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Ntpc Limited (Formerly National thermal Power Corporation Limited, a Company Incorporated Under the Companies Act, 1956 Vs. Reliance Industries Limited, a Company Incorporated Under the Companies Act, 1956 - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai High Court
Decided On
Case NumberChamber Summons No. 218 of 2009 in Suit No. 95 of 2006
Judge
Reported in2009(4)BomCR164
ActsCode of Civil Procedure (CPC) - Order 6, Rule 17; Code of Civil Procedure (CPC) (Amendment) Act, 2002
AppellantNtpc Limited (Formerly National thermal Power Corporation Limited, a Company Incorporated Under the
RespondentReliance Industries Limited, a Company Incorporated Under the Companies Act, 1956
Appellant AdvocateD.D. Madon, Sr. Counsel along with ;Meenakshi Iyer, Adv., i/b., Doijode Associates
Respondent AdvocateMilind Sathe, Sr. Counsel, ;Sunesh Gupta, ;C.D. Patel and ;Chirag Balsara, Advs. i/b., ;Junnarkar and Associates
Excerpt:
.....appeal no. the court's jurisdiction to allow such an application is taken away unless the conditions precedent therefor are satisfied, viz. the proposed amendment was based upon the events and the material available and well within the knowledge of the defendants even before filing of the suit. the amendment which is based upon the events/facts which are available or well within the knowledge of the concerned parties before filing of the suit and the subsequent events and/or the materials cropped up after filing of the suit and which are necessary to decide the controversy and/or relevant for the proper adjudication of the issue and/or for passing executable final decree/judgment, the court needs to consider the same differently, based upon the facts and material available on the..........out hereinbelow:a. the 'issues' have already; been framed in and the trial has commenced of the suit. the plaintiffs have filed their affidavit of evidence on 9th january 2009. thereafter the matter has been adjourned from time to time at the instance of the defendant on some pretext or the other.b. the proposed amendments, if allowed, would not assist in doing justice between the parties but will inevitably result in delay of justice to the plaintiff.c. allowing the proposed amendments at this stage would cause substantial and irreparable loss and prejudice to the plaintiff incapable of being compensation by way of costs or otherwise.d. the proposed amendments do not in any manner touch the real question of controversy between the parties.e. the proposed amendments do not fulfill the.....
Judgment:

Anoop V. Mohta, J.

1. The parties have no objection if this Bench decides the chamber summons finally.

2. The plaintiffs' suit is for declaration that there exists a valid and concluded and binding contract (Exhibits D, E, F and G) between the parties and also for a decree of specific performance of the contract. The averments and the documents revolve around the alleged contract of supply of gas by the defendants.

3. This Chamber summons dated 6.2.2009 is taken out by the defendants to amend the written statement dated 31.10.2007. The issues are framed on 6.10.2008. The plaintiffs have filed an affidavit in chief of its first witness on 9.1.2009. The Suit is fixed for cross-examination. The trial has commenced.

4. Once the plaintiffs lead the evidence in chief and the case is fixed for cross-examination, it is a commencement of the trial. The Apex Court in Vidyabai and Ors. v. Padmalatha and Anr. : AIR2009SC1433 , in paragraph 8 has observed in this regard as under:

8. ...The question, therefore, which arises for consideration is as to whether the trial had commenced or not. In our opinion, it did. The date on which the issues are framed is the date of first hearing. Provisions of the Code of Civil Procedure envisage taking of various steps at different stages of the proceeding. Filing of an affidavit in lieu of examination in chief of the witness, in our opinion, would amount to 'commencement of proceeding'.

Both the learned senior counsel appearing for the respective parties concede to the position that the trial has commenced.

5. This Court on 6.10.2008 has framed the issues which are as under:

i) Do the plaintiffs prove that there exists valid, concluded and binding contract as reflected in Exhibits D, E, F & G and the Letter of Intent issued by the plaintiffs and signed and returned by the defendants for supply of natural gas of 132 Trillion but annually for a period of 17 years by defendants to plaintiffs?

ii) If answer to above issue is in the affirmative, whether the plaintiffs are entitled to specific performance of the said agreement reflected in Exhibits D, E, F and G to the plaint and the letter of intent duly issued by the plaintiffs and signed and returned by the defendants?

iii) Do the defendants prove that the suit is not maintainable for the reasons set out in paragraphs 1.1 and 1.9 of the written statement?

iv) What order?

