Bombay High Court

Sakhar Kamgar Union, Shrirampur vs Pravara Renewable Energy Ltd. And Anr on 11 April, 2022

Author:
G.S. Kulkarni

Bench:
G.S. Kulkarni

Digitally signed
PRASHANT by PRASHANT
VILAS RANE
VILAS Date:
RANE 2022.04.11
19:25:21 +0530

PVR 1 CARBPL23525_2021(Pravara).doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION

COMMERCIAL ARBITRATION PETITION (L.) NO.23525 OF 2021

Pravara Renewable Energy Ltd. ..Petitioner
Vs.
Padmashri Dr. Vitthalrao Vikhe Patil
Sahakari Sakhar Karkhana Ltd. ..Respondent

WITH
INTERIM APPLICATION (L.) NO.4446 OF 2022

Sakhar Kamgar Union, Shrirampur ..Applicant
Vs.
Pravara Renewable Energy Ltd. & Anr. ..Respondents

WITH
INTERIM APPLICATION (L.) NO.4443 OF 2022

Alenka Dhrubcharan Linka & Ors. ..Applicants
Vs.
Pravara Renewable Energy Ltd. & Anr. ..Respondents

WITH
INTERIM APPLICATION (L.) NO.4426 OF 2022

Pravara Oos Tod Va Vahatuk Majoor
Sanstha Pvt. Ltd. ..Applicant
Vs.
Pravara Renewable Energy Ltd. & Anr. ..Respondents

WITH
INTERIM APPLICATION (L.) NO.3343 OF 2022

Pravara Renewable Energy Ltd. ..Applicant
Vs.
Padmashri Dr. Vitthalrao Vikhe Patil
Sahakari Sakhar Karkhana Ltd. ..Respondent
----
Mr. Zal Andhyarijuna, Senior Advocate with Mr. Karl Tamboly, Mr. Subhash
Jadhav, Mr. Amit Patil, Mr. Vinit Kamdar and Ms. Shruti Sardessai i/b. Parinam
Law Associates for Petitioner.
Mr. Darius Khambata, Senior Advocate along with Mr. Kevic Setalvad, Senior
Advocate, Mr. Ammar Faizullabhoy, Mr. Nayan Parjiea, Ms. Virit Dhanki and Ms.
Vibhuti Keny, i/b. Olive Law for Respondent.
Dr. Birendra Saraf, Senior Advocate with Ms. Ankita Singh i/b. A & P Partners
for Applicants in IAL Nos.4446/22, 4443/22 & 4426/22.
-----
CORAM : G.S. KULKARNI, J.
RESERVED ON: 3 MARCH 2022.
PRONOUNCED ON : 11 APRIL 2022
PVR 2 CARBPL23525_2021(Pravara).doc

JUDGMENT:

The Judgment is divided into the following parts:

Sr.no. Particulars Paragraph Nos.
I Prelude 1 to 9
II Pleadings 10 to 52
III Submissions 53 to 54
IV Interim Applications 55 to 58
V Analysis and Conclusion 59 to 145

(I) Prelude

1. This is a petition filed under
Section 9
of the Arbitration and

Conciliation Act, 1996 (for short 'the Act'), whereby, the petitioner has

prayed for interim measures pending the arbitral proceedings.

2. An interesting question, which has arisen for consideration in the

present case before the initiation of arbitral proceedings, is as to

whether the respondent has any legal right under the contractual

scheme the parties stand, to interfere in the petitioner's managing and

operating its Co-generation plant and attempt to lock, stock and barrel,

oust the petitioner from operating and managing its own Co-generation

Power Plant.

3. The petitioner's case, is of coercive actions having taken place to

outs the petitioner from the Co-generation plant by the respondent after

the present petition was filed on 12 October 2021. The respondent using

its dominating position as a powerful sugar factory.

PVR 3 CARBPL23525_2021(Pravara).doc

4. The petitioner company was incorporated as a special purpose

vehicle by its parent company Gammon Infrastructure Project Limited,

to undertake installation and running of the Co-generation plant at the

respondent's sugar factory. The respondent is a well-established co-

operative sugar factory situated at Pravara Nagar, District Ahmednagar,

and is registered under the
Maharashtra Co-operative Societies

Act,1960
.

5. Disputes and differences have arisen between the parties under

the Project Development Agreement dated 12 July 2010 (for short "the

PDA") whereunder the petitioner had agreed to set up a co-generation

power plant (for short the "Co-gen plant") on a Built-Own-Operate-

Transfer basis (BOOT) basis, on land to be provided by the respondent

to the petitioner on a lease for a term of 28 years and 6 months. Under

the PDA, the petitioner was to utilize the agreed quantity of bagasse fuel

and bio-gas to be supplied by the respondent being generated by the

respondent's sugar factory, which were the primary raw materials, to

produce power and steam. The power/electricity and the steam so

generated by the petitioner's Co-gen plant was to be utilised/consumed

by the respondent's sugar factory in its operations. Any excess power to

be generated could be sold in the open market by the petitioner. The

assets of the plant were to be transferred to the respondent on the

"Assets Transfer Date" being twenty five years from the date the co-gen

plant commences commercial operation.

PVR 4 CARBPL23525_2021(Pravara).doc

6. The Co-gen plant was accordingly, set up on land as provided by

the respondent, for which a separate lease deed dated 12 July, 2010 was

executed between the parties. There is no dispute between the parties in

regard to the execution of the PDA and the land lease agreement. The

arbitration agreement between the parties is contained in clause 33.2 of

the PDA.

7. The case of the petitioner is that in accordance with the terms and

conditions of the PDA, the petitioner at a cost of about Rs.274 crores has

set up a Co-gen plant after undertaking substantial borrowings from the

banks. This was as agreed between the parties. To be discussed in some

detail, hereafter, the PDA contemplated minimum quantity of bagasse as

also biogas to be supplied by the respondent to the petitioner in the

specific manner as agreed in the PDA. It, however, appears that friction

started mounting between the parties from the crushing season 2015-16,

as according to the petitioner, the respondent was not supplying the

requisite agreed quantity of bagasse and biogas, so that the agreed

quantity of power generation can be achieved by the co-gen plant. The

petitioner had to depend on raw materials (coal etc) from outside

sources which were procured at heavy costs. The petitioner has

contended that such short supply of bagassee and bio-gas continued for

the subsequent crushing seasons upto 2020-21. This outsourcing of raw

materials to maintain the power generation led to heavy financial

burden on the petitioner. Consequent to which the parties entered into a
PVR 5 CARBPL23525_2021(Pravara).doc

supplementary agreement dated January 2015 whereunder the

respondent agreed to refund the petitioner an amount of Rs. 13.5 crores.

As the situation on the supply of bagasse and bio-gas did not improve,

the parties entered into a second supplementary agreement dated 30

October, 2018, to have an arrangement under which for a limited period

of one year i.e. from 01 November, 2018 to 31 October, 2019, the

petitioner permitted the respondent to operate the plant strictly in a

manner as agreed in the said agreement. It is not in dispute that by

efflux of the one year period, the respondent's right to operate the co-

gen plant ceased. However, it is the case of the petitioner that

nonetheless the respondent was causing interference in the petitioner

operating and managing the co-gen plant, which according to the

petitioner was with an ultimate aim to take over the Co-gen plant from

the petitioner, by exploiting the situation of financial distress of the

petitioner. In these circumstances, this petition was filed for praying the

following interim measures pending the arbitral proceedings:-

"a. That pending the hearing and final disposal of the arbitral
proceedings, making of the arbitral Award and until final execution of the
arbitral Award, this Hon'ble Court be pleased to restrain the Respondent,
its board of directors, promoters, partners, employees, agents,
representative and any one acting on behalf of the Respondent, in any
manner from engaging any third party for the operation and maintenance
of the Co-generation plant owned by the Petitioner;

b. That pending the hearing and final disposal of the arbitral
proceedings, making of the arbitral Award and until final execution of the
arbitral Award, this Hon'ble Court be pleased to restrain the Respondent,
its board of directors, promoters, partners, employees, agents,
representative and any one acting on behalf of the Respondent, in any
manner from entering the premises of the Petitioner's Co-generation plant
and from carrying out any work/activity for the repairs/ maintenance/
operation of the Petitioner Co-generation plant;

PVR 6 CARBPL23525_2021(Pravara).doc

c. That pending the hearing and disposal of arbitral proceedings,

making of the arbitral Award and until final execution of the arbitral
Award, this Hon'ble Court be pleased to order and direct Respondent to
deposit in this Hon'ble Court Rs. 126,94,00,000/- (Rupees One Hundred
and Twenty Six Crores and Ninety-Four Lakhs only) in terms of particulars
of claim annexed as EXHIBIT - "L" hereto, or a part thereof, to secure the
claim of the Petitioner, failing which, the Respondent be directed to
furnish a bank guarantee for the said amount in such manner as this
Hon'ble Court deems fit and appropriate;

d. That without prejudice to prayer clauses (a - c) and in the
alternative, the Respondent be directed to forthwith install the biogas
stainless steel pipeline in the Petitioner's Co-generation plant;

e. That without prejudice to prayer clause (a - c) and in the
alternative, pending the hearing and disposal of Arbitration proceedings,
making of the Arbitral Award and until execution of the Arbitral Award,
the Respondent be directed to disclose on oath details of all assets and
properties (both movable and immovable) owned by the Respondent,
giving complete details along with documents of title to the same, within
two weeks from the date of an order to this effect;

f. That without prejudice to prayer clause (a - c) and in the
alternative, and pending the hearing and disposal of Arbitration
proceedings, making of the Arbitral Award and until execution of the
Arbitral Award, that this Hon'ble Court be pleased to pass an order
directing the Respondent, its board of directors, promoters, partners,
employees, agents, representative and any one acting on behalf of the
Respondent, or otherwise howsoever, be restrained by an order and
injunction from in any manner giving for repairs/ maintenance/
modification, selling, transferring, disposing, alienating or encumbering or
pledging or mortgaging or hypothecating or charging or parting with
possession of or transferring, or inducting anyone else into or creating any
right, title or interest or license in favour of anyone else in respect of the
assets of Respondent;"

8. The petitioner has thereafter filed an interim application (Interim

Application (l) No.3343 of 2022) based on some subsequent

developments praying for the following reliefs:-

"a) this Hon'ble Court be pleased to restrain the Respondent and its
servants/agents from running and/or operating the Petitioner's Co-

generation plant in any manner whatsoever;"

9. In the said interim application a specific concern is raised by the

petitioner inter alia in regard to the issue of safety of the co-gen plant
PVR 7 CARBPL23525_2021(Pravara).doc

which is stated to be a fully automated plant. The petitioner has raised

a concern in regard to the respondent entering the co-gen plant and mis-

handling of the co-gen plant and, more particularly of the boiler. It is

the petitioner's case that the respondent started running and operating

the said co-gen plant for the crushing season 2021-2022.

(II) Pleadings
Factual Antecedents

10. Having briefly adverted to the controversy, the factual matrix

needs to be adverted:-

11. As noted, disputes have arisen between the parties under the PDA

dated 12 July 2010. It is the petitioner's case as per Clause 4.5 of the

PDA that the respondent was to supply to the petitioner's co-gen plant

bagasse and biogas as per the agreed minimum quantity. Such bagasse

and biogas was to be processed as per the requirements as agreed

between the parties under Schedule-I of the PDA. The generation of any

surplus power as also the steam, after the requirement of the

respondent was satisfied could be sold to any third party by the

petitioner.

12. It is the petitioner's case, that the petitioner indisputedly being

the owner of the Co-gen's plant and machinery, was entitled to operate

the co-gen plant and upto to the assets transfer date, that is, 25 years

from the commercial operation's date, which was to be a period up to 30
PVR 8 CARBPL23525_2021(Pravara).doc

June, 2041, without any obstruction or interference from the respondent

as agreed under Clause 1.2 of the PDA.

13. As per the terms of the PDA, for the purpose of setting up of the

Co-gen plant, land was to be made available to the petitioner by the

respondents. Accordingly a "land lease deed" dated 12 July, 2010 was

executed between the parties, where-under the respondent as a lessor

had agreed to lease to the petitioner land admeasuring 50.81 acres, for a

period of twenty eight years and six months on monthly rent of

Rs.5,08,100/-. As contended by the petitioner under such lease deed,

the petitioner was fully and absolutely entitled to quietly hold, possess

and use the leased land and any part thereof, without any eviction,

interruption, disturbance, claim and demand whatsoever, by the

respondent or any other person during the lease period. The petitioner

has relied on the different clauses of the PDA, to support its case on its

entitlement of supply of bagasse and the bio-gas fuels and the

petitioner's ownership of the Co-gen plant and its entitlement to hold

the land in lease upto the 'assets transfer date'. The relevant clauses of

the PDA and the 'land lease deed' would be referred in the later part of

this order.

14. In January 2015, a supplementary agreement (for short "SA")

was entered between the petitioner and the respondent whereunder the

respondent inter alia agreed to refund to the petitioner an amount of
PVR 9 CARBPL23525_2021(Pravara).doc

Rs.13.50 crores, which was advanced by the petitioner towards

modernization of the sugar plant. This was on the assurance that the

petitioner would complete and commission the co-gen plant by 31

March 2015.

15. The petitioner has contended that the Co-gen plant was set- up

by the petitioner, and was made fully functional. The commercial

operations of the Co-gen plant started on 6 November 2015, being the

"Commercial operation date" as defined in the PDA, from which date

the period of 25 years would be reckoned for the "assets transfer date"

to be arrived. This was from the crushing season 2015-2016. The

petitioner started producing steam and electricity in the Co-gen plant,

which was being supplied to the respondent as per the PDA.

16. The petitioner contends that during the crushing season for the

year 2015-2016, the respondent supplied only 174,380 metric tons of

bagasse fuel as against the minimum assured quantity of 264,270 metric

tons, in terms of the PDA. The short supply was of 90340 metric tons of

bagasse. The petitioner, therefore, was required to source coal as a

substitute fuel, which caused heavy financial burden on the petitioner. It

is the petitioner's contention that even for the next crushing season

2016-17, the respondent again supplied only 124031 metric tons of

bagasse as against 264720 metric tons of bagasse, which was again a

short supply of 140,689 metric tons. Further, the respondent also did
PVR 10 CARBPL23525_2021(Pravara).doc

not supply bio- gas fuel to the petitioner. Thus, even for such crushing

season, the petitioner had to source coal as the substitute fuel as also

source water from the open market, which again added to the heavy

financial burden of the petitioner.

17. The respondent on such backdrop, addressed a letter dated 10

November 2017 to the petitioner on issues arising under the PDA, inter

alia stating that the petitioner had not completed modification work of

the boiler despite the crushing season for 2017-2018 having begun in

November 2017. The petitioner by its letter dated 22 November 2017

responded to such letter denying the respondent's contentions. In such

letter, the petitioner inter alia stated that the operations of the 30 mega

watt Co-gen plant as installed by the petitioner in the premises of the

respondent, was fully dependent upon respondent making available the

input fuels (bagasse and bio gas) as per the quantities under the PDA,

which was the respondent's primary obligation. The petitioner recorded

that the petitioner had faced immense difficulties and challenges in

running the plant with full capacity principally due to non-compliance of

the obligation by the respondent on supply of such input fuels and in the

process, the petitioner had suffered losses as also additional costs. The

petitioner also stated that to mitigate the defaults of the respondent, the

petitioner had been continuously exploring possible solutions in a

manner which would be beneficial to the petitioner and the respondent.

The petitioner also complained that the petitioner was not informed in
PVR 11 CARBPL23525_2021(Pravara).doc

advance by the respondent, of the commencement of the crushing

season, so as to enable the respondent to get ready, of exact date when

the plant was to be operationalized for the crushing season. It was

recorded that despite such lapse on the part of the respondent, the

petitioner had kept the boiler operational for a reasonable period of

time, including to have an inspection and re-inspection of the boiler by

the Government authorities. The petitioner also stated that the power

supply to the respondent from the petitioner was never discontinued

and that the petitioner was continuously supplying the required power

to the respondent, throughout the year. The petitioner stated that

although the operations of the respondent's sugar factory for the

crushing season commenced on 10 November 2017, however, till the

time, such letter was being addressed by the petitioner, the respondent

had not achieved the capacity of 6000 metric ton per day. It was stated

that the respondent's distillery plant could not commence its operations

as the works on the distillery plant were still in progress. The petitioner

accordingly, stated that the financial stress caused to the petitioner was

due to failure of the respondent to fulfill the obligations and its non-

adherence to the agreed conditions under the PDA. The petitioner thus

on such counts, claimed from the respondent an amount of Rs.48.12

crores, towards the financial losses suffered by it, as a consequence of

the non-compliance of its obligation by the respondent under the PDA

and SA.

PVR 12 CARBPL23525_2021(Pravara).doc

18. The petitioner has stated that despite such conduct, the

respondent by its letter dated 26 October 2018, requested the petitioner

for permission to dismantle the petitioner's existing bio-gas pipeline

from the Co-gen plant boiler, for the purpose of using it for the

respondent factory. Such permission was not granted by the petitioner,

however, the respondent dismantled the bio-gas stainless steel pipeline

and installed the same within the respondent's factory for captive use.

The petitioner contends that since then the respondent has been using

the said pipeline and continues to use it till date. The petitioner has

contended that the said pipeline was installed by the petitioner for

receiving bio-gas in compliance of the terms of the PDA, which the

respondent for its own requirement and without permission or any

authorization of the petitioner, had dismantled and removed in complete

breach of the PDA. According to the petitioner, such coercive action of

the respondent to dismantle the stainless pipeline supplying bio-gas was

fatal to the PDA apart from the fact that this was a direct breach of the

PDA.

19. In the aforesaid situation, on 30 October 2018, a second

agreement titled as "Second Supplementary Agreement to the Project

Development Agreement (PDA) dated 12 July 2010 and the first

supplementary agreement dated January 2015" (for short 'the Second

SA') was entered between the petitioner and the respondent. In the

introductory paragraph of this agreement, the parties stated that since
PVR 13 CARBPL23525_2021(Pravara).doc

the commercial operation date of the project, certain events like drought

had taken place which were beyond the control of either parties, thereby

causing prejudice to the smooth running of the plant and affecting

commercial interests of both the parties. It was stated that on such

backdrop, the parties were desirous to resolve such situation on a

mutually convenient basis so that the plant can be optimally operated by

leveraging on efficient and appropriate utilization of synergies and local

resources which the respondent could provide to operate the plant, and

accordingly the parties mutually agreed to record the manner of

operation, management and maintenance of the plant in the terms and

conditions as set out in the second SA. The parties agreed that all the

terms and conditions in the second SA shall mutatis mutandis stand

deemed to be incorporated in the PDA, which shall also stand inter alia

amended, to the extent as stated in such agreement, with a stipulation

that all other provisions of the amended PDA shall remain the same. It

was also agreed between the parties that the second SA read with the

PDA and the first SA shall constitute the entire understanding between

the parties. In Clause 8 of this agreement, the parties agreed on a

'Modifying Operational Arrangement', under which it was agreed that

Co-gen plant then run by the petitioner will be operated, managed and

maintained by the respondent for a period of one year, from the date of

the modified operational commencement date. In clause 9, the parties

agreed that the tenure of the modified operational arrangement shall
PVR 14 CARBPL23525_2021(Pravara).doc

commence from 1 November 2018 and shall continue till 31 October

2019. It was agreed that subject to Clause 12 (extension of the modified

arrangement) of the Second SA, the modified operational term shall be

extended from time to time by mutual consent of the parties, which shall

be recorded in writing. In clause 12.4, it was agreed between the

parties, that in the event the terms of the modified operational

arrangement, were not to be extended, in that event, the respondent

had categorically agreed to hand over the plant after completion of

annual maintenance of the plant in good working condition to the

petitioner at least in 15 calendar days prior to the start of the

immediately succeeding crushing season. It was agreed and

acknowledged between the parties that the respondent shall not have

any right to maintain and operate the plant upon expiry of the modified

operational arrangement term and that the modified arrangement

including of provisions thereof, shall automatically stand terminated and

shall fall away. Clause 15.2 of the agreement stipulates that respondent

no.1 agreed not to change, modify, alter, add or remove or do any such

similar act to the existing technical set up or the structure of the plant

without prior approval of the petitioner. The clauses of the Second

Supplementary Agreement are noted in the subsequent paragraphs.

20. The petitioner has contended that for the next crushing season,

that is 2019-2020, despite the petitioner's account being classified as
PVR 15 CARBPL23525_2021(Pravara).doc

Non-Performing Asset (NPA), and the petitioner's lenders unwilling to

release funds for operational requirements of the Co-gen plant, the

promoters of the petitioner infused an additional amount of more than

Rs.4 crores towards the maintenance of the Co-gen plant. The petitioner

has stated that as per Clause 6.6 of PDA the respondent had to intimate

the petitioner three months in advance, of the tentative date of

commencement of crushing season for the said year and provide a

finalized schedule for supply of bagasse and biogas, at least one month

prior to commencement of crushing season. However, the respondent

did not provide the finalized schedule of the supply of baggasse and

biogas, either before the commencement of crushing season or during

the crushing season, thereby breaching the terms of the PDA.

21. The petitioner has stated that the respondent supplied only

109,498 MT of bagasse fuel during the crushing season 2019-20 as

against 264,720 MT of bagasse fuel as per the terms of the PDA, which

resulted in shortfall of about 155,222 MT of bagasse fuel. It is also

stated that due to illegal dismantling and removal of biogas pipeline by

the respondent, the petitioner could not receive biogas, hence, even the

minimum guaranteed quantity of biogas was not supplied to the

petitioner by the respondent. Thus, according to the petitioner, there

was a forced outage for a period from 7 November 2020 to 23 January

2021 and 25 April 2021 to 6 May 2021 on account of technical

difficulties like turbine breakdown and issues with the voltage control
PVR 16 CARBPL23525_2021(Pravara).doc

tap changer. It is contended by the petitioner that despite all these

technical issues, the petitioner, as requested by the respondent,

continued uninterrupted supply of steam through its boiler, as also

electricity was supplied to the respondent through MSEDCL, thereby

fulfilling its obligations during the forced outage period as per Clause

1.11 and 8.11 of the PDA.

22. It is the petitioner's case that for the next crushing season 2020-

21, the respondent supplied only 168,376 MT of bagasse fuel as against

2,64,720 MT of bagasse fuel in breach of its commitment as per the

terms of the PDA, resulting in a shortfall of nearly 96,344 MT of bagasse

fuel. The petitioner contends that also due to the illegal dismantling

and removal of the bio-gas pipeline by the respondent, the petitioner

was not supplied the bio-gas, hence, even bio-gas was not supplied by

the respondent to the petitioner as per the terms of the PDA.

23. The petitioner contends that the respondent, however, by its letter

dated 29 September 2020, intimated the petitioner about the start of

crushing season 2020-21 from 15 October 2020, when as per Clause 6.6.

of the PDA, the respondent was required to intimate the petitioner three

months in advance of the tentative date of commencement of the

crushing season and provide a finalized schedule of supply of bagasse

and bio-gas at least one month prior to the commencement of crushing

season. Although the respondent was bound to adhere to the schedule,
PVR 17 CARBPL23525_2021(Pravara).doc

however, it did not provide a finalized schedule of supply of bagasse and

bio-gas either before the commencement of crushing season or during

the crushing season, which the petitioner would contend, was clearly in

breach of the terms of the PDA.

24. It is the petitioner's case that on 24 September 2020 and 25

September 2020, there were discussions between the parties inter alia

on the issue of supply of biogas by the respondent to the petitioner,

wherein, it was agreed that the respondent shall restore, the biogas

supply and transportation pipeline arrangement, so that the respondent

can resume supply of biogas to the petitioner as per the terms of PDA.

The petitioner also requested the respondent to issue a written

confirmation on the re-installation of the said biogas pipeline. However,

no steps were taken by the respondent in that regard.

25. The petitioner has contended that on the above backdrop, an

Addendum Agreement dated 14 October 2020 came to be executed

wherein the respondent has explicitly admitted that over the earlier

crushing seasons from 2015-16 to 2019-20, the respondent had failed in

its obligations and had short-supplied bagasse equivalent fuel of about

474,435 MT of bagasse. The respondent agreed that over and above the

contracted supply of 2,64,720 MT of bagasse fuel every crushing season,

it will supply additional quantum of fuel of 1,05,000 MT each of

crushing seasons 2020-21, 2021-22 and 2022-23 and 60000 MT in
PVR 18 CARBPL23525_2021(Pravara).doc

2023-24. There was also a condition provided in the said Addendum

Agreement in clause 8, that in the event there is a failure of supply of

bagasse by the respondent as per such agreed terms.

26. The petitioner has contended that even for the crushing season

2020-21, the petitioner faced severe financial losses on account of the

respondent's failure to supply bagasse and biogas to the petitioner in

accordance with the said agreements, the details of which are set out in

a chart as set out in paragraph (19) of the petition. From the chart, the

petitioner contends that for the period from 2015-16 to 2020-21, there

was a gross revenue loss of Rs.179.36 crores caused to the petitioner

and that the cost of fuel payable and other operating expenses stood at

Rs.39.06 crores and Rs.13.35 crores respectively, and the net loss of

revenue suffered by the petitioner is of Rs.126.94 crores.

27. It is the petitioner's case that in the above situation, the petitioner

by its letter dated 29 May 2021 called upon the respondent to supply the

agreed/contracted quantity of bagasse fuel in accordance with the

Addendum Agreement. The petitioner again by its letters dated 3 August

2021 and 6 August 2021 called upon the respondent to compensate the

petitioner for the short supply of the contracted bagasse fuel. The

respondent replied to the said letters of the petitioner by its letter dated

4 September 2021, wherein to the surprise of the petitioner, the

respondent inter alia denied the respondent entering into the said
PVR 19 CARBPL23525_2021(Pravara).doc

Addendum Agreement with the petitioner. The respondent also denied

the short supply of bagasse fuel to the petitioner in accordance with the

said agreements. This apart the respondent also restricted the access of

the petitioner's representatives to the Co-gen plant, by threat and

intimidation, as contended by the petitioner, and instead permitted the

movement of the respondent's staff and employees.

