Arbitration Appeal Nos. 16 and 23 of 2008. Case: Kerala State Electricity Board and Ors. Vs Western India Cottons Limited. High Court of Kerala (India)

Case NumberArbitration Appeal Nos. 16 and 23 of 2008
CounselFor Appellant: N.N. Sugunapalan, Sr. Adv. SC and S. Sujin, Adv. and For Respondents: U.K. Ramakrishnan, Sr. Adv. and Devidas U.K., Adv.
JudgesAntony Dominic and V. Shircy, JJ.
IssueArbitration Act, 1940 [Repealed] - Sections 20, 30, 33, 35; Constitution of India - Article 141; Electricity (Supply) Act, 1948 [Repealed] - Section 76
Judgement DateJanuary 09, 2017
CourtHigh Court of Kerala (India)


V. Shircy, J.

  1. These two Arbitration Appeals have been filed against the common Judgment dated 21.7.2007 in O.P. No. 3/2006 and O.P. No. 8/2005 on the files of the Subordinate Judge, Thalassery. Hence these two appeals are disposed of by this common judgment.

  2. The material facts required for disposal of these appeals in brief are as follows:

    The appellant is the Kerala State Electricity Board represented by its Secretary (for short ' the Board'). The respondent in both the appeals is Western India Cottons Limited (for short' the Company'). The respondent is a manufacturing company engaged in production of cotton yarn and cloth in its mill which is being run by electricity. The Board admittedly agreed to supply the required electricity continuously to the Company on the terms and conditions in the agreement executed between them on 1.9.1973. The Company has a case that the Board has failed to supply electricity as agreed to from January 1980 to July 1982 hence claimed compensation from the Board for the loss sustained in production of their products which led to an arbitration. The case of the company was that as per clause 26 of the agreement entered into, the disputes between them have to be decided in arbitration and therefore, the company filed O.S. No. 3/1983 to refer the dispute for arbitration under the Arbitration Act 1940 (for brevity 'Arbitration Act') as there was interruption in supply of electricity, resulting heavy loss in production. The Board has contended that the dispute would not come within the purview of the Arbitration Act. But O.S. No. 3/1983 was decreed by the Sub court by a judgment and decree dated 17.3.1984. In O.S. No. 3/1983, the two agreements executed between the parties dated 1.9.1973 were produced and marked as Exts.A1 and A2. It is not in dispute that O.P. No. 78/1984 was filed by the Company for appointing an umpire to decide the dispute before this Court and by an order dated 17.12.1984 Justice George Vadakkel (retired) was appointed as Umpire and an award was passed on 13.7.1987. The subject matter of the dispute in that award pertains to the period, January 1980 to July 1982.

  3. The further case of the Company is that even after the said period, there was failure to supply electricity resulting in loss of production to the Company and so for the subsequent period also, the Company claimed compensation and sought for reference to arbitration. Both the Company as well the Board named its Arbitrators respectively. Thereafter the Company filed O.P. No. 115/1987 before the Sub Court, for extension of time for arbitration. The Board also filed O.P. No. 120/1987 to declare that the agreements (Exts. C1 and C1(a) as referred in O.P) are illegal and void. Subsequently the learned Sub Judge dismissed the O.P filed by the Board, holding that the Board is not entitled to question the validity of the agreements in view of the decision in O.S. No. 3/1983 and the application is barred by res judicata. But the learned Sub Judge has also held that the O.P is barred by limitation under Article 137 of the Limitation Act. The said order was challenged by the Board before this Court in C.R.P No. 1699/89. The same was also disposed of by a Division Bench of this Court by an order dated 28.2.2001 appointing Justice B.M. Thulasidas (retired) as the Arbitrator to adjudicate the dispute relating to the period, from August 1982 to July 1985 (the subsequent period).

  4. The sole Arbitrator on 21.1.2004 has passed an award in favour of the Company (the claimant) for a sum of Rs. 1,21,26,942/- with 12% interest. The said award was then questioned in O.P(Arbitration) No. 3/2006 by the Board. O.P 8/05 was filed by the company for passing a decree in terms of the award. O.P.(Arbitration) Nos. 3/2006 and 8/2005 were jointly tried by the learned Sub Judge and O.P.(Arbitration) No. 3/2006 was dismissed and O.P.(Arbitration) No. 8/2005 was allowed. The Board aggrieved by the Common Judgment dated 21st July 2007 of the learned Subordinate Judge Thalassery have preferred these appeals.

  5. We heard the learned senior counsel for the Board and the learned Senior Counsel for the Company.

  6. As we have mentioned above the Company has a case that even though the Board has agreed to supply electricity continuously without interruption, there was interruption during the period from January 1980 to July 1982 on several occasions and due to the interruption in power supply as well supply at low voltage in violation of the terms and conditions of Exts.C1 and C1(a) agreements, the Company suffered huge loss. For the period from January 1980 to July 1982 a claim for Rs. 56,92,248.46 was raised by the...

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