6. The pleadings and the documents/exhibits, as noted, revolve around the proposed execution of a Gas Sale and Purchase Agreement(GSPA) for the supply of certain quantity of gas on certain price. Admittedly, the said GSPA is not executed till this date. The documents/exhibits, as referred above, read with this GSPA, deal with the basic aspect of utilisation and pricing for the supply of natural gas to power plant of the plaintiffs at Kawas and Janur-Gandhar. These documents also reflect the earlier correspondences and discussions to finalise and to modify the GSPA's terms and conditions. Both the parties are fully aware of the importance of execution of GSPA and its terms and conditions. They are also aware that approval of the Government of India is necessary on various facets as per the various clauses, including the pricing and utilisation of the gas. The Government's role and its policy play important role in such gas supply agreement. Both the parties are aware that gas is a natural resource and the matter is of national importance.

7. The reason and the material for the amendment to the written statement, which are averred as under:

4. I submit that in view of the following facts, some of which have transpired after filing of the written statement by the defendant on 31st October, 2007 the cause of action in the plaint does not survive. It is further submitted that even assuming without admitting and merely for the sake of arguments, that the plaintiff's contention about there being a valid subsisting, binding and concluded Agreement being in existence is correct, the said Agreement has frustrated or has become incapable of performance in view of the subsequent events. These events are set out below:

(i) The Government of India had announced a policy called New Exploration and Licensing Policy ('NELP') in 1999 under which the Government of India decided that certain blocks for exploration of petroleum (which includes oil and natural gas both) were to be offered to private entrepreneurs.

(ii) Government of India invited bids in respect of one of the blocks called KGD-6 in Krishna Godavari Basin. The Defendant was the successful bidder with its consortium partner Niko Limited and was awarded this Block for exploration and the Production Sharing Contract was entered into between the Defendant, Union of India and Niko Limited on 14th February, 2000 (hereinafter referred to as the said PSC). The Defendants crave leave to refer to the said PSC dated 14th February 2000; when produced. The Defendants started exploration of the said Block and subsequently announced the discovery of natural gas. On the basis of this discovery, in response to the Request for proposal invited by the plaintiff, the defendant had participated in the Tender process floated by the plaintiff;

(iii) The Government of India has constituted an Empowered Group of Ministers (EGoM) to take decisions in relation to NELP Contracts.

(iv) On 2nd September, 2007 the EGOM has taken a decision in respect of commercial utilization and pricing of gas under NELP and has approved the formula for valuation and sale of natural gas under the Production Sharing Contract. The Defendant had submitted the formula under which the price discovered by the Defendants was US Dollars 4.32 per MMBTU. However, the EGOM modified the same by which the said price has been reduced and fixed (at this stage) to US Dollars 4.20 per MMBTU. This decision was communicated to the plaintiff by letter dated 10th October, 2007.

(v) On 28th May, 2008 and 23rd October, 2008 EGOM took decisions relating to commercial utilization of Natural Gas under NELP and formulated guidelines for sale of natural gas by NELP contractors. The said decisions also prioritises the allocation of gas.

(vi) Reliance Natural Resources Limited ('RNRL') has filed proceedings against the Defendants in respect of supply of gas by the Defendants. RNRL was demerged from the Defendant under the Scheme of Demerger which was sanctioned by this Hon'ble Court in Company Petition No. 735 of 2005 on 9th December, 2005. The Defendant Company had entered into an Agreement with RNRL on 12th January, 2006 called 'Gas Supply Master Agreement ('GSMA') with a draft Gas Sale and Purchase Agreement ('GSPA') appended thereto. RNRL filed Company Application No. 1122 of 2006 questioning these Agreements signed by the defendant.

(vii) This Company Application was disposed of by the learned Company Judge by judgment and Order dated 15th October, 2007. The Defendants as well as RNRL have filed appeals against the said judgment of the learned Company Judge being Appeal No. 844 of 2007 and Appeal No. 1 of 2008 respectively.

(viii) In the course of hearing of the aforesaid Appeals, Union of India filed an application for being joined as a party Respondent to the said Appeals. However, by an order dated 22nd October, 2008 the Division Bench has permitted Union of India to intervene in the proceedings of the said Appeals and not as a party.

