfere by issuance of a second injunction. There is no established rule of exclusion which would deprive a court of jurisdiction to issue an injunction because of the issuance of an injunction between the same parties appertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission in the same manner. Thus, it itself thought that the final relief would be granted only by the Arbitrator. The Commission is yet to apply its mind. Even before the Commission, the Appellant has not made any application for a direction in terms of sub-section (2) of Section 94 of the Act. The Respondent has installed the Power Generation Plant. It has continuously been supplying electrical energy to the Appellant. Indisputably, it has to discharge its contractual obligation. The Appellant being the only consumer, the Respondent has no other option but to supply electrical energy to it. In the event, the dispute is referred to the arbitrator, the equity between the parties can be adjusted. Without going into the correctness or otherwise of the claim of the Respondent, we may notice, that according to it, the Appellant owes a hefty sum of ₹ 132 crores to it. According to the Appellant, in the event, the disputes and differences between the parties are determined in its favour, it may be held, that it has paid an excess sum of ₹ 35 crores only. Clause 2 of Article 14 postulates that pending arbitration, the rights and obligations of the parties shall remain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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