Chennai Port Trust Represented by its Chief Mechanical Engineer v. Chennai Container Terminal (P) Ltd. , Represented by its Managing Director/CEO
2021-10-22
N.SATHISH KUMAR
body2021
DigiLaw.ai
ORDER : 1. Aggrieved over the Majority Award of the Arbitral Tribunal, the present Application has been filed. 1.a. Parties are arrayed as per their own rankings before the Tribunal. 2. The Government of India decided to involve private partnership in the operation of Chennai Container which was fully operating under the Chennai Port Trust invited International Parties on 20.11.1997 to submit their tenders for the project. One consortium formed by Ms. Jakari Express Pvt. Ltd., Mumbai and M/s.Meherji Cassinath Limited, Mauritius and Chettinad Logistics Pvt. Ltd., were success bidders. Thereafter, a special purpose vehicle the Respondent was duly incorporated by the said Consortium. An agreement was entered between the Claimant and Respondent on 09.08.2001. As per the agreement Clause 3.12 the Claimant/Licensor shall provide access to the utilities such as power, water and telecommunication subject to availability. Clause 3.12(e) stipulates that the Licensee shall pay actual cost worked out from time to time. The Claimant from the date of inception used to bill the Respondent for consumption of electricity under the following heads: (1) Consumption in units (2) Demand Charges (3) Container Station excess KVA (if exceeds the Demand) (4) Metter Rent (5) 5% Electrical Tax 3. It is also stated by the Claimant that for the purpose of providing electricity the Claimant has to incur several expenses towards the construction, repair and maintenance of substations within the Port. TANGEDCO supplies power from Kalmandapam sub-Station to the Bharathi Dock, 33 KV sub station located within the premises of the Port. From there the electricity is routed through high tension cables and other infrastructure including substations, transformers etc., to the Respondent. For that purposes the Claimant has employed qualified staff and equipment to maintain the cable and other infrastructure for the continuous, uninterrupted power supply to the Respondents. 4. When the Claimant noticed that the expenditure of the Port in building and maintaining the infrastructure is not passed on to the Respondent and the Respondent is billed only for the consumption units along with demand charges. Therefore, the Claimant has worked out the actual cost of supplying electricity to the Respondent after adding the expenses towards maintaining the infrastructure and staff and arrived at a ratio of apportionment between the Port's electricity users. In this regard sanction was accorded by the Claimant's Chairman vide order dated 12.07.2012. Thereafter, several negotiations also took place between the parties.
Therefore, the Claimant has worked out the actual cost of supplying electricity to the Respondent after adding the expenses towards maintaining the infrastructure and staff and arrived at a ratio of apportionment between the Port's electricity users. In this regard sanction was accorded by the Claimant's Chairman vide order dated 12.07.2012. Thereafter, several negotiations also took place between the parties. However, the Respondent having agreed one of the letter dated 19.05.2014 to pay the actual cost incurred by the Claimant. Thereafter, the Respondent refused to make payment. Hence, the Claim has been preferred by the Claimant for recovery of service charges to the tune of Rs.12,81,76,834/- together with interest at 24% pa. 5. Denying the contention of the Claimant the Respondent taken a defence that as the Agreement was entered in the year 2001 and the use of the expression “actual cost” of the License Agreement refers to the cost i.e., actually invoiced to the Respondent by the Claimant based on the meter reading done by the TNEB. From 2001 till 2012, only the actual cost of electricity consumed was invoiced to the Respondent and there was no additional 20% service charge ever claimed. It is the contention that use of expression “from time to time” including the License Agreement for 2 key reasons. One is when the Respondent entered in to the License Agreement in 2001, it did not have its own substation on the terminal and was getting power directly from the Claimant till 2003 for its QCs, Reefers, Containers Freight Station and administrative building. For this, the Claimant had set up 4 separate meters wherein the sub meter for the QCs, Reefers and CFS received high tension (HT) connection and the sub-meter or the administrative building received the Low Tension (LT) connection. 6. The computation of the consumption of power by the Respondent is based on the reading of the sub-meter and the Claimant has to work out the actual cost from time to time. However, after the setting up of the own substation by the Respondent at its terminal in 2003 the aforementioned arrangement stopped.
