Salil Kumar Roy Chowdhury, J. - (1.) This is an application under section 33 of the Arbitration Act, inter alia, for determination of the scope and effect of an arbitration agreement dated the 28th of January, 1960, as modified by the letter dated the 12th December, 1960, and 14th of January, 1961 and the jurisdiction of the Umpire to decide and entertain the questions referred to including the counter-claim and also for remitting the matter to the Umpire after giving directions.
(2.) The facts of the case appears to be that by an agreement dated the 28th of January, 1960, entered into between Indian Refineries Ltd. (predecessor-in-interest of the petitioner) and the Respondent, Industrial Gases Ltd. as modified by two subsequent letters dated the 12th of December, 1960 from the said Indian Refineries Ltd. to the Respondent and a letter dated the 14th of January, 1961 from the Respondent to the said Indian Refineries Ltd. The petitioners predecessor-in-interest agreed to supply electricity and colling water on the terms and conditions contained in the said agreement as modified. The Respondent also agreed to provide sewage disposal facilities connected with the Refineries sewage at the cost of the said Indian Refineries Ltd. if requested. The said agreements was for a period of 25 years. In September, 1964, the petitioner, Indian Oil Corporation was formed by amalgamating the Indian Refineries Ltd and Indian Oil Corporation Ltd. and it took over the assets and liabilities of the amalgamated companies and as such the petitioner became entitled to the full benefits of the said agreement with the Respondent. It appears that the rate originally chargeable for electricity supplied by. the petitioner (predecessor-in-interest) for the supply of electricity to the petitioner which was obtained exclusively from the Assam State Electricity Board. Subsequently, the petitioner arranged its own generating facilities at its Gauhati Refinery aDd commence supplies of electricity generated by it to the Respondent. The Assam State Electricity Board also claimed substantial increase in the rate of electricity supplied by it to the petitioner and disputes arose between the petitioner and the Assam State Electricity Board in relation to the rate chargeable for bulk supplies by the Assam State Electricity Board to the petitioner. In the meantime, a dispute also arose between the petitioner and the Respondent as to the rate of electricity charges payable for electricity supplied by the petitioner to the Respondent pursuant to the said agreement as modified. The matter of the disputes were as to whether the provisions of the said letter dated the 12th of December, 1960 applied only to supplies of electricity prior thereto and also to supplies subsequent thereto, and if so, whether the provisions thereof applied only to the cost of electricity supplied by the Assam State Electricity Board or also applied to the cost of electricity generated by the petitioner and supplied to the Respondent, and in either event, what was the method of circulation and procedure for billing and the time within which such bill to be paid by the Respondent and whether the Respondent was liable to pay interest for the arrears of charges of electricity. In addition, the dispute also arose in respect of charges for maintenance and service of sewage line and also cost of sewage line. After protracted correspondence between the parties the disputes were agreed to be referred to arbitration in terms of the arbitration clause in the contract as evidenced by the petitioners letter dated the 7th of September, 1968 and the Respondents letter dated the 14th of September, 1968. The parties appointed their respective Arbitrators to adjudicate the said two disputes and the Arbitrator entered upon the reference and appointed an Umpire on the 30th of July, 1969. On the 30th of August, 1969, the petitioner filed the statement of claims relating to the said two disputes and claimed an amount accrued up to 31st of March, 1969, and with a submission to direct the Respondent to pay the petitioners bills for supplies and services rendered after the said period also after deciding the principles governing the rate and charges to be paid to the petitioner by the Respondent. The Respondent filed its counter-statement on the 10th of March, 1970 making a counter-claim which is alleged to be unconnected with the said two disputes and contrary to the agreement between the parties for reference to arbitration. The petitioner filed a rejoinder disputing the alleged counter-claim of the Respondent. Thereafter, it appears that the Arbitrator appointed by the petitioner resigned by his letter dated the 25th/29th of May, 1971. Thereafter, the General Manager of the petitioner by his letter dated the 16th of June, 1971 appointed another arbitrator in place and stead of the out going Arbitrator. It further appears that the time to make the award by the Arbitrators expired which was extended from