Dispute resolution clause in the concession agreement

Headnote:
Contract - Concession Agreement - Extension of Tenure - Dispute Resolution
Fact of the Case:

The petitioner sought an extension of the concession agreement by three years, which was denied by the first respondent. The court considered the commencement date of the contract and the dispute resolution clause in the agreement.
Finding of the Court:

The court kept the order directing the petitioner to close all operations in abeyance, allowing time for the parties to resolve the disputes amicably or resort to arbitration. The court did not express any view on the merits of the controversy.
Issues: Extension of concession agreement, commencement date of the contract, dispute resolution process
Ratio Decidendi: The court considered the dispute resolution clause in the agreement, which made it mandatory for a process of conciliation to take place between the parties before resorting to arbitration.
Final Decision: The court disposed of the writ petition with clarifications, keeping the order directing the petitioner to close all operations in abeyance till a specified date, without expressing any view on the merits of the controversy.

O R D E R

Heard Mr. Srinath Sridevan, Learned Senior Counsel appearing for the Petitioner and Mr. P.S.Raman, Learned Advocate General assisted by Ms. Ashwini Devi, Learned Standing Counsel appearing for the Respondents and perused the materials placed on record, apart from the pleadings of the parties.

2. The Third Respondent had in Letter of Acceptance in Proceedings S.P.D.C. No. B1/0494/2017 dated 18.04.2018 awarded the contract for the development, implementation, operation & maintenance of parking management solution for on street parking within Greater Chennai Corporation, which contains the following among other terms:-

“Design, Built, Finance, Operate and Transfer (DBFOT) the on street parking management and guidance system in Greater Chennai Corporation are (GCC) facility over a period of 5 (Five) years (excluding six months installation period). The last six months of the concession period would be the project transition period to GCC.

....

Concession Agreement: The Concession Agreement has to be signed with GCC within one month from the date of letter of acceptance submitted to GCC. The Concession Agreement period shall not be extended beyond five (5) years. Any further extension of the concession period would be to the sole discretion of GCC and would be well intimated six (6) months prior to the closure of the concession agreement.”

However, the parties had entered into the Concession Agreement only on 20.02.2019, which was beyond the stipulated time limit of one month from the date of letter of acceptance. Clause A of that Concession Agreement reads as follows:-

“A. The Party of the First Part invited bids under Tender Notice No. S.P.D.C. No. B1/0494/2017 (the “Tender Notice”) Request for Qualification cum Request for Proposal dated 20/01/2018 (the “RFQ-cum-RFP”) for selection of a Service provider for Design, Development, Implementation, Operation and Maintenance of Smart Parking Solution for on street parking in all 15 zones of GCC area for a concession period of five (5) years (excluding six months installation period). The last six months of the concession period would be the project transaction period to Party of the First part.”

When the Petitioner had made a representation dated 27.11.2023 for extension of the aforesaid tenure of the contract, the First Respondent by Proceedings in S.P.D.C. No.B1/00494/2017 dated 06.02.2024 held as follows:- “ Considering all the above reasons, GCC had decided not to consider the extension request of the concessionaire and to close the current contract. The service provider is hereby instructed to close all operations and to smoothly transtition the project back to GCC with immediate effect.”

The said order is challenged in this Writ Petition seeking consequential direction to the Respondents to consider its request for extension of tenure of the concession agreement by three years.

3. This Court during the earlier hearing on 23.02.2024 had passed the following self-explanatory order:-

"4. The impugned action is justified by Learned Counsel for the Respondents by reckoning the commencement of the tenure of contract of 5 years and 6 months from the date of letter of acceptance on 18.04.2018 which has already come to an end on 18.10.2023, but Learned Counsel for the Petitioner contends that the said period would commence from 20.02.2019, when the Concession Agreement has been entered between the parties and would lapse only in 20.08.2024 and could not be earlier.

5. In this context, reference must be made to clause 14.1 of the agreement entered between the parties, which reads as follows:-

“14. Dispute Resolution

14.1. Any disputes and or difference relating to this agreement or claims arising out of or relating to this agreement or breach, termination or the invalidity thereof or on any issue whether arising during the progress of the services of after the completion or abandonment thereof or any matter directly or indirectly connected with this agreement will be resolved through joint d

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