Delhi High Court
Vil Rohtak Jind Highway Pvt. Ltd .... vs National Highways Authority Of India ... on 28 January, 2022
Author: Sanjeev Narula
Bench: Sanjeev Narula
NEUTRAL CITATION NO: 2022/DHC/000564
$~14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 28th January, 2022
+ O.M.P. (COMM) 339/2021 & I.A. 14702/2021
VIL ROHTAK JIND HIGHWAY PVT. LTD. ..... Petitioner
Through: Mr. Sujoy Kumar, Mr. Krishna Vijay
Singh, Mr. Manish Dembla, Mr.
Pradyuman Sewar, Mr. Nachiketa
Goyal, Advocates.
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA (NHAI)
..... Respondent
Through: Ms. Gunjan Sinha Jain, Advocate with
and Mr. Ramkrishna Veerendra,
Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJEEV NARULA
JUDGMENT
[VIA VIDEO CONFERENCING] SANJEEV NARULA, J. (Oral):
1. The Petitioner viz. VIL Rohtak Jind Highway Pvt. Ltd. has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"] seeking the setting aside of the impugned Order dated 25th September, 2021 passed by the Arbitral Tribunal - to the extent it disallows the amendment sought by Petitioner in respect of the Claim (b) qua termination payment due under the contract.
2. At the outset, the Respondent viz. National Highways Authority of India [hereinafter, "NHAI"], raises a preliminary objection qua the O.M.P. (COMM) 339/2021 Page 1 of 14 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000564 maintainability of the present petition on the ground that the impugned Order is not an "award or interim award", and hence, does not fall within the ambit of Section 34 of the Act.
3. In light of the foregoing, it would be apposite to first decide the afore- noted objection, before dealing with the contentions advanced by the parties on merits of the proposed amendment, so declined.
THE FACTS
4. The factual matrix, giving rise the present petition, is as follows:
4.1. In February, 2011, NHAI invited tenders for the 'Four Laning of Rohtak-Jind Section from KM 307.000 to KM 347.800 of NH-71 and connecting link from KM 347.800 of NH-71 to KM 9.400 of NH-71A in the State of Haryana to be executed as BOT (Toll) on DBFO pattern under NHDP Phase-III' [hereinafter, "the Project"] at an estimated cost of Rs. 283.75 Crores.
4.2. In terms of the tender requirements, M/s VIL Limited promoted and incorporated the Petitioner-Company as a special purpose vehicle to act as the concessionaire for execution of the Project. The Project was awarded to M/s VIL Limited vide Letter of Award dated 23rd December, 2011.
4.3. Pursuant thereto, a Concession Agreement dated 7th March, 2012 was executed between Petitioner and NHAI. [hereinafter, "Agreement"].O.M.P. (COMM) 339/2021 Page 2 of 14
This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000564 4.4. According to Petitioner, after commencement of the Project, land was made available only on a piecemeal basis and there were other delays on account of NHAI. The led to disputes between the parties. 4.5. On 13th July, 2016, NHAI issued a termination notice stating that works were not taken up in the right earnest and that the project shall be deemed to be terminated w.e.f. 23rd July, 2016.
4.6. In such circumstances, Petitioner approached this Court initially by way of a writ petition,1 followed by a petition under Section 9 of the Act2 - wherein, vide Order dated 25th July, 2016, NHAI was restrained from taking any coercive steps against the Petitioner. 4.7. Subsequently, parties were directed to nominate their respective Arbitrators, and a three-member Arbitral Tribunal was constituted which was then directed to consider and decide the Section 9 petition as one under Section 17 of the Act.
AT ARBITRATION & PROCEDURAL HISTORY
5. Thereafter, the Arbitral Tribunal vide Order dated 12th January, 2018, granted a stay on the afore-noted termination notice. The operative portion of said Order reads as under:
"Therefore, till the legality and correctness of the termination orders are adjudicated by the Arbitral Tribunal, the termination orders shall remain stayed"
[Emphasis Supplied] 1 Being W.P. (C) 6305/2016.
2Being O.M.P. (I) (Comm.) 310/2016.