time to time till 4th of July, 1972. The two Arbitrators having differed on the question of admissibility of the counter-claim of the Respondent within the purview of the reference, the matter was referred by the Arbitrators to the Umpire by their letter dated the 8th of June, 1972. The Umpire duly entered upon the reference which is still pending. It appears that subsequent to the disputes between the parties were referred Co arbitration several bills in respect of the supplies of electricity to the Respondent by the petitioner became due and payable but the Respondent restricted the payment only to the amount payable by them according to their own calculation and left a huge balance outstanding which were payable according to the calculation of the petitioner. It further appeals that the Respondent by their letter dated the 4th of April, 1973 intimated the petitioner that as the question of alleged balance amount accumulated during the pendency of the arbitration was sub-judice before the Umpire, they were not in a position either to pay or to make any comment thereon. The petitioner by its Solicitors letter dated the 13th of March, 1974 filed before the Umpire sought permission to file a supplementary statement in respect of its claim for supplies of electricity and charges for sewage lines, maintenance and service during the pendency of the arbitration. On the preference held on the 13th of March, 1974, the Umpire stated that the matter would be decided at a subsequent date On the 2nd of April, 1974 the Umpire after hearing the contention of both the parties held that he had no jurisdiction to entertain the claim of the petitioner for the subsequent period after the reference to arbitration was made. The petitioner through its Solicitors letter dated the 9th of December, 1974, requested the Arbitrator to file its said decision dated the 2nd of April, 1974, by way of an interim award. The Umpire after bearing both the parties on the 4th of December, 1974 ordered that his decision dated the 2nd of April, 1974 cannot be treated as an interim award and as such cannot be filed. The petitioner thereafter, on the 14th of February, 1975 made this application and after directions for filing affidavits were given, the parties filed their respective affidavits and the matter ultimately was heard.
(3.) Before dealing with the contention of both the parties, it will be convenient to set out the relevant portion of the agreement dated the 28th January, 1960 and the modification thereof by the letters dated the 12th of December, 1960 and 14th of January, 1961, the Respondent is described as the "Suppliers" and the predecessor-in-interest of the petitioner is described as the "Buyers".............. "3 The Buyers agree to provide the Suppliers at the Refinerics site at Gauhati suitably levelled and plot of land duly demarcated on lease for a period of 25 years at a reasonable rent to be agreed upon, only for the specific purpose of production of oxygen and acetylene gases and by products and accessories and ancillary buildings and the Suppliers shall have no right to sublet the entire or any portion of this land to any other party. the area should measure about 1-1/2 acres near the main road with direct access to it. The Buyers also agree to supply to the suppliers at their factory electric power supply of 150 KW capacity, electrical energy at 440 volts three phase and colling water as required by the Suppliers at cost prices of the Buyers which quantities are to be measured by means of meters to be further installed at Suppliers factory by the Buyers at Buyers cost. The Buyers further agree to provide sewage at the Suppliers cost if requested by the suppliers. All the above facilities will be made available to Suppliers for the contracted period of 25 years provided the Buyers continue to operate the Refinery for the period." "20. Arbitration : All disputes arising out of this Agreement or incidental thereto shall be referred to arbitration of two persons one to be appointed by each party. The said arbitrators shall appoint an Umpire before entering into the arbitration. The award of the arbitrators or the Umpire as the case may be, shall be final and binding upon the parties. The arbitration proceedings shall be conducted under the provisions of the Indian Arbitration Act, 1948 and the vanue of the arbitration proceedings shall be mutually agreed upon. Signed at Gauhati this date 28th of January, one thousand nine hundred and sixty. JUDGEMENT_50_LAWS(CAL)7_1975_1.html Relevant portion of the letter dated the 12th of December, 1960 written by the predecessors-in-interest of the petitioner to the Respondent : "It has been further agreed that the cost of electricity which I. R. L. charge from I. G. L., shall not be higher than the bulk rate which I. R. L. pay to Assam State Electricity Board plus five percent thereon". (here I. R. L. means Indian Refineries Ltd. and I. G. L. means Industrial Gases Ltd.) Ultimately, the