# M/s Ultra Tech Cement Ltd. (UTCL) v. UPRVUNL, Lucknow

- **Citation:** (2020) 2 ILRA 1
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-02-17
- **Case number:** Arbitration Application No. 44 of 2019
- **Bench:** Jaspreet Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-ultra-tech-cement-ltd-utcl-v-uprvunl-lucknow-45595
- **Pages:** 23

## Headnote

A. Arbitration and Conciliation Act,
1996-Section
11(6)-
challenge
toappointment of arbitrator-agreement
between
the
parties
required
the
respondent to provide fly ash free of
cost
to
the
petitioner-negotiation
continued for some time-respondent
were charging for the fly ash from
others then why the charge should not
be levied from the petitioner upon the
objection raised by the audit teammeanwhile,
respondent
issued
a
tender
seeking
bids
from
third
parties-this
triggered
the
disputeupon request for appointing arbitrator
according
to
arbitration
clause,objection
raised
by
the
respondent that agreement is not duly
stamped-the
court
considered
the
agreement is akin to licence and is
duly stamped-petitioner proposed the
name of an Arbitrator, which was not
acceptable
to
the
respondentarbitration clause invoked by a notice
duly served on the respondent-since
the arbitration clause between the
parties is not disputed-the court has
ample jurisdiction to exercise its
power u/s 11(6) of the Act, to appoint
an Arbitrator.(Para 61 to 81)

The application is allowed. (E-6)

List of Cases Cited:-

## Text

_Characters 0–39,945 of 73,940. This is a partial read: ask again with offset=39945 for what follows._

2 All.
M/s Ultra Tech Cement Ltd. (UTCL) Vs. UPRVUNL, Lucknow
1
(2020)02ILR A1
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 17.02.2020

BEFORE

THE HON'BLE JASPREET SINGH, J.

Arbitration Application No. 44 of 2019
Alongwith
Arbitration Application No. 45 of 2019

M/s Ultra Tech Cement Ltd. (UTCL)
 ...Applicant
Versus
UPRVUNL, Lucknow ...Opposite Party

Counsel for the Applicant:
Rajat Gangwar, Rahul Agarwal

Counsel for the Opposite Party:
Vibhanshu Srivastava, Suyash Manjul,
Vibhanshu Srivastava

A. Arbitration and Conciliation Act,
1996-Section
11(6)-
challenge
toappointment of arbitrator-agreement
between
the
parties
required
the
respondent to provide fly ash free of
cost
to
the
petitioner-negotiation
continued for some time-respondent
were charging for the fly ash from
others then why the charge should not
be levied from the petitioner upon the
objection raised by the audit teammeanwhile,
respondent
issued
a
tender
seeking
bids
from
third
parties-this
triggered
the
disputeupon request for appointing arbitrator
according
to
arbitration
clause,objection
raised
by
the
respondent that agreement is not duly
stamped-the
court
considered
the
agreement is akin to licence and is
duly stamped-petitioner proposed the
name of an Arbitrator, which was not
acceptable
to
the
respondentarbitration clause invoked by a notice
duly served on the respondent-since
the arbitration clause between the
parties is not disputed-the court has
ample jurisdiction to exercise its
power u/s 11(6) of the Act, to appoint
an Arbitrator.(Para 61 to 81)

The application is allowed. (E-6)

List of Cases Cited:-

1. Garware Wall Ropes Ltd. Vs. Coastal
Marine
Constructions
&
Engineering
Ltd.,AIR (2019 )SC 2053

2.
SMS
Tea
Estates
(P)
Ltd.
Vs.
Chandmari Tea Company (P) Ltd. (2011)
14 SCC 66

3. Errington Vs. Errington & Woods Lord
Denning, (1952) 1 KB 290

4. Thomas Vs. Sorrell (1558-1774) All ER
Rep 107

5. Associated Hotels of India Ltd. Vs.
R.N. Kapoor, AIR (1959) SC 1262

6. Qudrat Ullah Vs. Municipal Board,
Bareilly, (1974) 1 SCC 202

7.
Khalil
Ahmed
Bashir
Ahmed
Vs.
Tufelhussein Samasbhai Sarangpurwala,
(1988) 1 SCC 155

8. Ashoka Marketing Ltd. Vs. PNB (1990)
4 SCC 406

9.
Corporation
of
Calicut
Vs.
K.
Sreenivasan (2002) 5 SCC 361

10. New Bus Stand Owners Association
Vs.
Corporation
of
Kozhikode
&
Anr.(2009) 10 SCC 455

(Delivered by Hon'ble Jaspreet
Singh, J.)

1. Heard Shri Jaideep Narain Mathur
learned Senior Advocate alongwith Shri
Rahul Agarwal and Shri Rajat Gangwar
learned counsel for the petitioner and Shri
2 INDIAN LAW REPORTS ALLAHABAD SERIES
Sandeep Dixit learned Senior Advocate
alongwith Shri Suyash Manjul for the
respondent.

