Delhi High Court
General Manager Northern Railway vs Pioneer Publicity Corporation & Anr on 1 June, 2022
Author: C. Hari Shankar
Bench: C. Hari Shankar
NEUTRAL CITATION NO: 2022/DHC/002336
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on : 24th November, 2021
Pronounced on: 1st June, 2022
+ O.M.P. (COMM) 154/2020
GENERAL MANAGER NORTHERN RAILWAY
..... Petitioner
Through: Dr. Sarabjit Sharma and Ms.
Yamini Nijhawan, Advs.
versus
PIONEER PUBLICITY CORPORATION & ANR
..... Respondents
Through: Mr. A.S. Chandhiok, Sr. Adv.
with Mr. Tarang Gupta, Ms. Shambhavi
Kala and Ms. Neelam, Advs.
+ OMP (ENF.) (COMM.) 120/2018 & E.A. 868/2020
M/S PIONEER PUBLICITY CORPORATION
..... Decree Holder
Through: Mr. A.S. Chandhiok, Sr. Adv.
with Mr. Tarang Gupta, Ms.Shambhavi Kala
and Ms. Neelam, Advs.
versus
GENERAL MANAGER, NORTHERN RAILWAY
..... Judgement Debtor
Through: Dr. Sarabjit Sharma and Ms.
Yamini Nijhwan, Advs.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
% JUDGMENT
01.06.2022
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NEUTRAL CITATION NO: 2022/DHC/002336
1. These petitions arise out of Interim Award-I dated 19th May,
2010, Interim Award-II dated 1st November, 2010 and interim Award
(III) dated 29th October, 2012, passed by the learned Arbitrator in
arbitral proceedings between Pioneer Publicity Corporation Pvt. Ltd.
("PPC" hereinafter), as the claimant and the General Manager,
Northern Railway ("the Railways" hereinafter) as the respondent. Of
the three Interim Awards, OMP (Comm) 154/2020, by the Railways,
assails Interim Award III dated 29th October, 2012. Interim Awards I
and II have not been challenged by either party. OMP (Enf) (Comm)
120/2018 by PPC seeks enforcement of all the three Interim arbitral
Awards.
Facts
2. Vide Commercial Circular No. 36 of 2006 dated 1st May, 2006,
the Railway Board in the Ministry of Railways announced its intention
to implement its scheme of awarding sole rights for commercial
publicity on nominated divisions of the Railways to individual parties.
In pursuance thereof, a notice inviting tender (NIT) was issued by the
Railways in December, 2006, inviting tenders for commercial
publicity in the Delhi division of the Railways. PPC emerged as the
successful bidder. PPC‟s bid was accepted by the Railways vide
letter of acceptance dated 18th May, 2007, which read thus:
"No.7 PUB/TN/Sole Right/DLI/DIV./2007
Date: May 18, 2007 DRM‟s Office
New Delhi
M/s Pioneer Publicity Corporation
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274-CM-I, Office Complex,
Jhandewalan, New Delhi-55
Sub: Acceptance of Sole Commercial Publicity Rights for
ent Division for a period of five years.
Ref: Tender dated 22/01/2007
In reference to above, it is to inform you that your offer
of Rs.22,85,500/- (Rs.Twenty Two Crore Eighty Five Lacs
Eighty Five Thousand Five Hundred only) with an Increase of
100%, 15%, 20% & 25% respectively over the previous
year‟s license fee for Sole Commercial Publicity Rights of
entire Delhi Division has been accepted by the competent
authority for a period of five years.
Before starting the work, you are required to fulfil the
following formalities:
1. Submit a bank draft of Rs.11,00,42,750/- (after
adjusting the EMD for Rs.42,50,000/- deposited in the tender)
as license fees for first six months in favour of Sr. Divisional
Finance Manager, Northern Railway New Delhi.
2. Submit FDR of Rs.2,28,58,550/- (10% of bid amount)
as Security Deposit in the form of FDR or Irrevocable Bank
Guarantee issued by a Scheduled Commercial Bank for a
period of two years, within 15 days from issue date of issue of
this letter in favour of Sr. Divisional Finance Manager,
Northern Railway, New Delhi.
3. Stamp paper of Rs.100/- for execution of agreement.
The above mentioned formalities should be fulfilled
within 15 days of issue of this letter.
Sd/-
Sr. Divisional Commercial Manager
New Delhi"
3. As required by Clauses 31 to 33 of Section III of the tender
documents, license fee, for the first six months of ₹ 11,00,42,750/-,
alongwith security deposit of ₹ 2,28,85,500/- was paid, by PPC, to the
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Railways, on 1st June, 2007. Clause 31 to 33 of the Agreement may
be reproduced thus:
"Payment schedule for license fees
31. The licensee will have to pay license fee for a period of
five years subject to an enhancement of 10% for
second year, 15% for third year, 20% for fourth year &
25% for fifth year over the previous year's licensee fee
respectively.
32. The licensee will have to pay the 1st six months' rent in
advance after adjusting the earnest money deposit
within 15 days of the receipt of the acceptance letter
sent by this office.
33. Further payments for subsequent three months period
shall be made on completion of three months from
award of contract and so on every quarter."
4. Section V of the tender documents envisaged the making, by the
Railways, of 213147 sq. ft. of area available to the successful bidder.
This total area available for the tender was denoted, in Section V as
„P‟ area. This „P‟ area was divided, further, into two sections, (A) and
(B). Section (A) included 63 sites, comprising a total area of 167923
sq. ft, whereas Section (B) included 45 sites, with a total area of 45224
sq. ft.
5. Section V of the tender documents is pivotal to resolution of the
controversy in issue and is, therefore, reproduced, in extenso thus:
Sites assessed by Railways for advertisements in this
Tender
Important Note: The details given in this section are for
general guidance of tenderers. They are expected to visit
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the area and familiarize themselves with the earning
capacity of advertisements before quoting for this tender
(A) Existing Medias as per running contract already
awarded.
Shivaji Bridge- Existing Area (Sq.ft.) Availability
Palwal Date
Section Neelam Flyover 10400 13.07.2007
Faridabad 4850 09.10.2008
Ballabhgarh 1350 09.10.2008
Tughlakabad 604 09.10.2008
Faridabad New 784 09.10.2008
Town
Palwal 834 09.10.2008
Shivaji Bridge 264 09.10.2008
Tilak Bridge 264 09.10.2008
Okhla 664 09.10.2008
Sub Total 19814
Delhi Cantt-Rewari Existing
Section Gurgaon 2130 08.10.2007
Delhi Cantt. 1290 08.10.2007
Palam 435 08.10.2007
Level Crossing 1400 08.10.2007
Palam
Sub Total 5255
South Punjab Railway Existing
Section
Rohtak 2127 16.01.2009
Bahadurgarh 604 16.01.2009
Level Crossing 1400 16.01.2009
Rohtak
Shakurbasti 1238 16.01.2009
Delhi Sadar 154 16.01.2009
Bazar
Delhi Kishanganj 384 16.01.2009
Sub Total 5907
Ghaziabad- Existing
Saharanpur
(Via Meerut City) Meerut City 1961 22.05.2007
Section Meerut Cantt 544 22.05.2007
Level Crossing 1600 05.07.2007
Meerut City
Level Crossing 2400 05.07.007
Muzaffar Nagar
Sakhoti Tanda 800 05.07.2007
Flyover
Sub total 7305
Delhi Ambala Section Existing
Panipat 2150 22.08.2008
Sonepat 1550 22.08.2008
Karnal 2150 22.08.2008
Kurukshetra 1550 22.08.2008
Gannaur 400 22.08.2008
Narela 1078 22.08.2008
Naya Azadpur 400 22.08.2008
Sub Total 9278
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Delhi Area Section Existing
Delhi Sarai 1350 08.10.2007
Rohilla
New Delhi PF-2- 250 20.05.2007
11
New Delhi FOB- 640 15.07.2007
1
New Delhi Main 1174 12.09.2007
Hall
New Delhi PF-1 946 09.03.2008
New Delhi PF-12 1860
New Delhi 17211 02.02.2008
Circulating area
New Delhi FOB- 883
II
New Delhi FOB- 564 02.04.2007
I/II
Delhi Jn 1048 04.10.2007
Overhead signage
Delhi Jn 5501 11.06.2008
Circulating Area
Delhi Jn.Main 440 29.09.2008
Hall
Delhi Jn.PF- 502
11/13, 12/15,
16/17/18, 1A
NizamuddinPF- 344
6/7
Nizamuddin Main 721 02.12.2006
Hall PF-1
Nizamuddin PF- 1504 02.09.2007
2/3/4/5 FOB-1/II
Nizamuddin 784 04.10.2007
overhead signage
Ghaziabad 2392 23.03.2007
Delhi Shahdara 1665 02.03.2007
Subzi Mandi 1045 19.02.2007
Sahibabad 2168 18.06.2007
Level Crossing 1800 30.05.2007
Ghaziabad
IRCA 772
PRS locations 4797 15.10.2008
over Delhi
Division
Bridge Panel 1960 14.09.2009
Zone-I
Bridge Panel 6968 14.09.2009
Zone-III
Bridge Panel 4000 01.10.2009
Zone-IV
Bridge Panel 3600 01.10.2009
Zone-V
Protection Screen 8637 01.03.2007
Zone-III
Unipoles Zone-I 2560 11.02.2007
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Unipoles Zone-II 5280 11.02.2007
Electronic 37000 01.05.2007
Displays
Sub Total 120366
Grand total Area Available for existing 187923
sites (Sq. Ft.)
