Delhi High Court
National Highways Authority Of India vs Irb Goa Tollwayprivate Ltd. on 21 February, 2022
Author: C. Hari Shankar
Bench: C. Hari Shankar
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 14th February, 2022
Pronounced on: 21st February, 2022
+ O.M.P. (COMM) 349/2016 & I.A. 9043/2016, I.A. 11952/2020,
I.A. 11953/2020
NATIONAL HIGHWAYS AUTHORITY OF INDIA
..... Petitioner
Through: Mr. S. Nandakumar and Ms.
Deepika Nandakumar, Advs.
versus
IRB GOA TOLLWAY PRIVATE LTD. ..... Respondent
Through: Mr. Saurabh Kirpal, Sr. Adv.
with Mr.Sanjay Agarwal, Mr.Parthiv
Goswami, Mr.H.P Chaturvedi, Mr.M.V
Ravindran, Mr.Apoorva Agrawal,
Mr.Sarthak Sachdev and Ms. Terresa R.
Daulat, Advs.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
% JUDGMENT
21.02.2022
1. This petition, at the instance of the National Highways
Authority of India (NHAI), has been preferred under Section 34 of the
Arbitration and Conciliation Act, 1996 ("the 1996 Act"), assailing an
Award, dated 26th February, 2016, passed by an Arbitral Tribunal by a
majority of two learned Arbitrators to one.
2. The respondent was the claimant before the learned Arbitral
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Tribunal and the petitioner-NHAI was the respondent.
3. The respondent raised two claims. The learned Arbitral Tribunal
awarded, to the respondent,
(i) against Claim No. 1, ₹ 196,38,00,000/- along with
interest of ₹ 100,15,38,000/- and
(ii) against Claim No. 2, ₹ 4,71,00,000/- along with interest
of ₹ 2,73,18,000/-.
4. As a result, a total amount of ₹ 303,98,01,213/- stands awarded
against NHAI and in favour of the respondent along with further
interest @ 12 % on the said amount from the date of Award till the
date of payment, in the event of failure, on the part of NHAI, to pay
the amount to the respondent within 30 days of the award.
5. It merits mention, at the outset, that the present petition does not
assail, directly or indirectly, the award of interest by the learned
Arbitral Tribunal. Nor were arguments on the aspect of interest
advanced before the court, by Mr. Nandakumar, learned Counsel for
the NHAI. The award of interest by the learned Arbitral Tribunal, as
an independent cause of action has, therefore, gone unassailed.
6. As such, the court is concerned only with the correctness of the
grant, by the impugned Award, of the amount of ₹ 196.38 crores
against Claim No. 1 and ₹ 4.71 crores against Claim No. 2, in favour
of the respondent and against the NHAI. Needless to say, however,
should the court find the said award to be deserving of interference,
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interest as granted by the learned Arbitral Tribunal would also perish
with the principal. If, however, the court finds the award of the
principal amount not to be justifying of interference, the principal
amount would become payable along with interest as awarded by the
learned Arbitral Tribunal, as the award of interest has not been
independently contested.
7. It also merits mention that the petition does not include any
challenge to the computation, by the learned Arbitral Tribunal, of the
amount awarded to the respondent. All that is contested is the
entitlement of the respondent to the awarded amount. Mr
Nandakumar did, however, make certain limited submissions on the
aspect of computation, with which I would presently deal.
Facts
Events till execution of Concession Agreement
8. In response to a Notice Inviting Tenders (NIT) floated by the
NHAI in March, 2008, for operation and maintenance of a stretch of
NH-4A in the State of Goa, a consortium of IRB Infrastructure
Developers Ltd. (IIDL) and Modern Road Makers Ltd. (MRM) ("the
IIDL-MRM consortium") submitted their bid and were successful.
9. IIDL wrote to NHAI on 20th July, 2009, requesting to issue a
Letter of Acceptance (LoA) in favour of the IIDL-MRM Consortium,
as it had emerged as the lowest bidder against the NIT issued by
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NHAI. Para 2 of the letter also indemnified NHAI, in the following
terms:
"We are aware of the recent changes brought in with regard to
land acquisition related pre-compliances. In this regard, we
hereby indemnify NHAI for any delay caused with respect to
signing of Concession Agreement due to delay arising out of
completion of 3D process for 80% land acquisition."
10. LoA was issued by NHAI in favour of IRB-MRM Consortium
on 5th January, 2010. The LoA required the Consortium to form a
Special Purpose Vehicle (SPV), execute a Concession Agreement
(hereinafter referred to as "CA") and submit performance security by
way of an irrevocable and unconditional Bank Guarantee of ₹ 23.55
crores within the period expiring on the 180th day from the date of
signing of the Concession Agreement.
11. In compliance, the IRB-MRM Consortium wrote to NHAI on
8th February, 2010, informing NHAI that the Consortium had
constituted the respondent IRB Goa Tollways Pvt. Ltd. as an SPV, to
undertake the project.
12. Following the constitution of the respondent as an SPV by the
Consortium, the CA was executed between the NHAI and the
respondent on 19th February, 2010. The CA, significantly, did not
contain any indemnity clause, as was contained in the letter dated 20 th
July, 2009 (supra) from IIDL to NHAI.
13. The following clauses of the CA are relevant:
"4.1.2 The Concessionaire may, upon providing the
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Performance Security to the Authority in accordance with
Article 9, at any time after 90 (ninety) days from the date of
this Agreement or on an earlier day acceptable to the
Authority, by notice require the Authority to satisfy any or all
of the Conditions Precedent set forth in this Clause 4.1.2
within a period of 30 (thirty) days of the notice, or such longer
period not exceeding 60 (sixty) days as may be specified
therein, and the conditions precedent required to be satisfied
by the Authority prior to the Appointed Date shall be deemed
to have been fulfilled when the Authority shall have:
(a) provided to the Concessionaire the Right of
Way to the site in accordance with the provisions of
Clause 10.3.1; provided that the conditions set forth in
Clause 10.3.2 shall also be satisfied on or prior to the
Appointed Date;
(b) Deleted
(c) procured approval of the Railway authorities in
the form of a general arrangement drawing that would
enable the Concessionaire to construct road
overbridges/ underbridges at level crossings on the
Project Highway in accordance with the Specifications
and Standards and subject to the terms and conditions
specified in such approval; and
(d) procured all Applicable Permits relating to
environmental protection and conservation of the Site:
(e) execute and procure execution of the State
Support Agreement.
Provided that the Authority may from time to time by
notice extend, for up to 6 (six) months, the period for
procuring the approval set forth in Subclause (c) and/or
Sub-clause (d) above and in that event the land to be
covered by overbridges or the affected sections of the
Project Highway, as the case may be, shall be included
in the Appendix referred to in Clause 10.3 and dealt
with in accordance with the provisions thereof; and
provided further that upon procurement of such
approval, the Concessionaire shall be entitled to a
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period of 12 (twelve) months therefrom for completion
of the overbridges.
4.2 Damages for delay by the Authority
In the event that (i) the Authority does not procure fulfilment
of any or all of the Conditions Precedent set forth in Clause
4.1.2 within the period specified in respect thereof, and (ii) the
delay has not occurred as a result of breach of this Agreement
by the Concessionaire or due to Force Majeure, the Authority
shall pay to the Concessionaire Damages in an amount
calculated at the rate of 0.1% (zero point one percent) of the
Performance Security for each day's delay until the fulfilment
of such Conditions Precedent, subject to a maximum of 20%
(twenty percent)of the Performance Security.
