AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1988 (10) TMI 290
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....use 9 of the said agreement contained terms of the rate of supply and the contingencies in Which such rates could be increased. The said Clause provided as follows: The consumer shall, subject to the provisions hereinafter contained, pay to the Company for all electrical energy supplied and registered or estimated as herein provided at the rate of Rs. 0.20 (Rupees zero decimal two zero) per unit per month for all energy so supplied and registered and/or estimated in the case of a defective meter installation in accordance with the proviso to Clause 6 thereof. The charge for all energy shall be subject to the scale of special discounts in accordance with the schedule annexed thereto. Provided that, (without regard to the quantity of units supplied) if the payment made or to be made for any one English Calendar year ending 31st March in respect of the electricity consumed shall fall short of a minimum sum of Rs. 38640 (Rs. Thirty eight thousand six hundred and forty) the consumer shall nevertheless pay to the Company such amount in addition to the payments already made in respect of the electricity consumed for such Calendar year as will, being the total payment mad....
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....shall be paid and if by both parties in what proportion. 4. On or from 26th September, 1973 the Agra Electric Supply Co. Ltd. increased per unit rate of electricity from 0.20 P to 21.5 P in terms of Clause 9 of the said agreement. Thereafter, the bills were sent @ 21.5 P per unit, after giving discounts and rebates as per the agreement. On or about 17/18th December, 1973, the respondent herein took over the undertaking of the Agra Electric Supply Co. Ltd. On or about 16th January, 1974, the respondent informed the appellant by a written communication that consequent upon the expiry of licence granted to Agra Electric Supply Co. Ltd. to generate and supply electricity the respondent had taken it over and would supply electric energy to the hotel and that the Bulk Supply Agreement with Agra Electric Supply Co. Ltd. will continue to be in force with the respondent until such time the agreement is determined in accordance with its relevant provisions. All bills received subsequent to the take over were billed at the agreed rate allowing discounts and rebates. 5. On or about 23rd November, 1974, the appellant received a communication from the respondent informing that uniform tari....
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....the respondent advising all Engineers-in-charge of the undertakings to bill the consumers having special agreements with the ex-licensees as per those agreements and steps be taken to terminate the old agreements with new agreements providing for application of tariff. 7. On 7th October, 1977, vide written communication the appellant informed the respondent that upon latter's failure to resolve the disputes and differences arising between them consequent to the illegal increase, in the rates and discontinuation of discounts and rebates w.e.f. 12.10.1974, the appellant was referring the disputes for decision by the arbitrator and appointed Justice Manchanda, a retired Judge of the Allahabad High Court, as the arbitrator and the respondent appointed Justice Nigam, another retired Judge of the same High Court, as its arbitrator. On or about 8th April, 1977, the joint arbitrators appointed Justice V. Bhargava, a retired Judge of this Court, as an Umpire. 8. Between 3rd November, 1979 and 4th March, 1980, several sittings were held before the arbitrators but the parties were unable to agree and upon their disagreement the disputes were referred to the learned Umpire for decisi....
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.... unilaterally and according to the petitioner illegally and arbitrarily purported to replace the original terms in the agreement and revised the charges with effect from 12th October, 1974. The Board, under this notification, increased the rate of electricity supplied to 30 paise per unit and further refused to grant the discount to which the petitioner was entitled under the agreement as well as the cash discount of three paise per rupee. The opposite party further levied a fuel cost adjustment charges and subsequently the rate was raised to 31 paise per unit with effect from June 1976. 10. Thereafter, the learned Umpire set out the history of the negotiations between the parties resulting in the agreement dated 20.10.1962. After referring to the bulk supply agreement the learned arbitrator set out the terms upon which supply was made to the appellant. The appellant was to make an initial payment of Rs. 35,326 towards service connection for the purpose of supply, though irrespective of the payment the service connection was to continue to be the property of the Supply Company. The Supply Company was to make provision in the appellant's monthly bill granting a rebate of Rs. ....
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.....f. 12.10.1974, it was claimed that the opposite party had not, in any way, failed to fulfil its obligations on the alleged agreement and that the opposite party was fully competent under law to fix a uniform tariff and also to levy fuel adjustment charges. This is the main and substantial question involved in this matter. 12. It was then contended that the respondent was entitled even under the agreement and under its second proviso to Clause 9 to revise the tariff and the appellant was not entitled to any relief. It was further urged that the payments were made after coming into operation of the Electricity (Supply) Act, under protest. In respect of these contentions the learned Umpire held that the plea was that even if the agreement was in existence, it was not binding on the opposite party and that the opposite party was competent under Section 49 of the Electricity Supply Act, to fix revised charges w.e.f. 12.10.1974 and had not violated any terms of the agreement. The appellant had also relied on the alternative provisions of Section 49(3) of the Act, set out hereinbefore. The said Sub-section (3) provides that nothing contained in Sub-sections (1) & (2) of Section 49 sha....