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6. NHAI's appeal against the said Order3 was then disposed of vide judgment dated 17th January, 2019 - directing the Arbitral Tribunal to re-hear the application under Section 17 of the Act. This time, the Arbitral Tribunal vide Order dated 17th May, 2019 vacated the interim order. The operative portion of the said order reads as under :
"103. Accordingly, in view of the liberty granted to the Arbitral Tribunal by the Delhi High Court, and on an overall consideration of all the facts and circumstances, we vacate the interim order granted by the Delhi High Court on 25th July, 2015 in favour of the Claimant. Consequently, the petition filed by the Claimant under Section 9 of the Act which is converted into an application under Section 17 of the Act is dismissed and the corresponding application filed by NHAI is allowed.
104. We make it absolutely clear that any observations made by us for the purposes of the present Order will not and cannot influence the Award in the arbitration proceedings. The observations made are only for the purposes of deciding the question whether the interim relief granted to the Claimant should continue or not and our observations should be read only in this light and as our prima facie conclusions."
[Emphasis Supplied]
7. In the interregnum, vide Order dated 11th February, 2021, 4 the mandate of the Arbitral Tribunal, that had expired on 8th September, 2019, was extended until 10th February, 2022 and hearings were recommenced on 16th March, 2021. Thereafter, the Petitioner was unable to deposit the Arbitral Tribunal's fee, resulting in termination of the proceedings in respect of the Petitioner's SoC. Subsequently the same was restored vide Order dated 28th June, 2021, consequent to Petitioner approaching this Court.
8. Thereafter, Petitioner filed an application under Section 23(3) of the Act dated 1st August, 2021 seeking leave of the Tribunal to amend its SoC.
3Being Arb. A. (Comm.) 10/2018.
4In O.M.P. (Misc.) (Comm.) 116/2020.
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NEUTRAL CITATION NO: 2022/DHC/000564 This has been decided by way of the impugned Order, wherein while allowing some of the amendments, the amendment qua Claim (b) - was disallowed.
9. Congruently, on 2nd August, 2021, NHAI filed an application for amendment of its counter-claim, which included claims on account of termination/ repudiation, that were not claimed earlier. The said application was allowed on 24th May, 2021 and NHAI was permitted to amend the counter-claims.
CONTENTIONS OF THE PARTIES ON BEHALF OF THE PETITIONER
10. On the preliminary objection qua maintainability, Mr. Sujoy Kumar, counsel for the Petitioner, contends as follows:
10.1. The decision and reasoning of the learned Arbitral Tribunal is patently illegal and merits interference of this Court. Although the Tribunal allowed the amendment for adding a prayer for declaration that the purported termination of the Agreement is wrongful and amounts to a repudiation, yet, the prayer seeking the consequential and obvious relief for damages arising out of such wrongful termination/ repudiation has been denied. Therefore, even if Petitioner is successful in establishing that the termination/ repudiation was indeed wrongful, it would be unable to recover any damages, and thus, arbitration on this issue would be a futile exercise. The impugned Order is therefore, unfair and unreasonable and shocks the consciousness of this Court. 10.2. Section 21 of the Specific Relief Act, 1963 allows the Plaintiff to amend a suit for specific performance at any stage of the proceedings O.M.P. (COMM) 339/2021 Page 5 of 14 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000564 to include a claim for compensation. In this regard, reliance is placed upon the decisions of the Supreme Court in Raghu Thilak D. John v. S. Rayappan5 and Shamshu Suhara Beevi v. G. Alex.6 Petitioner was entitled to claim damages by amending the SoC in terms of Section 21 of the Specific Relief Act, 1963 as well as the afore-said and other binding precedents.
10.3. The impugned Order dated 25th September, 2021, amounts to an "interim award", in line with the reasoning and covered by the judgements in Cinevistaas Ltd. v. Prasar Bharti 7 and H.S. Bedi & Ors v. STCI Finance Ltd.8 Further, it is submitted that the decision in Lindsay International Pvt. Ltd. v. IFGL Refractories Ltd.,9 which NHAI has placed reliance upon, is distinguishable on facts and law. Also appeal filed against the same, is pending adjudication. Reliance is also placed upon the judgements of the Supreme Court in State of Goa v. Praveen Enterprises10 and Indian Farmers Fertilizer Co-operative Limited v. Bhadra Products.11 10.4. Mr. Kumar further submits that judgements on the aspect of an "interim award", as relied upon by NHAI, would not govern the field as the effect of Shah Babulal Khimji v. Jayaben D. Kania 12 was not considered by the Court in Babu Lal v. M/s Hazari Lal Kishori Lal & 5 (2001) 2 SCC 472.