7.2 Representations and Warranties of the Authority
The Authority represents and warrants to the Concessionaire
that:
(a) it has full power and authority to execute,
deliver and perform its obligations under this
Agreement and to carry out the transactions
contemplated herein and that it has taken all actions
necessary to execute this Agreement, exercise its rights
and perform its obligations, under this Agreement;
(b) it has taken all necessary actions under the
Applicable Laws to authorize the execution, delivery
and performance of this Agreement;
(c) it has the financial standing and capacity to
perform its obligations under the Agreement;
(d) this Agreement constitutes a legal, valid and
binding obligation enforceable against it in accordance
with the terms hereof;
(e) there are no actions, suits or proceedings
pending or, to its knowledge, threatened against it at
law or in equity before any court or before any other
judicial, quasi-judicial Or other authority, the outcome
of which may result in the default or breach of this
Agreement or which individually or in the aggregate
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may result in any material impairment of its ability to
perform its obligations under this Agreement;
(f) it has no knowledge of any violation or default
with respect to any order, writ, injunction or any decree
of any court or any legally binding order of any
Government Instrumentality which may result in any
material adverse effect on the Authority's ability to
perform its obligations under this Agreement;
(g) it has complied with Applicable Laws in all
material respects;
(h) all information provided by it in the Tender
Notice and invitation to bid in connection with the
Project is, to the best of its knowledge and belief, true
and accurate in all material respects;
(i) it has the right, power and authority to manage
and operate the Project Highway up to the Appointed
Date;
(j) it has good and valid right to the Site, and has
power and authority to grant a licence in respect
thereto to the Concessionaire; and
(k) upon the Concessionaire paying the Concession
Fee and performing the covenants herein, it shall not at
any time during the term hereof, interfere with peaceful
exercise of the rights and discharge of the obligations
by the Concessionaire, in accordance with this
Agreement
10.3.2 Without prejudice to the provisions of Clause 10.3.1,
the Parties hereto agree that on or prior to the Appointed Date,
the Authority shall have granted vacant access and Right of
Way such that the Appendix shall not include more than 50%
(fifty per cent) of the total area of the Site required and
necessary for the Four-Lane Project Highway, and in the
event Financial Close is delayed solely on account of delay in
grant of such vacant access and Right of Way, the Authority
shall be liable to payment of Damages under and in
accordance with the provisions of Clause 4.2.
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24.1 Financial Close
24.1.1 The Concessionaire hereby agrees and undertakes that
it shall achieve Financial Close within 180 (one hundred and
eighty) days from the date of this Agreement and in the event
of delay, it shall be entitled to a further period not exceeding
120 (one hundred and twenty) days, subject to payment of
Damages to the Authority in a sum calculated at the rate of
0.1% (zero point one per cent) of the Performance Security
for each day of delay; provided that the Damages specified
herein shall be payable every week in advance and the period
beyond the said 180 (one hundred and eighty) days shall be
granted only to the extent of Damages so paid; provided
further that no Damages shall be payable if such delay in
Financial Close has occurred solely as a result of any default
or delay by the Authority in procuring satisfaction of the
Conditions Precedent specified in Clause 4.1.2 or due to Force
Majeure.
24.2 Termination due to failure to achieve Financial Close
24.2.2 Upon Termination under Clause 24.2.1, the Authority
shall be entitled to encash the Bid Security and appropriate
the proceeds thereof as Damages provided, however, if
Financial Close has not occurred solely as a result of the
Authority being in default of any of its obligations under
Clause 4.1.2. it shall upon Termination, return the Bid
security forthwith along with Damages, equal to 25% (twenty-
five per cent) thereof. For the avoidance of doubt, it is
expressly agreed that if the Bid Security shall have been
substituted by Performance Security, the Authority shall have
been substituted by Performance Security, the Authority shall
be entitled to encash therefrom an amount equal to Bid
Security.
33.3 Certification of claims by Statutory Auditors
Any claim or document provided by the Concessionaire to the
Authority in connection with or relating to receipts, income,
payments, costs, expenses, accounts or audit, and any matter
incidental thereto shall be valid and effective only if certified
by its Statutory Auditors. For the avoidance of doubt, such
certification shall not be required for exchange of information
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in the normal course of business including the submission of
Monthly Fee Statements under Clause 19.5.
34.1 Force Majeure
As used in this Agreement the expression "Force Majeure" or
"Force Majeure Event" shall mean occurrence in India of any
or all of Non-Political Event, Indirect Political Event and
Political Event, as defined in Clauses 34.2,34.3 and 34.4
respectively, if it affects the performance by the Party
claiming the benefit of Force Majeure (the "Affected Party")
of its obligations under this Agreement and which act or event
(i) is beyond the reasonable control of the Affected Party, and
(ii) the Affected Party could not have prevented or overcome
by exercise of due diligence and following Good Industry
Practice, and (iii) has Material Adverse Effect on the Affected
Party.
34.4 Political Event
A Political Event shall mean one or more of the following acts
or events by or on account of any Government
Instrumentality:
(a) Change in Law, only if consequences thereof
cannot be dealt with under and in accordance with the
provisions of Article 41 and its effect, in financial
terms, exceeds the sum specified in Clause 41.1;
(b) compulsory acquisition in national interest or
expropriation of any Project Assets or rights of the
Concessionaire or of the Contractors;
(c) unlawful or unauthorised or without jurisdiction
revocation of, or refusal to renew or grant without
valid cause, any clearance, licence, permit,
authorisation, no objection certificate, consent,
approval or exemption required by the Concessionaire
or any of the contractors to perform their respective
obligations under this Agreement and the Project
Agreements; provided that such delay, modification,
denial, refusal or revocation did not result from the
Concessionaire's or any Contractor's inability or failure
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to comply with any condition relating to grant,
maintenance or renewal of such clearance, licence,
authorisation, no objection certificate, exemption,
consent, approval or permit;
(d) any failure or delay of a Contractor but only to
the extent caused by and/or Political Event and which
does not result in any offsetting compensation being
payable to the Concessionaire or on behalf of such
Contractor; or
(e) any event or circumstance of a nature analogous
to any of the foregoing.
34.5 Duty to report Force Majeure Event
34.5.1 Upon occurrence of a Force Majeure Event, the
Affected Party shall by notice report such occurrence to the
other Party forthwith. Any notice pursuant hereto shall
include full particulars of:
(a) the nature and extent of each Force Majeure
Event which is the subject of any claim for relief under
this Article 34 with evidence in support thereof;
(b) the estimated duration and the effect or probable
effect which such Force Majeure Event is having or
will have on the Affected Party's performance of its
obligations under this Agreement;
(c) the measures which the Affected Party is taking
or proposes to take for alleviating the impact of such
Force Majeure Event; and
(d) any other information relevant to the Affected
Party's claim.
34.5.2 The Affected Party shall not be entitled to any relief
for or in respect of a Force Majeure Event unless it shall have
notified the other Party of the occurrence of the Force
Majeure Event as soon as reasonably practicable, and in any
event not later than 7 (seven) days after the Affected Party
knew, or ought reasonably to have known, of its occurrence,
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and shall have given particulars of the probable material effect
that the Force Majeure Event is likely to have on the
performance of its obligations under this Agreement.