2. The aforesaid two petitions have been
preferred under Section 11 (6) of the
Arbitration and Conciliation Act, 1996. Both
involve similar facts and common questions of
law and as such have been heard together and
are being decided by this common judgment.

3. In order to appreciate the controversy
involved in the above petitions, briefly the
facts giving rise to the present petitions are
being noted hereinafter.

4. M/s. Jai Prakash Associates Limited
"hereinafter referred to as JAL" had entered an
agreement for the purposes of consumption of
fly ash which was to be generated as a by
product at 1x250 Unit 9 MW Harduganj
Thermal Extension Power Project, Kasimpur,
Aligarh while the aforesaid fly ash was to be
consumed by the petitioner for its Portland
Pozzollona Cement "hereinafter referred to as
PPC" at Sikandrabad U.P.

5. However, on account of changed
circumstances, in term of the order passed by
the National Company Law Tribunal at
Mumbai & at Allahabad, a scheme for
acquiring the identified cement plants of JAL
in the States of Madhya Pradesh, Andhra
Pradesh, Himachal Pradesh, Uttar Pradesh and
Uttarakhand was prepared and the petitioner
entered in an agreement with JAL on 31st of
March, 2016 which was approved by the
NCLT at Mumbai and Allahabad, by means of
the order dated 15th of February 2017 and 2nd
of March, 2017 respectively.

6. Subsequently the Board of Directors
of the petitioner's company and JAL in their
meeting held on 29th of June, 2017 declared
the scheme to be made effective and all the
identified assets of JAL vested with the
petitioner's company with effect from 29th of
June, 2017. It is in this backdrop that the
petitioner's company, namely, M/s. Ultra Tech
Cement Limited "hereinafter referred to as
UTCL" acquired all the rights and the
liabilities of JAL including the rights,
obligation in terms of the agreement which
was entered between JAL and the respondent
dated 16th of February, 2007.

7. The respondent is a State Thermal
Power Utility and is wholly owned and
controlled by the State of Uttar Pradesh.
The respondent corporation i.e. Uttar
Pradesh Rajya Vidyut Utpadan Nigam Ltd.
"hereinafter referred to as UPRVUNL"
was constituted for the purposes of
construction of new Thermal Power
Projects in the State and is responsible for
the
generation,
transmission
and
distribution of power within the State of
Uttar Pradesh. It is with the aforesaid
purpose that the operations of the State
Sector Thermal Power Stations were
handed over to it.

8. To put the controversy in a
prespective,
certain
background
facts
which led the parties to enter in an
agreement dated 16th of February, 2007
"hereinafter referred to as the said
agreement of 2007" and which is in the
eye of the storm, may be noted first:-

(i) Usually, thermal power is
generated from coal which leads to
generation of fly ash as its by-product.
This, by-product which is generated from
the thermal power is a hazardous product
and causes environmental damage and
accordingly the Ministry of Environment
and Forest, Union of India has made strict
regulations
in
respect
thereto
and
necessarily all thermal power plants are
2 All.
M/s Ultra Tech Cement Ltd. (UTCL) Vs. UPRVUNL, Lucknow
3
required to have a fly ash pond for
stocking of fly ash generated by the said
power plants;

(ii) The aforesaid by product i.e.
fly ash is used in production of several
products such as bricks, roads and cement
amongst others;

(iii)
The
Ministry
of
Environment and Forest, Union of India
had issued a notification dated 14th of
September 1999, a copy of which has been
annexed as Annexure no.1 with the
petition. The aforesaid notification with
the objective of restricting the excavation
of top soil for manufacture of bricks and
promoting the utilization of fly ash in the
manufacture of building material and in
construction activity within a specified
radius of fifty kilometers from the coal or
lignite based thermal power plants as well
as to prevent the dumping of fly ash and
regulate the disposal of fly ash discharged
from coal or lignite based thermal power
plants
had
issued
the
aforesaid
notification.

(iv) For the present purposes,
clause 2 of the aforesaid notification dated
14th of September, 1999 relating to
utilization of ash by thermal power plant is
being reproduced hereinafter, for ready
reference:-

(1) 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 ashbased 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.

(2) Every coal or lignite based
thermal power plant commissioned subject
to environmental clearance conditions
stipulating the submission of an action
plan for full utilisation of fly ash shall,
within a period of nine years from the
publication of this notification, phase out
the dumping and disposal of fly ash on
land in accordance with the plant. Such an
action plan shall provide for thirty per cent
of the fly ash utilisation, within three years
from the publication of this notification
with further increase in utilisation by at
least ten per cent points every year
progressively for the next six years to
enable utilisation of the entire fly ash
generated in the power plant at least by the
end of ninth year. Progress in this regard
shall be reviewed after five years.

