NATIONAL ELECTRIC SUPPLY AND TRADING CORPORATION PRIVATE LIMITED v. UNION OF INDIA
1980-12-10
O.N.VOHRA, RAJINDAR SACHAR
body1980
DigiLaw.ai
SACHAR ( 1 ) THIS is an appeal against the order of Prakash Narain, J. (as his Lordship then was) by which he held that the report of Mr. Bhatia, dated 31- 12-1963 was not an award, but only an evaluation report and consequently that the application filed under Sections 14 and 16 of the Arbitration Act for filing the award and the objections filed by the appellant under Section 30/33 of the Arbitration Act were not maintainable, and dismissed both the applications. ( 2 ) A decade of frustrated waiting seems to have made the appellant revise his position with regard to his objections under Sections 30 and 33 of the Arbitration Act, which he is not pressing. At the time when he filed his objections a decade back he was optimistic enough to hope for getting more amount than awarded by Mr. Bhatia. Reality however seems to have sobered him and now he restricts his claim only to what Mr. Bhatia awarded. But before he can get this amount, it has to be found that the report of Mr. Bhatia was an award by the arbitrator and that is what Mr. Bhatia the learned counsel for the appellant has persuaded us to hold. ( 3 ) THE appellant was engaged in the business of supplying electricity to the Township of Narela. The question of supplying and generation of electricity is dealt with by Indian Electricity Act, 1910 (hereinafter to be called the Act ). Section 3 of the Act empowers the State Government to grant licence to any person to supply energy in any specified area or place electricity lines for the conveyance and transmission of energy. Section 28 of the Act lays down that no person other than the licensee shall engage in the business of supplying energy to the public except with the previous sanction of the State Government and in accordance with such conditions as the State Government may fix in this behalf. ( 4 ) THE Chief Commissioner, Delhi Administration, in exercise of the powers under Section 28 (1) of the Act granted a sanction to the appellant to engage in the business of supplying energy within the limits of notified Committee is Narela vide his order of 25-5-1950.
( 4 ) THE Chief Commissioner, Delhi Administration, in exercise of the powers under Section 28 (1) of the Act granted a sanction to the appellant to engage in the business of supplying energy within the limits of notified Committee is Narela vide his order of 25-5-1950. The said sanction was subject to the conditions specified in the Schedule and such conditions as may from time to time be imposed by the Commissioner. Clause (7) of the conditions laid down that sanction granted may be revoked or withdrawn at any time for breach of the above conditions and that the sanction may also be revoked by the Chief Commissioner. . . . . . . . . for any other reason after giving the company at least 6 calendar months notice in writing. This clause (7) also provided that on the revocation of sanction by the Chief Commissioner the provisions of Section 5 of the Indian Ilectricity Act 1910 and those contained in 4th Schedule to the Electricity Act l942 will apply so far they will be appropriate. ( 5 ) BY virtue of the power under Section 28 (1) of the Act read with cl. (71 of Conditions of sanction the Chief Commissioner by an order of 24-1-1961 gazetted in the Delhi Gazette of 9-2-1961 revoked the sanction granted to the appellant and also gave notice that the said sanction shall stand revoked on the 1st August, 1961. ( 6 ) SECTION 5 provides that where the State Government revokes the license of a licensee certain consequences will ensue. amongst them being that if the State Electricity Board is willing to purchase the undertaking. . . . . . . . . the licensee shall sell the undertaking to the State Electricity Board. In the present case Delhi Electric Supply Undertaking had expressed its readiness to purchase the undertaking. ( 7 ) SUB-SECTION (2) of Section 5 provides that where an undertaking is sold under sub-section (l ). . . . . . . . . the purchaser shall pay to the licensee the purchase price of the undertaking determined in accordance with the provisions of subsection (1) of Section 7a, or as the case may be, sub-section (3) of that section.
