WEST BENGAL STATE ELECTRICITY BOARD versus CALCUTTA ELECTRIC SUPPLY CORPN. LTD.

Citation: [2001] SUPP. 5 S.C.R. 447 · Decided: 04-12-2001 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Dismissed

Judgment (excerpt)

WEST BENGAL STATE ELECTRICITY BOARD 
v. 
CALCUTTA ELECTRIC SUPPLY CORPN. LTD. 
DECEMBER4, 2001 
[G.B. PATTANAIK AND RUMA PAL, JJ.] 
Electricity Laws : 
Electricity (Supply) Act, 1948-Section 44(2) and (3)-Dispute regard-
ing escalated project cost of new thermal generating system-Maintainability 
~f-When Board approves the reasonable revised project cost at a particular 
.figure in exercise o,f its prnver under Section 44, such a dispute arises within the 
ambit of Sec/ion 44(3) and is arbiirable under Sec/ion 44(3). 
Respondent-licensee sought consent from appellant Board for estab· 
lishment of new thermal generating station. The appellant accorded sanc-
tion. However, the project cost got escalated. The respondent applied for 
further consent for revised project cost. The appellants did not approve 
the entire revised cost. Then the respondent requested the Central Elec-
tricity Authority to refer the dispute to arbitration under Section 44(3) of 
the Electricity Supply Act which was allowed. Appellants challenged the 
appointment of the Arbitration Tribunal. However, Arbitrator passed an 
award dismissing the applications. Thereafter the Arbitrator determined 
the revised project cost and then passed an award. Aggrieved, appellants 
filed objections before the Single Judge against the award. The Single 
Judge held that the subject matter of the arbitration was beyond the scope 
of the statutory provisions under Section 44(3) and thus the award was 
without jurisdiction and was liable to be set aside. Division Bench set aside 
the findings of the Single Judge. Hence the present appeal. 
On appeal, appellants contended that as approval of the project cost 
of a generating station would not come within the ambit of Section 44 of 
the Act, the dispute on project costs is not arbitrable under Section 44(3) of 
the Act. 
The respondents contende,1 that the appellant having approved the 
project cost and exercised power under Section 44 was not entitled to raise 
the question that the cost of the project would not come within the purview 
447 
A 
B 
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D 
E 
F 
G 
H 
448 
SUPREME COURT REPORTS 
(2001] SUPP. 5 S.C.R. 
A 
of Section 44 of the Act. 
·~
Dismissing the appeal, the Court 
HELD : 1. A dispnte relating to escalated project cost of the thermal 
generating station would come within the pnrv.iew of Section 44(2) of the 
B 
Electricity (Supply) Act, 1948 and as such is arbitrable under Section 44(3) 
thereof and the award cannot be held to be withoutjnrisdiction.(454-B; CJ 
/!
~ 
2. It is necessary for every applicant while invoking power of the 
Board under Section 44(1) to obtain the previous consent in writing for 
I•
c 
establishment of a generating station to indicate the cost of the project. 
Where consent is received on the basis of the project cost indicated in the 
) ,, 
application, while acting in pursuance of such consent, if the project cost 
varies, then it would be a material variation of an important particular 
and consequently, a further consent of the Board would be necessary 
nuder Section 44(2). [356-F-H] 
D 
3. In the instant case the original consent of the Board had been 
obtained and while acting in pursuance of such consent, it was found that 
the project cost has got escalated and application for further consent was 
made to the Board and the Board also did accord its further consent at a 
E 
particular figure which was communicated to the applicant licensee. While 
the af1plicant·licensee had indicated the revised project cost at a mnch 
higher figure, the Board approved the revised cost at a particular figure 
and this further consent on the basis of revised cost can only be under 
Section 44(2) and in fact the Board also communicated the same in the 
purported exercise of power under Section 44(2). The further consent in 
F 
respect of the revised project cost having been given nuder Section 44(2), a 
dispute did arise within the ambit of Section 44(3) and, therefore, the 
authority con~>erned contemplated under Section 44(3) get• jurisdiction to 
arbitrate upon the rlispnte between the parties. [356-H; 357-A·C] 
4. On facts of the case the Board not only understood that the project 
G 
cost is required to be approved under Section 44, hut did take a decision 
.. 
approving the reasonable revised project cost at a particular figure in 
exercise of its power under Section 44. The Board having exercised power 
nnder Section 44 and having approved the revised cost at a particular 
figure,

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