(v) It is in this backdrop that the
respondent
which
is
managing
the
operations of the State sector thermal
power station and is responsible for
generation of thermal power as a result of
its
production,
fly
ash
was
being
generated, whereas in terms of the
aforesaid
notification
of
14th
of
September, 1999, the respondent was
required to create appropriate model for
disposal of fly ash. On the other hand, the
petitioner who is a Company engaged in
production
of
cement
wherein
the
aforesaid fly ash is used as a natural raw
material accordingly had set up its cement
plant at Sikandrabad.

(vi) Thus, the predecessor of the
petitioner i.e. JAL and the respondent had
entered in an agreement dated 16th of
February, 2007.

9. It is this agreement dated
06.02.2007 which contain the arbitration
clause which reads as under:-

"If any dispute or difference
arises between two parties, the same shall
be
conducted
in
accordance
with
Arbitration and Conciliation Act, 1996. All
4 INDIAN LAW REPORTS ALLAHABAD SERIES
disputes of any nature shall be subject and
the jurisdiction of Allahabad High Court,
Bench of Lucknow."

10. The aforesaid agreement, a copy
of which has been annexed with the
Annexure no.2 with the petition, contained
certain recitals which are relevant for the
effective disposal of the present petition
and are being quoted hereinafter:-

a. UPRVUNL is desirous to
dispose off dry fly ash from their proposed
2 x 250 MW Harduaganj Thermal Power
Station Kasimpur, Aligarh [referred as
HTPS] in the state of U.P. which will in
the process of electricity generation will
produce huge quantity of fly ash which
need to be disposed off in an effective
manner so as to prevent environmental
hazards according to quidelines issued by
MOEF, Government of India vide gazette
notification 763 [Aa] dated 14.09.1999.

b.
UPRVUNL
intends
to
commission the 2 x 250 MW power plant
extention by August 2009 and fly ash
availability thereafter 'JAL' intends to
commission Grinding Unit at Sikandrabad
U.P. by October 2008.

c. 'JAL' intends to use fly ash for
cement manufacturing of its proposed
cement
manufacturing
units
of
Sikandfabad U.P. for manufacture of fly
ash based Portland Pozzollona Cemen
[PPC].

d. 'JAL' in pursuance of the
proposal submitted by them have agreed to
use entire quantity (approximate 4.5 lac
tones per annum. (MIPA) or 1350 tones
per day (MTPO) of 1 x 250 MW [Unit
no.9].

e.
Both
the
parties
viz
UPRVUNL and 'JAL are desirous of
recording the terms and conditions which
have been agreed by both the parties.

various discussions were held
between the representatives of UPRVUNL
and JAL which have culminated in certain
agreed terms and conditions and a MOU
dated 29.09.2006 was signed relating to
utilization of dry fly ash of 2 x 250 MW
(Unit No.9) Harduaganj Thermal Power
Project Kasimpur, Aligarh of UPRVUNL
by JAL for their Cement Plants as detailed
above.

NOW THEREFORE forth and in
consideration of the discussion, mutual
convenient set forth herein and MOU
dated 29.09.2006 and proposal submitted
dated 6th Jan.,2007 by JAL both the
parties enter into an agreement as
follows:-

1.
That
JAL
shall
install,
maintain and operate the Dry Fly Ash
Extraction System (DFAES) starting from
ESP hopper's bottom to Silos and its
loading system into close bulkers for 1 x
250 MW (Unit no.9) HTPS of UPRVUNL
at its own cost as per the layout plant to be
submitted by JAL and approved by Chief
Engineer,
Environment
&
Safety
UPRVUNL.

2. UPRVUNL shall allow to
collect the entire quantity (Approximate 45
lacs MTPA of Dry Fly Ash generated from
ESP of Unit No.9 on as is where is basis
from the date of installation and operation
of the Dry Fly Ash Extraction System, free
of cost. JAL shall make arrangements for
carrying the same to their premises of
their own cost.

3. UPRVUNL shall allow to
collect the Dry Fly Ash, Free of Cost for a
period of 25 years or life time of the plant
of either of the said parties whichever is
earlier.

4. As the DFAES is the integral
part of Thermal Power Station, hence
2 All.
M/s Ultra Tech Cement Ltd. (UTCL) Vs. UPRVUNL, Lucknow
5
electricity and wather used for collection
of Dry Fly Ash from ESP hoppers and
conveying it to the silos and loading pipes
shall
be
treated
as
the
auxiliary
consumption of Thermal Power Station.

5.
JAL
shall
obtain
NOC/permissioin from the other related
department if any as required, however,
assistance if any shall be provided by
UPRVUNL.

6. If any dispute or difference
arises between the two parties, the same
shall be conducted in accordance with the
Arbitration & Conciliation Act, 1996. All
disputes of any nature shall be subject and
the jurisdiction of Allahabad High Court
Bench of Lucknow.

7. UPRVUNL shall transfer the
right to use and work at HTPS land for
construction activities of DFAES System.
Power
and
Water
required
for
construction shall be charged as per
prevailing tariff.

