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CASE NO.: Appeal (civil)  7522 of 2005

PETITIONER: M/s Transmission Corporation  of A.P. Ltd.

RESPONDENT: M/s Lanco Kondapalli Power  Pvt. Ltd.

DATE OF JUDGMENT: 15/12/2005

BENCH: S.B. Sinha & P.P. Naolekar

JUDGMENT: J U D G M E N T

[Arising out of S.L.P. (Civil) No.24857 of 2004]

S.B. SINHA,  J :

       Leave granted.

Background facts

The parties herein entered into a Power Purchase Agreement on  31.03.1997 for short gestation liquid fuel based power project of 355 MW.   

       The said agreement contained an arbitration clause  in Article 14  thereof.  Dispute

The Plant was commissioned.   In terms of the said agreement, the  power generated in the Plant constructed by the Respondent herein  was to  be supplied to the Appellant Corporation.  The price to be paid therefor by  the Appellant included ’capacity charges’ and ’variable charges’.  Upon  commission of the Plant, various tests as regard capacity of the plant to  generate electricity were carried out.  The Appellant herein had been paying  capacity charges on the output of the Plant which was fixed at 368.144 MW  from 08.11.2001.  A notice, however, was issued by the Appellant alleging  that the capacity charges payable by it with reference to the installed  capacity should have been fixed at 334.75 MW x Rh (relative humidity)  factor with tolerance limit of  + or \026 5% as per the agreement which works  out at 351.49 MW and on that premise as to why future payments should not  be made accordingly and why the previous bills should not be revised with  reference thereto.  The Respondent by a letter dated 17.12.2003 demanded  withdrawal of the said notice from the Appellant.   

Proceedings In view of the threatened action on the part of the Appellant herein, an  application purported to be under Section 9 of the Arbitration and  Conciliation Act, 1996 (for short, ’the 1996 Act’) was filed before the City  Civil Court praying for a permanent injunction restraining the Appellant  herein from taking any unilateral decision pursuant to the said show cause  notice.  Evidently, the said application was filed relying on or on the basis of  the arbitration clause contained in the said Power Purchase Agreement.

       The Appellant, however, filed an application before the Andhra  Pradesh  Electricity Regulatory Commission (for short, ’the Commission’)  originally constituted under the Andhra Pradesh  Electricity Reform Act,  1998 (for short, ’1998 Act’), praying, inter alia, for fixing the installed  capacity of the Plant and for consequential reliefs.  

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       The said application before the Commission was filed by the  Appellant herein on the premise that the Commission alone has the  jurisdiction to arbitrate in respect of disputes and differences arising between  the parties or to nominate an arbitrator therefor in terms of Section 37(1) of  the 1998 Act corresponding to Section 86(1)(f) read with Section 174 of the  Electricity Act, 2003 (for short, ’2003 Act’).  However, in the meantime, as  no arbitrator was appointed by the Appellant in terms of the arbitration  agreement contained in Article 14 of the Power Purchase Agreement, an  application purported to be under sub-sections (3) and (4) of Section 11 of  the 1996 Act was filed before the Chief Justice of the Andhra Pradesh for  appointment of an arbitrator.  The said application is still pending.  

A writ petition marked as Writ Petition No.7838 of 2004 was also  filed by the Respondent before the Andhra Pradesh High Court on or about  22.04.2004 praying for issuance of a writ of prohibition against the  Commission restraining it from proceeding to adjudicate the dispute between  the parties on the premise that the constitution of the Commission was  incomplete.  In the said writ petition, an interim order was passed by the  High Court directing "interim stay of the impugned proceedings purported to  be taken by Respondent No.1 (Appellant herein) in terms of the impugned  notice".  

The Respondent’s application for grant of injunction in the  proceedings initiated before the City Civil Court in the meanwhile was taken  up for hearing and by an order dated 11.08.2004, the said Interlocutory  Application was dismissed, holding that having regard to the provisions of  the 1998 Act and the 2003 Act, the Commission alone had the jurisdiction to  decide the dispute and not the City Civil Court.  

