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1986 DIGILAW 429 (ALL)

U. P. State Electricity Board, Lucknow v. Municipal Board, Almorah

1986-07-14

A.N.DIKSHITA, B.N.SAPRU

body1986
JUDGMENT A.N. Dikshita, J. - This is an appeal filed by U. P. State Electricity Board, Lucknow against the judgment and order dated 10-4-75 passed in Misc. Case No. 80 of 1971 refusing to set aside the award dated 18- 9-71. 2. Brief facts as material for disposal of the appeal are : that Municipal Board, Almora some time in 1958 applied to the U. P. Government for bulk supply of energy to which the Government agreed on certain terms. A draft agreement was prepared and was executed on behalf of the Municipal Board, Almora, but it could not be executed on behalf of the Government. The supply was, however, started awaiting the execution of the agreement. This agreement was for a period of ten years commencing from May 10, 1958. The rates at which the energy was to be supplied by the Government were specified in the schedule annexed to the agreement. A note was appended in the schedule that the rates were subject to revision by the Government and would he applicable after such revision. 3. U.P. State Electricity Board (hereinafter called as the Board) was constituted within the meaning of S. 5 of Electricity (Supply) Act, 1948 and all the functions in respect of generation. transmission and distribution were taken over by the Board. 4. The Board in exercise of the powers enjoined under S. 49 of the Electricity (Supply) Act decided to revise the rates in respect of bulk supplies to all its licensees inclusive of the Municipal Board, Almora and a notification dated 24-4-62 to that effect was published on April 28, 1962. The Municipal Board, Almora was informed accordingly that henceforth supply of electricity would be chargeable as per revised rates with effect from Dec., 1962. The Municipal Board, Almora instantly protested. 5. The draft agreement which was to be executed between the Government and the Municipal Board, Almora, was ultimately finalised and executed by the Municipal Board, Almora, and the Board on 30-12-63 with certain minor changes but the other terms of the draft agreement which was finalised remained the same. However, relying on the notification the Board started billing the Municipal Board, Almora, at the revised rates w.e.f. Dec., 1962. However, relying on the notification the Board started billing the Municipal Board, Almora, at the revised rates w.e.f. Dec., 1962. The Municipal Board, Almora, categorically adhered to its contention that the supply of electricity is liable to be given for a period of ten years as per the rates provided in the agreement and the Board was not justified in claiming the amount as per revised rates. The Board contended that it had the power to revise the rates as per the postulates of the Electricity (Supply) Act and also on the basis of the note inserted in the schedule of rates attached to the agreement executed on 30-12-63. 6. A dispute thus arose between the Board and Municipal Board, Almora, which was initially referred to the Electrical Inspector but on the refusal of the Electrical Inspector to arbitrate the Board was requested for the appointment of an Arbitrator vide Municipal Board's letter dated 26-9-66. On 17-3-63 the Board appointed Sri B. N. Malhotra as its Arbitrator while the Municipal Board, Almora, appointed Sri Mathura Dutt Joshi as its Arbitrator on 1-5-69. 7. During the proceeding before the Arbitrators the Municipal Board set forth a claim of Rs. 2,80,298.09. The Board also filed its claim. The Arbitrator Sri B. N. Mehrotra appointed on behalf of the Board came to the conclusion that the Municipal Board, Almora, has not made out a case for refund of the amount while Sri M. D. Joshi the Arbitrator for the Municipal Board, Almora, was of the view that in view of the agreement the Board is not entitled to the amount. However, in view of differences of opinion amongst the Arbitrators the matter was referred to the Umpire. The Umpire Sri Ambika Prasad Srivastava gave his award and found that there was an agreement of arbitration between the parties. It was further held that during the pendency of the agreement the Board was not justified in claiming the charges at the revised rates and the excess amount was liable to refund. The Umpaire awarded that Municipal Board, Almora, is entitled to the refund of amount of Rs. 1,09,699.45 p. The other objections raised on behalf of the Board were repelled. 8. The award given by the Umpire was submitted to the Court of Civil Judge, Bareilly, for being made the rule of the Court. 9. The Umpaire awarded that Municipal Board, Almora, is entitled to the refund of amount of Rs. 1,09,699.45 p. The other objections raised on behalf of the Board were repelled. 8. The award given by the Umpire was submitted to the Court of Civil Judge, Bareilly, for being made the rule of the Court. 9. Objections under S. 30/33 of the Indian Arbitration Act were filed on behalf of the Board. Vide judgment and order dated 12-4-75 the objections preferred by the Board under S. 30/33 of Arbitration Act were rejected and the award was made a rule of the Court and accordingly a decree was ordered to be prepared in terms of the award. 