6. The computation of the consumption of power by the Respondent is based on the reading of the sub-meter and the Claimant has to work out the actual cost from time to time. However, after the setting up of the own substation by the Respondent at its terminal in 2003 the aforementioned arrangement stopped. Hence it is the main contention of the Respondent that the expression “from time to time” has to be read in context with Article 3.12(b) of the Licence Agreement which mandates that the Licensee/Respondent has to pay any increase in power and water tariffs as a result of revision by appropriate authority. Therefore, only when there is any revision in the tariff by the TNEB actual cost will vary from time to time. Hence, the interpretation of Article 3.12(e) adopted by the Claimant for claiming 20% service charges is legally incorrect. 7. It is also stated that no demand for service charges have been made from the year 2001. It is also stated that it is the obligation of the Claimant to maintain all general port infrastructure other than those covered under the license, which are necessary for the management operation and maintenance of the project facilities and services. Therefore, it is their contention that unless there is a specific provision in the License Agreement for service charges the contention of the Claimant cannot be countenanced. It is also stated that the Respondent paid the initial amount of Rs.100 million to the Claimant while executing the License Agreement and continue to pay royalty at 37.128% on the revenues collected with a condition of minimum guarantee loyalty. 8. The Respondent also filed counter claim, contended that the Claimant have collected wharfage classifying the cranes as vehicle instead of classifying them as machinery. From 2002 to 2004 the Claimant collected huge amount.
8. The Respondent also filed counter claim, contended that the Claimant have collected wharfage classifying the cranes as vehicle instead of classifying them as machinery. From 2002 to 2004 the Claimant collected huge amount. Therefore, he prayed for refund of excess amount of Rs.42,14,225/- and also they prayed in the counter claim to permit the Respondent to close the CFS operations without having to surrender the CFS land as a pre condition and exchange the present 2.7 hectares of CFS land at “0” yard with equivalent land contiguous to the yard to enable the Respondent to carry out non CFS activities and also prayed that as per the contract they do not require any permission from the Claimant to remove any of the equipment beyond the original equipment, to avoid any future conflict the Respondent made a request and prayed in the counter claim for removal of equipments from its terminal which is over and above quantities of original equipment detailed in Annexure VIII and X of the License Agreement, besides cost of the proceedings and also claimed damages to the tune of Rs.5,53,08,000/- for delay in closure of CFS business at the “0” yard and pay damages. 9. On the basis of the above pleadings the Tribunal has framed as many as 19 issues which are as follows:- 1. Weather Respondent liable to pay 20% service charges and the 12.36% service tax on Electricity Consumption? 2. Weather the Claimant is entitled to refuse to provide power to the Respondent, when the service charges, demanded, are not paid? 3. Is it not permissible for the Claimant to direct the Respondent to arrange for power directly from the TamilNadu Electricity Board, when the Respondent refuse to pay the service charges? 4. Whether the Claimant entitled to get the sum of Rs. 12,81,76,836/-from the Respondent towards Electricity Service Charge And Service Tax? 5. Whether the Claimant is entitled for interest @ 24% on the said amount? 6. Whether the Respondent paid any excess wharfage? 7. Whether the Respondent is entitled for the refund of Rs. 42,14,225/- ? 8. Is not the claim for refund barred by limitation? 9. Are the QCs and RTGCs to be classified as machineries? 10. Is the Respondent bound to collect 100% wharfage on the goods handled by them? 11. Has the Respondent any right, to shift or exchange, the CFS (Contain Freight Station)? 12.
42,14,225/- ? 8. Is not the claim for refund barred by limitation? 9. Are the QCs and RTGCs to be classified as machineries? 10. Is the Respondent bound to collect 100% wharfage on the goods handled by them? 11. Has the Respondent any right, to shift or exchange, the CFS (Contain Freight Station)? 12. Whether the Claimant liable to pay Rs. 5,53,08,000/- towards damage for not permitting the Respondent, to shift or exchange the CFS? 13. Does the Respondent has a right to dispose – off the excess RTGCs and QCs, not required for managing the current contained terminal traffic? 14. Is the Claimant liable to pay sum of Rs. 9,38,13.205/- as damages for not permitting for the Respondent to dispose – off such excess RTGCs and QCs? 15. Is the Respondent entitled for the interest on the damages? 16. To what relief the parties are entitled? 17. Who is to bear the costs of the arbitration? Additional Issue: 18. Is there any compulsion for the Respondent to draw power only through the Claimant? 19. Has the Respondent sought permission to obtain Electricity supply from TANGEDCO? 10. In the Majority Award, Issue Nos.1 to 5, 9 and 10 answered against the Claimant and also decided Issue Nos.7 and 8 as against the Respondent. Issue No.11 the Majority Award held that the Respondent is entitled to get an equal extent of 640 square meters of land, which was surrendered to the Claimant for widening the road on the understanding of exchange of equal land and if the Claimant is not allotting equal extent of 640 square meters of land of the Respondent, then the Claimant is bound to reduce the rent in proportion to the land taken by the Claimant from the date of taking over. Issue No.12 held against the Respondent. Issue Nos.13, 14 and 15 also held against the Respondent. Issue Nos.18 and 19 it is held that there is no compulsion on the Respondent to get power supply from the Claimant in terms of the Agreement dated 9.8.2001. Issue No.17 is in respect of the cost, bearable by the parties. Counter claim made by the Respondent was dismissed. As agaomst Issue Nos.6,7,8,12 to 15 which went against the Respondent. No challenge was made by the Respondent.
