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CASE NO.: Appeal (civil) 10014  of  1995

PETITIONER: U.P.  STATE ELECTRICITY BOARD

       Vs.

RESPONDENT: M/S SEARSOLE CHEMICALS LIMITED

DATE OF JUDGMENT:       21/02/2001

BENCH: S. Rajendra Babu & S.N. Phukan.

JUDGMENT:

J  U  D  G  M  E  N   T RAJENDRA BABU,  J. : L...I...T.......T.......T.......T.......T.......T.......T..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.

   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.   Over-ruling the  objections  of  the appellant, the Civil Judge  made  a decree  in  terms of the award against which an  appeal  was

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preferred  to  the High Court and which appeal  having  been dismissed, this appeal by special leave is filed.

   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  books 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  issues  Nos.  1 and 2 after assessing the evidence,  the arbitrators came to this conclusion.  Before us the extracts of  the  logbooks have been produced and the  reasons  noted therein,  for  instance,  are  Tripping,  Shut  down,  Grid failure, Break down.  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 :-

   The  opposite party failed to produce log books for the period  6.12.1978 to 3.12.1980 and also admitted vide  their letter  dated  4.7.1987  that  these   log  books  were  not traceable.   In  these circumstances we are of  the  opinion that  had  the  opposite party filed the said log  books  it would  have  gone against them.  The opposite party has  not filed  the best evidence available.  Besides, the log  books which  the opposite party produced, did not give any reasons or where reasons were given, they were untenable.

   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

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case  there  is  no  such  scope  the  view  taken  by  the arbitrators would prevail.

   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 the result of such  order  which falls 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.  (i) In respect of electrical energy consumer by all large  and heavy power industrial consumers receiving  power at  33  KV  and above from Uttar Pradesh  State  Electricity Board,  a  cut of 33-1/3 per cent in their  highest  maximum demand  recorded in any month during the twelve months  from August, 1978 to July, 1979 shall be exercised :

   Provided that where any such industrial consumer has his own  source of generation of energy which alone enables  him to  obtain 66-2/3 per cent or more of his aforesaid  highest maximum  demand  then  a cut of 100 per cent  in  the  power supplied by the Board shall be exercised.

   (ii)  All Arc Furnaces, Induction Furnaces, Rolling  and Re-Rolling  mills  receiving  power below 33  KV  from  U.P. State  Electricity Board shall use energy for 10 hours  only every day during such hours as may be specified by the Board from  time  to  time  anything   contained  in  Clause  8(a) notwithstanding.

   (iii)  All  other  continuous process  industrial  power consumers  (listed  in Annexure 2) as well as Textile  Mills and  non-continuous industrial power consumers having  loads above  110 BHP/100KVA/75 KW billed on large and heavy  power tariffs  receiving  power from the U.P.   State  Electricity Board  shall  exercise 33.1/3 per cent cut in their  highest maximum  demand  recorded  in any month  during  the  twelve months from August, 1978 to July, 1979:

   Provided  that any such consumer or Mill may for reasons of  technical difficulty instead of observing the  aforesaid cut  avail  supply  for such 20 days in a month  as  may  be determined  with  the  approval of  the  Executive  Engineer concerned and may observe block closure during the remaining days  of the month so, however, that consumption up to 5 per cent  of such highest maximum demand shall be allowed during the  block  closure to meet the requirements of light,  fan, tube-well and repair workshops."

   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 33.1/3 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  that  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.

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   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.

..J. @@ IIIIIIIIIIIIIIIIII                                                                                 [ S. RAJENDRA BABU ]

.J. @@ IIIIIIIIIIIIIIIII                                                                                 [ S. N. PHUKAN ]

FEBRUARY  21, 2001.