Contentions of the Appellant  An appeal thereagainst was preferred by the Respondent before the  High Court which was marked as Appeal No.3269 of 2004, wherein by  reason of the impugned judgment and order dated 05.10.2004, the High  Court while setting aside the said order of the City Civil Court granted an  injunction restraining the Appellant herein from refixing the capacity of the  Plant at 334.75 MW x Rh Factor at the site till disposal of the OP by the City  Civil Court.

       Mr. P.P. Rao, the learned Senior Counsel appearing on behalf of the  Appellant, would submit that the Respondent herein, although not being a  licensee within the meaning of the 2003 Act, was required to have a licence  as it supplied electrical energy to the Appellant herein.

       It was urged that in view of the provisions contained in the 1998 Act  and the 2003 Act, not only the jurisdiction of the Civil Court is barred, any  dispute and difference between the two licensees and/or two generating  companies can be referred to an arbitration of the Commission only, as  envisaged under Section 86(1)(f) of the 2003 Act and in that view of the  matter, the High Court committed a serious error in passing an order of  injunction.   

       It was submitted that both under the 1998 Act as also under the 2003  Act, the Commission had the requisite jurisdiction to pass an interim order  also and, thus, the said Acts are self-contained Codes.          Mr. Rao contended that the High Court despite findings of the City  Civil Court to the effect that it had no jurisdiction to pass an interim order in  terms of Section 9 of the 1996 Act, did not address itself to the said question,  could not have proceeded to allow the appeal preferred by the Respondent  herein and granted ad interim order of injunction only on the premise that  the jurisdiction of the Commission to proceed with the arbitration in terms of

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the reference made by the Appellant herein is subjudice.

Contentions of the Respondent         Mr. C.A. Sundaram, the learned Senior Counsel appearing on behalf  of the Respondent, on the other hand, submitted that Sections 37 and 50 of  the 1998 Act have no application to the facts of the present case as it is not a  case where a dispute between the two licensees is involved. The dispute  between the parties being confined to the interpretation of the expression  ’installed capacity’ within the meaning of the provisions of the agreement,  the  Commission which is primarily concerned with framing of tariffs and  adjudication of disputes between licensees and others as envisaged, inter  alia, under Section 9, 29 and 33 of the Act can be said to have no jurisdiction  to decide disputes and differences between the parties arising under an  agreement.  In view of the fact that the parties were ad idem as regard  construction of the said agreement as payments of the bills had been made  on the basis of the installed capacity 368.144 MW from 08.11.2001 to  10.12.2003, and having regard to the arbitration agreement contained in the  contract; without resolution of the dispute in terms thereof, the Appellant  could not have taken an unilateral action in changing the terms and  conditions thereof for the purpose of the payments of bills.   

       In any view of the matter, the Appellant itself having made the  following prayers before the Commission :

       "In the aforesaid facts and circumstances, the  Applicant prays that Hon’ble Commission may pass  appropriate orders in respect of the following :

a)      To fix the Installed Capacity of the plant,  M/s Lanco Kondapalli Power Limited, as 334.75 MW x  RH factor at the site Reference Conditions (as per PPA)  with tolerance limit of + 5%.

b) To allow AP TRANSCO to pay all future power  purchase bills (fixed charges, variable charges, Incentive  etc.) based on the capacity on 334.75 MW x RH factor  and as per all other provisions of PPA including tolerance  limit.

c)      To allow APTRANSCO  to revise all  previous power purchase bills (fixed charges, variable  charges incentive etc.) from inception based on the  capacity of 334.75 MW x RH factor and as per all other  provisions   of      PPA     including      tolerance      limit;   and thus cannot now turn round and contend that it would do so unilaterally  without any award made in that behalf.  The Respondent, thus, not only has  a prima facie case keeping in view that that a sum of Rs.132 crores is due to  the Respondent, the balance of convenience also lies in its favour.

Agreement         Clause 35 of Article 1 of the said agreement defines ’Installed  Capacity’ to mean :  

"the maximum electrical generating capacity of the  Project or a Generating Unit, as the case may be, in  megawatts ("MW") as measured at the generator  terminals, determined from time to time pursuant to the  tests given in Schedule F, subject to adjustments for the  Ambient Reference Conditions.