10. Feeling aggrieved this appeal under S. 39(1), cl. IV of the Arbitration Act has been preferred by the Board. 11. Learned counsel for the parties have been heard. 12. Learned Counsel for the appellant firstly submitted that there was no arbitration agreement between the parties and cl. 24 of the agreement arrived at between the parties would not be construed, to be an agreement succumbing to arbitration. In the absence of an agreement existing between the parties for the reference of dispute to arbitration the Umpire committed legal misconduct inasmuch as he had no such jurisdiction. There is no merit in this contention as cl. 24 of the agreement clearly provided that if there was any dispute between the parties to the agreement the same was to be decided as enjoined under S. 76(1). No doubt sub-cl. (1) of S. 76 was deleted w.e.f. 17-9-66 and its assertion in cl. 24 would be deemed to be omitted but the other matter of cl. 24 would remain existing. However, the intention of the parties was there to get the dispute settled through arbitration. Once the Board had agreed to get the dispute resolved through arbitration and appointed its own arbitrator and in view of the fact that the Arbitrators gave their award the objection that the Umpire had no jurisdiction is wholly misconceived. Such plea from a Corporate Body is unimaginable once the dispute in view of the difference of the opinion between the Arbitrators was referred to Umpire who decided and gave an award contrary to the interest of the Board. Such plea from a Corporate Body is unimaginable once the dispute in view of the difference of the opinion between the Arbitrators was referred to Umpire who decided and gave an award contrary to the interest of the Board. Moreover, the Board participated in the proceedings firstly before the Arbitrators and later on before the Umpire and to raise an objection in regard to the competence of the Umpire to make an award at the fag-end of the day is really uncalled for. 13. Learned counsel for the appellant then urged that the Board while exercising its powers under S. 46 read with S. 49 of the Electricity (Supply) Act was competent to revise the rates unilaterally. Learned counsel for the respondent has submitted that cl. IVA of the agreement provides the words `Mutual agreement' and as such the Board could not have acted or done anything unilaterally in derogation of the terms and conditions of the agreement. 14. Reliance has been placed in regard to the revision of tariff in the case of Jagdamba Paper Industries Pvt. Ltd. v. Haryana State Electricity Board, AIR 1983 SC 1296 . It has been urged that the Board has been conferred with statutory power under S. 49(1) to determine the conditions on the basis of which the supply of electricity is to be made. In the case of Jagdamba Paper Industries Pvt. Ltd, (supra) certain conditions regarding security of meter and for payment of energy bill were accepted by the consumers which were incorporated in the agreement arrived at between the parties. Under cl. 31 of the agreement the Board reserved to itself the right to amend, cancel or to add to any of the schedule or conditions at any time. The Supreme Court on the basis of the agreement arrived at between the parties held that the Board has the power to unilaterally revise the conditions of supply and it follows that the demand of additional security for payment of energy bills is unassailable provided that the Board has not acted arbitrarily or unreasonably. This case is apparently distinguishable from the controversy before us. This case is apparently distinguishable from the controversy before us. Here the Board on its formation had some time in the year 1962 revised the rates but in the agreement executed by the Board with the Municipal Board in the year 1963 provided for the charge of the electricity at the rate applicable prior to such revision in 1962. The Umpire has rightly held that the Board has no such power to charge at a higher rate than the rate provided in the agreement, dated 30- 12-63. This agreement was for a period of ten years. The Board cannot wriggle out of such an agreement on account of its own errors or mistakes as the agreement dated 30-12-63 clearly provides for the charging of the electricity at the rate provided in the agreement though such rates were revised in 1962 but were never brought in the agreement at a time of its execution. There is no error apparent so as to construe that the Umpire was guilty of any legal misconduct. It may be taken note of a singular fact that the Board has powers to revise the rates unilaterally provided there is no such agreement between the parties. But in the instant case in view of an agreement providing for the charge of electricity at a lower rate as was prevailing prior to the revision of tariff in 1962 it would not be open to the Board to claim at a higher rate and that too contrary to the terms of the agreement arrived at between the parties. 