disputes were referred to arbitration and from the statement of claim by the petitioner, it appears that dispute regarding the payment of electricity charges related to the period from 1st of April, 1962 up to the date i. e., 31st of March, 1969 and also a claim regarding the cost of sewage system and service and maintenance charges of the same up to 31st of March, 1969. The Prayer in the said statement of claim filed by the petitioner are, inter alia, as follows:- "(a) A sum of Rs 3,24,513.51 (Rupees three lakhs twenty four thousand, five hundred thirteen and paise fifty one) be awarded against outstanding bills towards electricity supplied during the period 1.4.62 to 31.3.69, vide details in Annexure in Schedules 1 and 2. (c) The second party be directed to settle bills in future promptly and regularly with 30 days of their presentation on the basis of the cost of generation or the rate at which the first party pays to Assam State Electricity Board plus 5% thereon which over is less, and that, for this purpose certificates issued by the Chief Accounts Officer of the first party should be accepted by the second party as adequate." The Respondent in their counter statement, inter alia, denying the claim of the petitioner as being time barred and also the method and manner and procedure for calculation of the rate to be charged by the petitioner in respect of the said supplies of electricity, the Respondent also made a counter-claim alleging that the Respondents paid the bills for supplies of electricity by the petitioner in full and thereby, made an over payment of sum of the bills under pressure and coercion and annexed a copy of the alleged excess payments made by the Respondent being annexure "D" to the counter-statement. Beside the said counter-claim the Respondent also made a claim on account of alleged loss or damages suffered by it on account of alleged stoppage of power supply by the petitioner to the Respondent and also to the supplies of electricity at a lower capacity than the agreed capacity pursuant to the said agreement dated the 28th of January, 1960 and also damages for non-supply of cooling water by the petitioner to the Respondent and other claims for alleged breach of the terms of the agreement by the petitioner and the Respondent also asked for award in respect of their alleged counter-claims as would appear from the prayers in the said counter-statement filed by the Respondent before the arbitrators by its letter dated the 10th of March, 1970 and annexed to the petition at page 36. The petitioner filed a rejoinder dated the 31st of March, 1970 before the arbitrators which is annexed to the petition and are at pages 48 to 61. Thereafter, the Arbitrators by their order dated the 8th June, 1970 as appearing from the minute of the meeting of the Arbitrator held on that date, formulated the points of difference as follows and referred the same to the Umpire. The said Order is annexed to the petition at page 66 which is set out hereunder. (Copy) Before The Arbitrators Shri H.B. Sahai and Shri H.L. Gupta In The Matter Of Arbitration In The Disputes Between Indian Oil Corporation Gauhati Refinery And The Industrial Gases Limited 15, Ganesh Chandra Avenue, Calcutta. JUDGEMENT_50_LAWS(CAL)7_1975_2.html Both the parties are represented by their respective representatives, namely Mr. Bitharia for Claimants and Mr. T. S. Mundra and Mr. T. K. Majumdar for Respondents. The Claimants are also represented by their Counsel Mr. Chakravarti and Mr. Mondal. Since the parties did not come to any agreement about making a fresh joint reference either confining the reference to the two disputes originally raised by the claimants or including some other disputes raised by the Respondents in their Counter-Statements and since the parties did not take any step so far to revoke our authority as suggested in our order Serial No. 4 dated 26.1.1972 we noticed the parties to hear again finally today and to chalk out the future course of action in this proceeding. We have already expressed the situation created by certain actions of the parties and our differences due to existence of those circumstances in our order dated 26.1.1972. It was however, submitted on behalf of the Claimants that as our order dated 26.1.1972 is not very clear-regarding differences of opinion between us, a clear order indicating points of differences should be passed and the matter should be referred to the Umpire for his decision. The same action was also suggested in the letter dated 10.5.72 bearing No. GA/A/Misc./16/III of the Claimants. We have, therefore, decided to record our paints of differences hereunder and to refer the same for the decision of the Umpire, Shri P. K. Sarkar retired Judge, High Court residing at P-385, Keyatolla Street, Calcutta 29 for his decision. Points of differences : 1) Whether we should decide only the two disputes raised in the letter dated 7th of September, 1968 bearing No. GA/68 of the Claimants ? 