Explanation 1 : Where  the output of one or more  Generating Units of the Project or of the Project as a  whole, in final tests to be specified by the Board is higher  than the output initially guaranteed by the manufacturer  /supplier thereof, the output initially guaranteed by the

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manufacturer/supplier will be the installed capacity  thereof, as from the date of such final tests.  However,  where the output of one or more Generating Units of the  Project or of the Project as a whole, in final tests to be  specified by the Board is lower than the output initially  guaranteed by the manufacturer/supplier thereof, that  lower output alone will be the installed capacity thereof.

Explanation 2 : The installed Capacity furnished in the  Bid is taken as the nominal capacity and for installed  Capacity as determined as per Explanation 1 above, a  tolerance limit of plus or minus 5% is permitted."

The expression ’Project’ has been defined in sub-clause 47 of the said  agreement to mean :

"the combined cycle power station proposed to be  established at Kondapally, Krishna Dist., in Andhra  Pradesh, India, consisting of 2 (two) Generating  Units,  which are designed for poly-fuel-firing and 1 (one) steam  Generating Unit, having a nominal installed capacity of  355 Mega Watts (ISO) adjusted to Ambient Reference  Conditions."

Schedule A appended to the said agreement provides for the technical  limits, clause 3 whereof defines ’Dynamic Parameters’ to mean :

       "3.     Dynamic Parameters The Dynamic Parameters are the essential  operating characteristics which will define  the limits within which a Unit or the Project  is required to operate during normal  operation.

The Dynamic Parameters of each Unit and  the Project will initially be those projected  in the EPC Contract.  During testing under  the EPC Contract, the Company will  establish Dynamic Parameters and it will  supply details of these to the Board.  Subject  to the Dynamic Parameters being adjusted  and verified prior to the COD of each Unit  and the Project COD, the Dynamic  Parameters established by the Company  shall replace those projected in the EPC  Contract and shall be deemed incorporated  into this Schedule."

Relevant parts of Article 14 containing the arbitration agreement  between the parties read as under:

                       "Article 14

14.1    Information Dispute Resolution

(a)     Each party shall designate in writing to the other  party is a representative who shall be authorized to  resolve any dispute arising under this Agreement  in an equitable manner.

(b)     If the designated representatives are unable to  resolve a dispute under this Agreement within

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fifteen (15) days, such dispute shall be referred by  such representatives to a senior officer designated  by the Company and a senior officer designated by  the Board, respectively, who shall attempt to  resolve the dispute within a further period of  fifteen (15) days.

(c)     The parties hereto agree to use their best efforts to  attempt to resolve all disputes arising hereunder  promptly, equitably and in good faith, and further  agree to provide each other within reasonable  access during normal business hours to any and all  non-privileged records, information and data  pertaining to any such dispute.

14.2    Arbitration

       (a)     In the event that any dispute is not resolved  between the Parties pursuant to Article 14.1, then  such dispute shall be settled exclusively and finally  by arbitration.  It is specifically understood and  agreed that any dispute that cannot be resolved  between the parties, including any matter relating  to the interpretation of this Agreement, shall be  submitted to arbitration irrespective of the  magnitude thereof, and the amount in dispute or  whether such dispute would otherwise be  considered justiciable or ripe for resolution by any  court or arbitral tribunal.  This Agreement and the  rights and obligations of the Parties hereunder  shall remain in full force and effect pending the  award in such arbitration proceedings, which  award shall determine whether and when  termination of this Agreement if relevant shall  become effective.                 xxx                xxx                  xxx (f)     Any decision or award of an arbitral tribunal  appointed pursuant to this Article 14.2 shall be  final and binding upon the Parties and shall be the  sole and exclusive remedy between the Parties  regarding any claims, counterclaims, issues or  accountings presented or pled to the arbitrators.   The Parties waive any rights to appeal or any  review of such award by any court or tribunal of  the competent jurisdiction.  The Parties agree that  any arbitration made may be enforced by the  Parties against assets of the relevant Party  wherever those assets are located or may be found,  and judgment upon any arbitration award may be  entered by any court of competent jurisdiction  thereof.  The Parties expressly submit to the  jurisdiction of any such court.