8. UPRVUNL shall help in
securing the 9 MVA/132 KV power supply
from UPPCL. However, it will no have
any
contractual
liability
on
the
UPRVUNL.

9. UPRVUNL will not be liable
legally or financially to pay any kind of
damages or compensation to JAL in the
event of not being able to supply dry fly
ash during the period of the agreement for
reasons beyond its control and decision
regarding shut down and maintenance of
electricity generating units will be solely
of UPRVUNL and will be on "JAL".

10. 'JAL' shall observe all the
safety rules & regulations as per Indian
Factory Acts and Rules and UP Factor Act
and Rules and will arrange labour
insurance for their employees in case of
any accident or mis-happening during
installation, operation & maintenance of
DFAES. JAL shall be responsible for
payment
of
compensation
to
their
employees
as
per
Workmen's
Compensation Act and any other rules &
regulations as prevalent at that point of
time.

11.
Any
change
in
GOI
guidelines regarding cost of fly ash shall
be binding on both the parties.

11.

Under
the
head
general
conditions as mentioned in the aforesaid
agreement, it contained certain more
clauses
which
are
being
mentioned
hereinafter:-

5. 'JAL' will actually use the
lifted quantity of fly ash for manufacturing
of PPC/RMC plants only and trading of fly
ash will not be permitted.

6. 'JAL' will develop greenbelt
on the 5 hectare land of UPRVUNL by
planting the 5000 nos of non exotic India
species plant such as Neem, Peepal,
Kadam, Jangli Jalebi, Shisham, Imli etc.,
however the cost of the plant and their
maintenance shall be borne by the 'JAL'.
The plants shall remain the properties of
UPRVUNL.

9.
All
cost
necessary
for
modification of the system for taking fly
ash from DFAES of HTPS, if any required
shall be borne by the JAL, subject to prior
approval
from
Chief
Engineer,
Environment and Safety, unit UPRVUNL
Lucknow.

10.
All
the
operation
and
maintenance instructions for DFAES given
by Chief Engineer, HTPS or his appointed
nominee shall be binding on JAL.

11. In case JAL is not able to lift
the fly ash for a continuous period of four
weeks because of their own inability and
no genuine reasons agreed by Chief
Engineer (E & A). Chief Enginerr (E & S)
UPRVUNL may impose a penalty as
6 INDIAN LAW REPORTS ALLAHABAD SERIES
deemed fit to a maximum of Rs.10,000/-
(Rupees Ten Thousand only) per day.

12. UPRVUNL shall not be
responsible for supply of any specific
quality/grade of fly ash to 'JAL'. The
chemical
composition
and
physical
properties of fly ash depends on grades of
coal and varying firing conditions in the
boiler.

15. All vehicles of 'JAL', which
will carry fly ash shall be liable for
checking by HTPS for ensuring of safety
regulations enforced in the area from time
to
time.
The
JAL
shall
indemnify
UPRVUNL's properly by their workmen or
any member of their establishment. The
JAL must ensure that the fly ash must be
transported through closed vessel carriers.

16.UPRVUNL reserves the right
to terminate the contract earlier and
forfeit the security deposit in case of Chief
Engineer [E & S] is satisfied without
prejudice to any other proceedings that
may be taken up by UPRVUNL that the
progress of installation of Dry Fly Ash
Extraction System is not up to the mark
and may delay the implementation of the 2
x 250 MW Harduaganj Extension Project
as a whole such termination will not
entitle 'JAL' to any claim for compensation
of any kind whatsoever.

17. UPRVUNL reserves the right
to terminate the contract earlier for nonfulfillment of any of the conditions as
stipulated
in
the
contract
without
prejudice to any other proceedings that
may be taken up by UPRVUNL. Such
termination will not entitle "JAL to any
claim for compensation of any kind
whatsoever. This clause shall not be
effective for day to day working minor
disputes at site.

20. 'JAL' shall indemnify and
save harm to the property of HTPS against
all actions, claims suits, demand, costs or
expenses arising in connection with
injuries suffered during the Agreement
period by persons employed by the JAL or
his sub-contractor on the works whether
under the General Law or under the
Workmen's Compensation Act 1923 or any
other statute in force during the currency
of the agreement.

22. Liability for damages to
works or plants:

JAL shall during the currency of
Agreement,
property
protect
the
work/plant
and
shall
take
every
reasonable, proper, timely and useful
precaution against the accident or injury
to the same from any cause and shall
remain answerable and liable for all
accidents or injuries there to which until
the same be or deemed to be or be
occasioned by the acts or commissions of
or their contractor or their workmen or
their sub-contractors and all losses and
damages JAL to the work/plant arising
from such accidents or injuries as
aforesaid shall be made good in the most
complete and substantial manner by and at
the cost of JAL and to the reasonable
satisfaction of the Chief Engineer HTPS or
any other persons designated by him.