28. It is on this backdrop, the petitioner has contended that a cause of

action accrued to the petitioner to file the present proceedings in a

glaring urgency. In this context, the following contentions of the

petitioner raised in paragraph 22 of the petition are relevant, and need

to be noted :-

"22. Shortly thereafter, the Respondent has restricted the access of
the Petitioner's representatives to the said Co-gen plant, through
threat and intimidation, and has permitted the movement of the
Respondent's personnel and staff into the Co-gen plant for carrying
out repair and maintenance work of the plant, without the prior
consent/permission of the petitioner. The petitioner address a letter
dated 18.06.2021 to the Respondent, inter alia bringing forth the
issues relating to the administration, safety and security of the Co-gen
plant, as the petitioner apprehended serious threat and damages to
the Co-gen plant and machinery and was concerned about its security
and safety. However, the respondent has not replied to the said letter
and has also not taken steps to remedy its actions. Hereto annexed
and marked as EXHIBIT - "K" is a copy of the letter dated
18.06.2021."

(emphasis supplied)

29. It is hence the petitioner's case that the respondent had no

authority whatsoever under the PDA and allied agreements to restrict

the access of the petitioner's representative to the co-gen plant by threat

and intimidation and only to force and permit the entry and movement

of the respondent's personnel and staff into the co-gen plant. It is
PVR 20 CARBPL23525_2021(Pravara).doc

contended that the respondent could not have foisted their employees

for carrying out repairs and maintenance of the plant, without prior

consent/permission of the petitioner.

30. The petitioner's contention is that the respondent was intending to

takeover and operate the petitioner's Co-gen plant for the crushing

season 2021-22 without the involvement of the petitioner and for such

purpose, also engaged some third parties to operate the petitioner's co-

gen plant. It is stated that the respondent had also placed multiple work

orders/purchase orders for the repair and maintenance of the plant and

machinery of the petitioner's Co-gen plant, with such purpose and

intent, by excluding the petitioner. The petitioner contends that the

respondent has no right under the said agreements to operate the Co-

gen plant of the petitioner, as the respondent does not have the expertise

to do so, as also the respondent cannot in any manner engage any third

parties, to operate the said co-gen plant which exclusively belongs to the

petitioner. It is contended that all these actions of the respondent are in

complete breach of the agreements which have seriously jeopardized the

rights accrued to the petitioner under the said agreements.

31. It is in these circumstances, the petitioner contends that it is

imperative and in the interest of justice that the respondent be

restrained from operating and maintaining the petitioner's Co-gen plant.

It is contended that in the absence of any such interim orders, the
PVR 21 CARBPL23525_2021(Pravara).doc

petitioner would be put to irreparable losses of several crores and

immense hardship which cannot be compensated in terms of money.

Apart from this, the petitioner contends that it cannot suffer a brazen

illegality of the respondent dis-housing the petitioner from its own co-

gen plant. It is in these circumstances, the petitioner has filed the

present petition praying for interim measures as noted above.

32. There is an additional affidavit filed on behalf of the petitioner

dated 26 October, 2021 inter alia placing on record that the respondent

and their persons/employees who are entering upon the petitioner's

premises, who are also entering the co-gen plant and are inter alia

dismantling/damaging the plant and machinery of the petitioner. To

support such contention, the petitioner has referred to videos which are

saved and stored in a pen drive and filed along with the said affidavit.

There are six video recordings as set out in paragraph 3 of the said

affidavit.

33. As this petition was filed on 12 October 2021, in view of the

subsequent developments, an Interim Application bearing (Lodging) No.

3343 of 2022 has been filed by the petitioner on 4 February, 2022 inter

alia contending that the respondent has forcibly taken over the running

and operation of the petitioner's co-gen plant. The Co-gen plant being

fully automated, it required a high level of expertise to run and operate

it. It is contended that the respondent cannot foist the persons who
PVR 22 CARBPL23525_2021(Pravara).doc

severely lack technical expertise to run the fully automated co-gen plant.

It is contended by the petitioner that repeated and continuous

mishandling of the plant by the respondent and more particularly, of the

boiler, was causing grave and irreparable harm and damage to the Co-

gen plant, and if the same is allowed to continue, it is likely that the

boiler may explode and it will not only cause irreparable injury and

damage to the plant but also lead to loss of human lives. It is stated that

there have been several instances of boiler tube leakages of the co-gen

plant in the crushing season of 2021-22 is the respondent's foisted

running of the co-gen plant. Also in December 2021, there was leakage

in the economizer tube and the plant was required to shut down for 22

hours for repairing the leakages. Further, there were a leakages between

10 January 2022 to 13 January 2022 in the roof tube and the plant was

shut down for about 51 hours for repairing the leakages. Subsequently,

there was another leakage on 01 February 2022 in the front wall tube

panel and the plant was shut town as on date of filing of the application.

The petitioner has contended that the leakages are required to be fixed

as per the
Boilers Act,1923
read with the Indian Boiler Regulations

(IBR), as also the respondent is using non IBR certificate workers to fix

leakages without finding out the root cause of the persistent leakages.

The petitioner has referred to the instances of boiler explosions in India

which have claimed human lives in those instances. The petitioner has,

therefore, contended that the respondent has been repeatedly causing
PVR 23 CARBPL23525_2021(Pravara).doc

damage to the co-gen plant. The petitioner has, therefore, prayed for the

following reliefs in the interim application:-

"(a) This Hon'ble Court be pleased to restrain the respondent and its
servants/ agents from running and/or operating the petitioner's co-generation
plant in any manner whatsoever."

Respondent's Pleadings

34. The respondent has filed a reply affidavit dated 21 November,

2021 opposing the grant of ad-interim and interim reliefs as prayed for

in the petition. The respondent has raised a preliminary objection that

the reliefs claimed by the petitioners are barred under
Section 41(ha)
of

the Specific Relief Act, 1963, in as much as the same would amount to

interference with the continued provision of power supply under the

facility created in the infrastructure project jointly undertaken by the

petitioner and the respondent. It is their contention that
Section 41(ha)

of the Specific Relief Act expressly prohibits the grant of an injunction if

the same would impede or delay the progress or completion of any

infrastructure project or interfere with the continued provision of

relevant facility related thereto or services being related to the matter of

such project. It is the respondent's contention that the petitioner intends

to injunct the respondent to prevent any operation or maintenance of

the Co-gen plant which has been created as part a part of an

infrastructure agreement for electricity generation between the parties.

Hence, granting of such relief would amount to closure of the facility,

being the subject matter of the infrastructure project. Such relief,
PVR 24 CARBPL23525_2021(Pravara).doc

therefore, cannot be granted considering the provisions of
Section

41(ha)
of the Specific Relief Act. Supporting such contention, reliance is

placed on Clause 8.11 of the PDA to contend that the parties have

agreed for providing of continuous and uninterrupted power supply and

steam to the sugar factory of the respondent.

35. The next contention as urged on behalf of the respondent is to

the effect that the petitioner by such interim measures is jeopardizing

the rights of the respondent under the PDA by failing to maintain and

showing a constant lack of interest in running the co-generation power

plant for the past years. It is contended that, in terms of the provisions

of the PDA, the petitioner was to effect a transfer of the asset, i.e. the co-

gen power plant to the respondent after 25 years from the date of

commencement of the operation of the plant in a normal working

condition, this being the essence of the contract. However, according to

the respondent, the facts demonstrate that the petitioner is not

interested in running the power plant and has not been maintaining it

since a long time causing a depreciation in its value. The respondent

contends that this would render the PDA frustrated much to the

detriment of the respondent. The respondent, hence, has contended

that the respondent is entitled to protect its interests by preserving the

Co-gen power plant by keeping it in a working condition as per the

norms and guidelines specified by the State of Maharashtra.

PVR 25 CARBPL23525_2021(Pravara).doc

36. The respondent has next contended that the petitioner is not

entitled to any equitable relief on the principle that one who seeks

equity, must do equity. The respondent would contend that the

petitioner has approached the Court with unclean hands and has

suppressed material and relevant facts in the petition. The suppression

being that the fact that Co-gen plant is hypothecated to its lenders by

the petitioner and is also being considered for attachment in a separate

litigation before this Court with one of its creditors namely 'Ask Energy

Solutions Pvt. Ltd.' has not been disclosed. It is contended that the

petitioner has also failed to disclose that it has not made payment of its

debts owed to the respondent under the PDA. It is contended that the

intention of the petitioner is to stall the functioning of the respondent's

sugar factory, just before the crushing season in an attempt to extort

money from the respondent knowing fully well that the functioning of

the respondent's sugar factory is completely dependent on the provision

of power and steam as supplied by the co-gen plant. The respondent

contends that the petition being filed just at the beginning of the

crushing season, itself, is indicative of a coercive attempt on the part of

the petitioner so that the respondent is made to purchase the Co-gen

plant at an exorbitant price.

37. The respondent has next contended that the respondent has

significantly altered its position upon the assurances of the petitioner.

On this aspect, the respondent contends that the petitioner did not have
PVR 26 CARBPL23525_2021(Pravara).doc

any wherewithal to run the co-gen plant owing to its acute financial

distress, hence it had requested the respondent to invest money and

personnel, for the upkeep of the Co-gen plant. Pursuant to such request

of the petitioner, the respondent had agreed to co-manage the co-gen

plant with the petitioner and has made huge investment of monies

towards the maintenance of the Co-gen plant over the past crushing

seasons. Hence, the respondent had altered its position on the assurance

of the petitioner that uninterrupted power and steam is supplied to the

respondent. It is contended that, however, the petitioner, after

profiteering at the cost of the respondent, has now reneged from its

assurances, and is seeking to defeat the legitimate rights of the

respondent. It is hence the respondent's case that the petitioner is not

entitled to seek ouster of the respondent from the premises of the power

plant facility.

38. The respondent would next contend that the reliefs claimed by the

petitioner are beyond the scope of
Section 9
of the Act, in as much as

the petitioner has claimed final reliefs in the garb of an ad-interim

injunction in the instant petition, which is clear from the prayers as the

petitioner has also inter-alia sought installation of the bio-gas pipeline.

Such relief cannot be granted without proper adjudication of the

petition on merits by the arbitral tribunal.

PVR 27 CARBPL23525_2021(Pravara).doc

39. It is next contended that no irreparable loss or damage would be

caused to the petitioner if the Co-gen power plant is continued to be

operated by the respondent, moreover, if the Co-gen plant ceases to

operate, the workers of the respondent would suffer irreparable losses

and damage to their income and livelihood. In support of such

contention, it is stated that the respondent's business is a source of

livelihood for thousands of people which include the respondent's staff,

workmen, employees, labour, local farmers and their families from

whom the respondent purchases sugarcane, farming labour,

transporters, harvest labour etc. It is stated that the entire sugar

industry depends upon the 'crushing season'. The start of the crushing

season is in the month of October each year and continues till the end of

April and beginning of May of the year thereafter. It is stated that the

operations of the sugar factory are dependent upon the continuous and

uninterrupted supply of electricity and steam. It is hence the

respondent's contention that with such intentions the PDA was entered

into between the petitioner and respondent for setting up of Co-gen

plant on a BOOT basis.

40. In paragraph 22 of the reply affidavit, setting out as to how the

Co-gen plant is critical to the respondent's sugar factory, the respondent

has stated that it was the petitioner who had called upon the respondent

to purchase spares, consumables and other materials required for

maintenance activities from time to time, prior to the start of crushing
PVR 28 CARBPL23525_2021(Pravara).doc

season 2020-21. It is contended that the representatives of the petitioner

invited/requested the respondent's representatives to take steps to

jointly carry out the maintenance activities in the co-gen plant, which

was agreed by the respondent as it was critical for the respondent to

keep the Co-gen plant working. It is stated that meetings were held

from time to time between the representatives of the parties and various

decisions were taken jointly as to the schedule of work to be undertaken

and the payments to be made to the vendors. As the contention as

urged by the respondent in this paragraph of the affidavit was subject

matter of quite some discussion, the contents are required to be noted

which read thus:-

"The Respondent has thus been handling the maintenance activity of
the Co-gen plant prior to the start of the crushing season of 2020-21
as well. Acting on the requests/ invitations of the Petitioner, the
Respondent has deputed its labour, personnel, engineers at the Co-gen
plant to look into the day-to-day operations of the Co-gen plant. The
Co-gen plant has therefore been in the joint possession of the
Petitioner and the Respondent, uninterruptedly for the past couple of
years. The Respondent and the Petitioner have been provided
unrestricted access to the Co-gen plant and the sugar factory. Further
acting on the various representations of the Petitioner (including oral
discussions between the engineers/staff of Petitioner and the
Respondent), the Respondent has provided spares, consumables, paid
salaries of staff of the Petitioner, provided operational support by
deputing personnel from time to time to the Co-gen plant. In this
entire endeavour (which is not the business of the Respondent) the
Respondent has spent crores of Rupees in respect of the Co-gen plant's
operations and running at the instance and requests of the Petitioner,
made from time to time. The Petitioner has not repaid the Respondent
for these expenses and has thus earned the benefits of all the
expenses/work put in by the Respondent. In these circumstances it is
submitted that the Petitioner is now estopped from seeking the reliefs
set out in the aforesaid
Section 9
Petition against the Respondent."

(emphasis supplied)

41. Further the reply affidavit thereafter sets out the details in regard

to payments to vendors and supply of material, spares as required by the
PVR 29 CARBPL23525_2021(Pravara).doc

petitioner and the amount spent on this count by the respondent. The

respondent has also referred to an arbitral award dated 15 June, 2019

passed against the petitioner and in favour of one Ask Energy Solutions

Pvt. Ltd.. It is stated that in the execution proceedings filed by the said

award creditor, the respondent has been joined as a garnishee, which

according to the respondent clearly shows that the petitioner is not in a

position to maintain the power plant.

42. The respondent contends that it had incurred vendor's payments

at the start of crushing seasons 2020-21 and 2021-22, having supplied

material to the petitioner, from the respondent's stores, which would

also go to show that the petitioner is not in a position to run the co-gen

plant. Also, the salaries of the petitioner's staff were borne by the

respondent, as also, the respondent has deputed its engineers and staff

who have been maintaining the maintenance activity of the power plant

much prior to the start of crushing season 2020-21. It is stated that

even payment towards repair of the power plant turbine to an extent of

Rs. 90,21,693/- was made by the respondent. The respondent has also

stated that substantial payments were made by the respondent to

MSEDCL aggregating to 2.72 crores on behalf of the petitioner. It is for

such reasons, the respondent would contend that the reliefs be denied to

the petitioner and the petition be rejected.

PVR 30 CARBPL23525_2021(Pravara).doc

Petitioner's Rejoinder Affidavit

43. An affidavit in rejoinder dated 02 December, 2021 is filed on

behalf of the petitioner inter alia denying the respondent's case in its

reply affidavit. The petitioner in paragraph 9 (xviii) has denied in

totality the respondent's case of any joint possession of the Co-gen plant

of the petitioner and that of the respondent. The petitioner states that

the statements, insinuations and allegations made in the said paragraph

are false and baseless. The petitioner denies that the Co-gen plant has

been in joint possession of the Petitioner and the Respondent for the

past couple of years, as also the respondent's contention that the

respondent had provided spares, consumables, paid salaries of staff of

the Petitioner, provided operational support by deputing personnel from

time to time to the co-gen plant and that the Respondent has spent

crores of Rupees in respect of the co-gen plant's operations at the

instance and requests of the Petitioner. The petitioner states that the

respondent has withheld from this Court the fact that there was a

mutual arrangement between the petitioner and the respondent wherein

the respondent had agreed to make certain operational payments and

bear certain operational expenses on behalf of the petitioner, in order to

compensate the petitioner for the losses caused to it due to the short-

supply of bagasse fuel by the respondent. It is stated that the said

arrangement was entered into keeping in mind the fact that the said

operational expenses and operational payments made by the respondent
PVR 31 CARBPL23525_2021(Pravara).doc

on behalf of the petitioner, would eventually be set-off with the amounts

that were due and payable by the respondent to the petitioner, due to

the short-supply of bagasse fuel by the respondent to the petitioner. The

petitioner has accordingly denied the case of the respondent and the

allegations as made in the reply affidavit.

Respondent's Rejoinder Affidavit

44. The respondent although had filed a reply affidavit, as also when

a rejoinder affidavit was filed on behalf of the petitioner, and what could

be filed by the respondent was a sur-rejoinder, that too, with the leave of

the Court, very unusually and the respondent again filed a second reply

affidavit dated 15th February, 2022 titled as "Affidavit in reply on behalf

of the respondent to the petition dated 12 October, 2021 and the

rejoinder dated 02 December, 2021 and the Additional Affidavit dated

26 October, 2021 filed by the Petitioner dated 15 February, 2022". On

behalf of the petitioner, there was a vehement objection to this affidavit,

being accepted and taken on record. The Court had accordingly passed

an order to accept the affidavit to be taken on record subject to the

objections as raised on behalf of the petitioner.

45. This affidavit is again a detailed affidavit to the petition, in which

the respondent has inter alia repeated its plea that the petitioner was

potentially an insolvent company and its accounts being classified as a

'Non Performing Asset' (NPA) by its lenders since December 2017. The
PVR 32 CARBPL23525_2021(Pravara).doc

respondent has stated that the petitioner is a wholly owned subsidiary of

Gammon Infrastructure Private Limited (for short "GIPL"), now known

as AJR Infra and Tolling Limited. It is stated that also several

subsidiaries of GIPL are facing insolvency proceedings under the

Insolvency & Bankruptcy Code, 2016 ("IBC") before the National

Company Law Tribunal ("NCLT"). It is stated that some of them have

already been admitted for corporate insolvency resolution process under

the IBC. It is thus contended that evidently, the 'Gammon group of

companies' of which the petitioner is a part, is under severe financial

distress and is at the risk of being liquidated. It is hence contended that,

the petitioner no longer has the wherewithal to run, operate or maintain

the Co-gen plant. It is stated that the petitioner has not arranged any

materials and had barely stationed 16 employees to run the power plant,

whose salaries have also not been paid for more than 9 months. All

these factors clearly indicate that the petitioner has not been

maintaining the power plant for a long time or making any efforts to

keep it in a functional state. The respondent has also set out that

subsequent to its reply affidavit dated 21 November, 2021, there was

agitation at the respondent's factory by hundreds of persons and

labourers. That the labourers also approached the Sugar Commissioner,

Pune, who had convened a meeting on 17 November, 2021 to resolve

the issues raised by the labourers on an urgent basis. The respondent

has referred to the proceedings before the Sugar Commissioner
PVR 33 CARBPL23525_2021(Pravara).doc

culminating into an order dated 27 December, 2021 passed by the Sugar

Commissioner recording that the dispute between the parties cannot be

resolved amicably hence either party could refer the dispute to

arbitration according to provisions of Clause 33.2 of the PDA, and

meanwhile directed status-quo to be maintained by the parties so that

peaceful crushing operations of the sugar factory should not be

obstructed by any of the parties. The Sugar Commissioner also observed

that such order should not be construed so as to give any special right to

either of the parties to the contract, to obstruct any rights of other party

given under the contract. It is hence the respondent's contention that in

light of the order of the Sugar Commissioner, the status quo be directed

to be maintained till the reference of the disputes before an arbitral

tribunal, needs to be continued. It is also contended that the petitioner

has not invoked arbitration against the respondent till date, hence it

ought not to have initiated the present proceedings under
Section 9
.

46. The respondent has contended that, it was also constrained to file

proceedings against the petitioner before the Debt Recovery Tribunal at

Aurangabad under
Section 17
of the SARFAESI Act. This, on the basis

that the respondent had learnt that the petitioner had received financial

assistance from Central Bank of India and Corporation Bank in July

2012 for the purposes of setting up of the power plant under the PDA

and as there was a default such banks had a charge on the assets of the

petitioner including on the plant and machinery. Also that by way of
PVR 34 CARBPL23525_2021(Pravara).doc

security, the petitioner had hypothecated all fixed assets, including

furniture, fixtures, equipment, motor vehicles etc. (present and future)

at the Co-gen plant's premises and created a charge on the uncalled

share capital, book debts etc, and had mortgaged the immovable

property in favour of the banks. It is contended that such application

was required to be made before the DRT at Aurangabad seeking relief

against the lenders, the petitioner and the MSEDCL. It is stated that in

such proceedings, the following order came to be passed by the DRT on

29 December, 2021:-

" ORDER

In view of the above, I pass the following order through
Video Conference:

A. The Registry is directed to register this case as
Securitisation Application.

B. Registry is directed to issue notices to the respondents to
be served by the applicant through all prescribed modes
including by hand & the Registered Post AD as well as e-mail etc.
along with complete paper book.

.....

E. The respondent bank shall give minimum 15 days' notice
prior to taking physical possession.

F. No status-quo order can be granted on the securitisation
proceedings as such. However, the applicant will be at liberty to
discuss and settle with the respondent bank and take the co-gent
plant under its wing under the private treaty at the market
value. If that does not get through then the respondent bank i.e.
respondent no. 1 shall be at liberty to put the property at
auction within the four corners of the project development
agreement PDA clearly mentioning that the auction is with all
terms and conditions to be complied of the project development
agreement PDA i.e. all rights and liabilities and compliances
under PDA will be the responsibility of purchaser and the plant
has to be kept running. The Bank can also decide to give on
lease the running of plant to recover its dues.

PVR 35 CARBPL23525_2021(Pravara).doc

G. The Project Development Agreement PDA shall be made
part of such auction notice.

H. The Respondent No.4 Maharashtra State Electricity Board

is hereby directed not to remit any amount to the respondent
no.3, the borrower, and if any amount is to be remitted it should
be remitted to respondent no.1 who shall adjust the amount in
the liability of the borrower.

I. Since the co-gent plant is being possessed and run by the
applicant now such a position shall not be disturbed by any of
the parties till further order except as per law."

(emphasis supplied)

47. The remaining contents of the Additional affidavit more or less

are the contentions as urged by the respondent in its reply affidavit.

Again an Additional Affidavit of the Respondent

48. Thereafter, despite earlier repeated affidavits of different

descriptions being filed again an additional affidavit dated 21 February,

2022 titled as "Additional Affidavit on behalf of the respondent to place

on record events and documents post the hearing dated 15 February,

2022 was sought to be filed by the respondent for the limited purpose of

placing on record the events and documents stated to be relevant for the

matter on the basis of what had transpired after hearing of the matter

on 15 February, 2022. The gist of the affidavit is that the petitioner's

accounts are marked as Non Performing Assets by its creditors namely

Central Bank of India and Union Bank of India being the lender banks

since December 2017. It is stated that the lender banks had filed

Original Application under section 19 of the Recovery of Debts and

Bankruptcy Act, 1993 before the DRT, New Delhi against the petitioner

in which the respondent was also arrayed as a party along with MSEDCL
PVR 36 CARBPL23525_2021(Pravara).doc

and Gammon Infrastructure Private Limited. Copy of the original

application before the DRT, New Delhi is placed on record. It is stated

that the said original application was heard by the DRT on 14 February,

2022 and thereafter on 15 February, 2022. It is the respondent's

contention that such Original Application had material bearing on the

present proceedings. The respondent has referred the order dated 15

February 2022 passed by the DRT II, Delhi which was an order ex-parte

to the petitioner. The said order reads thus:-

Debts Recovery Tribunal-II, Delhi

O.A. No. 69 of 2022

CENTRAL BANK OF INDIA & OTHERS
Vs.
PRAVARA RENEWABLE ENERGY LIMITED

15.02.2022 Item no.08

Present: Mr J.Amal Anand alongwith Mr Elvin Joshy & Ms Kirtika
Chhatwal, advocates for Applicant Bank.

Mr Sandeep Defendant no 2 Das Advocate Defendant no. 2.

Mr Anup Jain alonwith Mr Udit Gupta & Mr Akshay Goel for
Defendant no 3.

Due to Covid 19 situation the matter is taken through VC.

1. It is a fresh OA filed on behalf of Applicant Bank for recovery of
Rs.227,81,73,396.43. The value of the properties is not stated but
charge is on lease hold property and assignment of project
documents specially rights under PDA (project development
agreement between Defendant 1 & 2. Defendant no 1 is stated to
be special purpose vehicle & the plant is operated on BOOT basis
which means after certain period the plant will have to be
transferred to Defendant no 2 and as such, they have interest in the
plant and also Defendant no. 1.

2. I have heard the arguments of Ld. Counsel for Applicant Bank.

Defendant no. 2 & 3 appears through counsels and accept the
notice. Registry is directed to issue Notice to other defendants to
show cause within 30 days of the service of Notice as to why the
relief(s) prayed for should not be granted in favour of Applicant
Bank. Notice and order along with complete Paper Book shall be
served by Authorised Officer of Applicant Bank through all
PVR 37 CARBPL23525_2021(Pravara).doc

prescribed modes including by hand, registered post AD as well as
email/Pen Drive etc.

3. Due to COVID-19 circumstances, the Registry shall forward the
notice to the Applicant Bank through email for onward service to
the defendants. After service, the Applicant Bank shall file affidavit
of service in the Registry at least one week prior to the next date of
hearing. Order should be downloaded from website of DRT.

4. Written Statement/reply to show cause be filed by the defendants
within 30 days from date of service with directions to supply
advance copy of the same to Ld. counsel for Applicant
Bank/Applicant Bank. Thereafter within one week Bank shall file
rejoinder, if any.

5. The pleadings shall be completed including evidence by both
parties before the Registrar.

It has been argued before me that the defendant no 3 is getting the
electricity generated in the plant and pays the amount to defendant
no.1 The money goes in escrow account from there it is transferred
elsewhere instead of being paid to bank. The SPV was created for this
generation plant to feed the sugar factories of Defendant no. 2 in the
vicinity and the property on which plant is located also belongs to them.

The account is NPA since 2018 but nothing is paid. Defendant no 3
submits that they are ready to make payment to Bank subject to
assurance that they will be permitted to continue with their obligations
and rights under various agreements which they have entered into with
defendants no 1 & 2 and other commitments of supply to other parties
and these operations should not be hampered.

The present situation is that Defendant no. 2 submits that since more
than two years they are running the plant as Defendant no 1 was not
interested in doing so and all day today operations are handled by them
though few employees of Defendant no. 1 are still there but all salaries/
maintenance and compliance of all statutory obligations are done by
them and they face difficulty as defendant no. 1 is interested in
syphoning of funds and not running the plant. They submit that PDA is
sacrosanct and all obligations under it have to be complied and they
have first right over the same, they also submit that they are interested
in purchasing the plant and have approached the Bank who have sought
a concrete proposal and shortly that will be submitting. They further
submit that the plant cannot be closed as lively hood of more than one
lakh family is dependent upon it besides various commitments of
Defendant no 3. The material for plant comes from sugar factories and
as such it is complete circle and all are dependent on each other and
slightest disturbance may bring every thing to halt which will not be a
welcome situation for any body and for the economy of state and
country.