34.5.3 For so long as the Affected Party continues to claim to
be materially affected by such Force Majeure Event, it shall
provide the other Party with regular (and not less than
weekly) reports containing information as required by Clause
34.5.1, and such other information as the other Party may
reasonably request the Affected Party to provide.
34.7 Allocation of costs arising out of Force Majeure
34.7.1 Upon occurrence of any Force Majeure Event prior to
the Appointed Date, the Parties shall bear their respective
costs and no Party shall be required to pay to the other Party
any costs thereof.
34.7.2 Upon occurrence of a Force Majeure Event after the
Appointed Date, the costs incurred and attributable to such
event and directly relating to the Project (the "Force Majeure
Costs") shall be allocated and paid as follows:
(a) upon occurrence of a Non-Political Event, the
Parties shall bear their respective Force Majeure Costs
and neither Party shall be required to pay to the other
Party any costs thereof;
(b) upon occurrence of an Indirect Political Event,
all Force Majeure Costs attributable to such Indirect
Political Event, and not exceeding the Insurance Cover
for such Indirect Political Event, shall be borne by the
Concessionaire, and to the extent Force Majeure Costs
exceed such Insurance Cover, one half of such excess
amount shall be reimbursed by the Authority to the
Concessionaire; and
(c) upon occurrence of a Political Event, all Force
Majeure Costs attributable to such Political Event shall
be reimbursed by the Authority to the Concessionaire.
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For the avoidance of doubt, Force Majeure Costs may include
interest payments on debt, O&M Expenses, any increase in
the cost of Construction Works on account of inflation and all
other costs directly attributable to the Force Majeure Event,
but shall not include loss of Fee revenue or debt repayment
obligations, and for determining such costs, information
contained in the Financial Package may be relied upon to the
extent that such information is relevant.
34.9 Termination Payment for Force Majeure Event
34.9.3 If Termination is on account of a Political Event, the
Authority shall make a Termination Payment to the
Concessionaire in an amount that would be payable under
Clause 37.3.2 as if it were an Authority Default.
37.3.2 Upon Termination on account of an Authority Default,
the Authority shall pay to the Concessionaire, by way of
Termination Payment, an amount equal to
(a) Debt Due; and
(b) 150% (one hundred and fifty per cent) of the
Adjusted Equity.
37.3.3 Termination Payment shall become due and payable to
the Concessionaire within 15 (fifteen days of a demand being
made by the Concessionaire to the Authority with the
necessary particulars and in the event of any delay the
Authority shall pay interest at a rate equal to 3% (three per
cent) above the Bank Rate on the amount of Termination
Payment remaining unpaid; provided that such delay shall not
exceed 90 (ninety) days. For the avoidance of doubt, it is
expressly agreed that Termination Payment shall constitute
full discharge by the Authority of its payment obligations in
respect thereof hereunder
37.4. Other rights and obligations of the Authority
Upon Termination for any reason whatsoever, the Authority
shall:
(a) be deemed to have taken possession and control of the
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Project Highway forthwith;
(b) take possession and control of all materials, stores,
implements, construction plants and equipment on or
about the Site;
(c) be entitled to restrain the Concessionaire and any
person claiming through or under the Concessionaire from
entering upon the Site or any part of the Project;
(d) require the Concessionaire to comply with the
Divestment Requirements set forth in Clause 38.1; and
(e) succeed upon election by the Authority, without the
necessity of any further action by the Concessionaire, to
the interests of the Concessionaire under such of the
Project Agreements as the Authority may in its discretion
deem appropriate, and shall upon such election be liable to
the Contractors only for compensation accruing and
becoming due and payable to them under the terms of their
respective Project Agreements from and after the date the
Authority elects to succeed to the interests of the
Concessionaire. For the avoidance of doubt, it is hereby
agreed, and the Concessionaire hereby acknowledges, that
all sums claimed by such Contractors as being due and
owing for works and services performed or accruing on
account of any act, omission or event prior to such date
shall constitute debt between the Concessionaire and such
Contractors, and the Authority shall not in any manner be
liable for such sums. It is further agreed that in the event
the Authority elects to cure any outstanding defaults under
such Project Agreements, the amount expended by the
Authority for this purpose shall be deducted from the
Termination Payment."
44.3 Arbitration
44.3.1 Any dispute which is not resolved by conciliation, as
provided in Clause 44.2, shall be finally decided by reference
to arbitration by a Board of Arbitrators appointed in
accordance with Clause 44.3.2. Such arbitration shall be held
in accordance with the Rules of Arbitration of the
International Centre for Alternative Dispute Resolution, New
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Delhi (the "Rules"), or such other rules as may be mutually
agreed by the Parties, and shall be subject to the provisions of
the Arbitration Act. The venue of such arbitration shall be
Delhi, and the language of the arbitration proceedings shall be
English.
48.1 Definitions
"Appointed Date" means the date on which Financial Close is
achieved or an earlier date that the Parties may by mutual
consent determine, and shall be deemed to be the date of
commencement of the Concession Period;
"Adjusted Equity" means the Equity funded in Indian Rupees
and adjusted on the first day of the current month (the
"Reference Date"), in the manner set forth below, to reflect
the change in its value on account of depredation and
variations in WPI, and for any Reference Date occurring:
(a) on or before COD, the Adjusted Equity shall be
a sum equal to the Equity funded in Indian Rupees and
expended on the Project, revised to the extent of one
half of the variation in WPI occurring between the first
day of the month of Appointed Date and the Reference
Date;
(b) from COD and until the 4th (fourth) anniversary
thereof, an amount equal to the Adjusted Equity as on
COD shall be deemed to be the base (the "Base
Adjusted Equity") and the Adjusted Equity hereunder
shall be a sum equal to the Base Adjusted Equity,
revised at the commencement of each month following
COD to the extent of variation in WPI occurring
between COD and the Reference Date;
(c) after the 4th (fourth) anniversary of COD, the
Adjusted Equity hereunder shall be a sum equal to the
Base Adjusted Equity reduced by 0.28% (zero point
two eight per cent) thereof at the commencement of
each month following the 4th (fourth) anniversary of
COD and the amount so arrived at shall be revised to
the extent of variation in WPI occurring between COD
and the Reference Date;
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For the avoidance of doubt, the adjusted Equity shall, in the
event of Termination be computed as on Reference Date
immediately preceding the Transfer Date; provided that no
reduction in the Adjusted Equity shall be made for a period
equal to the duration, if any, for which the Concession Period
is extended, but the revision on account of WPl shall continue
to be made;"
Achieving Financial Close
14. On 31st March, 2010, the respondent wrote to NHAI stating that
it had achieved "financial close", within the meaning of Clause 24.1.2
of the CA. Thereafter, certain amendments in the financing agreement
were sought by NHAI, which were also effected by the respondent on
3rd September, 2010. Vide letter dated 20th October, 2010, addressed
to the respondent, NHAI acknowledged that the respondent had
achieved financial close on 3rd September, 2010, albeit as against the
Scheduled Date of Financial Close i.e. 18th August, 2010. This fact is
also acknowledged by NHAI in its written statement filed before the
learned Arbitral Tribunal, as has been noticed in the impugned Award.