12. The aforesaid agreement is
stamped with a duty of rupees one hundred
and it has been acted upon between the
parties. It will be relevant to point out that
as far as the parties are concerned, there is
no dispute regarding the factum of signing
and entering into the aforesaid agreement
dated 16th of February, 2007. It is also not
disputed that the parties acted upon the
same and the terms and conditions
contained in the aforesaid agreement was
followed
by
the
parties,
until
the
controversy erupted.
2 All.
M/s Ultra Tech Cement Ltd. (UTCL) Vs. UPRVUNL, Lucknow
7

13. The contents and recital of the
agreements in between the parties in the
two petitions are identical. The only
difference is that in the Arbitration
Application No.44 of 2019, relates to the
thermal power plant 1x250 Unit 9 MW
Harduganj,
whereas
the
Arbitration
Application No.45 of 2019 relates to
2x250 Unit 8 MW Harduganj. The parties
are the same and the same controversy is
in both the petitions hence they were
consolidated and are being disposed of by
this common judgment. However, for the
sake of convenience the facts relating the
Arbitration Case No.44 of 2019 has been
noticed by this Court.

14. It would be seen from the perusal
of the agreement entered between the
parties that the petitioner's Company was
required to lift the fly ash from the thermal
power station at Harduganj which was to
be used by the petitioner as raw material
for its cement plant at Sikandrabad.

15. It was specifically provided in
the agreement that the respondent shall
allow the petitioner to collect the entire
quantity of dry fly ash generated from its
power plant on 'As Is Where Is Basis' from
the date of installation and operation of the
dry fly ash extraction system, free of cost.
JAL "the predecessor in the interest of the
petitioner's Company" was required to
make arrangement for carrying the same to
their premises at their own cost.

16. In furtherance of the aforesaid
agreement dated 16th of February 2007,
the respondent got the permission from the
Ministry of Environment and Forest for
setting up its thermal power plant at
Harduganj, Kasimpur and Aligarh. The
respondent commissioned its Unit 9 and
the petitioners have been lifting the fly ash
generated from the said Unit 9 with the
effect from May 2013.

17. On 3rd of November, 2009, the
Ministry of Environment and Forest issued
another notification, a copy of which has
been annexed as Annexure no.3 to the
petition.

18. By the instant notification, the
earlier notification issued on 14th of
September, 1999 was amended and as a
result of the aforesaid notification the
thermal power station which were earlier
required to provide the fly ash free of
costs, now, enabled the power plant to
charge for the fly ash upto 80% and 20%
of the fly ash was to be made available
free of charge. The relevant portion of the
notification of 2009 reads as under:-

"(1) All coal or lignite based
thermal power stations would be free to
sell fly ash to the use agencies subject to
the following conditions, namely:-

(i) the pond ash should be made
available free of any charge on "as is
where is basis" to manufacturers of bricks,
blocks or tiles including clay fly ash
product manufacturing unit(s), farmers,
the
Central
and
the
State
road
construction
agency
Public
Works
Department, and to agencies engaged in
back filling or stowing of mines.

(ii) at least 20% of dry ESP fly
ash shall be made available free of charge
to unit manufacturing fly ash or clay-fly
ash bricks, blocks and tiles on a priority
basis over other users and if the demand
from such agencies falls short of 20% of
quantity, the balance quantity can be sold
or disposed of by the power station as may
be possible;
Provided that the fly ash obtained from the
thermal power station should be utilized
8 INDIAN LAW REPORTS ALLAHABAD SERIES
on for the purpose for which it was
obtained from the thermal power station
or plant failing which no fly ash shall be
made available to the defaulting users."

19. Be that as it may, despite the
aforesaid notification of 2009, the parties
to the instant agreement continued to
follow the earlier notification of 1999.

20. In terms of the agreement, the
petitioner had invested large sum of
money for the purposes of installation of
Dry
Fly
Ash
Extraction
System
"hereinafter referred to as DFAES" at it
own cost. The aforesaid investment
included
the
monetary
involvement
towards silos, compressor, vacuum pumps,
panel etc. In terms of the agreement, it was
the petitioner who had to bear the
maintenance and operational charges of
the DFAES.

21. It is only on the 4th of May, 2011
the respondent wrote a letter to JAL
(predecessor in interest of the petitioner)
regarding negotiating the rate for lifting of
fly ash from Harduaganj thermal power
station. The same was replied by the
predecessor of the petitioner stating that
the agreement between the parties required
the respondent to provide the fly ash free
of cost and it was not fair for the
respondent to charge for the same. This
negotiations continued for quite sometime
and it was also informed that in the audit
conducted of the respondent power plant,
it revealed that the respondent were
charging for the fly ash from others then
why the charge should not be levied from
the petitioner. It was in light of the
objection so raised by the audit team that
the respondent initiated the negotiation
regarding the price of lifting of the fly ash.

