The introduction of GST is a change in law that materially affects contractual obligations, enabling claims for force majeure under the Contract Agreement.

JUDGMENT

Vibhu Bakhru, J. (Oral)--The petitioner (hereinafter `NHAI) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter the `A&C Act'), inter alia, impugning the Arbitral Award dated 12.12.2020 (hereinafter the `impugned award') passed by the Arbitral Tribunal comprising of a Sole Arbitrator.

2. The impugned award was rendered in respect of disputes that had arisen between the parties in relation to an agreement dated 30.07.2016 (hereinafter the `Contract Agreement') entered into between the parties for "Collection of user fee of Vemapadu Fee Plaza at Km. 795.498 for Ankaapalli to Tuni Section from Km. 358.00 to Km. 272.00 (New Chainage from Km. 830.525 to Km. 741.255) of NH-5 in the State of Andhra Pradesh" (hereinafter the `project').

3. On 17.06.2016, NHAI invited tenders by issuing a Request for Proposal (RFP) in respect of work relating to collection of User Fee at Vempadu Toll Plaza located at Km. 795.498 on the stretch extending from Km. 830.525 to Km. 741.255 on National Highway No.5 (now renamed as National Highway No.16) in the State of Andhra Pradesh.

4. On 21.07.2016, the respondent submitted the financial bid for the aforesaid work. He was declared the highest bidder and NHAI issued a Letter of Acceptance. Thereafter, on 30.07.2016, the parties entered into a Contract Agreement, whereby the respondent was granted the concession for collecting User Fee at Vempadu Toll Plaza for a period of one year with effect from 08:00:00 hours on 01.08.2016 to 07:59:59 hours on 01.08.2017. In terms of the Contract Agreement, the respondent was required to pay Rs.2,24,40,274/- per week to NHAI. The said payment was exclusive of any TCS or any taxes or service charges as applicable.

5. In terms of Clause 19 of the Contract Agreement, the respondent was liable to pay penalty at the rate of 0.2% per day for initial one month delay and at the rate of 0.5% per day for further delay beyond one month in remittance of the agreed amount. In terms of Clause 17(b)(i) of the Contract Agreement, the respondent also furnished the following performance security: (i) cross DD, Pay order in the sum of Rs.9,75,09,000/- and (ii) bank guarantee being BG No. 24/2016 dated 30.07.2016 in the sum of Rs.9,75,09,000/- issued by Indian Bank.

6. The Government of India rolled out the Goods of Services Tax (GST) with effect from 01.07.2017. The said levy subsumed all indirect taxes.

7. The respondent claimed that in view of the uncertainty surrounding the implementation of GST, there was a rapid decline in the movement of traffic and it adversely affected the collection of tolls. The respondent brought this to the notice of NHAI by its letter dated 05.07.2017.

8. The respondent informed NHAI that he had incurred a loss of Rs.52,62,228/- on account of reduction in collection of tolls for the period 28.06.2017 to 05.07.2017. According to the respondent, the said communication was received by the Project Director (PD) and was submitted to the Regional Office (RO) for assessment. Thereafter, the respondent sent another letter dated 08.07.2017, tabulating the loss incurred by him for the period from 28.06.2017 to 07.07.2017 at Rs.62,89,975/-. This was also followed by another letter dated 12.07.2017 whereby the respondent quantified the loss for the period from 28.06.2017 to 11.07.2017 at Rs.85,21,