The learned Arbitral Tribunal has, therefore, justifiably held that the
achievement of financial close, by the respondent, on 3 rd September,
2010 could not be disputed.
Sub-contract with IIDL and communications from IIDL
15. In the interregnum, the respondent, in turn, sub-contracted the
work to IIDL as the EPC contractor on 17th March, 2010, and
forwarded a copy of the EPC contract to NHAI on 31 st March, 2010.
IIDL, thereafter, addressed several communications to the respondent,
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inter alia on 20th April, 2010, 19th May, 2010, 11th June, 2010, 25th
August, 2010, 4th November, 2010, 8th December, 2010, 31st January,
2011, 4th April, 2011, 27th May, 2011, 13th July, 2011, 9th September,
2011, 18th November, 2011 and 1st December, 2011, stating that huge
expenses were being incurred as, owing to non-commencement of
work on the project, the resources that had been mobilised were lying
idle.
Demand for damages and the "Appointed Date"
16. Performance security, as required by Clause 4.1.3 (a) read with
Clause 9.1 of the CA was furnished, by the respondent, on 2nd August,
2010, within the time stipulated in that regard. On 20th October, 2010,
NHAI wrote to the respondent thus:
"NHAI/BOT/11012/46/2005/14734 20th October, 2010
To,
M/s IRB Goa Tollways Private Limited
IRB Complex
Chandivali Farm, Chandivali Village
Andheri (East), Mumbai - 400072
Fax 022-66751024
Sub; Four Laning of Goa/Karnataka Border to Panaji-Goa
stretch of NH-4A from Km 844+000 to Km 153+070 in the
State of Goa on BOT (Build, Operate and Transfer) Toll basis
on DBPO Pattern under NHDP Phase-III Appointed
Date/Financial Close-Reg.
Sir,
Please refer to various correspondences in connection
with Financial Close of subject project. In this contexts, it is
intimated that you have achieved the Financial Close as on
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03.09.2010 as against the Scheduled Date of Financial Close
i.e.18.08.2010 (180 days from the date of Concession
Agreement).
As per Clause 24.1.1 of the CA, the Concessionaire is
requested to deposit the applicable damages at the rate of
0.1% of the performance security for each day of delay.
In pursuant to above provision, you are requested to
deposit the requisite amount on priority at the rate of 0.1% of
the performance security for each day of delay w.e.f.
18.08.2010 till the date of the financial close i.e. 03.09.2010,
so that further action on fixation of Appointed Date can be
taken.
Yours faithfully,
Sd/-
(A.K. Sharma)
General Manager (Tech.)"
17. The respondent replied on 27th October, 2010, objecting to the
demand of NHAI to the respondent to pay damages under Clause
24.1.1, contending that the delay, if any, was owing to reasons not
attributable to the respondent. As such, the respondent requested
NHAI to waive the demand for damages, comply with the obligations/
Conditions Precedent cast on NHAI under Clause 4.1.2 of the CA and
declare the Appointed Date for the project.
18. Communications were also addressed by the respondent and by
IIDL to NHAI, stating that NHAI had not provided Right of Way, as
required by Clause 10.3.1 and 10.3.2 of the CA. This was reiterated
by IIDL vide letter dated 28th April, 2011, in which NHAI was again
put on notice that it had failed to grant Right of Way to the
respondent, as required by Clause 4.1.2 read with Clauses 10.3.1 and
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10.3.2 of the CA, as well as to provide applicable permits relating to
environmental protection and conservation of the site. As a result, it
was stated that NHAI had been unable to declare the Appointed Date
for the project. NHAI was, therefore, requested to expedite fulfilment
of the conditions precedent as they apply to it.
Appointment of Statutory Auditor
19. In the interregnum, vide letter dated 26th October, 2010, NHAI
concurred to the appointment of Dass Maulik Mahindra K. Aggarwal
& Co. as the statutory auditor for the project, in terms of Clause 33.2.1
of the CA. The statutory auditor, vide letter dated 12th April, 2011,
certified the aggregate project cost incurred till 31st March, 2011 to be
₹ 142.09 crores, of which ₹ 34.6 crores was sourced through equity
capital and ₹ 92.94 crores through unsecured loans.
Termination of CA
20. On 23rd November, 2011, the following communication was
addressed by NHAI to the respondent, terminating the CA:
"NHAI/BOT/11019/46/2008/1373 November 23, 2011
By Speed Post/Fax
M/s IRB Goa Tollway Private Limited
IRB Complex, Chandivali Farm,
Chandivali Village, Andheri (East),
Mumbai - 400072
Tel: 022-66404220
Fax 022-66751024
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Signing Date:21.02.2022
15:25:58
Kind Attn: Mr. D.K. Joshi, Director
Sub: Four Laning of Goa/Karnataka Border - Panaji Goa
Stretch of NHAI- 4A From Km 84.000 to km 153.070
in the State of Goa on BOT (Toll) Basis under NHDP
Phase III - Termination of Concession Agreement of
the Project
Ref: Your Letter No. IRBGTPL/CTO/OUT/1936/2011
dated 24/08/2011
Sir,
Please refer to the Concession Agreement signed on
19/02/2010 for the above subject project and to state that the
issues of Land Acquisition, Clearance of forest &
Environmental and disputes on Toll Rates is pending with the
Government of Goa for a long time and after persistent
persuasion with the Government of Goa, the matter is, stand
still.
Further, without resolving the above issues, there can
not be any progress on construction of said project.
2). In light of the above peculiar situation and best efforts
by NHAI, the Competent Authority had no other option but
constrained to terminate the said Concession Agreement as
per provisions provided in Article 37 of the Concession
Agreement and cancellation of the entire project. Thus the
Agreement is, hereby, terminated.
3) Accordingly; the 'Bank Guarantee No.
2915IGPER036910 dated 30/07/2010 for Rs. 23,55,00,000(.-
(Rupees Twenty Three Crores Fifty Five Lacs Only) issued by
Bank of Baroda, Mumbai in favour of NHAI, towards
Performance Security for the subject work is released
herewith.
4) You would appreciate that despite best efforts of NHAI
the project can not be started and your participation in the
bidding has been highly appreciated and any inconvenience is
regretted.
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Yours sincerely,
Sd/-
Anil Kumar Sharma
General Manager (Tech)
(Maharashtra & Goa Division)"
This letter does not admit of two interpretations. NHAI has, clearly
and umabiguously and without any equivocation whatsoever, admitted
the failure to commence the project to be attributable to its inability in
obtaining Governmental clearance, despite its best efforts. Somewhat
inexplicably, NHAI sought to contend, before the learned Arbitral
Tribunal as well as before me, that the termination was owing to
default of both NHAI and the respondent. The learned Arbitral
Tribunal, per majority, has rightly rejected this submission.
21. Following the aforesaid termination of the CA, the respondent
wrote to IIDL on 25th November, 2011, requesting it to de-mobilise its
resources, at the site.
Claim of respondent and invocation of arbitration
22. On 6th February, 2012, the respondent wrote to NHAI,
submitting its claim for ₹ 267.1245 crores and ₹ 4.71 crores under
Clause 37.3.2 and 4.2 of the CA. The details of the cost incurred as
certified by the statutory auditors were also enclosed therewith.