22. Number of meetings took place
between
JAL
and
the
respondent,
however, no conclusive decision could be
arrived at and as late as on 31st of January,
2018 i.e. by this time the present petitioner
had acquired the assets of its predecessor
and made an offer by means of its letter
dated 31st January, 2018 a price of rupees
fifty per metric tonne for lifting fly ash
from Harduaganj Thermal Power Plant.
This offer made by the petitioner was not
acceptable to the respondent. In the
meantime, the respondent issued a tender
seeking bids from third parties for lifting
of dry ash. It is this publication of tender
which trigerred the dispute and the
petitioner reacting to the same sent a letter
dated 15th of May, 2019 objecting to the
tender notice published on 29th of April,
2019.

23. The respondent replied to the
said letter vide its reply dated 24th of May,
2019 and invited the petitioner to a
meeting which were scheduled to be held
on 29th of May, 2019 between the
representative of the petitioner and the
concerned officers of the UPRVUNL. The
said meeting did not result in any fruitful
outcome and thereafter the petitioner
instituted a petition before the Commercial
Court at Lucknow invoking Section 9 of
the Arbitration & Conciliation Act, 1996.
The said petition was registered as
Arbitration Case No.619 of 2019 which,
after hearing the parties, was dismissed by
the Commercial Court at Lucknow by
means of its judgment/order dated 10th of
July, 2019. The petitioner also preferred an
appeal before the High Court. However,
the same was also dismissed on 14th of
June, 2019, a copy of which has been
annexed as Annexure No.22 with the
petition.
2 All.
M/s Ultra Tech Cement Ltd. (UTCL) Vs. UPRVUNL, Lucknow
9

24. The petitioner by means of its
notice dated 04.06.2019, a copy of which
has been annexed as Annexure No.23,
invoked
the
arbitration
clause
and
suggested the name of retired Judge of this
Court to act as the sole arbitrator. The
aforesaid notice was duly served on the
respondents. However, the respondents did
not take any active participation in the
constitution of the arbitral tribunal, hence
the aforesaid petition.

25. The respondents filed their
counter-affidavit seeking rejection of the
aforesaid petition. At the very outset, it
may be stated that the scope of this Court
while entertaining a petition under Section
11(6) of the Arbitration & Conciliation
Act is limited to the extent that this Court
is required only to look into the fact
whether the agreement entered between
the parties contained an arbitration clause
or not. It is also required to look into the
fact whether the proper court having
jurisdiction has been approached for the
aforesaid
purpose
and
primarily
all
contentious issues have to be left to be
decided by the Arbitrator.

26. However, in so far as this aspect
of the matter is concerned, the respondent
does not dispute the arbitration clause nor
the signing of the agreement dated 16th of
February, 2007. Though the respondent
while filing its counter-affidavit have
raised objection on the merit. However,
suffice to state that this Court is not
inclined to go into the merits of the dispute
and confines itself only to the fact that the
agreement dated 16th of February, 2007 is
not disputed by the respondent and so also
the arbitration clause.

27. Having said that, it would be
relevant to mention that the respondent has
raised a primarily objection regarding the
maintainability of the above petition. The
ground so raised by the respondent is
squarely based on the decision of the Apex
Court in the case of Garware Wall Ropes
Ltd. Vs. Coastal Marine Constructions &
Engineering Ltd., reported in AIR 2019
SC page 2053.

28. On the strength of the aforesaid
case, the respondent has raised a plea that
unless and until the agreement which
contain the arbitration clause is duly
stamped as required in law till then the
agreement becomes unenforceable and the
court in terms of Section 11(6) of the
Arbitration & Conciliation Act is denuded
of its jurisdiction to appoint an Arbitrator.

29. Thus, the gist of the preliminary
objection raised by the respondent is that
the agreement dated 16th of February,
2007 is under stamped and as such unless
and until the same is impounded and
properly stamped as required in law, no
Arbitrator can be appointed.

30. It is in this backdrop that the
question before this Court to be considered
and decided is whether the agreement
dated
16th
of
February,
2007
is
appropriately stamped or not. In case if it
is properly stamped, then the Court
possesses the jurisdiction to appoint an
Arbitrator and in case if the answer is in
the negative, then the agreement requires
to be impounded and unless appropriately
stamped as per provisions contained in the
Stamp Act, the Court will not appoint an
Arbitrator.

31. It is in light of the aforesaid
question so formulated that the Court has
heard
the
learned
Senior
Counsel
appearing on the two sides at length.
10 INDIAN LAW REPORTS ALLAHABAD SERIES

32. Shri Jaideep Narain Mathur
learned counsel for the petitioner has
plainly, but vehemently, submitted that as
far as the agreement dated 16th of
February, 2007 is concerned, the said
instrument is governed by Article 5 (c) of
Schedule 1-B of the Indian Stamp Act as
duly amended and applicable in the State
of Uttar Pradesh. It is the submission of
Shri Mathur that the aforesaid agreement
entered
between
the
parties
is
appropriately stamped; inasmuch as a
stamp duty of rupees one hundred is
provided for an instrument which is
mentioned in Article 5 entry (c) contained
in Schedule 1-B.