(g)     All arbitration awards shall be denominated in  Indian Rupees.  If the arbitration award (or part  thereof) consists of any currency other than Indian  Rupees, then award (or part thereof) shall be  converted to Indian Rupees based on the  applicable market rate(s) of foreign exchange, not  exceeding such TT selling rate(s) as published by  the State Bank of India on the date of such  payment.  Interest at a rate equal to the Working  Capital Rate plus two percent (2%) shall be due  and payable to the Party on receipt of an  arbitration award from the date thirty  (30) days

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after the date such award is made pursuant to this  Article 14.2 through the date of payment.

(h)     Any arbitration proceedings or award rendered  hereunder and the validity, effect and  interpretation of this Article 14 shall be governed  by the laws of India and (to the extent applicable)  the New York Convention on the Recognition and  Enforcement of Arbitral Awards, June, 10, 1958,  to which England and India are parties.

(i)     The Parties agree that any amount due under this  Article 14.2 shall be due as a separate debt and  shall not be affected by or merged into any  judgment being obtained for any other sum due  under or in respect of this Agreement."                   

Statutory provisions :         The State of Andhra Pradesh enacted the Andhra Pradesh. Electricity  Reforms Act, 1998, for providing the constitution of an Electricity  Regulatory Commission, restructuring of the electricity industry,  rationalization of the generation, transmission, distribution and supply of  electricity avenues for participation of private sector in the electricity  industry and generally for taking measures conducive to the development  and management of the electricity industry in an efficient, economic and  competitive manner and for matters connected therewith or incidental  thereto.  

       ’Licensee’ has been defined in Section 2(e) of the 1998 Act as under :

"Licensee" or "licence holder" means a person licensed  under section 14 of the Act to transmit or supply energy   including APTRANSCO;"    

       It is not in dispute that the Commission was constituted in terms of the  Act.  Section 37 of the said Act contains a non-obstante clause stating that  notwithstanding anything contained in the 1996 Act, any dispute arising  between the licensees shall be referred to the Commission.  The Commission  may proceed to act as arbitrator or nominate arbitrator or arbitrators to  adjudicate and settle such disputes. Section 28 of the 1998 Act empowers the  Commission to issue an interim order as it deems proper for securing  compliance if it is satisfied that a licensee is contravening or is likely to  contravene any relevant condition or requirement of the licence.

       The 2003 Act came into force with effect from 26.05.2003.  Sub- section (64) of Section 2 of the said Act defines the State Commission to  mean, inter alia, the State Electricity Regulatory Commission constituted  under sub-section (1) of Section 82 thereof.  In terms of Section 82, a State  Government is enjoined with a duty to constitute  a commission within six  months from the appointed day.  The proviso appended to sub-section (1) of  Section 82, however, postulates that the commission earlier constituted shall  continue and its Chairperson, Members, Secretary and officers and other  employees shall continue to function for the purpose of the said Act.   Section 86 provides for functions of the State Commission.  Clause (f) of  sub-section (1) thereof empowers the State Commission to adjudicate upon  the disputes between the licensees and generating companies and to refer  any dispute for arbitration.  Section 158 of the said Act occurring in Part  XVI deals with dispute resolution, which reads as under :

       "158.  Arbitration.-Where any matter is, by or  under this Act, directed to be determined by arbitration,  the matter shall, unless it is otherwise expressly provided  in the licence of a licensee, be determined by such person  or persons as the Appropriate Commission may nominate

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in that behalf on the application of either party; but in all  other respects the arbitration shall be subject to the  provisions of the Arbitration and Conciliation Act, 1996  (26 of 1996)"    

       Sub-section (2) of Section 94 of the Act empowers the State  Commission to pass an interim order in any proceeding before it.  The Civil  Court’s jurisdiction is barred under Section 145 of the said Act which reads  as under :