23. On NHAI failing to honour the aforesaid claim of the
respondent, the respondent issued a notice under Section 21 of the
1996 Act, invoking arbitration, on 25th November, 2013. Consequent
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thereto, by consent of parties, the disputes were referred to a three
member Arbitral Tribunal which has come to render the impugned
Award by a majority of two learned Arbitrators to one.
24. Reference to the "award", hereinafter, would denote the
majority award, as that is the ultimately enforceable award, and
subject matter of challenge.
The Award
25. It would be appropriate to summarise the impugned Award,
before proceeding to examine the challenge thereto.
Rival contentions of parties before the learned Arbitral Tribunal
26. At the outset, the learned Arbitral Tribunal set out the rival
stands of the parties before it. The respondent, as the claimant before
the learned Arbitral Tribunal, contended that it had fulfilled the
Conditions Precedent in Clauses 9, 24 and 47 of the CA, as (i)
Performance Security was given within the stipulated time, (ii)
financial close was achieved by it on 31st March, 2010, though it was
not contesting the stand of NHAI, in its letter dated 22nd October,
2010, as well as in the written statement filed before the learned
Arbitral Tribunal that financial close had been achieved by the
respondent on 3rd September, 2010 and (iii) by operation of Clause
48.1 of the CA, therefore, the Appointed Date was also 3rd September,
2010. The respondent contended, before the learned Arbitral Tribunal,
that NHAI had defaulted in providing the Right of Way as was
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required by Article 4.1.2 of the CA, till April 2011, which was more
than a year from the execution of the CA, during which period the
respondent's investment and resources remained idle. The respondent
also submitted that Clause 7.2 of the CA misrepresented, to the
respondent, that NHAI had good and valid right to the site, whereas, in
actual fact, NHAI had no Right of Way, as it had to approach the
Government of Goa in that regard. The respondent pointed out that
Clause 10.3.2 of the CA required NHAI, at or before the Appointed
Date, to grant vacant access and Right of Way to the site, which was
not done.
27. The respondent also assailed the termination of the CA, by
NHAI on 23rd November, 2011, as illegal. As such, before the learned
Arbitral Tribunal, the respondent contended that it was entitled to
damages under Clause 37.3.2 of the CA read with Section 73 of the
Indian Contract Act, 1872 ("the Contract Act").
28. Thus did the respondent lay, before the learned Arbitral
Tribunal, two claims, the first predicated on Clause 37.3.2 for 150% of
the Adjusted Equity, amounting to ₹ 267.21245 crores and the second
for damages towards delay in fulfilment of the Conditions Precedent
by NHAI.
29. NHAI contended, per contra, that financial close had never
taken place, as the respondent had failed to pay penalty/damages at the
rate of 0.1% of Performance Security for each day of delay in
achieving the financial close, as required by Clause 24.1.1 of the CA.
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It also disclaimed any liability to pay damages to the respondent,
citing force majeure. NHAI relied on Clause 4.1 of the CA to contend
that the rights and obligations of the parties under the CA was subject
to satisfaction of the Conditions Precedent, stipulated in the said
Clause.
30. It was further contended, by NHAI, that the CA was terminated
on account of non-fulfilment of Conditions Precedent by both parties
and that the termination was valid. As both parties had failed to
perform their Conditions Precedent, NHAI submitted that no
Appointed Date had been determined. NHAI's contention was that
merely achieving financial close did not amount to fixation of the
Appointed Date even on the date of achievement of financial close as
endorsed by NHAI. The respondent had failed, contended NHAI, to
fulfil the Conditions Precedent, cast on it by the CA, prior to the
Appointed Date and these Conditions Precedent had not been waived
by NHAI. As such, the contention of NHAI was that the Appointed
date had not reached till the termination of the CA by NHAI on 23 rd
November, 2011. As the Appointed Date had yet to reach, the
Concession Period had also yet to commence. NHAI also placed
reliance on Clause 34 of the CA to contend force majeure and
submitted that the CA had been terminated by NHAI on account of
failure, by both parties, to fulfil the Conditions Precedent, owing to
force majeure.
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Consideration by the learned Arbitral Tribunal
31. Having thus set out the rival stands of the parties before it, the
learned Arbitral Tribunal proceeded to examine the issues arising,
seriatim.
Financial Close
32. The learned Arbitral Tribunal first addressed the issue of
attainment of financial close. Clause 24.1.1 of the CA, it was noted,
recorded the undertaking of the respondent to achieve financial close
within 180 days from the execution of the CA, with an additional
permissible period of 120 days, subject to payment of damages to
NHAI @ 0.1% of the Performance Security per day. Clause 24.1.1
also exempted the requirement of payment of damages if delay in
achieving financial close was solely due to delay/default by NHAI in
satisfying the Conditions Precedent stipulated in Clause 4.1.2 of the
CA, or owing to force majeure.
33. NHAI had, it was noted, admitted, both in its letter dated 22 nd
October, 2010, as well as in the written statement filed before the
learned Arbitral Tribunal, that financial close had been achieved by
the respondent on 3rd September, 2010. On the ground that this was
beyond the period of 180 days from the execution of the CA, which
expired on 18th August, 2010, NHAI, vide its letter dated 20th October,
2010, called upon the respondent to deposit damages under Clause
24.1.1 @ 0.1% of the Performance Security per day of delay, so that
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further action for fixation of the Appointed Date could be taken. The
learned Arbitral Tribunal noted, however, in this regard, that (i) NHAI
did not deduct, from the Performance Security, any damages under
Clause 24.1.1, (ii) the quantum of damages was not stipulated in the
letter dated 20th October, 2010, (iii) no counter claim was preferred by
NHAI, seeking damages and (iv) Clause 24.2.2 exempted the
requirement of payment of damages where the delay in achieving
financial close had occurred solely on account of force majeure.
Inasmuch as NHAI was itself pleading force majeure, the learned
Arbitral Tribunal opined that it could not, very well, call upon the
respondent to pay damages.
34. In any event, these circumstances did not alter the fact that the
respondent had achieved financial close, admittedly at least on 3rd
September, 2010.
Appointed Date
35. The learned Arbitral Tribunal noted that Clause 48 of the CA,
plainly and simply read, stipulated, as the only precondition for
determining the Appointed Date, achievement of financial close, and
that no other condition or stipulation was contained in this regard.
The only circumstance in which Clause 48 envisaged any other
Appointed Date, was where the parties, by mutual consent, fixed an
earlier date as the Appointed Date. That had not taken place in the
present case.
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Signing Date:21.02.2022
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36. As financial close, even as per NHAI, had been achieved by the
respondent on 3rd September, 2010, the learned Arbitral Tribunal held
that, by operation of Clause 48 of the CA, the Appointed Date was
also 3rd September, 2010.
37. The communications exchanged between NHAI and the
respondent, the learned Arbitral Tribunal noted, indicated that both
parties were harbouring a misunderstanding regarding the Appointed
Date, presuming that the Appointed Date had yet to be fixed. This
misunderstanding, however, it was observed, could not alter the effect
of the contractual covenants contained in Clause 48. Clause 48 did not
provide for any determination of the Appointed Date by NHAI. The
Appointed Date automatically came into existence on achievement of
financial close. Having, therefore, admitted, both in its letter dated
22nd October, 2010, as well as in its written statement filed before the
learned Arbitral Tribunal, that financial close had been achieved by
the respondent on 3rd September, 2010, it was held that NHAI could
not contend that the Appointed Date had yet to reach, as damages
were not paid by the respondent under Clause 24.1.1.
