Page 1 of 43

IN THE HIGH COURT OF DELHI AT NEW DELHI

%

Judgment delivered on: 29.03.2022

+

O.M.P. (COMM) No.441/2020 & IA No.6079/2020 & IA

No.6766/2020

HARYANA STATE INDUSTRIAL &

INFRASTRUCTURE DEVELOPMENT

CORPORATION LTD.

..... Petitioner

versus

IDBI BANK LIMITED AND ANR.

..... Respondents

Advocates who appeared in this case:

For the Petitioner

: Mr Sudhir Nandrajog, Senior Advocate with

Mr Anil Grover, Sr. Addl. Advocate General

for State of Haryana, Mr Parvinder Chauhan,

Advocate with Mr Nitin Jain, Advocates for

HSIIDC/Petitioner-Applicant.

For the Respondents

: Mr Gopal Jain, Senior Advocate with Mr

Raunak Dhillon, Ms Madhavi Khanna, Ms

Isha Malik, Ms Niharika Shukla, Advocates

for IDBI Bank Ltd.

Mr Pallav Shishodia, Senior Advocate with

Mr Deepak Khurana, Mr Tejasv Anand,

Advocates for KMP Expressways Pvt. Ltd.

CORAM

HON’BLE MR JUSTICE VIBHU BAKHRU

JUDGMENT

VIBHU BAKHRU, J

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/001141

Page 2 of 43

Introduction

1.

Haryana State Industrial and Infrastructure Development

Corporation Limited (hereafter ‘HSIIDC’) has filed the present petition

under Section 34 of the Arbitration and Conciliation Act, 1996

(hereafter the ‘A&C Act’) impugning an arbitral award dated

24.03.2020 (hereafter the ‘impugned award’) delivered by an Arbitral

Tribunal comprising of two former Judges of the Supreme Court of

India with a Former Chief Justice of India acting as a Presiding

Arbitrator (hereafter the ‘Arbitral Tribunal’).

2.

The impugned award was rendered in the context of claims made

by respondent no.1 (hereafter ‘IDBI’) on its behalf as well as on behalf

of the ‘Senior Lenders’, against HSIIDC. In this order, a reference to

IDBI unless the context indicates otherwise, be construed as referring

to the ‘Senior Lenders’ or to IDBI acting as the ‘Lender’s

Representative’.

3.

IDBI claimed that HSIIDC had breached its obligations under the

tripartite Substitution Agreement dated 08.01.2007 (hereafter the

‘Substitution Agreement’) as HSIIDC had appointed Concessionaires

after terminating the Concession in favour of respondent no.2 (hereafter

‘KMPEL’) to complete the development of the KMP Expressway,

without safeguarding the dues of the Senior Lenders (represented by

IDBI as the Lenders’ Agent). The Arbitral Tribunal found in favour of

IDBI and against HSIIDC and, awarded damages in favour of IDBI for

a sum of ₹1737.11 crores along with future interest at the rate of 9% per

annum from the date of the impugned award. The Arbitral Tribunal

This is a digitally signed Judgement.

NEUTRAL CITATION NO: 2022/DHC/001141

Page 3 of 43

further found that HSIIDC would be entitled to reimbursement of the

amount that IDBI would recover from KMPEL pursuant to the

proceedings instituted before the Debts Recovery Tribunal. Further,

IDBI would be liable to pay simple interest at the rate of 9% per annum

on the recovered amount if the same is not paid to HSIIDC within one

month from the date of recovery of such amount.

4.

The Arbitral Tribunal had quantified the aforesaid damages

equivalent to the amount due to IDBI from KMP against the loan

disbursed by IDBI (representative of the Senior Lenders), for the

development of the Kundli-Manesar-Palwal Expressway (hereafter the

‘KMP Expressway’).

5.

HSIIDC contends that the impugned award is vitiated by patent

illegality on the face of the award as HSIIDC had not incurred any

liability towards IDBI. HSIIDC contends that it had entered into a

Substitution Agreement only to secure Senior Lenders (represented by

IDBI) in respect of financial assistance extended by the Senior Lenders

to the Concessionaire (KMPEL) for development of the KMP

Expressway. It is contended on behalf of HSIIDC that although IDBI

has instituted proceedings against KMPEL under The R