(B) Proposed Media Not awarded yet ad immediately available to contractor
Shivaji Bridge-Palwal Proposed Area
Section
Bata Flyover 640
Sub Total 640
Delhi Cantt.-Rewari Proposed
section
Pankha Road 640
Flyover
Palam Flyover 640
Level Crossing 480
Palam
Road under 640
Bridge near
Shahbad
Mohammadpur
Level Crossing 480
Gurgaon
Sub Total 2880
South Punjab Railway Proposed
Section
Rotak 1192
Sampla 504
Nangloi 160
Gohana 400
Level Crossing 1200
Rohtak
Road Over 320
Bridge Hisar
Road
Road Over 160
Bridge Ismaila
Level Crossing 800
Sampla
Level Crossing 400
Asaudha
Level Crossing 400
Bahadurgarh
Level Crossing 400
Ghevra
Level Crossing 400
Nangloi
Level Crossing 800
Rohtak-Panipat
Sub Total 7130
Ghaziabad- Proposed
Saharanpur (viza-
Meerut City) Section
Murad Nagar 500
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Modi Nagar 192
Muzaffarnagar 580
Deoband 300
Level Crossing 800
Muzaffarnagar
Sub Total 2452
Delhi Sahadara- Proposed
Shamli-Saharanpur
Section
Shamli 472
Baraut 544
Baghpat 404
NOU 440
Sub Total 1860
Jind-Jakhal Section Proposed
Narwana 824
Tohana 832
JIND 832
Level Crossing 1600
Narwana
Level Crossing 400
Tohana
Delhi Ambala Section Proposed
Gannaur 400
Narela 700
Badli 500
Kurukshetra 800
Sonepat 400
Panipat 600
Sub Total 3400
Delhi Area Proposed
Bridge Panels 3740
Zone-II
Protection Screen 3760
Zone-I
Protection Screen 4484
Zone-II
Protection Screen 2724
Zone-IV
Unipole Zone-III 2240
Circulating Area 5420
Nizamuddin
Sub Total 22368
Grand Total Area 45224
available for proposed
site
Total area available for 213147 Say Area „P‟
the tender (A+B) Sq.Ft.
Note: Exact location indicated in Part 'A' above shall be
made over to the contractor w.eJ. date shown against
each. However, the contractor shall be at liberty to display
equivalent / more area at adjoining locations in accordance
with para 4.9 of. Section II of Tender Document.
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6. The aforesaid transactions culminated in the execution of an
agreement between PPC and the Railways. The agreement bore no
date; however, PPC and the Railways consented, both before the
learned Arbitrator as well as before this Court, that they were bound
by the said agreement. The following clauses of the agreement merit
reproduction :
"1. The licensee shall be given the sole rights for display
of advertisements over Delhi Division as per the area
specified in the Annexure appended for a period of five years
i.e. from 20/09/2007 to 19/09/2012.
2. The advertisement rights for the sites mentioned in the
annexure would vest with the licensee. The total assessed area
for such sites works out to 213147 sq. foot.
3. The contractor will be permitted to display
advertisement at any station/and belonging to Delhi Division
for a period of five years i.e. from 20/09/2007 to 19/09/2012.
4. The exclusive Advertisement for Railway
Stations/Platforms Concourse Halls/Circulating Area will vest
with the licensee. All advertisers, recognized agents or
otherwise, wishing to advertise will have to deal directly with
the licensee and will have no dealing with the railways or
stake any claim on the Railways for any commission etc.
5. The ownership of the existing contracts will pass on to
the contractor for display of commercial advertisement only
after the expiry of the term of the contract. The contractor will
have no locus-standi on the advertisement displayed by
existing contractor until the expiry of the contract. The list of
the contract in the order of their expiry is enclosed along with
the terms and conditions of the contract.
Period of contract
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6. The contract will be for a period of Five years i.e. from
20/09/2007 to 19/09/2012.
*****
Reserving 10% area for Railways Slogan
15. Railway will reserve 10% of the area free of cost, for
display of commercial/safety posters, or/and other
advertisements to promote socially relevant messages and
railway services at the bottom/side of the display. The
licensee will not have any claim over these displays. The
matter for such displays shall be provided by Railways which
the contractor shall arrange to print, erect, display at his cost.
This will also be displayed on same pattern as remaining 90%
area.
Pro-Rata Allotment
16. The amount quoted by the tenderer in Packet „B‟ of
this tender, will be applicable for total advertising area (P)
assessed by the Railway or part thereof (including 10% free
area as per para 15 above). Total assessed area (P) is, as
indicated in Section V of these tender documents. The
contractor will be allotted extra sites over and above the
assessed area on his request, only after getting the technical
and aesthetical feasibility of the sites from the Railway
Administration. However, for this purpose the contractor will
have to pay to Railway pro-rata extra amount that will be
calculated for the relevant year and subsequent years based on
total amount quoted for first year and worked out for the
subsequent years as per formula given in Packet „B‟ in the
Tender Documents.
****
Security Deposit
25. The licensee will have to deposit the security deposit
equivalent to 10% of license fee for the relevant year before
start of each year in the form of FDR or irrevocable Bank
Guarantee issued by a Scheduled Commercial Bank for a
period of two years, within 15 days from issuing date of
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acceptance letter. The security deposit will be refunded on
satisfactory completion of the contract period taking into
consideration that all Railway dues are cleared.
****
Payment Schedule for license fees
31. The licensee will have to pay the license fee for a
period of five years, subject to an enhancement of 10% for
second year, 15% for third year, 20% for fourth year & 25%
for fifth year and the previous year‟s license fee respectively.
32. The licensee will have to pay the 1st six months rent in
advance after adjusting the earnest money deposit within 15
days of the receipt of accepting letter sent by this office.
33. Further payments for adjustments three months period
shall be made on completion of three months from award of
contract and so on every quarter.
****
Commencement of contract
37. The date of commencement of contract will be 120
days from the date of issue of the allotment letter or first
display of any advertisement anywhere in this contract,
whichever is earlier.
****
Arbitration
41. In the event of any dispute or difference of opinion
arising out of this Agreement or any special condition of
contract or in connection with this agreement, the same shall
be referred to the sole arbitration of a Gazetted Railway
officer appointed by the General Manager/NR. The Gazetted
officer appointed as arbitrator, however will not be one of
those who had an opportunity to deal with the matter to which
the contract relates or who in the course of their duties as
Railway servants have expressed view on all or any of the
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aspects of the matter under dispute or difference. The award
of the arbitrator shall be final and binding on the parties to
this contract subject to aforesaid, the Arbitration &
Conciliation Act, 1996 and the rules made thereunder or any
statutory modification thereof for the times being in force
shall be deemed to apply to the arbitration proceeding under
this clause.
The venue of arbitration shall be the place from which the
acceptance note is issued.
****
48. For the purpose of this agreement, the competent
authority is Divisional Railway Manager/New Delhi."
7. Disputes having arisen between PPC and the Railways with
respect to execution of the aforesaid Agreement, PPC, after following
the protocol prescribed in that regard in the Arbitration and
Conciliation Act, 1996 ("the 1996 Act") moved this Court, under
Section 11 thereof, by way of Arb. Appl. 30/2009. The Railways
disputed the existence of an Arbitration Agreement, whereupon the
petitioner filed CS (OS) 659/2009 (Pioneer Publicity Corpn Pvt. Ltd.
v. UOI & Anr.). Ultimately, with consent of parties, this Court, vide
order dated 26th May, 2009, referred the dispute to the learned
Arbitrator, who came to pass the aforesaid Interim Awards.
8. Claim petition was filed, by PPC, before the learned Arbitrator,
on 18th August, 2009. On one ground or the other, the grievance of
PPC, against the Railways, was that the contractually stipulated
number of workable sites had not been provided by the Railways
within the time stipulated in the agreement read with the tender
documents. PPC raised, essentially, four claims against the Railways,
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resulting in nine reliefs claimed from the learned Arbitrator. Claim 1
was predicated on PPC‟s asserted entitlement to be provided 213147
sq. ft. of area of advertising space from the commencement of the
contract till its conclusion, i.e. for the entire period of the contract. In
the event of non-availability of any particular advertising site, PPC
asserted that the agreement obligated the Railways to provide
equivalent area to PPC at no extra cost. Failure, on the part of the
Railways, to comply with both these alternative requirements,
contended PPC, entitled it to be refunded the license fee paid by it in
respect of the non-available advertising sites. Claim 2 sought
adjustment, by the Railways, of the advance license fee paid by PPC.