Frustration due to force majeure
38. NHAI contended, before the learned Arbitral Tribunal, that as,
prior to the Appointed Date, force majeure had occurred (in the form
of the Government of Goa not granting approval as sought by NHAI)
and was known to the respondent earlier in point of time, it was not
entitled to any claim from NHAI, by virtue of Clause 34.7.1.
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39. The learned Arbitral Tribunal noted that force majeure was
defined in Clause 34. The CA envisaged force majeure on account of
occurrence of a political event, non-political event or an indirect
political event. In the circumstances of the present case, no non-
political event or indirect political event had occurred and the
stipulations to that effect in the CA were not, therefore, relevant.
40. Of the various sub-clauses in Clause 34.4, therefore, the learned
Arbitral Tribunal held that the only relevant sub-clause would be
Clause 34.4(c), if at all. This sub-clause applied only where clearance,
as required by the Concessionaire, i.e. the respondent, was not
granted. It was not applicable where NHAI had applied for
authorisation or clearance. The invocation of force majeure by NHAI
was not, therefore, it was held, valid.
41. Besides, noted the learned Arbitral Tribunal, Clause 34.5 cast,
on the party seeking to avail the benefit of force majeure, a duty to
report force majeure by way of notice under Clause 34.5.1, containing
the necessary particulars. Admittedly, no such notice had been given
by NHAI to the respondent. On this ground, too, therefore, the learned
Arbitral Tribunal held that NHAI could not claim the benefit of force
majeure.
42. Having thus held, the learned Arbitral Tribunal also noted that,
under Clause 37.3.1, NHAI was liable to reimburse force majeure
costs to the respondent.
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Signing Date:21.02.2022
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Termination of the CA
43. The learned Arbitral Tribunal next addressed the issue of
termination of the CA by NHAI.
44. Before the learned Arbitral Tribunal, NHAI placed reliance on
the indemnity, granted while submitting its bid in response to the NIT,
in the letter dated 20th July, 2009, indemnifying NHAI from damages
on account of delay in handing over the land. It was sought to be
contended that the CA had been executed, based on the said
undertaking.
45. The learned Arbitral Tribunal noted that no such undertaking
was contained in the CA itself. Moreover, observed the learned
Arbitral Tribunal, the claim of the respondent against NHAI under
Clause 37.3.2 arose out of termination of the CA by NHAI, and not
delay in handing over of land. In any event, once the CA had been
terminated, it was held that the undertaking lost all significance. The
CA had been terminated on 23rd November, 2011, after the
commencement of the Concession Period on 3rd September, 2010,
being the Appointed Day, when financial close had been achieved by
the respondent. The contention of NHAI that the Concession Period
had not yet commenced, as the Appointed Date had not been reached
before the termination of the CA was, therefore, found to be
untenable.
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Signing Date:21.02.2022
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Satisfaction of Conditions Precedent
46. NHAI sought to contend, before the learned Arbitral Tribunal,
that the respondent had not fulfilled the Conditions Precedent
stipulated in the CA. This, in fact, was also contended to be one of the
grounds on account of which the Appointed Date had not been
reached.
47. As against this, the respondent contended that NHAI had not
provided the Right of Way, as required by Clause 4.1.2 read with
Clause 10.3.2 of the CA, till April 2011.
48. NHAI, in its letter dated 13th June, 2012, addressed to the
Independent Engineer, stated thus:
"a) The Concession Agreement for the project has been
terminated under clause 37 due to non-fulfilment of
conditions precedent by both the parties i.e. Concessionaire
and NHAI. Reasons for non-fulfilment of a condition
precedent by both the parties may be the same and no support
from State Government."
This communication, noted the learned Arbitral Tribunal, admitted, in
so many words, non-fulfilment of the Conditions Precedent by NHAI.
It remains, therefore, to be decided whether the respondent was also
remiss in this regard. Needless to say, the respondent contended in
the negative.
49. The learned Arbitral Tribunal noted that the issue of the ground
on which the CA had been terminated by NHAI would essentially
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have to be determined by reading the termination letter, dated 23 rd
November, 2011, as it stood. This letter, it was found, was
unambiguous in acknowledging that the grounds for terminating the
CA was the failure, of the NHAI, to obtain land acquisition, clearance
of forested environment and settlement of disputes on toll rates
pending with the Government of Goa, despite its best efforts or on any
default on the part of the respondent. Nor did it seek to invoke force
majeure. In view thereof, the learned Arbitral Tribunal held that the
CA had not been terminated on account of any default on the part of
the respondent, and that the contention of NHAI, to this effect, was
misguided. In this context, the learned Arbitral Tribunal noted that
NHAI had not, in any of its communications to the respondent, or
even before the learned Arbitral Tribunal, clarified which condition
precedent was remaining to be fulfilled by the respondent. The
learned Arbitral Tribunal also sought support, for these conclusions,
from the fact that no amount was deducted, by NHAI, from the Bank
Guarantee for ₹ 23.55 crores, furnished by the respondent, at the time
of releasing the said Bank Guarantee.
Respondent's claim for damages
50. The learned Arbitral Tribunal held that, having terminated the
CA on account of its own default, NHAI was bound by the
consequences of the said act. It was noted that the respondent had,
vide its letters dated 23rd December, 2011 and 5th December, 2011, put
NHAI on notice that it would be claiming damages.
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Digitally Signed
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Signing Date:21.02.2022
15:25:58
Analysis of Claims
51. Having thus set out the rival contentions of the parties before it,
and expressed its views thereon, the learned Arbitral Tribunal
proceeded to deal with the two individual claims of the respondent.
Re. Claim 1
52. Addressing Claim 1 of the respondent, the learned Arbitral
Tribunal noted that, in its communications dated 13 th April, 2011, 14th
July, 2011 and 2nd August, 2011, the respondent had noticed the
expenses which it had incurred as a result of non-commencement of
work. This, it was observed, was supported by the certificate, dated
31st March, 2011, of the Statutory Auditor's, to the effect that the
respondent had incurred a cost of ₹ 142.9 crores on the project.
53. The learned Arbitral Tribunal noted that Clause 37.3.2 of the
CA stipulated the method for determination of damages in the event of
termination of the CA on account of default of NHAI. This clause
entitled the respondent, in such events, to be paid the debt due and
150% of the Adjusted Equity. The entitlement of the respondent, to
these amounts, also stood vouchsafed by the Section 73 of the
Contract Act1. Of these, the respondent was not claiming, before the
1 "73. Compensation for loss or damage caused by breach of contract. - When a contract has been
broken, the party who suffers by such breach is entitled to receive, from the party who has broken the
contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual
course of things from such breach, which the parties knew, when they make the contract, to be likely to result
from the breach of it.
Such compensation is not to be given for any remote an indirect loss or damage sustained by reason
of the breach."
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learned Arbitral Tribunal, the amount payable to it by way of Debt
Due, but was claiming 150% of Adjusted Equity. NHAI sought to
contend that the equity bought could not be used, as no work had
commenced at their site and that, therefore, 150% thereof would be
nil.
