2020 Supreme(Del) 1056

IN THE HIGH COURT OF DELHI AT NEW DELHI
Rekha Palli, J.
West Haryana Highways Projects Private Limited - Appellant
Versus
National Highways Authority Of India & Ors. - Respondent
Original Miscellaneous Petition (I) (Comm ) No. 144 of 2020 , 263 of 2020; Interlocutory Application No. 4646 of 2020, 5915 of 2020, 7652 of 2020
Decided On : 07-10-2020

Headnote:

The present decision disposes of two petitions under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ''the Act''), both filed by the Concessionaire, raising disputes pertaining to the Concession Agreement dated 06.11.2007 executed with respondent no.1.

Fact of the Case:

The Concessionaire, a special purpose vehicle formed pursuant to a joint venture arrangement between Era Infra Engineering Limited and M/s Karam Chand Thapar, & Bros. (C.S.) Ltd., is engaged in the business of constructing, developing and maintaining highways etc. The respondent no.1 is the National Highway Authority of India (NHAI), an autonomous statutory body responsible for development, maintenance, management, operation and toll collection of the national highways. On 04.12.2006, the respondent no.1 issued a tender inviting bids from interested parties to execute a Build Operate and Transfer (BOT) project with respect to a section of National Highway-10 (NH-10). Once the bid submitted by the consortium of Karam Chand Thaper and Bros. (C.S) Limited and Era Infra Engineering Limited was accepted by the respondent on 05.07.2007, the petitioner (West Haryana Highway Project Private Limited) came to be incorporated on 23.08.2007. Accordingly, on 06.11.2007, the petitioner and respondent no.1 entered into the Concession Agreement to design, engineer, finance, operate and maintain a length of approximately 63.49 km of NH-10 which has been specifically identified below. As per the terms of the Concession Agreement, the project work pertained to a portion of NH-10 which extended from the Delhi-Haryana border to Rohtak between the 29.70 km chainage and 87.00 km chainage. The petitioner was required to expand this portion of the highway from a two-lane single carriageway to a six-lane dual carriageway, which included construction of the Bahadurgarh and Rohtak bypasses as well as certain major/minor bridges (hereinafter referred to as ''the project work''). As the entire cost of the project was stipulated to be borne by the petitioner in terms of Article 3.1.1 of the Concession Agreement, the petitioner was granted a concession period of 25 years during which it had the exclusive right to construct, operate and maintain the highway, as also to demand and collect appropriate fee from vehicles for utilizing the highway or any part thereof by way of toll fee.

Finding of the Court:

The petitioner's primary contention is that when the respondent no.1 delayed carrying out its obligations under the Concession Agreement, it also caused a delay in toll revenue generation, which was the only way for the petitioner to recover costs and repay its debts. The petitioner has further challenged the suspension of its right to collect toll as being arbitrary and illegal, whereas the respondent no.1 has contended that the suspension of petitioner's rights under the Concession Agreement has been carried out strictly in terms of Article 36 of the Concession Agreement, and was a direct result of the petitioner failing to effectively discharge its work, which was gravely harming public interest.

Issues: 1. Whether the petitioner, having spent INR 900 crores out of its own money to build the highway, which stands 96.73% completed as on 13.01.2020 even as per respondent no.1, should be deprived of this right to collect toll at this premature stage of the dispute? 2. Whether the petitioner, notwithstanding the protestations of respondent no.1, were directed to carry out maintenance work, such a direction would undoubtedly involve an element of supervision from this Court, which is neither feasible nor permissible in the light of Sections 14(b) read with Section 41(e) of the Specific Relief Act? 3. Whether the suspension of petitioner's rights under the Concession Agreement, including its right to collect toll, as being arbitrary and illegal?

Ratio Decidendi: 1. The petitioner has not only made out a sufficient prima facie case and proved balance of convenience in its favour, it has also established that it is likely to incur irretrievable injury were it to be denied its rights under the Concession Agreement, including its right to collect toll. In these circumstances, the Court deems it appropriate to issue interim orders under Section 9 of the Act to protect the petitioner, till invocation of arbitration or the expiry of three months, whichever is earlier, from incurring any further injury on account of suspension of its rights under the Concession Agreement. 2. The impugned NITs were issued by respondent no.1 in pursuance of this power. Keeping in view the fact that there is a serious dispute between the parties regarding the quality of work rendered by the petitioner, any injunction granted upon these NITs could possibly impede or delay the repair and maintenance work on the highway as also have a direct impact on its safety and condition. For this reason, granting such an injunction, as rightly contended by respondent no.1, would fall foul of Section 20A of the Specific Relief Act and operate against public interest. 3. The petitioner has also challenged the suspension of its right to collect toll as being arbitrary and illegal, whereas the respondent no.1 has contended that the suspension of petitioner's rights under the Concession Agreement has been carried out strictly in terms of Article 36 of the Concession Agreement, and was a direct result of the petitioner failing to effectively discharge its work, which was gravely harming public interest. The Court is of the view that this question also cannot be decided by this Court. They can only be decided in arbitration and it is in those very proceedings that it will be examined whether the petitioner ought to be compensated for any repair and maintenance work done at its risk and cost by respondent no.1 in exercise of its powers under Article 17.9.1 of the Concession Agreement.

Final Decision: The first petition, OMP(I)(COMM) 144/2020 seeking stay of the impugned NITs dated 17.04.2020 and 05.05.2020 is dismissed. The second petition, OMP(I)(COMM) 263/2020, is partly allowed by staying the operation of notice/letters No. NHAI/PIU-RTK/B-H/LTR/20-21/300 dated 27.05.2020 and letter No.NHAI/PIU-RTK/B-H/LTR/20-21/339 dated 28.05.2020 suspending the rights of the petitioner under the Concession Agreement. However, this direction shall only subsist for a period of three months from today, or until further orders in this regard are passed in arbitration, whichever is earlier. It is made clear that in case the petitioner fails to invoke arbitration within three months, this interim order will no longer continue to operate. Furthermore, while carrying out toll collections, the petitioner shall ensure that all sums collected are duly deposited in the escrow account, as per the stipulations of the agreements between the parties. In IA 6365/2020, the respondent no.2 is directed to release 50% of INR 5.25 crores to the petitioner, after deducting the sum of INR 42 lakh which has already been paid to it pursuant to the orders of this Court.