(ix) Union of India has filed an Affidavit on 13th January, 2009 and has brought to the notice of the Division Bench various decisions taken by EGOM in respect of commercial utilization of gas under NELP in which it has been stated as follows:

2. I state that during the course of legal submissions on behalf of Union of India yesterday i.e. 12th January 2009 with regard to scope and interpretation of Production Sharing Contract which is being examined by this Hon'ble Court, the Hon'ble Court desired to know the stand of the Government as to whether the price at which the gas is to be sold under Article 21.6.2(b) to the Government nominees and the price of the gas which is to be sold or disposed of in accordance with Article 21.6.2(c) which is to be valued at competitive arms length sales in the region for similar sales under similar conditions will be the same.

3. That this Hon'ble Court also wanted a clarification as to the entities who would qualify to come under ambit of Article 21.6.2(b).

4. That with regard to the above, it is respectfully submitted that after due consideration on 12th Sept. 2007, EGoM took the decision inter-alia, relating to the issue of pricing of gas to be produced under provisions of the PSC. It was decided that the price discovered by the contractor and approved by the EGoM would be applicable to all the sectors uniformly. Even Article 21.6.3 of the PSC states that the formula or basis on which the prices shall be determined pursuant to Article 21.6.2(b) or (c), shall be approved by the Government. Article 21.6.3 stipulates that once the formula or basis on which the prices shall be determined has been approved, such price is applicable both to the gas covered by Article 21.6.2(b) and Article 21.6.2(c).

5. In view of the above, price to be determined under Article 21.6.2(b) is not different form the price that already stands fixed for consumers falling under Article 21.6.2(c).

6. It is further respectfully submitted that the price as derived under Article 21.6.2(c) would apply to the Government nominees. It is however made clear that as per the decision taken by the Empowered Group of Ministers, gas should be sold in accordance with the marketing priorities as determined by the Government, as elaborated in the Gas Utilization Policy approved by the Empowered Group of Ministers on 28th May 2008 and 23rd October, 2008. A copy of the minutes of the said meetings of the EGoM are hereto annexed and marked as Annexures I and II.' A copy of the Government Affidavit is annexed hereto and marked Exhibit-A.

x) Government of India has also placed before the Division Bench in the above appeals a further decision of EGoM dated 8th January 2009 in relation to commercial utilization of Natural Gas by NELP Contractors.

8. The plaintiffs have resisted the amendment by its reply dated 25.02.2009. The defendants rejoinder dated 25.03.2009 is on the record.

9. The objections to the amendment are:

5. At the further outset, I say that the above Chamber Summons is wholly misconceived, not maintainable and liable to be dismissed with costs inter alia for the reasons more particularly set out hereinbelow:

a. The 'Issues' have already; been framed in and the trial has commenced of the Suit. The plaintiffs have filed their Affidavit of Evidence on 9th January 2009. Thereafter the matter has been adjourned from time to time at the instance of the Defendant on some pretext or the other.

b. The proposed amendments, if allowed, would not assist in doing justice between the parties but will inevitably result in delay of justice to the plaintiff.

c. Allowing the proposed amendments at this stage would cause substantial and irreparable loss and prejudice to the plaintiff incapable of being compensation by way of costs or otherwise.

d. The proposed amendments do not in any manner touch the real question of controversy between the parties.

e. The proposed amendments do not fulfill the condition required under the proviso to Rule 17 of Order VI of the Code of Civil Procedure.

f. The proposed amendments are not bonafide but for a purpose of achieving some collateral objective which is not bonafide.

6. I say that a bare perusal of the amendments shows that they are not necessary to determine the real controversy between the parties or the issues in the above suit as the amendments relate to certain EGoM decisions which themselves specifically mention that the decisions contained therein are without prejudice to the above suit. Hence, the disputes between the parties with regard to supply of gas to the plaintiff is rightly not covered by the said decision of EGoM. The said decision, therefore, is not necessarily required to be brought into the above Suit.

The basic events & the EGoM and the orders are not in dispute. The discussion and the controversy is about the interpretation and the effect of the contents' of these documents including the subsequent events.

