Case: U.P. Hotels Etc Vs. U.P. State Electricity Board

of the report observed that it was permissible to look a the whole of the pleadings delivered in the arbitration, and it appears therein that the respondents affirmed and the applicants denied that the respondents were entitled to terminate the agreement as the applicants refused to attend daily at the site, and that this was a specific question submitted to the decision of the arbitrator. Our attention was also drawn to the observations of House of Lords in Pioneer Shipping Ltd. v. BTP Tioxide Ltd. ((1981) 2 All ER 1030). In that case by a charterparty dated November 2, 1978 the owners of a vessel chartered her to the charterers. It was held by the House of Lords that having regard to the purpose of the Arbitration Act, 1970 of England which was to promote greater finality in arbitration awards than had been the case under the special case procedure judicial interference with the arbitrators award was only justified if it was shown that the arbitrator had misdirected himself in law or had reached a decision which no reasonable arbitrator could have. 27. In the instant case, the view taken by the Umpire on the interpretation of the agreement between the parties in the light of the observations of this Court in Indian Aluminium Co. case ((1975) 2 SCC 414 : (1976) 1 SCR 70 ) was at bests a possible view to take, if not the correct view. If that was the position then such a view, even if wrong, cannot be corrected by this court on the basis of long line of decisions of this Court. In the aforesaid view of the matter it is necessary to examine the aforesaid decision in the Indian Aluminium Co. case ((1975) 2 SCC 414 : (1976) 1 SCR 70 ). There under Section 49(1) and (2) of the Electricity (supply) Act, 1948, the legislature had empowered the State Electricity Board to frame Uniform tariffs and had also indicated the factors to be taken into account in fixing uniform tariffs. Under sub-section (3), the Board was empowered, in the special circumstances mentioned therein, to fix different tariffs for the supply of electricity, but in doing so, sub-section (4) directed that the Board was not to show undue preference to any person. Under Section 59 it was stipulated that the Board shall not, as far as practicable, carry on its operations at a loss and shall adjust its charges accordingly from time to time. Certain consumer of electricity had entered into agreements for the supply of electricity for their manufacturing purposes at specified rates for specified period. Some of the agreements were entered into with the State Governments and the others with the State Electricity Boards. In one of the agreements there was an arbitration clause. On account of the increase in the operation and maintenance cost, due to various causes which caused loss to the State Electricity Boards, the Boards wanted to increase the charges in all the cases. The consumers challenged the competency of the Boards to do so by petitions in the respective High Courts. The High Court sustained the Boards claim, in some cases, under Section 49 and 59, and in others, held that the Board was incompetent to do so. In the case of the consumer where there was the arbitration clause, the High court refused to entertain the petition on account of the clause. This Court held that fixation of special tariffs under Section 49(3) can be a unilateral Act on the part of the Board but more often it is the result of negotiations between the Board and the consumer and hence a matter of agreement between them. Therefore, the Board can, in exercise of the power conferred under the sub-section, enter into an agreement with a consumer stipulating for special tariff for supply of electricity for a specific period of time. The agreements for supply of electricity to the consumers must therefore be regarded as having been entered into by the Boards in exercise of the statutory power conferred under Section 49(3). The Umpire in his award stated that the decision of this Court covered and supported the claim of the claimant. In the present case the only difference is that there was only an agreement by which the Electricity Board accepted the agreement which was held by the Umpire to have become operative. Once that agreement was binding on the Board, its terms could not be varied form the uniform rate under sub-section (1) and (2) of Section 49. The Umpire was right. In our opinion, the Umpire committed no error in arriving at such conclusion. Furthermore, such a conclusion is certainly a possible view of the interpretation of the decision of this Court in Indian Aluminium Co. case ((1975) 2 SCC 414 : (1976) 1 SCR 70 ), if not the only view. We need go no further than that. 28. We are, therefore, of the opinion that the view taken by the Umpire on Section 49 was a possible view in the light of the decision of this Court in Indian Aluminium case ((1975) 2 SCC 414 : (1976) 1 SCR 70 ). In the premises, a question of law arose certainly during the course of the proceedings. Such a question has been decided by the Umpire on view which is possible one to take. Even if there was no specific reference of a question of law referred to the Umpire, there was a question of law involved. Even on the assumption that such a view is not right, the award is not amenable to interference or correction by the courts of law as there is no proposition of law which could be said to be the basis of the award of the Umpire, and which is erroneous. 