UHL POWER COMPANY LTD. versus STATE OF HIMACHAL PRADESH

Citation: [2022] 1 S.C.R. 1 · Decided: 07-01-2022 · Supreme Court of India · Bench: N.V. RAMANA · Disposal: Disposed off

Cited by 8 judgment(s) · cites 5 · see the full citation network in Lexace

Judgment (excerpt)

[2022] 1 S.C.R. 1
1
UHL POWER COMPANY LTD.
v.
STATE OF HIMACHAL PRADESH
(Civil Appeal No. 10341 of 2011)
JANUARY 07, 2022
[N. V. RAMANA, CJI, A. S. BOPANNA AND
HIMA KOHLI, JJ.]
Arbitration and Conciliation Act, 1996: Post award interest
on the interest amount awarded – Held: Can be granted by
Arbitrator.
Arbitration and Conciliation Act, 1996: s.34 – Jurisdiction
under, Scope – Held: Court does not sit in appeal over the arbitral
award and may interfere on merits on the limited ground provided
under s.34(2)(b)(ii).
Arbitration: If there are two plausible interpretations of the
terms and conditions of the contract then no fault can be found if
the arbitrator proceeds to accept one interpretation as against the
other.
Arbitration: Arbitral award – Scope of interference by courts
– Held: Courts should not interfere with an award merely because
an alternate view on facts and interpretation of contract exists.
Deeds and Documents: Whether in the instant case, the
Memorandum of Undertaking (MoU) dated 10th February, 1992
merged into the Implementation Agreement dated 22nd August, 1997
– Held: As admitted by State, the MoU was mentioned as “Appendix
A” in the second recital of Implementation Agreement which itself
demolished the plea taken by the State that the Arbitral Tribunal
and the Appellate Court have erred in returning a finding that the
MoU dated 10th February, 1992 did not merge into the
Implementation Agreement dated 22nd August, 1997 – The view is
reinforced on a reading of the definition of the word “Agreement”
as used in Clause 2.2 of the Implementation Agreement which clearly
stated that the word “Agreement” wherever used in the
Implementation Agreement, shall include all its appendices and
annexures – The MoU having been described by the parties as
A
B
C
D
E
F
G
H
2
SUPREME COURT REPORTS
[2022] 1 S.C.R.
Appendix A to the Implementation Agreement, would have to be
treated as having merged with the Implementation Agreement for all
effects and purposes.
Disposing of the appeals, the Court
HELD: 1. As the judgment in the case of S.L. Arora, on
which reliance has been placed by the Division Bench of the High
Court of Himachal Pradesh, has since been overruled by a three-
Judge Bench of this Court in the case of Hyder Consulting (UK)
Ltd., the findings returned by the Appellate Court in the impugned
judgment to the effect that the Arbitral Tribunal is not empowered
to grant compound interest or interest upon interest and only
simple interest can be awarded in favour of UHL on the principal
amount claimed, is quashed and set aside. As a result, the findings
returned in para 54(a) of the impugned judgment insofar as it
relates to grant of the interest component, are reversed while
restoring the arbitral award on the above aspect in favour of UHL.
[Para 6][8-E-G]
2. The very fact that the State admits to having executed
the MoU with UHL on 10th February, 1992 and the said MoU
has been mentioned as “Appendix A” in the second recital of the
Implementation Agreement, itself demolishes the plea taken by
the State that the Arbitral Tribunal and the Appellate Court have
erred in returning a finding that the MoU dated 10th February,
1992 did not merge into the Implementation Agreement dated
22nd August, 1997. The said view is reinforced on a reading of
the definition of the word “Agreement” as used in Clause 2.2 of
the Implementation Agreement which clearly states that the word
“Agreement” wherever used in the Implementation Agreement,
shall include all its appendices and annexures. The MoU having
been described by the parties as Appendix A to the
Implementation Agreement, would have to be treated as having
merged with the Implementation Agreement for all effects and
purposes. In the light of the said recitals and clauses of the
Implementation Agreement, this Court endorses the findings
returned in para 47 of the impugned judgment, wherein it has
been held that a plain reading of the second recital read with
Clause 2.2 of the Implementation Agreement suggested that the
A
B
C
D
E
F
G
H
3
MoU has merged with the Implementation Agreement and,
therefore, the disputes that were referable to arbitration under
the Implementation Agreement in terms of Clause 20, were to
include disputes arising under the MoU, even though the latter
document did contain a separate arbitration clause. [Para 10]
[10-B-F]
3. All the points of dispute between the parties regarding
performance of the contractual obligations including claims for
damages an

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