Issue No.17 is in respect of the cost, bearable by the parties. Counter claim made by the Respondent was dismissed. As agaomst Issue Nos.6,7,8,12 to 15 which went against the Respondent. No challenge was made by the Respondent. The challenge in this application is made only in respect of Issue Nos.1 to 5, 11, 18 and 19 by the Claimant before this Court. 11. On perusal of the Issues, it is not disputed by both sides that the Issue Nos.1 to 5 and 18 and 19 are intertwined and Issue No.11 is a separate issue. Now, challenge mainly before this Court is in respect of Issue Nos.3 and 11 alone, which covers the other issues also. This Court by order dated 03.11.2020 issued notice on two points i.e., Issue Nos. 3 and 11 which has not been disputed by both sides. 12. Learned Additional Solicitor General Mr.R. Sankaranarayanan appearing for the Petitioner vehemently contended that the Award of the learned Arbitrators in respect of Issue Nos.1 to 5 , 18, 19 and Issue No.11 suffers from Patent Illegality. Each Arbitrator has passed Award separately. The Presiding Arbitrator and First Co-Arbitrator held Issue Nos. 1 to 5, 11, 18 and 19 against the claimant. Whereas the Second Co-Arbitrator passed an Award against the Respondent. It is his contention that though different Awards have been passed separately, the Award is contrary to the findings recorded by each Arbitrator. The main fulcrum of the dispute is the interpretation of Contract entered between the parties which provide for charges payable to the Licensor as per the actual cost worked out from time to time. It is his contention that the interpretation of the contract of the learned Presiding Arbitrator is against the fundamental principle of interpretation. The contract of commercial nature has to be interpreted taking note of its plain language. Whereas the reasons has been supplemented and read into the contract which is nothing but perversity. 13. No reasonable and fair-minded person would make such interpretation to contend that charges payable by the Licensee only relate to the actual power tariff. Such finding recorded without considering the relevant evidence available on record to substantiate the contention of the Claimant to prove the nature of expenses met by them in supplying the power obtained from the TANGEDCO.
13. No reasonable and fair-minded person would make such interpretation to contend that charges payable by the Licensee only relate to the actual power tariff. Such finding recorded without considering the relevant evidence available on record to substantiate the contention of the Claimant to prove the nature of expenses met by them in supplying the power obtained from the TANGEDCO. The oral evidence in abundance in this regard was totally ignored by the Presiding Arbitrator as well as the First Co-Arbitrator. Whereas the Arbitrators have recorded their own reasons without any materials which is nothing but patent illegality which goes to the root of the matter. Conflict findings have been recored by the Presiding Arbitrator, First Co-Arbitrator and Second Co-Arbitrator interpreting the Contract. 14. The learned Additional Advocate General has also brought to the notice of the Court that the First Co-Arbitrator has also held specifically in his finding that in Paragraphs 50 and 52 of the Award that the Respondent's substation and Distribution system and that of the Claimant's are adjacent to each other, being divided by a wall or just few meters. It is totally contrary to the evidence available on record. The evidence in record clearly shows that the actual distance between the take off point and power substation. Therefore, it is his submission that the vital evidence was totally ignored by the Presiding as well as First Co-Arbitrator. The interpretation of the Contract has been substituted by their own reasons, cannot be sustained in the eye of law. 15. It is his further contention that merely because service charges and actual costs were not claimed from the date of agreement, the same cannot be a ground to give a different meaning to contract. Whereas the plain reading of the contract makes it very clear that the Licensee shall pay all charges for the power supplied to the licensee premises as worked out from time to time. Learned Additional Advocate General submitted that the only issue to be decided is interpretation of contract. Where as the Presiding Arbitrator and First Co-Arbitrator have not considered the claim of the Petitioner and they recorded their own reasons by giving different meaning to the contract. Therefore, the Award is certainly liable to be interfered. Further with regard to the Issue No.11, it is his contention that the Presiding Arbitrator has not even discussed Issue No.11 specifically.