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....ted 16th January 1974 (Ex. R). 13. The aforesaid basis of the decision, it was contended, was the error of law which vitiated the award. This question will require further consideration later. It was held that the decision in Indian Aluminium Co., (supra) fully covered the dispute on this aspect in the instant case. The learned Umpire further held as follows: Once the agreement was binding on the Board its terms under Sub-section (3) of Section 49 could not be varied by fixation of uniform tariff under Sub-sections (1) and (2) of Section 49. The opposite party in these circumstances must be held to have failed to fulfil its obligations under the agreement. 14. On 1st July, 1983, an application was made under Section 14(2) of the Arbitration Act before the learned District Judge, Lucknow, for filing of the award and making the same Rule of the Court. Objections were filed by the respondent against the said award. The learned IInd Addl. Distt. Judge, Lucknow , held that the award was legal, valid and binding on the parties and the alleged grounds of misconduct were not maintainable. The award was, however, set aside on the ground that the reference made to arbitration ....
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....subject to the discounts mentioned in the subsequent clauses of the agreement. In view of the discounts, the sum payable under Clause 9 was altered and the altered amount becomes the sum payable under Clause 9. According to the learned Judge, since the amount determined after allowing discounts is also sum payable under Clause 9, it followed that in exercise of the power conferred under the third proviso, the discount could only be tampered with in the same way the unit charge could be tampered with. Beyond this it was not permissible. In permitting this the Umpire committed an error in drawing distinction between 'rates' and 'discount' and upholding the right of the Board to tamper with the former and negating similar right in respect of the latter. According to the learned Judge, this was a wrong understanding of the decision of the Indian Aluminium's case (supra). In the aforesaid view of the matter, the learned Judge agreed with the other learned Judge and held that the award was vitiated. 17. It appears that the main question that arises is: whether the decision of this Court in Indian Aluminium's case (supra) was properly understood and appreciated ....
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....n referred for arbitration is a question of construction, which is, generally speaking, a question of law, the arbitrator's decision cannot be set aside only because the court would itself have come to a different conclusion; but if it appears on the face of the award that the arbitrator has proceeded illegally, as, for instance, by deciding on evidence which was not admissible, or on principles of construction which the law does not countenance, there is error in law which may be ground for setting aside the award. 18. It was contended by Mr F.S. Nariman, counsel for the appellant, that a specific question of law being a question of construction had been referred to the Umpire and, hence, his decision, right or wrong, had to be accepted. In view of Clause 18, it was submitted that in this case a specific reference had been made on the interpretation of the agreement between the parties, hence, the parties were bound by the decision of the Umpire. Our attention was drawn to the observations of this Court in Hindustan Tea Co. v. K. Sashikant & Co. AIR1987SC81 , where this Court held that under the law, the arbitrator is made the final arbiter of the dispute between the partie....
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....ring for the appellant contended that there was no proposition of law as such stated by the Umpire which could be said to be the basis of his decision. Hence, the award was not amenable to corrections on the ground that there was an error of law apparent on its face. Mr. Nariman further submitted that the Umpire had decided the specific question of law and such a decision, right or wrong, is binding on the parties. In aid of his submission Mr. Nariman referred to the decision of this Court in Kapoor Nilokheri Co-op. Dairy Farm Society Ltd. v. Union of India and Ors. AIR1973SC1338 , where it was held that in a case of arbitration where the appellants had specifically stated that their claims were based on the agreement and on nothing else and all that the arbitrator had to decide was as to the effect of an agreement between the appellant and the respondent, the arbitrator had really to decide a question of law, i.e. of interpreting the document, the agreement. Such a decision of his, is not open to challenge. 23. Our attention was drawn to the observations of this Court in Tarapore & Co. v. Cochin Shipyard Ltd. Cochin and Anr. [1984]3SCR118 , where Desai J., spoke for the Court a....
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....ten in Hitchins and Anr. v. British Coal Refining Processes Ltd. [1936] 2 A.E.R. R 191. There, by an agreement the applicants were to act as consulting Engineers in connection with a certain coal refining process owned by the respondents. While the plant for the working of the process was being erected, a dispute arose, the respondents wanting the applicants to attend every day at the site of the plant and the applicants considering this to be no part of their duty. The respondents thereupon terminated the agreement and the matter was referred to arbitration. The applicants pleaded that the termination of the agreement was unjustified; the respondents pleaded that the applicants should have attended every day and that they had been quality of negligence in respect of certain matters set out in the counterclaim. The arbitrator found the termination of the agreement to be unjustified and also negligence on the part of the appellants in respect of the matters set out in the counterclaim, and he awarded the appellants damages after setting off an unspecified amount for damages for negligence. The respondents moved to set aside the award on the ground of error of law apparent on the fac....
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....7. In the instant case, the view taken by the Umpire on the interpretation of the agreement between the parties in the light of the observations of this Court in Indian Aluminium Co.'s case (supra) was at best a possible view to take, if not the correct view. If that was the position then such a view, even if wrong, cannot be corrected by this Court on the basis of long line of decisions of this Court. In the aforesaid view of the matter it is necessary to examine the aforesaid decision in the Indian Aluminium Co.'s case (supra). There under Section 49(1) & (2) of the Electricity Supply Act, 1948, the Legislature had empowered the State Electricity Board to frame uniform tariffs and had also indicated the factors to be taken into account in fixing uniform tariffs. Under Sub-section (3), the Board was empowered, in the special circumstances mentioned therein, to fix different tariffs for the supply of electricity, but in doing so, Sub-section (4) directed that the Board was not to show undue preference to any person. Under Section 59 it was stipulated that the Board shall not, as far as practicable, carry on its operations at a loss and shall adjust its charges accordingly f....