Case: Grid Corporation of Orissa Limited Vs. Messrs Indian Charge Chrome Limited

in the GRID it could not absorb power generated by ICCL and as a result thereof its Captive Plant and boilers were required to be shut down. At times the boilers were closed down for several hours. Though the high rise frequency was intermittent but once the boilers were shut down they used to take more than two hours to produce the steam which is supplied to the turbines to generate power. The GRID high frequency had caused damage to the blades of the turbines costing about couple of crores in replacing the same. Mr. Venugopal then urged that in fact the GRIDCO owed certain amounts to ICCL and had received Rs. 10 crores and for the balance the matter is pending before the high power Committee set up by Government of Orissa. As regards the wheeling charges counsel disputed any liability thereof and urged that there was no question of paying any wheeling charges when power was not wheeled by GRIDCO by reason of time to time shutting down to turbines and boilors of ICCL. It was, therefore, urged that the GRIDCO had no claim whatsoever against the ICCL and therefore the courts below were right in staying the disconnection notices without imposing any condition. (18) In our considered view the spacious claim pressed before us on behalf of ICCL cannot be accepted at this interlocutory stage. it is not denied by ICCL that back up power was available to its sister concern IMF and PPL and the manufacturing process was continuing. At this interlocutory stage what the courts are required to bear in mind is as to whether a prima facie case for recovery of arrears of energy charges is made out and on whose side the balance of convenience lies. In the facts and circumstances of the case whether interim order should be passed by imposing certain conditions or without any condition. The net result of the impugned order is that the GRIDCO is required o maintain back up power to the constituents of ICCL but for such supply latter was not required to make any payment for power consumed. It also needs to be mentioned that under the MOU dated 15.11.94 and agreement dated 4.3.95 ICCL is required to pay for consumption of energy @ Rs. 2.31 per unit which is far less than the rate at which power is supplied to other commercial units. It is true that ICCL when supplies power to GRIDCO the latter pays at the rate of 77 paise per unit to former. Some dispute is also raised as regards interpretation of MOU and agreement but we do not think it appropriate to deal with these contentions at his point of time .(19) Mr. Venugopal also disputed the recording of consumption of power on half hourly basis. It was according to learned counsel wholly illegal and as a result thereof the amounts in the bills stood inflated, and consequently ICCL is not liable to honour such bills. On the other hand Mr. Nariman urged that it is not open to ICCL to challenge the half hourly recording because it was specifically agreed upon between the parties under MOU and the agreement. We do not propose to deal with these rival contentions at this interlocutory stage and, therefore, they are kept open. (20) Mr. Nariman alternatively urged that at any rate on the basis of monthly billing, the amounts payable by ICCL to GRIDCO would come to Rs. 46.193 crores and, therefore, at this interlocutory stage without touching the controversy as regards half hourly recording is right or wrong, I CCL must make the full payment of this amount. Another dispute also relates to wheeling charges @ 15%. According the GRIDCO power was in fact wheeled but according to Mr. Venugopal when the turbines were shut down though intermittantly there was no question of wheeling the power. This issue again needs further investigation in depth and at this interlocutory stage it would not be proper to conclude one way or the other. We, therefore, proceed on the assumption that the amount reflected on the basis of monthly bills payable to the GRIDCO by ICCL would be Rs. 46.193 crores less 15% wheeling charges which would come Rs. 6.92 crores approximately. At this interlocutory stage even if we give benefit of this amount of R s. 6.92 crores payable by ICCL to GRIDCO under the various bills still the outstanding arrears payable by ICCL to GRIDCO would come to Rs. 39.273 crores. (21) Now the question is what could be the fair and just order as regards the payment of these arrears. Mr. Venugopal although expressed the financial constraints of ICCL to make any payment but that cannot be a ground to allow ICCL to use power without any charges. We, therefore, feel that the fair and proper order to meet the ends of justice a t this interim stage would be to direct ICCL to pay Rs. 39.273 crores in seven equal installments of Rs. 5 crores payable on or before 10th of each month to GRIDCO and the 8th installment of Rs.5 crores will be payable in the month of June , 1998. The Regulatory Commission while making the award, will pass appropriate orders as regards interest on the amount if found refundable to ICCL or recoverable by GRIDCO on their respective claims in accordance with law. In the event of an y two defaults, facility of payment by installment to stand vacated. Disconnection notices will revive and Gridco will be at liberty to take such steps as permissible in law. As regards the recurring charges if ICCL wants to use power it will have to make payment of such bills as and when served upon them. ICCL may raise a dispute before the Regulatory Commission. If there be any Occasion to consider such application the Regulatory Commission will pass interim orders in accordance with law. These calculations and directions are without prejudice to the rights and contentions of the parties.

