Reliance Industries Limited v. Gail(India) Limited

NAVIN CHAWLA, J JULY 16, 2019/vp

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 19.03.2019 Date of Decision : 16.07.2019 + O.M.P. 597/2012 & IA 11956/2012 RELIANCE INDUSTRIES LIMITED ..... Petitioner Through: Mr.Paras Kuhad, Sr. Adv. with Mr.K.R.Sariprabhu, Mr.Shubranshu Padhi, Mr.Jitin Chaturvedi, Ms.Aditi Tripathi, Mr.Shuaib Hussain, Mr.Vishnu Sharma & Mr.Kavin, Advs. versus GAIL(INDIA) LIMITED ..... Respondent Through: Mr.Dhruv Mehta, Sr.Adv. with Ms.Manmeet Arora, Mr.Sarad K Sunny & Mr.Harkirat Singh, Advs. + O.M.P. 648/2012 M/S GAIL(INDIA) LTD ..... Petitioner Through: Mr.Dhruv Mehta,Sr. Adv. with Ms.Manmeet Arora, Mr.Sarad K Sunny & Mr.Harkirat Singh, Advs. versus M/S RELIANCE INDUSTRIES LTD ..... Respondent Through: Mr.Paras Kuhad, Sr. Adv. with Mr.K.R. Sariprabhu, Mr.Shubranshu Padhi, Mr.Jitin Chaturvedi, Ms.Aditi Tripathi, Mr.Shuaib Hussain, Mr.Kavin and Mr.Vishnu Sharma, Advs. Page 2 CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. These petitions have been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") challenging the Arbitral Award dated 25.02.2012 passed by the Sole Arbitrator (hereinafter referred to as "Impugned Award"), as corrected by the order dated 24.03.2012. Hereinafter, "Reliance Industries Limited" shall be referred to as the petitioner and "GAIL (India) Limited" shall be referred to as the respondent. 2. The Impugned Award partially allowed the claim of the respondent towards additional amounts claimed vide Debit Notes raised by the respondent in 2008 for the amount of gas supplied, representing the difference between amount remitted by the petitioner for the period between 01.08.2005 to 31.08.2008 and amount found payable by virtue of Article 11.02, along with interest @ 9% p.a. from the date of the Award, on the aforesaid amount to be determined by the respondent. 3. The disputes between the parties arose in relation to the Gas Supply Agreement (hereinafter referred to as the "Agreement") dated 30.03.2000 for supply of Natural Gas by the respondent to the petitioner for extraction of C2 (Ethane) and C3 (Propane) fractions after removal of CO2 (Carbon Dioxide) in the petitioner"s Petrochemical Plant located at Dahej, Gujarat. The Agreement was initially executed between the respondent and "Indian Petrochemicals Corporation Limited" ("IPCL"), however, on IPCL being taken over by the petitioner in 2002, the petitioner assumed all the rights and obligations of IPCL under the Agreement. The original period of the Agreement was uptil 01.01.2005, Page 3 however, the same was extended on a number of occasions, the last extension being uptil 31.08.2008. 4. As per Clause 4 of the Agreement, which provides for the mechanism for delivery and return of gas, the supply of gas by the respondent was to be made in two phases; Phase I period was from 01.01.2000 upto 31.12.2000; and Phase II period was from 01.01.2001 onwards. The disputes between the parties pertain to Phase II of the Agreement. 5. During Phase II, the Gas was to be supplied from the respondent"s LPG plant in Gandhar to the petitioner at the outlet of the Gas Metering Station No. 4 in the respondent"s LPG plant in Gandhar (hereinafter referred to as the "Point of Onward Delivery"), whereafter the petitioner was to process the gas for extraction of C2 (Ethane) and C3 (Propane) fractions after removal of CO2 (Carbon Dioxide) in its plant at Dahej and deliver back the balance quantity of the Gas to the respondent at the outlet of Gas Metering Station No. 5 in the respondent"s LPG Plant at Gandhar (hereinafter referred to as the "Point of Return Delivery"). The processing of the Gas by the petitioner through extraction is referred to as "Shrinkage" of the Gas and the resultant Gas denuded of C2 and C3 hydrocarbons is referred to as "Lean Gas". 6. Article 5 of the Agreement provides for terms relating to the Quantity of Gas. It provides for the Daily Shrinkable Quantity of Gas to be calculated as per formula given in Art