       "145. Civil court not to have jurisdiction.-No civil  court shall have jurisdiction to entertain any suit or  proceeding in respect of any matter which an assessing  officer referred to in section 126 or on appellate authority  referred to in section 127 or the adjudicating officer  appointed under this Act is empowered by or under this  Act to determine and no injunction shall be granted by  any court or other authority in respect of any action taken  or to be taken in pursuance of any power conferred by or  under this Act."           In terms of the Section 185, the Electricity Regulatory Commissions  Act, 1998  was repealed but in terms of sub-section (3) thereof the  provisions of the enactments specified in the Schedule, not inconsistent  therewith shall apply to the States in which such enactments are applicable.   Item No.3 of the Schedule refers to the Andhra Pradesh  Electricity Reform  Act, 1998.    

Analysis of the agreement and the statutory provisions

The Appellant is a licensee within the meaning of both the 1998 Act  and the 2003 Act.   

The question as to whether the Respondent should have taken a  licence or permit under the 2003 Act or not is not a matter which requires  our immediate attention.  The Appellant is a licensee and the Respondent is  a generating company in terms of the provisions of the 2003 Act.  Section 37  of the 1998 Act deals with disputes between the licensees.  

Prima facie Section 50 of the 1998 Act, which bars the jurisdiction of  the Civil Court keeping in view the language employed therein, is required  to  be read with Section 37 thereof.  The resolution of the disputes between  the parties rests upon the proper interpretation of the said Power Purchase  Agreement and in particular the definition of ’installed capacity’.  Who  would arbitrate in respect of the said dispute is the principal question.  It is  no doubt true that in the event if it ultimately be held that the arbitration  clause contained in the contract between the parties dated 31.03.1997 stood  superseded in view of the provisions of the 1998 Act and the 2003 Act,  arguably, the question of Civil Court’s granting of an order of injunction in  terms of Section 9 or the High Court to determine the question as to who  should be appointed as an arbitrator, may not arise.  As to whether Section  86(1)(f) of the 2003 Act confers an exclusive jurisdiction to decide all  disputes and differences between a licensee and a generating company is  open to question.  It may or may not be that the said provision may have to  be read with other provisions contained in the power of the Commission to  resolve disputes between various parties as for example Sections 9, 20 or 29  thereof.  But it would be matter of construction of the relevant provisions as  to whether by reason of Section 86(1)(f) of the 2003 Act, the Commission  derives a power so as to enable it to arbitrate also in relation to a dispute  arising out an agreement although the Commission may not have any role to  play whatsoever in respect thereof.   

Determination  

       The learned Counsel for the parties, as noticed hereinbefore, have

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argued before us on the interpretation of the provisions of the relevant  statutes and agreement for determining the effect and purport thereof.

       As at present advised, however, we refrain ourselves from expressing  any opinion one way or the other having regard to the fact that the matter  ultimately must receive a detailed consideration at the hands of the High  Court both in the writ petition as also in the application filed by the  Respondent under Section 11 of the 1996 Act.

We do so  for the reason that recently a 7-Judge Bench of this Court in  M/s S.B.P. & Co. v. Patel Engineering Ltd. & Anr. [(2005) 9 SCALE 1]  overruling an earlier Constitution Bench Judgment of this Court in Konkan  Railway Corporation Ltd. & Anr. v.  Rani Constructions Pvt. Ltd. [2002) 2  SCC 388], held that the power of the Chief Justice or his nominee under the  1996 Act is a judicial power as opposed to the administrative power.  The  contention of the Appellant that the City Civil Court or for that matter the  High Court have no jurisdiction in terms of the 1996 Act, therefore, must  finally be determined  by the High Court itself.  Such a question indisputably  will also be a subject-matter of determination by the High Court in the writ  proceedings pending before it.

However, it is not a case where any dispute has arisen in respect of a  statutory function of the Commission to frame tariff and in that view of the  matter the decision of this Court in West Bengal Electricity Regulatory  Commission v. CESC Ltd. [(2002) 8 SCC 715] cannot be said to have any  application whatsoever.     

