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2017 Supreme(Del) 416
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
NATIONAL HIGHWAYS AUTHORITY OF INDIA - Petitioner
versus
IRB AHMEDABAD VADODARA SUPER EXPRESS TOLLWAYS PRIVATE LIMITED - Respondent
O.M.P (COMM) 298 of 2016 & IA No. 7250 of 2016
Decided On : 06-02-2017
For the Petitioner:Mr Sandeep Sethi, Senior Advocate with Mr Mukesh Kumar and Ms Gunjan Sinha Jain, Advocates alongwith Mr R. K. Garg, Manager, NHAI.
For the Respondent:Mr P. Chidambaram and Mr Jayant Bhushan, Senior Advocates with Mr Shivaji M. Jadhav, Mr Anshuman Animesh, Mr Nipun Katyal, Mr Ketan Paul, Mr Ankit Nigam and Ms Reeja Varghese, Advocates.
The main legal point established in the judgment is that the expression 'Project Highway' includes both the NH8 section and the Expressway, and the issuance of discounts in terms of Rule 9 of the 2008 Toll Rules is practicable.
Headnote:
NHAI - Arbitration and Conciliation Act, 1996 - Section 34 - 2008 Toll Rules - The court discussed the applicability of concessions for local vehicles and frequent travelers using the Expressway. The court held that the expression 'Project Highway' includes both the NH8 section and the Expressway. The court also found that the issuance of discounts in terms of Rule 9 of the 2008 Toll Rules is practicable. The impugned award was set aside as it was fundamentally flawed and contrary to the express language of the concession agreement.
Fact of the Case:
NHAI filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, impugning an arbitral award. The principal dispute between the parties related to the applicability of concessions for local vehicles and frequent travelers using the Expressway. IRB was awarded a project for Six Laning of Ahmedabad to Vadodara Section of NH 8 and Improvement of Existing Ahmedabad Vadodara Expressway. The disputes arose regarding the issuance of concessional passes and the interpretation of the concession agreement.
Finding of the Court:
The court found that the impugned award was fundamentally flawed and contrary to the express language of the concession agreement. The court also held that the issuance of discounts in terms of Rule 9 of the 2008 Toll Rules is practicable. The impugned award was set aside.
Issues: The issues included the interpretation of the concession agreement, the applicability of concessions for local vehicles and frequent travelers using the Expressway, and the practicality of providing discounts as per Rule 9 of the 2008 Toll Rules.
Ratio Decidendi: The court's decision was based on the interpretation of the concession agreement, the applicability of concessions for local vehicles and frequent travelers using the Expressway, and the practicality of providing discounts as per Rule 9 of the 2008 Toll Rules.
Final Decision: The impugned award was set aside, and the pending application was disposed of. The parties were left to bear their own costs.
VIBHU BAKHRU, J
1. National Highways Authority of India (hereafter 'NHAI') has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act') inter alia impugning the arbitral award dated 08.01.2016 (hereafter 'the impugned award') made and published by the Arbitral Tribunal (by majority).
2. By the impugned award, the Arbitral Tribunal has allowed the claims made by the respondent, M/s IRB Ahmedabad Vadodara Super Express Tollways Pvt. Ltd. (hereafter 'IRB') and has rejected the counter-claims made by NHAI.
3. IRB was awarded a project for Six Laning of Ahmedabad to Vadodara Section of NH 8 from Km. 6.400 to Km. 108.700 (Length 102.300 Km.) in the State of Gujarat (hereafter referred to as 'the NH8 section') and Improvement of Existing Ahmedabad Vadodara Expressway from Km. 0.000 to Km. 93.302 in the State of Gujarat(Length 93.302Km.) (hereafter referred to as 'the Expressway') under NHDP Phase V on Design Build Finance Operate Transfer (DBFOT) Toll Basis (hereafter collectively referred to as “the works?).
4. The principal dispute between the parties relates to the applicability of concessions for local vehicles and frequent travellers using the Expressway. While IRB claims that concessional passes are not required to be issued either as per the provisions of the agreement between the parties or the National Highways Fee (Determination of Rates and Collection) Rules, 2008 (hereafter 'the 2008 Toll Rules'), NHAI contends to the contrary.
5. Briefly stated, the relevant facts to address the aforesaid controversy are as follows:
5.1 NHAI invited bids by Request for Proposals (RFP) for the works, prescribing technical and commercial terms. Thereafter, the selected bidder?s bid, submitted in response to the RFP, was accepted by NHAI and a Letter of Award (LOA) dated 28.04.2011 was issued in favour of the selected bidder. Thereafter, IRB (the concessionaire) was incorporated by the selected bidder as a limited liability company to perform the obligations and exercise the rights of the selected bidder pursuant to the LOA. Subsequently, on 25.07.2011, the Concession Agreement was executed between NHAI and IRB for a concession period of 25 years. The appointed date was declared as 01.01.2013.
5.2 On 15.12.2012, IRB sent a letter submitting the proposal for validation of the toll rates for the Expressway. IRB further requested NHAI to issue the toll fee Notification and provide the validated toll rates to start the toll collection activity at the Expressway. These rates provided for discounts/concessions; IRB claims that the same were included by inadvertence. In response, NHAI validated the rates by a letter dated 26.12.2012, which did not provide for discounts/concessions on the Expressway. However, subsequently the issue was clarified and NHAI insisted that concessions be provided to local and frequent users of the Expressway as well. NHAI states that IRB started issuing return passes and multi journey passes after six months with effect from 01.07.2013; that is, after six months from the appointed date of 01.01.2013. Further NHAI did not issue monthly passes for local users (non-commercial vehicles, registered within 20 kilometres of the toll plazas). This led to disputes between the parties.
5.3 As the disputes between the parties could not be resolved, IRB sent a notice invoking the procedure for conciliation as per clause 44.2 of the concession agreement for amicable settlement of the disputes. However since amicable settlement of the disputes could not be arrived at, the parties executed a supplementary agreement dated 14.07.2014 for resolution of disputes through rules and procedure of Society of Affordable Resolution of Disputes (hereafter 'SAROD Rules'). While IRB nominated Prof. Dr. Vandana Bhatt, NHAI nominated Mr Basant Kumar as their nominee arbitrators respectively. Both