Where as the Presiding Arbitrator and First Co-Arbitrator have not considered the claim of the Petitioner and they recorded their own reasons by giving different meaning to the contract. Therefore, the Award is certainly liable to be interfered. Further with regard to the Issue No.11, it is his contention that the Presiding Arbitrator has not even discussed Issue No.11 specifically. Therefore, the same cannot be called as Majority Award. At the same time the Second Co-Arbitrator has interpreted the contract and also considered the entire evidence and passed the Minority Award, rejecting the contention of the Respondent herein. 16. In support of his contention the learned Additional Advocate General has cited the following judgments: 1. M/s. MotilalPadmapat Sugar Mills –Vs- Sate of Uttar Pradesh and others [ (1979) 2 SCC 409 ] 2. Ester Industries Ltd. –Vs- U.P State Electricity Board and others [ (1996) 11 SCC 199 ] 3. United India Insurance Co. Ltd. –Vs- Harchand Rai Chandan Lal [ (2004) 8 SCC 644 ] 4. Krishnan Bahadur –Vs- Purna Theatre and others [ (2004) 8 SCC 229 ] 5. Sahkari Khand Udyog Mandal Ltd. –Vs- Commissioner of Central Excise and Customs [ (2005) 3 SCC 738 ] 6. Associate Builders –Vs- Delhi Development Authority [ (2015) 3 SCC 49 ] 7. Ssangyong Engineering and Construction Company Ltd. –Vs- National Highway Authority of India [ (2019) 15 SCC 131 ] 8. South East Asia Marine Engineering And Construction Limited –Vs- Oil India Ltd., [ (2020) 5 SCC 164 ] 17. Whereas Mr.Vinodkumar the learned counsel appearing for the Respondent submitted that the Majority Award has taken note of the entire evidence and interpreted the contract. It is further submitted that the interpretation of Contract is in the domain of Tribunal. When the Tribunal has interpreted the Contract taking note of various circumstances, the Court cannot interfere in the Award. The relief claimined by the Claimant is limited only with regard to 20% of the service charges on the monthly consumption units of electricity along with the applicable service tax forthwith from the date of claim. Hence it is his contention that when the Arbitrator has analysed the entire evidence and found that the payment relate only to actual cost and not relate to the charges as demanded by the Claimant, this Court cannot re-appreciate the entire evidence in Application under Section 34 of the Arbitration and Conciliation Act. 18.
Hence it is his contention that when the Arbitrator has analysed the entire evidence and found that the payment relate only to actual cost and not relate to the charges as demanded by the Claimant, this Court cannot re-appreciate the entire evidence in Application under Section 34 of the Arbitration and Conciliation Act. 18. It is the further contention of the learned counsel for the Respondent that the Claimant actually agreed to collect 37.128% royalty for all the revenue activity operations. Therefore, all the services has to be given by the Claimant. It is his contention that from the year 2001 to 2012 no charges were collected. The issue was never raised, that itself clearly indicates that the payment is only for the actual cost towards the consumption of the electricity not for the service charges, as contended by the Claimant. Learned Arbitrators in the Majority Award has clearly found and recorded the conduct of the parties from the beginning. Hence submitted that when the Tribunal has recorded finding on interpreting the contract, the Court cannot interfere the same. 19. In support of his contention the learned counsel for the Respondent relied upon the following judgements: 1. Chennai Container Terminal Pvt. Ltd. –Vs- Board of Trustees of Chennai Port Trust [ (2018) 4 MLJ 385 ] 2. HRD Corporation –Vs- GAIL [ (2018) 12 SCC 471 ] 3. National Highways –Vs- M.Hakeen [2021 SCC Onlile SC 473] 4. Delhi Airport Metro Express Pvt LTd. –Vs- Delhi Metro Rail Corporation [ 2021 SCC Online SC 695] 20. The very issue is only with regard to the interpretation of the very contract between the parties i.e., whether the Claimant is entitled to claim charges for the electricity supplied to the Respondent or not. Other issues relating to counter claim not challenged by the Respondent. 21. The Respondent before the Arbitral Tribunal as well as this Petition was incorporated by the consortium of Companies. The License Agreement dated 09.08.2001 entered between the Claimant and Respondent for development, management and operation of the Chennai Container Terminal located in the Chennai Port Trust. The main issue arose with regard to the payment of actual cost to the Licensor and worked out from time to time. It is not in dispute that the issue has been brought up only in the year 2012, though the agreement was entered in the year 2001.
The main issue arose with regard to the payment of actual cost to the Licensor and worked out from time to time. It is not in dispute that the issue has been brought up only in the year 2012, though the agreement was entered in the year 2001. For the first time in 2012, the Claimant woke up and claimed charges of the power supplied to the Respondent. It is also not disputed that take off point for electricity is from Kalmandapam substation to the Bharathi Dock 33KV substation. 33KV substation from where electricity being supplied to the Respondent's substation. It is relevant to extract the particular clause i.e., Article 3.12 of the License Agreement, which is bone of contention in this matter:- “3.12. Utilities and Services At the request of the License the Licensor shall provide access to utilities and services such as power, water and telecommunication, subject to availability. The Licensee shall be liable for, and shall pay to the Licensor, throughout the term of the Licence Period or early termination, as the case may be, all charges for the power supplied to the Licensed Premises and/or the Project Facilities and Services within seven days of receipt of the bills/demand from the Licensor. The Licensor, shall install meters to measure the consumption of power. In the event of disruption of power supply or break down in supply of power for any reasons whatsoever or for a panned maintenance shut down, no compensation whatsoever shall be paid by Licensor for any loss or damages caused to or suffered by the Licensee as a result thereof. In future if there are any restrictions or short supply of power from Tamil Nadu Electricity Board, then the power supplied to the Licensee shall also be subject to these restrictions/short supply peeportionately as for supply power to the Licensor. a. the power made available shall be as received by the Licensor from Tamil Nadu Electricity Board. The take off point for electricity shall be from 33 KV Substation at Bharathi Dock. b. at the request of the Licensee, Licensor shall supply water in the Licensed Premises and/or the Project Facilities and Services. The water made available shall be as received by the Licensor from Chennai Metropolitan Water supply and Sewerage Board. The take off point for water shall be at Low Level Reservoir (LLR)/Container Terminal.