10. I am not dealing with the merit of the amendment as sought, that the Court will decide by giving full opportunity to both the parties. [Usha Devi v. Rijwan Ahmd and Ors. : AIR2008SC1147 ]

11. The pointer of the plaintiffs is proviso to Order 6, Rule 17 of Code of Civil Procedure (CPC) (amended by Act 22 of 2002). The Apex Court while dealing with the same in Vidyabai (supra) has observed as under:

7. By reason of the Civil Procedure Code (Amendment) Act, 2002 (Act 22 of 2002), the Parliament inter alia inserted a proviso to Order VI Rule 17 of the Code, which reads as under:

Provided that no application for amendment shall be allowed after the trial has commenced, unless the court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of trial.

It is couched in a mandatory form. The court's jurisdiction to allow such an application is taken away unless the conditions precedent therefor are satisfied, viz., it must come to a conclusion that in spite of due diligence the parties could not have raised the matter before the commencement of the trial.

12. In Vidyabai (supra), the amendment application was rejected by the trial court in a suit for specific performance. However, the High Court had allowed the same and also on the reason that filing of affidavit-in-chief did not amount to the commencement of the trial. The Apex Court has maintained the order of the trial court. The proposed amendment was based upon the events and the material available and well within the knowledge of the defendants even before filing of the Suit. Therefore, such belated amendment after filing of the affidavit in chief was rejected by reversing the order passed by the High Court and maintained the order passed by the trial Court.

13. To grant or not to grant amendment application under Order 6, Rule 17 of CPC, depends upon the facts and circumstances of the case. It cannot be allowed or rejected without first testing on the anvil of proviso to Order 6, Rule 17 of CPC.

14. It is essential to give full opportunity to both the parties to put their respective case in the Suit, If case is made out even at the appellate stage or until the suit/litigation attains finality. The amendment which is based upon the events/facts which are available or well within the knowledge of the concerned parties before filing of the suit and the subsequent events and/or the materials cropped up after filing of the suit and which are necessary to decide the controversy and/or relevant for the proper adjudication of the issue and/or for passing executable final decree/judgment, the Court needs to consider the same differently, based upon the facts and material available on the record. The Court also to consider, that even if the facts/materials are taken on record as it is, whether the Court will be in a position to pass the executable order/decree. There is no point in passing any Judgment or order which is inexecutable. The Court cannot overlook the subsequent events or the material which are necessary for passing final order/decree in the interest of justice for or against the parties and or even to consider whether it is likely to frustrate the basic claim or the case.

15. The Apex Court a Three-Judge Bench decision in Shikharchand Jain v. Digamber Jain Praband Karini Sabha and Ors. : [1974]3SCR101 , has observed as under:

10. ...Ordinarily, a suit is tried in all its stages on the cause of action as it existed on the date of its institution. But it is open to a Court (including a court of appeal) to take notice of events which have happened after the institution of the suit and afford relief to the parties in the changed circumstances where it is shown that the relief claimed originally has (1) by reason of subsequent change of circumstances become inappropriate; or (2) where it is necessary to take notice of the changed circumstances in order to shorten the litigation; or (3) to do complete justice between the parties.

16. In Pasupuleti Venkateswarlu v. The Motor & General Traders : [1975]3SCR958 , a three-Judge Bench has further observed as under:

4. ...If a fact, arising after the lis has come to court and has a fundamental impact on the right to relief or the manner of moulding it, is brought diligently to the notice of the tribunal, it cannot blink as it or be blind to events which stultify or render inept the decretal remedy. Equity justifies bending the rules of procedure, where no specific provision or fair play is violated, with a view to promote substantial justice - subject, of course, to the absence of other disentitling factors or just circumstances. Nor can we contemplate any limitation on this power to take note of updated facts to confine it to the trial Court. ...We affirm the proposition that for making the right or remedy claimed by the party just and meaningful as also legally and factually in accord with the current realities, the Court can, and in many cases must, take cautious cognisance of events and developments subsequent to the institution of the proceeding provided the rules of fairness to both sides are scrupulously obeyed.

17. The events which took place and as recorded after filing of the affidavit of Union of India on 13.01.2009 which concerned with the decisions (EGoMs) based upon the policy with regard to the pricing and utilisation of the gas play an important role, in such dispute. The pricing policy (EGoM) dated 12.09.2007 though available but further modified by EGoM dated 23.10.2008. The EGoM of 28.05.2008 with regard to the utilisation of gas is further modified and clarified by 8.1.2009. The fact remains that these are events which took place after filing of the written statement dated 31.10.2007.