6(2004) 8 SCC 569.
72019 SCC OnLine Del 7071.
8O.M.P. (Comm.) 546/2020 decided on 7th December, 2020.
9APO No. 112 of 2021 decided on 22nd September, 2021.
10(2012) 12 SCC 581 [See para 10, 11 and 26].
11(2018) 2 SCC 534 [See para 24, 25, 30 and 31].
12(1981) 4 SCC 8.
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NEUTRAL CITATION NO: 2022/DHC/000564 Ors.,13 Mahila Ramkali Devi and Ors. v. Nandram14 and Indian Farmers (Supra).
ON BEHALF OF NHAI
11. On the other hand, Ms. Gunjan Sinha Jain, counsel for NHAI, vehemently opposes the maintainability of the present petition and submits that the rejection of an application under Section 23(3) of the Act does not amount to an "interim award". The claim, sought to be introduced by way of amendment, was never raised originally and the Petitioner tried setting-up a new case altogether. She submits that the impugned Order is not even appealable under Section 37 of the Act. The Act provides for minimum judicial interference as per Section 5 of the Act. Since there is no specific provision for an appeal against an order under Section 23(3) of the Act, the Petitioner cannot be permitted to approach this Court under Section 34 of the Act and seek a remedy which is not provided under the Act. She further submits that the issue urged in the present petition qua maintainability has been specifically answered by this Court in Container Corporation of India Ltd. v. Texmaco Limited.15 She also distinguishes the judgment of this Court in Cinevistaas (Supra) on facts, and further, submits that the reasoning given therein is flawed and that the said judgment is per incuriam - insofar as it relies upon Shah Babu Lal Khimji (Supra) and is in disagreement with the judgment of the Bombay High Court in Punj Lloyd (Supra). She also places reliance upon a judgement of this Court in Shyam Telecom (Supra) and a recent decision of the Calcutta High Court in Lindsay International (Supra).
13(1982) 1 SCC 525.
14(2015) 13 SCC 132.
152009 SCC Online Del 1594.
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NEUTRAL CITATION NO: 2022/DHC/000564 ANALYSIS
12. The Court has heard the counsel at length. Before adverting to the contentions noted above, it must be noted that the original statement of claim filed by Petitioner, contained three broad claims i.e., (i) damages for delays/ prolongation; (ii) declaration that the termination threatened in the notice dated 13th July, 2016 has not taken effect; and (iii) specific performance of the Agreement by way of directions to NHAI to extend time, release balance grant, etc. While amending the claims, Petitioner gave up its claims in relation to specific performance and inter alia sought a declaration that the purported termination of the Agreement by NHAI is wrongful and amounts to repudiation along with consequential relief for damages in the form of termination payment. The proposed amended prayers relevant to the issues at hand reads as follows:
"(a) Declaring that the purported termination of the Concession Agreement by the Respondent is wrongful and amounts to a repudiation; (b) Awarding termination payment of Rs.258.85 crores payable by the Respondent to the Claimant on account of alleged termination of the Concession Agreement." 16 While the Arbitral Tribunal allowed the amendment in respect of Claim (a) above, the prayer for consequential relief of damages - in the form of termination payment, has been disallowed. The relevant portion thereof, reads as under:
"14. Claim B is for a termination payment of Rs.258.85 crores payable under Clause 37.3.2 of the Concession Agreement and the pleadings in respect of this claim are in paragraphs 115-118. The Tribunal is of the opinion that this claim raises a totally new case not pleaded prior to the proposed amendment. It also changes the character of the Statement of Claim. Accordingly, the amendment is rejected."16
As per the written submissions of the Petitioner dated 27th November, 2021.
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13. As is evident from the afore-noted extract, the Arbitral Tribunal has opined that the proposed amended claim raises a totally new case and that allowing the same would change the character of the SoC.
