The court affirmed that compensation under Article 35.4 of the Concession Agreement should not depend on whether a competing road opened to traffic before toll collection commenced, necessitating a reevaluation of claims.

JUDGMENT :

C. HARI SHANKAR, J.

The challenge and issue in controversy

1. Under challenge at the instance of IRB Ahmedabad Super Expressway [“IRB” hereinafter], in the present petition preferred under Section 34 of the Arbitration & Conciliation Act, 1996 [“the 1996 Act” hereinafter] is an arbitral award passed by a learned three-member Arbitral Tribunal on 7 April 2024. IRB was the claimant in the arbitral proceedings, and the National Highways Authority of India [NHAI] was the respondent and counter-claimant.

2. The challenge, in this petition, is restricted to the rejection, by the Arbitral Tribunal, of the claim of IRB for compensation, from NHAI, under Article 35.4 of the Concession Agreement [“CA” hereinafter], dated 25 July 2011, executed between them.

3. To clear the air and not for anything else, I may note, here, that the CA envisaged payment of premium by IRB to NHAI. The Government had announced a Premium Deferment Scheme, whereunder part of the premium could be paid by Concessionaires (such as IRB) upfront, and the remainder deferred for payment later. NHAI raised a counter-claim, in the arbitral proceedings, against IRB, claiming payment of the deferred premium. The Arbitral Tribunal has held NHAI to be entitled to the said payment. IRB has, candidly, conceded that it is not challenging that part of the award, though the parties have joined issue, in other cognate proceedings, on the issue of whether the deferred payment is to be paid by IRB upfront, following the impugned Arbitral Award, or at a later point of time.

4. That controversy is, however, foreign to the present petition, which is restricted to IRB’s claim against NHAI for compensation in terms of Article 35.4 of the CA, and the sustainability of the decision of the Arbitral Tribunal to reject the said claim. I have deemed it appropriate to mention this only because the impugned Award, which is lengthy deals at times with IRB’s claim against NHAI and at others with NHAI’s counter-claim against IRB, and there is chance of confusion.

5. To repeat for the third time, this petition is concerned only with the decision of the Arbitral Tribunal on IRB’s claim, against NHAI, for compensation in terms of Article 35.4 of the CA.

6. Needless to say, even if this Court were to agree with IRB, that the Arbitral Tribunal was not justified in rejecting IRB’s claim, for the reasons contained in the impugned award, this Court would have to stop at that. It cannot adjudicate on the claims on merits, as that would amount to modifying the impugned arbitral award, which the law proscribes. The power with the Court is only to uphold the award, or set aside the award, or, in the very limited circumstances envisaged by Section 34(4), adjourn the matter to enable the Arbitral Tribunal to take steps, as it may choose, to remove any removable defect in the Award, so as to avoid the Award being set aside on that ground [ NHAI v. M. Hakeem , (2021) 9 SCC 1 ] Exercise of Section 34(4) jurisdiction can, however, only be on application ad invitum, and not suo motu.

7. It is nobody’s case that Section 34(4) applies.

Facts

8. Under the CA, which was executed between IRB and NHAI on 25 July 2011, IRB was to develop, maintain and manage, by six laning, a stretch of NH-8 [“the Project Highway” hereinafter] between km 6.4 and km 108.7, and improve the existing Ahmedabad Vadodara Expressway from km 0.00 to km 93.302. The agreement was on Design, Build, Finance, Operate and Transfer basis, as per w