15. Learned counsel for the appellant placed reliance in the case of Bisra Stone Lime Co. Ltd. v. Orissa Textile Mills Ltd, AIR 1976 SC 127 . This was a case for increase by adding surcharge in the tariff. However, in view of the fact that the agreement provided raising of the bill on the tariff applicable prior to revision in 1962 would be applicable and the Board while executing the agreement in 1963 agreed to charge the petitioner on the tariff applicable prior to such revision. 16. Learned counsel for the respondent has submitted that the Board had no right to revise the tariff and has placed reliance in the case of Indian Aluminium Co. v. Kerala State Electricity Board, AIR 1975 SC 1967 . 16. Learned counsel for the respondent has submitted that the Board had no right to revise the tariff and has placed reliance in the case of Indian Aluminium Co. v. Kerala State Electricity Board, AIR 1975 SC 1967 . The Supreme Court has held that the Board has no such power to unilaterally enhance the rate in derogation of such contractual stipulation. It is thus clear that the Board had the right to revise the tariff unilaterally but not in derogation to its contractual obligations. It has already been found that after the revision of the tariff the Board entered into an agreement with the Municipal Board, Almora for charging at the rate prior to such revision. The Board is thus estopped from claiming the amount as per the revised tariff or rates. In view of the above the Umpire rightly awarded the refund. 17. Learned counsel for the appellant then urged that the claim of the respondent was barred by time. In view of S. 37(3) of the Arbitration Act it is to be read along with S. 9(b) of the Act. A perusal of S. 9(b) would clearly show the fallacy in the submission inasmuch as S. 9(b) provides the eventuality for the appointment of an Arbitrator where one party fails to appoint an Arbitrator and the other party who has appointed the Arbitrator may act as sole Arbitrator in the reference. However, the proviso to S. 9(b) provides for the setting aside of the appointment of the sole Arbitrator on sufficient cause being shown. Instantly the appellant as well as the respondent had appointed their Arbitrators and as such S. 9(b) of the Act cannot be attracted. Further the Umpire had framed issue No. 4 in regard to the submission of limitation which reads as under : "On which date should the Arbitration be deemed to have been commenced for the purposes of limitation as contemplated under S. 37 of the Indian Arbitration Act". On perusal of the evidence and the documents before the Umpire he came to the conclusion that the Arbitration commenced on 26-9-66 and the period of limitation applicable to the claim is 3 years. Further, where the claim was in time the Umpire has clearly concluded that the claim to the extent of Rs. 1,09,699.45 is within time while the claim in respect of Rs. 24,717.85 is barred by time. Further, where the claim was in time the Umpire has clearly concluded that the claim to the extent of Rs. 1,09,699.45 is within time while the claim in respect of Rs. 24,717.85 is barred by time. Learned counsel for the appellant except for urging that the claim was barred by limitation has not placed any material to justify the plea regarding submission nor any material or document which may show or substantially prove that the claim was barred by limitation and beyond time. This submission on behalf of the counsel for the respondent that the claim was barred by limitation is ill-merited and such findings arrived at by the Umpire are wholly correct and unassailable. In any case notice dated 26-9-1966 was given by the respondent and if the Board took its own time for the appointment of an Arbitrator the respondent cannot be held to be guilty of any such mistake or delay which was in fact caused at the instance of the Board. The proceedings would be deemed to have commenced w.e.f. 26-9-66. The contention of the learned counsel for the respondent finds support that the arbitration is within time. In the case of Moti Lal Chamaria v. Lal Chand Dugar, AIR 1960 Cal 6 . While interpreting sub-s. (3) of S. 37 it was held that it cannot be construed as exhaustive of the circumstances under which an arbitration commences. The expression `shall be deemed to be commenced' indicates that the sub-section deals with two modes of notional or fictional commencement as distinguished from factual commencement. It is thus clear that the claim of the respondent was well within time to the extent of Rs. 1,09,699.45 as awarded by the Umpire. 