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IN THE HIGH COURT OF DELHI
Suresh Kumar Kait, J.
CG Tollway Limited - Appellant
Versus
National Highway Authority of India - Respondent
Arb.P. 888 of 2021, Arb.P. 889 of 2021 and Arb.P. 892 of 2021
Decided On : 28-10-2021




Parties must adhere to arbitration agreements, and judicial intervention is permitted only if arbitration procedures are exhausted; allegations of bias against SAROD were not substantiated.

Headnote:(A) National Highways Authority of India Act, 1988 - Arbitration and Conciliation Act, 1996 - Petitioners, subsidiaries of infrastructure company, sought arbitration against statutory body NHAI regarding premium payments under Concession Agreements, asserting Force Majeure due to Covid-19. Court emphasized adherence to arbitration agreements and questioned bias allegations against SAROD. (Paras 15, 18, 31, 34)

(B) Issues of Maintainability - Court highlights requirement for parties to exhaust arbitration procedures prior to judicial intervention under Sec. 11(6) of the Arbitration Act, as per contractual obligations. (Paras 23, 25)

(C) Governance of Arbitration - Court reaffirms established protocol regarding selection of arbitrators from agreed panels, dismissing claims of bias and confirming NHAI’s control over SAROD is legitimate. (Paras 18, 19, 34)

Facts of the case:
Petitioners in three petitions related to toll highway projects alleged improper application of premium due to COVID-19 related delays under Concession Agreements. Completion dates were extended, and claims for losses were made citing Force Majeure.

Findings of Court:
Petitions under Sec. 11(6) for appointment of arbitrators were dismissed; parties directed to follow arbitration processes laid out in Concession Agreements.

Issues: The court assessed the adherence to arbitration agreements; determination of bias in the arbitration process; and the maintainability of petitions under the Arbitration Act.

Ratio Decidendi: The court advanced the principle that arbitration agreements must be respected and judicial intervention is only suitable when the agreed-upon mechanisms fail, reinforcing the legal validity of SAROD and its arbitration procedures.

Result: Petitions dismissed.

Table of Content
1. introduction of petitioners and nature of case. (Para 1 , 2)
2. details of awarded projects and agreements. (Para 3 , 4 , 5)
3. financial obligations and force majeure claims. (Para 6 , 7 , 8)
4. dispute resolution mechanism in agreements. (Para 9)
5. background judgments and procedural history. (Para 10 , 11)
6. petitioners' concerns regarding impartiality in arbitration. (Para 12 , 13 , 14 , 15)
7. respondents' defense regarding arbitration procedures. (Para 16 , 17 , 18)
8. petitioners' rebuttal and further arguments. (Para 19 , 20 , 21)
9. court's observations on maintainability of arbitration petitions. (Para 22 , 23 , 24)
10. legal framework under section 11(6) of arbitration act. (Para 25 , 26 , 28 , 29 , 30)
11. court's final decision on arbitration petitions. (Para 31 , 32 , 33 , 34 , 35)

JUDGMENT

1. Petitioners in the above captioned three petitions are companies incorporated under the provisions of Companies Act, 1956 and are subsidiary of M/s IRB Infrastructure Developers Limited, who claims to be the largest infrastructure developers in India with vast experience in construction, operation & maintenance of highway projects. Respondent is a statutory body constituted under the National Highways Authority of India Act, 1988 (NHAI) and respondent No. 2 has been incorporated under Societies Registration Act, 1860 formed by NHAI along with NHBF for settlement of disputes through arbitration.

2. Since similar relief has been sought in these petitions, therefore, with the consent of learned counsel for the parties, these petitions were heard together and are being disposed of by this common judgment.

3. In the above captioned first petition [ARB.P.888/2021], the petitioner-Company was awarded a project of six laning of Kishangarh Udaipur Ahmedabad Section from Km. 90.000 (near Gulabpura) to Km. 214.870 (end of Chittorgarh bypass) of NH-79 in the State of Rajasthan package - 2 under NHDP Phase-Von BOT (Toll) for which a Concession Agreement dated 09.12.2016 was executed between petitioner and respondent No.1-NHAI.

4. In the above captioned second petition [ARB.P.889/2021], the petitioner-Company was awarded a project of six laning of Kishangarh to Gulabpura section of NH-79A and NH-79 in the State of Rajasthan (Length 90.000km) on DBFOT (Toll) under NHDP Phase-V Package-1, for which a Concession Agreement dated 22.02.2017 was executed between the petitioner and respondent-NHAI.

5. In the above captioned third petition [ARB.P.892/2021], the petitioner-Company was awarded the Project of six laning from Km 287.400 to Km 401.200 Section of NH-8 in the state of Rajasthan & Gujarat (Approx length 113.800 Km.) on DBFOT (Toll) under NHDP Phase-V (Package-V) i.e. on "Design Build Finance Operate Transfer Basis" ("the said Project"), for which a Concession Agreement dated 09.12.2016 was executed between petitioner and respondent, National Highways Authority of India (NHAI).

6. The Concession Agreements in question required the petitioners to undertake the entire cost of projects and in addition, to pay fixed premium of Rs.228.60 crores, Rs.186.30 crores and Rs.163.80 crores respectively to the respondent each year, with annual increase @3% p.a. till the subsistence of the agreement. In lieu of the above, petitioner was entitled to collect and retain toll, from which petitioner could satisfy the project costs, reasonable returns etc. The Appointed Date/Commercial Operation Date (COD) under the Concession Agreements in respect of the project of the petitioner were 04.11.2017, 21.02.2018 and 03.09.2017 respectively. Petitioners were, therefore, entitled to recover toll fee from the road users in accordance with the law for use of the subject section of National Highways as per "National Highways Fee (Determination of Rates and Collection) Rules, 2008" and the right of way in respect of concerned land was to be provided by respondent-NHAI to petitioner within 120 days of respective COD.

7. According to petitioners, t

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