MISC. Petition No. 442 of 2022 · The High Court
Case Details
- 1 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE ASHOK S.KINAGI CIVIL MISC. PETITION NO. 442 OF 2022 BETWEEN: BAGALKOT CEMENT AND INDUSTRIES LTD. A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT 1956 AND HAVING ITS REGISTERED OFFICE AT STADIUM HOUSE BLOCK NO.1, 6TH FLOOR, VEER NARIMAN ROAD CHURCH GATE MUMBAI-400020 MAHARASHTRA REPRESENTED BY ITS AUTHORISED SIGNATORY MR. ABBAS NIDASHESHI (BY SRI. VIJAY M A., ADVOCATE) AND: …PETITIONER VYSHALI ENERGY PVT. LTD., A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT 1956 HAVING ITS REGISTERED OFFICE AT NO.66, 4TH CROSS, 3RD MAIN, DOLLARS COLONY RMV 2ND STAGE, BENGALURU-560094 REPRESENTED BY ITS MANAGING DIRECTOR (BY SMT.MISS. DOLIN ANN KURIAN, ADVOCATE) …RESPONDENT THIS CIVIL MISC. PETITION IS FILED UNDER SEC.11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING Digitally signed by SUNITHA K S Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR TO ALLOW THE INSTANT PETITION AND APPOINT THE IN TERMS OF THE SECTION 11(6) OF ARBITRATOR, ARBITRATION AND CONCILIATION ACT, FOR ADJUDICATION OF DISPUTES / DIFFERENCES BETWEEN THE PARTIES AS STIPULATED UNDER CLAUSE 8(V)(D) OF THE ENERGY PURCHASE AGREEMENT DATED 10/04/2017. 1996, THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI ORAL ORDER This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, for the appointment of an arbitrator to resolve the dispute
Legal Reasoning
between the parties to the petition in terms of clause 8 (v) (d) of the Energy Purchase Agreement dated 10.04.2017 vide Annexure-D, as per the provisions of the Arbitration and Conciliation Act, 1996. 2. Brief facts, leading rise to the filing of this petition are as follows: The petitioner, vide Board Resolution dated 07.02.2017 authorised its Executive Director to negotiate the terms and conditions of the Energy Purchase - 3 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR Agreement with the respondent. The Executive Director informed the respondent that any additional energy supplied beyond the contractual quantity shall be taken by the petitioner only at the prevailing rates under the open access system, which were between Rs.2/- and Rs.3.50 per unit, as of 07.04.2017. The petitioner and respondent entered into an Energy Purchase Agreement dated 10.04.2017 for the supply of Wind Power to the extent of 3 million units per year, by the respondent to the petitioner. 3. The petitioner, by a communication dated 21.04.2021 addressed to the respondent, stated that without prior intimation, the respondent had arbitrarily discontinued the supply of energy from 01.04.2021 causing a grave hardship and financial loss to the petitioner, and requested the respondent to issue credit notes for the excess charges levied towards the energy in the invoices raised for the period from 01.04.2018 to 31.03.2021. The petitioner received an alleged demand - 4 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR notice dated 02.03.2022 from the respondent demanding the payment of a sum of Rs.7,42,50,734/-. Upon receiving the said demand notice, the petitioner discovered the fraudulent activities committed by the respondent in collusion with one of the employees of the
Legal Reasoning
petitioner, namely Mr.Mariappan T. The petitioner replied to the demand notice on 16.03.202 highlighting the fraudulent acts of the respondent. The petitioner having gained knowledge of the fraudulent acts committed by the respondent, vide its letter dated 17.03.2022 terminated the Energy Purchase Agreement dated 10.04.2017, and also invoked the arbitration clause 8(v)(d) of the agreement, nominating the arbitrator from their side to resolve the dispute arising between the parties as envisaged under clause 8 (v)(d) of the said agreement. The respondent replied to arbitration notice on 16.04.2022. The respondent disagreed, and failed to nominate the arbitrator from their side under clause - 5 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR 8(v)(d) of the Energy Purchase Agreement. Hence, this petition. 4. Though, the sufficient opportunity was provided to the respondent, the respondent did not file a statement of objections. Hence, the statement of objections is taken as not filed. 5. Heard the arguments of Sri.Vijay M.A., learned counsel for the petitioner, and Smt/Miss. Dolin Ann Kurian, learned counsel for the respondent. 