U.P. State Electricity Board v. M/s. Searsole Chemicals Ltd., (SC) BS14327
SUPREME COURT OF INDIA

Before:- S. Rajendra Babu and S.N. Phukan, JJ.

Civil Appeal No. 10014 of 1995. D/d. 21.2.2001.

U.P. State Electricity Board - Appellant

Versus

M/s. Searsole Chemicals Ltd. - Respondent

For the Appellant :- Mr. Ranjit Kumar, Sr. Advocate with Mr. Pardeep Misra and Mr. T. Mahipal, Advocates.

For the Respondent :- Mr. P.B. Menon, Sr.Advocate with Mr. Rohit Choudhary and Ms. B. Vijay Lakshmi Menon, Advocates.

Arbitration - Electricity supply - Deficiency in promised supply - Claim of damages on account of deficit in 24 hours promised supply - Supplier claiming exemption in accordance with special circumstances prescribed in the contract itself but failed to produce log books or any other materials before the arbitrators to indicate that the deficiency was covered within the circumstances prescribed - In the absence of such a material placed before the arbitrators, the court cannot embark upon an investigation on the basis of Govt. orders.

[Paras 5, 6 and 7]

JUDGMENT

S. Rajendra Babu, J. - An agreement was entered into between the appellant and the respondent for supply of electrical energy and by virtue of clause 1 of the agreement, the supply of electrical energy shall be "in form of a three-phase alternating current at a pressure of approximately 400 Volts between phases, a frequency of approximately 80 cycles per second and a power not exceeding 744.12 KVA and the supply shall be available continuously during the 24 hours of each day and throughout the whole period of this agreement, provided always that the supplier shall not be responsible for damages or otherwise on account of accidental interruption of supply or stoppage or deficiency of energy caused by any order or direction issued by the Government of Uttar Pradesh or resulting from fire, flood, tempest or any accident or from any strike or lock out of workman or from any other cause beyond the control of the supplier, but the supplier shall make every effort to restore the supply as soon as possible". On the ground that disputes arose between the appellant and the respondent, the matter was referred to the arbitration as provided in the agreement. The respondent in the claim statement made various claims for refund of the amounts paid under various bills and for various losses suffered on account of various acts of commission and omission of the appellant, details of which are set out therein. By their written statement the appellant refuted the various claims of the respondent.

2. On April 6, 1990 the arbitrators made an award for a sum of Rs. 1,74,338.98 by way of refund, while in regard to losses suffered on account of interruption in the power supply as a result of the negligence and acts of omission and commission by the appellant a sum of Rs. 24,00,000 was awarded with interest at 12% with effect from 12.11.1986 up to the date of the award and interest @ 6% per annum from the date of the award till the date of payment. In the Court of the Civil Judge the award was filed. Overruling the objections of the appellant, the Civil Judge made a decree in terms of the award against which an appeal was preferred to the High Court and which appeal having been dismissed, this appeal by special leave is filed.

3. Shri Ranjit Kumar, the learned Senior Advocate appearing for the appellant, submitted that the award made by the arbitrators is not within the scope of the agreement entered into between the parties inasmuch as the claim for damages would arise except in the circumstances arising in the proviso to clause 1 of the terms of agreement, to which we have adverted to at the very outset. Damages would not arise on account of interruptions, stoppage and deficiency caused by (i) accident, or (ii) by any order or direction issued by the Government of Uttar Pradesh, or (iii) resulting from fire, flood, tempest or any accident or from any strike or lock out of workman or from any other cause beyond the control of the supplier. Thus the principal contention addressed before us is that there is a guarantee of supply of electricity for 24 hours of a day but under the circumstances set out in the proviso supply could be interrupted without liability of paying damages and this aspect was not considered by the arbitrators. When this point was raised before the High Court, the High Court noticed the finding of the arbitrators that all log book were not made available and even where they were made available by the appellant were not complete and even did not give any reasons and, where they contained reasons, the same were not tenable. While recording findings in respect of issue Nos. 1 and 2 after assessing the evidence, the arbitrators came to this conclusion.

4. Before us the extracts of the log books have been produced and the reasons noted therein, for instance, are "Tripping, Shut down, Grid failure, Breakdown". The respondent wrote to the appellant seeking for clarification regarding the interruption in the power supply and there was no response to such correspondence at all. Taking this circumstance into consideration and after going through the documents produced by the parties, it was noticed by the arbitrators as follows:-

Shri Ranjit Kumar very strenuously contended that the relevant documents have been placed before the arbitrators and stated that except in regard to one station for some period, rest of the documents of the log books had been made available. However, as noticed by us, there were reasons set out in the log books or, as noticed earlier, those reasons, in the opinion of the arbitrators, were either not relevant or where they were relevant, they were untenable. Therefore, the view taken by the arbitrators cannot be characterised as not emanating from the agreement and falls squarely within the excepted part of the proviso to clause 1 of the agreement. When the arbitrators have applied their mind to the pleadings, the evidence adduced before them and the terms of the contract, we do not think, it is within our scope to re-appraise the matter as if this were an appeal, and it is clear that where two views are possible - in this case there is no such scope - the view taken by the arbitrators would prevail.

5. Shri Ranjit Kumar further pointed out that the interruptions in the power supply, if any, were on account of the Uttar Pradesh Electricity (Regulation of Supply Distribution, Consumption and Use) Order issued from time to time and, therefore, if there is any power cut effect at any time or staggering of the power supply, it was result of such order which fails within the scope of the proviso to clause 1 of the agreement. Clause 6 of the Order, which regulated the supply, reads as follows:-

6. The log books should have indicated or other materials should have been placed before the arbitrators to indicate that the heavy power tariffs received from the U.P. State Electricity Board should exercise 33⅓ per cent cut in the highest maximum demand recorded in any month during the 12 months from August 1978 to July 1979 and the manner in which the same should be regulated. Whether the amount of electricity was supplied to the respondent or not is also not clear from the records. In the absence of such material placed before the arbitrators, we cannot embark upon an investigation on the basis of this order of the U.P. Government.

7. Therefore, we think, the High Court is justified in having dismissed the appeal filed by the appellant, and we do not think that there is any justification for us to interfere with the award which was made the decree of the civil court and in appeal affirmed by the High Court.

The appeal, therefore, stands dismissed. However, in the circumstances of the case, the parties shall bear their respective costs.

Appeal dismissed.