The court emphasized the necessity of arbitration for disputes arising from contractual agreements when the existence of an arbitration agreement is prima facie established, allowing parties to resolve differences through the arbitral process.

JUDGMENT

Vibhu Bakhru, J. (Oral)

1. The petitioner has filed the present petition under Section 11(6) of the Arbitration & Conciliation Act, 1996 (hereafter the `A&C Act'), inter alia, praying that an Arbitrator be appointed to adjudicate the disputes between the parties.

2. The parties had entered into a Concession Agreement dated 16.08.2010 for six-laning of the Tumkur-Chitradurga section from KM 75 to KM 189 of National Highway-4 in the state of Karnataka and for operation and maintenance of the Project Highway for a period of 26 years on `Design Build Finance Operate Transfer Basis'.

3. In terms of the aforesaid Concession Agreement, the petitioner was required to pay a premium of Rs.140.40 crores to the respondent for each year with an annual increase at the rate of 5%. The petitioner states that there was revenue shortfall from the realization of the project. Similar issues were also faced by other Concessionaires.

4. In this backdrop, the Central Government floated a `Premium Deferent Scheme' by a Circular dated 04.03.2014. It is stated that in terms of the said Scheme, the premium payment to the extent of shortfall was deferred to a later stage. The petitioner applied to avail benefit of the said Scheme and sought modification of the terms of payment of premium as agreed under the Concession Agreement. The respondent by a letter dated 06.06.2014 approved the same and granted deferment of the premium to the extent of the revenue shortfall as projected.

5. The petitioner states that in terms of Clause 3(b) of the Scheme, interest at the rate of 2% per annum above the bank rate, was payable on the deferred premium amounts.

6. Thereafter on 06.06.2014, the parties entered into a Supplementary Agreement.

7. Certain disputes have arisen between the parties with regard to the shortfall of revenue. The petitioner claims that shortfall of revenue was required to be re-evaluated and, on such re-evaluation, it was found that the shortfall was higher than the earlier projected shortfall. This is contested by the respondent. The respondent claims that the revenue deficit was lesser by more than 5% of the projected revenue and therefore, has demanded additional premium from the petitioner.

8. In view of the disputes between the parties, the petitioner invoked the Dispute Resolution Mechanism as provided under Article 44.2 of the Concession Agreement and sought resolution of the disputes by conciliation. According to the petitioner, the conciliation proceedings were not successful and by a letter dated 03.05.2019, the petitioner declared that the conciliation proceedings had failed. The petitioner invoked the Arbitration Agreement in terms of Article 44.3. of the Conciliation Agreement and also nominated an Arbitrator. It is stated that certain meetings were held between the parties, however, NHAI has failed to appoint an Arbitrator.

9. In the meanwhile, the petitioner filed a petition under Section 9 of the A&C Act [being OMP(I)(COMM) no.270/2019]. The said petition was allowed and certain interim reliefs were granted to the petitioner.

10. Article 44.3 of the Concession Agreement reads as under:

"44.3 Arbitration