Claim 3 sought fixation of the date of commencement of the contract
as the date when display was put up, by PPC, on at least 50% of the
contracted advertising sites. Claim 4 envisaged merger of pre-
existing contracts for commercial publicity/advertising, between PPC
and the Railways, with the sole rights contract forming subject matter
of the present controversy. Claim 4, asserted PPC, was in the event
of the learned Arbitrator holding Claim 1 (iii), claiming refund of the
license fee in respect of the unavailable advertisement sites, to be
inadmissible.
9. Predicated on these claims, PPC prayed, in its claim petition, for
(a) a declaration that the Railways was liable to make available to PPC
2,13,147 sq. ft. of area of advertisement space from the
commencement of the contract and for its full term, (b) a declaration
that in case the Railways was unable to provide the advertisement
space enlisted in the contract, then the Railways was liable to make
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available to PPC 'equivalent' or 'alternate‟ advertisement space in lieu
of the non-available enlisted advertisement space, without any
additional cost, (c) a declaration that demands raised by the Railways
for license fee vide its letters dated 27th December, 2007, 8th May,
2008, 4th June, 2008, 3rd March, 2009, 25th March, 2009 and 6th
August, 2009 were null and void abinitio, being contrary to the terms
of the contract, (d) a declaration in favour of PPC and against the
Railways declaring Clause 37 of the Agreement, regarding the
"commencement date of contract" unconscionable, oppressive and
unenforceable and therefore null and void and severable from the
Agreement, (e) a declaration that the contract was deemed to have
commenced from on or around 23rd March, 2008 or such other date as
the learned Arbitrator determined, (f) a direction to the Railways to
pay the claimant a sum of ₹ 11,32,36,050 being the principal sum of
the excess license fee paid to the Railways during the first year of the
contract, reckoned by the Railways from 20th September, 2007 to 19th
September, 2008. (g) a direction to the Railways to pay, to PPC, a sum
of ₹ 5,21,73,780.64/- being the sum of the excess license fee paid to
the respondents (from 20th September, 2008 to 31st September, 2009)
during the second year of contract, reckoned by the Railways from
20.9.2008 to 19.9.2008 and any other claim for such further periods,
as may have arisen during the pendency of these proceedings, (h) a
direction to the Railways to pay PPC interest @ 2% per month
towards past, pendente lite, and for future on the sums found due and
payable by the Railways to PPC, (i) in the alternative to prayers (f),
(g) and (h), a declaration in favour of PPC and against the Railways,
extending the period of contract for a period equivalent to the days as
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would be assessed against the excess amount of license fee paid by
PPC to the Railways.
10. The learned Arbitrator notes, in para 19 of the impugned
Award, that the total 213147 sq. ft. of area which, according to Section
V of the tender documents, was to be made available to PPC, was
divided into Parts A and B, consisting of 63 and 45 items/sites
respectively. The 63 sites/items comprising Part A (covering 167923
sq. ft.) were already in occupation by other contractors, consequent to
pre-existing advertising contracts executed by the Railways which
were still in operation. They would, therefore, become available to
PPC only after expiry of the said contracts, on the dates stipulated in
Part A of Section V. Part B consisted of 45 items/sites (covering
45224 sq. ft.), which were vacant and were, therefore, to be made
immediately available for possession by PPC. The total area of
213147 sq. ft. was denoted in Section V as the „P‟ area.
11. In order to avoid confusion amongst the various categories of
sites, a systematic procedure was followed by the learned Arbitrator.
Initially, he called upon the parties to assign numbers to the various
sites, with which we need not, in this case be particularly concerned.
Thereafter, on 31st December, 2009, a joint signed chart was prepared
for all the 108 tendered items/sites.
12. Thereafter, 10 Joint Lists of items were prepared by consent of
both the parties in the arbitral proceedings, i.e. Joint Lists A, A-1, A-2,
B, B-1, C, D, E, F and G. Joint Lists A, A-1 and A-2, which were
jointly signed on 10th February, 2010, 5th April, 2010 and 28th April,
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2010, respectively covered 39, 15 and 13 sites which the Railways
admitted, for various reasons, not to have been able to make available
to PPC. Joint Lists B and B-1, which were signed on 10th February,
2010 and 5th April, 2010 covered new sites, or sites of which the area
was increased by the Railways on PPC‟s request. Joint List F covered
13 sites on which display was disrupted due to interference by various
local or governmental agencies, who were third parties, and in respect
of which the interruption was admitted by the Railways. The
remaining disputed sites were, therefore, covered by Joint Lists C, D,
E and G.
13. Interim Award-I dated 19th May, 2010 and Interim Award-II
dated 1st November, 2010 were passed, by the learned Arbitrator, in
respect of the admitted sites covered by Joint Lists A, A-1, A-2, B, B-
1 and F, for the periods 20th September, 2007 (the date of
commencement of the contract) to 31st December, 2009. The learned
Arbitrator held PPC to be entitled, for the aforesaid periods, to ₹
1,35,54,035/- and ₹ 1,06,48,631/- respectively.
14. These Interim Awards, i.e. Interim Award-I dated 19th May,
2010 and Interim Award-II dated 1st November, 2010, have not been
challenged by the Railways.
15. Interim Award-III, which forms subject matter of challenge in
OMP (Comm) 154/2020, dealt with the sites/items covered by Joint
Lists C, D, E and G. The particulars of these lists may be provided
thus:
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(i) Joint list C covered sites reflected in Part A of Section V
of the tender documents (which dealt with sites which would
not be immediately made available to PPC as they were already
being worked under pre-existing contracts with other
contractors), in respect of which no future dates on which the
sites would become available were stipulated in the tender
documents. There were 4 items in the said Joint List C, of
which one item was shifted to Joint List A and 3 items were
shifted to Joint List G which dealt with the relief that PPC was
seeking in respect of such sites.
(ii) Joint List D contained 17 items in respect of which
refund was sought, by PPC, owing to delay in sanctioning
approval, by the Railways, of the site plans submitted by PPC,
as a result of which PPC was unable, during the period for
which the site plans remained unapproved, to display on the
said sites. There were initially 17 items in Joint List D, of
which 8 were shifted to joint list A-1 and 9 remained to be
adjudicated by the learned Arbitrator.
(iii) Joint List E comprised items in respect of which PPC
alleged that the sites were not feasible for advertising. There
were 25 items in Joint List E of which, by consent, 21 items
were shifted to Joint List A-1 and A-2 and 4 items remained to
be adjudicated by the learned Arbitrator. To these four, one
additional item, i.e. Item 169 (Gurgaon Level Crossing) was
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added, after shifting it from Joint List A-2. There were,
therefore, 5 items for adjudication by the learned Arbitrator in
Joint List E.
(iv) Joint List G comprised the 41 items, which under Part (A)
of Section V of the tender documents, and would not be
available to PPC at the commencement of the contract, but
would be made available on future dates, specified or
unspecified. In respect of these sites, PPC claimed refund of
license fee deposited by it, as the Railways had neither made the
said sites available at the time of commencement of the
contract, nor had provided equivalent alternative sites.
Re-prayer regarding fixation of date of commencement of contract
16. As already noted in para 9 supra, one of the prayers of PPC, in
its claim petition, was that the date of commencement of the contract
be fixed as the date when PPC was able to display on at least 50% of
the contractually envisaged advertising sites. The learned Arbitrator
did not agree, and fixed the date of commencement of the contract as
20th September, 2007, being the date stipulated in the tender
documents as well as in the agreement executed between the parties.
17. This finding, of the learned Arbitrator, is not in challenge.
Accordingly, the date of commencement of the contract stands at 20th
September, 2007.
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Findings, grounds of challenge and analysis thereof
18. The stage having thus been set, one may proceed to the findings
of the learned Arbitrator, insofar as they are under challenge at the
instance of the Railways, in OMP (Comm) 154/2020.
Re. Joint List D
19. The learned Arbitrator proceeded, first, to deal with the items
covered by Joint List D, which comprised the sites in respect of which
refund of license fee deposited by it was claimed by PPC on the
ground of delay, by the Railways, in approving the site plans
submitted by PPC.