6. Learned counsel for the petitioner submits that the petitioner and respondent entered into an Energy Purchase Agreement dated 10.04.2017. The respondent issued a demand notice demanding a sum of Rs.7,42,50,734/-. The petitioner contended that a fraud had been played by the respondent in collusion with an employee of the petitioner. It is contended that the petitioner is not liable for the claim made by the respondent. He submits that the dispute has arisen - 6 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR between the parties to the petition, and there is an arbitration clause in the said Agreement, and the dispute has to be resolved through arbitration. Hence, on these grounds, he prays to allow the petition. 7. Per contra, the learned counsel for the respondent opposes the petition, and accordingly, prays to dispose of the petition. 8. Perused the records, and considered the submissions of the learned counsel for the parties. 9. The point, that arises for consideration, is as follows: “Whether the petitioner has made out a ground to refer the dispute to the arbitrator to resolve the dispute between the parties to the petition in terms of clause 8(v)(d) of the Energy Purchase Agreement dated 10.04.2017, as per the provisions of the Arbitration and Conciliation Act, 1996 and the Rules?” - 7 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR 10. It is not in dispute that the petitioner and respondent entered into an Energy Purchase Agreement on 10.04.2017 for the supply of wind power to the extent of 3 million units per year, by the respondent to the petitioner. It is contended that the respondent arbitrarily discontinued the power supply from 01.04.2021, and due to the disconnection of power supply, the petitioner is put to grave hardship, and financial loss, and requested the respondent to issue a credit note for the excess charges levied towards energy in the invoices raised for the period from 01.04.2018 to 31.03.2021. The respondent issued a demand notice on 02.03.2022, demanding the amount of Rs.7,42,50,734/-. The petitioner replied to the legal notice on 16.03.2022. There is arbitration clause in the Energy Purchase Agreement dated 10.04.2017, which reads as follows: d. Within a period of fifteen (15) days following the expiry of the one-month consultation period, unless the parties shall have otherwise agreed to the contrary or the event leading to the preliminary termination notice shall have been remedied, the - 8 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR parties jointly may refer the matter to arbitration under the provisions of the Indian Arbitration and Conciliation Act, 1996, or any of its statutory modifications or re-enactments, and shall be referred to arbitral panel consisting of three (3) arbitrators, of which one (1) shall be appointed by the Purchaser, 1 (one) shall be appointed by the seller and such (2) arbitrators shall appoint the third arbitrator. The place of arbitration shall be Bangalore and the language of arbitration shall be English. The award resulting from such arbitration shall be final and binding on the parties. 11. Thus, issued an arbitration notice on 17.03.2022 nominating the arbitrator from the petitioner’s side, and calling upon the respondent to nominate the arbitrator from their side. The respondent replied to the arbitration notice, but failed to nominate the arbitrator from their side in terms of clause 8(v)(d) of the Energy Purchase Agreement dated 10.04.2017. The dispute arose between the parties to the petition and the petitioner, invoked the arbitration clause by issuing an arbitration notice. The respondent failed to nominate the arbitrator - 9 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR from their side. The dispute between the parties is to be resolved through arbitration. As there exists an arbitration clause in the Energy Purchase Agreement dated 10.04.2017, the same has to be resolved through
Decision
arbitration. In view of the above discussion, the petitioner has made out a ground to refer the dispute to the arbitrator in terms of clause 8(v)(d) of the Energy Purchase Agreement dated 10.04.2017. Accordingly, I answer the point for consideration in the affirmative. 12. In view of the above discussion, I proceed to pass the following order: ORDER i. The Civil Miscellaneous Petition is allowed. ii. Hon’ble Shri Justice C.R.Kumarswamy, Former Judge, High Court of Karnataka, is nominated as Arbitrator to resolve the dispute between the parties to the petition in terms of 8(v)(d) of the Energy Purchase Agreement dated 10.04.2017, - 10 - NC: 2025:KHC:22864 CMP No. 442 of 2022 HC-KAR as per the Provisions of the Arbitration and Conciliation Act, 1996, and the Rules. iii. The office is directed to communicate a copy of this order to the learned arbitrator, and the Arbitration and Conciliation Centre, Bengaluru. iv. Pending applications, if any, stand disposed of. Sd/- (ASHOK S.KINAGI) JUDGE SKS