Case Note & Summary
The dispute arose between the Tata Hydro-Electric Power Supply Co. Ltd. and the Union of India regarding the supply of electricity under a Power Supply Agreement executed in 1971. The appellants discovered a defect in the Current Transformer (CT) in June 1993, which led to under-registration of electricity supplied to the Western Railways. After rectifying the defect, the appellants submitted a supplementary bill for the under-registered energy. The respondent contended that the metering responsibility lay with the appellants and limited their liability to three months prior to the bill date. The appellants referred the matter to arbitration as per the agreement's arbitration clause. The Umpire awarded Rs. 4 crores to the appellants, which the respondent challenged in the High Court under Section 34 of the Arbitration and Conciliation Act, 1996, claiming an error of law. The High Court set aside the award, stating that the dispute was subject to the jurisdiction of the Electrical Inspector under Section 26 of the Indian Electricity Act, 1910. The Supreme Court, however, found that there was no dispute regarding the defectiveness of the CT, thus making the matter arbitrable. The court restored the Umpire's award but modified the interest rate to commence from the date of the award rather than the earlier date. The appeal was allowed, and the High Court's judgment was set aside.
Headnote
A) Arbitration Law - Jurisdiction of Umpire - Dispute Not Contemplated by Section 26(6) - Arbitration and Conciliation Act, 1996 - The court held that since there was no dispute regarding the defectiveness of the Current Transformer, the matter was arbitrable and not subject to the jurisdiction of the Electrical Inspector as per Section 26(6) of the Indian Electricity Act, 1910. The High Court's finding that the dispute was not arbitrable was erroneous. (Paras 8-9).
Issue of Consideration
Whether the dispute regarding the defective Current Transformer was arbitrable under the Arbitration and Conciliation Act, 1996.
Final Decision
The Supreme Court restored the Umpire's award of Rs. 4 crores but modified the interest to commence from the date of the award, setting aside the High Court's judgment.
Law Points
- Arbitration
- Electricity Supply
- Error of Law
- Jurisdiction
- Metering Responsibility