b. at the request of the Licensee, Licensor shall supply water in the Licensed Premises and/or the Project Facilities and Services. The water made available shall be as received by the Licensor from Chennai Metropolitan Water supply and Sewerage Board. The take off point for water shall be at Low Level Reservoir (LLR)/Container Terminal. Ther Licensee also agree and undertake to pay any increase in respect of power and water tariffs, as a result of revision by the Appropriate Authority. c. The Licensor, shall install meteres to measure the consumption of water in the event of disruption of water supply or break down in the supply of water for any reasons whatsoever or for a planned maintenance shut down, no compensation whatsoever shall be paid by Licensor for any loss or damages caused to or suffered by the Licensee as a result thereof. d. the Licensee shalll also be subject to restrictions/short supply of water in the event that the License or faces any restrictions or short supply in its receipt of water from Chennai Metropolitan Water Supply and Sewerage Board proportionately as for supply to the Licensor. e. for water and power consumed by the Licensee, charges shall be paid by the Licensee as per actual cost to the Licensor, worked out from time to time, within seven days of receipt of the bills/demand from the Licensor. f. the Licensee may, at its cost, make alternate arrangements for power including but not limited to installation of generators, subject to obtaining Applicable permits, if any, therefor. g. the licensee shall, at its own cost, be free to obtain power or water from a source different from those described in this Article.” 22. The learned Presiding Arbitrator has interpreted the above Article particularly in clause (e) of the contract and held that the actual cost referred in Clause (e) can be related only to the quantity of power consumed by the Licensee. The Presiding Arbitrator in Paragraphs 46, 47 and 48 of the Award has held as follows: “46. The word “consumed” be read in conjunction with the word in second para “all charge for the power supply” because the said para enumerate that the licnesee shall be liable to pay the Lincensor..... all charges for the power supplied to the licensed premises and/or the project facilities and services within 7 days of receipt of the bill/demand from the Licensor.
all charges for the power supplied to the licensed premises and/or the project facilities and services within 7 days of receipt of the bill/demand from the Licensor. The consumption of electricity by the Licensee can be only to the extent of supply made by the Licensor. When that be so, the actual cost referred in Clause (e) can be related only to the quantity of power consumed by the Licensee. Apart from this, the actual cost should be read together with the rest of the portion of the Clause i.e., “as per actual cost to but Licensor, worked out from to time”. Now, this has to be read in conjunction with Clause (b) of the Article, which refers to the understanding of the Licensee to pay any increase in respect of power and water tariffs as a result of revision. 47. The interpretation of this Clause 3.12 in entirety would mean that the Licensee is liable to pay the actual cost of the Licensor in respect of the water supply and electricity consumption, which are to be measured or calculated on the basis of the reading in the meter installed by the Licensor. The Licensee also to pay higher charges if there is any change in the charges by way of any increase made by the appropriate Authority. The Licensee has to pay the “charges worked out from to time” by the Licensor and pay the bill as per the demand raised by the Licensor within 7 days from the receipt of the bill. It may also be noted that the quantity of consumption of the energy and water cannot be a constant and uniform for every month, Definitely, the consumption of both electricity and water bill vary for every month depending upon the work load of the Licensee. That is why the duty cast upon the Licensor to calculate the actual cost of the consumption of energy and the water worked out from time to time as per the reading of the meter installed to measure the same and raise a demand to the Licensee. 48. Apart from this, as rightly pointed out by the learned Counsel for the Respondent that the agreement doe not refer the “service charges” anywhere in the agreement. Moreover, admittedly the claimant did not claim the service charges for nearly 11 years prior to the present demand in July 2012.
