Demonetisation constituted a force majeure event under the contract, materially affecting obligations, thus allowing waiver of payment claims.

JUDGMENT

Sanjeev Narula, J. (Oral)--The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"] impugns the Arbitral Award dated 14th February, 2019 passed by the learned Sole Arbitrator, whereby claims of the Respondent (Claimant in Arbitration) stand allowed and the counter-claims of the Petitioner (Respondent therein) stand rejected.

BRIEF FACTS

2. National Highways Authority of India [hereinafter, "NHAI"], entrusted operations of the Toll Plaza at Vempadu, Visakhapatnam District, Andhra Pradesh [hereinafter, the "Toll Plaza"] to M/s. C.P. Rama Rao vide a Contract Agreement dated 30th July, 2016 [hereinafter, the "Contract Agreement"]. During the term of Contract, from 1st August, 2016 [08:00 hrs] to 01st August, 2017 [07:59 hrs] Respondent had agreed to pay Rs.2,24,40,274/- as weekly remittance from user fee collections at the Toll Plaza.

3. Disputes arose in relation to collection of user fee at the Toll Plaza, consequent to demonetisation policy effectuated by the Union of India, whereby Rs.500/- and Rs.1000/- notes (the extent of which was about 85% of the total currency in circulation) were withdrawn as legal tender w.e.f. 8th November, 2016. Respondent sought waiver in remittance of agreed weekly amount, claiming the act of demonetisation to be a "force majeure" event - in accordance with Clause 25(b) of the Contract Agreement. NHAI, on the other hand, disputed that the event was force majeure, and also the Respondent's entitlement for waiver in remittance of agreed weekly charges. The disputes culminated in arbitration before an Arbitral Tribunal, appointed by this Court, on a petition filed by the Respondent.

4. In Arbitration, Respondent (Claimant therein), contended that as a result of demonetisation, collection of user fee at the Toll Plaza came to a grinding halt w.e.f. 9th November, 2016 [00:00 hrs]. NHAI, vide e-mail dated 9th November, 2016, suspended collection of user fee from vehicles passing through the Toll Plaza. Nonetheless, before receipt of notice of suspension, for approximately 21 hours, commencing from 8th November, 2016 [22:00 hrs], the Respondent could not collect user fee at the Toll Plaza, and accordingly, sought waiver of the same during the said period. Such suspension continued at the Toll Plaza from 9th November, 2016 [17:30 hrs] to 2nd December, 2016 [24:00 hrs] for approximately 23.263 days [hereinafter, "toll free period"], on the basis of different circulars issued by NHAI and its respective Regional Offices. However, Respondent contended that the effect of demonetisation persisted throughout the `force majeure period' from 9th November, 2016 to 28th February, 2017, and thus, sought waiver of user fee during such period to the extent of the difference between actual weekly remittance and actual collection (minus the maintenance charges).

AT ARBITRATION

5. At Arbitration, the Respondents sought reliefs as follows:

"i) Waiver of the payment of Rs.6,76,71,317/- out of the liability of Rs.8,09,02,416/- considering the period 09.11.2016 to 28.02.2017 as period falling under Force Majeure period and;

ii) Refund for a sum of Rs.1,32,31,099/- (already paid under duress) out of the liability of Rs.8,09,02,416/- considering the period 09,11.2016 to 28.02.2017 as period falling under Force Majeure period and;

iii) Interest @ 18% per annum compounded quarterly on the amount of refund of Rs.1,32,31,099/-."

6. NHAI, on the other hand, defended the claims and raised counter-claims against the Respondent to the extent of (i) recovery of unpaid balance in terms of Clause `H' and 19 of the Contract Agreement; (ii) liquidated damages; and (