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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.