18. Learned counsel for the appellant then urged that the award is bad as the Umpire has not recorded the reasons. This contention has been very seriously contested by the learned counsel for the respondent. On a careful scrutiny of the award we are clear in our mind that the award does not give any reason but only conclusions. It is in fact a non-speaking award and Courts would hesitate rather refrain to go behind it. This contention has been very seriously contested by the learned counsel for the respondent. On a careful scrutiny of the award we are clear in our mind that the award does not give any reason but only conclusions. It is in fact a non-speaking award and Courts would hesitate rather refrain to go behind it. An award is liable to be set aside if the Arbitrator has misconducted himself in the proceedings or when it has been made after the issue of an order by the Court superseding the arbitration or the proceedings or after the proceedings have become invalid or also where it has been improperly procured or is otherwise as provided in S. 30 of the Act. An award can also be set aside on the ground of an error apparent on the face of the award but it would not become invalid solely because the Arbitrator or Umpire has committed some mistake in arriving at his conclusion. An award is conclusive as the judgment between the parties and can only be set aside on the reasons enjoined in S. 30 as discussed above. The adjudication of the Arbitrator/Umpire is binding between the parties and the powers to set aside such a conclusion is restricted to cases set out in S. 30. While dealing with an application for setting aside the award the Court has not to consider whether the view of the Arbitrator/Umpire on the evidence is justified. It is also not open to Court to speculate where no reasons have been given out by the Arbitrator/Umpire as to what impelled the Arbitrator/Umpire to arrive at his conclusions. Certain processes of reasoning as to whether the conclusion is right or wrong are also not liable to scrutiny by the Court. It is beyond the jurisdiction of the Court to attempt to probe the mental process by which the Arbitrator/Umpire has reached his conclusion. This view finds support in the case of Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji, AIR 1965 SC 214 . Moreover, we do not find in the award any illegal proposition which is the basis of the award far less a legal proposition which is erroneous. When such an award does not suffer from any of the infirmities or invalidity or any misconception of law, it is not liable to be set aside. Moreover, we do not find in the award any illegal proposition which is the basis of the award far less a legal proposition which is erroneous. When such an award does not suffer from any of the infirmities or invalidity or any misconception of law, it is not liable to be set aside. In the case of Firm Madan Lal Roshan Lal v. Hukumchand Mills Ltd., AIR 1967 SC 1030 the Supreme Court took the view that unless there was any misconception of law the award was not liable to be set aside. 19. The Umpire in the instant case has not given any reason. Only the findings have been recorded. To assail the award on the assumption or the inference that the Umpire misunderstood law as applicable would not be drawn. An Arbitrator/Umpire is not bound to give any reason for his award. The Arbitrator/Umpire may have given some reasons though not all reasons which may have influenced him in coming to such conclusions even then it would not render the award as illegal and liable to be set aside. Here the award does not disclose any reason and only conclusions had been arrived at. In the case of Nanak Chand v. Firm Panna Lal Durga Prasad, AIR 1948 All 444 the Court also took a similar view that the award is not liable to be set aside on the ground that some reasons have been given but not all which influenced the Arbitrator in coming to certain conclusions. Learned counsel for the appellant could not show any fact which may satisfy us that while giving the award the Umpire misconducted himself or misunderstood the law. 20. Learned counsel for the appellant then urged though suduedly regarding the validity of the arbitration agreement and the consequent reference on which the award is made. Cl. 24 of the agreement provided as recited above for the reference of the dispute to arbitration. Arbitrators were appointed by the parties and on the differences of opinion between the Arbitrators the matter was referred to the Umpire. In any proceedings under Ss. 30 and 33 of the Act while claiming for setting aside an award it is clear that it is beyond the scope of the provisions to challenge the validity of the arbitration agreement. Section 30 at no stage embraces the validity of an arbitration agreement. Cl. In any proceedings under Ss. 30 and 33 of the Act while claiming for setting aside an award it is clear that it is beyond the scope of the provisions to challenge the validity of the arbitration agreement. Section 30 at no stage embraces the validity of an arbitration agreement. Cl. (c) of S. 30 where the expression is otherwise invalid finding does not include such an objection. This explanation is to be taken as ejusdem generic with the words proceedings in (c). It must be presumed that the parties challenging the award accepted the validity of the reference on which the award is based. It is thus clear that an arbitration agreement existed between the parties and as such the application of S. 30/33 of the Act is not made out. In case of Mangal Singh v. Nawab Singh, AIR 1962 All 219 it was held that the validity of an arbitration agreement cannot be challenged. As already stated challenging the award must be presumed to accept the validity of the reference on which the award is made. 21. In view of the above the appeal has no merit and deserves to be dismissed. 22. In the result the appeal fails and is hereby dismissed with costs.