The court upheld the arbitral award regarding damages for breach of contract, affirming that a party's obligations remain intact despite arbitration findings focusing on different agreements.

JUDGMENT :

Vibhu Bakhru, J

Introduction

1. KMP Expressways Limited (hereafter `KMPEL') has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the `A&C Act') impugning an arbitral award dated 24.03.2020 (hereafter the `impugned award') delivered by an Arbitral Tribunal comprising of two former Judges of the Supreme Court of India with a Former Chief Justice of India acting as a Presiding Arbitrator (hereafter the `Arbitral Tribunal').

2. The impugned award was rendered in the context of claims made by respondent no.1 (hereafter `IDBI') on its behalf as well as on behalf of the `Senior Lenders' as the `Lenders' Representative', against respondent no. 2 (hereafter `HSIIDC'). In this order, a reference to IDBI unless the context indicates otherwise, be construed as referring to the `Senior Lenders' or to IDBI acting as the `Lender's Representative'.

3. IDBI claimed that HSIIDC had breached its obligations under the Substitution Agreement dated 08.01.2007 (hereafter the `Substitution Agreement') as HSIIDC had appointed new Concessionaires in place of KMPEL to complete the development of the KMP Expressway, without safeguarding its dues and those of the `Senior Lenders'. The Arbitral Tribunal found in favour of IDBI and against HSIIDC and, awarded damages in favour of IDBI for a sum of Rs.1737.11 crores along with future interest at the rate of 9% per annum from the date of the impugned award. The Arbitral Tribunal further found that HSIIDC would be entitled to reimbursement of the amount that IDBI would recover from KMPEL pursuant to the proceedings instituted before the Debts Recovery Tribunal. Further, IDBI would be liable to pay simple interest at the rate of 9% per annum on the recovered amount if the same is not paid to HSIIDC within one month from the date of recovery of such amount.

4. The Arbitral Tribunal had quantified the aforesaid damages to be equivalent to the amount due to IDBI and the `Senior Lenders' from KMPEL against the loan disbursed by IDBI, for the development of the Kundli-Manesar-Palwal Expressway (hereafter the `KMP Expressway').

5. KMPEL has challenged the operative part of the impugned award to extent that (i) it directs that the KMPEL shall bear its own costs; and (ii) it contemplates recovery of any amount by IDBI from KMPEL in proceedings instituted before the Debts Recovery Tribunal and directs reimbursement of the said amount to HSIIDC. According to KMPEL, the impugned award to the aforesaid extent is vitiated by patent illegality.

Factual Context

6. The Government of Haryana had appointed HSIIDC as the Nodal Agency for Development of 135.650 km long KMP Expressway in the State of Haryana and its operation and maintenance, on a Build, Operate and Transfer basis (BoT basis).

7. HSIIDC had invited proposals for the development and operation of KMP Expressway on a BoT basis (hereafter the `Project'). Pursuant to the said invitation, M/s Madhucon Projects Limited, M/s Apollo Enterprises Limited and M/s D.S. Constructions Limited had submitted their bid as a Consortium with M/s Madhucon Projects Limited as the Consortium Leader. T