Pattanaik, J. - (1.) Leave granted.
(2.) The West Bengal State Electricity Board is in appeal against the Judgment of the Division Bench of Calcutta High Court. The respondent is the licensee. The licensee on 27th of December, 1989 submitted an application to the Board for getting its consent for establishment of new Thermal Generating Station at Budge Budge and a Project Report was enclosed with the said application. Under Section 44 of the Electricity (Supply) Act, 1948 [hereinafter referred to as 'the Supply Act'], no licensee can establish a new generating station without the previous consent in writing of the Board. Under sub-section (2-A) of Section 44, the Board before giving consent to a licensee for establishing a new generating station, shall consult the Authority. The expression "Authority" has been defined in Section 2 (1) of the Supply Act to mean the Central Electricity Authority constituted under Section 3 of the Act. On 23-2-1990, the Board accorded sanction under Section 44 of the Supply Act for setting up a new generating station in Budge Budge with an installed capacity of 2 x 250 M.W. Units, operating on pulverised fuel fired boilers. The Board forwarded the Project Report to the CEA, requesting the authority to consider the proposal in the light of likely gap in system demand that would exist in the year 1995, after taking into account the plans of the Board to set up the Sagardighi Thermal Project, which was at that point of time awaiting techno-economic clearance from CEA. The CEA replied to the Board that issues may be resolved through Government of West Bengal and intimated that the techno-economic examination of the proposal was being withheld by CEA till the final views on the matter is conveyed by the Board. The Board in its letter dated 23rd of April, 1990, informed the CEA that the issues raised had been resolved and the consent already given may be treated as final and, therefore, CEA may take up the techno-economic examination. On 29th of January, 1991, CEA communicated its 'in principle' clearance to the Budge Budge Project, subject to certain conditions mentioned therein. It also informed that any clearance required under Section 44 of the Supply Act would be made after the Department of Power, Ministry of Energy, Govt. of India, clears the project. Finally on 11th of November 1991, CEA intimated its clearance of the Budge Budge Project under Section 44 of the Act at a total cost of Rs. 1285.70 crores, subject to the conditions mentioned in the letter. The licensee informed the CEA by its letter dated 23rd April 1992, indicating that there has been an enhancement of Project cost which stands revised to Rs. 2220 crores and requested the CEA to convey its approval, after examining the estimates and other required particulars. On 24th of April, 1992, a revised breakup of the Project cost was furnished to the CEA. The Government of India, Ministry of Power by its letter dated 21st October, 1992 intimated its approval of the revised financial plan for the project at Rs. 1638 crores, with certain conditions mentioned in the said letter. The CEA then wrote a letter to the Government of West Bengal on 26th of September, 1996 regarding escalation of the Budge Budge Project cost to Rs. 2220 crores and it was stated therein that the CEA has not received any revised cost estimates from the Board though the same was required under Section 44 of the Supply Act. The Board then called upon the licensee by its letter dated 4th of December, 1996 to furnish the detailed break-up of the cost estimates as well as the revised cost of the Project which was then at Rs. 2220 crores. The Government of West Bengal, through its Power Department also made correspondence with the licensee, seeking information as to whether the licensee has submitted the detailed proposal for revision of the Project cost, as required under Section 44 of the Supply Act and also further requested that the copies of the Project cost be furnished to the Government. On 17th of January, 1997, the licensee wrote to the petitioner Board, giving groupwise break-up of the escalated project cost as in July, 1996, amounting to Rs. 2220 crores and also intimated that the cost is being revised by the Financial Institution I.C.I.C.I. The licensee then informed the Board by letter dated 24th of February, 1997 that the revised cost which has been approved by the financial institution in January, 1997 work out at Rs. 2308 crores. On 30th of July, 1997, the Board sought for clarification, details and reasonings from the licensee, regarding the revised cost and those clarifications were duly communicated by the licensee to the Board. Unit I of the Project was commissioned on 15th of September, 1997 and on 20th of February, 1998, the licensee requested the Board to give its consent to the revised project cost at Rs. 2460 crores, as in the interregnum, the project cost had further got escalated. The Board then constituted a Committee for determining the quantum as to what would be the reasonable cost of the Budge Budge Project and the said Committee arrived at a figure at Rs. 1853 crores. On 22nd of May, 1998, West Bengal State Electricity Board approved the revised cost by Resolution at Rs. 1853 crores and the same was intimated to the licensee. Along with the Resolution the Committees Report also had been appended. On 