IMPORTANT POINT
When participation in tender process is made condition precedent for claiming ROFR, a party seeking ROFR must have participated in the process. There can be no tacit or implied exemption from participating. Power of Arbitral tribunal to grant such exemption is itself debatable.

JUDGMENT

A.M. Khanwilkar, J.

1. This appeal emanates from the decision of the High Court of Delhi at New Delhi dated 21st August, 2017 in Appeal ARB.A (Comm.) No.20 of 2017 whereby the appeal filed by the appellant under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 (for short, “the Act”) seeking to quash the order dated 24th May, 2017 passed by the Arbitral Tribunal under Section 17 of the Act came to be dismissed. The Arbitral Tribunal vide order dated 24th May, 2017 allowed the application preferred by the respondent (claimant) under Section 17 of the Act seeking a direction to the appellant to allow the respondent to exercise an option to match the lowest bid in terms of the order dated 23rd July, 2016 passed by the Arbitral Tribunal and including to exercise Right of First Refusal (“ROFR”) and for other consequential reliefs.

2. Shorn of unnecessary details, some of the relevant facts are that the appellant (a body corporate, constituted under the National Highways Authority of India Act, 1988) entered into a Concession Agreement dated 17th December, 2006 with the respondent (a consortium comprising of Apollo Enterprises Limited and D.S. Construction Limited) for works of widening the existing two-lane portion of Km 16.000 to Km 96.127 on National Highway No.75 to four lanes in the States of Uttar Pradesh and Madhya Pradesh on the terms and conditions specified therein. The appellant asserts that the respondent failed to undertake the project work at the requisite pace, inter alia, due to inadequate deployment of machinery, plant, material and manpower. The respondent had merely achieved 62% progress and eventually abandoned the project site in March, 2012. The appellant, therefore, had to issue a Cure Period Notice dated 19th October, 2013 requiring the respondent to cure the breaches within 30 days from receipt of the notice, failing which the appellant may be forced to initiate further action to terminate the contract in terms of the Concession Agreement. The respondent denied the correctness of the stated notice by a written reply. The appellant then issued letters dated 27th February, 2014 and 7th March, 2014 expressing its intention to issue termination notice of the Concession Agreement. The respondent immediately rushed to the court by filing a petition under Section 9 of the Act seeking stay of the Cure Period Notice dated 19th October, 2013 as well as the notice expressing the intention to issue termination notice. The High Court of Delhi passed an interim stay on 12th March, 2014 restraining the appellant from taking any coercive action. The petition under Section 9 of the Act was finally disposed of on 22nd April, 2015 with a direction to the Arbitral Tribunal, which was already constituted in the meantime, that the interim order dated 12th March, 2014 would continue during the pendency of the arbitral proceedings with liberty to the parties to seek its modification or revocation before the Arbitral Tribunal.

3. The appellant accordingly moved an application dated 8th April, 2016 under Section 17 of the Act before the Arbitral Tribunal seeking permission to complete the balance works of the project as it was causing huge distress due to traffic congestion, unsafe highway, increase in expenditures, higher wear and tear of the vehicles and, in particular, national loss to the public at large. The respondent also filed an application under Section 17 of the Act on 17th May, 2016 seeking interim directions against the appellant to pay Rs.400 crores to the respondent at the risk and costs of the respondent for completing the balance works of the project. The reliefs claimed in the application filed by the respondent read thus:

“a) Allow the present application and as an interim measure direct the Respondent to pay a sum of Rs.400 Crores to the Claimant at the risk and cost of the Claimant so as to complete balance/remnant works of the project;

b) In the alternative and strictly without prejudice to