48. Apart from this, as rightly pointed out by the learned Counsel for the Respondent that the agreement doe not refer the “service charges” anywhere in the agreement. Moreover, admittedly the claimant did not claim the service charges for nearly 11 years prior to the present demand in July 2012. Clause 3.2(e) contemplates that the actual cost has to be worked out by the Licensor and send the bill thereon to the Licensee who shall pay the bill amount with 7 days of the receipt of such bill. There is no explanation on the part of the Claimant as to why they have not claimed any services charges all along, if they are entitled for the same as per the terms of the License. CW1 has admitted that earlier to 2012 the 20% service charges was not collected from the Respondent. Apart from that his evidence is clear that the service charges were included in the monthly bills.” 23. The First Co-Arbitrator in paragraphs 50, 52 and 53 of the Award has also held as follows: “50. Factually the distance between the two substations is negligible as they are located adjacent to each other, divided by a wall. The licensee has also located its own substation and transformers for reducing the usage of 33 KVA to 3.3 in there same procedure. This facility is connected by the cablke provided for by the licensee to connect it to the respondent's substation. In other words, the substation located adjacent to each other are inter words, the substation located adjacent to each other are inter connected and all the steps required to connect the cable have been provided for by the licensee by way of permanent arrangement and measure. 52. The stipulations relating to payment of electricity charges towards consumption of electricity, by the Licensee as already extracted above, is as per actual cost, which the licensor pays to TANGEDCO. It is also not in dispute that the respondent's substation and Distribution system and that of the claimant's are adjacent to each other, being divided just by a wall or just few meters. Therefore from either side before or after take off point, there will be no transmission loss for the licensor in providing power supply to the licensee's Board. 53.
Therefore from either side before or after take off point, there will be no transmission loss for the licensor in providing power supply to the licensee's Board. 53. The expression 'charges' shall be paid by the licensee as per actual cost to the licensor, would only mean the actual cost paid by the licensor to TANGEDCO for the power drawn by the licensor and availed by the licensee at the take off point and nothing more. Actual cost means real price actually paid upon, genuine, bonafide charges and it will not include any other expenses incurred.” and both Arbitrators have held that the expression ‘charges’ shall be paid by the Licensee as per the actual cost by the Licensor, would only mean the actual cost paid by the Licensor to TANGEDCO for the power drawn by the Licensor and availed by the Licensee at the take off point and nothing more. 24. Though the interpretation of the Contract is always in the domain of the Arbitral Tribunal provided such interpretation is reasonable and not contrary to the plain meaning of the contract. While interpreting the contract first and foremost principle is a judicial approach. Though it may be stated that the interpretation made by the Arbitrator is a possible and plausible view, same cannot be gone into. However, such interpretation by Tribunal should be in the context of object of the Contract. The entire clauses to be read harmoniously, keeping in mind the reasons for including such clauses in the contract. 25. A perusal of the clauses referred above, Paragraph 2 of the Article 3.12 makes it very clear that the obligation on the part of the Licensee to pay all charges for the power supplied to the Licensed premises and/or the project facilities and services within 7 days of the receipt of the bills/demand from the Licensor. Clause (e) also indicated that the charges shall be paid by the Licensee as per the actual cost to the Licensor. Para (2) and Para (e) to be harmoniously construed. There was a commonality involved in both the clauses. Both when read harmoniously, same make it clear that the charges incurred by the Port for the supply of the Power obtained from the TANGEDGO also to be paid by the Respondent. The plain meaning indicate the same.
Para (2) and Para (e) to be harmoniously construed. There was a commonality involved in both the clauses. Both when read harmoniously, same make it clear that the charges incurred by the Port for the supply of the Power obtained from the TANGEDGO also to be paid by the Respondent. The plain meaning indicate the same. Though this Court is also aware of the fact that Court normally cannot substitute its own reason while interpreting particular clause in the Contract the object behind incorporation of such clause in the contract has to be seen. 26. It is admitted by both side that the power has to be supplied from 33 KVA substation Bharathi Dock. The Presiding Arbitrator while interpreting the Contract held that what is meant in the Contract is only actual cost of the electricity consumed. Whereas Presiding Arbitrator not even considered the evidence on record produced on the side of the Claimant to show that 33 KVA Substation situated in a quite distance and claimant has employed many number of staff and incurred cost for repair and maintenance of substation regularly only in order to provide electricity. This aspect has not even considered on the other hand, the learned Presiding Arbitrator has mainly focused on the conduct of the Claimant for not claiming service charges for more then 11 years and the above conduct not pitted against the Claimant. What was the nature of the expenses incurred in the power station for supply of power to the Respondent was never considered by the Presiding Arbitrator. 27. It is also to be noted that the very clause in the Contract giving option to the Respondent to make an arrangement for getting power from different sources indicate the fact that if they are not satisfied with the charges they may make alternative arrangements for power and also obtain power from different source as per the clauses (f) and (g) Article 3.12. Whereas the First Co-Arbitrator in paragraph 50 of his Award while interpreting the contract has recorded as follows: “Factually the distance between the two substations is negligible as they are located adjacent to each other, divided by a wall.” 28.
