Case Note & Summary
The dispute arose from a Power Purchase Agreement (PPA) between Reliance Infrastructure Limited and the Government of Goa, concerning the supply of electricity using alternate fuel. The claimant commenced operations in 1999, and various supplementary agreements modified the terms over the years. In 2013, the Government of Goa expressed intentions to cease purchasing power due to rising costs but later agreed to a fluctuating tariff based on the price of Regassified Liquefied Natural Gas (RLNG). Disputes over unpaid invoices led to arbitration, resulting in an award directing the State to pay Rs. 278.29 crore to the claimant. The State challenged the award under Section 34 of the Arbitration Act, which was upheld by the Commercial Court. However, the High Court later partially set aside the award, leading to appeals by both parties. The Supreme Court examined the High Court's findings, particularly regarding the principles of natural justice and the scope of review under the Arbitration Act. The court noted that the High Court had erred in its application of the law and in its findings on several key issues, including the fluctuating tariff and the downrating of capacity. Ultimately, the Supreme Court partly allowed the appeal, reinstating parts of the arbitral award while adjusting the interest rate from 15% to 10%. The court directed the State to assess any amounts withdrawn against bank guarantees and deposit any remaining dues within a specified timeframe.
Headnote
A) Arbitration Law - Scope of Challenge - Grounds for Interference - Arbitration and Conciliation Act, 1996, Sections 34, 37 - The High Court's interference with the arbitral award was examined, particularly regarding the grounds for setting aside an award under Section 34. The court held that the High Court had erred in its approach by not adhering to the limited scope of review under Section 37, which is confined to the grounds specified in Section 34 (Paras 195-200).
Issue of Consideration
Whether the High Court erred in partially setting aside the arbitral award and the grounds for interference under the Arbitration Act.
Final Decision
The Supreme Court partly allowed the appeal, reinstating parts of the arbitral award while reducing the interest rate from 15% to 10%. The court directed the State to assess any amounts withdrawn against bank guarantees and deposit any remaining dues within a specified timeframe.
Law Points
- Arbitration Act
- 1996
- Section 34
- Section 37
- natural justice
- fluctuating tariff
- interest rate determination
