Railways Asked To Pay Rs 4 Crore To Power Firms

The Supreme Court last week upheld the award of the umpire in an arbitration of dispute between Tata Hydro-Electric Power Supply Co and other power companies on the one hand and Central and Western Railways on the other.

The court set aside the decision of the Bombay High Court that the dispute should be settled under the Indian Electricity Act and not according to the Arbitration and Conciliation Act.

The umpire had awarded Rs 4 crore to the power firms with 12 per cent interest from 1993. The power firms had agreed to supply electricity to the two railways at several points on the electrified track.

According to the power supply pact, any dispute between the parties is to be referred to arbitration by persons chosen by the parties.There was a defect in the machine reading the electric supply.

The companies sent a supplementary bill of Rs 9 crore to the railways after correcting the defect. The railways disputed it.

The power firms invoked the arbitration clause in the agreement. Two arbitrators were selected. But since they failed to agree, an umpire was chosen.

The government moved the Bombay High Court challenging the award arguing that the umpire had no jurisdiction in the matter since the dispute should have been resolved under Section 26 of the Indian Electricity Act.

According to this provision, a electricity inspector would decide disputes over defective meters and wrong readings. The high court agreed with the railways. The power companies moved the Supreme Court.

A Bench headed by Justice M B Shah ruled that the dispute in this case was not whether the meter was defective or not. If it was so, the Electricity Act would have applied. The umpire was not deciding whether the meter was defective or not. The dispute was over the claim of the power companies who had submitted a supplementary bill for the power supplied but not recorded.