Calcutta High Court refers DVC–Debeanjana tariff dispute to sole arbitrator under Section 11(6)

Background of the dispute

The Calcutta High Court was called upon to decide an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking constitution of an arbitral tribunal to adjudicate disputes arising from a long-standing power supply arrangement.

The dispute stems from a Power Supply Agreement dated 6 June 2006 between Damodar Valley Corporation (petitioner) and Debeanjana Hard Coke Private Limited (respondent). Under this contract, Damodar Valley Corporation agreed to supply bulk electricity to the respondent’s project facility located at Village Hetadoba, Mouza Hetedoba, PO Ichapur, PS Faridpur-Loudhoa, District Burdwan, West Bengal, from its Parulia sub‑station.

Over time, issues emerged regarding:

  • Claims for differential tariff based on tariff determinations of the West Bengal Electricity Regulatory Commission (WBERC), and
  • Additional sums allegedly outstanding towards electricity consumption charges.

When these dues allegedly remained unpaid, the matter escalated into regulatory and insolvency proceedings, and ultimately into an arbitration-appointment proceeding before the Calcutta High Court.

Claims relating to differential tariff and outstanding dues

Differential tariff demand

The petitioner contended that pursuant to tariff determinations issued by WBERC, it was entitled to recover differential tariff for electricity supplied over an extended period. Acting on this position:

  • The petitioner raised a final bill dated 1 January 2021,
  • The bill covered the period from 2006 to 2013, and
  • The petitioner asserted that this bill, reflecting the differential tariff component, remained unpaid by the respondent.

Additional outstanding consumption charges

Beyond the differential tariff claim, the petitioner further alleged that:

  • There were additional unpaid amounts towards electricity consumption,
  • The quantum of these arrears was stated to be Rs. 19,84,51,145/-, and
  • Despite demands, these dues remained outstanding.

In response to the continuing default, the petitioner initiated coercive measures under applicable electricity laws and thereafter resorted to insolvency proceedings.

Disconnection and initiation of insolvency proceedings

Disconnection of electricity supply

Faced with non‑payment of the alleged dues, the petitioner initiated the disconnection process:

  1. A disconnection notice dated 3 September 2022 was issued to the respondent.
  2. Upon failure of the respondent to clear the dues as per the petitioner’s demand,
  3. The petitioner proceeded to disconnect the electricity supply to the respondent’s unit.

These steps were taken in the context of the petitioner’s assertion that substantial unpaid dues had accumulated under the Power Supply Agreement.

Section 9 IBC proceedings before NCLT

Parallelly, the petitioner initiated insolvency proceedings:

  • Proceedings were commenced under Section 9 of the IBC, 2016 before the NCLT, Kolkata Bench,
  • The case was filed as an operational creditor’s petition for initiation of the corporate insolvency resolution process against the respondent,
  • As on the date of the High Court’s consideration, the Section 9 application was pending adjudication before the NCLT.

Thus, at the time the Calcutta High Court considered the Section 11(6) petition, two distinct tracks were active: