The main legal point established in the judgment is that a claim under Section 70 of the Indian Contract Act, 1872 is not maintainable if the conditions for such a claim are not satisfied, and a party cannot be forced to pay a sub-contractor directly if there is a subsisting contract with the main contractor.

JUDGMENT :

Prathiba M. Singh, J.

I.A. Nos. 5576/19, 10680/19 and 6834/19

Brief Facts

1. The present case demonstrates the difficulties plaguing construction contracts involving the development of infrastructure projects.

2. The Ministry of Road Transport and Highways (hereinafter, "MORTH") is concerned with the promotion, building, maintenance and upgradation of national highways and strategic roads, including interconnecting roads in various parts of the country which share international boundaries with neighbouring countries.

3. Morth had entrusted to the Border Roads Organization (hereinafter, "BRO") the existing road from Km 69 to Km 81.3 on the Srinagar-Gumri road section of National Highway-1 in the State of Jammu and Kashmir and construction of a Z-Morh Tunnel including its approaches (approximately 6.5 km tunnel and 6 km approaches) (hereinafter, "Project"). The BRO was required to augment the said road by two-laning the same.

4. On 16th April, 2012, the BRO, through a Request for Qualification, invited bidders to submit their bids. One M/s Soma Enterprise Private Limited (hereinafter, "M/s Soma") was the successful bidder who was issued a letter of award on 12th March, 2013. The bidder M/s Soma, promoted a special purpose vehicle company called Srinagar Sonamarg Tunnelway Limited (hereinafter, "SSTL") to undertake the Project.

5. On 30th April, 2013, a Concession Agreement was entered into between BRO and SSTL. This Concession Agreement was subsequently transferred from BRO to the Defendant - National Highways & Infrastructure Development Corporation Limited (hereinafter, "NHIDC"), a fully owned company of MORTH, on 12th November, 2014. The Project was to be executed on a design, build, finance, operate and transfer annuity basis. Despite the transfer, the terms of the Concession Agreement continued to bind the Project. The total term of the agreement was for a period of twenty years, which included the construction period of five years. As per the Concession Agreement, NHIDC was obligated to pay the annuities.

6. Sstl appointed IL&FS Transportation Networks Limited (hereinafter, "ITNL"), a company with 48.99% share in SSTL, as the Engineering, Procurement and Construction Contractor (hereinafter, "EPC"), under an agreement dated 9th November, 2015.

7. On 5th July, 2014, i.e. prior to the EPC agreement dated 9th November, 2015, ITNL had floated a RFP for appointment of a Construction Contractor. The Plaintiff i.e., APCO-Titan (JV), submitted its offer letter on 13th December, 2014. On 9th June, 2015, i.e., even prior to the Construction Contract between the Plaintiff and ITNL dated 11th November, 2015, a letter of intent cum notice to proceed had been issued by ITNL to the Plaintiff to commence work on the Project.

8. Itnl is a group company of Infrastructure Leasing and Financial Services Limited (hereinafter, "IL&FS"), against whom liquidation proceedings are pending in the National Company Law Appellate Tribunal (hereinafter, "NCLAT").

Plaintiff's Case

9. The Plaintiff, who was undertaking the construction, claims to have been submitting regular Running Account Bills (hereinafter, "RA Bill") to ITNL. It states that it had imported specialised machinery for undertaking the tunnelling works, exclusively for the Project and the same was done with the knowledge and assistance of the Defendant i.e., NHIDC. Monthly progress reports were also being submitted by the Plaintiff to ITNL. According to the Plaintiff, it has carried out a total value of work to the tune of approximately Rs. 261 crores, however, it has only been paid approximately a sum of Rs. 171 crores. The case of the Plaintiff is that despite the RA bills being duly certified by ITNL engineers and independent engineers, the outstanding amounts have not been paid.

10. Thereafter, ITNL and SSTL began facing financial difficulties and due to non-payment of their dues, the