The counsel for Bank submits that they are ready and willing and are
complying with the orders passed in SA no. 209/2021 at DRT
PVR 38 CARBPL23525_2021(Pravara).doc

Aurangabad. Let them do so. It is admitted by appearing parties that
defendant no. 2 is in possession of plant and running the same.

The consent has been arrived at that Defendant no 3 is ready to pay
money directly to Bank who shall remit the expenses to Defendant no. 2
and balance amount will be adjusted in the NPA liability.

Defendant no. 2 will be entitled to do all necessary act in relations to
running of the plant including getting appropriate approvals from
various authorities as they may require for changing parts of plant or
doing regular upkeep.

For this purpose, the Bank will operate two accounts one in which
money received from Defendant no 3 will be deposited and second from
which the Defendant no. 2 will be entitled to get the expenses and other
charges including maintenance of plant and or expenses for change of
any part. The expenses can be paid directly to vendors or be reimbursed
to Defendant no.2. The balance, if any in the escrow account shall after
defraying the expenses above shall be adjusted in NPA liability of
Defendant no. 1.

These orders are passed keeping in view and balancing between
recovery of Bank and running of plant, commitments of Defendant no.
3, Lively hood of one lakh families and dispensing the fears of closure of
plant & sugar factories.

The STATUS QUO is granted and it is made clear that none of the
parties will do any such act which comes in the way of restraining any
party for compliance of its obligations under any agreements entered
into.

ORDERED ACCORDINGLY.

Defendants to maintain status quo in respect of assets as per
section 19

sub-section 4(A) of The Recovery of Debts and Bankruptcy Act 1993.

List the matter on 25.03.2022 for further proceedings.

The parties may download the order from the official web-site which
will be treated as a true copy as due to COVID 19 & staff constraints, the
certified copies cannot be issued as of now till further orders.

(VIMAL GUPTA)
PRESIDING OFFICER
I/C DRT-II, DELHI"

(emphasis supplied)
PVR 39 CARBPL23525_2021(Pravara).doc

Respondent's Additional Affidavit

49. The respondent has filed an additional affidavit dated 26

February, 2022 titled as "Additional Affidavit on behalf of the

Respondent pursuant to order dated 25 February, 2022" by which the

respondent places certain additional affidavit on record in regard to the

credit facilities advanced to the petitioner by the lender banks, being

Central Bank of India and Union Bank of India. The respondent has

stated about the nature of mortgage created by the petitioner as also has

commented on the Deed of Hypothecation. Referring to the recall notice

issued to the petitioner by the lender banks dated 27 September 2021

and 15 December, 2021, it is contended that the petitioner has no right,

title or interest in the co-gen plant. It is contended that there is

suppression of all these materials, which would disentitle the petitioner

from claiming reliefs in the present proceedings.

Respondent's Affidavit-in-Reply to the Interim Application.

50. To the interim application as filed on behalf of the petitioner, a

reply affidavit dated 15th February, 2022 has been filed on behalf of the

respondent. The contention in the reply affidavit is not different than

what has been set out in the reply affidavit as filed by the respondent in

the
Section 9
petition. However, some of the aspects, as seen from such

affidavit, which need to be referred, is the respondents contention that

the respondent was constrained, to step in, and manage the Co-gen
PVR 40 CARBPL23525_2021(Pravara).doc

plant during the crushing season 2020-21, since, according to the

respondent, the petitioner had abandoned its obligations under the PDA.

It is contended by the respondent that as per the provisions of the PDA,

the petitioner was to effect transfer of assets, that is Co-gen plant to the

respondent after 25 years from the date of commencement of the

operation of the plant, in a normal working condition and without

encumbrances, and if the plant was not maintained and run for full 330

days, it would have deteriorated in value and found render the PDA

frustrated. It is stated that as the petitioner failed to maintain the Co-

gen plant regularly, the respondent exercised its rights to protect and

preserve the Co-gen plant, hence, it had to step in and incur all expenses

including keeping the Co-gen plant in a working condition as per the

provisions of the PDA and all other applicable laws. The respondent has

also disputed that the Co-gen plant was required to run and managed by

highly technical trained engineers and personnel. The petitioner's case

that it has spent approximately Rs.274 crores for setting up the Co-gen

plant has been denied by the respondent. It is contended that the co-

gen plant of such standard developed between 2010 and 2015 should

cost Rs.125 crores or Rs.4 crores per MW. Hence, the petitioner's

contention of an investment of Rs.274 crores has been denied by the

respondent. The respondent has also stated that they have an internal

captive plant which is capable of generating 40 MT of steam per hour

and maximum 1.5 MW of electricity. It is stated that the internal captive
PVR 41 CARBPL23525_2021(Pravara).doc

plant is incapable of generating of steam required by the respondent due

to its limited capacity and such high quantity of steam can only be

sourced by the power plant as set up by the petitioner in conducting the

operations of the sugar factory and thus, the respondent is completely

dependent on the Co-gen plant. Respondent has accordingly denied the

contention as raised by the petitioner that the internal captive plant of

the respondent was sufficient to run the respondent's operation. It is

contended that if the contentions as urged on behalf of the petitioner if

accepted and the reliefs granted, the Co-gen plant would automatically

cease to operate as the petitioner does not have financial capacity to run

the co-gen plant and that would lead to a shut down of the respondent's

sugar factory.

Petitioner's Rejoinder to the Interim Application.

51. A rejoinder affidavit has been filed on behalf of the petitioner to

the said reply affidavit filed by the respondent to the interim application,

whereby the petitioner has contended that it is the owner of the Co-gen

plant and is entitled to operate the said plant until the asset transfer

date 30th June, 2014 being 25 years from the start of the commercial

operations. It is stated that the petitioner is ready and willing and

financially capable of running and operating the said co-gen plant

subject to the respondent supplying minimum quantity of bagasse fuel

as per the terms of the PDA and the additional bagasse fuel as per the

Addendum Agreement dated 14 October 2020. The petitioner has stated
PVR 42 CARBPL23525_2021(Pravara).doc

that it is not only financially sound but technically sound to manage and

operate its co-gen plant. While saying so, the petitioner states that it has

spent more than Rs.274 crores for setting up the Co-gen plant and over

the years had deputed / employed highly trained engineers and

personnel for running, operation and maintenance of the said Co-gen

plant. Hence, there was no reason for the petitioner to abandon and/or

not run the said plant till the assets transfer dated 6 November 2040. It

is also stated that by the present proceedings, the petitioner does not

seek to disrupt or stop the continuous operation of the Co-gen plant but

rather seeks to ensure that the Co-gen plant is not run by the respondent

who is not only technically unfit and sound to do so, but also is not

legally entitled to be in possession of the plant. The petitioner has

stated that the forceful take over of the petitioner's co-gen plant by the

respondent is completely illegal and infringes the petitioner's right to

free enjoyment of its property which includes inter alia the right to

maintain, run, operate and otherwise deal with the plant and machinery

of the petitioner's Co-gen plant. It is stated that during the crushing

season of 2018-19, the Co-gen plant was operated in terms of the second

supplementary agreement dated 30 October 2018 which was entered

between the parties for optimal operation of the power plant and under

which the respondent could operate the plant for a limited period from

1 November 2018 till 31 October 2019 which was operated by the

respondent under the monitoring and supervision of the petitioner and
PVR 43 CARBPL23525_2021(Pravara).doc

utilizing the petitioner's technically trained human resources. The

petitioner has also contended that the respondent has sought to oust the

petitioner from its own co-gen plant through threat and intimidation

due to which the petitioner is unable to monitor and supervise the

functioning of the co-gen plant.

Petitioner's Sur-Sur-Rejoinder.

52. There is a rejoinder affidavit dated 26 February, 2022 which has

been filed by the respondent. There is an affidavit in reply filed by the

petitioner to the said additional affidavit dated 26 February 2022 filed

by the respondent. The petitioner in paragraph 6 of the said affidavit

has denied the case of the respondent that the petitioner has transferred

or assigned all properties under the land lease deed and/or the PDA

(including co-gen plant) to the lender banks as alleged by the

respondent. It is stated that a plain reading of the said indentures of

mortgage dated 27 July 2012 and 19 May 2015 would show that there

is no assignment whatsoever of the properties by the petitioner.

(III) Submissions

Submissions on Behalf of the Petitioner

53. Mr. Andhyarujina, learned senior counsel for the petitioner has

made the following extensive submissions referring to the pleadings and

the documents as placed on record :-

PVR 44 CARBPL23525_2021(Pravara).doc

(i) The petitioner under the PDA, has exclusive right to possess

and operate the co-gen plant which is clear from several clauses of

the PDA. It is on account of breaches of the respondent in supply

of bagasse and the bio-gas, that there were difficulties on the part

of the petitioner in achieving targets set out under the agreements.

The respondent is aware that the petitioner has spent about

Rs.274 crores for setting up and operating the Co-gen plant.

However, the respondent is falsely stating that the petitioner's

investment is about Rs.125 crores and that too, on some surmises

of the market valuation of the relevant period. Any investment in

a project of such magnitude is not a small investment. Under no

provision of the PDA would the respondent be entitled to remain

in possession of the Co-gen plant and oust the petitioner from the

running and operation of the plant. It is submitted that it is clear

from the respondent's own letter dated 4 September 2021 that the

petitioner was operating and maintaining the plant as on 4

September 2021, as the respondent had called upon the petitioner

to take all steps necessary to ensure that the Co-gen plant is fully

ready and operational, well in advance before the commencement

of the crushing season 2021-22. It is his contention that the

contents of paragraph 14 of such letter clearly demonstrates that

the petitioner was operating the plant before the respondent
PVR 45 CARBPL23525_2021(Pravara).doc

attempted to oust the petitioner from the premises of the Co-gen

plant.

(ii) It is submitted that the respondent has sought to takeover

the petitioner's Co-gen plant by preventing the petitioner from

entering the Co-gen plant since about 23 October, 2021. The

petitioner hence called upon the respondent to vacate the Co-gen

plant by its letter dated 11 November, 2021, clearly setting out

that the persons/employees/representatives have trespassed into

the petitioner's Co-gen plant and started commencing the

operations of the Co-gen plant without the permission of the

petitioner. It is submitted that it was pointed out to the respondent

that such actions were illegal, bad in law and manifestly malafide

especially when the present petition was filed and pending before

this Court. The petitioner also called upon the respondent to

forthwith stop the operations of the Co-gen plant and to

immediately vacate the said premises. It is submitted that the

respondent by its letter dated 12 November, 2021 replied to the

said letter of the petitioner purporting to justify the respondent

remaining on the co-gen plant inter alia stating that about 50,000

small and marginalized farmers from Ahmednagar district, were

dependent for their livelihood on the respondent-sugar factory and

that the crushing season of sugarcane had already commenced on

15 October, 2021 in the State, for all the sugar factories, including
PVR 46 CARBPL23525_2021(Pravara).doc

the respondent-sugar factory, which according to the petitioner

was an untenable plea.

(iii) It is submitted that the respondent's plea that the petitioner

was in financial trouble and was facing legal proceedings as also

the petitioner' account was marked as 'NPA' by the lenders was

misconceived, if tested on the terms and conditions of the PDA in

the context of the relief being sought by the petitioner. It is

submitted that, in fact, there is no denial by the respondent to the

petitioner's statements as contained in the letter dated 11

November, 2021 that the persons, employees, representatives of

the respondent have trespassed into petitioner's Co-gen plant, and

have commenced the operations of the co-gen plant without

permission and the consent of the petitioner. It is submitted that

there is no clear denial whatsoever as to how the respondent was

legally entitled to run the co-gen plant.

(iv) It is submitted that it was clear from the record that the Co-

gen plant was taken over after the present petition was filed. It is

submitted that the respondent is conducting itself, as if there was

no breach whatsoever on its part when, contractually there was a

manifest breach on the part of the respondent in not supplying the

bio-gas and the bagasse to the petitioner, which was clearly
PVR 47 CARBPL23525_2021(Pravara).doc

admitted by the respondent in paragraph no.9(g) of its letter.

dated 04 September, 2021 in the following terms:-

"The Karkhana cannot be expected to supply bagasse to PREL and
at the same time operate its captive plant by using bagasse as a
fuel. The minimum supply of bagasse can be made to PREL, as
long as PREL provides uninterrupted and continuous supply of
electricity and steam (Clause 8.11) of the PDA). In view of what
is mentioned hereinabove, there is no actionable shortfall in
supply of bagasse by the Karkhana and no claim can be made by
PREL against the Karkhana."

(v) It is thus submitted that infact the bagasse and bio-gas was

diverted by the respondent to the captive plant of the respondent.

Thus, the case of the respondent is a false case that the respondent

is wholly dependent on the co-gen plant for its operations. It is

submitted that considering the clear provisions of the PDA, the

respondent had no contractual authority whatsoever or any other

authority de hors the contract which can be recognized in law,

except force and intimidation to take over the operation of the co-

gen plant from the petitioner. It is thus submitted that the actions

of the respondent are extremely serious inasmuch as by force and

intimidation, the respondent cannot take over the co-gen plant

without any authority in law and deprive the petitioner of its

property. It is submitted that it is clear from the correspondence

that at the most, any claim of the respondent, if at all, on the short

supply of electricity and steam can be a monetary claim, and in no

manner the respondent's conduct can be justified for any reason to

take over the co-gen plant and conduct the same.

PVR 48 CARBPL23525_2021(Pravara).doc

(vi) It is submitted that even under clauses 8 and 9 of the

second supplementary agreement, the respondent was permitted

to undertake operations of the plant strictly in terms of the said

agreement and for a limited period commencing from 01

November, 2018 to 31 October, 2019. It is submitted that clause

12.4 of the second supplementary agreement clearly provides that

in the event the modified operational agreement term was not

extended, then the respondent categorically agreed to hand over

the plant after completion of annual maintenance, in good

working condition to the petitioner, at least 15 calendar days prior

to the start of immediately succeeding crushing season. Hence, in

light of the second supplement agreement, the parties had clearly

agreed that the respondent was not to have any right to operate

and maintain the plant upon the expiry of MOA term and the

modified arrangement including the provisions thereof, shall

automatically stand terminated and shall fall away.

(vii) It is submitted that the case of the respondent of the

accounts of the petitioner becoming NPA and/or the parent

company of the petitioners becoming a NPA is totally untenable in

so far as the contractual relations between the parties are

concerned, and the reliefs as prayed for in the present

proceedings. In this context, it is submitted that the respondent

has falsely contended that the respondent has recently come to
PVR 49 CARBPL23525_2021(Pravara).doc

know that the petitioner had mortgaged its assets to the lenders,

including the land. According to the petitioner, such contention of

the respondent is in the teeth of clause 8 of the land lease deed

dated 12 July, 2010 which permitted the petitioner to create "any

mortgage or charge" over the leased land in favour of the lenders

or any trustees acting on their behalf or assign the lease deed in

favour of the lenders by way of security for the implementation of

the co-generation facilities and allied facilities. In the event a

charge or mortgage was to be created or the lease deed was to be

assigned to any person other than the lenders, the lessee

(petitioner) was to do so only with a prior consent of the lessor

(respondent no.1). Therefore, the respondent's contention of

suppression of information according to the petitioner is

completely untenable and contrary to the record.

(viii) It is next submitted that the respondent was clearly aware

about the petitioner's borrowings, which is clear from the

proceedings as filed by the respondent itself before the DRT at

Aurangabad being Securitization Application No. 290 of 2021 filed

on 23 December, 2021, wherein respondent no.1 in paragraph 7

had stated that the petitioner had obtained credit facilities to the

extent of about 191.67 Crores for the purpose of financing

construction development and implementation of the co-gen plant

and which was secured by the hypothecation of all fixed assets
PVR 50 CARBPL23525_2021(Pravara).doc

including plant and machinery, furniture, fixtures, equipment,

motor vehicles, etc. It is thus submitted that in the teeth of what

was pointed out by the respondent in its own application, the

respondent could not have taken a plea of being unaware about

the petitioner's borrowings and set up a farcical defence of

financial difficulties as faced by the petitioner in the present

proceedings. It is submitted that in fact, as to what the

respondent has pleaded in regard to the ownership of the plant

before the DRT is shocking. In this regard, the following paragraph

of the grounds/reasons in the securitization application as filed by

the respondent before the DRT at Aurangabad have been

referred :-

"(xxix) - It is submitted that ultimately the Co-gen plant has to
be transferred to the Applicant as per the terms of the PDA
without any charge or encumbrance even though the same may
be hypothecated with the Respondent No.1 (Central Bank of
India) and Respondent No.2 (Union Bank of India) by
Respondent No.3 (petitioner). It is repeated that the Applicant
is the absolute owner of the Property and has the right to use
the same. Furthermore, the said Co-gen plant is fundamental to
the existence and functioning of the Applicant's sugar factory,
which is being primarily run by the Applicant, jointly with
Respondent No.3. As mentioned earlier, the sugar factory of the
Applicant is a source of livelihood for more than 2 lakh
stakeholders, whose life will be directly impacted if it ceases to
operate. Therefore, even in equity, the Applicant has a right to
continue to use the Property under all circumstances since the
livelihood of lakhs of people is dependent on it. Moreover, the
cessation of the same may also create a law and order issue, as
witnessed in November 2021, when the Respondent No.3 failed
to run the Co-gen Plant in time. Accordingly, enforcement
rights to be exercised by the Respondent No.1 and 2 in respect
of the use of the Property should be allowed, if at all, only with
the direction that the Co-ten plant be kept in a running
condition and in compliance of the terms and conditions of the
PDA, neither less nor more. "

PVR 51 CARBPL23525_2021(Pravara).doc

It is submitted that it is on the above averments, it is infact the

respondent which has obtained ex-parte orders from the the DRT,

Aurangabad on 29 December, 2021.

(ix) It is next submitted that neither of the orders passed by the

DRT at Aurangabad on the securitization application filed by the

respondent, nor on the proceedings filed by the Central Bank of

India before the DRT at Delhi can influence much less prevent this

Court to consider the present proceedings and pass appropriate

orders, as the orders passed by the DRT recognize the contractual

position between the parties under the PDA and the allied

agreements and such orders would not disturb the contractual

rights of the parties under the PDA. It is submitted that even if

the assets of the petitioner are mortgaged, the petitioner cannot

be prevented from exercising its rights under the PDA.

(x) In so far as the respondent's contention that the petitioner

and the respondent are in joint possession of the co-gen plant, it is

submitted that it is false for the respondent to so contend, as such

a contention of the respondent is contrary to the record and from

what can be revealed from several documents. It is submitted

that the respondent's contention of joint possession is a totally

false defence which has been set up in the reply affidavit without

any foundation.

PVR 52 CARBPL23525_2021(Pravara).doc

(xi) In so far as the respondent's contention on the
section 9

proceedings being not maintainable is concerned, it is submitted

that the petitioner was entitled to approach this Court and invoke

the jurisdiction under
Section 9
of the Act in terms of what is

provided in
Section 9
of the Act, namely, that a party may, before

the arbitral proceedings, approach the Court in the circumstances

as they exist in the present proceedings. It is submitted that as

the present application is filed before the commencement of the

arbitral proceedings, the petitioner is entitled to seek the reliefs of

the nature as prayed for. It is submitted that the petition would

be maintainable also considering the provisions of sub-sections

(2) and (3) of
Section 9
of the Act. It is submitted that even

considering that this petition is filed on 12 th October, 2021 there

is no delay whatsoever on the part of the petitioner, when the

petitioner has an intention to commence the arbitration. The

situation in hand would not preclude the petitioner from seeking

reliefs as contended under sub-section (2) of
section 9
of the Act.

(xii) In the above context, it is submitted that by an order dated

11 November, 2021, the Sugar Commissioner had referred the

parties to mediation and ultimately, the Sugar Commissioner by

his order dated 27 December, 2021 ordered that the parties take

recourse to arbitral proceedings. Thus the contention that the
PVR 53 CARBPL23525_2021(Pravara).doc

section 9
application is not maintainable, is thoroughly

misconceived. It is submitted that the petitioner has already

clarified that the petitioner has intended to proceed in arbitration

and that the petitioners are very much inclined to appoint an

arbitral tribunal. However, this would not mean that the

petitioner is not entitled to the reliefs as prayed when there is a

brazen breach of his contractual rights by the respondent. It is

also submitted that there is not an iota of material suggesting that

there is a delay on the part of the petitioner in referring the

disputes to arbitration. Such is not the objection taken in any of

the affidavits filed on behalf of the respondent.

(xiii) It is submitted that the petitioner's case before the Sugar

Commissioner on the several illegalities of the respondent to

pressurize the petitioner not to run the co-gen plant, was clear

from the contents of the petitioner's letter dated 08 December,

2021, addressed to the Sugar Commissioner, Maharashtra State,

in which the petitioner pointed out that the respondent having

political clout has used its influence on the MSEDCL. Further, the

respondent had forcefully started operating the co-gen plant for

the present crushing season (2021-22), and that too, completely

contrary to the terms of the contract between the parties and has

engaged a third party M/s. Energy, for operating and running the

co-gen plant. It is thus submitted that the reliefs as prayed for by
PVR 54 CARBPL23525_2021(Pravara).doc

the petitioner be granted.
In support of the above contentions on

behalf of the petitioner, reliance is placed on the decisions of the

learned Single Judge of this Court in
Baker Hughes Singapore Pte

v. Shiv-Vani Oil and Gas Exploration Services Ltd.1

Submissions
on behalf of the Respondents

54. Mr. Khambata, learned Senior Counsel appearing for the

respondent has made the following submissions:

(i) At the outset, it is submitted that the present

proceedings under
Section 9
of the Act are not maintainable

inasmuch as the respondent is not satisfied that the petitioner is

ready and willing to refer the disputes to arbitration and/or the

petitioner continues to have such willingness. It is his submission

that it has already been five months since the dispute commenced

between the parties, however, no inclination has been shown by

the petitioner to refer the disputes to arbitration. At the threshold,

the petitioner has not satisfied the basic requirement to seek relief

under
Section 9
of the Act, which the petitioner ought to satisfy to

maintain the prayers for interim measures. It is hence submitted

that a
Section 17
application before the arbitral tribunal is the

appropriate remedy for the petitioner.
In support of his

submissions, reliance is placed on the judgment of the Supreme

1 (2015) 1 Bom CR 377
PVR 55 CARBPL23525_2021(Pravara).doc

Court in "
Firm Ashok Traders and Anr. Vs. Gurmukh Das Saluja &

Ors.
"2, "
Arcelor Mittal Nippon Steel India Ltd. Vs. Essar Bulk

Terminal Ltd.
"3, and the decision of the Division Bench of Gujarat

High Court in "
Essar Bulk Terminal Ltd. Vs. Arcelor Mittal Nippon

Steel India Ltd.
"4

(ii) In so far as the petitioner's case that the respondent

illegally took over the possession of the co-gen power plant is

concerned, it is submitted that the parties are in joint possession of

the plant, however, in view of mishandling of the plant by the

petitioner, today the respondent is controlling the plant as pointed

out by the respondent in paragraphs 52 to 54 of its reply. Also

that the petitioner itself has stated in paragraph (9) (XLII) of the

rejoinder affidavit that the turbine has broken down due to

mishandling of the turbine, hence, the respondent was obligated

to get the turbine repaired. This, according to the respondent,

shows that the petitioner's admission on the handling of the plant

by the respondent.

(iii) It is next submitted that the respondent has denied the

execution of the addendum agreement dated 14 October 2020 and

hence, the petitioner is precluded from placing reliance on the

same. The intention of the petitioner in seeking the relief that the

respondent be prohibited from running the co-gen plant, is in fact,

2 (2004)3 SCC 155
3 2021 SCC OnLine SC 718
4 R/First Appeal No.3040 of 2021, Dt. 03/02/2022
PVR 56 CARBPL23525_2021(Pravara).doc

to stop the running of the sugar factory which would cause serious

prejudice to the permanent employees and others like farmers,

who are dependent on the sugar factory. The respondent is

managing the co-gen plant as also the salaries are being paid by

the respondent, which shows that the petitioner was not interested

in conducting the co-gen plant.

(iv) The respondent is successfully running the co-gen plant,

which the petitioner is not in a position to run due to severe

financial constraints as the petitioner is indebted to the banks for

the borrowings as made by it for setting up the co-gen plant,

which itself indicates that it is not possible for the petitioner to

manage and run the co-gen plant. There is no urgency as made

out by the petitioner for any reliefs in the present petition which

can be clearly seen from the averments as made in paragraphs 23

and 29 of the petition.

(v) The bonafides of the petitioner are extremely doubtful

considering the averments as made in paragraph 29 of the petition

inasmuch as its the petitioner's own case that the plant is taken

over by the respondent after the petition was filed on 12 October

2021. It is submitted that the respondent would not mind the

representatives of the petitioner visiting and helping the

management of the plant. However, they cannot seek reliefs as

prayed in the petition.

PVR 57 CARBPL23525_2021(Pravara).doc

(vi) It is submitted that the petitioner is not correct in its

contention that there was mutual arrangement between the

parties, under which, the respondent was permitted to use and

operate the plant. This plea of the petitioner is belied by the

record and the correspondence exchanged between the parties.

(vii) It cannot be said that the respondent has no right

whatsoever to run the Co-gen plant, it is for the reason that the

land belongs to the respondent and it has been leased in its favour

for the purpose of installation of the plant under a valid lease

deed.

(viii) The case of the petitioner of any breach of the PDA by

the respondent and more particularly, in respect of supply of

bagasse and bio gas cannot be accepted, in view of the clear

clauses of the PDA being Clause (6) and (7). The nature of the

dispute is such that it is appropriate that the petitioner seeks relief

before the arbitral tribunal, as different complexities under the

contract can be gone into, only before the arbitral. In fact, this is a

case where the petitioner has dealt with the land in question

without prior consent of the respondent and when the mortgage in

respect of the land was created in favour of the financial

institution.

(ix) It is submitted that by praying for such interim reliefs,

the petitioner is in fact seeking specific performance of the
PVR 58 CARBPL23525_2021(Pravara).doc

agreement. It is submitted that no interlocutory relief can be

granted when the petitioner itself has breached the essential terms

of the contract disentitling itself for reliefs under
section 9
as per

the provisions of
Section 16(b)
and (c) of the
Specific Relief Act
.