2) Whether we should decide those two disputes raised by the Claimants and any or all the disputes raised by the Respondents in their Counter-Statements dated 10th of March, 1970 ? The parties are requested to make available copies of their pleadings and correspondence to the Umpire. Sd/- Sd/- (H.B. Sahai) Arbitrators (H.L. Gupta) After the Arbitrators referred the matter to the Umpire by their said order dated the 8th of June, 1972, the Umpire entered into the reference and on the 2nd of April, 1974, the Umpire, inter alia, decided that claim for the subsequent period for electricity charges claimed by the petitioner was not within the scope of the reference before the Umpire and as such beyond his jurisdiction. It will be convenient to set out the material portion of the order dated the 2nd of April, 1974 passed by the Umpire which is at page 82 of the petition : "In view of this objection and opposition and having regard to the letters which gave rise to this arbitration, I am inclined to accept his view and I hold that the claim for the subsequent period is not within my jurisdiction to decide in this proceeding. The claimants can avail themselves of all legal means open to them. This order is without prejudice to any contention that may be raised hereinafter by both parties with regard to the claim or any portion of it included in this arbitration proceeding." Thereafter, on the 19th of November, 1974, the petitioner through its Solicitor requested the Umpire to file the said decision dated the 2nd of April, 1974 under section 14 of the Arbitration Act as an interim award under section 27, but the Umpire in his sitting dated the 4th oi December, 1974, after hearing the parties decided that his order dated the 2nd of April, 1974, can never be treated as interim award. The minutes of the said meeting dated the 4th of December, 1974, is annexed to the petition and is at page 84 and it will be convenient to set out the minutes of the said meeting hereunder:- (COPY) Minutes Of The Sitting Held On Wednesday 4th December, 1974 At 6 30 P.M. At The Residence Of The Umpire. In the Matter of Arbitration Between Indian 0il Corporation (Refinery) and Industrial Gases Limited Present : 1. Mr. P. Sarkar, Umpire. 2. Mr. R.L. Sinha, Counsel with Mr. R. N. Ghose, Solicitor for the Claimant. 3. Mr. M. K. Banerjee and Mr. A. N. Ganguli, Counsel with Mr. S. B. Mondal, Solicitor and Mr. Venkateswaralu and Mr. Dhanuka for the Respondent. 4 Stenographer. ....... .......... ............ ........... The respondents Solicitor, Mr. S. B. Mondal, sent to me a letter containing their objections to the letter of Mr. R. N. Ghose referred to in the last order. The same is placed before the learned Counsel today a.id the matter is fully argued. The only short question remains for me to decide is whether my order dated 2nd of April, 1974 can be treated as an interim award. As the order itself makes it clear this was an order holding that the claim regarding the rates of electricity for the period subsequent to March 31, 1959 cannot be considered by me as not being within my jurisdiction. The objection petition of the respondent has also contended that there was never any reference of the dispute concerning this subsequent claim to me. There has been no arbitration proceedings also in respect of this alleged claim. An interim award under section 27 of the Arbitration Act can only be made in respect of the dispute decided by the Arbitrators or the Umpire within their jurisdiction. As I have held that the matter regarding the subsequent claim is not within my jurisdiction I am unable to make an interim award under section 27 of the Arbitration Act. The order dated 2nd April, 1974 can never be treated as an interim award. Mr. Sinha submits that a reference may be made in the order to the fact that he again claimed that the letters of the respondent addressed to the claimant on April 4, 1973 and also on November 18, 1972, referred to in my order dated 2nd of April, 1974 constituted an estoppel against the respondent and, in any event, gave the Umpire jurisdiction to deal with the claim. This point has already been decided by me in my order dated 2nd of April, 1974 holding that the matter is not within my jurisdiction and cannot be reopened as submitted by Mr. Banerjee and I am only making a reference of the argument in pursuant of the submission of Mr. Sinha. The meeting has lasted for an hour and a half. The parties should pay my fee for the day amounting Rs. 200/- on the next day in equal shares, and I. O. C. should pay Rs. 100/- more on that day for the sitting held on 27th November, 1974. The sitting fixed on 10th of December, 1974 will be held on 12th December, 1974 at 6 30 p. m. when Nr. Nayar should remain present for recording his deposition. Sd/- (P. K. Sarkar) Umpire As would appear from the said minutes of the sitting of the Umpire dated the 4th December, 1974, or Respondents letters dated the 18th of November, 1972 and 4th of April, 1973 are practically