54. The definition of "Adjusted Equity", as contained in Clause 48
of the CA, to the extent it was relevant, read as under:
" "Adjusted Equity" means the equity funded in Indian rupees
and adjusted on the 1st day of the current month (the
"Reference Date"), in the manner set forth below, to reflect
the change in its value on account of depreciation and
variations in WPL, and for any Reference Date occurring:
(a) On or before COD2, the adjusted Equity shall be
a sum equal to the equity funded in Indian Rupees and
expended on the project, revised to the extent of one
half of the variation in WPI occurring between the 1st
day of the month of Appointed Date and the Reference
Date;
*****
For the avoidance of doubt, the Adjusted Equity shall, in the
event of Termination, be computed as on the Reference Date
immediately preceding the Transfer Date; provided that no
reduction in the Adjusted Equity shall be made for a period
equal to the duration, if any, for which the Concession Period
is extended, but the revision on account of WPI shall continue
to be made."
The learned Arbitral Tribunal noted that, as operations were yet to
commence, there was no "Commercial Operation Date" and that,
therefore, sub- clause (a) of Clause 48 of the CA3 alone was relevant.
2
Commercial Operation Date (as per Clause 48 of the CA)
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55. The Statutory Auditors as appointed by the respondent with the
consent and approval of NHAI and had certified the cost incurred by
the respondent on the project to be ₹ 164.91 crores up to 9th
December, 2011. This certificate, observed the learned Arbitral
Tribunal, was valid and effective, in view of Clause 33.3 of the CA,
already reproduced supra. The respondent, in fact, vide letter dated
24th August, 2015, which was also vouchsafed by the Statutory
Auditor and the Chartered Accountant of the respondent, reduced the
cost incurred up to 21st August, 2015 from ₹ 164.91 crores 2 ₹ 130.92
crore. No objection, to this computation, had been raised by NHAI.
56. Thereafter, the learned Arbitral Tribunal proceeds to conclude,
qua Claim 1 of the respondent, thus:
"131. The aforesaid amount of ₹ 130.92 crores has to be
further calculated as per the definition of "Adjusted Equity".
According to the said definition, the said amount of ₹ 130.92
crores has to be "revised to the extent of one half of the
variation in WPI occurring between the 1st day of the month
of Appointed Date and the Reference Date".
132. As per the calculation given by the Statutory Auditors
the one half of the variation in WPI occurring between the 1st
day of the month of Appointed Date and the Reference Date
is 7.9882%; ₹ 13.69 crores (₹ 212.07 as claimed minus ₹
198.38) (see page 38 of the Claimants revised documents).
However, the Statutory Auditors have not given any method
for its calculation or for arriving at the said percentage
amount. He has only mentioned WPI of 1-Mar-10 - 135.20
and 31-Oct-11 - 156.80 and calculated the difference between
the said 2 figures. This is not sufficient. The Arbitral
Tribunal requires complete details before any amount may be
awarded. Hence, this cannot be taken into consideration.
133. Therefore, the Concessionaire/Claimants are entitled to
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a sum of Adjusted Equity amounting to ₹ 130.92 crores + ₹
65.46 crores (being 50% of the Adjusted Equity) = ₹ 196.38
crores. The same is awarded to the Claimants."
Re. Claim 2
57. Claim 2, as raised by the respondent, was for an amount of ₹
4.71 crores, towards damages sustained on account of delay by NHAI
in providing Right of Way as provided for under Clause 10.3.2 read
with Clause 4.1.2 of the CA. Clause 4.2 of the CA was invoked by the
respondent for the said purpose. The respondent contended that
Clause 4.1.2 required NHAI to satisfy all Conditions Precedent within
60 days of providing of Performance Security by the respondent.
Performance Security had been provided by the respondent on 2nd
August, 2010. 60 days, therefrom, expired on 10 th October, 2010. As
NHAI had failed to provide Right of Way by the said date, the
respondent claimed damages in terms of Clause 4.2 of the CA.
58. As against this, NHAI contended that the respondent had failed
to fulfil its contractual obligations under the CA.
59. The learned Arbitral Tribunal observed that no specific
contractual obligation, which remained to be fulfilled by the
respondent, had been pointed out by NHAI. The defence of NHAI
was, therefore, rejected as unsustainably general and vague.
60. Resultantly, the learned Arbitral Tribunal awarded, to the
respondent, the claim of ₹ 4.71 crores.
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Signing Date:21.02.2022
15:25:58
Interest
61. Interest, held the learned Arbitral Tribunal, was payable in
terms of Clause 37.3.3 of the CA, read with Clause 47.4.2 thereof. As
the dispute pertained to the years 2010 and 2011, at which time Bank
rate of interest was in the region of 12% per annum, the learned
Arbitral Tribunal held the respondents to be entitled to interest, on the
amounts found payable to it, @ 12% per annum.
Operative portion
62. The learned Arbitral Tribunal, in para-143 of the majority
award, summed up its conclusions thus:
"(a) In respect of claim No. 1, the claim for a sum of ₹
196.38 crores is allowed.
(b) Interest from the date of termination of the Concession
Agreement, that is, November 23, 2011 at the rate of 12% per
annum till the date of award, that is 29 February 2016 (for 4
years and 3 months) amounting to ₹ 1,001,538,000/- is
allowed.
(c) In respect of claim No. 1, the claim for a sum of ₹
15.69 crores is rejected.
(d) In respect of claim No. 2, the claim for a sum of ₹
4,71,00,000/-is allowed.
(e) Interest from the date of the demand of the Right of
way, that is, April 27, 2011 at the rate of 12% per annum till
the date of award, that is, 29th February, 2016 (for 4 years and
10 months) amounting to ₹ 27,318,000/- is allowed.
(f) The claimants have also paid, as per their letter dated 9
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September 2015 arbitration venue charges and other expenses
for 10 hearings amounting to ₹ 90,426. The Claimants are
entitled to 50% of the said fees and expenditure amounting to
₹ 45,213. The same is allowed to the Claimants.
(g) Thus, the Respondents are liable to pay to the
Claimants a total sum of ₹ 3,039,801,213. The said amount
shall be paid within 30 days from the date of receipt of this
Award. If the Respondents failed to pay the same, the
Respondents shall be liable to pay interest at the rate of 12%
on the total amount of ₹ 3,039,801,213 from the date of The
award till the date of payment.
(h) All other claims and counter claims, if any, not
specifically dealt with herein shall be treated as rejected.
(i) The Parties to bear their own cost of these arbitration
proceedings."
Rival Contentions
63. I have heard Mr. S. Nandakumar, learned Counsel for NHAI
and Mr. Saurabh Kirpal, learned Senior Counsel for the respondent, at
length.
64. Arguing for NHAI, Mr. S. Nandakumar essentially raises the
same grounds which were raised by NHAI before the learned Arbitral
Tribunal and were rejected. He submits that having, in its letter dated
20th July, 2009, whereby LoA was sought, indemnified NHAI from
any damages on account of delay in signing of the CA or in acquiring
the land, the respondent (of which IIDL was, according to Mr.
Nandakumar, a mere alter ego) would not claim damages from NHAI.
