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IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
NATIONAL HIGHWAY AUTHORITY OF INDIA - Petitioner
Versus
M/S CHANDA ALLIED SERVICES - Respondent
O.M.P. (COMM) 226 of 2018
Decided On : 22-05-2018
Arbitration - Departmental Collection of User Fee - Arbitration and Conciliation Act, 1996, Section 34 - Agreement
Fact of the Case:
The NHAI filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, impugning an arbitral award related to disputes arising from the Contract for Departmental Collection of User Fee. The NHAI raised claims for shortfall in collection of User Fee, which were dismissed by the Arbitral Tribunal as being barred by limitation.
Finding of the Court:
The Court found that the claims made by NHAI were barred by limitation as the right to sue accrued in favor of NHAI way back in December 2010, and the claims were beyond the period of three years when the right to sue had accrued. The Court dismissed the petition as unmerited.
Issues: The issues involved the calculation of the period of limitation for filing a suit and for invoking arbitration proceedings, as well as the acknowledgment of liability by the respondent.
Ratio Decidendi: The period of limitation for arbitration proceedings commences once the claim is made and denied by the other party resulting in a dispute. The right to sue accrues when the claimant makes a demand and takes steps for recovering the amount demanded.
Final Decision: The petition was dismissed as unmerited.
VIBHU BAKHRU, J.
1. The petitioner (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 15.01.2018 (hereafter ‘the impugned award') delivered by the Arbitral Tribunal constituted by the sole arbitrator, namely, Sh. N.S. Brar (hereafter 'the Arbitral Tribunal'). The impugned award was rendered in the context of disputes that had arisen between the parties in relation to the Contract for Departmental Collection of User Fee dated 01.05.2010 (hereafter 'the Agreement').
2. In terms of the Agreement, the respondent was engaged to collect user fee at the specified toll plaza. The term of the Agreement was for a period of three months commencing on 02.05.2010 and it expired on 02.08.2010.
3. NHAI had raised claims including for shortfall in collection of User Fee, which were dismissed by the Arbitral Tribunal as being barred by limitation. NHAI disputes the same and seeks to assail the impugned award as patently illegal and contrary to the fundamental policy of Indian Law.
Background facts
4. On 05.04.2010, NHAI issued a proposal for the right of Toll Collection at Boothakudi Toll Plaza located at km 21/020 (near Boothakudi village) in Trichy-Thuvarankurichi (km 0/0 to 60/950) section of National Highway No. 45B (hereafter 'the project').
5. On 12.04.2010, the respondent submitted its willingness to take up the function of collecting user fee at the Boothakudi Toll Plaza (hereafter 'the Toll Plaza'). Thereafter, NHAI issued a Letter of Acceptance (LOA) accepting the respondent's willingness for the project. The contract between the parties was for a period of three months commencing on 02.05.2010 and ending on 02.08.2010.
6. On 01.05.2010, NHAI and the respondent entered into an agreement for Departmental Collection of User Fee ('the Agreement').
7. The respondent commenced collection of user fee, which was divided into three shifts; Shift A from 000 hrs to 800 hrs, Shift B from 800 hrs to 1600 hrs and Shift C from 1600 hrs to 2400 hrs.
8. The Project Director of NHAI deployed Assistant Toll Supervisor (ATS) for supervision of the toll plaza as per Clause 11(e) of the Agreement. Several irregularities were observed by the ATS including that vehicles were allowed to cross the toll without any tickets being issued to them.
9. On 21.07.2010, NHAI issued a letter pointing out major shortfall in the daily collection of user fee for the period between 01.07.2010 to 19.07.2010 from Rs. 4.28 lacs to Rs. 2.43 lacs.
10. Since there were allegations that the respondent was collecting toll without issuing the tickets, NHAI did not extend the Agreement and took over the Toll Plaza.
11. After taking over the function of collecting user fee from the respondent, NHAI found that there was a significant increase in collection of user fee. During the period 02.08.2010 to 31.08.2010 (referred to as 'the survey period') there was increase in the daily collection and the average daily collection was Rs. 4,74,527/- against Rs. 3,41,734/- during the operational period – that is, from 05.05.2010 to 01.08.2010 (referred to as 'the operational period') . Thus, NHAI concluded that it had incurred a loss of Rs. 1,32,793/- each day for the period of 89 days during which the respondent had managed the collection of user fee.
12. On 01.09.2010, NHAI sent a letter to the respondent stating that the average collection during the survey period was Rs.4,74,527/- and the average collection reported by the respondent during the operational period amounted to Rs. 3,41,734/- and, thus, there was a shortfall of Rs. 1,32,793/- per day in collection of user fee, which amounted to Rs. 1,18,18,577/- for the entire period. NHAI also stated that it proposed to encash the bank guarantee of Rs. 15,00,000/- furnished by the respondent against the said shortfall and further called upon the respondent to pay the balance amount of Rs. 1,03,18,577/-.
13. Thereafter, NHAI sent a
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