18. As recorded earlier, the Government's stand in such gas supply dispute, in view of the affidavit of 13.01.2009, in the matter where the defendant is a party, is a binding policy decision. Both the parties are fully aware of such dispute/litigation dealing with the similar aspects of such gas supply agreement. It is necessary to decide or adjudicate the issue of supply of gas even for the plaintiffs and if that is so, the importance of pricing and utilisation of gas based upon the agreements and documents, the Court just cannot overlook the same.

19. The fact that both the parties are fully aware of the litigations, the fact that these EGoMs, as well as, the orders referred and relied by either of the parties itself shows the importance of these materials in pending matters. The Court just cannot overlook these aspects merely because the present suit/proceeding is saved or excluded from the purview of the decisions as alleged. I am of the view that in such types of litigation/dispute for proper adjudication of the matter such materials are necessary to decide the issues as raised from the point of view to grant or not to grant the prayers of the suit. This is a bonafide and vital amendment. The submission that this amendment does not touch or not necessary to resolve the controversy between the parties is unacceptable.

20. The submission, that this EGoMs and the orders passed by the other Courts in other litigation between the defendants and RNRL is no way concerned with the issue in the suit and, therefore, such amendment need not be allowed as not necessary, has also no force. Admittedly, this EGoMs deals with the pricing and utilisation of/distribution of certain quantities of gas which include various aspects of approval and the control of Government in all respects.

21. These EGoMs, though referred and observed specifically to exclude the dispute/suit from its decision or recommendation yet just cannot be overlooked by the Court while considering the case of the plaintiffs as averred. As noted, the documents and the averments as raised/made by the plaintiffs itself, based upon and revolve around terms and conditions of GSPA and all other necessary and connected aspects. The say of Government and such policies always play important role. In my view, all these issues are interlinked and interconnected and depends upon the declared policy and the scheme of such agreement to supply of natural gas.

22. I am not accepting the submission that if chamber summons is allowed, it would cause grave harm and irreparable loss and injury to the plaintiffs. In view of the events and material on record, I am of the view the amendment is bonafide and filed within the reasonable time. The affidavit of Government dated 13.01.2009 play an important role in a matter of this nature specifically when it deals with the natural resource and in the present case the supply of gas. Those averments/affidavit and the respective stand and the submission of the Government in other matter is within the knowledge of the defendant, who is concerned defendant in the present case also. Therefore, moved this application to bring of those material on record for adjudication of the Suit in question, where the plaintiff is also claiming the respective quantity of gas from the defendants again based upon the relevant terms and conditions of GSPA, in my view such amendment and the material are necessary for proper adjudication of the controversy involved in the present suit also. Therefore, this chamber summons filed on 6.2.2009, just cannot bar or attract the proviso of Order 6, Rule 17 of CPC as contended by the learned sr. counsel for the plaintiffs.

23. Once the conditions are fulfilled and the Court comes to a conclusion that it is necessary to determine the controversy between the parties, based upon the facts and circumstances of the case, it is primary duty of the court to pass an appropriate order to give full opportunity to both the parties. This proviso, no way restricts the power of the court to grant amendment, if case is made out.

24. The Apex Court while dealing with the proviso of Order 6, Rule 17 CPC in Usha Devi v. Rijwan Ahamd and Ors. (supra) observed as under:.Still, we are of the opinion that the proposed amendment was necessary for the purpose of bringing to the fore the real question in controversy between the parties and the refusal to permit the amendment would create needless complications at the stage of the execution in the event of the plaintiff-appellant succeeding in the suit.

25. Resultantly, the chamber summons is allowed as prayed. No costs. The defendant to carry out amendment within two weeks from today. The defendant to file further affidavit and documents within two weeks thereafter. The parties to exchange the draft additional issues, if any.

26. The Suit be listed for directions on 10th June, 2009.

27. The learned senior counsel for the plaintiffs seeks stay to the effect and operation of this judgment. Considering the fact that the issue plays important role in final adjudication of the plaint in question, I am inclined to grant stay for six weeks.


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