The court upheld the principle of balancing equities and preserving the subject matter of the dispute without causing prejudice to any party.

SANJEEV SACHDEVA, J.

IA No. 10315/2017 (exemption)

Allowed, subject to all just exceptions.

ARB. Appeal (COMM.) No. 26/2017 and IA No. 10320/2017 (stay)

1. The Appellant, by this Appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) impugns the order dated 09.06.2017 passed by two Members of the Arbitral Tribunal in the application filed by the respondent under Section 17 of the Act.

2. By the impugned order dated 09.06.2017, the Arbitral Tribunal has restrained the appellant from taking any coercive steps against the respondent/claimant on the basis of notices dated 14.10.2016 and 15.10.2016.

3. Further, the appellant has been directed to release to the claimant the entire amount of the 14th annuity which became due on 06.10.2016 within seven days from the date of the receipt of the order. The respondent/claimant has been directed to complete the work at the disputed stretch within a period of three months from the date of receipt of the payment from the appellant towards the 14th annuity.

4. The Arbitral Tribunal has clarified that the observations in the order are prima facie in nature and are without prejudice to the rights and contentions of the parties and are subject to the Award that would be passed by the Tribunal.

5. The respondent entered into a Concession Agreement with the petitioner for design, construction, improvement, operation and maintenance of new 4 lane Gwalior Bypass from Kilometre 103.000 on National Highway-3 to Kilometre 16.000 on National Highway-75 in the State of Madhya Pradesh on BOT Annuity basis.

6. The respondent has constructed Highway.

7. As per the appellant, the respondent failed to maintain a stretch of 23 kilometres, because of which, the appellant withheld the 14th Annuity payable to the respondent.

8. Further, the appellant proposed to tender the said work of repair and maintenance of the said stretch to a third party at the risk and cost of the respondent.

9. Being aggrieved by the action of the petitioner, the respondent invoked Arbitration and arbitration proceedings are continuing.

10. The contention of the respondent is that the liability to carry out relaying of bituminous layer of the Highway is to arise only five years after the commissioning of the project.

11. It is contended that the Highway was made operational in 2013 and prior to 2018, there is no responsibility of the respondent to relay the Highway.

12. Further contention of the respondent is that the petitioner permitted overloaded trucks to ply on the Highway by charging excess fee and did not prevent the overloaded trucks from plying in accordance with the Agreement. On account of plying of overloaded trucks, the Highway got damaged.

13. The appellant has disputed the contentions. It is contended that irrespective of the period, as the Highway was constructed by the respondent, the respondent is obliged to maintain the same and keep it in repair. Further, it is contended that the Highway is to bear the weight of the overloaded trucks and merely because of plying overloaded trucks the highway cannot get damages and that cannot be a ground not to repair the Highway.

14. It is further contended that the work to the third party has already been tendered and the letter of intent has already been issued.

15. The Arbitral Tribunal, after noticing the contentions of the parties, has balanced equities by the impugned order.

16. The Arbitral Tribunal has observed that the issue whether the respondent was to maintain Highway or could be called upon to relay the tarmac within the period of five years or that the Highway got damaged because of plying overloaded trucks is subject matter of the arbitration proceedings and yet to be determined.

17. At a prima facie stage, the Arbitral Tribunal came to the conclusion that no prejudice would be caused to the Appellant if the respondents were directed to maintain the Highway and carry out the repair work as per the requirement and to the