GRID CORPORATION OF ORISSA LIMITED versus INDIAN CHARGE CHROME LIMITED

Citation: [1998] 3 S.C.R. 375 · Decided: 13-05-1998 · Supreme Court of India · Bench: G.T. NANAVATI · Disposal: Appeal(s) allowed

Judgment (excerpt)

GRID CORPORATION OF ORI SSA LIMITED 
A 
v. 
INDIAN CHARGE CHROME LIMITED 
MAY 13, 1998 
[G.T. NANA VA Tl AND S.P. KURDUKAR, JJ.] 
B 
Arbitration & Conciliation Act, 1996-Section I I-Maintainability of 
Application under-Proceedings before Regulatory Commission under Orissa 
Electricity Reform Act, 1995-0ne of the parties later applying under Section C 
11 of the Arbitration Act before the High Court-Proceeding before the 
Regulatory Commission adjourned by it on an application filed by the party 
approaching High Court under Section 11 of the Arbitration Act-High 
Court on erroneous assumption that Regulatory Commission has failed to 
arbitrate under Section 37(1) of the Reform Act, entertained the application 
under Section I I-Held, application under Section 11 was premature and D 
High Court exceeded its jurisdiction in entertaining the same-Orissa 
Electricity Reform Act, 1995, Section 37(1). 
Orissa Electricity Reform Act, 1995-Sections 37(1), 33, 2(e) and (j) 
and 14-Arbitrability of dispute-Licensee-Respondent was authorised! 
engaged in supplying electricity through its captive power plant to Electricity E 
Board and later to appellant, its successor-No formal licence issued to 
respondent under the Electricity Act or under the Reform Act-Held, High 
court erred in taking the view that the respondent was licensee under the 
Section 2(h) of Electricity Act and continued to be the same even after 
coming into force of the Reform Act-Hence the dispute was arbitrable under F 
Section37(1) read with Section 33 of the Reform Act-Electricity Act, 1910, 
Section 2(h). 
Electricity Act, 1910-Section 24-Notice for payment of arrears of 
electricity bill or else power supply would be disconnected-Application for 
injunction-Held, injunction orders could be passed only if prima facie case G 
existed and balance of convenience in favour of the party-Financial 
constraint cannot be a ground to allow the party to use power without 
; 
charges-However, instalments fixed for payment of undisputed outstanding 
arrears-Arbitration & Conciliation Act, 1996, Section 9-Civil Procedure 
Code, 1908, Order 39, Rules 1& 2. 
H 
375 
376 
SUPREME COURT REPORTS 
[1998] 3 S.C.R. 
A 
Respondent set up a Captive Power Plant in 1989 after due permission 
from the state for supplying power to its sister concerns IMFA and PPL and 
surplus power to State Electricity Board (OSEB) and accordingly an 
agreement was signed between the respondent and the OSEB. This 
arrangement continued until a MOU of 1994 followed by an agreement of 
1995 signed between the respondent and OSEB. Under the MOU of 1994 the 
B power supplied by the respondent to OSEB was charged at 77 paise per unit 
and a wheeling charge@ 15% Appellant became the successor of OSEB in 
1996. Appellant thereafter called upon respondent to pay outstanding dues 
for the pehod December 1994 to December 1996 amounting to Rs. 24.8281 
crores. DJring this period the OSEB and thereafter appellant had been 
C wheeling/supplying power to respondent. 
Respondent filed an application before the Regulatory Commission in 
February 1997 constituted under the Orissa Electricity Reform Act raising 
a dispute as regard bill amounts and its liability to pay to appellant In April 
1997 appellant informed respondent that unless the arrears are paid, they 
D would be compelled to discontinue the power supply in accordance with law. 
When no payment was, made the appellant issued another notice under 
Section 24(1) of the Electricity Act calling upon the respondent to pay the 
arrears within seven days or else face disconnection. The respondent on the 
contrary moved a petition under Section 9 of the Arbitration & Conciliation 
Act iii the Court of District Judge for relief of injunction which was granted 
E by it ex-parte. Appellant thereafter filed an appeal before the High Court 
which stayed the operation of the order of the District Judge. However the 
High Court recalled its earlier Order and directed the appellant to restore 
the supply which was disconnected subject to the condition that 5 crores 
would be deposited out of the total areas. Aggrieved by that order of the High 
F Court, an SLP was filed before this Court which confirmed the order of the 
· High Court but granted facility to make the payment in two instalments. 
In the meantime the Regulatory Commission asked respondent to 
clarify as to how its petition could be treated as reference under Section 
37(1) of the Reform Act since it was 

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