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2018 Supreme(Del) 1460
IN THE HIGH COURT OF DELHI AT NEW DELHI
JAYANT NATH, J.
National Highways Authority of India - Petitioner
Versus
M/s Sangam (India) Ltd. - Respondent
O.M.P. 463 of 2015
Decided On : 03-07-2018
Advocate Appeared:
For the Petitioner: Mr. Mukesh Kumar
For the Respondent: Mr. Rohit Madan, Ms. Sayaree Basu Mallik, Mr. Nitin Gulati
The main legal point established in the judgment is that the learned arbitrator's misinterpretation of statutory provisions and erroneous conclusion regarding the voidability of the contract led to the setting aside of the award.
Headnote:
Arbitration Act - National Highway Authority of India - Arbitration and Conciliation Act, 1996
Fact of the Case:
The petitioner, a statutory body, invited bids for the collection of user fee at a toll plaza. The respondent won the bid but failed to remit the agreed amount, leading to disputes and termination of the contract. The respondent filed a petition under Section 9 of the Arbitration Act, and the award was passed in favor of the respondent, holding the contract voidable and granting reliefs.
Finding of the Court:
The court set aside the award, stating that the learned arbitrator had ignored statutory provisions and erroneously concluded that the contract was voidable at the option of the respondent. The court also noted that it did not deal with any finding of fact recorded by the arbitrator and their consequences on the relief claimed by the respondent.
Issues: The issues included breach of contract provisions, voidability of the contract, legality of orders passed by the petitioner, entitlement to awards for return/refund of performance security and bank guarantee, and termination of the contract.
Ratio Decidendi: The court found that the learned arbitrator had misinterpreted the statutory provisions and concluded that the contract was voidable at the option of the respondent, which was contrary to the substantive provisions of law and against public policy.
Final Decision: The court set aside the award and directed the petitioner to re-nominate a fresh arbitrator as per the arbitration clause.
Jayant Nath, J.
1. This petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Arbitration Act”) seeking to impugn the Award dated 03.05.2015.
2. The brief facts of the case are that the petitioner is a statutory body constituted under Section 3 of the National Highway Authority of India Act, 1988. On 18.10.2012, the petitioner invited bids for the work of collection of user fee at Chamari Toll Plaza at KM 229.913 for the Section from KM 220.000 to KM 260.713 on NH-25 and KM 421.200 – KM 449.000 on NH-2 (Bara to Orai) in the State of U.P. on Annuity basis for a period of two years. The notice inviting tender had mentioned Annual Potential Collection (APC) for the Toll Plaza in question at Rs.47.09 crores per annum. This APC was determined based on the survey and research carried out by the petitioner.
3. In response to the bid, the respondent was one of the bidders and made a bid for Rs. 62.10 crores i.e. about 31.88% above the APC. The second highest bidder had quoted a sum of Rs.50.04 crores which was only 7.03% above the APC. The respondent was declared as the selected bidder and a contract dated 07.03.2013 was signed between the parties. The contract was for a period of two years beginning from 09.03.2013 to 09.03.2015. The contract provided that the respondent would collect user fees at such rates and from such vehicles as would be notified by the Central Government for the use of the said Section of the National Highway/the said bridge. The respondent was required to remit a total sum of Rs.62.10 crores per annum in installments of Rs.1,19,09,589/- to the petitioner every week. It is pleaded that the said payment was independent of the toll actually collected by the respondent at the Toll Plaza.
4. Notification dated 26.02.2013 was issued which provided that the fee levied and collected would be due and payable at the stated Toll Plaza for the net road length specified for such Toll Plaza. The same was stated as follows:-
“1. The fee levied and collected hereunder shall be due and payable at the following Toll Plaza for net road length specified for such Toll Plaza(s):
Location of Toll Plaza (s) (chainage)
Length (in Km.) For which fee is payable
Before completion of stretch at Kalpi
Km/Ch.222.913 (near village Usaka in Jaluan District)
66.813
After Completion of stretch at Kalpi
Km/Ch.229.913 (near village Usaka in Jaluan District)
68.513
5. Hence, it is pleaded by the petitioner that in view of the said notification, it is clear that the Central Government had taken note of the fact that a certain stretch at Kalpi still required completion. Hence, the notification stipulated that the user fees would be charged for 66.813 KM of length whereas after completion of the stretch at Kalpi, user fee would be charged for 68.513 KM. The notification also allowed the respondent to reduce the remittance amount to be deposited by it on pro-rata basis for 66.813 KM due to incomplete stretch of 1.7 KM at Kalpi.
6. The respondent started collecting toll on 09.03.2013 at 8.00 am at the designated toll plaza location. However, the respondent is said to have failed to remit the agreed amount to the petitioner causing losses to the petitioner. Penalty was also levied on the respondent which it failed to pay. Instead the respondent on 16.04.2013 and 08.06.2013 sent notices making averments against the petitioner.
7. Subsequently, the respondent filed a petition under Section 9 of the Arbitration Act being OMP 599/2013 seeking directions that the contract dated 07.03.2013 be suspended till the matter is resolved or in the alternative, the actual toll collected be taken away by NHAI and no coercive measures like encashment of bank guarantee or forfeiture of security deposit be taken by the petitioner. As the petitioner in terms of the arbitration cl