14. The crucial point is that the Arbitral Tribunal has not finally decided whether the Petitioner is entitled to Claim (b) - which was sought to be introduced by way of the amendment application. The impugned Order only denies the Petitioner an amendment of the SoC. Section 23(3) of the Act specifically deals with the power of the Tribunal to allow amendments. That exercise of power of the Tribunal is not amenable to challenge under Section 37 of the Act, which grants a constricted right of appeal -only against certain specified orders listed out in the statue. Therefore, indisputably and evidently, the impugned Order is not appealable under Section 37 of the Act. There is indeed sufficient case-law holding that only orders enumerated under Section 37 of the Act are appealable and the Court cannot exercise appellate jurisdiction over such orders under any other provision. Under the scheme of the Act, once arbitration has commenced, parties have to wait until the Award is pronounced to challenge the same, unless of course, a right of appeal is available to them under Section 37 of the Act - even at an earlier stage. Pertinently, the non-obstante clause contained in Section 5 stipulates that notwithstanding anything contained in any other law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene, except where so provided. Therefore, if the impugned Order, undoubtedly passed under Section 23(3) is not appealable under Section 37, the question arises as to whether the Petitioner can be permitted to challenge the same as an "interim O.M.P. (COMM) 339/2021 Page 9 of 14 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000564 award" under Section 34 of the Act. The answer to the above question has to be in negative.
15. What would qualify to be an "interim award" is now well-settled in light of several judicial precedents that would guide this Court as to whether an objection petition under Section 34 qua can be entertained. An order can be considered as an "interim award", if it completely decides an issue. Section 31(6) of the Act provides that the Tribunal may, at any time during the arbitral proceedings, make an interim award on any matter wherein it may make a final award. Thus, 'finality' is the key to identifying whether an 'interim order' qualifies as an "interim award". In ONGC Petro Additions v. Tecnimont S.P.A & Ors.,17 the Court has held that determination of any valuable right in any legal proceedings would not necessarily result in an immediate actionable right. In order to ascertain whether an order is an "interim award" or "partial award", the two most important factors that would weigh upon the Court are 'finality' and decision on an 'issue'. If the nature of the order is final, in the sense that it conclusively decides an issue, the award would qualify to be an "interim award". In the instant case, although a right of the Petitioner has certainly been decided apropos the application under Section 23(3) of the Act, however, this finding is not on an issue in the arbitration proceedings. It is only a finding on the right to amend the SoC, which is not a finding on any of the issues in arbitration. The issues in arbitration are still open. The application only disallows the Petitioner to introduce Claim (b) by way of amendment. The Tribunal has observed that 17 262 (2019) DLT 496.
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NEUTRAL CITATION NO: 2022/DHC/000564 the proposed claim is a "totally new case not pleaded prior to the proposed amendment" and that it "changes the character of the statement of claim". Thus, only the amendment has been rejected, and not the claim itself. The twin-test of issue and finality has not been met in the instant case. In other words, neither has any issue in arbitration been decided, nor is there any finality on the proposed Claim (b). Thus, the impugned Order is not an 'interim award'.
16. In light of the above discussion, the Court now proceeds to deal with the judgments relied upon by the Petitioner. These judgments were also considered and delved into in depth in ONGC Petro Additions (Supra), however, for the sake of completeness, since Petitioner has relied upon the same, a brief discussion thereon is necessary. Firstly, a reference must be made to the decision of the Supreme Court in Indian Farmers (Supra), wherein the issue that arose for consideration was whether an award on the issue of limitation may be said to be an "interim award" and whether a decision on point of limitation would then go to jurisdiction, and therefore, be covered by Section 16 of the Act. The Supreme Court held that any point of dispute between the parties which has to be answered by the Arbitral Tribunal, can be the subject-matter of an 'interim arbitral award'. In that light, it was observed that since the Arbitrator had disposed of one of the issues between the parties in finality i.e., the issue of limitation, the award made therein was an "interim award" within the expression "arbitral award" and the scope of Section 2(1)(c) of the Act; and would therefore, be amenable to challenge under Section 34 of the Act. In the said judgement, the question qua limitation was indeed decided finally, in a very different context, and therefore, the O.M.P. (COMM) 339/2021 Page 11 of 14 This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000564 reliance placed upon the said decision by the Petitioner is mis-placed, and in fact, it would advance the contentions urged by NHAI before this Court.
