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Judgment
Heard learned counsel for the petitioners and learned counsel for the respondents.
The present writ petition has been filed for the following reliefs â€
 “(a) A declaration that the (i) purported preliminary termination notice dated 24.05.2018 purporting to terminate the DFA; (ii) the purported letter
dated 24.05.2018 invoking the performance Bank Guarantee No. 0728BG0000052013; and the (iii) the purported letter dated 25.05.2018 threatening
criminal action against the petitioners and its officials, in respect of Bodhgaya Circle and (iv) the purported letter dated 29.05.2018 asking the
petitioners to reinstate the Performance Bank Guarantee are unfair, arbitrary, malafide, illegal and bad;
 (b) A further writ of mandamus and/or any other appropriate writ/order/ directions to the Respondents and their men, agents and subordinates, to
forthwith forbear from acting on the basis of and/or in furtherance of the (a) purported preliminary termination notice dated 24.05.2018; (b) the
purported letter dated 24.05.2018 invoking the performance Bank Guarantee No. 0728BG0000052013; and (c) the purported letter dated 25.05.2018
threatening criminal action against the petitioners and its officials, in respect of Bodhgaya Circle and (d) the purported letter dated 29.05.2018 asking
the petitioners to reinstate the Performance Bank Guarantee;
(c) A further writ of mandamus and/or any other writ/order/direction to the respondent authorities to produce the records pertaining to (a) the
purported preliminary notice dated 24.05.2018; (b) purported letter dated 24.05.2018 of the Respondents invoking the performance Bank Guarantee
and (c) purported letter dated 25.05.2018 threatening criminal action against the petitioners and its officials, and (d) the purported letter dated
29.05.2018 asking the petitioners to reinstate the Performance Bank Guarantee so that conscionable justice may be done by quashing the same;
(d) Appropriate Writs and/or orders and/or directions to issue as would afford complete relief to the petitioners;
(e) Rule Nisi in terms of prayers above;
(f) Stay of operation of the purported preliminary termination notice dated 24.05.2018; purported letter dated 25.05.2018 threatening criminal action
against the Petitioners and its officials; purported letter dated 24.05.2018 invoking the performance Bank Guarantee; and the purported letter dated
29.05.2018 asking the petitioners to reinstate the Performance Bank Guarantee.
(g) Injunction restraining the respondents from proceeding with the purported notice dated 24.05.2018; purported letter dated 24.05.2018 invoking the
performance Bank Guarantee and purported letter dated 25.05.2018 threatening criminal action against the Petitioners and its officials, in respect of
Bodhgaya Circle and (d) the purported letter dated 29.05.2018 asking the petitioners to reinstate the performance Bank Guarantee.
(h) Injunction restraining the Respondents No. 1 from terminating the Distribution Franchisee Agreement dated 31.12.2013.
(i) Injunction restraining the Respondents from taking any coercive action against the Petitioners leading to disruption of power supply in the
Distribution Franchisee Area that would adversely impact around two lakh households comprising ten lakh individuals.
(j) Injunction restraining the Respondents from initiating any criminal proceedings against the Petitioners and its officials or give effect to or further
effect to the purported letter dated 25.05.2018 threatening criminal action against the petitioners and its officials;
Ad interim orders in terms of prayers (f), (g), (h), (i) and (j) above;
(k) such further or other order or orders be made and/or directions be given as this Hon’ble Court may deem fit and proper.â€
The short facts of the case according to the petitioners are that the petitioner no. 1 is a Company incorporated by the petitioner no. 2, which is
engaged, inter alia, in the business of generation, transmission and distribution of electricity. Petitioner No. 3 is a citizen of India and a Director of the
petitioner no. 2. The respondent no. 1 has license to supply electricity in four Electric Supply Areas and for the said purpose entered into a Distribution
Franchisee Agreement on 31.12.2013 (Annexure-1) with the petitioner Nos. 1 and 2 for sale and distribution of electricity in the South Bihar region
namely Gaya Town and adjoining areas. In due course, disputes arose between the parties and it was alleged that the respondents had violated the
agreed terms recorded in the minutes of a meeting dated 14.12.2016 by making an excess withdrawal of 92% in August, 2017. It had been agreed in
the meeting that the entire collected amount would be deposited in a Default Escrow Account and the respondents were entitled to withdraw 75% and
the petitioners would withdraw 25%. The respondents encashed the petitioners’ Letter of Credit of Rs. 9.34 crores leading the petitioners to
invoke arbitration. An Arbitrator was appointed under Section 11(6) of the Arbitration Act (for short, ‘the Act’) by order dated 04.04.2018 and
hearing before the learned Arbitrator commenced. An order of status quo was passed by the learned Arbitrator and it is alleged by the petitioners that
the respondents encashed the petitioner’s Performance Bank Guarantee of Rs. 13.29 Crores in violation of the status quo order. The impugned
preliminary notice of termination was also filed by the respondents on 24.05.2018. Accordingly a contempt application was filed by the petitioners
before the learned Arbitrator on 27.05.2018 for referring the matter to this Court.
Learned Senior counsel, Mr. Ajit Kumar Sinha, appearing on behalf of the petitioners vehemently submits that the respondents have acted
contumaciously and their action is fraught with arbitrariness. It is submitted that the status quo granted by the learned Arbitrator in terms of his order
dated 12.04.2018 was continued thereafter, first on condition of deposit of the amount collected as well as future collections in the Escrow Account,
which subsequently stood modified by order dated 12.05.2018 to the effect that upon failure of the petitioners to bring on record the details of the
amount deposited in the Default Escrow Account on the date fixed for hearing i.e. 16.05.2018 the status quo would automatically stand vacated. It is
submitted that the requisite details were brought on record on the date fixed on 16.05.2018 and hence the status quo order continued. It is further
pointed out that thereafter the matter was taken up on 17.05.2018, 19.05.2018, 27.05.2018 and finally on 31.05.2018. Neither claim nor counter claim
was brought on record by the parties as permitted earlier by order dated 27.05.2018, and in view of non-availability of counsels as well as the
Tribunals owing to the intervening Summer Vacation, the matter was adjourned for two months and fixed on 12.08.2018 as jointly prayed and agreed
between the parties.
