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IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
M/s Athaang Dichpally Tollway Private Limited – Appellant
Versus
The National Highways Authority of India & Anr. – Respondents
O.M.P.(I) (COMM.) 30 of 2023
Decided On : 01-05-2023
Arbitration and Conciliation Act - Stay of Operation of Letter - Section 9
Fact of the Case:
The petitioner sought relief under Section 9 of the Arbitration and Conciliation Act, 1996 to stay the operation of a letter imposing damages and to restrain the respondent from encashing the escrow account. The petitioner argued that the damages were unilaterally imposed and in breach of the Concession Agreement.
Finding of the Court:
The court found that there were arbitrable disputes between the parties and referred the matter to arbitration. It emphasized the intent and purpose of the Arbitration Act to facilitate a less rigorous, technical, and formal mechanism for dispute resolution.
Issues: The issues revolved around the imposition of damages, breach of the Concession Agreement, and the appropriateness of referring the disputes to arbitration.
Ratio Decidendi: The court's decision was influenced by the intent and purpose of the Arbitration Act, which aims to provide an easier, more accessible, and efficient mechanism for resolving disputes. It emphasized the advantages of alternative dispute resolution and the need to relieve the burden on the courts.
Final Decision: The court appointed a sole arbitrator to adjudicate the disputes, directed the petitioner to file an application under Section 17 of the Act before the Arbitral Tribunal, and kept the interim order in operation until the first date of hearing before the Arbitrator.
ORDER
Chandra Dhari Singh, J. (Oral)--The instant petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter "the Act") has been filed on behalf of the petitioner seeking the following reliefs:
"(a) Stay the operation of the Letter dated 24.01.2023, i.e., DOCUMENT-13 and to restrain Respondent No. 2 from acting upon the unilateral directions therein specified;
(b) Allow the petition and be further pleased to pass an order for injunction restraining Respondent No. 1 from encashing on or dealing with the Escrow Account number 921020050848762 qua the encashment or imposition of the damages imposed amounting to INR 68,96,81,003/- (Rupees Sixty-Eight Crore Ninety-Six Lakhs Eighty-One Thousand and Three Only);
(c) Grant injunction restraining the Respondents, their legal representatives, assigns, administrators, men, servants or employees or any one acting through or under them qua the encashment or debiting or dealing with any amounts towards damages imposed amounting to INR 68,96,81,003/- (Rupees Sixty Eight Crore Ninety-Six Lakhs Eighty-One Thousand and Three Only) from the Escrow Account bearing Account number 921020050848762;
(d) Declare that the damages amounting to INR 68,96,81,003/- (Rupees Sixty-Eight Crore Ninety-Six Lakhs Eighty-One Thousand and Three Only) unliterally imposed upon the Petitioner by the Respondent No. 1 are in breach of the terms of the Concession Agreement;
(e) Pass any other or further order(s) as this Hon'ble Court deem fit in the facts and circumstances of the case."
2. Learned senior counsel for the petitioner, Mr. Sandeep Sethi, submitted that the petitioner, inter alia, seeks the interim injunction restraining the respondent no. 1 from encashing the alleged damages to the tune of Rs.68,96,81,003/- imposed upon the petitioner. It is also prayed that the respondent no.1 shall also be restrained from dealing with the ESCROW Account No. 921020050848762 qua the encashment or imposition of the said damages.
3. It is stated that the petitioner is a company incorporated under the Companies Act, 1956 and the respondent No.1 is a Government of India Undertaking established under the National Highways Authority Act, 1988. The respondent no.2 is the lenders' representative and the ESCROW Bank.
4. It is submitted that the respondent no.1 had been entrusted with the development, maintenance and management of National Highway No. 7 (hereinafter referred to as 'NH-7'), including the section from km 308 to km 367. In this regard the respondent no.1 resolved to augment the existing road from km 308 to km 367 on the Nagpur-Hyderabad Section of NH-7 (hereinafter referred to as 'the Project').
5. For the said Project, respondent no.1 invited proposals, by its Notice No. NHAI/Tech/NS-2/BOT/AP-1/RFQ/2008/2367 dated 24th February, 2009, for short listing of bidders for the construction, operation and maintenance of the section of NH-7 on DBFOT basis and short listed certain bidders, including the petitioner, which was part of a consortium at the relevant time. Respondent no.1 accepted the bid of the petitioner and issued a Letter of Acceptance bearing No. HAI/Tech/NS2/BOT/AP-1/RFQ/2008/2475 dated 27th May, 2009 (hereinafter referred to as 'the LoA') to the petitioner consortium requiring, inter alia, the execution of the Concessionaire Agreement within 45 days of the date of issue.
6. The learned senior counsel submitted that subsequent to the LoA, petitioner and respondent no.1 entered into the Concession Agreement dated 5th August, 2009 and thus, respondent no.1 granted the petitioner the exclusive right, license and authority to construct, operate and maintain the Project for a total period of 20 years from the appointed date.
7. During the course of operation of the project, certain disputes arose between the respondent no. 1 and M/s Essel Dichpally Tollway Private Limited, Concessionaire No. 2, whereupon a Settlement Agreement was executed between them on December 2020. The learned senior cou
The central legal point established in the judgment is the emphasis on the intent and purpose of the Arbitration Act to provide a less rigorous, technical, and formal mechanism for dispute resolution....
Pre-referral conciliation in arbitration agreements is directory, allowing parties to proceed directly to arbitration if amicable resolution fails.
Damages under the Concession Agreement can be recovered from the Escrow Account based on certification, irrespective of ongoing disputes, ensuring compliance with contractual obligations.
The Arbitration Act facilitates a less rigorous, technical, and formal dispute resolution mechanism, and disputes between parties with an arbitration clause are considered arbitrable.
The relief sought under Section 9 of the Arbitration Act is interim in nature and cannot be a permanent measure.
A court cannot grant permanent relief under Section 9 of the Arbitration and Conciliation Act, as its provisions are limited to interim measures to support arbitration, not for final outcomes.
Right to recover damages as per contractual agreements is independent of prior remedial measures, allowing unilateral calculations by authorities for damages under specified articles.
The court's decision emphasized the importance of arbitration clauses in settlement agreements and the parties' consensus to refer disputes to an arbitrator.
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 contemplat....
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