the basis of the petitioners contention as to the enlargement of the scope of the reference and conduct constituting estoppel against the respondent as to the Umpire jurisdiction to deal with the subsequent claim. It will be convenient to set out the said three letters hereunder. The letter dated the 18th of November, 1972 is annexed to the affidavit-in-opposition affirmed by Sardar Singh Bapna on the 22nd of March, 1975. GTI/14/20824 Registered A. D. 18.11.1972 Indian Oil Corporation Limited, Gauhati Refinery, Gauhati-20 Assam. Re : Accounts, Dear Sirs, We are in receipt of your letter No. A/Misc./16/371-73 dated 13th November, 1972 along with details of your alleged but standing against us. We do not admit that any amount mentioned in your above letter is payable by us. We are paying your electricity charges in accordance with our agreement with you regularly and we deny that we are making only part payment against your letters as alleged by you. Yours faithfully, For The Industrial Gases Limited Sd/- Asstt. Secretary. The petitioners reply to the said letter dated the 28th of March, 1973 and is at page 69 of the petition which is as follows (Copy) Regd. Annexure-B No. A/Misc./16/744 Dated 28. 2. 83. M/s. Industrial Gases Ltd., 15, Ganesh Chandra Avenue, Post Box No. 853. Calcutta. Ref. Your letter No. GTI/14/20824 dated 18.11.1972 Dear Sirs, With reference to your above letter we are to inform you that the clarification given about the outstanding debit balance against you vide our letter No. A/Misc./16/371-73 dated 13.11.1972 is correct. It is fact that we have regularly raised bills on you for supply of electricity. After acknowledging receipt of our such bills you have been making payment again the bills keeping a substantial balance from each bill. Hence there remains always a debit balance of each bill and the accumulated debit balance of each such bill upto 31. 3. 1972 amounts to Rs. 5,04,154 22 on account of supply of electricity. Another bill No. A/Misc./WE/66-67/308 dated 31. 3. 67 for supply of water for Rs. 254.15 has not been paid yet by you. Hence the total outstanding debit balance against your account on 31.3.72 is Rs. 5,04,408.37. You are, therefore, requested to clear the above outstanding before 31. 3. 73. Yours faithfully, for and on behalf of Indian Oil Corporation Limited Sd/- (G. N. Barua) Accounts Officer. And letter dated the 4th of April, 1973 is annexed to the petition and is at page 70 (Copy) The Industrial Gases Limited 15, Ganesh Chandra Avenue Post Box 853 Calcutta-1. Our Ref. GTI/I4/6150 4.4.1973 Accounts Officer, Indian Oil Corporation Limited, Gauhati Refinery, Gauhati 20 Dear Sir, We are in receipt of your letter No. A/Misc./16/744 dated 28th March, 1973. We do not admit the liability as mentioned by you. The subject-matter is already sub-judice being pending before an Umpire. We, therefore, refrain from writing anything more than what we have stated in our letter No. GIT/14/20824 dated 18.11.1972. Yours faithfully, for the Industrial Gases Limited Sd/- (Asstt. Secretary) It appears that on the 13th of March, 1974, the petitioners Solicitor by his letter addressed to the Umpire submitted a statement in respect of the claim in the subsequent period from 1st of April, 1969 to 31st of March, 1973. The said letter is annexed to the petition and is set out hereunder. (COPY) Sri P. K. Sarkar, The Umpire MARCH 13, 1974 Sir, Arbitration between Indian Oil Corporation Ltd , and The Industrial Gases Ltd. In continuation of the claim of Indian Oil Corporation Limited against the opposite party. The Industrial Gases Ltd. for the period 1962-69, I am submitting herewith a further claim of my clients Indian Oil Corporation Ltd., Gauhati Refinery on account of dues repayable from the opposite party. The Industrial Gases Ltd. for the period 1st April, 1969 to 31st March, 1973. The claim is being submitted herewith in the form of statements of Claim along with Annexure thereto numbering 184 pages. As soon as the aforesaid claim is allowed to be filed in this proceeding we shall forward a copy of the same to the Opposite Party. Yours faithfully, Sd/- (R.N. Ghose) Thereafter, the respondent rafted the dispute as to the arbitrators jurisdiction to entertain the subsequent claim as the same was beyond the scope of the reference and the Arbitrator decided that it had no jurisdiction in respect of the claim of the petitioner for the subsequent period by his order dated the 2nd of April, 1974 which has been set out before. This application was filed on the 29tb of February, 1975 under section 33 of the Arbitration Act for determination of the scope and effect of the arbitration agreement and deciding the Umpire jurisdiction entertain the subsequent claim of the petitioner and consider the counterclaim of the respondent in the reference before him and for remitting back its matter to the Umpire to proceed with the reference in accordance with the order and/or direction to be given by the Court.;