Whereas the First Co-Arbitrator in paragraph 50 of his Award while interpreting the contract has recorded as follows: “Factually the distance between the two substations is negligible as they are located adjacent to each other, divided by a wall.” 28. In para 52 it is also recorded that it is also not in dispute that the Respondent's substation and Distribution system and that of the Claimant's are adjacent to each other, being divided just by a wall just few meters. Therefore, from either side before or after take off point, there will be no transmission loss for the Licensor in providing power supply to the Licensee's Board. 29. As already indicated, the Presiding Arbitrator has not even discussed about the distance between the power station i.e., take off point to supply point. Whereas the First Co-Arbitrator has recorded as if there is no distance between both and held that both are adjacent to each other. Such finding is in fact contrary to the evidence. The evidence recorded in this regard has been totally ignored by both the Presiding Arbitrator and First Co-Arbitrator. 30. Though this Court cannot re-appreciate the entire evidence it has been recorded only to show that the relevant evidence has been totally ignored by the Presiding Arbitrator as Well as First Co-Arbitrator, while interpreting the contract which provides for charges. C.W.1 himself has stated that the actual cost to the Lisensor means TNEB Tariff Charges + 20 % service charges. R.W.1 himself admitted the distance between 33 KVA substation to Bharathi Dock/Respondent's substation is 100 Meters and he has also admitted that the distance between Kalmandapam Substation and 33 KVA Substation is approximately 1500 Meters. He has also admitted that they never made any maintenance in substation. He has also admitted that the entire expenditure for establishment or maintenance or other infrastructure between the TNEB Kalmandapam Substation and 33KVA substation at Bharathi Dock have been entirely borne by the Claimant. 31. Evidence also available on record to show that more than 55 staff and 6 engineers were employed in the 33 KVA substation. His vital evidence has been ignored by the Presiding Arbitrator as well as the First Co-Arbitrator. Similarly, the documents Exs.C.37 to C.47 the salary slips were filed to prove the salaries of staff have not been considered.
31. Evidence also available on record to show that more than 55 staff and 6 engineers were employed in the 33 KVA substation. His vital evidence has been ignored by the Presiding Arbitrator as well as the First Co-Arbitrator. Similarly, the documents Exs.C.37 to C.47 the salary slips were filed to prove the salaries of staff have not been considered. The nature of expenses incurred by the Port in supplying electricity from substation also not been taken note of. Therefore, when the vital evidence which are required to interpret the contract i.e., to find out whether the charges includes actual charges incurred by the Port for supply of electricity or mere meagre charges alone to be paid by the Licensee, these evidence are absolutely necessary. The learned Arbitrators have not even considered these aspects. These facts show that relevant evidence and materials were ignored by the the Arbitrators which goes to the very root of the matter and certainly falls within the category of perversity, as per the Judgment of the Apex Court in Ssangyong Engineering and Construction Company Ltd.,case (supra). The relevant portion is as follows: “30. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), while no longer being a ground for challenge under “public policy of India”, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.” 32. It is also to be noted that though the conduct of Claimant in not claiming charges for 11 years was put against Claimant. However, there is no evidence on record that such conduct was deliberate or intentional act with knowledge. In the absence of such finding mere omission to claim a bill from initial period, the same cannot be construed as waiver. In this regard in M/s. Motilal Padampat Sugar Mills Co.
However, there is no evidence on record that such conduct was deliberate or intentional act with knowledge. In the absence of such finding mere omission to claim a bill from initial period, the same cannot be construed as waiver. In this regard in M/s. Motilal Padampat Sugar Mills Co. Ltd. Case (supra) the Honourable Apex Court has held that basic requirement for waiver there must be a intentional act with knowledge, which has not discussed by the Arbitrators in this case. 33. In Associate Builders case (supra) the Honourable Supreme Court has held that the “judicial approach” demands that a decision be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would obviously not be a determination which would either be fair, reasonable and objective. In para 31 of the judgment the Honourable Apex Court has also held as follows: “31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where- (i) a finding is based on no evidence, or (ii) an arbitral tribunal takes into account something irrelevant to the decision which it arrives at; or (iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse. 34. In South East Asia Marine Engineering and Construction Limited case (supra) the Honourable Apex Court has held as follows: “28. In this context, the interpretation of Clause 23 of the Contract by the Arbitral Tribunal, to provide a wide interpretation cannot be accepted, as the thumb rule of interpretation is that the document forming a written contract should be read as a whole and so far as possible as mutually explanatory. In the case at hand, this basic rule was ignored by the Tribunal while interpreting the clause.” 35. In Chennai Container Terminal Pvt. Ltd., case (supra) this Court has held as follows: “37. From the judgment of the learned Single Bench, it is patently clear that the view taken by the Arbitral Tribunal was not only a possible view, it was a plausible view based on literal interpretation of the contract and, in our opinion, the correct view.