(x) In any event, considering the precarious financial

condition of the petitioner and that the petitioner was not capable

to conduct the plant, there is no continuous readiness and

willingness to perform the contract on the part of the petitioner.

Substantial emphasis is laid on the proceedings as initiated by the

consortium of the bank before the DRT at Delhi as also an

application filed under the Securitization Act by the respondent

before the DRT at Aurangabad and the orders passed thereunder,

to contend that these proceedings would also clearly show that the

respondent cannot maintain the prayers as made in the present

proceedings, not only on merits but also considering the legal

position.

(xi) In any event, the injunction which is prayed for is in the

nature of an interim mandatory injunction which ought not to be

granted in the
Section 9
proceedings as none of the essential

requirements as per the settled principles of law
laid down by
the

Supreme Court, are present for this Court to grant such interim

mandatory measures.
To support this submission, reliance is
PVR 59 CARBPL23525_2021(Pravara).doc

placed on the decision of the Supreme Court in "
Dorab Cawasji

Warden Vs. Coomi Sorab Warden & Ors.
"5

(xii) Lastly it is submitted that even the provisions of
Section

41(1)(ha)
of the Specific Relief Act would bar the petitioner to

seek reliefs as prayed for in respect of an infrastructure project.

(IV) Intervention Applications

55. There are three intervention applications, the details of which are

set out hereunder:-

(I) Interim Application (L) No. 4443 of 2022

This interim application is filed by one Alenka Dhrub Lanka and 15

others who are stated to be the employees of the petitioner. It is

contended that the reliefs as prayed in the arbitration petition have a

direct bearing on the the operation of the co-gen plant and their

employment, hence an impleadment is prayed by these applicants. The

principal contention of these applicants is that the petitioner has failed

to pay the salaries of the applicants for several months. The applicants,

therefore, have lodged complaints before the Labour Court, Ahmednagar

for non-payment of the salaries. They have continued to attend work

with the hope that the petitioner would pay their unpaid salary. They

contend that their livelihood depends on the operation of the co-gen

plant and they do not want the co-gen plant to be shut down in any
5 (1990)2 SCC 117
PVR 60 CARBPL23525_2021(Pravara).doc

manner. They apprehend that the petitioner, in view of the disputes

with the respondent, would close down the facilities without any notice

to these applicants. The applicant has made a categorical statement that

the petitioner had paid the salary of the applicant in the month of

October and November, 2021, however, the past salaries for February,

2021 to September, 2021 are yet to be paid. It is their contention that

the Sugar Commissioner has rightly passed the order dated 27

December 2021 and directed to maintain "status quo" so that the

crushing operation continues unhindered. It is contended that the

applicants have severely suffered as they have not been paid by the

petitioner. The affidavit in support of this application has been affirmed

on 12 February 2022.

(II) There is a reply affidavit filed on behalf of the petitioner denying

that the petitioner has been unable to pay the salaries of the applicants.

It is contended that these applicants have no locus to intervene in the

present proceedings as the applicants have nothing to do with the

arbitral dispute between the petitioner and the respondent. It is denied

that the petitioner has deliberately removed staff and that the petitioner

was unable to pay the salaries. It is contended by the respondent that

the disputes in that regard is sub judice before the Labour Court at

Ahmednagar. It is contended that the applicants are not correct in their

contention that the petitioner wants to close down the co-gen plant. The

endeavour of the applicants is that the petitioner be prevented from
PVR 61 CARBPL23525_2021(Pravara).doc

conducting the co-gen plant, when they know that respondent is unfit

and technically not sound to do so. The case of the petitioner is that it

has invested Rs.274 crores to install and operate the co-gen plant and

hence, it is obvious that the petitioner wants to run the co-gen plant and

generate revenue.

Interim Application (L) NO. 4426 of 2022

(I) This interim application is filed by the applicant-Pravara Oos Tod

Va Vahatuk Majoor Sanstha Pvt. Ltd., praying for intervention/to be

impleaded in the present
Section 9
proceedings, filed by the petitioner,

on the ground that the interest of the applicant is likely to be affected. It

is the case of the applicant that it is engaged in the process of

harvesting, carting and transporting of sugarcane and engages around

15,000 labourers and other contractors who harvest and transport

sugarcane from the farmers to the respondent sugar factory. It is

contended that the functioning of the respondent-sugar factory is

necessary for the sustenance of the harvesting labourers and their

families. It is for this purpose, in the proceedings filed before the Sugar

Commissioner, the Sugar Commissioner has passed an order dated 17

November 2021 directing "status quo" to be maintained regarding the

respondent's sugar factory. The apprehension of the applicant is that the

petitioner may shut down the respondent - sugar mill thereby affecting

the applicants. However, as the Sugar Commissioner thereafter passed
PVR 62 CARBPL23525_2021(Pravara).doc

an order on 27 December 2021 noting that the dispute cannot be

resolved amicably, he had granted liberty to the petitioner and the

respondent to resolve the disputes by arbitration. It is the applicants'

contention that it is before the Sugar Commissioner that the members of

the applicant learnt about the pendency of the present petition and the

reliefs as prayed for in the proceedings. It is contended that the present

Section 9
proceedings filed by the petitioner are an abuse of the process

of law, whereby the petitioner is seeking to unlawfully maximise its

commercial gains at the expense of the interest of the applicant, farmers,

harvesting labour and other workers. It is contended that in case the co-

gen plant is allowed to be closed, the operations of the respondent

factory will cease, and the harvesting labour of the applicant would

consequently have no income and hence, they become necessary parties

to the present proceedings.

(II) A reply affidavit has been filed on behalf of the petitioner to

contend that the applicant in no manner is likely to be affected either

directly or indirectly by any order of interim measures passed on this

petition. It is contended that the applicant is not a party to the

arbitration agreement between the petitioner and the respondent,

hence, this intervention application is not maintainable. It is next

contended that the interim application is lacking in bonafides as it has

been filed at the behest of the respondent, solely to prevent the urgent

and expeditious hearing of the petition, and the same is abuse of the
PVR 63 CARBPL23525_2021(Pravara).doc

process of the Court and ought to be dismissed outright as such. It is

also contended by the petitioner that the apprehension of the applicant

that the petitioner would close down the co-gen plant, is totally

misconceived and against the case of the petitioner in the interim

application. It is further reiterated that the petitioner has invested an

amount of Rs.274 crores in setting up the plant and hence, there is no

question of the applicant being under any apprehension that the

petitioner wants to shut down the plant. The petitioner has denied that

the applicant has spent an amount of Rs.30 crores as alleged, in

engaging harvesting labour, machines etc. The petitioner has also

contended that the applicant lacks bonafides in moving this interim

application and can have no interest in the subject matter of the instant

dispute, mainly in regard to functioning of the co-gen plant, and hence,

the prayer for intervention is misconceived and deserves to be rejected.

Interim Application (L.) NO. 4446 of 2022

(I) This interim application is filed by one Sakhar Kamgar Union,

Shrirampur. The applicant in this application claims to be a Union

comprising of 1409 members who are currently working with the

respondent-sugar factory as labourers, workers and employees. Their

contention is not different from what has been alleged in the previous

two interim applications, namely, that the sustenance of the members of

the applicant is dependent on the effective functioning of the

respondent-sugar factory. It is contended that the applicant had
PVR 64 CARBPL23525_2021(Pravara).doc

previously filed a representation with the office of the Sugar

Commissioner who had passed an order dated 27 December 2021

directing to maintain status quo, as also directed that the petitioner and

respondent to resolve the disputes in arbitration proceedings. The case

of the applicant is that the petitioner is not in good financial condition

as it had failed to pay the electricity dues in consequence of which, the

MSEDCL has issued disconnection notice to the petitioner on 29

November 2021. It is contended that the electricity for the respondent's

premises including the staff quarters and primary school is also

dependent on the electricity generated by the co-gen plant. Thus, any

action of the petitioner shutting down the co-gen plant would affect the

applicant. It is for such reason the applicant contends that it was

required to move a representation dated 10 November, 2021, before the

Sugar Commissioner complaining that the co-gen power plant was not

operational till 12 November 2021 and there was a delay in

commencement of the crushing operation of about 27 days, which

caused hardship and economic distress to the members of the applicant-

union. The other contents of the application are similar to the other two

interim applications. There is also a reply affidavit filed where the

petitioner contended that the interim application is not bonafide and

that the applicant in this interim application has nothing to do with the

arbitral proceedings. It is contended that none of the rights of the

applicant are affected by the subject matter of the proceedings between
PVR 65 CARBPL23525_2021(Pravara).doc

the petitioner and the respondent. It is also contended by the petitioner

that all apprehensions of the applicant are incorrect and false and they

are denied in totality.

SUBMISSIONS :-

56. Dr. Saraf appearing for all the interveners has submitted that

even if the applicants are third parties to the inter parte disputes

between the petitioner and the respondent, however, the rights of the

applicants would be vitally affected, if any orders adverse to the

respondent is passed in the present
Section 9
proceedings.
In support of

his contention that when the rights of the third parties are being

affected, then such parties can be impleaded and infact become

necessary parties to the proceedings, reliance is placed on the decision

of the learned Single Judge of this Court in
Prabhat Steel Traders Pvt.

Ltd. Vs. Excel Metal Processors Pvt.Ltd.6

57. Mr. Andhyarijuna responding to the interventions and the

submissions as made by Dr. Saraf for the intervenors would submit that

the relief as prayed for in the
Section 9
proceedings would in fact aid

the applicants and not prejudice them. It is submitted that the legal test

in regard to intervention in
Section 9
proceedings has not been correctly

formulated by the applicants. It is his submission that, in fact, the

intervenors fail on such legal test, inasmuch as
Section 9
per se is not

6 2018 SCC OnLine Bom 2347
PVR 66 CARBPL23525_2021(Pravara).doc

available to the intervenors to assert their right, by stepping into the

shoes of the respondent. It is his submission that it is for the
Section 9

petitioner to implead a necessary party who might affect the rights of

the
Section 9
petitioner in regard to the reliefs as prayed for or who may

be adversely affected. However, it is submitted that a converse situation

is not, what
Section 9
would provide.
Insofar as the reliance of Dr. Saraf

on the decision of
Prabhat Steel Traders Pvt. Ltd.
(supra) is concerned,

Mr. Andhyarijuna's would submit that such decision is not an authority

for the propositions that intervention per se at the stage prior to any

order being passed under
section 9
can be permitted more particularly

considering the provisions of
Section 9(1)(c)
of the Act.

58. It is next submitted by Mr. Andhyarijuna that the entire premise of

the applicants to raise contentions that the petitioner is not in a good

financial condition is wholly untenable, as there is no denial of the fact

that the parent company of the applicant is a debt free company. Hence,

the entire case of the applicants that the petitioner's conducting co-gen

plant will be prejudicial to the applicants interest is merely an

apprehension and totally untenable. Mr. Andhyarijuna has submitted

that the petitioner has invested an amount of Rs.247 crores in the co-

gen plant and certainly the intention of the petitioner is to run the plant

and recover its investment as also make profits.

PVR 67 CARBPL23525_2021(Pravara).doc

Submissions of Mr. Andhyarijuna in rejoinder to submissions on behalf
of respondent

(i) Mr. Andhyarijuna would submit that Mr. Khambata's

submission referring to the DRT proceedings is nothing but an

attempt on the part of the respondent to deviate from the issue in

question, namely, of the illegal takeover and running of the co-gen

plant by the respondent without any authority in law. It is

submitted that the orders passed by DRT at New Delhi as also the

orders passed by the DRT at Aurangabad are ex-parte to the

petitioner. It is submitted that whatever was observed by DRT-

New Delhi in its order dated 15 February 2022 is on the basis of

what the respondent (defendant no.2 therein) had pointed out

before the DRT, which was completely a one sided affair. Hence, it

was totally misconceived for the respondent to place reliance on

the orders passed by the DRT, New Delhi. It is submitted that,

similarly, the orders passed by the DRT-Aurangabad could not be

relied by the respondent since such orders were passed ex-parte.

(ii) Insofar as the respondent's contention that the mortgage of

the land in favour of consortium of bank was illegal, it is

submitted that it is an untenable contention, inasmuch as in the

Land Lease Deed dated 12 July, 2010 in Clause 8, provided that

the lessee (petitioner) may create any mortgage or charge over the

leased land in favour of the lenders and/or assign the lease deed
PVR 68 CARBPL23525_2021(Pravara).doc

in favour of lenders by way of security for the implementation of

the Co-Generation Facility and allied activities. Mr. Andhyarujina

would thus submit that no permission was required to be taken to

create a mortgage in favour of the financial institutions. He would

submit that also read with Clause 8 of the Land Lease Deed, under

Clause 4.7 of the PDA, the petitioner was entitled to borrow

money for setting up of the co-generation facility by offering the

leased land as security. Thus, the case of the respondent that it

was surprised to note that the land on which the co-generation

plant was installed was leased to financial institutions is a false

case of the respondent. Mr. Andhyarijuna would submit that the

Lease Deed is still with the petitioner. The mortgage as created by

the petitioner of the bank is an English mortgage.

(iii) Mr. Andhyarijuna referring to the provisions of
Sections 58

and
of the Transfer of Property Act read with the clauses of the

Land Lease Deed as also the PDA would submit that it was

untenable for the respondent to argue that creating security of the

land in favour of the financial institutions/banks is as good as

transfer of ownership. It is his submission that even the financial

institutions are not taking up such contention and it is only a

charge on the property which is created so as to secure borrowings

from the lenders. It is thus submitted that creation of mortgage

does not amount to sale of the co-gen plant. Referring to the
PVR 69 CARBPL23525_2021(Pravara).doc

additional affidavit dated 26 February, 2022 filed on behalf of the

respondent, it is submitted that the respondent at all material

times was aware of the indenture of mortgage dated 27 July,

2012 and 19 May, 2015 entered between the lender-banks and the

petitioner, which is also annexed to the original application as

Annexures A-16 and A-25 respectively and thus, their case in the

present proceeding that the creation of mortgage was a

suppression to the respondent, is false and dishonest, when the

respondent has made a submission in paragraph 10 of its reply

that the petitioner is not entitled to any equitable relief as they

have suppressed that the co-gen plant was hypothecated to its

lenders.

(iv) In regard to the submissions as advanced on behalf of the

respondent on joint possession of the co-gen plant, Mr.

Andhyarijuna would submit that it is false for the respondent to

urge such contention, since under the second supplementary

agreement, the respondent was permitted to operate the plant for

a limited period of time. It is submitted that there is not a single

document as shown by the respondent which would go to show

that there was any joint possession of the co-gen plant. The

Court's attention is drawn to paragraph no. 9(xviii) of the affidavit

in rejoinder filed on behalf of the petitioner wherein the petitioner

had specifically denied that the co-gen plant is in joint possession
PVR 70 CARBPL23525_2021(Pravara).doc

of the petitioner and respondent for the past couple of years, and

that, the respondent had provided spares, consumables, paid

salaries of staff of the petitioner, provided operational support by

deputing personnel from time to time and/or the respondent has

spent crores of rupees for the co-gen plant's operations and

running at the instance and requests of the petitioner. It is pointed

out that the petitioner has specifically pleaded that the respondent

had withheld from this Court a vital fact that there was a mutual

arrangement between the petitioner and respondent, wherein, the

respondent had agreed to make certain operational payments and

bear certain operational expenses on behalf of the petitioner, in

order to compensate the petitioner for the losses caused to it due

to the short-supply of bagasse fuel by the respondent, which was

with an understanding that the operational expenses and

operational payments made by the respondent on behalf of the

petitioner will eventually be set off with the amounts that were

due and payable by the respondent to the petitioner, due to the

short supply of bagasse fuel by the respondent to the petitioner. It

is submitted that the possession of the co-gen plant in respect of

which a serious grievance has been made by the petitioner in the

present proceedings have in fact happened between 12 October,

2021 to 26 October, 2021, i.e., after filing of the
Section 9

petition.

PVR 71 CARBPL23525_2021(Pravara).doc

(v) Mr. Andhyarijuna would next submit that merely taking

assistance from the respondent to manage the co-gen plant would

not amount to joint possession. It is submitted that in fact when

the petitioner requested for support, it would categorically show

that the petitioners are running co-gent plant and certainly, the co-

gent plant is not in a situation of joint possession. At the most, the

right to enter the co-gen plant as may be granted by the petitioner

would be a permissive entry to the respondent. Hence, the

petitioner would be justified in seeking reliefs as prayed for as an

interim measure, if such rights are usurped by the respondent.

Even the proceedings before the DRT Delhi, would show that the

contention of the respondent of joint possession of the co-gen

plant is totally untenable inasmuch as a specific plea has been

taken by the respondent before DRT that the respondent is

exclusively running the co-gen plant. As also before DRT,

Aurangabad, a plea has been taken by the respondent that the

petitioner has abandoned the co-gen plant. It is thus submitted

that contrary to such contention on record of the said proceedings

a theory of joint possession is being asserted by the respondent in

the present proceedings. It is submitted that such inconsistent

stand of the respondent itself proves the falsity of its contentions.

(vi) Mr. Andhyarijuna would next submit that considering the

clauses of PDA it completely belies the case of the respondent that
PVR 72 CARBPL23525_2021(Pravara).doc

any of such clauses would permit the respondent to take over the

plant even in the event there was any failure of the petitioner to

comply with its obligations, as the consequences in that regard are

provided for under clause 25 of the PDA.

(vii) Insofar as the respondent's contention that the prayer as

made in the petition is for an interim mandatory injunction, it is

submitted that Court has powers to grant such interim orders

when a strong prima facie case of a nature as made out in the

present petition exists, as also that the balance of convenience is in

favour of the petitioner coupled with the fact that if the prayers as

made are not granted, grave and irreparable prejudice would be

caused to the petitioner. It is also submitted that as to what is

prayed for in the present proceeding is also for a temporary

injunction as seen from prayer clause (b), so as to restrain the co-

gent plant from being usurped by the respondent.

(V) Analysis and Conclusion

59. I have heard learned counsel for the parties at length and with

their assistance I have gone through the record. At the outset, it needs

to be noted that the petitioner intends to press this petition for a relief as

prayed for in terms of prayer clause (b) which is noted above. Insofar as

the prayer clause (a) is concerned, Mr. Khambata on behalf of the

respondent has made a statement that the respondent has no intention
PVR 73 CARBPL23525_2021(Pravara).doc

to engage any third party to undertake operation/maintenance and

management of the petitioner's co-gen plant.

60. On the above premise, following questions would fall for

consideration of the Court in the present proceedings :-

(i) Whether the petitioner is entitled for an injunction as prayed for

in prayer clause (b) of restraining the respondent from in any

manner entering the premises of the petitioner's co-generation

plaint and from carrying out any work/activity for the

repairs/maintenance/operation of the petitioner's co-gen plant?

(ii) Whether the respondent has any legal right under the contractual

scheme as the parties stand, to interfere in the petitioner's

managing and operating its Co-generation plant and make an

attempt to lock, stock and barrel, oust the petitioner from

operating and managing its own Co-generation power plant?

61. To aid the discussion it would be appropriate to recapitulate some

of the admitted facts. The petitioner was created as a Special Purpose

Vehicle (SPV) incorporated by Gammon Infrastructure Projects Ltd. to

set up the co-gen plant to be used for generating power and steam inter

alia to be supplied to the respondent's sugar factory. On 12 July, 2010,

the Project Development Agreement (PDA) was entered between the

respondent and the petitioner whereunder the petitioner agreed to set
PVR 74 CARBPL23525_2021(Pravara).doc

up and run a bagasse fired Co-generation (Co-gen) plant on a Build Own

Operate Transfer (BOOT) basis, on land to be provided by the

respondent adjoining to the sugar factory. Bagasse and biogas which are

the bi-products in the sugar manufacturing process, were to be utilized

in the Co-gen plant for the production of power and steam.

62. The Co-gen plant was to function as agreed between the parties

under the PDA subject to the respondent's supplying bagasse and biogas

as per the "agreed minimum assured quantity" to the petitioner, so as to

enable the petitioner to produce electricity as per the quantity as agreed

between the parties in Schedule-I of the PDA. Under the PDA, the

petitioner was also free to sell to any third party surplus power and

steam after meeting the requirements of the Kharkhana-respondent.

The parties also agreed under the PDA, on an "Assets Transfer Date"

when the assets of the Co-gen plant would be transferred in favour of

the respondent, which was to be 25 years from the operation

commencement date which was to be 30 June, 2041 (considering that

the date of commencement of the operation of the plant was 6

November, 2015).

63. In the context of the controversy which is raised in the present

proceedings, some of the clauses of the PDA, the Land Lease Deed are

required to be noted, which are as under:-

RELEVANT CLAUSES UNDER THE PDA
PVR 75 CARBPL23525_2021(Pravara).doc

1.2 "Assets Transfer Date" or "ATD" shall be 30th June after
completion of 25 years of operation starting from COD. For
example, if the COD is 28thFeb 2009, the ATD will be 30 June
2034.

1.5 "Commercial Operation Date" or "COD" of the Co-generation
Facility will be deemed to occur on the date PREL delivers to
Maharashtra State Electricity Distribution Company Ltd
(hereafter called "MSEDCL") or to the Karkhana a certificate
stating that the Co-generation Facility has become operational
by PREL.

1.10 "Fair Market Value" is the value of an entity by treating the
entity as a going concern which thereby recognizes a stream of
future cash flows upto the Assets Transfer Date.

4.0 PREL TO BUILD AND OPERATE CO-GENERATION FACILITY

4.1 Subject to the fulfillment of the aforesaid conditions
precedent, then in fulfillment of the responsibilities of GIPL
under the Memorandum of Terms dated 23" August 2007,
PREL will set up the Co-generation Facility at Pravaranagar
using plant and equipment and consistent with the technical
specifications necessary to meet its obligations under this
Agreement.

4.2 The installed capacity of the Co-generation Facility shall be
decided by PREL in consultation with its technical consultants.

However, it shall be sufficient to meet the process steam and
power requirement of the Karkhana during the Crushing
Season and Off Season.

4.3 PREL shall be responsible for designing, development,
procurement, installation, erection, commissioning and
operation of the co-generation Facility and for arranging
finance for setting-up the co-gen Facility.

4.4 PREL shall operate and maintain the Co-generation Facility in
accordance the Prudent Utility Practices, Operating Procedures
and Interconnection Procedures.

4.5 Subject to the supply of Bagasse and Bio-gas as per the agreed
minimum assured quantity mentioned herein below and as per
quality specified in Schedule-I by Karkhana to PREL and
except for Forced Outage, PREL shall meet entire process
steam and power requirement of the Karkhana up to the
extent mentioned in Schedule-I during the Crushing Season
and Off Season. PREL shall be free to sell surplus power and
steam after meeting the requirements of the Karkhana to any
third party.

4.6 PREL will operate the Co-generation Facility until the Assets
Transfer Date in accordance with the terms of this Agreement.

PVR 76 CARBPL23525_2021(Pravara).doc

4.7 PREL shall be entitled to borrow money for setting up of the
Co-generation facility by offering the same including the
Leased Land as security.

4.8 PREL may take planned shutdown of its co-gen Facility for
periodical maintenance on such occasions and at such
intervals, as maybe finalized in consultation with the
Karkhana. However, no such planned shutdown of co-gen
Facility shall be scheduled during the Crushing Season.
Provided however, the co-gen Facility can do a planned outage
as and when the Karkhana is having a planned outage.

5.0 LAND FOR THE PROJECT

5.1 The Karkhana shall grant Leased Land to PREL for the purpose
of setting up and operating Co-generation Facility.

5.5 The Karkhana shall grant lease of the Leased land for the
period commencing on the date as mutually decided on or
before the Appointed Date and ending on the Assets Transfer
Date.

6.0 SUPPLY OF BAGASSE

6.1 The Karkhana shall continuously supply to PREL entire
bagasse (excluding bagacillo) as and when generated in its
sugar plant at Pravaranagar during the period beginning with
Crushing Season of the year in which the Co-gen Facility
commences production and ending with the close of last
Crushing Season Day until the Assets Transfer Date.

6.4 PREL shall pay price for bagasse supplied by the Karkhana at
the rate mentioned in Schedule - II. The price shall be paid by
PREL on monthly basis. The Karkhana shall raise bill on PREL
for bagasse supplied by the Karkhana to PREL during the
previous month. PREL shall make payment for such supply
within 30 (thirty) days.

6.5 The Karkhana shall supply bagasse to PREL having quantity
not less than 216,000 MT during each Crushing Season and as
per quality specified in Schedule-l. The total quantity of supply
of bagasse of 216,000 MT in a Crushing Season is arrived at
considering 160 days in a Crushing Season (tolerance level of
maximum 4 days). If the Crushing Season is longer than 160
days (tolerance level of maximum 4 days), a quantity of 1100
MT/day of bagasse at the contracted price shall be supplied by
the Karkhana in addition to the 216,000 MT. Therefore, under
such circumstances, the minimum assured quantity of bagasse
to be supplied by the Karkhana shall stand increased
accordingly. The Karkhana shall give all help to PREL in
procuring sugarcane trash/biomass from the farmers for this
project. The Parties agree that a detailed agreement for this
purpose shall be executed within 6 months of signing of this
Agreement.

6.6 The Karkhana shall intimate to PREL three months in advance
the tentative date of commencement of Crushing Season and
PVR 77 CARBPL23525_2021(Pravara).doc

provide a finalized schedule of supply of bagasse and bio-gas
at least one month prior to the commencement of Crushing
Season. Karkhana shall adhere to. The said Schedule. If during
any Crushing Season, the Karkhana is unable to adhere to its
given schedule, the Karkhana shall procure the quantity
equivalent to the shortfall from other sources at its own cost
and supply the same to PREL to adhere to the schedule. PREL
shall pay to the Karkhana at the contracted rate as mentioned
in Schedule. II for such supply of bagasse.

6.7 If the Karkhana fails to supply the minimum assured quantity
of bagasse as mentioned above, PREL shall be entitled to
recover and the Karkhana shall pay to PREL the loss due to the
purchase price differential of the bagasse over and above the
contracted rate incurred by PREL. PREL shall be free to
purchase bagasse from the open market up to the quantity of
shortfall. Cost incurred by PREL on purchase and transfer of
the bagasse up to Hook Up Point on such shortfall over the
contracted rate mentioned in Schedule - II shall be borne by
the Karkhana. The Karkhana shall make payment to PREL for
such loss every month before the end of the month.

