Damages under the Concession Agreement can be recovered from the Escrow Account based on certification, irrespective of ongoing disputes, ensuring compliance with contractual obligations.

JUDGMENT

Vibhu Bakhru, J. (Oral)

IA No.5668/2022 (for exemption)

1. Exemption is allowed, subject to all just exceptions.

2. The application is disposed of.

O.M.P.(I) (COMM.) 118/2022

3. The petitioner has filed the present petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereafter the `A&C Act'), inter alia, praying as under:

"a) Grant an injunction against the Respondent from recovering any amount whatsoever for alleged breach of contractual obligations in terms of letter dated 08.10.2021 from the Escrow Account bearing No. 1903201010137 of Canara Bank at Prime Corporate Branch, Mumbai.

b) Grant an injunction on the operation of the letter dated 09.09.2021 issued by the Respondent and the IE's letters dated 22.10.2021 and 02.02.2022, directing the proposed levy and recovery of the damages from the Petitioner.

c) Grant ex parte ad interim reliefs in terms of the above."

4. The respondent (hereinafter `NHAI') had invited proposals by issuing a Request for Qualification (RFQ) for shortlisting the bidders for "construction, operation and maintenance of NH-7 Six-laning of Hosur-Krishnagiri, Km 33.130 to Km 93.000 in the state of Tamil Nadu under NHDP Phase-V on BOT (Toll) on DBFOT basis" (hereinafter `the Project').

5. On 13.05.2010, NHAI had accepted the bid of Reliance Infrastructure Ltd. and instructed furnishing of the Bank Guarantee for a sum of Rs.52.60 crores. Thereafter, the petitioner company was incorporated as a Special Purpose Vehicle for executing the Project.

6. On 02.07.2010, the parties entered into the Concession Agreement for executing the said Project.

7. It is stated that the petitioner had completed the Project and on 05.04.2016, a Provisional Completion Certificate was issued by the Independent Engineer. The Project was thereafter, placed in commercial service.

8. The petitioner indicates that there were some issues with regard to collection of toll and carrying out the maintenance works. The petitioner claims that it had notified NHAI about the occurrence of a force majeure event on account of the outbreak of Covid-19 and the measures taken for combating the pandemic. The petitioner also claimed certain reliefs on account of the said force majeure events.

9. According to the respondent, the petitioner was required to carry out certain rectification works and to maintain the highway. On 01.12.2020, the Independent Engineer issued a letter to the petitioner to carry out certain rectification work in respect of certain defects, in terms of Clause 17.8 of the Concession Agreement. Thereafter, on 16.12.2020, NHAI also issued a notice under Clause 17.9.1 of the Concession Agreement requiring the petitioner to carry out certain repair/remedial measures in respect to the stated defects, within a period of fifteen days. According to the petitioner, it submitted a detailed work programme and also complied with the said directions. However, it apparent that there is a dispute in this regard because according to NHAI, certain defects have not been remedied.

10. On 05.08.2021, the Independent Engineer sent a letter to the respondent estimating the damages at Rs.10,24,42,009/-, on account of breach on the part of the petitioner to comply with its maintenance obligations. The petitioner disputes that it is in default of any of its obligations.

11. On 08.10.2021, NHAI sent a letter to the Canara Bank (Escrow Agent) requesting it to charge damages amounting to Rs.10,24,42,009/- from the Escrow Account (Account bearing no. 1903201010137) of the petitioner. The said letter also indicates the abstract of damages, which the respondent claims is