. . . . . . . . the purchaser shall pay to the licensee the purchase price of the undertaking determined in accordance with the provisions of subsection (1) of Section 7a, or as the case may be, sub-section (3) of that section. ( 8 ) SECTION 7a (1) lays down that where an undertaking of a licensee, not being a local authority, is sold under sub-section (1) of Section 5. the purchase-price of the undertaking shall be the market- value of the undertaking at the time of purchase or where the undertaking has been delivered before the purchase under sub-section (3) of that section, at the time of the delivery of the undertaking and if there is any difference or dispute regarding such purchase price, the same shall be determined by arbitration. ( 9 ) SUB-SECTION (4) of Section 7a further lays down that where an undertaking of a licensee is purchased under Section 6, the purchase price shall be the value thereof as determined in accordance with the provisions of sub-secs. (1) and (2 ). The proviso further lays down that there shall be added to such value such percentage, if any, not exceeding 20 per centum of that value as may be specified in the license on account of compulsory purchase. ( 10 ) IT Evidently there was a dispute with regard to the price to be paid to the appellant for the sale of the undertaking. A letter, therefore, was addressed by the appellant on 7-3-1963 to the Ministry of Irrigation giving its agreement to refer all the disputes to arbitration. After some further talks the appellant apparently was asked and did put in writing his agreement to handover the undertaking on certain terms as disclosed in his letter of 21-13-1963. The letter clearly mentions that the total compensation to be paid to the undertaking shall be the market value plus a solatium of 20% and the market value of the undertaking shall be determined by Mr. H. L. Bhatia. In reply to this the Delhi Administration, through its Development Commissioner wrote on 24-10-1963 accepting the terms and conditions indicated by the appellant and informing him that the Delhi Electricity Supply Undertaking and the Municipal Corporation was being requested to takeover the undertaking and also Mr.
H. L. Bhatia. In reply to this the Delhi Administration, through its Development Commissioner wrote on 24-10-1963 accepting the terms and conditions indicated by the appellant and informing him that the Delhi Electricity Supply Undertaking and the Municipal Corporation was being requested to takeover the undertaking and also Mr. Bhatia, Chairman of Punjab State Electricity Board was being requested to take up the work in connection with the determination of the market value of the undertaking and also the quantum of the interim compensation to be paid. In due course Mr. Bhatia took up the matter and by his award of 31-12- 1963 determined the compensation at Rupees 1,18000/- and adding a 20% solatium worked out a total compensation at Rs. 2. 16 lakhs. Out of this Rs. l lakh had already been paid asinterim compensation and he directed that Rs. 1. 16 lakhs was now to be paid to the appellant in full and final settlement for the transfer of the undertaking. He also made it clear that no interest will be payable on the balance of amount, if paid within a period of 2 weeks from the receipt of the award. ( 11 ) IT appears that the appellant was also claiming equitability, admissibility and the quantum of compensation in respect of some other items of evaluation of the undertaking, which were, however, rejected, on which there was no mention in Mr. Bhatia s award. Apparently it was for this reason that the appellant had moved the court for filing the award and after the same was filed had raised objections about the non-awarding of the other claims. The respondents on this retorted by taking the stand that Mr. Bhatia s report was only an evaluation and was not an award. It also took the stand that as Mr. Bhatia had not made any award, therefore, the application under the Arbitration Act was not competent. This plea found favour with the learned Judge, who has held that Mr. Bhatia acted only as an evaluator and, therefore, naturally his direction and his award could not be made a rule of the court under the Arbitration Act; he has, therefore, dismissed both the applications filed under Sections 14 and 16 and objections under Sections 30 and 33 of the Arbitration Act by the appellant. Aggrieved he has now come up in appeal.
Aggrieved he has now come up in appeal. ( 12 ) FROM a perusal at the judgment it would appear that the learned Judge has accepted the plea taken by the respondent that Mr. Bhatia only acted as an evaluator. It appears to us that conclusion has been arrived at without considering the various provisions of the Act like Sections 5, 7a and Section 52 which provides that where any matter is, by or under this Act, directed to be determined by arbitration, the same shall be determined by. . . . . . . . . . . . and in all other respects, the arbitration shall be subject to the provisions of Arbitration Act. The reason probably may have been that no one appeared on behalf of the appellant before the learned single Judge. ( 13 ) NOW the scheme of the Act is that Sec. 28 empowers sanction to be given subject to such conditions as may be fixed. In the present case clause 7 permits the Chief Commissioner to revoke the sanction and in terms provide that in such an eventuality Section 5 of the Act would be applicable. Section 5 (2) provides in case of revocation for sale of the undertaking and sub-section (2) of Section 5 casts an obligation on the purchaser to pay to the licensee the purchase price of the undertaking to be determined in accordance with sub-section (1) and (2) of Section 7a. Reference to Section 7a clearly shows that the purchase price, if there is a difference or dispute regarding the same, has to be determined by arbitration. Section 7a (4) which talks of the purchase price being evaluated clearly shows that it shall be determined in accordance with sub-sections (1) and (2) of Sec. 7a. The whole scheme, therefore, is that if there is a difference and dispute about the purchase price (as undoubtedly there was in the present case) the matter has to be determined in terms of Section 7a by arbitration. Even in the absence of a provision like Section 52 of the Act the provisions of Sections 46 and 47 of the Arbitration Act would have made a determination under Section 7a (1) subject to the provisions of the Arbitration Act.