33. To elaborate his submission Shri
Mathur has taken the Court extensively
through the recital of the notification dated
14th
of
September,
1999
and
the
agreement dated 16th of February, 2007.
On the strength of the aforesaid, it has
been argued by Shri Mathur that the
agreement in question only relates to
lifting of fly ash and that too free of cost.
It has been submitted that though the
petitioner was required to install operate
and maintain the DFAES at the costs of
the petitioner. In the entire agreement,
there is not a single word or terminology
which is used to indicate that the aforesaid
DFAES has been either sold or transferred
to the respondent.

34. Shri Mathur has also emphasized
that as far as the lifting of the dry fly ash is
concerned, the same was to be done by the
petitioner at his own costs by providing its
own vehicle and since the aforesaid fly ash
was generated from the power plant of the
respondent and in terms of notification
dated 14th of September, 1999 and it was
for a period of 25 years, the dry fly ash in
terms of the agreement dated 16th of
February, 2007 was required to be
given/provided to the petitioner free of
costs. Thus, for the entire transaction as
mentioned and depicted in the agreement
of February 2007, there is neither any
transfer nor any consideration as such it
cannot be treated either as a conveyance
nor it can be said that it relates to any
transfer
of
movable
or
immovable
property, accordingly the agreement falls
within Article 5(c) of Schedule 1-B of the
Stamp Act as amended in the State of
U.P., accordingly there is no deficiency of
any stamp duty and there is no impediment
for the court to appoint an Arbitrator.

35. Per contra, Shri Sandeep Dixit,
learned Senior Advocate appearing for the
respondent has also meticulously taken the
Court to the terms of the agreement as well
as
the
notification
dated
14th
of
September, 1999 and 3rd of November,
2009 and has submitted that the entire
transaction as indicated in the said
agreement is squarely covered by Article
23 relating to a conveyance of Schedule 1B of the Stamp Act and has submitted that
apparently in terms of the aforesaid Article
23, the agreement in between the parties is
under stamped accordingly the agreement
requires to be impounded and only when
the stamp duty is properly paid alongwith
the penalty, can the Court appoint an
Arbitrator.

36. Shri Dixit in order to buttress his
submission has vehemently urged that in
terms of the agreement which clearly
provides that the DFAES which is to be
installed, operated and maintained by the
petitioner on the premises belonging to the
respondent is embedded in earth and as
such would be treated as an immovable
property. It has also been submitted that
since according to the petitioner, the value
2 All.
M/s Ultra Tech Cement Ltd. (UTCL) Vs. UPRVUNL, Lucknow
11
of the said DFAES is in several lacs
accordingly that should be taken minimum
as the value and appropriate stamp duty be
paid.

37. Shri Dixit has also submitted that
the agreement provides that the said
DFAES shall form an integral part of the
power station of the respondent, thus it
implies
that
the
DFAES has
been
transferred to the respondent, accordingly
it is squarely covered under Article 23 of
Schedule 1-B of the Uttar Pradesh Stamp
Act.

38. Another limb of argument of Shri
Dixit is, that the petitioner was required to
develop a green belt on an area of about
five hectares of land belonging to the
respondent by planting five thousand, nonexotic Indian species plants such as Neem,
Peepal, Kadam, Jangaljalebi, Shisham,
Imli etc. on the costs as well as its
maintenance which was to be borne by the
petitioner whereas the plants shall remain
the property of the respondent. Thus in
view thereof, Shri Dixit has submitted that
the agreement also contemplates transfer
of five thousand trees which are embedded
in and as such also amounts to a transfer of
immovable property attracting Article 23
of Schedule 1-B of the Stamp Act
applicable in the State of U.P. Since the
stamp duty applicable on conveyance is on
ad- volerum basis directly connected with
the valuation hence the value of the
aforesaid agreement runs in several lacs
and in any case stamp duty of rupees one
hundred on the agreement is grossly
deficient and thus in light of the decision
rendered by the Apex Court in the case of
SMS Tea Estates (P) Ltd. Vs. Chandmari
Tea Company (P) Ltd. reported in 2011
(14) SCC page 66 and Garware Wall
Ropes Ltd. (supra), the request of the
petitioner to appoint the Arbitrator, cannot
be acceded unless the stamp duty is made
good.

39. In order to appreciate the
submission of the respective parties, it will
be essential to note the ratio of the
decision rendered by the Apex Court in the
case of Garware Wall Ropes Ltd. (supra)
and SMS Tea Estates (P) Ltd. (supra).