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

Explanation:
1[ds](14) We have gone through the judgment of the High Court and in our considered view it had exceeded the jurisdiction while entertaining the application of ICCL under Section 11 of the Arbitration and Conciliation Act, 199 6. The High Court erroneously assumed that the Regulatory Commission had failed to arbitrate under Section 37(1) of the Reform Act. this finding is factually incorrect because vide application dated 19.797 ICCL asked the Regulatory Commission to adjourn the proceedings pending before it on the ground that it had filed MJC No. 229/97 in the High Court . In view of this application the Regulatory Commission did not proceed in the matter. If this be so the High Court in our opinion was wrong in holding that there was failure on the part of Regulatory Commission to arbitrate and consequently the application made by ICCL under Section 11 of Arbitration Act is maintainable. In our considered view the application made by ICCL under Section 11 of the Arbitration Act, 1996 (MJC No. 229/97) was premature and the High Court could not have entertained the same and granted desired relief to) Another question which was seriously contested on behalf of GRIDCO before the Regulatory Commission as well as before the High Court was that ICCL is not a licensee within the meaning of Section 2(h) of Indian Electricity Act, 1910 and also under Section 2(e) and (f) of the Reform Act, 1995. The High Court recorded a finding that ICCL is a licensee under the Indian Electricity Act, 1910 and it continued to be a licensee even after Reform Act, 1995 came into force. The High Court placed reliance on Section 14(1) of the Reform Act and held that ICCL is authorised by the State Authority in the business of supplying the electricity. It was thus concluded that ICCL in view of Section 14 of the Reform Act, 1995 shall continue to be a licensee. In view of this finding the High Court held that the dispute is arbitrable under Section 37(1) read with Section 33 of the Reform Act, 1995. It is not seriously disputed that ICCL after a long drawn correspondence with the Orissa Government had received no objection to put up the captive power plant at Choudwar to generate power. Accordingly in 1989 the Captive power plant started generating power which was supplied to the OSEB. This arrangement continued till 1994 When MOU and agreement were entered into between ICCL and OSEB. The GRIDCO being a successor of OSEB naturally the MOU of 1994 and agreement of 1995 will be binding upon the GRIDCO in the absence of any material to the contrary. It is not the contention of the GRIDCO that ICCL did not supply any power at all during the period for which the bills were raised on ICCL. Despite this factual position it appears that no formal licence was issued under Section 2(h) of Indian Electricity Act, 1910 or under the Reform Act, 1995. It cannot be ignored that the investment of ICCL in putting up a Captive power Plant at choudwar is running into few hundred croresFrom the facts noted hereinabove and in view of Section 14(1) of the Reform Act it is quite clear that ICCL was/is authorised and engaged in supplying the electricity to OSEB and thereafter to GRIDCO and if this be so the dispute between the GRIDCO and ICCL could be arbitrable under Section 37(1) read with Section 33 of the Reform Act, 1995(18) In our considered view the spacious claim pressed before us on behalf of ICCL cannot be accepted at this interlocutory stage. it is not denied by ICCL that back up power was available to its sister concern IMF and PPL and the manufacturing process was continuing. At this interlocutory stage what the courts are required to bear in mind is as to whether a prima facie case for recovery of arrears of energy charges is made out and on whose side the balance of convenience lies. In the facts and circumstances of the case whether interim order should be passed by imposing certain conditions or without any condition. The net result of the impugned order is that the GRIDCO is required o maintain back up power to the constituents of ICCL but for such supply latter was not required to make any payment for power consumed. It also needs to be mentioned that under the MOU dated 15.11.94 and agreement dated 4.3.95 ICCL is required to pay for consumption of energy @ Rs. 2.31 per unit which is far less than the rate at which power is supplied to other commercial units. It is true that ICCL when supplies power to GRIDCO the latter pays at the rate of 77 paise per unit to former. Some dispute is also raised as regards interpretation of MOU and agreement but we do not think it appropriate to deal with these contentions at his point of timeWe do not propose to deal with these rival contentions at this interlocutory stage and, therefore, they are kept openAnother dispute also relates to wheeling charges @ 15%. According the GRIDCO power was in fact wheeled but according to Mr. Venugopal when the turbines were shut down though intermittantly there was no question of wheeling the power. This issue again needs further investigation in depth and at this interlocutory stage it would not be proper to conclude one way or the other. We, therefore, proceed on the assumption that the amount reflected on the basis of monthly bills payable to the GRIDCO by ICCL would be Rs. 46.193 crores less 15% wheeling charges which would come Rs. 6.92 crores approximately. At this interlocutory stage even if we give benefit of this amount of R s. 6.92 crores payable by ICCL to GRIDCO under the various bills still the outstanding arrears payable by ICCL to GRIDCO would come to Rs. 39.273 croresWe, therefore, feel that the fair and proper order to meet the ends of justice a t this interim stage would be to direct ICCL to pay Rs. 39.273 crores in seven equal installments of Rs. 5 crores payable on or before 10th of each month to GRIDCO and the 8th installment of Rs.5 crores will be payable in the month of June , 1998. The Regulatory Commission while making the award, will pass appropriate orders as regards interest on the amount if found refundable to ICCL or recoverable by GRIDCO on their respective claims in accordance with law. In the event of an y two defaults, facility of payment by installment to stand vacated. Disconnection notices will revive and Gridco will be at liberty to take such steps as permissible in law. As regards the recurring charges if ICCL wants to use power it will have to make payment of such bills as and when served upon them. ICCL may raise a dispute before the Regulatory Commission. If there be any Occasion to consider such application the Regulatory Commission will pass interim orders in accordance with law. These calculations and directions are without prejudice to the rights and contentions of the parties.