ULTRA TECH CEMENT LTD. (UTCL) THRU. CHETAN PRAKASH PARIHAR Vs. U.P. RAJYA VIDYUT UTPADAN NIGAM LTD., LUCKNOW THRU. M.D.

JUDGEMENT

(1.) Heard Shri Jaideep Narain Mathur, learned Senior Advocate assisted by Shri Rajat Gangwar and Sri Diptiman Singh, learned counsel for the appellant and Shri Manish Kumar, learned Senior Advocate, assisted by Vibhanshu Srivastava, appearing for the respondent.

(2.) By way of present arbitration appeal under Section 37 of the Arbitration and Conciliation Act, 1996 read with Section 13 of the Commercial Court Act, 2015, the order dated 31.05.2019 passed by the learned Commercial Court, Lucknow in Arbitration Case No.619 of 2019 (M/s Ultra Tech Cement Ltd. v. U.P. Rajya Vidyut Utpadan Nigam Limited) is under challenge. The prayer made in Appeal are as under:-

(3.) Learned counsel for the appellant has submitted that the respondent is a wholly state owned thermal power project and further submitted that the thermal power is generated usually from coal and it leads to the emergence of fly ash. The Ministry of Environment and Forests issued a notification dated 14.09.1999 and provided that every coal or lignite based thermal power plant shall make available ash, for at least ten years from the date of publication of this notification without any payment or any other consideration, for the purpose of manufacturing ash-based products such as cement, concrete blocks, bricks, panels or any other material or for construction of roads, embankments, dams, dykes or for any other construction activity. He has further submitted that fly ash is used in manufacturing of cement, and the cement industry is the most promising sector for fly ash utilization for protecting environment. The predecessor company of the appellant entered into an agreement with the respondent dated 16.02.2007 for 25 years in respect of fly ash to be lifted from ESP of 1x 250 MW (Unit No-9) Harduaganj Thermal Power Plant (hereinafter referred as "HGTPP") Kasimpur Aligarh, free of cost. The fly ash was to be used for the Kotputli Cement Manufacturing Unit and Aligarh Cement Works, Grinding Unit of the appellant. In furtherance of agreement dated 16.02.2007 the appellant installed the Dry Fly Ash Extraction System (DFAES) on 26.04.2013, at its own cost, as Unit-9 of Harduaganj Thermal Power Plant. On the basis of aforesaid agreement, the concerned unit of the predecessor of appellant at Aligarh had decided to set up Grinding Unit and invested about Rs.500 Crores for the same. That in view of the Fly Ash Notification dated 14.09.1999 and the Agreement dated 16.02.2007 the supply of Fly Ash to the appellant had been agreed on a free of cost basis, but the supply was not actually free of cost, as the appellant made significant investment for operationalizing the system. He has further submitted that on 10.07.2014 the meeting held between the respondent and the appellant, the respondent started demanding cost for supply of fly ash by relying on Fly Ash Notification issued by Ministry of Environment of Forest dated 03.11.2009. He has further submitted that the notification dated 03.11.2009 is in the form of an enabling provision and only states that all coal or lignite based thermal power stations would be free to sell fly ash to the user agencies. The selling of fly ash has not been made mandatory by the said notification, as a result, on 10.07.2014, the appellant sought time to consider the proposal of the respondent and thereafter, several meetings were held between them. The respondent kept insisting and pressuring for price for fly ash from the appellant. He has further submitted that a meeting held on 12.01.2017, the appellant informed that it is not possible for it to bear the cost of fly ash as per demanded rate of Rs.268/- per metric tonne and offered the rate of Rs.28/- per metric tonne. Thereafter, on 30.01.2017, the appellant in furtherance to meeting dated 12.01.2017, once again expressed its inability to bear the cost for additional quantity of fly ash. Further, the appellant again requested the respondent to levy the dry fly ash charges at the rate of Rs.28/- in line with Panki Power Plant. Finally vide letter dated 31.01.2018 the appellant offered the price of Rs.50 per metric tonne for lifting of dry fly ash from the said Unit-9. On 12.02.2019 a meeting was held at Lucknow with the Director (Technical) and team of Utpadan Nigam Limited, between the representatives of the appellant and it was informed to the official representative of the appellant that Utpadan Nigam Limited's Board of Directors had taken a decision to invite a tender for lifting of dry fly ash from Unit Nos.8 and 9 and counter offer shall be taken from the appellant with right to rejection. Thereafter, vide letter dated 14.02.2019 the respondent required the appellant to provide the cost of setting up silo and dry fly ash system along-with its depreciated value so that the price for fly ash could be negotiated between the parties. Once again vide letter dated 16.04.2019, the respondent informed that the appellant to value the dry fly ash extraction system. Thereafter, on 29.04.2019 the respondent issued Notice Inviting Tender bearing Reference No.01 (one)/ECMC/ECMD-III/HTPS/2019 for lifting of dry fly ash in relation to Unit Nos. 8 and 9 for its said power plant at Harduaganj, Kasimpur, Aligarh in blatant violation of agreement dated 16.02.2007. He further submitted that the respondent is now proceeding to sell the fly ash, which it had earlier agreed to give to the appellant free of cost for the period of 25 years commencing from 16.02.2007 to third parties by means of floating a tender.