Even in the absence of a provision like Section 52 of the Act the provisions of Sections 46 and 47 of the Arbitration Act would have made a determination under Section 7a (1) subject to the provisions of the Arbitration Act. The reason is that Section 46 provides that the provisions of Arbitration Act subject to certain exceptions which are not relevant shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration was being in pursuance of the agreement. In the present case, however, Section 52 of the Act does not leave scope for any argument by the respondent that the determination by Mr. Bhatia, was anything else but an award, and subject to the Arbitration Act. What, therefore, Mr. Bhatia was doing was a determination by arbitration under Section 7a (1) of Electricity Act and the said determination would attract Section 52 and the Arbitration Act will become applicable. In that view the only course open to the appellant was to move under Sections 14/16 of the Arbitration Act. It is true that the appellant also filed objections under Sections 30/33 (but in view of his stand that he is not pressing those objections) the only course that could be followed was either to set aside the award or to make it a rule of the court or to remit, the award. As there are now no grounds to set aside or remit the award and as in view of our finding about the maintainability of the application under Sections 14/16 of the Arbitration Act, the inevitable consequence would be to make the award a rule of court. ( 14 ) MISS Rekha Sharma the counsel tor the respondent did make an effort to persuade us to hold that Mr. Bhatia could not be deemed to have given an award, as the State Government could alone nominate a person who can act as an arbitrator in terms of Section 7a (1 ). We find that the objection is without substance because, firstly, no such objection was taken before the single Judge that Mr. Bhatia could not act as an arbitrator as he was not appointed by a proper authority. There was no challenge at all to the competency of the authority who had appointed Mr. Bhatia. The only objection taken was to the status of Mr.
Bhatia could not act as an arbitrator as he was not appointed by a proper authority. There was no challenge at all to the competency of the authority who had appointed Mr. Bhatia. The only objection taken was to the status of Mr. Bhatia, whether as an arbitrator or as an evaluator. The position in law as we find is thai Mr. Bhatia was an arbitrator and not an evaluator. Even on facts there is no substance in this objection because the letter of 24-10-1963 by which Mr. Bhatia was asked to determine the purchase price was written in accordance with the decision by the Union Minister for Irrigation and Power and it clearly stated that the Delhi Electricity Supply Undertaking and the Municipal Corporation of Delhi were being requested to takeover the undertaking and that the Chairman of Punjab State Electricity Board, Mr. Bhatia, was being asked totake up the work in connection with the determination of the market value. The said letter was by the Development Commissioner on behalf of Delhi Administration. There is nothing on record to show that this authorisation to appoint Mr. Bhatia was not under the authority of the Chief Commissioner. This objection by the respondent, therefore, fails. As a result we would allow the appeal, set aside the order of the learned single Judge and make the award of Mr. Bhatia dated 31-12-1963 a rule of the court. Decree in terms of the award be prepared accordingly. We also direct that the payment in terms of Mr. Bhatia s award will be made to the appellant within a period of 2 months from today and if it is not paid it will carry an interest @ 9% per annum till the date of payment. ( 15 ) WE may in this connection note an unfortunate fact. The appellant has shown us photostat copy of the letter (which has been taken on record) from which it appears that some meeting had taken place before the Lt. Governor on 9-3-1977 in which the General Manager of the Delhi Electric Supply Undertaking was also present, and that it was decided that the balance of Rs. 1. 16 lakhs which was outstanding from Mr. Bhatia s award will be paid to the appellant, who had also agreed to withdraw the suits pending in the court. The letter is written by Mr.
1. 16 lakhs which was outstanding from Mr. Bhatia s award will be paid to the appellant, who had also agreed to withdraw the suits pending in the court. The letter is written by Mr. J. N. Gupta, who was then Secretary, (Electricity), Delhi Administration, at that point of time, it appears that the appellant notwithstanding this though he met a number of persons did not receive the amount. As a matter of fact when the matter came up for hearing before us on 11-2-1980 we adjourned the matter because we were told that the representation had been made by the appellant and he hoped the matter to be settled. We again adjourned the matter once or twice with the hope that the matter would be sorted out by the authorities. But today we again find that the matter was still at that very stage, where it was originally, and that is why we heard the appeal on merits and have given out judgment. It is unfortunate that in spite of the agreement, (if Mr. Gupta s letter is a correct representation of what transpired in that meeting) a citizen should be made to go on waiting for getting his dues for a number of years, and only through the process of court. It is not necessary to deal with this aspect any further.