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2019 Supreme(Del) 37
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
M/S BGR MINING AND INFRA LIMITED - Petitioner
Versus
NTPC LIMITED AND ANR. - Respondents
W.P.(C) 463 of 2018 and CM Nos. 2006 of 2018, 11943-11944 of 2018, 16245 of 2018 & 16371 of 2018
Decided On : 21-01-2019
For the Petitioner:Mr. Dayan Krishnan, Sr. Advocate with Mr. Mohd. Wasay Khan and Ms. Filza Moonis, Advocates.
For the Respondents:Mr. Tushar Mehta, SGI with Mr. Puneet Taneja, Ms. Shaheen, Ms. Laxmi Kumari, Ms. Khushboo, Advocates.
The main legal point established in the judgment is that NTPC was obliged to comply with the dispute resolution mechanism as contemplated under Article 23 of the Project Agreement.
Headnote:
Corrupt Practice - Dispute Resolution - Clause 9.1, Clause 24.3, Clause 24.4, Clause 23 - The court directed NTPC to hold good faith discussions with the petitioner in terms of Clause 23.1(b) of the Project Agreement, construing it as compliance with Clause 24.4(c) as well. The court clarified that it had not expressed any opinion on the merits of the controversy between the parties.
Fact of the Case:
The petitioner sought direction for NTPC to comply with Clause 23 of the Project Agreement after NTPC issued a show cause notice alleging corrupt and fraudulent practices, following the registration of an FIR against the petitioner's director.
Finding of the Court:
The court directed NTPC to hold good faith discussions with the petitioner in terms of Clause 23.1(b) of the Project Agreement, construing it as compliance with Clause 24.4(c) as well. The court clarified that it had not expressed any opinion on the merits of the controversy between the parties.
Issues: The main issue was whether NTPC was bound to join the petitioner in an endeavor to settle the disputes in an amicable manner.
Ratio Decidendi: The court held that NTPC was obliged to comply with the dispute resolution mechanism as contemplated under Article 23 of the Project Agreement and directed NTPC to hold good faith discussions with the petitioner in terms of Clause 23.1(b) of the Project Agreement.
Final Decision: The petition was disposed of with the direction for NTPC to hold good faith discussions with the petitioner in terms of Clause 23.1(b) of the Project Agreement, construing it as compliance with Clause 24.4(c) as well. The court clarified that it had not expressed any opinion on the merits of the controversy between the parties.
VIBHU BAKHRU, J.
Introduction
1. The petitioner has filed the present petition, inter alia, praying that the respondent be directed to act in compliance with Clause 23 of the Project Agreement dated 28.11.2017 (hereafter ‘the Project Agreement’) entered into between the petitioner and respondent No.1 (hereafter ‘NTPC’). The petitioner is, essentially, aggrieved by a show cause notice dated 29.12.2017 issued by NTPC calling upon the petitioner to show cause why the Project Agreement should not be terminated. The petitioner alleges that NTPC is proceeding on a predetermined path to terminate the Project Agreement without following the procedure for an amicable resolution of disputes as contemplated under the contract.
2. According to NTPC, the show cause notice has been issued to the petitioner as it is alleged that the petitioner has indulged in corrupt and fraudulent practice. NTPC contends that in view of the aforesaid allegation, the event of default as alleged is not of a nature that can be remedied by good faith discussions and, therefore, no purpose will be served by holding any discussion under Clause 23 of the Project Agreement.
Factual Context
3. The petitioner is a company registered under the Companies Act, 1956 and is engaged in the business of mining and infrastructure. NTPC is a Government of India enterprise and is, inter alia, engaged in the business of generation of power.
4. On 05.03.2016, NTPC issued a Request for Proposals (RFP) inviting online bids for selection of a ‘Mine Operator cum Developer’ for developing and operating the Chatti Bariatu Coal Block situated in the state of Jharkhand (hereafter ‘the Project’). In response to the RFP, the petitioner submitted its techno-commercial and price proposal through the online mode on 02.05.2016.
5. The techno-commercial proposals submitted by various bidders were opened on 04.05.2016. Thereafter, NTPC opened the price proposal submitted by all eligible bidders and conducted a reverse auction on 09.12.2016. The proposal submitted by the petitioner was accepted and NTPC issued a letter of acceptance (LoA) on 13.11.2017. The petitioner accepted the LoA on the same date (that is, 13.11.2017).
6. Thereafter, on 28.11.2017, the parties entered into the Project Agreement. It is stated that a meeting was held between NTPC and the representatives of the petitioner and the petitioner committed that it would commence the work of removing overburden by the end of December, 2017.
7. On 07.12.2017, an FIR was registered by the Central Bureau of Investigation (CBI) against one Sh. Kulamani Biswal, Director (Finance) NTPC, Sh. B. Rohit Reddy, Director of the Petitioner Company, Sh. T. Prabhat Kumar and other unknown persons. The FIR indicates that information was received that Mr. Biswal was to travel abroad with his wife and daughter on 08.12.2017, from Bhubaneshwar. It was alleged that Sh. Biswal requested Mr. Rohit Reddy to arrange US Dollars equivalent to Rs.5 lakhs for him to travel overseas and Sh. Reddy offered to deliver the same at Delhi or Bhubaneshwar. It was alleged that subsequently, Sh. Kulamani Biswal asked Sh. Reddy to give him cash in Indian currency which he would convert to US Dollars on his own. It is alleged that Sh. Reddy informed Sh. Biswal that one Sh. T. Prabhat Kumar (an employee of the petitioner) would deliver the said amount to Sh. Biswal at Delhi. CBI alleged that it had information that Sh. Reddy had arranged to deliver Rs. 5 lakhs in cash through hawala channels to Sh. T. Prabhat Kumar to further deliver to Sh. Biswal at Delhi. It was further alleged that Sh. T. Prabhat Kumar was likely to deliver the aforesaid amount to Sh. Biswal at his residence shortly. CBI had alleged that Sh. Biswal had attempted to obtain for himself, valuable things without consideration from the petitioner with whom he had dealings due to business transacted between NTPC and the petitioner. According to CBI, the information disclosed, prima facie, commission of an offe