20. This covered tendered items Serial No. 1, 20, 21, 33, 34, 46, 49,
53 and 108. Of these, the learned Arbitrator allowed all the claims
except the claim in respect of Serial Nos. 1 and 108. The amounts
awarded in respect of these items were as under:
Serial No. Item Amount
20 Meerut City Station ₹ 557336/-
21 Meerut Cantt Station ₹ 154610/-
33 New Delhi PF 2-11 ₹ 410200/-
34 New Delhi FOB 1 ₹ 210022/-
46 NZM Station ₹ 236603/-
49 Ghaziabad ₹ 784958/-
53 Ghaziabad Lxing ₹ 590688/-
21. The aforesaid awarded amounts have not been challenged by
the Railways. They, therefore, are upheld.
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Re. Joint List E
22. This list comprised 4 items in respect of which, according to
PPC, it was not feasible to erect displays at the site. Of the four items
1, 60, 63 and 69, the learned Arbitrator allowed three, rejecting the
claim in respect of Serial No. 1. The amounts awarded in respect of
these three items are as under:
Serial No. Item Amount (Rs)
60 Protection Screen Zone-III
(a) Paharganj Bridge 2,44,221
(b) Zakhira Bridge 7,74,253
63 Electronic Display
(a) Pankha Road Flyover 5,04,546
(b) School Lane Flyover NIL
69 Gurgaon Level Crossing 3,83,947/-
23. The amounts awarded in respect of Joint List E are also not
under challenge in the present OMP filed by the Railways. The
award in that respect is also, therefore, upheld.
24. The total amount awarded by the learned Arbitrator in respect
of joint lists D and E is ₹ 48,51,386/-.
25. With that, one comes to the items in respect of which the
Railways have disputed the impugned Award, which are contained in
Joint Lists C and G.
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26. These lists pertained to the items covered by Part A of Section
V of the tender documents, i.e. the sites which could not be
immediately be made available to PPC as they were already subject
matter of pre-existing contracts with other contractors, who were
working on the said sites. As already noted hereinbefore, PPC‟s
contention was that (i) contractually, the Railways were required to
make available, throughout the period of the contract and starting with
the date of commencement of the contract, 213147 sq. ft. of
advertising area, (ii) in the event of any part of the said area not being
available, the Railways were required to make available, to PPC,
equivalent area and (iii) failing that, the Railways were required to
refund, to PPC, license fee, deposited by it in advance, proportionate
to the area which had not been made available.
27. In respect of this, the learned Arbitrator held as under:
(i) It was true that, in Section V of the tender documents, the
sites in Part A were reflected as available to PPC only
prospectively, on future dates, as they were under possession by
third parties, with whom publicity contracts were in progress.
The allotment letter dated 6th August, 2007 assessed that PPC
would acquire (a) by the end of 2007, 65% of the total
advertising area, admeasuring 135664 sq. ft, (b) by the end of
2008, 87% of the total advertising area, admeasuring 183593 sq.
ft. and (c) by October, 2009, the entire advertising area,
comprising 213174 sq. ft.
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(ii) Vis-a-vis the position as it existed in the tender
documents, by the time of issuance of the allotment letter on 6th
August, 2007, 2747 sq. ft. of area had been shifted from Part B
of Section V to Part A thereof. With this change, the area in
respect of which the dates by which the sites would be made
available to PPC were postponed stood reduced to 6418 sq. ft.
(iii) On 19th June, 2010, PPC and the Railways mutually
agreed to reduce the total tendered area from 213147 sq. ft. to
199295 sq. ft.
(iv) As per the allotment letter dated 6th August, 2007, 123985
sq. ft. of area was to be immediately available to PPC and
89162 sq. ft. was to be made available on stipulated future
dates. Even so, between the time of floating of the tender in
December, 2006 and commencement of the contract on 20th
September, 2007, 17 sites, which were earlier included in Part A
of Section V, covering 84690 sq. ft., became physically
available for use by PPC. The details of these sites are provided
in the impugned award thus:
S. No. Name of item/site/media Area (Sq.Feet) Area
of as per Tender (Sq.Feet)
Tender as per
Item Allotment
letter
1 Neelam fly over 10400 10400
20 Meerut City 1961 1961
21 Meerut Cant 544 544
33 New Delhi PF 2-11 250 1250
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34 New Delhi FOB 1 640 640
35 New Delhi Main Hall 1174 1174
40 Delhi Jn FOB I & II 504 504
46 NZM Main Hall/PF-1 721 721
47 NZM PF 2/3/4/5 FOB I & 1504 1504
II
49 Ghaziabad 2392 2392
50 Delhi Shahdara 1665 1665
52 Sahibabad 2168 2168
53 Lxing Ghaziabad 1800 1800
60 Protection Screen Zone 8637 8637
III
61 Unipoles Zone I 2560 4000
62 Unipoles Zone II 5280 6240
63 Electronic display 37000 39090
Total 79200 84690
(v) With the making of the aforesaid 17 items available, 46
sites/items, in Part A of Section V of the tender documents,
remained unavailable for display, by PPC, on the date of
commencement of the contract, i.e. on 20th September, 2007.
These 46 items covered an area of 88663 sq. ft.
(vi) Of these, with the issuance of the letter of allotment on 6th
August, 2007, the future dates when the sites would become
available were stipulated in respect of all but two sites.
(vii) 5 items out of the aforesaid 46 items, covering an area of
7534 sq. ft., were settled between the parties and included in
Joint Lists A and A-1 and B-1 and were, therefore, covered by
Interim Award-I. 41 items, covering 81120 sq. ft. therefore,
remain to be adjudicated by the learned Arbitrator.
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(viii) The findings of the learned Arbitrator, therefore, insofar
as they are subject matter of challenge by the Railways in the
present case, are in respect of the aforesaid 41 items covering
81120 sq. ft.
(ix) The prime issue that arose for consideration, as identified
by the learned Arbitrator, in respect of the claim of PPC in the
above regard was the relationship between the offered price and
the assessed area. The learned Arbitrator has delineated the
issue thus, in para 26 of the impugned Award:
"a) The issue which arises for my determination is
whether the liability of the Claimant to pay the license
fee of Rs. 22.85 crores (approx.) for the 1st year has
any nexus with the Respondent's obligation to provide
the entire area of 2,13,147 sq. ft. for the entire period
of 1st year i.e. 20.9.2007 to 19.09.2008.
Or
Is the Respondent entitled to receive the entire
payment of license fee of Rs.22.85 crore (approx) in
the 1st year, even if the area provided, is admittedly
much short of tendered area of 2,13,147 sq.ft., and it
has provided the advertisement area/ sites , in phases
and in a staggered manner, as per the dated specified in
Section V of the tender?
b) The same issue shall also arise for determination
in respect of liability of enhanced license fee payable
for 2nd year and enhanced license fee payable for the
3rd year ending with 12.10.2009, when admittedly, as
per the Respondent, all sites would have been handed
over to the Claimant, as per the dates specified in
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Section V of the Tender and modified in allotment
letter."
(x) Relying on Clauses 1, 2, 3, 4 and 16 of the Agreement,
and paras 4.1, 4.9 of Section II read with the Annexure and
Section V of the tender documents, the learned Arbitrator has,
in paras 27 to 30 of the impugned award, held that the Railways
were required, ab initio and from the date of commencement of
the contract, to make available, to PPC, 213147 sq. ft. for
display/publicity. Paras 27 to 30 of the impugned award read
thus:
"27. The relationship of quoted price by the licensee
(Rs.22.85,85,500) with the area(2,13,147sq feet) to be
provided by the Respondent with reference to the
Agreement has been scrutinized and appreciated
further (Claimant's Documents Vol. I {pages 5. to 55.
and Respondent's filed a copy of the agreement on
7.09.2009):-
(a) Under Clause 1, it is announced and
committed that licensee would be given the
Sole Rights for display of advertisements over
entire Delhi Division, as per the area specified,
for a period of five years. It is reproduced
below:
"The licensee shall be given the sole
rights for· display of advertisements over
Delhi Division as per the Annexure
appended for a period of five years i.e.
from 20.9.2007 to 19.9.2012"
The Paragraph 4.1 of tender conditions state
that 'contractor will be permitted to display
advertisement at any station, land belonging to
Delhi Division for a period of five years." ....
(b) Under Clause-2 of the Agreement, it is
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promised that all advertisement rights for the
sites mentioned would vest with the licensee
The total assessed area for such sites works out
to be 2,13,147 sq.ft . lt is reproduced below:
"The advertisement rights for the sites
mentioned in the Annexure would vest
with the licensee. The total assessed area
for such sites works out to be 2,13,147
sq. feet.
Paragraph 4.9 of tender conditions states
that "The amount quoted by the tenderer will
be applicable for total advertising area
assessed by. The Railway ...." Paragraph 4.5
of tender conditions state that "The exclusive
advertisements (rights) for railway
stations/platform/concourse halls/circulating
area will vest with the successful tenderer .....
