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IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Roadway Solutions India Infra Limited – Appellant
Versus
National Highway Authority of India – Respondent
O.M.P.(I) (COMM.) 41 of 2023 and I.A. Nos. 4029 of 2023, 536 of 2023
Decided On : 24-05-2023
ARBITRATION - SECTION 9 - STAY OF TERMINATION NOTICE - DETERMINABLE CONTRACT - SPECIFIC PERFORMANCE - BALANCE OF CONVENIENCE - IRREPARABLE LOSS - PUBLIC INTEREST - INFRASTRUCTURE PROJECT - SECTIONS 20A AND 41(HA) OF THE SPECIFIC RELIEF ACT, 1963 - NHAI CONTRACT.
Fact of the Case:
The petitioner, a construction company, entered into an item rate Contract/Agreement (Contract) with the respondent, National Highway Authority of India (NHAI), for strengthening/overlaying on Six Lane Gurgaon - Kotputli - Jaipur section of NH-48. The petitioner commenced the maintenance work after 18th August, 2022. On 30th August, 2022, the Ministry of Road, Transport and Highways (MoRTH) issued a circular with the objective of "adopting worldwide best practice in engineering techniques in design, construction and maintenance of highways, bridges and tunnels". On 24th December, 2022, the petitioner submitted the mixed design of Reclaimed/Recycled Asphalt Pavement (RAP) along with the Construction Methodology of RAP for review and approval of the respondent. The petitioner sent a reminder letter dated 3rd January, 2023 to the respondent seeking review and approval of the RAP methodology for laying the road but the respondent rejected the proposal for use of RAP. The respondent issued a notice of termination dated 31st January, 2023 under Clause 63.1 of CoPA, giving a notice of 14 days, upon the expiry of which the respondent was automatically entitled to terminate the contract. The petitioner sent a reply to the said notice vide response dated 4th February, 2023. Thereafter disputes arose between the parties.
Finding of the Court:
1. The Contract is determinable in nature and can be terminated by the respondent for default of the petitioner. 2. The petitioner's contention that the Contract is not determinable is misconceived. 3. The Court cannot grant the reliefs as sought for by the petitioner as it would amount to granting of final relief which cannot be granted by the Court in the instant proceedings under Section 9 of the Act. 4. The petitioner has failed to make out any case for granting interim injunction in the instant matter. 5. The petition is dismissed along with the pending applications, if any.
Issues: 1. Whether the Contract is determinable in nature? 2. Whether the Court can grant the reliefs as sought for by the petitioner? 3. Whether the petitioner has made out any case for granting interim injunction in the instant matter?
Ratio Decidendi: 1. A contract is determinable if it can be terminated by one party without the consent of the other party. 2. The Court cannot grant the reliefs as sought for by the petitioner as it would amount to granting of final relief which cannot be granted by the Court in the instant proceedings under Section 9 of the Act. 3. The petitioner has failed to make out any case for granting interim injunction in the instant matter.
Final Decision: The petition is dismissed along with the pending applications, if any.
JUDGMENT
Chandra Dhari Singh, J. 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) Pass an order staying the operation and effect of the Notice dated 31.01.2023 of intent to terminate the Contract issued by the Respondent to the Petitioner, and restrain the Respondent from acting upon the said notice pending the completion of the dispute resolution process set out in Clause 67 of Conditions of Particular Application in the Contract;
(b) Issue ex-parte ad interim stay to restrain the Respondent, its principal officers, servants, agents and all other acting for, and on their behalf, from invoking and encashing the following bank guarantees submitted by the Petitioner and its group concerns:
a. Performance Security Bank Guarantee dated 27.06.2022 bearing No. TTGGPGE221780068 issued for an amount of Rs.12,29,10,754/- by the Petitioner;
b. Additional Performance Security Bank Guarantee dated 27.06.2022 bearing No. TTGGPGE221780066 issued for an amount of Rs.3,51,37,643/- by the Petitioner.
(c) Direct the Respondent to maintain status quo with respect to the Performance Security Bank Guarantee dated 27.06.2022 and Additional Performance Security Bank Guarantee dated 27.06.2022, pending determination of subject matter of dispute between the parties in accordance with the terms of the Contract;
(d) Pass ad-interim orders reliefs in terms of the above prayer;
(e) Pass any other order/direction which this Hon'ble Court may deem just, fair and equitable in the circumstances."
FACTUAL MATRIX
2. The petitioner i.e. Roadway Solutions India Infra Limited is a company incorporated under the provisions of the Companies Act, 2013, having its registered office at SN-29 HN-20 Kondhwa Kd. Nr. Kubex Soc. Nr. Shera School, Pune, Maharashtra-411048. The petitioner is a construction company having a wide experience in the construction of roadways. The respondent i.e. National Highway Authority of India was set up by the NHAI Act, 1988, as an autonomous agency of the Government of India. The respondent invited bids for strengthening/overlaying on Six Lane Gurgaon - Kotputli - Jaipur section of NH-48 (Old NH-8) from Km 107+100 to Km 273+000 of main carriage way (MCW) and additionally, about 312 Km both sides of service road project in the State of Rajasthan at the risk and cost of Concessionaire on item rate basis (percentage basis project). In August 2021, the petitioner also took part in said bid and being the lowest bidder, the Letter of Award No. NHAI/NHDP-V/MC-II/Gur-Jpr/Raj/Item Rate/2021 (Pt-1)/E-138079/55406 dated 30th May, 2022 (LOA) was issued in favour of the petitioner.
3. On 19th July, 2022, the petitioner and respondent entered into item rate Contract/Agreement (Contract), thereby materializing the terms and conditions to carry out the works under the project. On 27th July, 2022, the respondent issued the Notice of Commencement and declaration of commencement date, whereby 27th July, 2022 was declared as the date of commencement of the project. In terms of Clause 41.1 of the Conditions of Particular Application (CoPA), the petitioner was supposed to commence the works as soon as possible after the receipt of a notice from the engineer.
4. The petitioner submitted the Performance Security dated 27th June, 2022 and Additional Performance Security dated 27th June, 2022, amounting to Rs.12,29,10,754/- (Rupees Twelve Crores Twenty Nine Lakhs Ten Thousand Seven Hundred and Fifty Four Only) and Rs.3,51, 37, 643/- (Rupees Three Crores Fifty One Lakhs Thirty Seven Thousand Six Hundred and Forty Three Only) respectively to the respondent in the form of bank guarantees in accordance with the Contract.
5. The petitioner commenced the maintenance work after 18th August, 2022. On 30th August, 2022, the Ministry of Road, Transport and Highways (MoRTH) issued a circular with the objective of "adopting worldwide best practice i
The main legal point established in the judgment is that in the case of a determinable contract, no injunction against termination and enforcement of the contract can be issued.
The court affirmed that the Tribunal's rejection of the appellant's request for interim measures was valid due to established insufficient funding and non-compliance, affirming limited grounds for in....
A contract that is determinable in nature cannot be specifically enforced, and no injunction against termination and enforcement of the contract can be issued.
The court found that the contract in question is in the nature of a commercial contract and cannot be enforced specifically under the Specific Relief Act. The Tribunal held that NHAI's exercise of po....
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.
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