The ratio laid down in Grid Corporation of Orissa Ltd. v. Indian  Charge Chrome Ltd. [(1998) 5 SCC 438] whereupon Mr. Rao placed strong  reliance is not applicable in this case as therein it was found that the High  Court erroneously assumed that the Regulatory Commission had failed to  arbitrate under Section 37(1) of the 1998 Act, which was found to be  factually incorrect.

In A.P. Gas Power Corporation Ltd. etc. v. A.P. State Regulatory  Commission and Another etc. [(2004) 10 SCC 511], the question was as to  whether the Appellant therein was required to take, under the law,  a licence  for utilization/sale or supply of power generated by it to the  participating/shareholding  industries or to their sister concerns or the  industries to whom  the shares of  A.P. GPCL  have been transferred  by the  participating industries. It was held that such licence was necessary, stating  

"\005It would surely be a supply to a non-participating  industry and in that event it would be necessary to have a  licence under the relevant provisions of law. If there is  such a legal requirement, merely an agreement amongst  certain parties would not exclude the application of law.  Provisions of law regulating the situation, would prevail  over any kind of agreement amongst some individuals as  a group or otherwise. We are, therefore, of the view that  such a clause in the Memorandum of Understanding  would not do away with the requirement of having a  licence for supply of electricity generated by A.P. GPCL  to such concerns which may be under the same group as  the participating industries but not the participating  industries themselves."

The Respondent, therefore, has raised triable issues.  What would  constitute triable issues has succinctly been dealt with by the House of Lords  in its well-known decision in American Cyanamid Co v. Ethicon Ltd.  [(1975) 1 AER 504], holding :

       "Your Lordships should in my view take this  opportunity of declaring that there is no such rule.  The  use of such expression as ’a probability’, ’a prima facie

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case’, or ’a strong prima facie case’ in the context of the  exercise of a discretionary power to grant an  interlocutory injunction leads to confusion as to the  object sought to be achieved by this form of temporary  relief.  The court no doubt must be satisfied that the  claim is not frivolous or vexatious; in other words, that  there is a serious question to be tried."   

It was further observed : "Where other factors appear to be evenly balanced it  is a counsel of prudence to take such measures as are  calculated to preserve the status quo. If the defendant is  enjoined temporarily from doing something that he has  not done before, the only effect of the interlocutory  injunction in the event of his succeeding at the trial is to  postpone the date at which he is able to embark on a  course of action which he has not previously found it  necessary to undertake; whereas to interrupt him in the  conduct of an established enterprise would cause much  greater inconvenience to him since he would have to start  again to establish it in the event of his succeeding at the  trial.                         *       *       * The factors which he took into consideration, and in  my view properly, were that Ethicon’s sutures XLG were  not yet on the market; so that had no business which  would be brought to a stop by the injunction; no factories  would be closed and no workpeople would be thrown out  of work. They held a dominant position in the United  Kingdom market for absorbable surgical sutures and  adopted an aggressive sales policy."

       We are, however, not oblivious of the subsequent development of law  both in England as well as in this jurisdiction.  The Chancery Division in  Series 5 Software v. Clarke [(1996) 1 All ER 853] opined:

"In many cases before American Cyanamid the prospect  of success was one of the important factors taken into  account in assessing the balance of convenience. The  courts would be less willing to subject the plaintiff to the  risk of irrecoverable loss which would befall him if an  interlocutory injunction was refused in those cases where  it thought he was likely to win at the trial than in those  cases where it thought he was likely to lose. The  assessment of the prospects of success therefore was an  important factor in deciding whether the court should  exercise its discretion to grant interlocutory relief. It is  this consideration which American Cyanamid is said to  have prohibited in all but the most exceptional case. So it  is necessary to consider with some care what was said in  the House of Lords on this issue."

       In Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd. [(1999) 7  SCC 1], this Court observed that Laddie, J. in Series 5 Software (supra) had  been able to resolve the issue without any departure from the true  perspective of the judgment in American Cyanamid.  In that case, however,  this Court was considering a matter under Monopolies and Restrictive Trade  Practices Act, 1969.