(c) Clause 3 and 4 of .... the Agreement
define the freedom of the Licensee to display
advertisement at any station/land belonging to
Delhi Division for a period of 5 years and
confirm that the licensee will be vested with
exclusive rights and will have direct relationship
with advertiser/space buyers, who will not be
entertained by the Railways. (These correspond
to contents of Paragraph 4.1 and 4.5 of tender
conditions)
(d) Clause 16 of the agreement states:-
"The amount quoted by the tenderer in
Packet 'B' of this tender, will be
applicable for total advertising area (P)
assessed by the .Railway or part thereof
(including 10% free area as per Para 15
above) Total assessed area (P), is as
indicated in Section V of these
documents. The contractor will be
allotted extra sites over and above the
assessed area on his request only after
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getting the technical and aesthetical
feasibility of the site from the railway
administration. However, for this
purpose, the contractor will have to pay
to Railway pro rata extra amount that
will be calculated for the relevant year
and subsequent years based on total
amount quoted for first year and worked
out for the subsequent years as per
formula given in Packet 'B' of the Tender
documents."
(e) Para 4.9 of Section II of the Tender
document (Terms & Conditions) also stated the
same, that "The amount quoted by the tenderer
will be applicable for total advertising area
assessed by the Railways, or part thereof
(including 10% free area as per para 4.8 above).
Total assessed area is indicated in Section V
of these tender documents. The contractor will
be allotted extra sites over and above the
assessed on his request, only after getting
technical and aesthetical feasibility, or the sites
from the Railway administration. However, for
his purpose, the contractor will have to pay to
Railway pro rata extra amount, that will be
calculated for the relevant year and subsequent
years, based on total amount quoted for the first
year and worked out for the subsequent years, as
per formula given in Packet B of the Tender
documents."
28. The "Annexure" referred in clauses 1 and 2 and
"Section V" referred in clause 16, (and also referred in
Para 4.9 of tender conditions) is one and the same
thing. The title page of Section V of Tender documents
has the following contents inscribed on it:
"Section V: Area assessed by railways for
advertisement for the purpose of present
tender and quoting the rate for first year
"(Sheets 24 to 26).
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The usage of words "first year" for inviting the bids
and out-lining the scope of the assessed area is vital.
This establishes the relationship of the „area‟ with the
offered rate for the first year .At the end of list of
tendered items, it is stated that "total area available
for the tender (A+B) Sq. Ft ...... 213147.... Say area
"P"
.
29. These clauses of the Agreement and Paragraphs
of the Tender conditions bring out the following facts:
a. Total area assessed by the Railway and
offered for the bid is 'P' (and it is 2,13,147 sq.
feet)
b. Offered license fee will be applicable to
total assessed area (it includes 10% area to be
used as free and is meant for Railway messages)
c. Any additional area on request will be
over and above the assessed area and offered
price.
d. Request for additional area can be made
by licensee at any time during the currency of
the contract of five years.
e. Pro rata license fee payable for additional
area will be derived, based on the first year
calculations of price, and recalculated for the
particular subsequent year, for the purpose of
'extra charge' to be levied.
30. Para 4.9 of tender conditions and clauses 2 and
16 of the Agreement clearly provide that the amount
quoted by the tenderer will be applicable for total
advertising area assessed by the Railways, (including
10% area meant to be earmarked free of cost for
railway messages). In other words, for the assessed
area i.e. 2,13,147 Sq ft., a fixed license fee is to be
charged, and for the additional area, licensee is liable
to pay more charges."
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(xi) The learned arbitrator has, thereafter, proceed to deal
with the Note in Section V of the tender documents, thus, in
paras 33 and 36 of the impugned award:
"33. Significance and Implications of the NOTE in
the Tender
a) The "Note" contained at the end of
Section V of the tender reads as under
"Note: Exact location indicated in Part A
above shall be made over to the
contractor w.e.f. date shown against
each. However, the contractor shall be at
liberty to display equivalent/more area
at adjoining locations in accordance with
para 4.9 of Section II of Tender
Document."
b) It has been admitted in the written
statement of Respondent that 'additional' or
more area/sites were to be given on specific
request to be made by the Claimant and
scrutinized/assessed and, permitted by the
Respondent. The provision of additional/more
extra area over and above the assessed area of
213147 sq. ft as reflected in Section-V, to be
charged at the prevailing rate during the
currency of the contract is already covered in
tender conditions 4.1 & 4.9 (Section-II) and
Clause 16 of the agreement (Section-III). These
provisions make it absolutely clear the action
to be taken by the licensee if it wants more
advertising area after it has been allotted and
handed over possession of 213147 sq. ft. The
method and formula of calculation of
applicable tariff has been specified in (Packet
B) of the tender document. No further
clarification was needed.
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c) If there was no intention of providing the
'equivalent area' , corresponding to unavailable
area, as such area was occupied by the pre-
existing contracted sites, such a special Note at
the end of the list of tender items ( Section -V)
was unnecessary and redundant. The usage of
words 'equivalent area' & 'adjoining' makes the
provision unique and attractive for the
prospective bidders. These are the key words
and have not been found referred or used
hitherto, anywhere in the tender/ agreement,
before one reaches the 'Note'.
d) This entitles the licensee to seek
'"equivalent" area at adjoining locations. But
the Respondent says "only on extra payment"
in accordance with Para 4.9. However, this
particularly referred paragraph covers the
allotment of extra sites over and above the
assessed area (and not before that ) and
requires a request from the licensee
,examination of the proposal from technical
and aesthetic point of view by the railway and
payment of extra charge. Charges are payable
when the additional sites are allotted, and the
area increases beyond the 'assessed area'. It is
implied and intended that in respect of these
sites which enables the licensee to reach and
remain within the total assessed figure of
2,31,47 sq. feet of area (P area), no further
charges are to be paid. No one can say "I will
use the area for a specified period, but will not
pay for it. Similarly, nobody can turn and say
that "I will take the full amount but will not
give total 'area' as specified." In other words
there has to be 'quid pro quo' i.e. it has to be
an equal exchange or substitution of goods or
services. It also indicates an item or a service
which has been traded in return for something
of value.
*****
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36. The Tribunal has gone into the meaning as
found in the Dictionaries, as far as word 'equivalent' is
concerned. Though 'more' , 'additional' and 'extra' fall
in the same category, and mean and connote the same
thing, but 'equivalent' implies 'equal in value',
'identical', 'corresponding' co-relative' 'comparable' and
'commensurate' etc. By no stretch .of imagination
'equivalent' can be termed synonymous of 'additional'
or 'extra' or 'more'. "
(xii) The learned arbitrator also holds that the stipulation, in
Clause 31 of the Agreement, that in each year, the fee payable
by PPC to the Railways would be 5% over the previous year‟s
fee would stand defeated if the quoted rate were to be applied to
the entire area on 213147 sq. ft. or any part thereof.
(xiii) Reliance was also placed, by the learned arbitrator, on a
communication dated 25th July, 2007, from the Divisional
Railways Manager (DRM), Delhi Division to the NDMC, MCD
and the Faridabad Municipal Committee, in which the tender
rate, per square foot, for the first year of the contract between
the Railways and the PPC was stated as ₹ 1072.43. This figure
of ₹ 1072.43, noted the learned arbitrator, was arrived at by
dividing the total contracted fee payable for the first year, of ₹
22,85,85,500 /- by 213147 sq. ft. This, therefore, amounted in
the view of the learned arbitrator, to an acknowledgement of the
fact that, during the first year of the contract, the Railways were
required to make available, to PPC, 213147 sq. ft. of advertising
area.
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(xiv) The learned arbitrator also notes that in the Joint Lists
drawn up and signed by them, PPC and the Railways had
applied the pro rata charges, as envisaged by the agreement, of
₹ 1072/- per square foot for the first year, ₹ 1180/- per square
foot for the second year and ₹ 1357/- per square foot for the
third year.
(xv) The learned arbitrator, thereafter, proceeded to examine
whether Clause 5 of the Agreement militated against the
requirement of the Railways making available, to PPC, of
213147 sq. ft. of advertising area in the first year. Clause 5, it
may be recalled, reads thus:
"The ownership of the existing contracts will pass on
to the contractor for display of commercial
advertisement only after the expiry of the term of the
contract. The contractor will have no locus standi on
the advertisement displayed by existing contractor
until the expiry of the contract. The list of the contract
in the order of their expiry is enclosed along with the
terms and conditions of the contract."
The learned arbitrator holds that Clause 5 could not be used as a
justification for the Railways not making available, to PPC,
213147 sq. ft. of advertising area during the first year, as it
merely gave a protective cover to pre-existing contracts.
Effectively, therefore, according to the learned arbitrator, the
Note in Section V of the tender documents read with Clause 5
of the Agreement counterbalanced the rights of PPC and the
contractors with whom pre-existing contracts were still in
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operation, by protecting the rights of such latter contractors till
the expiry of their contracts and, at the same time, requiring the
Railways to make available, to PPC, 213147 sq. ft. of
advertising area during the first year or, in the event of non-
availability, providing equivalent alternate space.