4th of June, 1998 the Government of West Bengal, Department of Power, directed the Board to communicate the decision of the Board, approving the revised project cost under Section 44 of the Supply Act to the licensee. Finally on 11th of June, 1998, the Board intimated the licensee with regard to its approval of the revised project cost of Budge Budge Project at Rs. 1853 crores under Section 44 of the Supply Act and along with it forwarded the copy of the Report of the Committee and the Minutes of the Board's Resolution. Since entire project cost furnished by the licensee had not been approved by the Board, as stated earlier, the licensee wrote a letter to the CEA, requesting him to refer the dispute to the Arbitration under Section 44 (3) of the Supply Act. Before the CEA the licensee also filed his Statement of claims on 16th of December, 1998. The Board, on the other hand, filed an application under Section 16 (2) and 16(3) of the Arbitration and Conciliation Act, 1996 against the appointment of CEA as arbitrator, contending inter alia that the approval of the revised project cost was not contemplated under Section 44 of the Supply Act and, therefore, CEA had no authority to arbitrate on the dispute, if any. Board then filed an application under Section 13 (2) of the Arbitration and Conciliation Act, 1996, challenging the appointment of the Arbitral Tribunal. The arbitrator passed an Award on 13th of July, 1999 dismissing the applications filed by the Board under Section 13 and Section 16 of the Act. The Board then filed a writ petition in Delhi High Court, but that was withdrawn with liberty to file in the appropriate forum. Arbitrator then passed an award, determining the revised project cost at Rs. 2295.57 crores on 12th of January, 2000. Against the Award, an objection was filed by the Board, which was heard by a learned single Judge of the Calcutta High Cout. The objection was essentially on the ground that the dispute regarding escalated project cost would not be a dispute under Section 44 of the Supply Act and, therefore, provisions contained in Section 44(3) will not apply and consequently, the Award is without jurisdiction and a nullity. The licensee, on the other hand reiterated before the single Judge that the project cost as well as the revised project cost would be a matter coming under Section 44 of the Supply Act and, therefore, any dispute in relation to the same would be arbitrable under Section 44(3). It was also contended that all the parties namely the licensee, the Board, the State Government, as well as the Electricity Authority have understood that the project cost was the matter covered under Section 44 and, therefore, it would not be open for the Board to take a stand that such project cost is outside the purview of Section 44 and as such is not arbitrable under sub-section (3) of Section 44 of the Supply Act. The learned single Judge on an analysis of Section 44 of the Supply Act, was persuaded to accept the contention of the Board and held that the subject matter of arbitration was beyond the scope of the statutory provision under sub-section (3) of Section 44 and as such the award passed by the Electricity Authority is without jurisdiction and is liable to be set aside. The licensee being aggrieved by the aforesaid order of the learned single Judge, filed an appeal before the Division Bench and the Division Bench of Calcutta High Court by the impugned judgment, having allowed the appeal, on setting aside the conclusions and finding of the single Judge, the present appeal by grant of special leave has been filed in this Court by the Board.
(3.) Mr. V. R. Reddy, the learned senior counsel appearing for the appellant-Board, contended that on a plain reading of Section 44 of the Supply Act, it is difficult to comprehend that the approval of the project cost comes within the purview of the said Act and as such any dispute relating to the project cost, will not be a dispute arising out of the provisions contained in Section 44 and as such is not arbitrable under sub-section (3) of Section 44 of the Supply Act. Mr. Reddy further contended that it is true that the Board itself has approved and given its consent to the revised cost to the tune of Rs. 1853 crores, but that was under the pressure from the State Government and such decision of the Board cannot be construed to bring within the sweep of Section 44 of the Act, any dispute on the project cost. Mr. Reddy also urged that Section 44 of the Supply Act, confers power on the Board to give consent in writing for establishment of a new generating station or to extend or replace any major unit of plant or works pertaining to the generation of electricity in a generating station and under the proviso to sub-section (1) of Section 44, such a consent can be withheld within three months from the date of receipt of an application only under two contingencies, as provided in Clause (a)(i) and (ii). According to Mr. Reddy, on a fair reading of the provisions contained in Section 44 of the Supply Act, the question of approval of the project cost of a generating station, would not come within the ambit of Section 44 and as such, the Division Bench of Calcutta High Court committed serious error in holding that the dispute relating to the project cost is an arbitrable dispute under Section 44 (3) of the said Act.;