       In S.M. Dyechem Ltd. v. Cadbury (India) Ltd. [(2000) 5 SCC 573],  Jagannadha Rao, J. in a case arising under Trade and Merchandise Marks  Act, 1958 reiterated the same principle stating that even the comparative  strength and weaknesses of the parties may be a subject matter of  consideration for the purpose of grant of injunction in trade mark matters

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stating :

"21\005Therefore, in trademark matters, it is now  necessary to go into the question of "comparable  strength" of the cases of either party, apart from balance  of convenience.  Point 4 is decided accordingly."

       The said decisions were noticed yet again in a case involving  infringement of trade mark in Cadila Health Care Ltd. v. Cadila  Pharmaceuticals Ltd. [(2001) 5 SCC 73].   

       We are, however, herein concerned with a different type of case.   Same standard would be applicable in a case involving Section 9 of the 1996  Act.

       In this connection, we may notice a decision of this Court in Firm  Ashok Traders and Another v. Gurumukh Das Saluja and Others [(2004) 3  SCC 155].  Although therein the applicability of the arbitration agreement  was in question having regard to a Constitution Bench decision of this Court  in Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd. [AIR 1964 SC  1882], this Court maintained an order appointing a Receiver albeit with  certain modifications on the premise that the right arising from the  partnership deed or conferred by the Partnership Act is being enforced in the  Arbitral Tribunal; the court under Section 9 is only formulating interim  measures so as to protect the right under adjudication before the Arbitral  Tribunal from being frustrated.

       We have referred to Firm Ashok Traders (supra) not because we agree  with the principle laid down therein but only to suggest that Section 9 of the  1996 Act should be applied so that status quo may be directed to be  maintained having regard to the fact that the parties understood the  workability of the agreement in a particular manner.

A writ court can also grant injunction in exercise of its power under  Article 226 of the Constitution of India.  If injunction is refused in this  proceeding, the interim order passed in the writ proceedings shall continue.   It may give rise to a stalemate.  It may violate the well-known rule of  judicial comity.    

       In ’A Treatise on The Law Governing Injunctions’ by  Spelling and  Lewis’ it is stated :                  "Sec. 8. Conflict and Loss of Jurisdiction. Where a court having general jurisdiction and having  acquired jurisdiction of the subject-matter has issued an  injunction, a court of concurrent jurisdiction will usually  refuse to interfere by issuance of a second injunction.   There is no established rule of exclusion which would  deprive a court of jurisdiction to issue an injunction  because of the issuance of an injunction between the  same parties appertaining to the same subject-matter, but  there is what may properly be termed a judicial comity  on the subject.  And even where it is a case of one court  having refused to grant an injunction, while such refusal  does not exclude another coordinate court or judge from  jurisdiction, yet the granting of the injunction by a  second judge may lead to complications and retaliatory  action\005"    

       The High Court, therefore, while noticing the interim order passed in  the writ proceedings may have the said principle in mind.

       In Wander Ltd. and Another v. Antox India P. Ltd.  [(1990) Supp.

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SCC 727], it is stated :                  "The interlocutory remedy is intended to preserve in  status quo, the rights of parties which may appear on a  prima facie case. The court also, in restraining a  defendant from exercising what he considers his legal  right but what the plaintiff would like to be prevented,  puts into the scales, as a relevant consideration whether  the defendant has yet to commence his enterprise or  whether he has already been doing so in which latter case  considerations somewhat different from those that apply  to a case where the defendant is yet to commence his  enterprise, are attracted."

[See also M/s Power Control Appliances and Others v. Sumeet  Machines Pvt. Ltd. [(1994) 2 SCC448 ].

The interim direction ordinarily would precede finding of a prima  facie case.  When existence of a prima facie case is established, the court  shall consider the other relevant factors, namely, balance of convenience and  irreparable injuries. The High Court in its impugned judgment although not  directly but indirectly has considered this aspect of the matter when on merit  it noticed that the Appellant has raised a dispute as regard payment of an  excess amount of  Rs.35 crores although according to the Respondent a sum  of Rs.132 crores is due to it from the Appellant and the Appellant had been  paying the amount for the last two years as per the contract.