6.8 If PREL remains in default in making payment for the bagasse
to the Karkhana for more than 3 months without prior written
consent of the Karkhana, the Karkhana shall be free to sell its
bagasse to any other party. In such situation, any short
realization on sale of bagasse in comparison to the contracted
rate mentioned in Schedule - II, shall be borne and paid by
PREL to the Karkhana.

7.0 SUPPLY OF BIO-GAS

7.1 The Karkhana shall supply entire bio-gas generated from the
bio-gas plant during the period beginning from COD and till
the Assets Transfer Date.

7.3 The bio-gas shall be transferred by the Karkhana to PREL at
the Hook Up Point mentioned in Schedule - I-B on continuous
basis as it is generated and collected. PREL shall provide and
install at a suitable position and at its own cost meters to
measure flow of bio-gas on continuous basis. The meters shall
be calibrated and serviced as per manufacturer's service
schedule during which time representatives of the Karkhana
and PREL shall remain present. The Karkhana shall provide
pumping pressurization required to maintain the supply
pressure of bio-gas.

7.7 If PREL is unable for any reason to accept delivery of bio-gas from the
Karkhana or remains in default in making payment for the bio-gas to
the Karkhana for more than 3 months without prior written consent
of the Karkhana, the Karkhana shall be free to divert and use its bio-
gas in any other plant of the Karkhana. In case the Biogas is not used
in any other plant of Karkhana, such non-supply of bio-gas to the co-
gen Facility shall be deemed to be in satisfaction of minimum assured
quantity mentioned in Schedule -I however PREL will not be liable to
pay for such non-supply of bio-gas.

PVR 78 CARBPL23525_2021(Pravara).doc

8.0 SUPPLY OF POWER & STEAM

8.1 Subject to the supply of Bagasse and Bio-gas as per the quantity and

quality specified in Schedule-I by Karkhana and except for the Force
Outage, PREL shall meet entire process steam and power requirement
of the Karkhana up to the extent mentioned in Schedule - I during the
Crushing Season and Off Season.

8.11 It is expressly provided that continuous and uninterrupted supply of
power and steam by PREL to the Karkhana, in accordance with
requirements mentioned in Schedule J is essence of this Agreement
based on fulfillment of mutual obligations by the Parties. PREL should
make best endeavors to ensure continuous and uninterrupted supply
of power and steam to the Karkhana, particularly during the Crushing
Season. In case of Forced outage, PREL would make best efforts to
provide power up to the limits specified in Schedule - I to the
Karkhana through MSEDCL or any alternative source at the sole costs
of Karkhana. PREL shall make best endeavors to maintain supply of
steam by keeping its boiler operational and supplying through
Pressure Reducing and De-Superheating Station ("PRDS").

8.12 Without prejudice to above, in case of failure on the part of PREL to
supply assured quantity of electricity and steam as mentioned in
Schedule - I, the Karkhana shall be free to take such steps as it thinks
appropriate including purchase of electricity/steam from any other
party or generation thereof in captive facilities, if any. Any difference
between the actual price paid or actual cost incurred by the Karkhana
for purchase/ generation of electricity/steam and the contracted rate
mentioned in Schedule - Il shall be borne by PREL. The Karkhana
shall deduct such amount from any sums payable by it to PREL

13.0 MODIFICATIONS IN SUGAR PLANT

13.3 Even after completion of.the.sugar plant modifications, the Karkhana
shall not discard or dispose off its steam and power generating
facilities and keep them as standby units for the duration of two
ensuing Crushing Seasons.

15.0 TERM OF AGREEMENT

15.1 The term of this Agreement shall be from the date of signing of this
Agreement until the Assets Transfer Date.

15.2 PREL will operate the Co-generation Facility until the Assets Transfer
Date in accordance with the terms of this Agreement

16.0 TRANSFER OF CO-GENERATION PLANT

16.1 On the Assets Transfer Date, PREL shall, subject to the provisions of
clauses below, transfer the Co-generation Facility to the Karkhana in
normal working condition.

16.2 The Karkhana shall pay a lump sum consideration of Rs. 1,00,000/
(Rupees One Lakh) to PREL for transfer of the Co-generation Facility
to the Karkirana. Any duty and taxes including stamp duty on assets
transfer shall be borne and paid by the Karkhana.

PVR 79 CARBPL23525_2021(Pravara).doc

16.3 It is obligatory on the part of PREL to maintain Co-generation Facility
normal working condition at the time of transfer to the Karkhana.
PREL shall be required to demonstrate and establish this by running
the generation Facility for a continuous period of 7 days any time
during en month of operation before Assets Transfer Date. The Co-
generation Facility shall be said to be in normal working condition if
it is operate at more than 60% of its rated power generation capacity
and its fuel consumption is not more than 115% of the standard
consumption with reference to actual power generation during
demonstration period.

16.4 If PREL fails to demonstrate and establish that the Co-generation
Facility is in normal working condition by running it for a continuous
period of 7 days and achieve performance parameters as mentioned
above, then PREL shall repair and bring the Co-generation Facility to
normal working condition at the cost of PREL.

25.0 EVENTS OF DEFAULT AND TERMINATION

25.1 Events of Default

Event of Default means either Karkhana Event of Default or PREL
Event of Default or both as the context may admit or require.

a. Karkhana Event of Default

Any events that are solely attributable to the Karkhana shall
constitute an event of default by the Karkhana ("Karkhana Event
of Default") unless caused by PREL Event of Default or any Force
Majeure event. The Karkhana Event of Default shall mean to
include as under:-

VI. In case Karkhana fails to fulfill its obligations of
soPAung /I .v./ and biogas as per the provisions
contained in this Agreement for two continuous
Crushing Seasons.

IX. Any payment which have become due and
payable by the Karkhana to PREL as per this
Agreement and the same have not been paid for a
period of 180 days.

b. PREL EVENT OF DEFAULT

Any events that are solely attlibutable to PREL shall constitute an
event of default by PREL ("PREL Event of Default"), unless caused by
Karkhana Event of Default or a Force majeure Event. The PREL Event
of Default shall mean to include as under:

II. As part of a scheme of arrangement or composition with its
creditors, PREL makes any assignment for the benefit of its creditors
generally an which is not reversed within 90 days of a written notice
from the terminating Party.

V. In case PREL fails to fulfill its obligations of supplying power
steam as per the provisions contained in this Agreement continuous
period of 120 days in a Crushing Season.

PVR 80 CARBPL23525_2021(Pravara).doc

25.2 TERMINATION

a. Termination Procedure

I. In case of an Event of Default, the Affected Party may serve a

notice to the defaulting party stating that an Event of Default under
this Agreement has occurred and the same should be remedied within
60 days. In case the defaulting party fails to remedy such Event of
Default within the notice period, the Affected Party shall have a right
to terminate this Agreement by serving a termination notice.

b Rights and obligations in case of Termination due to Events of
Default or Force Majeure.

I. Termination for Karkhana Event of Default:

PREL shall have the right (at its own discretion) to enforce either of
the following rights:

1) Continue to operate its Co-generation Facility situated on the
Leased Land and in which case the Karkhana shall continues to
supply quantity of bagasse and biogas required for the
operation of the Co-generation facility as abovementioned in
clauses 6 and 7, with the quality as mentioned in Schedule I to
PREL; and

PREL will generate power and steam therein up to the Assets
Transfer Date and sell such power and steam to the Karkhana
MSEDCL or other customers/consumers; or

2) Require the Karkhana to buy the Co-generation Facility at the
Fair Market Value. Such Fair Market Value shall be determined
by the independent Category I Merchant Banker to be
appointed jointly by Karkhana and PREL;

3) Transfer the co-generation facility to any third party to recover
its cost.

And in any of the above rights being enforced the Karkhana
hereby agrees, undertakes and covenants not to, in any
manner, obstruct the working or the operation of the co-
generation facility and not to commit any acts or deeds which
will have adverse effect on the operation and functioning of the
co-generation facility and to extend full co-operation in
enforcement of the rights by PREL.

II. Termination for PREL Event of Default

The Karkhana shall have the right to buy the Co-generation Facility at
a 90% of the Fair Market Value. The Fair Market Value shall be
determined by the independent Category I Merchant Banker to be
appointed jointly by the Karkhana and PREL."

28.0 NO OBSTRUCTION

28.1 The Kharkhana shall not create any kind of obstruction or
interference in the work of PREL till the subsistence of this
Agreement.

PVR 81 CARBPL23525_2021(Pravara).doc

64. Having noted the clauses of the PDA, the clauses of Land Lease

Deed dated 12 July, 2010 are required to be noted:

"5(viii) That the lessor hereby grants the irrevocable power and
authority to the lessee to construct on and under the Leased
Land and all such construction shall be the property of the
Lessee and/or its nominees/assignees.

(ix) That the lessor hereby agrees and undertakes that it shall not
mortgage, sell, dispose of or otherwise alienate or encumber
the Leased Land or any part of thereof in any manner
whatsoever during the expiry or earlier termination of this
agreement.

8. ASSIGNMENT

The Lessee may create any mortgage or charge over the
Leased Land in favour of the Lenders or any agent or trustee
acting on their behalf or assign this lease deed in favour of
the lenders by way of security for the implementation of the
Co-Generation Facility and allied activities. Provided that if
the charge or mortgage is created or the Lease Deed is
required to be assigned to any person other than the
Lenders, the Lessee shall do so only with the prior written
consent of the Lessor."

65. It is stated by the petitioner that as per the terms of the PDA, the

petitioner had agreed to inter alia facilitate modernization of the sugar

plant and had agreed to spend upto Rs.20 crores on such modernization.

The petitioner had accordingly advanced an amount of Rs.13.5 crores to

the respondent. Subsequently, in January 2015, the parties entered into

an agreement called as the "Supplementary Agreement", wherein the

respondent agreed to refund an amount of Rs.13.50 crores to the

petitioner so as to facilitate the commissioning of the plant in all

respects on or before 31 March, 2015. It is the case of the petitioner that

on the refund of the said advance, both the parties were relieved of all
PVR 82 CARBPL23525_2021(Pravara).doc

obligations as required under clause 14 of the PDA. It is the case of the

petitioner that under the Supplementary Agreement, the respondent had

agreed that the petitioner would be required to avail borrowings from

the banks or any other source for completing the installation of the Co-

gen plant.

66. It is not in dispute that the petitioner completed the setting up of

the Co-gen plant and started commercial operations with effect from 6

November, 2015. The Co-gen plant started producing electricity and

steam, which was being supplied to the respondent as per the PDA and

the Supplementary Agreement.

67. It appears that discord and friction started to built up between the

parties from the very first crushing season 2015-16. The petitioners have

contended that in the crushing season 2015-16, the respondent did not

supply the minimum assured quantity of bagasse fuel to the petitioner

and there was a short supply of 90,340 metric tons of bagasse fuel.

Consequently, the petitioner had to source coal as fuel, which caused a

heavy financial burden on the petitioner. Further, for the crushing season

2016-17 as well, there was short supply of 140,689 metric tons of

bagasse fuel, hence again the petitioner had to source coal to run the

Co-gen plant. All these factors according to the petitioner were not

attributable to the petitioner, caused heavy financial burden on the

petitioner.

PVR 83 CARBPL23525_2021(Pravara).doc

68. In the above circumstances, the petitioner addressed a letter dated

22 November, 2017 to the respondent inter alia informing about the

short supply of bagasse fuel as also of the non-supply of biogas in the

preceding crushing seasons and highlighted the losses incurred by it.

The petitioner appraised the respondent of the following issues : (i)

power supply to respondent from the petitioner was never discontinued

and the petitioner was continuously supplying the required power to

the respondent, throughout the year; (ii) there was no clarity/intimation

from the respondent about the commencement of the crushing season;

(iii) there was no delay in the boiler super heater coil work; (iv) the

petitioner had completed the kind of quantum of work in less than 20

days; (v) the operations of respondent's factory had started for the

crushing season on 10 November, 2017 however , the respondent did

not achieve the capacity of 6000 metric tons per day; (vi) also the

operation of respondent's distillery plant could not commence as work

on the same was in progress; The petitioner in the said letter stated

that for the successful running of the co-gen plant for both the parties

and especially beneficiary being the respondent, following were the

issues of concern :

"a) Karkhana is able to monetize vacant land in the form land rentals
being paid by PREL;

b) Karkhana is receiving power and steam at concession/subsidized
price/rates, which otherwise would have cost exorbitantly if it had to
arrange on its own;

c) Returns from bagasse are beneficial & economical. If Karkhana
was to use it directly in its system, it would have cost more & expensive.

PVR 84 CARBPL23525_2021(Pravara).doc

With power & steam being supplied from PREL plant, more value is
being realized by Karkhana out of bagasse;

d) In the event of supply of agreed quantity of bagasse & biogas by
Karkhana, it also stand to gain additional payment in the form of
additional compensation, if the generation is more than agreed
quantity;

e) Karkhana will also get various grants & subsidies, including
various tax exemptions on purchase of sugarcane, etc."

69. As noted above, it is the petitioner's case, that its financially

stressed condition was primarily due to respondent's failure to fulfill its

obligation and non-adherence to agreed conditions in the PDA. In this

situation, the petitioner requested the respondent to release the

petitioner's payment/compensation totaling to Rs.48.12 crores towards

the financial losses suffered by the petitioner due to non-compliance of

obligations/ commitment by the respondent. It prima facie appears that

in the very first operational year 2015-16, the respondent did not fulfill

the contractual requirement of supplying the agreed quantity of bagasse

and bio-gas.

70. It appears that even thereafter in the crushing season 2017-18

again there was a shortfall on the part of the respondent in supplying of

67544 metric tons of bagasse fuel. Also the biogas fuel was not supplied

to the petitioner. As the prices of coal were extremely high and unviable

due to international marketing conditions, the petitioner could not

procure coal as an alternate fuel. This again had a cascading effect on

the petitioner's finances, as on such failure of the respondent to supply

the assured minimum quantity of the bagasse and biogas the production
PVR 85 CARBPL23525_2021(Pravara).doc

had adversely affected which was causing the petitioner further losses,

eventually the petitioner defaulted on its commitment to service its

debts towards its lenders, resulting in the petitioner's account being

classified as Non-Performing Asset (NPA) since December, 2017. In

order to mitigate the situation, it was decided between the parties to try

and amicably resolve the situation. The parties accordingly entered into

a "Second Supplementary Agreement" dated 30 October, 2018 under

which for a period of one year, i.e., from 1 November, 2018 to 31

October, 2019, the respondent was to operate and run the Co-gen plant

for one year in a manner as agreed under the said agreement. The

relevant clauses of such agreement are required to be noted which read

thus :-

4. The Amended PDA shall stand amended to the extent as stated
under this Agreement. All other provisions of the Amended PDA shall
remain the same. The Parties agree that this Agreement when read
together with the Project Development Agreement and the
Supplementary Agreement shall constitute the entire understanding
between the Parties. Unless otherwise expressly provided elsewhere in
this Agreement, during the term of Agreement, the order of priority of
this Agreement, the Supplementary Agreement and the Project
Development Agreement shall in the event of any conflict between
them be in the following:

(a) this Agreement;

(b) The Supplementary Agreement; and

(c) The Project Development Agreement.

i.e. the agreement/ document at (a) above shall prevail over the
agreements and documents at (b) and (c), the agreement/ document at

(b) above shall prevail over the agreements and documents at (c).

7. The provisions of Clause 32 ( Notices), Clause 33 (Dispute
Resolution). Clause 34 (Confidentiality), Clause 40 (Governing Law),
Clause 38 (Further Acts and and Assurance), Clause 36 (Survival) and
Clause 35 (Assignment and Novation of Amended PDA shall be deemed
to have been incorporated herein and shall me mutandis apply to this
Agreement.

PVR 86 CARBPL23525_2021(Pravara).doc

8. Modified Operational Arrangement (the "MOA", the "Modified
Operation Arrangement" or the "Modified Arrangement"): The Parties
agree that the Co-generation Plant developed and presently being run
PREL will be operated, managed and maintained by Karkhana for a
period of (one) year from the MOA Commencement Date.

9. Tenure of the Modified Operational Arrangement: The term /
tenure ("MOA Term") of the Modified Arrangement shall commence
from 015 November 2018 ("MOA Commencement Date") and shall
continue til 31 October 2019. Subject to Clause 12 of this Agreement,
the MOA Term shall be extended from time to time by the mutual
consent of the Parties. Such mutual consent of the Parties shall be
recorded in writing.

10. Responsibility/ Scope of Karkhana and PREL during the MOA Term:

10.2 During the MOA Term, PREL shall be responsible for each of the
following: a) Handing over of the plant to Karkhana after
completion of full maintenance of the Plant;

b) Managing banking relationship and banking transactions for the
operation and maintenance of the Plant by Karkhana as per the terms of
the Modified Arrangement;

c) Monthly review and monitoring of Plant performance and other
compliances as per the terms and conditions of the Modified
Arrangement; and

d) Supervise and inspect the operations of the Plant by Karkhana from time to
time;

12. Extension of Modified Arrangement:

12.4 In the event, that the MOA Term is not extended then Karkhana
categorically agrees to handover the plant after completion of annual
maintenance of plant in good working condition to PREL at least 15
(fifteen) calendar days prior to the start of the immediately succeeding
crushing season. The parties hereby agree and acknowledge that
Karkhana shall not have any rights to operate and maintain the plant
upon the expiry of the MOA Term and the Modified Arrangement
including all provisions thereof shall automatically stand terminated and
shall fall away.

15. Addition/modification in the system of plant:

15.2 Karkhana agrees not to change, modify, alter, add or remove or
do any such similar act to the existing technical set up or structure of
the plant without obtaining prior written approval from PREL.

16. General Conditions:

16.2 The Parties expressly acknowledge that Karkhana has
comprehensively inspected the Plant prior to taking over the Plant
under this Modified Arrangement and warrants to PREL that the same is
in good working condition and does not suffer from any patent and/or
latent defects.

PVR 87 CARBPL23525_2021(Pravara).doc

16.9 PREL representatives shall be allowed access at all times in to
the premises of the Plant without any restriction for monitoring, review,
supervision of the functioning of the Plant, Karkhana shall at all-time
grant PREL immeidate access to all system reports, data, information
concerned with the Plant, machinery, equipment, fuel etc.

18. Termination of the Modified Arrangement:

18.1 Parties agree that the Modified Arrangement shall automatically
terminate in the event a) the expiry of the MOA Term unless extended
in accordance with Clause 12 of this Agreement and / or b) Karkhana
breaches any term as stated in this Agreement.

71. Thus, under
Article 10.2
and
Article 16.9
of the second

supplementary agreement, the petitioner was responsible to supervise

and inspect the operations of the co-gen plant from time to time. The

petitioner nominated two representatives from its Head office for the

smooth co-ordination and functioning of the plant. The human

resources, including technical team of the petitioner was to be retained

by the respondent. Also the respondent had agreed not to change,

modify or alter or remove existing structure of the co-gen plant. Under

Clause 11.1, the respondent was inter alia to pay the petitioner a

minimum guaranteed amount every month from 1 March, 2019

amounting to Rs.48 crores in escrow account for discharging

petitioner's financial obligations towards the lenders. The respondent,

however, breached in making payments as per Clause 11.1.

72. The petitioners have strenuously contended, and it appears to be

not in dispute that in October-November, 2018, the respondent had

requested for permission to dismantle the biogas pipeline from the co-

gen plant's boiler for connecting the same to the respondent's factory.

PVR 88 CARBPL23525_2021(Pravara).doc

The petitioner however did not grant such permission, as this would

have amounted to the petitioner being deprived of the contractual

supply of bio-gas as per clause 4.5, 6.6,7.7 of the PDA and

supplementary agreement. Despite which the respondent in patent

breach of
Article 15.2
of the Second Supplementary Agreement

dismantled the existing biogas pipeline from the co-gen plant boiler and

installed the same within the respondent's factory premises for captive

use, and since then, the respondent has not restored the pipeline and

continues to use the same for its captive use. It appears that in such

disturbing circumstances, the one year term for the respondent to

operate the co-gen plant under the Second Supplementary Agreement

came to an end on 30 October, 2019.

73. The ensuing period was the crushing season 2019-20. The

petitioner has stated that for the said crushing season, the petitioner

pumped in a sum of Rs. 4 crores for the maintenance of co-gen plant,

this was despite the petitioner's account being classified as NPA in

December, 2017 and even when the lenders were unwilling to release

funds for operational requirement of the co-gen plant. However,

although the financial constraints were so severe and when it was

expected that the plant should be operated optimally and with

particularity, it is the case of the petitioner that the respondent again put

the petitioner into a serious disadvantage and this time by committing a

breach of Clause 6.6 of the PDA, namely that the respondent failed to
PVR 89 CARBPL23525_2021(Pravara).doc

intimate the petitioner three months in advance of the tentative date of

commencement of the crushing season and to provide a finalized

schedule of supply of bagasse and biogas at least one month prior to the

commencement of crushing season. It appears to be an admitted

position that for the crushing season 2019-20, there was a shortfall of

155,222 metric tons of bagasse fuel than the minimum assured quantity

in terms of PDA. Also, biogas fuel was not supplied, as the respondent

had dismantled and/or removed the biogas pipeline in or around

October - November 2018.

74. There appears to be much substance in the petitioner's contention

on the respondent illegally dismantling and removing the biogas

pipeline for captive use. This breach appears to be a serious breach. It is

clear that the respondent has till date not restored the bio-gas pipeline

and is using the same for captive use of the bio-gas in breach of the

several conditions of the PDA. Further, it is also not clear as to under

what right such pipeline could be dismantled by the respondent, thereby,

disturbing the working of the co-gen plant to the serious prejudice and

at the cost of losses being caused to the petitioner. As correctly

contended on behalf of the petitioner the intention of the respondent

clearly appears that the biogas need not be supplied to the petitioner,

which certainly amounted to breach of Clauses 4.6 of the PDA

agreement and Clause 15.2 of the second Supplementary Agreement

whereby the respondent agreed not to change, modify, alter or removal
PVR 90 CARBPL23525_2021(Pravara).doc

or any such or similar act to existing technical set up/ structure of the

plant, without obtaining prior written approval of the respondent. It was

also clearly provided that the petitioner will operate the co-generation

facility till the asset transfer date (30 June 2041). Further, none of the

clauses in the second SA dated 30 October 2018 permitted the

respondent to dismantle the biogas pipeline. The petitioner categorically

pointed out to the respondent by its letter dated 14 October 2020 that

the biogas pipeline has been dismantled by the respondent in the

absence of the petitioner's permission and has been installed within the

respondent captive area for its own use. The petitioner not only by such

letter but also in an earlier meeting which was held between the parties

on 25 September 2020, requested the respondent to reinstall the

stainless steel pipeline from the co-gen plant to the respondent's bio-gas

plant so that the petitioner's co-gen plant starts receiving supply of

biogas from the respondent. However, there was no response

whatsoever to such request as also to the letter of the petitioner. This is

one of the telling circumstances as to what was being intended by the

respondent was to choke the petitioner's production.

75. It appears that even for the next crushing season 2020-21, there

was a short supply of 96,344 MT of bagasse fuel by the respondent, as

also the bio-gas fuel was not supplied to the petitioner, as the

respondent had dismantled the biogas pipeline. Thus, as rightly

contended on behalf of the petitioner, prima facie, there was a clear
PVR 91 CARBPL23525_2021(Pravara).doc

breach of Clause 6.5 of the PDA under which the respondent had agreed

to supply the minimum quantity of bagasse to the petitioner of 216000

MT during each crushing season. Further, for the crushing period 2020-

21 the respondent failed to intimate the petitioner by a three months

advance notice as agreed in Clause 6.6 of the PDA prior to the

commencement of the crushing season and to provide a finalized

schedule of bagasse and biogas one month prior to crushing season.

Thus, again, there was a breach of Clause 6.6 of the PDA.

76. As to why with impunity the respondent was intending to be in

breach of the several terms and conditions of the PDA and the second SA

and still remain in the contract, may be felt quite intriguing at this stage.

77. It is in these circumstances, just prior to the commencement of the

crushing season 2020-21, an addendum agreement was executed

between the petitioner and the respondent on 14 October 2020, under

which the respondent admitted that it was unable to provide to the

petitioner, the assured quantity of fuel (bagasse and bagasse equivalent

of shortfall of biogas, as per the agreed terms of the PDA) and that

there was short supply of bagasse and bagasse equivalent of biogas to

the extent of 474,435 Metric Tonnes and the co-generation facility hence

was not able to run to its logical optimum original capacity, on account

of which the petitioner was unable to comply its financial commitments

to its consortium lenders. In clause (E) of the addendum agreement, the
PVR 92 CARBPL23525_2021(Pravara).doc

parties agreed that in full and final settlement of the claims of the

petitioner, the parties agree that they were desirous to resolve the

situation by bringing the loan account back to a "standard status" with

its lenders within a reasonable time-frame. The respondent agreed on a

mutually acceptable basis on certain terms to supply fuel (bagasse and

biogas as per the agreed terms of the PDA) to enable the petitioner to

continue its operations and achieve optimal capacity which will benefit

both the parties. Accordingly, it was agreed between the parties under

the said agreement that the respondent will supply additional bagasse to

the petitioner over and above the quantity specified in the PDA in the

following manner:-

(a) During crushing season 2020-21 105,000 MT.
(b) During crushing season 2021-22 105,000 MT.

78. It was also agreed in the addendum agreement that there shall be

no change in the above quantities. Also for the crushing season 2022-23

it was agreed by the respondent to supply to the petitioner about

105,000 MT of bagasse and for the crushing season 2023-24 about

60,000 MT of bagasse, however, the exact quantity was to be decided

mutually and recorded in writing within two months from the date of

execution of the said addendum agreement. In clause (8) of the

addendum agreement it was agreed that in the event the respondent

failed to provide the bagasse aggregating to 210000 MT during the two

crushing seasons 2020-21 and 2021-22, the respondent shall be liable
PVR 93 CARBPL23525_2021(Pravara).doc

to supply to the petitioner the balance of the 4,74,435 MT bagasse as set

out in the said clause.

79. Although the addendum agreement is of such nature and appears

to have originated from the respondent itself, and also as clearly seen

from the document as placed on record that it has been signed by both

the parties, however, the respondent has taken a peculiar stand on the

addendum agreement. The respondent in its reply affidavit dated 21

November 2022 while not denying the execution of the said agreement

has contended that the addendum agreement does not bind the

respondent. The following statement of the respondent in paragraph 69

of the reply affidavit can be noted:-

"The purported Addendum Agreement dated 14 October 2020
relied by the petitioner, does not form a binding and subsisting
agreement and hence the Respondent is not under any obligation
to make good any loss to the petitioner under the purported
Addendum Agreement dated 14 October 2020"

80. It is surprising as to how the respondent can take this position,

having already executed the addendum agreement.