Learned counsel for the petitioners therefore submits that violation of the status quo order by the respondents is writ large on the face of it and the
preliminary notice of termination issued on 24.05.2018 granting time of 30 days to rectify and remedy the entire default is a looming threat to the
petitioners which is likely to crystalise in the next few days. It is submitted that once the matter is under consideration before the learned Arbitrator,
there was no need or necessity to take coercive steps by issuance of the impugned preliminary notice of termination and the other impugned actions
taken or proposed against the petitioners. It ought to have been borne in mind that the issue merely related to a financial aspect of alleged non-deposit
of the collected amount in the Escrow Account by the petitioners, and not to any operational deficiency or default on their part. The petitioners have
approached this Court in view of the urgency involved and non-availability of the learned Arbitrator until the next date of hearing fixed on 12.08.2018.
Any adverse and coercive action taken by the respondents would leave the petitioners remediless. It is submitted that the present petition has been
filed in public interest as the matter falls in the public domain having regard to the public utility services being dispensed. The consequences of the
impugned action of the respondents would affect about 10 lac citizens residing in the area of supply of electricity under the petitioners’ operations.
Learned Senior counsel Mr. Lalit Kishore appearing on behalf of the respondent-Power Distribution Company equally vehemently opposes the writ
petition, submitting at the outset that the same is not maintainable. It is pointed out that the petitioners had committed several defaults, for which a
notice of critical event of default was given to them and thereafter the impugned preliminary notice of termination dated 24.05.2018 has been issued
and other actions necessitated against the petitioners. It is a matter of record that the petitioners have already made a prayer before the learned
Arbitrator in their contempt petition filed by the petitioners under Section 27(5) of the Arbitration Act, for issuance of directions for status quo ante
enforcing the interim orders, as well as for issuance of directions to the respondents to withdraw the notice dated 24.05.2018 regarding termination of
the agreement and in respect of the Performance Bank Guarantee which had been encashed by the respondents. It is evident from the subsequent
orders passed by the learned Arbitrator on 27.05.2018 as well as 31.05.2018 that the petitioners have sought similar relief before the learned
Arbitrator as in the present writ petition, which was however not granted. The petitioners therefore cannot be allowed to take advantage of the
absence of the learned Arbitrator, that that too when the matter has been fixed on 12.08.2018 as agreed by the petitioners themselves, to approach
this Court in the meantime for relief on the self same grounds. If at all, their remedy might lie by way of approaching the Civil Court under Section 9
of the Act and not before this Court.
I have heard the parties at length and considered the materials on record. It is not in dispute that the petitioners have preferred a contempt petition
under Section 27(5) of the Act wherein they have also sought directions to the respondents to withdraw the impugned notice dated 24.05.2018
regarding termination as well as with regard to the Performance Bank Guarantee. It is also a matter of record that the petitioners have filed an
application under Section 17 of the Act (Annexure-P/28) pursuant to which an order of status quo was first passed on 19.04.2018 by the learned
Arbitrator which was continued from time to time as state above. It is also not in dispute that the impugned letter dated 24.05.2018 invoking the
Performance Bank Guarantee as well as issuance of the preliminary notice of termination have been alleged by the petitioners to be in violation of the
status quo orders, for which a contempt petition has been filed. As such I do not propose to enter into the question whether the impugned actions of
the respondents have in fact been taken in violation of the status quo orders as that is a matter for consideration by the learned Arbitrator. I am also of
the view that the petitioners may face difficulty in approaching the Civil Court under Section 9 of the Act. In the present case, the petitioners have
approached the learned Arbitrator with a petition under Section 17 of the Act which has been entertained. Thus, the bar in Section 9(3) which
prohibits the Court from entertaining an application for interim measure of protection unless the remedy under Section 17 of the Act would not be
efficacious, may come in the way of the petitioners. The respondents have further contended that the petitioners have already taken an objection in
their contempt petition with regard to the preliminary notice of termination and encashment of Performance Bank Guarantee and these aspects duly
agitated before the learned Arbitrator on 27.05.2018 and 31.05.2018. I am of the view that even assuming so, there is nothing to suggest that any
adverse order against the petitioners has been passed in that regard or that the issue has been decided and rejected. The matter thus remains pending
for decision before the learned Arbitrator. The fact that the next date has been fixed on 12.08.2018 with consent of the petitioners cannot operate in a
manner to preempt the issue and allow the respondents to crystalise the proposed coercive action in terms of the impugned preliminary notice of
termination. I do not also perceive any immediate urgency on the part of the respondents to take action under the impugned preliminary notice of
termination which merely involves a financial aspect of the dispute, but the consequences whereof would have far reaching ramifications including the
likely inconvenience to the public at large in the area of the petitioners’ operations.
In the larger interest and in the extraordinary circumstances that coercive action is being resorted to in between dates of hearing in the arbitration
proceedings, I am inclined to interfere in the matter in exercise of writ jurisdiction. I therefore deem it proper to direct the respondents not to resort to
coercive action against the petitioners for the time being. The preliminary notice of termination and the proposed actions in terms of the impugned
notices shall remain in abeyance until proceedings before the learned Arbitrator are resumed and a decision is taken by him on the pending contempt
petition.
The writ petition stands disposed of with the aforesaid observations and directions.