Conduct of the parties is also a relevant factor.  If the parties had been  acting in a particular manner for a long time upon interpreting the terms and  conditions of the contract, if pending determination of the lis,  an order is  passed that the parties would continue to do so, the same would not render  the decision as an arbitrary one, as was contended by Mr. Rao.  Even the  Appellant had prayed for adjudication at the hands of the Commission in the  same manner.  Thus, it itself thought that the final relief would be granted  only by the Arbitrator.

The Commission is yet to apply its mind.  Even before the  Commission, the Appellant has not made any application for a direction in  terms of sub-section (2) of Section 94 of the Act.

The Respondent has installed the Power Generation  Plant.  It has  continuously been supplying electrical energy to the Appellant.   Indisputably, it has to discharge its contractual obligation.  The Appellant  being the only consumer, the Respondent has no other option but to supply  electrical energy to it.  In the event, the dispute is referred to the arbitrator,  the equity between the parties can be adjusted.  Without going into the  correctness or otherwise of the claim of the Respondent, we may notice, that  according to it, the Appellant owes a hefty sum of Rs.132 crores to it.   According to the Appellant, in the event, the disputes and differences  between the parties are determined in its favour, it may be held, that it has  paid an excess sum of Rs.35 crores only.

Clause 2 of Article 14 postulates that pending arbitration, the rights  and obligations of the parties shall remain in full force and effect pending  the award in such arbitration proceedings, which award shall determine  whether and when termination of the said agreement if irrelevant shall  become effective.

It is now well-settled that this Court would not interfere with an order  of the High Court only because it will be lawful to do so.  Article 136 of the  Constitution vests this Court with a discretionary jurisdiction.  In a given  case, it may or may not exercise its power.  The question came up for  consideration before this Court in Chandra Singh and Others v. State of  Rajasthan and Another [(2003) 6 SCC 545] wherein it was observed:

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"42. In any event, even assuming that there is some force  in the contention of the appellants, this Court will be  justified in following Taherakhatoon v. Salambin Mohd.  wherein this Court declared that even if the appellants’  contention is right in law having regard to the overall  circumstances of the case, this Court would be justified  in declining to grant relief under Article 136 while  declaring the law in favour of the appellants."

[See also State of Punjab v. Savinderjit Kaur, (2004) 4 SCC 58]

The said principle was reiterated in N.K. Prasada v. Government of  India and Others [(2004) 6 SCC 299] stating:

"\005It is trite that in a given case, the Court may refuse to  exercise its discretionary jurisdiction under Article 136 of  the Constitution."  

In Inder Parkash Gupta v. State of J&K and Others [(2004) 6 SCC  786], it was stated:

"42. In ordinary course we would have allowed the  appeal but we cannot lose sight of the fact that the  selections had been made in the year 1994. A valuable  period of 10 years has elapsed. The private respondents  have been working in their posts for the last 10 years. It  is trite that with a view to do complete justice between  the parties, this Court in a given case may not exercise its  jurisdiction under Article 136 of the Constitution of  India."

The same principle has been reiterated in State of Uttaranchal  Through Collector, Dehradun and Another v. Ajit Singh Bhola and Another  [(2004) 6 SCC 800] wherein it was stated:

"9\005Having regard to the manner in which the District  Magistrate took over possession of the premises, which  appears to us as at present advised, to be high-handed,  arbitrary and without any legal sanction we are not  persuaded to exercise our discretion under Article 136 of  the Constitution of India to set aside the interim order  passed by the High Court. It is well settled that this Court  will not exercise its discretion and quash an order which  appears to be illegal, if its effect is to revive another  illegal order."

We, therefore, are of the opinion that it is not a fit case where  interference with the High Court’s judgment would be a proper exercise of  jurisdiction under Article 136 of the Constitution of India.   

We would, however, request the High Court to consider the  desirability of hearing both the writ petition as also the petition under  Section 11 of the 1996 Act filed by the Respondent herein as expeditiously  as possible and preferably within a period of six weeks from the date of  communication of this order.   

It goes without saying that all the contentions of the parties shall  remain open and any observation made by the High Court in the impugned  order or by us herein must be considered to have been made for the purpose  of disposal of the interim prayer.                  

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The appeal is dismissed.  No costs.