(xvi) The Railways sought to contend that PPC‟s right to
alternate equivalent area under the note in Section V of the
tender documents was conditional on PPC making payment for
such additional area as envisaged by Clause 4.9 of Section II of
the tender documents. In holding that no additional fee
would be recoverable from PPC for the "equivalent area"
envisaged by the Note in Section V, the learned arbitrator
placed reliance on Notice Inviting Tenders (NIT) which
specified that, after the provision for "P" area was over,
additional "Q" area could be provided to PPC, on requisition,
against additional payment. This indicated, according to the
learned arbitrator, that so far as 213147 sq. ft., covered by the
"P" area was concerned, there could be no question of
additional payment being made by PPC.
(xvii) In this context, the learned arbitrator relies on letters
dated 20th July, 2007 and 29th August, 2007, from the Chief
Commercial Manager (CCM) to the Senior Divisional
Commercial Manager and to the DRM, Delhi Division. The
former communication stated that it was "obvious that there was
every intention of the division to provide the total area for the
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full period of the contract, right from the first year, and as some
of the areas were not immediately available, due to running
contracts, there was a provision of giving an alternative area on
equivalent basis (equivalent area)", whereas the latter
communication stated that "for locations, which are not
immediately available, due to an existing contract having
validity for the next one year to two years, there is a provision
in the entire bunch of tender documents of an equivalent area to
be provided". The Background Note, dated 24th July, 2007, to
which these communications pertain, having been endorsed by
the Railways to PPC, the learned arbitrator held that these
communications could not be treated as mere internal missives.
He also relied on the known position that the CCM was the
head of the commercial department in a zonal railway for all
divisions in respect of which, subject to being overruled by the
General Manager, he was the final authority. In this context,
the learned arbitrator extracted the following passages from the
communications of the CCM:
"basic issue to be decided is, whether the area to be
given to the contractor is 2,13,147 sq. ft. right from the
start of the tender. This is because Section V of the
tender document mentions details of the sites in two
parts, item (A) and (B) and it's total as assessed by the
Railways, called (P), for this tender. In item (A), .the
sites where contracts awarded are running have been
mentioned along with the respective area, the total area
has been shown as 1,67,923 sq. ft. In item (B), the sites
available immediately to the contractor along with their
areas, have been separately shown; the total area
available under this head is 45,224 sq. ft. The total of
(A) and (B) adds up to 2,13,147 sq. ft. It is mentioned
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in a note below this that "Exact location indicated in
Part A shall be made over to the contractor w.e.f.
the date shown against each. However, the
contractor shall be at liberty to display
equivalent/more area at adjoining locations in
accordance with Para 4.9 of Section-II of Tender
Documents"
"We may also study the respective Clauses of the
agreements:"
(a) Clause 5 of the Agreement only
protects the rights of the existing Advertising
Contracts, as these cannot be removed and their
Contract terminated just because a Sole Right
Tender has been awarded. These contracts shall
continue till their validity. This is confirmed by
Para 4.2 of Instructions to Tenderers and the
Terms and Conditions.
(b) Clause 2 of the Agreement specified that
the Site mentioned in Annexure to the Tender
Document would vest with the licensee. The
total assessed Area works out to
2,13,147sq.ft."
(c) There is no mention of time frame for
handing over this area to the Licensee. The
obvious conclusion is that it is envisaged the
full area equivalent to 2, 13,147 sq. ft. would be
made available to the licensee for the total
period of the contract.
(d) Clause 16 confirms that the "amount
quoted in Packet-B will be applicable for
total Advertising Area assessed by the
Railway" (The wordings "part thereof' is to
identify the 10% area for Railway Slogans etc.
as per Clause 15)-This area is as mentioned
above 2, 13,147 sq. ft.
The obvious conclusion is that Clause 16 and 2 are
supplementing each other. In Clause 16 as the words
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'total advertising area" had been recorded; it had to be
clarified by words, or part thereof so that 10% area
could be excluded from the advertising area for
Railway's own slogans/messages. This is again
confirmed in Clause 16 itself where it is written- total
assessed area (P) is SIS indicated in Section V of these
documents" The area (P) is the total of items (A) and
(B) and, hence, it was envisaged that 2,13,147 sq. ft. of
area is to be given for the entire period of the contract"
"Let us now see what Section V of the Tender
Document provides":
Section V of the Tender Document has the Title- "Area
assessed by Railways for Advertisement for the present
Tender Quoting the Rates for the First Year". The
words "First Year" are very relevant. The total area
(P) which includes under all items (A) and (B) to be
given is 2,13,147 sq. feet.
"It is obvious that the total area is to be given from
the First Year'' itself.
If for some reason, the total area cannot be given, then
there is an alternative of giving an Alternative Area so
called "Equivalent Area" in this Annexure. There is
also a separate provision of More Area. However, for
'More Area', if asked for, there shall be a separate pro-
rata charge. There is, however, no such provision for
a separate charge for the 'Alternate Area'
provided."
"The Reserve Price fixed can also be an indication, if
the above contention is correct. We may also confirm
the above from the basis on which the Reserve Price of
the Tender was fixed. The total earning from all Areas
on the entire Division was earlier around Rs. 7 crore.
The Reserve Price fixed (3 times the earlier earnings as
per Board's policy i.e. approximately Rs. 21 crore) was
taken irrespective of the Areas immediately available.
The yearly increase in the valuation is 10%, 15%, 20%,
25% percent etc. each year is not linked to the different
Areas to be made available to the party year after year.
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Hence, it was envisaged that because of sites under
running Contracts; the total Area can only be given if
an "Equivalent Area" is given as an alternative. Then
only would the total valuation of the contract be
justified".
"It is, therefore, obvious that there was every
intention of the Division to provide the total Area
for the full period of the contract, right from the
first year, and as some of the Areas were not
immediately available due to running contracts, there
was a provision of giving an alternative area on
equivalent basis (equivalent area)"."
(xviii) Reliance was also placed by the learned Arbitrator,
on the following passage from the subsequent communication
dated 29th August, 2007, from the CCM to the DRM, Delhi
Division:
"Clause 16 of the Agreement provides that "Amount
quoted in packet B will be applicable for total
advertising area assessed by the Railways" (the
wordings-"part thereof" - is to identify 10% Area for
Railway Slogans etc. as per Clause 15). This total
Area is, as mentioned above 2,13,147 sq. ft. The
amount quoted in Packet 'B' in the Tender of this
contract is for the total area it would be less for a
lesser area. The obvious conclusion is that if the same
amount of the Advertising Area, as assessed by the
Railways, and mentioned in the "Tender Documents"
cannot be given (or an equivalent area thereof cannot
be provided by the Railways), the amount quoted in
packet 'B' should be correspondingly reduced."
Thus, holds the learned Arbitrator, the Agreement envisaged
grant of sole rights, to PPC, to advertise at the various sites in
the Delhi Division, during the period of the contract, i.e. 20th
September, 2007 to 19th September, 2012. A conjoint reading
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of Clauses 1 and 2 of the Agreement indicated that, during this
period of five years, PPC would enjoy sole advertising rights in
respect of the Delhi Division over an area of 213417 sq. ft. This
assurance, under the agreement, noted the learned arbitrator,
was belied, inasmuch as it was only on 13th April, 2010, when
the last of the sites envisaged in part A of Section V of the
tender documents was made available to PPC, consequent on
the expiry of the pre-existing contract in respect of the said
sites. Sole rights over the area of 213417 sq. ft were, therefore,
made available to PPC only on or after 13th April, 2010. The
consideration of ₹ 22,85,85,500/- envisaged by the tender
documents and the agreement as being payable by PPC for the
first year of the contract being relatable to availability, during
that year, to PPC of 213417 sq. ft. of the advertising area, the
learned arbitrator held that, to the extent the area made available
to PPC during that year shall short of 213417 sq. ft., PPC was
entitled to refund of proportionate advance license fee paid by
it.
(xix) Similar entitlement would ensue, in PPC‟s favour, during
the second and the third years of the contract.
(xx) On the aforesaid reasoning, the learned arbitrator held
that
(a) there was a contractual obligation, on the
Railways, to provide, to PPC, 213417 sq. ft. of
advertising year during the first year,
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(b) to the extent the available advertising space fell
short of these figures, the Railways were bound to
make available, to PPC the equivalent alternate
area at no extra costs and
(c) in default, the Railways were bound to refund, to
PPC, the proportionate advance license fee paid by
PPC to the Railways.
(xxi) The learned Arbitrator also rejected the submission of the
Railways, that before being entitled to equivalent alternate
space, PPC was required to make a requisition in that regard to
the Railways. On facts, the learned arbitrator found that, apart
from the fact that no such request was made by the Railways to
PPC, PPC had, on the other hand, addressed several
communications to the Railways for being provided the entire
area of 213417 sq. ft.