81. In fact, the stand as taken by the respondent in the reply affidavit

is replete with statements which show that the respondent at its

convenience has been changing its stands, with a common theme, as

reflected not only from the correspondence but also from its pleadings in

the present proceedings, that the respondent's intention is only to take

over the co-gen plant, as if it is its own property, in complete deviation
PVR 94 CARBPL23525_2021(Pravara).doc

from what has been agreed between the parties on the take over of the

plant, as on the "asset transfer date". There are number of statements in

different affidavits as filed on behalf of the respondent to this effect,

however, one of such statements to this effect in the affidavit dated 21

November 2021 can be noted which reads thus:-

"Various meetings have been held between the Chairman and senior
management of the Petitioner and the Respondent in 2020 and 2021,
wherein discussions have been held to arrive at an amicable
settlement inter alia exploring the options whereby the Petitioner's
plant would be permanently taken over/acquired by the Respondent
and the loans of the petitioner would be settled with the Bankers of
the Petitioner."

82. Prima facie it clearly appears from the reading of the pleadings on

record that having breached the clauses in the agreement and having

confirmed such breaches in the addendum agreement, the respondent

wanted to wriggle out of such binding commitment and obligations

under the addendum agreement . The above intention of the

respondent, so as to remain in breach of the contractual terms as agreed

in the PDA, is quite apparent from the fact, that the respondent despite

entering into an addendum agreement for the crushing season 2020-21,

the respondent defaulted in supplying minimum assured quantity of

bagasse and there was a shortfall of 96344 MT on its part.

83. It needs to be also noted that the petitioner by its letter dated 29

May 2021 addressed to the respondent had clearly recorded that for the

past five crushing seasons (2015 to 2020) there was a shortfall of

bagasse to the petitioner which amounted to 474435 MT. It was also
PVR 95 CARBPL23525_2021(Pravara).doc

stated that in the addendum agreement dated 14 October 2020 the

respondent had agreed to supply additional quantity of bagasse of

totally 365000 MT for the period 2020-21 to 2023-24. It was stated that

during the crushing season 2020-21, whcih was over and from 6 May

2021 the respondent had not supplied the agreed quantity of bagasse to

the petitioner. It was also pointed out that the shortfall of bagasse for

the crushing season 2020-21 was about 201344 MT. The petitioner also

recorded that the respondent was in breach of the terms of supply of

bagasse to the petitioner, both in terms of PDA as well as in terms of the

addendum agreement. It was also stated that unless the shortfall is

made good and the respondent does not provide bagasse to the

petitioner, till the start of the next crushing season (2021-22), the

petitioner will suffer huge financial losses. Another letter dated 3 August

2021 was addressed by the petitioner to the respondent pointing out

failure of the respondent to supply the contracted bagasse fuel to the

petitioner. It was again pointed out that the respondent was in breach of

the terms of supply of bagasse to the petitioner in terms of the PDA as

well as in terms of the addendum agreement and that short supply for

crushing season 2020-21 was 201344 MT. It was also recorded that due

to inability of the respondent to supply the entire quantum of bagasse

fuel of 264720 MT per annum as per the PDA from the date of

commencement of operations upto the end of the last financial year that

is 31 March 2021, the petitioner was not able to generate electricity,
PVR 96 CARBPL23525_2021(Pravara).doc

because of which it suffered huge losses, the figures of which were

detailed in a statement as set out in the said letter under the title

"Details of Loss of Profit on account of short supply of Bagasse by

Karkhana". It was stated that it was clear from the said chart that there

was a gross revenue loss of 170.19 crores and the net loss of Rs.120.41

crores, with a request to the respondent to henceforth honour the

conditions under the PDA and the addendum agreement, so that the

plant functions normally from the next crushing season. The petitioner

also recorded that the petitioner was awaiting the release of Rs.120.41

crores by the respondent.

84. It is interesting to note the respondent's stand in the reply of the

respondent to the above referred letters of the petitioner. The

respondent commonly replied to the petitioner's letter dated 29 May

2021, 3 August 2021 and 6 August 2021 by its letter dated 4 September

2021, and as noted above, disowning the addendum agreement dated

14 October 2020 and thereby not accepting any obligation thereunder,

with a justification as set out in paragraphs 7 and 8 as noted above.

From the perusal of this long letter of the respondent, it is quite

apparent that the respondent has not disputed that there was a short

supply of bagasse for the last five crushing seasons. There is also no

whisper on its conduct of dismantling the biogas pipeline. However, a

picture was sought to be painted, as if the petitioner is solely responsible

for the power supply and that too in the absence of adequate supply of
PVR 97 CARBPL23525_2021(Pravara).doc

bagasse and bio-gas which was the basic raw material on which the co-

gen plant was to operate and which was to be supplied by the

respondent. In fact, the respondent surprisingly goes to the extent of

denying that there was any short supply of bagasse for last five crushing

seasons on its part. It is also indicative that the respondent was trying to

make out a case of non maintenance of the plant as a reason for the

respondent not to supply the bagasse. Ex facie, such a contention was

absurd to say the least, as one could appreciate the respondent saying

that the bagasse was available and was being continuously supplied to

the petitioner and it was for some reason the petitioner refused to accept

the bagasse for any technical deficiency in the co-gen plant, only then,

the situation as being painted by the respondent could have been

understood.

85. It also needs to be noted from the contents of the respondent's

letter dated 4 September, 2021 that the respondent stated that the

parties had reconciled the accounts till 31 March, 2018 and it was

agreed that the total amount to be paid to the respondent by the

petitioner was Rs.5.01 crores towards full and final settlement of all

dues/outstanding amounts. Paragraph 10(i) of the said letter reads

thus:

(i) The claims made by the PREL are calculated from Crushing
Season of 2015-16 onwards. The 2 nd Supplementary Agreement dated
30 October, 2018 was executed between PREL and the Karkhana.

Under Clause 19.1 and 19.3 of the Supplementary Agreement dated 30
October, 2018, the parties had reconciled the accounts till 31 March,
2018 and it was agreed that the total amount to be paid to Karkhana by
PVR 98 CARBPL23525_2021(Pravara).doc

PREL is Rs.5.01 crores towards full and final settlement of all
dues/outstanding amounts."

86. It thus clearly appears from the respondent's own statement as

noted above that there can certainly be no justification for the

respondent to take over the assets of the petitioner, in a manner not

known to law. Further from paragraph 14 of the said letter, the

occupation and possession of the petitioner of the co-gen plant to be

with the petitioner as on 4 May 2021, can instantly be inferred. The

said paragraph reads thus:

"14. The Karkhana expects PREL to take all steps necessary to ensure
that the co-gen plant is fully ready and operational well in advance
before the commencement of the upcoming crushing season 2021-22
(i.e., tentatively from 15 October, 2021)."

87. The record also indicates that the petitioner by its letter dated 18

June, 2021 raised serious issues on the administration, safety and

security of the co-gen plant, again reiterating that there was a gross non-

compliance of the PDA by the respondent and that the respondent would

need to take appropriate consent from the petitioner, in writing, before

interfering in the affairs of the co-gen plant as set out in detail in the

said letter.

88. On behalf of the petitioner, it was strenuously submitted, that

after this petition was filed on 12 October, 2021 the respondent

usurping the petitioner's rights have foisted themselves on the co-gen

plant and has prevented the petitioners, its officers, employees and
PVR 99 CARBPL23525_2021(Pravara).doc

representatives to enter and operate the co-gen plant. The pleadings on

record as also the submissions as made on behalf of the respondent

clearly indicates that the petitioner's contention in this regard is correct,

as the respondent has started asserting that as on date, it is operating

the co-gen plant. The reply affidavit is also replete with diverse pleas of

the respondent contending that it is only the respondent which ought to

operate the co-gen plant by ousting the petitioner.

89. In the above circumstances, whether it was permissible for the

respondent to act in such manner and takeover the management and

operation of the co-gen plant under any of the conditions in PDA or in

other agreements as entered between the parties has become the core

issue. In my prima facie opinion, clearly none of the terms and

conditions of either PDA or the Supplementary Agreement or the Second

Supplementary Agreement would confer any such right on the

respondent to takeover the co-gen plant and exclusively operate and

manage the co-gen plant which admittedly belongs to the petitioner. If

any such rights were to accrue to the respondent, it would be only under

the "asset transfer mechanism" under the co-gen plant as per the terms

and conditions of the PDA.

90. As noted above, under the PDA the parties have clearly agreed for

an "Asset Transfer Date"(clause 1.2) which is after completion of 25

years from the commencement of the commercial operations date
PVR 100 CARBPL23525_2021(Pravara).doc

(clause1.5). Further, the parties in Clause 25 have agreed to the "Events

of Default and Termination". The 'events of default of respondent' as

also the 'event of default of the petitioner' have been separately defined

in Clause 25.1. In Clause 25.2, the parties have agreed to the

termination procedure. In the event, there was to be a termination on

account of the respondent's default, in that event it was clearly agreed

under Clause 25.2 (b)(I)(2) of the PDA that it would require the

respondent to buy the Co-generation Facility at the "Fair Market Value"

and such fair market value shall be determined by the independent

Category I Merchant Banker, to be appointed jointly by the respondent

and the petitioner, or failing which transfer the Co-generation facility to

any third party to recover its cost. In doing so, what is most vital to be

noted is, as to what has been agreed between the parties in the

paragraph below Clause 25.2 b (3), which reads thus:

"And in any of the above rights being enforced the Karkhana hereby
agrees, undertakes and covenants not to, in any manner, obstruct the
working or the operation of the Co-generation Facility and not to commit
any acts or deeds which will have adverse effect on the operation and
functioning of the Co-generation Facility and to extend full co-operation
in enforcement of the rights by PREL."

91. Further it needs to be noted that under the PDA in the event of

termination due to fault on the part of the petitioner, it was clearly

agreed between the parties in Clause 25.2(b)(II) that the respondent

shall have the right to buy the Co-generation Facility at a 90% of the Fair

Market Value, which shall be determined by independent Category I
PVR 101 CARBPL23525_2021(Pravara).doc

Merchant Banker to be appointed jointly by the respondent and the

petitioner. The said clause reads thus:

"II. Termination for PREL Event of Default

The Karkhana shall have the right to buy Co-generation Facility at a
90% of the Fair Market Value. The Fair Market Value shall be
determined by the independent Category I Merchant Banker to be
appointed jointly by the Karkhana and PREL."

92. Another clause which needs a special reference is clause 28 of the

PDA which provides for "No Obstruction" . This clause provides that the

respondent shall not create any kind of obstruction or interference in the

work of the petitioner till the subsistence of the PDA. Clause 28 of the

PDA reads thus:-

" 28.0. No Obstruction

The Kharkhana shall not create any kind of obstruction or
interference in the work of PREL till the subsistence of this
agreement."

93. It is thus crystal clear from the PDA that the only right which

would be available and accrue in favour of the respondent to takeover

the co-gen plant is in a manner as agreed under the PDA and that is only

on the agreed procedure of determining the fair market value, being put

into motion, and only, on such determination of the said value/amounts,

and on the same being paid to the petitioners, the assets of the co-gen

plant could be transferred to the respondent prior to the asset transfer

date in the manner as agreed under clause 25.2.bI (2) or II of the PDA

which is extracted below for convenience :-

"Clause 25.2.bI (2)
PVR 102 CARBPL23525_2021(Pravara).doc

Termination for Kharkhana Event of Default

2) Require the Kharkhana to buy the cogeneration facility at the Fair Market
Value. Such Fair Market Value shall be determined by the independent
category I Merchant Banker to be appointed jointly by Kharkhana and PREL;

...."

Clause 25.2.bII
Termination for PREL Event of Default

The Kharkhana shall have the right to buy the cogeneration facility at a 90%
of the Fair Market Value. The Fair Market Value shall be determined by the
independent category I Merchant Banker to be appointed jointly by
Kharkhana and PREL"

94. In my prima facie opinion, the attempt of the respondent however

appears to be to give a complete go-by to the above agreed procedure

under which the respondent could take over the assets of the petitioner

only at the fair market value and in no other manner. The respondent

therefore cannot take a position that the petitioner ought not to

operate /manage its own co-gen plant. As clear from the record, the

respondent in a coercive manner and taking undue advantage of the fact

that the petitioner is in financial distress appears to be exploiting the

situation to prepone the taking over of the plant, 15 years earlier to the

Assets Transfer Date (30.06.2041). Various actions of the respondent

suggest an attempt to grab this opportunity to its advantage and

profiteer at the cost of huge investment as made on the co-gen plant by

the petitioner.

95. Prima facie it is also gravely doubtful as to how the respondent

could disown the addendum agreement by merely saying that it is not
PVR 103 CARBPL23525_2021(Pravara).doc

binding on the respondent, which if was to be implemented could have

certainly changed the situation for the petitioner, and parties could have

possibly avoided to litigate.

96. Now, the submissions as made by Mr. Khambata in opposing the

reliefs prayed by the petitioner can be considered, so as to examine as to

whether the petitioner would nonetheless become dis-entitled to such

reliefs. The first submission of Mr. Khambata on the backdrop of the

Sugar Commissioner passing an order dated 27 December, 2021,

observing that "either party may refer the dispute to arbitration

according to the provisions of Clause 33.2 of the contract", is to the

effect, that the present petition filed under
Section 9
of the Act ought to

be held, to be not maintainable, on the ground that the petitioner has no

inclination to commence arbitral proceedings. In my opinion, such

contention is required to be stated to be rejected for more than one

reason. Firstly, for the reason that the present petition was filed on 12 th

October 2021 that is, prior to the Sugar Commissioner passing the said

order on 27th December 2021. Secondly, for the reason that Mr.

Andhyarujina, at the outset, has stated that his clients are immediately

intending to agree to nominate an arbitral tribunal, however, without

prejudice to the petitioner's right to press for the reliefs in the present

petition. Thus, Mr. Khambata's contention that there is no inclination for

the petitioner to commence arbitration cannot be accepted. It is also not

the case that the petitioner has invoked arbitration and the petitioner is
PVR 104 CARBPL23525_2021(Pravara).doc

dilly-dallying it. From a reading of
Section 9
of the Act, it is clear that a

party is entitled to approach the Court praying for interim measures

inter alia before the commencement of the arbitral proceedings, as in

the present case. Also a party in a given situation would be entitled to

approach the Court even during or after making of an arbitral award but

before it is enforced in accordance with
Section 36
of the Act.

97. It is clear that the petitioner, complaining of patent breach of their

contractual rights inter alia under the PDA and in order to seek

protection of its arbitral interest and preservation of the subject matter

of the arbitral agreement i. e. Co-gen plant, has approached the Court

praying for interim measures. Once the petitioner approaches this Court

raising such serious concerns, looked from any angle, it is not possible to

accept Mr. Khambata's submission that the petitioner deserves to be non-

suited either on account of its alleged non-willingness to proceed in

arbitration or of any alleged dis-entitlement on the petitioner in not

invoking the provisions of
Section 11
of the Act. The respondents have

also not invoked arbitration. Thus, in my opinion, in the facts and

circumstances of the case, it would be required to be held that the

petitioner was entitled to and has appropriately taken recourse to the

provisions of
Section 9
, and as such there is no impediment for the

Court, to consider the prayers as made in the Petition. Thus, in the facts

of the present case, Mr. Khambata's reliance on the decision of the

Supreme Court in the case of Firm Ashok Traders And Anr. Vs.
PVR 105 CARBPL23525_2021(Pravara).doc

Gurumukh Das Saluja And Ors., reported in (2004) 3 SCC 155 is not

well founded, as this is not a case, in which the petitioner in any

manner, has slept over its rights and secondly it is not the case that the

petitioner has no manifest intention to take recourse to arbitral

proceedings. The circumstances fully justify the petitioner to approach

this Court by taking recourse to
Section 9
of the Act.

98. Prima facie the complexion of the case is such that after the

present petition was filed, the respondent has left no stone unturned to

usurp petitioner's right to manage and operate Co-gen plant, and in fact,

the respondent has attempted to take over the Co-gen plant, so as to

foist removal of the petitioner and/or its employees and staff entering

the co-gen plant. It is, in these circumstances, Interim Application (L)

No. 3343 of 2022 was filed by the petitioner praying for further reliefs.

Thus, to accept Mr. Khambata's contention that the
Section 9
petition be

held to be not maintainable, and that petitioner should seek reliefs

before the arbitral tribunal under
Section 17
of the Act, in my opinion,

is a hyper technical argument which if accepted in the present facts

would amount to manifest derailment of justice. It may be observed

that technicalities of law can never prevail and/or overcome the pursuits

of justice. Thus, even applying the principles of law as laid down in the

decision in
Firm Ashok Traders
(Supra), it is difficult to accept that the

petitioner has not contemplated or is manifestly avoiding to commence

arbitral proceedings in a reasonable time. In such decision, it is clearly
PVR 106 CARBPL23525_2021(Pravara).doc

held by the Supreme Court, that what is expected of a party is to

commence arbitral proceedings within a reasonable time, and such

reasonable time would depend on facts and circumstances of each case.

It was also held that commencement of arbitral proceedings is not

contemplated on the interim relief itself being allowed or denied and the

Court while passing an order under
Section 9
may put a party on terms

and may also re-call the order, if the party commits breach of the terms.

The observations of the Court in this context can be noted in paras 13,

17 and 18 which read as under :-

"13. ........The reliefs which the court may allow to a party under
clauses (I) and (ii) of
Section 9
flow from the power vesting in the
court exercisable by reference to "contemplated", "pending" or
"completed" arbitral proceedings. The court is conferred with the
same power for making the specified orders as it has for the purpose
of and in relation to any proceedings before it though the venue of
the proceedings in relation to which the power under
Section 9
is
sought to be exercised is the Arbitral Tribunal. Under the scheme of
the A & C Act, the arbitration clause is separable from other clauses of
the partnership deed. The arbitration clause constitutes an agreement
by itself. In short, filing of an application by a party by virtue of its
being a party to an arbitration agreement is for securing a relief
which the court has power to grant before, during or after arbitral
proceedings by virtue of Section 9 of the A & C Act. .......

17. There are two other factors which are weighing heavily with us
and which we proceed to record. As per the law
laid down by
this
Court in Sundaram Finance Ltd. An application under
Section 9

seeking interim relief is maintainable even before commencement of
arbitral proceedings. What does that mean ? In Sundaram Finance
Ltd. Itself the Court has said : (SCC p. 488, para 19)

"It is true that when an application under
Section 9
is filed
before the commencement of the arbitral proceedings, there has to be
manifest intention on the part of the applicant to take recourse to the
arbitral proceedings."

Section 9
permits application being filed in the court before the
commencement of the arbitral proceedings but the provision does not
give any indication of how much before. The word "before" means,
inter alia, "ahead of; in presence or sight of; under the consideration
or cognizance of". The two events sought to be interconnected by use
of the term "before" must have proximity of relationship by reference
PVR 107 CARBPL23525_2021(Pravara).doc

to occurrence; the later event proximately following the proceeding
event as a foreseeable or "within-sight" certainty. The party invoking

Section 9
may not have actually commenced the arbitral proceedings
but must be able to satisfy the court that the arbitral proceedings are
actually contemplated or manifestly intended (as Sundaram Finance
Ltd. puts it) and are positively going to commence within a
reasonable time. What is a reasonable time will depend on the facts
and circumstances of each case and the nature of interim relief sought
for would itself give an indication thereof. The distance of time must
not be such as would destroy the proximity of relationship of the two
events between which it exists and elapses. The purpose of enacting

Section 9
, read in the light of the Model Law and UNCITRAL. Rules is
to provide "interim measures of protection". The order passed by the
court should fall within the meaning of the expression "an interim
measure of protection" as distinguished from an all-time or
permanent protection.

18. Under the A & C Act, 1996, unlike the predecessor Act of 1940,
the Arbitral Tribunal is empowered by
Section 17
of the Act to make
orders amounting to interim measures. The need for
Section 9
, in
spite of
Section 17
having been enacted, is that
Section 17
would
operate only during the existence of the Arbitral Tribunal and its
being functional. During that period, the power conferred on the
Arbitral Tribunal under
Section 17
and the power conferred on the
court under
Section 9
may overlap to some extent but so far as the
period pre- and post- the arbitral proceedings is concerned, the party
requiring an interim measure of protection shall have to approach
only the court. The party having succeeded in securing an interim
measure of protection before arbitral proceedings cannot afford to sit
and sleep over the relief, conveniently forgetting the "proximately
contemplated" or "manifestly intended" arbitral proceedings itself. If
arbitral proceedings are not commenced within a reasonable time of
an order under
Section 9
, the relationship between the order under

Section 9
and the arbitral proceedings would stand snapped and the
relief allowed to the party shall cease to be an order made "before" i.
e. in contemplation of arbitral proceedings. The court, approached by
a party with an application under
Section 9
, is justified in asking the
party and being told how and when the party approaching the court
proposes to commence the arbitral proceedings. Rather, the scheme in
which
Section 9
is placed obligates the court to do so. The court may
also while passing an order under
Section 9
put the party on terms
and may recall the order if the party commits breach of the terms."

(emphasis supplied)

99. Thus
,
the above decision
of the Supreme Court would not support

the proposition as canvassed by Mr. Khambata on his contention on

readiness and willingness of the petitioner to commence arbitration as in

the present case the petitioner is not disinclined to commence

arbitration and about which I am wholly satisfied. It is also difficult to
PVR 108 CARBPL23525_2021(Pravara).doc

conceive that when the petitioner itself feels aggrieved by so many

actions of the respondent, which have been urged to be in total breach

of the PDA, the petitioner in such situation would remain content with

the proceedings and not commence arbitration. The respondent hence

is completely ill-advised to labour such contention to this extent, to non-

suit the petitioner from the
Section 9
proceedings.

100. Further, the situation in hand is not such, as the parties stood, in

the case of
Arcelor Mittal Nippon Steel India Ltd. vs. Essar Bulk Terminal

Ltd.
, (2021) SCC Online SC 718 on which reliance is placed by

Mr.Khambata. In this case, the question which was raised, in the appeal,

before the Supreme Court was as to whether the Court has the power to

entertain an application under
Section 9(1)
of the Act once the arbitral

tribunal was constituted, and if so, what is the true meaning and period

of the expression "entertain" as used in
Section 9(3)
of the Act. Another

question which was examined by the Supreme Court was whether the

Court is obliged to examine the efficacy of the remedy under
Section 17

before passing an order under
Section 9(1)
of the Act, once an arbitral

tribunal was constituted. There cannot be two opinions, on what has

been
laid down in
such context by the Supreme Court, namely, it is only

when the Court finds that circumstances exist which may not render the

remedy provided under
section 17
efficacious, the Court in such

situations may entertain the
Section 9
proceedings. In the present case

the arbitral tribunal is yet to be constituted. Hence, the Court is certainly
PVR 109 CARBPL23525_2021(Pravara).doc

not concerned with a situation, that an arbitral tribunal having being

constituted the petitioner has invoked the jurisdiction of the Court under

Section 9
of the Act and/or the provisions of sub-section (3) of
Section 9

have become relevant, so as to consider a question, that the
Section 9

proceedings are not maintainable. In the context of examining the

questions which fell for consideration of the Supreme Court, as noted

above, the Supreme Court has categorically held that even if an arbitral

tribunal is constituted, there may be myriad of reasons why an interim

application before an arbitral tribunal may not be an efficacious remedy

to
Section 9(1)
proceedings. The Supreme Court observed that

applications for interim relief are necessarily applications which are

required to be disposed of urgently, as interim relief is granted in aid of

final relief. The object of the provision being to ensure protection being

granted in regard to the subject matter of arbitration and/or otherwise

ensure that the arbitration proceedings do not become infructuous and

the arbitral award does not become an award on paper of no real value.

The following observations of the Court which re-iterate the position in

law on the entitlement of the parties to invoke
Section 9(1)
is required

to be noted, which reads thus:

"96. Even after an Arbitral Tribunal is constituted, there may be
myriads of reasons why the Arbitral Tribunal may not be an
efficacious alternative to
Section 9(1)
. This could even be by reason
of temporary unavailability of any one of the Arbitrators of an
Arbitral Tribunal by reason of illness, travel etc.

97. Applications for interim relief are inherently applications
which are required to be disposed of urgently. Interim relief is
granted in aid of final relief. The object is to ensure protection of the
property being the subject matter of Arbitration and/or otherwise
PVR 110 CARBPL23525_2021(Pravara).doc

ensure that the arbitration proceedings do not become infructuous
and the Arbitral Award does not become an award on paper, of no
real value.

98. The principles for grant of interim relief are (I) good prima
facie case, (ii) balance of convenience in favour of grant of interim
relief and (iii) irreparable injury or loss to the applicant for interim
relief. Unless applications for interim measures are decided
expeditiously, irreparable injury or prejudice may be caused to the
party seeking interim relief.

107. It is reiterated that
Section 9(1)
enables the parties to an
arbitration agreement to approach the appropriate Court for interim
measures before the commencement of arbitral proceedings, during
arbitral proceedings or at any time after the making of an arbitral
award but before it is enforced and in accordance with
Section 36
of
the Arbitration Act. The bar of
Section 9(3)
operates where the
application under
Section 9(1)
had not been entertained till the
constitution of the Arbitral Tribunal. Of course it hardly need be
mentioned that even if an application under
Section 9
had been
entertained before the constitution of the Tribunal, the Court always
has the discretion to direct the parties to approach the Arbitral
Tribunal, if necessary by passing a limited order of interim
protection, particularly when there has been a long time gap between
hearings and the application has for all practical purposes, to be
heard afresh, or the hearing has just commenced and is likely to
consume a lot of time. In this case, the High Court has rightly
directed the Commercial Court to proceed to contemplate the
adjudication."

101. The judgment of the the Gujarat High Court in the case of
Essar

Bulk Terminal v. Arcelor Mittal Nippon Steel India Limited (First Appeal

No.
3040 of 2021 dated 03.02.2022) on which reliance is placed by Mr.

Khambata, is also a decision which discusses the powers of the Court

under
Section 9
of the Act vis-a-vis the power of the tribunal under

Section 17
of the Act.

In para 113 of
the said decision
, while referring to

the decisions in
Ramniklal N. Bhutta vs. State of Maharashtra
, reported

in (
1997)1 SCC 134 and Raunaq International Ltd. Vs. I.V.R.