40. The Apex Court in the case of
Garware Wall Ropes Ltd. (supra) was
confronted with the question as to what is
the
effect
of
an
arbitration
clause
contained in a contract which requires to
be stamped. The Apex Court further
noticed that in the case of SMS Tea
Estates (P) Ltd. (supra) the Court had held
that
when
an
arbitration
clause
is
contained in an unstamped agreement, the
provisions of the Indian Stamp Act
requires the Judge hearing the petition
under
Section
11
to
impound
the
agreement and ensure that the stamp duty
and penalty (if any) are paid before
proceeding further with the petition under
Section 11.

41. The Apex Court also noticed that
the legislative amendment brought in the
Arbitration & Conciliation Act, 1996 by
the
Arbitration
&
Conciliation
"Amendment" Act, 2015 whereby Section
11 (6-A) has been introduced and its effect
on such understamped or unstamped
agreement containing Arbitration Clause.
In order to under stand the controversy
before the Apex Court, it will be
worthwhile to reproduce Section 11 (6-A)
as amended by 2015 Act and which reads
as under:-

[(6A) The supreme Court or, as
the case may be, the High Court, while
12 INDIAN LAW REPORTS ALLAHABAD SERIES
considering any application under subsection (4) or sub-section (5) or subsection (6), shall, notwithstanding any
judgment, decree or order of any Court,
confine to the examination of the existence
of an arbitration agreement.]

42. Now the question arises as to the
effect of the decision of SMS Tea Estates
(P) Ltd. (supra) on dispute which arises
post the amendment of 2015; inasmuch as
by the aforesaid Section 11 (6A), the High
Court while considering an application
under sub-sections (4)(5) or (6) shall
confine itself only to the examination of
the existence of an arbitration agreement,
notwithstanding any judgment, decree or
order of any court. Thus, whether in the
changed circumstances the dictum of SMS
Tea Estates (P) Ltd. (supra) would
continue to govern the field or post 2015
even if an agreement is under stamped, the
court while dealing with an application
under Section 11(6) will still confine itself
only to the examination of the existence of
an arbitration agreement.

43. It is in this backdrop that the
Apex Court considering the various
provisions of both the Arbitration &
Conciliation Act as well as the Stamp Act
as applicable to the State of Maharashtra
including the provisions of the contract
Act and the earlier binding decision of the
Apex Court and thereafter held as under
and the relevant paragraphs reads as
under:-

16. ... A close look at Section
11(6A) would show that when the Supreme
Court or the High Court considers an
application under Section 11(4) to 11(6),
and comes across an arbitration clause in
an agreement or conveyance which is
unstamped, it is enjoined by the provisions
of the Indian Stamp Act to first impound
the agreement or conveyance and see that
stamp duty and penalty (if any) is paid
before the agreement, as a whole, can be
acted upon. It is important to remember
that the Indian Stamp Act applies to the
agreement or conveyance as a whole.
Therefore, it is not possible to bifurcate
the arbitration clause contained in such
agreement or conveyance so as to give it
an independent existence, as has been
contended for by the respondent. The
independent existence that could be given
for certain limited purposes, on a
harmonious reading of the Registration
Act, 1908 and the 1996 Act has been
referred to by Raveendran, J. in SMS Tea
Estates (supra) when it comes to an
unregistered agreement or conveyance.
However,
the
Indian
Stamp
Act,
containing no such provision as is
contained in Section 49 of the Registration
Act, 1908, has been held by the said
judgment to apply to the agreement or
conveyance as a whole, which would
include the arbitration clause contained
therein. It is clear, therefore, that the
introduction of Section 11(6A) does not, in
any manner, deal with or get over the
basis of the judgment in SMS Tea Estates
(supra), which continues to apply even
after the amendment of Section 11(6A).

17. Looked at from a slightly
different angle, an arbitration agreement
which is contained in an agreement or
conveyance is dealt with in Section 7(2) of
the 1996 Act. We are concerned with the
first part of Section 7(2) on the facts of the
present case, and therefore, the arbitration
clause that is contained in the sub-contract
in question is the subject matter of the
present appeal. It is significant that an
arbitration agreement may be in the form
of an arbitration clause "in a contract".
2 All.
M/s Ultra Tech Cement Ltd. (UTCL) Vs. UPRVUNL, Lucknow
13

18. Sections 2(a), 2(b), 2(g) and
2(h) of the Indian Contract Act, 1872
["Contract Act"] read as under:

"2. Interpretation clause.--In this
Act the following words and expressions
are used in the following senses, unless a
contrary intention appears from the
context:--

(a) When one person signifies to
another his willingness to do or to abstain
from doing anything, with a view to
obtaining the assent of that other to such
act or abstinence, he is said to make a
proposal;

(b) When the person to whom the
proposal is made signifies his assent
thereto, the proposal is said to be
accepted. A proposal, when accepted,
becomes a promise;

xxx xxx xxx

(g)
An
agreement
not
enforceable by law is said to be void;

(h) An agreement enforceable by
law is a contract;

xxx xxx xxx"

19. When an arbitration clause
is contained "in a contract", it is
significant
that
the
agreement
only
becomes a contract if it is enforceable by
law.