In Chennai Container Terminal Pvt. Ltd., case (supra) this Court has held as follows: “37. From the judgment of the learned Single Bench, it is patently clear that the view taken by the Arbitral Tribunal was not only a possible view, it was a plausible view based on literal interpretation of the contract and, in our opinion, the correct view. The learned Single Bench preferred a different interpretation by analysis of the correspondence at the time of execution of the contract, overlooking Article 1.03 of the Agreement, referred to above.” “54. The Supreme Court in P.R. Shah, Shares & Stock Brokers (P) Ltd. vs. B.H.H. Securities (P) Ltd. reported in : (2012) 1 SCC 594 , held that "A Court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in section 34(2) of the Act..... Therefore, in the absence of any ground under section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at." 36. In National Highways case (supra) the Honourable Supreme Court has held as follows: “40. It can therefore be said that this question has now been settled finally by at least 3 decisions of this Court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the ‘limited remedy’ under Section 34 is co- terminus with the ‘limited right’, namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996.” 37. In Delhi Airport Metro Express Pvt. Ltd., case (supra) the Honourable Apex Court has held as follows: “32. ... ... ... ... ... ...
In Delhi Airport Metro Express Pvt. Ltd., case (supra) the Honourable Apex Court has held as follows: “32. ... ... ... ... ... ... The Arbitral Tribunal in its award has clearly held that DMRC failed to cure the defects before the expiry of 90 days from the initial notice laying down the non-exhaustive list of defects issued on 09.07.2012. The said conclusion is the outcome of interpretation of Article 29.5.1 of the Concession Agreement by the Tribunal. An attempt was made by the learned Senior Counsel appearing for the Respondent to impress upon this Court that as the termination notice would become effective only after 90 days from the date of its issue, i.e., 08.10.2012, DMRC could avail this period as well to address the defects and if the defects stood cured or effective steps were taken within this additional 90-day period, the termination notice became defunct and should not be effectuated. Construction of a provision of the Concession Agreement is within the domain of the Arbitral Tribunal. The view taken by the Arbitral Tribunal that the defects have to be cured within 90 days from the date of the cure notice, failing which DAMEPL is entitled to terminate the Concession Agreement, is a possible interpretation of Article 29.5.1. We refuse to interfere with the findings of the Arbitral Tribunal on this point, even assuming a different view can be taken on a reading of the said Article.” In the above case the view taken by the Arbitrator is a possible representation, therefore, the same cannot be interfered. 38. Taking note of the settled position of law as discussed above, this Court is of the view the contract has to be read in entirety one clause cannot be read in isolation. Paragraph 2 and Clause (e) of the Article 3.12 and other clauses ought to have been construed in the context of the back ground on which clauses have been included. Therefore, such interpretation should be based on judicial approach should not be in arbitrary manner. The Arbitrator cannot supplant their own reasons ignoring the vital documents and evidence particularly to asses the nature of the expenses incurred which are meant to be paid by the Respondent who are the beneficiary of such service. Hence, this Court is of the view that the Award certainly suffers on the ground of patent illegality.
The Arbitrator cannot supplant their own reasons ignoring the vital documents and evidence particularly to asses the nature of the expenses incurred which are meant to be paid by the Respondent who are the beneficiary of such service. Hence, this Court is of the view that the Award certainly suffers on the ground of patent illegality. Therefore, Award relating to the interpretation of contract alone can be interfered as the same is severable. 39. Similarly, Issue No.11 though the Presiding Arbitrator concurred the First Co-Arbitrator in the final Award, it is made as if there was a unanimous decision of the three member Arbitral Tribunal. Whereas the Minority Award totally held against the Respondent. However, taking note of the Majority of the Award considering the fact that the Claimant has taken over 640 Sq.Mtrs of land, no alternative land has been provided and rent was also reduced and the fact that the First Co-Arbitrator has recorded the finding factually in this regard. Second Co-Arbitrator has also factually recorded that taking over the land of the Claimant. However, rejected the claim only on the ground that allotment of equal extent of land or in the alternative which will be done only by the amendment of agreement. However, the factual aspect of the reduction of the land has been recorded by the Second Co-Arbitrator. In such a view of the matter, this Court is of the view that the findings of the Arbitral Tribunal in respect of Issue No.11 does not require any interference. However, with regard to the Interpretation of Contract relating to the charges for the supply of electricity learned Presiding Arbitrator and First Co-Arbitrator have not considered the relevant documents and supplanted their own reasons and the contract has not been considered in its entirety. 40. In such a view of the matter, the Award relating to the Issue No.1 to 5 decided in the Arbitral Tribunal and it is reclassified as Issue No.3 by this Court while sending notice alone is set aside. It is open to the parties to go for fresh arbitration only in respect of the interpretation of contract relating to the charges to be paid for supply of the power alone. 41. Accordingly, the Original Petition allowed in part. Consequently the Application No.2155 of 2020 is closed.