Construction Ltd.
, reported in (1999)1 SCC 492, it was held that in an

appropriate case, the Court in ordering interim measures, must not
PVR 111 CARBPL23525_2021(Pravara).doc

hesitate in exercising its powers. The Court observed that in judging

whether a case is 'appropriate' or not for the grant of interim measures,

the Court is required to do some tightrope walking. The principles to be

borne in mind while granting interim measures are the existence of a

prima facie case, balance of convenience and the possibility of

irreparable loss or prejudice.

102. It is, hence, difficult to conceive as to how in the fact situation, the

Court can distance itself from exercising jurisdiction under
Section 9
,

especially when a party such as the petitioner, has approached the Court

with utmost expedition, when the situation eminently demanded it to

so approach and admittedly when the invocation to arbitration had not

happened. Thus, in the facts in hand, when affidavits after affidavits are

already filed by the respondent in contesting the present proceedings,

merely on the respondent raising a farcical issue of the petitioner not

commencing arbitral proceedings, should not deter this Court, from

entertaining this
Section 9
petition. It cannot be overlooked that in an

appropriate case, the need to grant of interim measures in exercise of

the powers under
Section 9
, cannot be rendered illusory, merely because

the opponent in such proceedings insists on arbitration. Such

proposition would be in the teeth of the mandate which flows from

section 9
. This more particularly when the Court has exercised its sound

discretion that the interest of justice overwhelmingly requires the Court

to entertain proceedings under
Section 9
of the Act.

PVR 112 CARBPL23525_2021(Pravara).doc

103. Thus, in the facts of the case, Mr. Khambata's submissions, if

accepted would lead to not only have the effect of the Court not

recognizing the mandate of sub-section (1) of
section 9
but would also

amount to prejudicially affecting the arbitral interest of the parties. It

can never be the intent of law that merely because in the midst of the

Section 9
proceedings, a party opposing
Section 9
proceedings insists

and shows intention to go to arbitration, in that event necessarily the

Court, should mechanically dispose the
Section 9
petition by

compulsorily referring the parties to agitate their contentions on interim

measures before the arbitral tribunal under
Section 17
of the Act. If

such an interpretation, as being canvassed on behalf of the respondent is

accepted, it would not only defeat the provisions of
Section 9(1)
of the

Act, but also in a given situation it would be contrary to the intent of the

provisions of Sub-section (3) of
Section 9
. The observations of the

Supreme Court paragraphs 96 and 107 in the case of
Arcelor Mittal

Nippon Steel India Limited
(supra) would aid this conclusion.

104. In any event, Mr. Khambata's contention that this petition ought

not to be entertained and the petitioner be relegated to a remedy under

section 17
of the Act, referring to the Sugar Commissioner's order dated

27 December 2021 whereunder the Sugar Commissioner merely

observed that ultimately it is the dispute between the petitioner and

respondent which needs to be taken to arbitration, by no acceptable
PVR 113 CARBPL23525_2021(Pravara).doc

standard can be interpreted to mean a manifest intention of the

petitioner not to invoke arbitration. By this logic even the respondent

has not invoked the arbitration in a manner known to law i.e. by

issuance of a notice, as contemplated by
Section 21
of the Act. Such

observation of the Sugar Commissioner cannot be any commencement

of arbitral proceedings as
Section 21
of the Act would ordain. It is, thus,

too farfetched for the respondent to contend that this petitoin ought not

to be entertained on the ground that there is no intention of the

petitioner to refer the disputes to arbitration.

105. The next contention as urged by Mr. Khambata is to the effect that

the petitioner is not entitled for the relief as prayed for in prayer clause

(b), for the reason that the respondent is in "joint possession" of the co-

gen plant with the petitioner. It is Mr. Khambata's submission that once

there is a joint possession, there is no question of the petitioner taking a

plea that the respondents be removed and restrained from the co-gen

plant, hence there is no necessity of such a relief to the petitioner. To

support such contention of joint possession, Mr. Khambata has drawn

the Court's attention to paragraph 22 of the reply affidavit, in which the

respondent on such plea, has made the following statement, which

needs to be reproduced :

"The respondent has thus been handing the maintenance activity
of the co-gen plant prior to the start of the crushing season 2020-21 as
well. Acting on the requests/invitations of the petitioner, the
Respondent has deputed its labour, personnel, engineers at the co-gen
plant to look into the day-to-day operations of the co-gen plant. The
co-gen plant has therefore been in the joint possession of the petitioner
PVR 114 CARBPL23525_2021(Pravara).doc

and the respondent uninterruptedly for the past couple of years. The
respondent and the petitioner have been provided unrestricted access
to the co-gen plant and the sugar factory. Further acting on the various
representations of the petitioner (including oral discussions between
the engineers/staff of petitioner and respondent), the respondent has
provided spares, consumables, paid salaries of the petitioner, provided
operational support by deputing personnel from time to time to the Co-
gen plant. In this entire endeavour (which is not the business of the
respondent), the respondent has spent crores of rupees in respect of the
co-gen plant's operations and running at the instance and requests of
the petitioner, made from time to time. The petitioner has not repaid
the respondent for these expenses and has thus earned the benefits of
all the expenses/work put in by the respondent. In these
circumstances, it is submitted that the petitioner is now estopped from
seeking the reliefs set out in
Section 9
petition against the respondent."

(emphasis supplied)

106. In my opinion, Mr. Khambata's contention of the respondent to be

in joint possession of the co-gen plant with the petitioner is not worthy

of acceptance looked from any angle including on facts. This, firstly for

the reason that such contention militates against express terms and

conditions of the PDA (refer clause 25.2 b(II), 25.2 b(3) and clause 28 )

and Clause 12.4 of the second Supplementary Agreement dated 30

October, 2018. Once such clauses expressly bring about the contractual

relations between the parties, that the respondent shall not be

interfering and/or obstructing in the conduct and operation of the co-

gen plant by the respondent, then a specious plea on affidavit to set up a

case of joint possession, as one of the defences cannot be countenanced.

There is no document whatsoever which would show that after the

expiry of the period of the second Supplementary Agreement being 31

October 2019, the petitioner had handed over the co-gen plant to the

respondent much less the possession as is normally and prudently

understood in law. In the absence of any lawful handing over of the
PVR 115 CARBPL23525_2021(Pravara).doc

management and operation of the co-gen plant in favour of the

respondent by the petitioner the only presumption is that the petitioner's

operation and management of the co-gen plant was sought to be

usurped by the respondent in an unlawful manner and by intimidation,

force or coercion as asserted by the petitioner. There can be no other

method.

107. In any event, even on fact, such a plea of the respondent of joint

possession appears to be extremely lame so as to warrant any

acceptance, considering the materials as placed on record. It needs to

be observed that even assuming that the petitioner permitted the

respondent to carry out certain activities after the one year period under

the second Supplementary Agreement (01.11.2018 to 30.10.2019) had

come to an end, in the absence of any cogent material, the respondent

cannot contend that the respondent are managing and operating the

plant and/or that the petitioner was ousted to operate and manage the

co-gen plant. There is not an iota of material which would support such

contention of the respondent that the petitioner consciously and with

full knowledge and in any manner known to law had put the respondent

in possession of the co-gen plant, thereby giving up its rights to operate

and manage the co-gen plant. The contentions of the respondent in this

regard, in my opinion, are too overbearing, far-fetched and far from

reality and bereft of an acceptable material whatsoever. It also needs to

be observed that the respondent in its mighty and dominant local
PVR 116 CARBPL23525_2021(Pravara).doc

position cannot be heard to say that the respondent have taken over,

operation and management of the co-gen plant in a manner not known

to law.

108. As noted in the foregoing paragraphs, the present proceedings

were filed on a clear apprehension as set out in paragraph 29 of the

petition that the respondents or its agents may enter upon the premises

of the co-gen plant to operate it for the benefit of the respondent and

thereby causing immense loss and hardship to the petitioner, which the

petitioner contended cannot be compensated in terms of money. The

petitioner also categorically contended that the respondent had started

mobilizing its manpower and security personnel on the site of the co-gen

plant and may therefore take control of the entire plant to the ouster of

the petitioner thereby depriving the petitioner of the lawful ownership

of the co-gen plant. It was also apprehended that the petitioner strongly

believed that the respondent would alienate, sell, destroy, damage,

transfer, tamper, assign and/or create third party interest in respect of

the assets with a view to prejudice the rights of the petitioner and hence,

such being the subject matter of the arbitral proceedings, interim

measures ought to be granted. Further in an Interim Application which

was filed on behalf of the petitioner on 4 February 2022, the petitioner

has referred to further events and thereafter the petitioner has

categorically pleaded that the respondents have prevented the

petitioner's entry to the co-gen plant and has taken over the operation
PVR 117 CARBPL23525_2021(Pravara).doc

and management of the co-gen plant between 12 October, 2021 (i.e. the

date of filing of the petition) till 26 October, 2021 thereafter in such

situation the petitioner was required to move the Court to seek interim

reliefs.

109. From the submissions as advanced on behalf of the respondent, it

clearly appears that the respondent although has taken an untenable

plea of joint possession, the respondent does not at all contest that the

respondent is not operating and managing the plant. In fact the entire

argument of Mr. Khambata is that it is imperative for the respondents to

manage and operate the plant so that it becomes beneficial to the

respondent and the respondent does not suffer any loss. This apart, all

the intervenors have also supported Mr. Khambata in his contention that

the respondents need to operate and manage the plant, so that the

interest of thousands of stakeholders as alleged by the intervenors also

stands protected.

110. In my opinion, it is unheard of in a civilized society and much less

in a commercial transaction of such magnitude that when the parties

have agreed to specific terms and conditions on transfer of assets, it

would become permissible for a contracting party like the respondent to

take over the assets/co-gen plant of the petitioner, for pure commercial

gains, in a manner unknown to the process of law. Even in commercial

transactions the parties are bound by the rule of law, apart from due

adherence to the principles of trust, honesty, fairness and ethics, which
PVR 118 CARBPL23525_2021(Pravara).doc

are the backbone of any long commercial relation between the parties.

Any untoward dent to such commercial relationship at the hands of a

contracting party would lead to an instability not conducive to

commerce and the commercial image of a contracting party. There is all

the likelihood that for quick and undeserving gains or profits, a party

may resort to such business tactics and unfair practices, however, in

doing so, they are oblivious that in the longer run, it is no real

commercial gain when it comes to such actions being tested in law.

This, even assuming that the respondent has spent amounts on repairing

or maintenance of the plant as alleged by the petitioner, which would

entitle the respondent only to make a monetary claim against the

petitioner.

111. On the above conspectus, it needs to be stated that the entire

conduct of the respondent is steered towards an early takeover of the co-

gen plant from the petitioner, than the agreed asset transfer date, which

would be 30 June, 2041, as gathered from the record and the arguments

advanced on behalf of the respondent. Such is the entire intention and

object which is sought to be achieved by the respondent. This, more

particularly, by exploiting and/or taking undue advantage of the

petitioner running into financial difficulties on the project in question,

which also prima facie is not solely attributable to the petitioner.

112. In fact, prima facie, it is quite apparent that there is a systematic

commercial modus operandi on the part of the respondent to take over
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the co-gen plant. This firstly, by permitting the petitioner to set up the

co-gen plant for which the petitioner incurred substantial expenditure of

Rs.274 crores by borrowing funds fully to the knowledge of the

respondent, and thereafter by not supplying the agreed amount of

bagasse and biogas, the basic raw-material for generation of power and

steam, thereby depriving the petitioner of a normal functioning of the

plant to recoup its investments and earn profits. Added to this was the

dismantling of biogas pipeline and using it for the captive generation

facility, which was a clear indication that there was no intention to

supply biogas thereby crippling the petitioner. All such actions which

appear to be systematically planned, have resulted in serious financial

difficulties for the petitioner, which also caused the petitioner's account

to be a non-performing asset, and thereafter, when the petitioner found

itself in such financial distress, the respondent by adopting coercive

methods, as noted above has attempted to take over the co-gen plant.

As if this was not enough, the respondent appears to have used its local

influences to pressurize the petitioner by making Trade Unions of

farmers and workers to stand against the petitioner, not only before

different authorities but also before this Court, in the present

proceedings to canvass the case of the respondent, so as to succeed in its

attempts to take over the co-gen plant. This more particularly, as if the

co-gen plant to be operated by the respondent is so very imperative, that
PVR 120 CARBPL23525_2021(Pravara).doc

the respondent's sugar factory was earlier never run on the electricity

received from other sources.

113. Hence, I am in complete agreement with Mr. Andhyarujina when

he submits that such was the sinister scheme of the respondent to take

over the operation and management of the co-gen plant. It may be

observed that this is a classic case where the Cooperative Sugar Factory

stated to be of repute, is not only acting by taking law into its hands, in

brazen breach of the terms and conditions of the PDA, but also

completely oblivious to the rule of law as noted above. No contracting

party howsoever mighty, is permitted to take law into its hands and act

in a manner which would deprive the other contracting party (in the

present case the petitioner) of its valuable assets and entitlement to its

property, enjoyment of which is required to be reckoned as a guarantee

under law.

114. If the conduct of the respondent was to be bonafide, there are

categorical conditions under the PDA which would permit the

respondent to take a fair position and terminate the contract in a

manner as agreed between the parties. This is exactly what the

respondent has intended to avoid, inasmuch as, the procedure of

termination as agreed between the parties is considered by the

respondent to be not beneficial to its commercial interest, because if the

respondent intends to take over the co-gen plant, then necessarily a
PVR 121 CARBPL23525_2021(Pravara).doc

valuation of the plant at the fair market value on the date of termination

would be required to be ascertained. It is for such reason, a calculated

shortcut of the nature as pleaded by the petitioner was conceived by the

respondent, so that the petitioner is suffocated and choked not only

financially but also insofar as its valuable assets are concerned. In my

opinion, there cannot be a better case where the demand for justice as in

the present petition, would require the Court to interfere and by

recognizing the justice in the case grant appropriate interim reliefs.

115. The other contention of Mr. Khambata, relying on the proceedings

before the DRT at New Delhi and Aurangabad is on the financial distress

of the petitioner. Mr. Khambata, referring to the proceedings before the

DRT - Delhi, as also referring to the proceedings before the DRT at

Aurangabad, has contended that the petitioner is a defaulter in making

payments of the loans obtained from the Central Bank of India and the

Union Bank of India, and that the banks have accordingly proceeded

against the petitioner in the said proceedings before the DRT at New

Delhi. He has referred to the order dated 15 February, 2022 in the

proceedings of the DRT-II, Delhi in O.A. No.69 of 2022 filed by the

Central Bank of India and others whereby the DRT has directed status-

quo to be granted in the following terms:-

"Defendants to maintain status quo in respect of assets as per
section 19
sub-
section 4(A) of The Recovery of Debts and Bankruptcy Act 1993.
List the matter on 25.03.2022 for further proceedings."

PVR 122 CARBPL23525_2021(Pravara).doc

116. A perusal of the above order passed by the learned Presiding

Officer of the DRT, Delhi would clearly indicate that it is an order ex-

parte to the petitioner. Secondly, such order has been obtained by the

bank accepting the contentions of the respondent who were impleaded

as defendant no.2 in the said proceedings who submitted before the said

DRT that since more than two years (prior to the said order), it was the

respondent which was running the co-gen plant on a premise that the

petitioner was not interested in doing so and the day-to-day operations

were being handled by the respondent. The respondent also contended

before the DRT that the petitioner (defendant no.1) was interested in

siphoning of funds and that the respondent is in possession of the plant

and running the same. The observations as made by the tribunal for

convenience are required to be re-noted which read thus:-

"The present situation is that Defendant no. 2 submits that since more
than two years they are running the plant as Defendant no 1 was not
interested in doing so and all day today operations are handled by
them though few employees of Defendant no. 1 are still there but all
salaries/maintenance and compliance of all statutory obligations are
done by them and they face difficulty as defendant no. 1 is interested
in syphoning of funds and not running the plant. They submit that
PDA is sacrosanct and all obligations under it have to be complied and
they have first right over the same, they also submit that they are
interested in purchasing the plant and have approached the Bank who
have sought a concrete proposal and shortly that will be submitting.
They further submit that the plant cannot be closed as lively hood of
more than one lakh family is dependent upon it besides various
commitments of Defendant no 3. The material for plant comes from
sugar factories and as such it is complete circle and all are dependent
on each other and slightest disturbance may bring every thing to halt
which will not be a welcome situation for any body and for the
economy of state and country."

(emphasis supplied)
PVR 123 CARBPL23525_2021(Pravara).doc

117. From the reading of the above order passed by the DRT, it is ex-

facie clear that the stand of the respondent as taken before this Court, is

far from honest to say the least, for the reason, that on oath the

respondent has taken a stand in paragraph 22 of the reply affidavit, that

the respondent is in "joint possession" of the co-gen plant with the

petitioner. However, before the DRT, Delhi, it has been clearly pleaded

as alo categorically observed by the DRT, that it is the respondent who is

in possession of the plant and running the same. It is thus not the case

that when the second reply affidavit dated 19 February, 2022 was filed

by the respondent before this Court, the respondent was not aware

about the stand taken by it earlier and as recorded in the order dated 15

February, 2022 passed by the DRT, Delhi, nonetheless the argument of

joint possession was canvassed with perseverance. Thus, the respondent

clearly appears to have taken a stand as it suits its convenience before

different forums for the reason which according to the petitioner are

quite apparent. Mr. Andhyarujina would be correct to contend that even

assuming that the petitioner was in financial difficulties, it does not

mean that the respondent, without espousing remedies available to it in

law, would maneuver things in such manner that the petitioner is left

defending proceedings, the genesis of which is breaches on the

respondent's part. It is clear from the reading of the orders passed by

both the DRT's that it is at the instance of the respondent the
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observations against the petitioner as noted above have been made and

that too ex-parte to the petitioner.

118. Before the DRT, Delhi proceedings, the respondent had also

moved an application before the DRT at Aurangabad under
Section 17

of the SARFAESI Act on the purported apprehension that the banks from

whom the petitioner had taken loans, may initiate an action against the

petitioner's co-gen plant for recovery of the amounts payable to these

banks and which may cause a prejudice to the respondent. On such

application, on 29 December, 2021, the DRT at Aurangabad passed an

order directing that no status-quo can be granted on the securitisation

proceedings and permitted the respondent to discuss and settle the

disputes with the bank and to take the co-gen plant under its wing,

under a private treaty at the market value. For convenience the relevant

extract of the said orders in this context can be re-noted as under:-

"

F. No status-quo order can be granted on the securitisation proceedings
as such. However, the applicant will be at liberty to discuss and settle with the
respondent bank and take the co-gent plant under its wing under the private
treaty at the market value. If that does not get through then the respondent
bank i.e. respondent no. 1 shall be at liberty to put the property at auction
within the four corners of the project development agreement PDA clearly
mentioning that the auction is with all terms and conditions to be complied of
the project development agreement PDA i.e. all rights and liabilities and
compliances under PDA will be the responsibility of purchaser and the plant
has to be kept running. The Bank can also decide to give on lease the running
of plant to recover its dues.

G. The Project Development Agreement PDA shall be made part of such
auction notice.

H. The Respondent No.4 Maharashtra State Electricity Board is hereby
directed that it not to remit any amount to the respondent no.3, the borrower,
and if any amount is to be remitted it should be remitted to respondent no.1
who shall adjust the amount in the liability of the borrower.

PVR 125 CARBPL23525_2021(Pravara).doc

I. Since the co-gent plant is being possessed and run by the applicant

now such a position shall not be disturbed by any of the parties till further
order except as per law."

119. Thus, prima facie the respondent's plan appears to be crystal clear,

first, make the petitioner invest large sums of about Rs. 274 Crs to set up

the plant which includes large borrowings from the banks. Secondly,

suffocate the petitioner by non-supply of materials (bagasse and bio-gas)

so that once the plant is not run optimally the petitioners would bleed

financially. This situation was achieved by the respondent in 2017 when

the petitioner's account was classified as NPA. Thirdly, interfere in the

running of the plant with an intention to take over the plant. Fourthly,

attempt a total ouster of the petitioner from the co-gen plant and lastly,

create circumstances conducive for a distress sale of the co-gen plant for

which already negotiations are sought to be commenced by the

respondent with the banks as seen from both the orders of the DRT so as

to have wind fall gains.

120. It is thus clear from the orders passed by both the DRTs that the

respondent has expressed before the DRT that the respondent is

interested in purchasing the plant and for which the respondent has

already approached the bank which has sought a concrete proposal.

The respondent's intention is to ultimately take over the co-gen plant

prematurely and not in a manner as agreed between the parties in the

PDA as per the fair market value. It is for such reason the respondent
PVR 126 CARBPL23525_2021(Pravara).doc

has not left a single stone unturned to takeover the co-gen plant, so that

it forms an integral part of the respondent's sugar factory. No other

intention can be culled out.

121. For the above reasons, in my opinion, it is totally untenable for the

respondent to put up a case relying on the orders passed by the DRT

and/or canvassing a case of financial distress of the petitioner to its

advantage in the present circumstances. The respondent instead of

giving a proposal to the bank could have invoked the conditions of the

agreement (PDA) and given a proposal to the petitioner, however, such

course of action does not appear to be profitable to the respondent. It is

thus clear that the intention of the respondent is to defy and run away

from the binding terms and conditions of the PDA and in the manner

unknown to what was agreed between the parties, in order to take over

the assets of the co-gen plant.

122. In so far as Mr. Khambata's contention relying on the provisions of

Section 16(b)
and (c) of the
Specific Relief Act, 1963
is concerned, that

an order of an interim relief as prayed for cannot be made in favour of

the petitioner in the facts of the case, is not well founded. Such

argument proceeds on the assumption that in the substantive

proceedings that the petitioner may initiate before the arbitral tribunal,

it would be praying only for a relief of specific performance and nothing

else. This is plainly a surmise at this stage of the proceedings to
PVR 127 CARBPL23525_2021(Pravara).doc

presume applicability of
Section 16
of the Specific Relief Act. Also, these

are proceedings where the petitioner has prayed for interim measures

pending the arbitral proceedings in which the concern of the Court

would be to protect the arbitral interest of the parties and protect the

subject matter of the arbitration. The Court is certainly not precluded

from considering the prayers made for interim measures when the

proceedings are at a pre-arbitral stage, and in which the petitioner has

asserted a case of several breaches on the part of the respondent, which

are ex-facie apparent and which may damage the arbitral interest of the

petitioner as also the subject matter of the arbitration, namely the co-

gen plant. Thus, it is difficult to accept the contention as urged by Mr.

Khambata referring to
Section 16(b)
and (c) of the
Specific Relief Act
,

that the Court cannot consider the prayers as made by the petitioner

seeking an interim injunction. In any event, even assuming Mr.Khambata

is right in his contention that
section 16 (b)
is attracted, in the facts of

the case, it is prima facie clear that it is the respondent who has acted in

breach of the essential terms of the contract by its short supply of

bagasse and bio gas right from the crushing season of 2015-16. It is

thus only an unsubstantiated plea on the part of the respondent that the

petitioner has become incapable of performing the contract. In fact, the

petitioner has clearly asserted its willingness to conduct the Co-gen

plant under the contract PDA which has reciprocal promises. The basic

conditions which the Court would weigh in applying the provisions of
PVR 128 CARBPL23525_2021(Pravara).doc

Section 16(b)
and (c) of the
Specific Relief Act
is certainly absent in the

present proceedings. Thus in the facts of the case, the respondent's

contention relying on such provisions of the
Specific Relief Act
, in

opposing the interim measures is certainly not tenable.

123. In so far as Mr. Khambata's contention relying on
Section 41(ha)

of the Specific Relief Act is concerned, the same is not well founded, for

the reason that the co-gen plant is in a working condition, which is

being used for the purpose of the respondent's sugar factory. In any

event, the relief as prayed for by the petitioner is not a relief which

would in any manner stop the working of the plant, which can continue

to run in the same manner in the petitioner's hands, as per the terms of

the PDA. The respondent cannot take a position that when the

petitioners would conduct the plant the respondent would not supply

the bagasse and the bio gas and when the respondent would run the

plant on its own, all such materials would be available. This for the

reason, that when the respondent at the relevant time was running the

co-gen plant under the second supplementary agreement, the

respondent had not stated that the respondent was running the plant

only on the coal being purchased from outside sources, and no bagasse

and bio-gas generated from the respondents sugar factory was used.

124. In so far as the respondent's contention that the relief as prayed

for by the petitioner would amount to granting a relief of an interim
PVR 129 CARBPL23525_2021(Pravara).doc

mandatory injunction, which ought not to be granted under
Section 9
of

the Act also cannot be accepted even assuming that the relief being

granted is of such nature.
Section 9
confers powers on the court to grant

interim measures which would certainly include a power to grant an

interim mandatory injunction pending the arbitral proceedings. The

powers of the Court under
Section 9
are not different from the powers

of a Civil Court to grant reliefs of a temporary injunction even in a

mandatory form when a strong prima facie case of a high standard is

made out by a party seeking such relief, coupled with the balance of

convenience as also a case of irreparable injury, which cannot be

compensated in monetary terms, being made out. Mr. Khambata in

supporting his contention that no case has been made out by the

petitioner for any relief for an interim mandatory injunction has relied

on the decision of the Supreme Court in
Dorab Cawasji Warden vs

Coomi Sorab Warden & Ors.7
.

125. To examine the respondent's contention on the issue of an interim

mandatory injunction, the peculiarity of the facts in the present context

is required to be noted. As observed above, this petition came to be filed

on 12 October, 2021 praying for interim measures inter alia of the

directions to the respondent not to interfere in the conduct of the co-gen

plant by the petitioners. Thus, the factual status at the time the petition

was filed was certainly that the petitioner was operating and managing

7 1990 AIR 867
PVR 130 CARBPL23525_2021(Pravara).doc

the plant. However, as categorically contended on behalf of the

petitioners, after filing of the petition and upto 26 October, 2021, the

respondent attempted to change the status quo and are now prohibiting

the petitioner and/or its representative, officers from conducting the co-

gen plant. Thus, the situation is that the respondent is intending to take

over the control of the co-gen plant by restraining the petitioner's entry

to the co-gen plant. The respondent is absolutely conscious of this

position, and in fact it has conceded that it is controlling the co-gen

plant to the exclusion of the petitioner. In my view, in a situation of

such nature, certainly the Court is not powerless to pass an interim

mandatory order directing the respondent to cease itself from entering

and conducting the co-gen plant. It cannot be conceived that with open

eyes, the Court would notice illegality of the respondent and yet be not

able to grant a relief, which the facts of the case and interest of justice

would warrant.