(xxii) PPC had also contended, before the learned arbitrator,
that seven of the sites, contained in Part A of Section V of the
tender documents, were already contracted to PPC, and that the
contracts were in existence on the date of the present "sole
rights" agreement. It was, therefore, sought to be contended that
in respect of these seven sites, the Railways had recovered fee
twice over from PCC.
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(xxiii) The learned arbitrator observed that, in its letters dated
26th February, 2010 and 6th March, 2010, addressed to the
learned arbitrator, the Railways had acknowledged thus:
"Find herewith the list of sites, out of location enlisted
in Section "V" of Tender documents, that ran parallel
to the Sole Rights contract for commercial publicity
over entire Delhi division. The list contains details of
the contract viz the allotted rate (i.e rate for first year),
their per year revised rates for subsequent years or the
pro rata tariff, number of days a contract ran parallel to
Sole Right Contract (per year wise) the accrual of
annual amount on pro rata basis for the days calculated
thereof and the total accrued earnings out of these
parallel running contract till their respective expiry
from the start of the Sole Rights contract i.e. 20.9.2007
& till 31.12. 2009 .....The copies of their respective
Agreements were also enclosed ...... there is no scope
of any rectification ...... and these may be taken on
record on as is basis."
(xxiv) From the statement provided by the Railways, the
proportionate advance license fee, paid by PPC under the Sole
Rights Agreement, which would overlap with the periods during
which the earlier contracts between the Railways and PPC
continued to remain in existence after the date of
commencement of the present agreement, stands tabulated thus,
in the impugned award:
S.No. Tender Item/Site/group of Overlapping period Proportionate
S.No. sites (from MCD of Sole license fee
(Super- right contract to accrued in pre-
imposed) expiry date of pre- existing contracts
existing contract (in Rs.) based on
Respondent
statement)
(6.3.2010)
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1 38 NDLS(CA) 20.09.07 to 1.2.08 32,91,200
2 41 Delhi Jn Overhead 20.09.07 to 3.10.07 18,896
signage
3 48 NZM overhead 20.09.07 to 3.10.07 13,724
signage
4 56 BP Zone I 20.09.07 to 13.09.09 1,53,89,452
5 57 BP Zone III 20.09.07 to 30.09.09 1,27,51,260
6 58 BP Zone IV 20.09.07 to 30.09.09 1,46,42,808
7 59 BP Zone V 20.09.07 to 30.09.09 1,35,38,966
(xxv) As a result of the afore-noted discussion, the learned
arbitrator held PPC to be entitled, in respect of the seven sites
for which pre-existing contracts with PPC itself were in
operation on the date of commencement of the contract in the
present case, to a refund of ₹ 4,11,78,730/- and, in respect of the
remaining 34 sites in Part A of Section V of the tender
documents, to a refund of ₹ 4,31,87,700 /-.
Submissions on behalf of the Railways:
28. Disputing the entitlement of the PPC to the awarded amounts of
₹ 4,11,78,730/- and ₹ 4,31,87,700/-, the Railways have submitted
before this Court through Dr. Sarabjeet Sharma, learned Counsel, thus:
(i) Part A of Section V of the tender documents made it clear
that the 41 sites enlisted therein would not be made available to
PPC at the commencement of the contract, and would become
available only on future dates, consequent on the pre-existing
contracts, in respect of the said sites, coming to an end. The
learned arbitrator could not, therefore, have held that PPC was
entitled to be provided 217417 sq. ft. of advertising area from
the commencement of the contract during the entire five year
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period. The area, which was contractually made available to
PPC during the entire five years, was the area covered by Part B
of the contract.
(ii) This position was made apparent by the Note in Section
V of the tender documents. A reading of the said Note made it
apparent that the entitlement of PPC to equivalent/more area
was to be in accordance with Para 4.9 of Section II of the tender
documents, which required an advance requisition, in that
regard, to be made by PPC, upon which the area would be
provided on additional payment at pro rata basis.
(iii) Internal notings of the CCM, which were contrary to the
terms of the tender documents and the contract, could not take
precedents over the provisions of the contract and the tender
documents, to which they were contrary.
(iv) Reliance was also placed, by Dr. Sharma, on Clause 5 of
the Agreement, which provided that ownership of existing
contracts would pass on to PPC only consequent on expiry of
pre-existing contracts.
Analysis
29. Having examined, in detail, the documents as well as the
findings of the learned arbitrator regarding the issues in controversy
and the contentions of Dr. Sharma, I do not find any reason to
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interfere with the ultimate decision of the learned arbitrator, insofar as
the impugned award is concerned.
30. The learned arbitrator has examined the clauses of the contract
and taken a view thereon by harmonizing, as he thought it appropriate,
the various clauses. He has taken into account the opening clauses of
the agreement, Clauses 4, 9 and 16 of the Agreement and Section V as
well as the Note incorporated in the tender documents. Following a
process of ratiocination which is unquestionably detailed and well
considered, he has interpreted the various clauses as entitling PPC, ab
initio, to 213417 sq. ft. of advertising area during the first year. He has
also held that, in the event of any part of the said area not being
available, the Railways were required to provide equivalent area at no
extra cost and, in default, were required to refund, proportionately, the
advance license fee paid by PPC.
31. The law, regarding the scope of interference, by the Court,
under Section 34 of the 1996 Act, is trite and well settled, progressing
and developing, as it has, through the decisions of the Supreme Court
in Associate Builders v. DDA1, Ssangyong Engineering &
Constructions Co. Ltd. v. NHAI2 and Delhi Airport Metro Express
Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd.3, among others.
32. The offshoot of the above decisions is that, ordinarily, the
Court, exercising jurisdiction under Section 34 of the 1996 Act, would
1
(2015) 3 SCC 49
2
(2019) 15 SCC 131
3
(2022) 1 SCC 131
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not interfere with in the manner in which the Arbitral Tribunal has
interpreted the contractual covenants. Having said that, when the
interpretation placed by the arbitrator is clearly unreasonable, or
contrary to the covenants of the contract read as a whole, or results in
disharmony among the various clauses of the contract, the Court may
interfere.4 Equally, the Court may interfere and enunciate what, in its
view, is the correct legal position, where the same covenants of the
contract have been interpreted differently by two arbitral awards in
similar circumstances, as held in NHAI v. Progressive MVR (JV)5.
33. In the present case, the submissions advanced by the Railways
to challenge the impugned award are themselves indicative of the
reason why the impugned award does not brook interference. The
issue in controversy may be vivisected into three parts.
Was PPC entitled to 213147 sq ft of advertising area, ab initio?
34. The first submission of Dr. Sharma; indeed, his main
contention, is that Section V of the Tender Documents made it clear
that the sites mentioned in Part A of Section V would be made
available only on future dates, with some of the dates being mentioned
in Part A of Section V itself and the remaining dates being provided in
the letter of allotment dated 24th August, 2007 (except for two sites).
As such, Dr. Sharma sought to contend that the learned arbitrator
erred, and ruled contrary to the contractual covenants, in holding that
4
Refer South East Asia Marine Engineering and Constructions Ltd. v. Oil India Ltd. (2020) 5 SCC 164
& State of Rajasthan v. Nav Bharat Construction Co. (2006) 1 SCC 86
5
(2018) 14 SCC 688
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PPC was entitled, ab initio, to be provided 213417 sq. ft. of
advertising area.
35. This submission of Dr. Sharma confuses and conflates the
concepts of "site" and "area". The learned arbitrator has, on the other
hand, remained alive to the distinction between these two contractual
concepts. The very opening recitals in the agreement reveal that the
area to be made available to PPC during the first year was 213417 sq.
ft. There is not a single covenant, to be found anywhere either in the
tender documents or in the agreement, which derogates from this
express stipulation. It is clear, unequivocal and non-negotiable. To
reiterate, PPC was entitled, ab initio, and during the entire term of the
contract to be provided 213417 sq. ft of advertising area.
36. What Section V and the Note in Section V says, apropos Part A
the sites mentioned in Part A thereof, is that would be made available
only on future dates, as they were already being operated by other
contractors, under pre-existing contracts. This is exactly what Clause
16 of the Agreement states as well. What is stated in Section V, the
Note in Section V as well as in Clause 16 is, therefore, only that, qua
the sites which were already being operated by other contractors,
under pre-existing contracts, PPC would acquire advertising rights
only consequent on the expiry of the said contracts.
37. The learned arbitrator has correctly held that this stipulation
cannot be treated as derogating, in any fashion, from the obligation,
expressly envisaged in the opening recitals of the Agreement between
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the PPC and the Railways as well as in the tender documents, that PPC
would be entitled, ab initio, to 213417 sq. ft. of advertising area. The
fact that certain sites would, per contract, become available to PPC
only in future would not detract from the requirement of providing, to
PPC, 213147 sq ft of advertising area throughout the contract. Any
other interpretation would render the express stipulation, in the
Agreement as well as in the Tender Documents, that the area made
available to PPC for advertising, during the period of contract i.e. 20th
September, 2007 to 19th September, 2012, was 213147 sq ft,
redundant. It is not permissible, while interpreting the covenants in a
contract, so accord, to one clause, an interpretation which would
render another redundant or otiose.
