The main legal point established in the judgment is that NHAI's right to recover damages from the escrow account is independent of the remedies provided under Article 15.8, and the damages contemplated under Article 15.8.1 are in the nature of pre-estimation of compensation for the damages suffered on account of breach.

JUDGMENT

Sanjeev Narula, J. - The present petition under Section 9 of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"] has been filed seeking interim measures pending constitution of the Arbitral Tribunal against coercive recovery by NHAI towards damages due to failure of repair and maintenance work on project assets.

THE DISPUTE

2. The facts leading to the present petition are as follows:

2.1. Petitioner Bamanbore Tollway Private Ltd. [hereinafter, "BTPL"] and Respondent No. 1 National Highways Authority of India [hereinafter, "NHAI"] entered into a Concession Agreement dated 26th April, 2018 inter alia for Tolling, Operation, Management, Maintenance & Transfer of National Highway stretch of Bamanbore to Garamore Section (from km 182+600 to km 254+537) of NH8A [hereinafter, Project Highway] in Gujarat on a Toll-Operate-Transfer (TOT) Basis for a period of 30 years.

2.2. Pursuant to a joint-inspection carried out on 25th Ap ril, 2020 along with representatives of BTPL, the Independent Engineer [hereinafter, "IE"], vide letter dated 27th April, 2020, listed out defects in the work thatrequired repair and maintenance. Subsequently the damages were quantified and proposed at Rs. 1,55,652/- in compliance with Article 15.8.1(b) of the Concessionaire Agreement. This was followed by another communication dated 18th August, 2020, wherein the IE, pursuant to inspection carried out at the project site on 12th August, 2020, listed out further defects. On the basis of said defects, the IE proposed that damages under Clause 15.8.1(b) be fixed at Rs. 2 lacs per day, till the repair work was completed by BTPL.

2.3. BTPL responded to the afore-noted communications vide letter dated 24th August, 2020 contending that defects had been rectified. It submitted a compliance report to that effect, enclosing photographs of rep airs carried out. In the meantime, NHAI on 31stMarch, 2021, on basis of the letter of IE proposing the damages, called upon the Petitioner to make a payment of Rs. 4,09,55,652/- as per Article 15.8.1. BTPL vide letters dated 7th Ap ril, 2021 and 9th June, 2021, refuted all allegations levelled against it in detail, and also called upon NHAI to withdraw the Demand Notice dated 19th June, 2020.

2.4. NHAI issued an escrow invocation letter dated 2nd November, 2021 threatening recovery of an amount of Rs. 4,09,55,652/- from an escrow account No. 038305001943 maintained by BTPL at ICICI Bank, Chembur Basant Cinema Branch, Mumbai.

2.5. In this background, BTPL has filed the present petition seeking interim protection of restraining NHAI from coercive recovery of damages from the aforesaid escrow account or such other means.

3. Mr. Nakul Dewan, Senior Counsel for BTPL, states that the action of NHAIis completely arbitrary and unreasonable, and makes the following submissions:

3. 1. The action of NHAI for recovering damages from the escrow account is contrary to contractual terms. NHAIs right to remedial measures is stipulated under Article 15.9 of the Concessionaire Agreement, which reads as follows:

"15.9 Authoritys right to take remedial measures

15.9.1 In the event the Concessionaire does not maintain and/or repair the Project Highway or any part thereof in conformity with the Maintenance Requirements, the Maintenance Manual or the Maintenance Prog ramme or Safety Requirements, as the case may be, and fails to commence remedial works within 15 (fifteen) clays of receipt of the O&M Inspection Report or a notice in this behalf from the Authority or the Independent Engineer, as the case may be, the Authority shall, without prejudice to its rights under this Agreement including Termination thereof, be entitled to undertake such remedial measures at the risk and cost of the Concessionaire, and to recover its cost from the Concessionaire. In addition to recovery of the aforesaid cost, a sum equal to 50% (fifty per cent) of such cost shall be paid by the Concessionaire to the Authority as Damages. For the avoidance of doubt, the