17. Next, Petitioner relied upon Cinevistaas (Supra), wherein this Court in paragraph 37, held as under:
"37. It is, accordingly, held that the present petition is maintainable. Additional claims having been raised in the first place in the notice invoking arbitration, the claims are not time barred by limitation as the commencement of arbitral proceedings is governed by Section 21 of the Act which stipulates that the notice invoking arbitration constitutes commencement. Amended claim petition is, therefore, directed to be taken on record. This Court has not gone into the merits of the amendments made or sought. All the claims would have to be adjudicated by the Ld. Arbitrator in accordance with law, after affording adequate opportunity to the Respondent."
18. This case is also distinguishable on facts. In the said case, the Court decided an application filed by the Claimant therein seeking to raise additional claims by way of an amendment of the SoC. The application was opposed inter alia on the ground of limitation. The Arbitrator therein, referring to the legal position on the question of limitation, dismissed the application - holding the additional claims to be barred by limitation. In that context, the question arose before the Court qua the nature of the order, and consequently, also on the aspect of maintainability of the petition under Section 34 of the Act. The Court held that the impugned interim order rejected the additional claims that were being proposed by way of amendments on the ground of limitation, and thus, there is a finality attached to the interim order and there would be nothing in the final award qua the said rejected claims. In that light, the Court held the order to be an "interim award". There are several factors which distinguish the said judgment, rendering the same to be wholly inapplicable to be facts of the present case.
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19. The reliance placed upon on the judgment in State of Goa v. Praveen Enterprises (Supra) is equally misplaced as the said judgment does not deal with the question in hand, at all. The other judgment of this Court in H.S. Bedi & Ors v. STCI Finance Ltd. (Supra), which follows the view taken in Cinevistaas (Supra), is also of no assistance to the Petitioner. In the said case, the facts are entirely different. The Petitioner therein (who was the Respondent in arbitration) proposed to introduce an amendment to amend its Statement of Defence by introducing the relief of equitable set-off - which due to its inadvertence, had not been pleaded earlier. The said application was rejected and in challenge thereto, this Court followed the judgment in Cinevistaas (Supra). The Court held that as long as the disputes fall broadly within the reference, correction and amendment ought to be permitted. In the present case, the proposed Claim (b) is not part of the original reference, and therefore, the said judgment is distinguishable on facts.
20. Further, the judgment of this Court in Container Corporation of India Ltd. (Supra) is quite similar on facts. In this case, an amendment was sought to be introduced in the written statement to add a counter-claim. The said amendment was rejected, and again, a question arose on maintainability under Section 34 of the Act. The Court, relying upon Section 5 of the Act, held that judicial intervention during arbitration proceedings is not permissible, unless it is specifically provided for under Part I of the Act, and in view thereof, it refused to entertain the petition.
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21. It must also be noted that the Calcutta High Court in Lindsay International (Supra) has also held that the introduction of a new cause of action, which is not part of the subject-matter of reference, cannot amount to an "interim award" under the ambit of Section 31(6) of the Act.
22. In light of the above discussion, since the impugned Order has only rejected an attempt to introduce a new cause of action which is not part of the subject-matter of reference, the same cannot amount to an "interim award"
under Section 31(6) of the Act. Hence, the present petition under Section 34 of the Act is not maintainable, and accordingly, the same is dismissed. The pending application also stands disposed of.
23. Before parting, it must also be noted that Mr. Kumar, without prejudice to his rights and contentions, prayed that Claim (b) may be considered as a fresh reference and the dispute be referred for adjudication before the same Arbitral Tribunal which is in seized of the disputes between the parties. Ms. Sinha responded by arguing that for fresh reference, there should be fresh invocation. She also submits that she had also raised the objection of limitation qua Claim (b) before the Arbitral Tribunal, which was not examined. Since the Respondent is not agreeable, it is clarified that if the Petitioner has any other remedy for adjudication of its Claim (b), it is free to exercise the same in accordance with law.
SANJEEV NARULA, J JANUARY 28, 2022/nd (corrected and released on February 14, 2022) O.M.P. (COMM) 339/2021 Page 14 of 14 This is a digitally signed Judgement.