38. I, therefore, find no reason whatsoever to interfere with the
findings of the learned arbitrator, that 213417 sq. ft of advertising area
was required to be made available to PPC during the entire period of
contract.
Was PPC entitled to be provided „equivalent area‟ at no extra cost?
39. The second aspect is regarding whether PPC would be entitled,
in the event of any part of the said 213417 sq. ft of advertising area not
being available, to be provided equivalent area, at no extract cost. The
learned arbitrator interpreted the Note in Section V to mean as
requiring advertising area, equivalent to the area in Part A of Section
V, which was not immediately available to PPC, as being required to
be provided by the Railways at no extra cost.
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40. On the interpretation of the Note in Section V, to this limited
extent, I do not find myself entirely in agreement with the findings of
the learned arbitrator. The learned arbitrator has adopted the view that
the Note in Section V of the tender documents entitled PPC to
equivalent area, to compensate for the area which was not
immediately available for advertising, at no extra cost. I am unable to
read the Note in such a fashion.
41. The Note in Section V consists of two sentences. The first
sentence states that the exact locations indicated in Part A of Section
V would be made over to PPC w.e.f. the date reflected against such
location. This, as I have already held, merely indicates that in respect
of locations/sites, which were being operated by contractors with
whom pre-existing contracts were still continuing, the right of PPC is
emerged only after the said contracts came to an end. That did not
derogate, from the obligation, of the Railways, to provide, to PPC, ab
initio and during the entire term of the contract, 213417 sq. ft. of
advertising area.
42. The second sentence of the Note of Section V, however, in my
view, has not been correctly interpreted by the learned arbitrator and,
in fact, the interpretation placed by the learned arbitrator on the said
sentence flies directly in the face only of the said sentence but also of
Clause 4.9 of Section II of the tender documents. What is stated, in
the second sentence in the Note in Section V, is that "the contractor
(i.e. PPC) would be at liberty to display equivalent/more area at
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adjoining locations in accordance with para 4.9 of Section II of the
tender documents". Clearly, therefore, the entitlement of the
contractor to additional/more area, under the second sentence in the
Note in Section V was only in accordance with Clause 4.9 of Section
II of the tender documents, and could not be understood de hors the
said clause. Clause 4.9 of Section II of the tender documents permits
grant of additional area to a contractor only on payment of additional
fee and not free of charge. In holding that PPC would be entitled, by
virtue of the Note in Section V, to advertising area, equivalent to the
area, which was covered by pre-existing contracts, at no extra cost,
therefore, in my view, the learned arbitrator held contrary to the
expressed terms of Clause 4.9 of Section II of the tender documents,
which have been incorporated by reference in the Note in Section V.
43. Where the provisions of a clause are incorporated by reference
into another, they are to be treated as bodily incorporated into the
latter, as held in, inter alia, M. R. Engineers and Contractors Pvt.
Ltd. v. Som Datt Builders Ltd.6
44. I cannot, therefore, agree with the findings of the learned
arbitrator, that PPC was entitled to be provided advertising area,
equivalent to the area which was covered by the sites enumerated in
Part A of Section V and which could not be provided to PPC owing to
the continuance of pre-existing contracts covering the said sites. No
such right to be provided equivalent area free of cost, in my view, can
be gleaned from the tender documents.
6
(2009) 7 SCC 696
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Was PPC entitled to be refunded advance licence fee deposited by it,
proportionate to the advertising area not made available?
45. That, however, does not detract from the entitlement, of PPC, to
be refunded the advance license fee deposited by it, proportionate to
the area which was not made available to PPC. In view of my
concurring, with the learned arbitrator, that the stipulation in the
tender documents as well as the contract required the Railways to
provide, during the entire period of contract, 213417 sq. ft of
advertising area, to PPC, I can find no fault with the learned arbitrator,
in his decision that, to the extent that the said area was not provided to
PPC, PPC would be entitled to a refund. The Railways cannot be
permitted to continue to retain the entire advance licence fee deposited
by PPC, even while breaching the contractual obligation to make
available, to PPC, the entire area of 213417 sq ft of advertising area.
That, as the learned Arbitrator correctly holds, would amount to unjust
enrichment.
46. I, therefore, approve and concur with the decision of the learned
Arbitrator that PPC is entitled to refund of Rs 8,43,66,430/-.
47. The Railways have also challenged the award, by the learned
arbitrator, of interest in favour of PPC. The learned arbitrator has
granted interest, on the amounts awarded by Interim Awards- I, II and
III, pre-reference and pendente lite @ 2% per month and post award
@ 1.5 % per month. In doing so, the learned arbitrator has relied on
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the judgments of the Supreme Court in Central Bank of India v.
Ravindra7, Bhagwati Oxygen Ltd. v. Hindustan Copper Ltd.8 and
State of Rajasthan v. Nav Bharat Construction Co.9.
48. No separate arguments were advanced by Dr. Sharma in respect
of the award of interest. Nor do the written submissions filed by the
Railways contest the award of interest by the learned arbitrator.
However, in O.M.P. (COMM) 154/2020, the Railways have sought to
contend that the agreement and tender conditions did not envisage
grant of interest to PPC.
49. The provision relating to grant of interest on delayed payment
by PPC has, contends the Railways, been erroneously applied, by the
learned arbitrator to award interest to PPC, at an exorbitant rate.
50. Both arguments stand covered against the Railways by
authoritative pronouncementS of the Supreme Court. The judgment in
Bhagwati Oxygen8 clearly holds that, in the absence of any
proscription, in the agreement between the parties, against award of
interest by the arbitrator, the arbitrator was within his jurisdiction to
award interest pre-reference, pendente lite as well as post-award.
Insofar as the rate of interest is concerned, the learned arbitrator has
noted that, in Bhagwati Oxygen8, the Supreme Court upheld the award
of interest, by the arbitrator, at 18% p.a. - incidentally, the same rate
of interest at which the learned arbitrator has awarded interest in the
7
2002 (1) SCC 367
8
2005 (6) SCC 462
9
2002 (1) SCC 659
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present case, observing that, in this regard, the rate of interest charged
by Hindustan Cooper Ltd. (the respondent in that case), to Bhagwati
Oxygen was a relevant and germane factor. Applying this principle,
the learned arbitrator has awarded interest, on the claims decided in
favour of the PPC, at the rates at which the PPC was liable to pay
interest in the event of delayed payments made to the Railways.
51. No interference is, therefore, justified, with the said decision.
Conclusion
52. In view thereof, the challenge, by the Railways, to the
impugned award dated 29th October, 2012 of the learned arbitrator,
fails.
53. The petition of the Railways is, accordingly, dismissed, with no
order as to costs.
OMP (ENF.) (COMM.) 120/2018
54. This petition seeks enforcement of the Interim Award-I dated
19th May, 2010, Interim Award-II dated 1st November, 2010 and
Interim Award-III dated 29th October, 2012, passed by the learned
Arbitrator, and, therefore, seeks a direction to the Railways, to pay, to
PPC, the amount awarded by the learned arbitrator.
55. No separate submissions were advanced, by Dr. Sharma,
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assailing this petition. The reply filed by the Railways in response to
this petition merely seeks to contend that, having allowed adjustment
of the amounts awarded by Interim Awards-I and II, without claiming
interest, the PPC was estopped from claiming interest now.
56. As PPC has correctly contended in its rejoinder, this submission
of the Railways is misconceived. Interim Awards-I and II expressly
resolve the decision on the issue of interest payable on the amounts
awarded under the said Interim Awards to be decided while
adjudicating on Interim Award-III. As such, there was no waiver or
abandonment, by PPC, of its right to interest on the amounts awarded;
the issue of payment of interest was only deferred till the passing of
the impugned Interim Award-III.
57. In that view of the matter, Interim Award-III having been
upheld in its entirety, the Railways become liable to pay, to the
petitioner, the principal amount as well as interest.
58. OMP (COMM.) 154/2020 having been decided by the judgment
passed today, for the present, in OMP (ENF.) (COMM.) 120/2018, the
Railways are directed to deposit, with the Registrar General of this
Court, the entire amount awarded by the learned arbitrator, including
principal and interest by way of a crossed cheque/demand draft within
a period of four weeks from the date of uploading of this judgement
on the website of this Court.
59. List OMP (ENF.) (COMM.) 120/2018 before the concerned
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Bench, as per roster, on 15th July, 2022 to proceed further with the said
enforcement petition and pass appropriate orders thereon.
C. HARI SHANKAR, J.
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