29. In the premises, we are of the opinion that the High Court and the learned Second Additional District Judge were in error in the view they took of the award of the Umpire.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]27. In the instant case, the view taken by the Umpire on the interpretation of the agreement between the parties in the light of the observations of this Court in Indian Aluminium Co. case ((1975) 2 SCC 414 : (1976) 1 SCR 70 ) was at bests a possible view to take, if not the correct view. If that was the position then such a view, even if wrong, cannot be corrected by this court on the basis of long line of decisions of this Court. In the aforesaid view of the matter it is necessary to examine the aforesaid decision in the Indian Aluminium Co. case ((1975) 2 SCC 414 : (1976) 1 SCR 70 ). There under Section 49(1) and (2) of the Electricity (supply) Act, 1948, the legislature had empowered the State Electricity Board to frame Uniform tariffs and had also indicated the factors to be taken into account in fixing uniform tariffs. Undern (3), the Board was empowered, in the special circumstances mentioned therein, to fix different tariffs for the supply of electricity, but in doing so,n (4) directed that the Board was not to show undue preference to any person. Under Section 59 it was stipulated that the Board shall not, as far as practicable, carry on its operations at a loss and shall adjust its charges accordingly from time to time. Certain consumer of electricity had entered into agreements for the supply of electricity for their manufacturing purposes at specified rates for specified period. Some of the agreements were entered into with the State Governments and the others with the State Electricity Boards. In one of the agreements there was an arbitration clause. On account of the increase in the operation and maintenance cost, due to various causes which caused loss to the State Electricity Boards, the Boards wanted to increase the charges in all the cases. The consumers challenged the competency of the Boards to do so by petitions in the respective High Courts. The High Court sustained the Boards claim, in some cases, under Section 49 and 59, and in others, held that the Board was incompetent to do so. In the case of the consumer where there was the arbitration clause, the High court refused to entertain the petition on account of the clause. This Court held that fixation of special tariffs under Section 49(3) can be a unilateral Act on the part of the Board but more often it is the result of negotiations between the Board and the consumer and hence a matter of agreement between them. Therefore, the Board can, in exercise of the power conferred under the, enter into an agreement with a consumer stipulating for special tariff for supply of electricity for a specific period of time. The agreements for supply of electricity to the consumers must therefore be regarded as having been entered into by the Boards in exercise of the statutory power conferred under Section 49(3). The Umpire in his award stated that the decision of this Court covered and supported the claim of the claimant. In the present case the only difference is that there was only an agreement by which the Electricity Board accepted the agreement which was held by the Umpire to have become operative. Once that agreement was binding on the Board, its terms could not be varied form the uniform rate undern (1) and (2) of Section 49. The Umpire was right. In our opinion, the Umpire committed no error in arriving at such conclusion. Furthermore, such a conclusion is certainly a possible view of the interpretation of the decision of this Court in Indian Aluminium Co. case ((1975) 2 SCC 414 : (1976) 1 SCR 70 ), if not the only view. We need go no further than that28. We are, therefore, of the opinion that the view taken by the Umpire on Section 49 was a possible view in the light of the decision of this Court in Indian Aluminium case ((1975) 2 SCC 414 : (1976) 1 SCR 70 ). In the premises, a question of law arose certainly during the course of the proceedings. Such a question has been decided by the Umpire on view which is possible one to take. Even if there was no specific reference of a question of law referred to the Umpire, there was a question of law involved. Even on the assumption that such a view is not right, the award is not amenable to interference or correction by the courts of law as there is no proposition of law which could be said to be the basis of the award of the Umpire, and which is erroneous29. In the premises, we are of the opinion that the High Court and the learned Second Additional District Judge were in error in the view they took of the award of the Umpire.