126. The present case is clearly a case where withholding of such a

relief would prick the conscience of the Court. There are certainly

strong circumstances which would warrant the Court to protect the

arbitral interest of the parties and the subject matter of the arbitration,

pending the arbitral proceedings. There is substantial prima facie

material on record which would justify that the status quo has been

attempted to be altered by the respondent and hence it has become

imperative in such case to pass interim orders which can even be of a
PVR 131 CARBPL23525_2021(Pravara).doc

mandatory nature. The following position in law in such context, which

has guided the Courts to grant interim mandatory injunction, is well

settled and would aid the said conclusion.

127.
In
Baban Narayan Landge vs. Mahadu Bhikaji Tonchar & Ors.
,

1989 Mh. L.J. 146, a learned Single Judge of this Court referring to an

earlier decision of this Court in
Champsey Bhimji and Co. vs. Jamna

Flour Mills Co. Ltd.
, AIR 1914 Bom.
195 and in Manoharlal vs. Seth

Hiralal, AIR 1962 SC 527, held that injunctions are a form of equitable

relief and they have to be adjusted or moulded in aid of equity and

justice to the facts and circumstances of each particular case. The Court

observed thus:

"The subject of temporary injunction is mainly covered by Order 39,
Rules 1 and 2,
Code of Civil Procedure
. In cases not covered by those
provisions, an appropriate temporary injunction can be granted also in
exercise of inherent power of a Court under
S. 151
, Code of Civil
Procedure. After all Order 39, Rules 1 and 2 are not exhaustive of the
circumstances under which interim injunction can be granted. The
controversy on that aspect of the matter is set at rest by a majority
decision of the Supreme Court in the leading case of Manoharlal v. Seth
Hiralal, AIR 1962 SC 527. But that apart the language employed in
those two Rules is clearly wide enough to include an order in the form
of a mandatory injunction and admits of no exception with reference to
a point of time to which it can be made. Injunctions are a form of
equitable relief and they have to be adjusted or moulded in aid of equity
and justice to the facts and circumstances of each particular case.
Jurisdiction is thus undoubted even under Order 39, Rules 1 and 2.
Even if it cannot be granted under the said Rules, Section 151 is the
source of such jurisdiction. I see no reason to lay down an absolute
proposition and forge unnecessary and unjustified fetters on the power
of the equity Courts to grant appropriate relief even in a well deserving
case and reduce its position only to a willing but helpless spectator - a
situation not warranted by our equity jurisprudence."

128.
In a recent decision of the Supreme Court in
Samir Narain

Bhojwani vs. Aurora Properties and Investments and Anr.
, (2018) 17
PVR 132 CARBPL23525_2021(Pravara).doc

SCC 203 referring to the decision of the Supreme Court in
Dorab

Cawasji Warden vs. Coomi Sorab Warden
, (1990) 2 SCC 117, the

Supreme Court has reaffirmed the law as
laid down in
the latter decision

to hold that the relief of interlocutory mandatory injunction is granted

generally to preserve or restore the status quo of the last non-contested

status which preceded the pending controversy until the final hearing at

which a full relief may be granted or to compel the undoing of those

acts, that have been illegally done or the restoration of that, which was

wrongfully taken from the party complaining. It is held that when a

strong prima facie case is made out, coupled with a case that if such an

interim mandatory relief is not granted, irreparable or serious injury

which cannot be compensated in terms of money may be suffered by the

applicant and when the balance of convenience is in favour of the party

seeking such a relief, then in such situation certainly the Court would

come to the aid to the party seeking the status quo ante. It was also

recognized that the Court in passing such an order of interlocutory

mandatory injunction would exercises a sound judicial discretion in the

light of the facts and circumstances of the case. The observations of the

Supreme Court in paragraphs 24 to 26 can be noted, which reads thus:

24. That apart, the learned Single Judge as well as the Division Bench have
committed fundamental error in applying the principle of moulding of relief
which could at best be resorted to at the time of consideration of final relief
in the main suit and not at an interlocutory stage. The nature of order
passed against the appellant is undeniably a mandatory order at an
interlocutory stage. There is marked distinction between moulding of relief
and granting mandatory relief at an interlocutory stage. As regards the
latter, that can be granted only to restore the status quo and not to establish
a new set of things differing from the state which existed at the date when
the suit was instituted. This Court in Dorab Cawasji Warden Versus Coomi
PVR 133 CARBPL23525_2021(Pravara).doc

Sorab Warden (1990) 2 SCC 117, has had occasion to consider the
circumstances warranting grant of interlocutory mandatory injunction. In
paragraphs 16 & 17, after analysing the legal precedents on the point as
noticed in paragraphs 11-15, the Court went on to observe as follows: (SCC
pp. 126-27)
"16. The relief of interlocutory mandatory injunctions
are thus granted generally to preserve or restore the status quo
of the last non-contested status which preceded the pending
controversy until the final hearing when full relief may be
granted or to compel the undoing of those acts that have been
illegally done or the restoration of that which was wrongfully
taken from the party complaining. But since the granting of
such an injunction to a party who fails or would fail to establish
his right at the trial may cause great injustice or irreparable
harm to the party against whom it was granted or alternatively
not granting of it to a party who succeeds or would succeed
may equally cause great injustice or irreparable harm, courts
have evolved certain guidelines. Generally stated these
guidelines are:

(1) The plaintiff has a strong case for trial. That is, it
shall be of a higher standard than a prima facie case that is
normally required for a prohibitory injunction.

(2) It is necessary to prevent irreparable or serious injury
which normally cannot be compensated in terms of money.

(3) The balance of convenience is in favour of the one
seeking such relief.

17. Being essentially an equitable relief the grant or refusal of
an interlocutory mandatory injunction shall ultimately rest in
the sound judicial discretion of the court to be exercised in the
light of the facts and circumstances in each case. Though the
above guidelines are neither exhaustive nor complete or
absolute rules, and there may be exceptional circumstances
needing action, applying them as prerequisite for the grant or
refusal of such injunctions would be a sound exercise of a
judicial discretion."

(emphasis supplied)

25. The Court, amongst others, rested its exposition on the dictum in
Halsbury's Laws of England, 4th Edition, Volume 24, paragraph 948, which
reads thus:

"948. Mandatory injunctions on interlocutory applications.- A
mandatory injunction can be granted on an interlocutory
application as well as at the hearing, but, in the absence of
special circumstances, it will not normally be granted. However,
if the case is clear and one which the court thinks ought to be
decided at once, or if the act done is a simple and summary one
which can be easily remedied, or if the defendant attempts to
steal a march on the plaintiff, such as where, on receipt of
notice that an injunction is about to be applied for, the
defendant hurries on the work in respect of which complaint is
PVR 134 CARBPL23525_2021(Pravara).doc

made so that when he receives notice of an interim injunction it
is completed, a mandatory injunction will be granted on an
interlocutory application."

26. The principle expounded in this decision has been consistently
followed by this Court. It is well established that an interim mandatory
injunction is not a remedy that is easily granted. It is an order that is passed
only in circumstances which are clear and the prima facie material clearly
justify a finding that the status quo has been altered by one of the parties to
the litigation and the interests of justice demanded that the status quo ante
be restored by way of an interim mandatory injunction. (See Metro Marins
Versus Bonus Watch Co. (P) Ltd., (2004) 7 SCC 478, Kishore Kumar Khaitan
Versus Praveen Kumar Singh (2006) 3 SCC 312 and Purshottam Vishandas
Raheja Versus Shrichand Vishandas Raheja (2011) 6 SCC 73 : (2011) 3 SCC
(Civ) 204.

129.
In
Hammad Ahmed vs. Abdul Majeed & Ors.
, (2019) 14 SCC 1,

the Supreme Court has reiterated the principles as
laid down in

Dorab

Cawasji Warden
(supra) and
Samir Narain Bhojwani
(supra) to hold

that ad-interim mandatory injunction can be granted when strong

circumstances are present so as to protect the rights and interest of the

parties. The Court in pararagraph 58 observed that:

"58. The ad interim mandatory injunction, is to be granted not at the
asking but on strong circumstance so that to protect the rights and interest
of the parties so as not to frustrate their rights regarding mandatory
injunction.
In
Deoraj vs. State of Maharashtra and Others
, (2004) 4 SCC
697, this Court held that Court would grant such an interim relief only if it
is satisfied that withholding of it would prick the conscience of the Court
and do violence to the sense of justice, resulting in injustice being
perpetuated throughout the hearing, and at the end the Court would not
be able to vindicate the cause of justice. Therefore, in appropriate case, ad-
interim injunction in mandatory form can be granted. The Court held as
under:-

"12. Situations emerge where the granting of an interim relief
would tantamount to granting the final relief itself. And then
there may be converse cases where withholding of an interim
relief would tantamount to dismissal of the main petition itself;
for, by the time the main matter comes up for hearing there
would be nothing left to be allowed as relief to the petitioner
though all the findings may be in his favour. In such cases the
availability of a very strong prima facie case -- of a standard
much higher than just prima facie case, the considerations of
balance of convenience and irreparable injury forcefully tilting
the balance of the case totally in favour of the applicant may
PVR 135 CARBPL23525_2021(Pravara).doc

persuade the court to grant an interim relief though it amounts
to granting the final relief itself. Of course, such would be rare
and exceptional cases. The court would grant such an interim
relief only if satisfied that withholding of it would prick the
conscience of the court and do violence to the sense of justice,
resulting in injustice being perpetuated throughout the hearing,
and at the end the court would not be able to vindicate the cause
of justice. Obviously such would be rare cases accompanied by
compelling circumstances, where the injury complained of is
immediate and pressing and would cause extreme hardship. The
conduct of the parties shall also have to be seen and the court
may put the parties on such terms as may be prudent."

130. A useful reference can also be made to the decision of the Division

Bench of this Court in
Omkar Realtors and Developers Pvt. Ltd. & Anr.

vs. Shahveer Padam Kapadia & Ors. (Commercial Appeal (L) No.
of 2022 dated 30 March, 2022) wherein following the principles of law

as
laid down in

Hammad Ahmed
(supra), the Division Bench held as

under:

"33. Should the argument be that the impugned order is 'mandatory'
in nature and, for the reason, vulnerable, we would have hesitation in
repelling the submission directly. Such an order, even as an ad-interim
one, and even if described as 'mandatory', is always possible where strong
circumstances indicate that the order would protect the rights and interests
of both sides, and that refusing relief would be unjust :
Hammad Ahmed vs.
Abdul Majeed
."

131. The above discussion would show that apart from the strong

circumstances, the petitioner in the present case has certainly made out

a strong prima-facie case for the Court to proceed to pass an interim

order which is necessary to prevent irreparable or serious injury to the

petitioner which cannot compensated in terms of the money even to

pass an interim order of mandatory injunction for which the balance of

convenience is also overwhelmingly in favour of the petitioner.

PVR 136 CARBPL23525_2021(Pravara).doc

132. This case would also be required to be considered from the

perspective of an exception being carved out to
Section 41
, namely, the

provisions of
Section 42
of the Specific relief Act, which reads thus:

"42. Injunction to perform negative agreement.--Notwithstanding
anything contained in clause (e) of
section 41
, where a contract
comprises an affirmative agreement to do a certain act, coupled with a
negative agreement, express or implied, not to do a certain act, the
circumstances that the court is unable to compel specific performance
of the affirmative agreement shall not preclude it from granting an
injunction to perform the negative agreement: Provided that the
plaintiff has not failed to perform the contract so far as it is binding on
him."

133. This is clearly a case wherein there is an affirmative obligation

on the respondent to run the co-gen plant and a negative agreement

under Clause 28 of the PDA on the respondent whereunder there is an

obligation on the respondent not to obstruct or interfere in the work of

the petitioner till the subsistence of the PDA. In my opinion, clause

28 in the PDA would be required to be regarded to be a clause of a

situation which
Section 42
would recognise, to enable the Court to grant

an injunction. This as
Section 42
provides that even if the Court is

unable to compel the specific performance of the affirmative agreement

read with other clauses, it shall not preclude the Court from granting an

injunction to perform the negative agreement. It is not the case that in

the peculiar circumstances in hand, the petitioner could be said to have

not performed the contract, as the present contract was certainly based

on reciprocal promises and its mutual performance by both the parties.

It is infact quite clear that right from the inception of the
PVR 137 CARBPL23525_2021(Pravara).doc

commencement of operation of the co-gen plant that the respondent has

defaulted in supplying bagasse and biogas. In these circumstances, also

Mr. Khambata's submission relying on
Section 41(ha)
certainly deserves

to be rejected.

134. The above conclusion would stand fortified by referring to the

decision of the Supreme Court in
Gujarat Bottling Co. Ltd. & Ors. vs.

Coca Cola Co. & Ors.
, (1995) 5 SCC 545 wherein the Supreme Court has

held that
Section 42
of the Specific Relief Act would certainly become

applicable where a contract comprises an affirmative agreement to do a

certain act coupled with a negative agreement, express or implied, not

to do a certain act, and in such a situation, the circumstances that the

court is unable to compel specific performance of the affirmative

agreement shall not preclude the Court from granting an injunction to

perform the negative agreement. The Court in the facts of the case held

that having regard to the negative covenant contained in the agreement

in question before it (which was subsisting), the respondent therein

(Coca Cola Co.) had made out a prima facie case for grant of an

injunction. In paragraphs 42 and 43, the Court observed thus:

"42. In the matter of grant of injunction, the practice in England is
that where a contract is negative in nature, or contains an express negative
stipulation, breach of it may be restrained by injunction and injunction is
normally granted as a matter of course, even though the remedy is
equitable and thus in principle a discretionary one and a defendant cannot
resist an injunction simply on the ground that observance of the contract is
burdensome to him and its breach would cause little or no prejudice to the
plaintiff and that breach of an express negative stipulation can be
restrained even though the plaintiff cannot show that the breach will
cause him any loss. In India
Section 42
of the specific
Relief Act, 1963

prescribes that notwithstanding anything contained in clause (e) of
PVR 138 CARBPL23525_2021(Pravara).doc

Section 41
, where a contract comprises an affirmative agreement to do a
certain act coupled with a negative agreement, express or implied, not to
do a certain act, the circumstances that the court is unable to compel
specific performance of the affirmative agreement shall not preclude it
from granting an injunction to perform the negative agreement. This is
subject to the proviso that the plaintiff has not failed to perform the
contract so far as it is binding on him. The Court is, however, not bound to
grant an injunction in every case and an injunction to enforce a negative
covenant would be refused if it would indirectly compel the employee
either to idleness or to serve the employer.

43. The grant of an interlocutory injunction during the pendency of
legal proceedings is a matter requiring the exercise of discretion of the
court. While exercising the discretion the court. While exercising the
discretion the court applies the following tests - (i) whether the plaintiff
has a prima facie case; (ii) whether the balance of convenience is in favour
of the plaintiff; and (iii) whether the plaintiff would suffer an irreparable
injury if his prayer for interlocutory injunction is disallowed. The decision
whether or not to grant an interlocutory injunction has to be taken at a
time when the existence of the legal right assailed by the plaintiff and its
alleged violation are both contested and uncertain and its alleged violation
are both contested and uncertain and remain uncertain till they are
established at the trial on evidence. Relief by way of interlocutory
injunction is granted to mitigate the risk of injustice to the plaintiff during
the period before that uncertainty could be resolved. The object of the
interlocutory injunction is to protect the plaintiff against injury by
violation of his right for which he could not be adequately compensated in
damages recoverable in the action if the uncertainty were resolved in his
favour at the trial. The need for such protection has, however, to be
weighed against the corresponding need of the defendant to be protected
against injury resulting from his having been prevented from exercising his
own legal rights for which he could not be adequately compensated. The
court must weigh one need against another and determine where the
'balance of convenience' lies. In order to protect the defendant while
granting an interlocutory injunction in his favour the Court can require the
plaintiff to furnish an undertaking so that the defendant can be adequately
compensated if the uncertainty were resolved in his favour at the trial."

135. The next contention as urged on behalf of the respondent is on

suppression of facts by the petitioner namely of suppressing its financial

position in invoking jurisdiction of this Court under
Section 9
of the Act.

Such contention is required to be stated to be rejected. The case on

suppression as alleged by the respondent of the financial condition of

the petitioner, is to the effect that proceedings against the petitioner as
PVR 139 CARBPL23525_2021(Pravara).doc

adopted by the banks and orders passed thereon are suppressed by the

petitioner. The documents of hypothecation and the document of

Indenture of Mortgage has not been placed on record by the petitioner.

In my opinion, such charge of suppression as made by the respondent is

wholly untenable inasmuch as the petitioner has already pointed out in

the petition that an account of default on the part of the respondent in

supplying the agreed quantity of bagasse and biogas, the petitioner has

suffered losses, which culminated into the petitioner's account being

categorized as a Non-Performing Assets (NPA). It is also clear from the

record that such a plea of suppression as urged by the respondent is

totally hollow, as the respondent at all material times right from the

inception was aware that the petitioner had set up the plant after

substantial borrowings and that there was already a mortgage as

permitted under the agreement in question as created by the petitioner

for availing financial facilities from the banks. The record also clearly

shows that the orders dated 29 December, 2021 and 15 February, 2022

passed by the DRT, Aurangabad and by the DRT, Delhi respectively, were

passed ex-parte to the petitioner and in the presence of the respondent,

and in fact accepting the plea of the respondent. Moreover the orders

passed by DRT are post filing of the present proceedings and hence there

are subsequent events which have taken place and are well to the

knowledge of the respondent. Thus, in no manner whatsoever it can be

said that the petitioner has suppressed anything of relevance to the
PVR 140 CARBPL23525_2021(Pravara).doc

present proceedings so as to gain an unfair advantage over the

respondent. Even otherwise the reliefs which are prayed by the

petitioner are not reliefs which in any manner would affect the rights of

the lenders to proceed against the petitioner.

136. Coming to the next contention of Mr. Khambata that prejudice

would be caused to the respondent if any order is passed in favour of the

petitioner, as the respondents have spent substantial amounts on the

maintenance of co-gen plant also cannot be accepted. This is an

argument of a purported equity. Equity can never override law. Thus

any plea which is intended to eclipse a patent illegality cannot be

accepted. The respondent is attempting to illegally takeover the

management and operation of the plant and that too in a coercive

manner by preventing the petitioner from legitimately operating the

plant which indisputedly belongs to the petitioner. If this be the case, the

argument of prejudice to the respondent has no legs to stand.

Something which is of the ownership of the petitioner cannot be taken

away by the respondent except in a manner known to law, even if the

case of the respondent was that it has purportedly spent amounts for

the maintenance of the co-gen plant. Thus, to recover such amounts

which are claimed to have been spent by the respondent, the only course

open for the respondent, was to raise a money claim against the

petitioner in a manner known to law. Even otherwise, these are all

matters of evidence wherein the genuineness of such claims of the
PVR 141 CARBPL23525_2021(Pravara).doc

respondent spending any amounts on the maintenance of the plant

would be required to be established in the trial before the arbitral

tribunal. Thus, in my opinion, the respondent having spent certain

amounts on maintenance etc, can be no argument to deny any relief to

the petitioner when prima facie the illegality of the respondent, acting in

patent breach of the contractual condition is as clear as the sun light.

Intervention Applications:

137. Insofar as the intervention applications are concerned, there is an

intervention application filed on behalf of employees of the co-gen plant,

who are employees of the petitioner who have already espoused their

grievances in regard to non-payment of wages, for a certain period,

before the Labour Court at Ahmednagar. Once these applicants have

taken recourse to the remedy available to them in law which can only be

confined to their contract of employment, I do not see how their

intervention can be permitted and in any manner would be relevant in

the present proceedings, and that too in supporting the case of the

respondent. The only recourse which was available to these workers

was to adopt appropriate remedy as was available to them in law against

the petitioner qua their employment, which they have already availed.

138. The position qua the other intervenors who claim to be workers

associated with the sugar factory or farmers supplying sugarcane to the

respondent is also not different. They cannot maintain their intervention
PVR 142 CARBPL23525_2021(Pravara).doc

applications in the present proceedings which are filed under
section 9

of the Act between parties to the contract (PDA), for the reason that any

plea advanced by these interveners are pleas primarily against the

petitioner on an apprehension of these applicants that the respondent

may stop the activities of the sugar factory for want of power to be

generated by the co-gen plant. However, these interveners cannot be

oblivious to the independent rights of the parties to the agreement

(PDA), and contend that dehors such rights of the parties under the

PDA, the co-gen plant ought to be kept operational and that too by the

respondent and not by the petitioner. Such a plea as urged by these

interveners is totally untenable. In fact, such plea militates against the

express terms and conditions of the PDA as also the Land Lease

Agreement as entered between the petitioner and the respondent. They

have no privity with the petitioner. They also do not appear to have any

privity touching the PDA between the petitioner and the respondent. In

any event, the plea as urged in the Intervention Application apart from

being merely on apprehension is too remote to be considered as any

substantive plea to admit of any intervention of these applicants.

139. It also needs to be observed that it is eminent that the interveners

have been put up at the behest of the respondent so as to advance an

argument of equity and fortify the position that the running of the co-

gen plant by the respondent is more effective than the petitioner

conducting its own plant. These are the basic arguments which are
PVR 143 CARBPL23525_2021(Pravara).doc

urged by Dr. Saraf in supporting the contentions of the respondent. In

my opinion, it would be too far-fetched for the Court adjudicating the

proceedings under
section 9
of the Act to consider interventions by

persons who are not only alien to the contractual dispute between the

petitioner and the respondent but also remote to the present

proceedings between the contracting parties. For such reasons, none of

the Intervention Applications can be held to be maintainable.
In view of

the above discussion, Dr. Saraf's reliance on the decision of a learned

Single Judge of this Court in
Prabhat Steel Traders Pvt. Ltd. Vs. Excel

Metal Processors Pvt. Ltd.
is not well founded. The present case is not

such where any interim order passed in arbitral proceedings is

prejudicially affecting any third parties like the intervenors. It is also not

the case that these third parties are likely to be directly affected if the

reliefs as prayed for are granted by the Court. It is also not a case that

the Court is passing any order against these parties. (Re.: Para. 45 - 46

of
the said judgment
).

140. In view of the above discussion, the petition needs to succeed. The

question as posed in paragraph 59 would stand answered in the above

terms.

141. As a sequel, to the above discussion, the petitioner is imminently

entitled to interim reliefs. The petition is accordingly allowed by the

following order:

PVR 144 CARBPL23525_2021(Pravara).doc

ORDER

(i) The petition is allowed in terms of prayer clause (b), which
reads thus:

"b. That pending the hearing and final disposal of the

arbitral proceedings, making of the arbitral Award and until
final execution of the arbitral Award, this Hon'ble Court be
pleased to restrain the Respondent, its board of directors,
promoters, partners, employees, agents, representative and any
one acting on behalf of the Respondent, in any manner from
entering the premises of the Petitioner's Co-generation plant and
from carrying out any work/activity for the repairs/
maintenance/ operation of the Petitioner Co-generation plant"

(ii) The parties are directed to commence the arbitral
proceedings within a period of one month from today.

142. Before parting, the conduct of the respondent in the present

proceedings is required to be commented. Despite filing an affidavit in

reply dated 21 November, 2021, the respondent under the garb of

rejoinder, filed a further affidavit in reply dated 15 February, 2022

peculiarly titled as "Affidavit in reply on behalf of respondent to the

petition dated 12 October, 2021 and the rejoinder dated 2 December,

2021 and the Additional Affidavit dated 26 October, 2021 filed by the

petitioner. Further an additional affidavit dated 19 February, 2022, was

sought to be tendered before the Court when it was seriously objected

by Mr. Andhyarujina, learned senior counsel for the petitioner. However,

things did not stop at this. When the hearing of the petition commenced

on 21 February, 2022 and when it had remained part-heard on 23

February, 2022 and 24 February, 2022, in the midst of the oral

arguments, the respondent to support its pleas intended to place on
PVR 145 CARBPL23525_2021(Pravara).doc

record the petitioner's financial documents by a further affidavit, hence

leave of the Court was taken to file further affidavit which for the

reasons are set out in the order dated 25 February, 2022 was granted.

Mr. Andhyarujina's objection to the affidavit dated 15 February, 2022

and 19 February, 2022, in my opinion, needs to be accepted considering

the fairness of the proceedings before the High Court. The respondent

could not have taken the process of the Court, for granted so as not to

maintain its sanctity and the procedural discipline and cause a serious

prejudice to the litigant who has knocked the doors of the Court to seek

urgent reliefs, by subverting the proceedings and/or delaying the

proceedings by repeated pleadings possibly to divert the focus of

proceedings. Such attempts of filing successive affidavits that too in the

midst of hearing of the proceedings also of a nature not permitted by the

Court, cannot go unnoticed. Such attempt of the respondent is required

to be reprimanded. It cannot be said that no prejudice was caused to

the petitioner by filing of such affidavits being swung, in the midst of the

hearing, but also the insurmountable inconvenience which was caused

to the Court in adjudicating the present proceedings, was of least

concern to the respondent. The conduct of the respondent, thus

requires this Court to pass an order of costs, as such conduct of a litigant

and that too in commercial matters cannot be accepted. The

respondents are accordingly directed to deposit costs of Rs.2,00,000/-

with the Dean, J.J. Hospital to be utilized for the terminally ill and the
PVR 146 CARBPL23525_2021(Pravara).doc

poor Cancer patients which shall be deposited within one week from

today.

143. The Petition as also the Interim Application filed by the petitioner

accordingly stands disposed of in the above terms.

144. The interim applications for intervention stand rejected. No costs.

145. At this stage, Mr. Setalvad, learned senior counsel for the

respondent prays for stay of this order. However, considering the

peculiar and strong circumstances of the case and the paramount duty of

the Court to preserve and protect the rule of law, even in the contractual

sphere, a request for stay needs to be rejected. Also there would be no

prejudice whatsoever to the respondent or even for that matter, to the

interveners who are not even remotely connected with the contractual

dispute between the parties, if the petitioner under its contractual rights

operates and manages its own co-gen plant and/or its assets. In any

event merely because some time was taken to deliver the judgment,

which was on account of the immense pressure of work on the Court, it

can be no ground to accept Mr.Setalvad's request, when the matter itself

was argued for days together.

[G.S. KULKARNI, J.]