IN THE HIGH COURT OF DELHI AT NEW DELHI
Prathiba M.Singh, J.
Kake Finvest Pvt Ltd - Appellant
Versus
Delhi Metro Rail Corporation Ltd - Respondent
W.P. (C) No. 11219 of 2020
Decided On : 22-02-2021
Parking Contracts - Dispute Resolution - Old Tender, Short-Term Licenses, Open Tender - Clause 38 of the Old Tender, Clause 13 of the Short-Term Licenses and Open Tender - Indian Arbitration and Conciliation Act 1996 - Conciliation and Arbitration Mechanism - Payment of License Fee during Covid-19 Pandemic - Waiver of License Fee - Termination Clause - Exit Plan
Fact of the Case:
The case involves parking contractors challenging the scheme awarded by the Delhi Metro Rail Corporation (DMRC) for payment during the Covid-19 lockdown period. The contractors argue that the proposed payment scheme is onerous due to reduced traffic and pandemic-related conditions.
Finding of the Court:
The court found that the DMRC scaled down the payments considerably and upheld the conciliation and arbitration mechanism in the contracts. It appointed a conciliator and a sole arbitrator to resolve disputes if the conciliation process fails.
Issues: The issues revolved around the payment of license fee post-lockdown, interpretation of contract clauses, and the applicability of the exit plan to parking contractors.
Ratio Decidendi: The court upheld the conciliation and arbitration clauses in the contracts, emphasized the waiver of license fee during the lockdown, and clarified the payment mechanism based on total passenger journeys.
Final Decision: The court disposed of the petitions, directing the parties to adhere to the payment scheme, appointing a conciliator and a sole arbitrator, and allowing termination of contracts with recourse to arbitration.
JUDGMENT
Prathiba M. Singh, J. - This hearing has been done by video conferencing.
2. The present writ petitions have been filed by various parking contractors who have been awarded parking contracts by the Delhi Metro Rail Corporation (hereinafter, 'DMRC').
3. These petitions challenge the scheme awarded by the DMRC vide letter dated 1 st December, 2020, for payment in respect of the period when the Covid-19 lockdown was in effect. The case of the Petitioners is that during the lockdown period, the DMRC has granted exemption from payment of licence fee for the period from 23rd March, 2020 to 11th September, 2020. Thereafter, however, a scheme has been devised for payment on a percentage basis, compared to the previous years' average metro train journeys.
4. Mr. Rakesh Tikku, ld. Sr. counsel appearing for the Petitioners submits that, on the one hand, traffic in the metro trains has not been the same as what it was in the previous years. Secondly, owing to the various conditions which have been imposed i.e., seats to be kept vacant and other terms for social distancing, traffic in the metro trains has considerably reduced. Ld. Senior counsel also submits that the apprehension of contracting Covid-19 and the concept of 'work from home' becoming the trend has also considerably reduced the traffic. It is submitted that the Petitioners, who are parking contractors, did not originally wish to quit but had sought for much more reasonable conditions during the time when the pandemic is continuing. However, now the contractors wish to terminate the contract but the DMRC is imposing very onerous terms. The final submission is that in the proposed chart as to amounts payable, which has been given to the Petitioners by the DMRC, instead of taking the average of the total train journeys from the previous year, the total number of passengers ought to be taken into account.
5. On the other hand, Ms. Vibha Mahajan, ld. counsel appearing for the DMRC submits that there are three types of tenders which were floated in respect of parking contracts.
The first type was an 'Old tender' where the period of license was three years and security deposit of four months' licence fee was taken. In the said kind of tender, four months' notice had to be given for termination, failing which, the security deposit would be forfeited.
The second category of tenders are 'short term licences' for a period of six months for which two months' licence fee is taken as security deposit. If the termination is prior to six months, the security deposit is forfeited.
Final category are those which are awarded, in an 'open tender process'. The period of licence in such tenders is four years and six months' licence fee is to be provided as security deposit. The lock-in period is of 12 months and after the lock-in period, 180 days' notice is to be given for termination. If termination is during the lock-in period or prior to the expiry of the 180 days' notice period, the security deposit is forfeited.
6. Ms. Mahajan, ld. counsel submits that in all three types of contracts, there are two levels of dispute resolution. Firstly, a conciliation process and secondly, an arbitration mechanism. It is submitted that all the Petitioners in these cases have multiple parking contracts of one or some of the abovementioned categories and are well aware of the DMRC's conciliation and arbitration process. Ld. counsel finally relies upon the benefits given by the DMRC in respect of licence fee during the lockdown and submits that the waivers etc., given by DMRC are very reasonable.
7. On a specific query from the Court, Ms. Mahajan, ld. counsel, sought a clarification from Mr. Sushant Tripathi, Legal Officer, DMRC. Ld. Counsel then submits that the total journeys which are contemplated in the scheme for payment of licence fee would, in effect, be total passenger journeys and not total train journeys.
8. On this clarification being given, Mr. Rakesh Tikku, ld. Sr. counsel, submits in rejoinder that s
The main legal point established is the enforcement of conciliation and arbitration clauses in contracts, the waiver of license fee during force majeure events, and the interpretation of payment mech....
The court upheld the DMRC's payment scheme for parking contracts during COVID-19, emphasizing the importance of conciliation and arbitration for disputes and affirming the rationale behind adjusting ....
The COVID-19 lockdown is recognized as a force majeure event affecting contractual obligations, necessitating equitable treatment for parties under similar circumstances.
The main legal principle established is the court's authority to appoint a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, to adjudicate disputes between parties wh....
The COVID-19 pandemic constituted a force majeure event, and the lockdown was not attributable to the fault of the allottees. Therefore, the DTIDC, being a public corporation, was directed to adopt a....
The court upheld that discretion in contract renewal must be exercised transparently, requiring justification from DMRC for refusal to extend the license agreement.
In case the site is required by the Licensor for its own or public purposes, the Licencee shall have to hand over the vacant possession of the site at once.
The court emphasized the limited scope of interference in appeals under Section 37 of the Arbitration Act and the primary role of the arbitrator in interpreting contract terms.
A force majeure clause may apply to contract obligations if unforeseen circumstances, such as a pandemic, prevent performance, potentially allowing for reductions in contractual fees.
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.