Secondly, Mr. Nandakumar submits that, prior to payment of damages
@ 0.1% of performance security for each day of delay in achieving
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financial close beyond 180 days from the date of signing of the CA,
the Appointed Date could not be said to have been reached. In this
context, he drew my attention to the communication dated 20 th
October, 2010, from NHAI to the respondent (reproduced in para 16
supra), which concluded with the request to the respondent to deposit
damages @ 0.1% of performance security for each day of delay in
achieving financial close beyond 180 days from the date of signing of
the CA, in terms of Clause 24.1.1, without delay, "so that further
action on fixation of Appointed Date can be taken". The respondent
not having complied with the request contained in the aforesaid letter
dated 20th October, 2010, Mr. Nandakumar submits that the Appointed
Date was never fixed by the NHAI. He has invited my attention, in
this context, to Clause 4.1.3, which set out the Conditions Precedent,
required to be fulfilled by the respondent. To a query from the Court,
as to how, in the face of the definition of "Appointed Date", as
contained in the CA, it could be said that, till the respondent paid
damages under Clause 24.1.1, the Appointed Date had not yet been
reached, Mr. Nandakumar invited my attention to the communications
between NHAI and the respondent, which indicate, prima facie, that
both NHAI and the respondent were of the opinion that the Appointed
Date was required to be fixed by NHAI. That, Mr Nandakumar
emphasizes, never took place.
65. Addressing, next, the issue of termination, Mr. Nandakumar,
referring to the notice of termination dated 23rd November, 2011,
issued by NHAI to the respondent, submits that the CA was
terminated by NHAI on account of default by NHAI as well as of the
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respondent.
66. Mr. Nandakumar also invoked force majeure, under Clause
34.4(c) of the CA, to contend that, by operation of the said clause,
NHAI was indemnified of the need to pay any damages to the
respondent, the failure in obtaining approvals from the Government of
Goa, constituting, as it were, force majeure within the meaning of
Clause 34.4(c) of the CA.
67. Considerable emphasis was laid, by Mr. Nandakumar, on the
fact that the respondent had not even commenced work. He submits
that the impugned Award results in a windfall to the respondent, as,
without doing a day's work, the respondent has become richer by ₹
303 crores. He submits that the learned Arbitral Tribunal erred in
failing to notice that damages could only be relatable to the costs
incurred by the respondent and, without commencing work, it could
not be said that the respondents had incurred any costs at all.
68. Mr. Nandakumar submits that, as the CA stood terminated
prior to the Appointed Date being reached, owing to force majeure
events, the claims of the respondent were misconceived. Besides, he
reiterates, without paying damages in accordance with Clause 24.1.1,
it could not be said that the Appointed Date had been reached.
69. Apropos the aspect of quantification of Claim No. 1, though the
petition does not raise any challenge to the impugned Award on that
ground, NHAI has placed brief written submissions on record, which
were reiterated by Mr. Nandakumar. The said submissions, too, do
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not question, in any manner, the propriety of the quantification of
Claim 1 by the majority Award of the learned Arbitral Tribunal.
Instead, the petitioner has merely sought to place reliance on the
following findings in the minority Award, on the aspect of entitlement
of damages under Clause 37.3.2. of the CA:
"7. The Respondent is seeking compensation under the
following heads:
EPC Contractor (Idling): 75.360 crore
Fixed Overheads: 31 crore
Design Supervision: 0.828 crore
Preliminary and Pre-operative Expenses: 8.516 crore
Interest During Construction: 15.216 crore
TOTAL: 130.92 Crore
That accordingly, 150% adjust equity determined with interest
by the Majority Award. But the dissenting Award delivered
by the Dr. B.P. Bagish has stated in their Award that,
"I have examined the above figures without adjustment
of equity.
I have come to a conclusion that idling of EPC
Contractor is not payable by the respondent as per
agreement. Moreover, there is nothing on record to
prove that the claimant has incurred this expenditure
and paid to EPC. Under Section 73 of the contract only
actual losses can be compensated.
Fixed overheads will also be not payable because the
claimant is under duty to mitigate losses when the right
of way is not available to him. Only design charges and
pre-operative expenses are payable to him if there is
proof. Thus, the claim can be entertained." "
70. On Claim 2, the only submission advanced by Mr. Nandakumar
is that this claim was effectively included in Claim 1 and that,
therefore, it could not be separately awarded.
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71. No submissions were advanced with respect to awarding of
interest by the learned Arbitral Tribunal.
72. Responding to the submissions of Mr. Nandakumar, Mr. Kirpal,
learned Senior Counsel for the respondent submits that, under Clause
34.9.3 of the CA supra, where termination was on account of a
political event, NHAI was required to make termination payment to
the concessionaire, as would be payable under Clause 37.3.2 as if it
were a default on the part of NHAI. As such, he submits, the entire
issue of force majeure was merely a red herring, as the NHAI was
pleading force majeure on the basis of a political event, in which case,
by operation of Clause 34.9.3, the respondent would in any event be
entitled to the benefit of Clause 37.3.2.
73. On the aspect of indemnity in the letter dated 20 th July, 2009,
Mr. Kirpal points out that the concluding paragraph of the said letter
makes it clear that the indemnity remained in place only till signing of
the CA. It was an indemnity granted for delay in signing of the CA.
Once the CA stood signed on 19th February, 2010, without any
corresponding indemnity clause, Mr. Kirpal submits that NHAI could
not claim indemnity on the basis of the letter dated 20 th July, 2009.
74. Insofar as the quantification of Claim 1, by the learned Arbitral
Tribunal, was concerned, Mr. Kirpal submits that no dispute,
regarding quantification, was ever raised before the learned Arbitral
Tribunal or has been raised in the present petition under Section 34 of
the 1996 Act. NHAI, therefore, he submits, is estopped from raising
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any dispute regarding quantification at this stage.
75. That apart, Mr. Kirpal submits that the learned Arbitral Tribunal
had proceeded on the basis of the certificate issued by the statutory
auditor. The statutory auditor was appointed with the consent of the
NHAI in terms of Clause 33.2.1 of the CA. Clause 33.2.1, as the
learned Arbitral Tribunal rightly held, made the certificate of the
statutory auditor valid and binding. Mr. Kirpal further points out that
the incurring of cost by the respondent of ₹ 130.92 crores also stood
certified by the Chartered Accountant of the respondent vide letter
dated 24th August, 2015. Supportive invoices, issued by IIDL have
also been placed on record.
76. Mr. Kirpal contests the submission, of Mr. Nandakumar, that, as
the respondent had been unable to commence work, it could not have
incurred any costs. He submits that costs have been incurred, by the
respondent, on the efforts made by it to mobilise resources, which had
continued to remain idle for want of commencement of work. This, he
submits, stands vouchsafed by the letters on which the learned Arbitral
Tribunal itself relied. The contention of Mr. Nandakumar that, as
work on the project had not commenced, no expenses had been
incurred by the respondent is, therefore, according to Mr. Kirpal,
thoroughly misconceived. He had invited my attention, in this
context, to the following passages, from the letters dated 2 nd April,
2011 and 24th August, 2011 issued by the respondent to NHAI:
Letter dated 2nd April, 2011
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"For your information, the EPC Contractor has already been
mobilized by us to take up the construction Works for the
project and we wish to assure you that once these critical
issues listed above are sorted out by NHA1, we will be in a
position to quickly proceed with the mobilization of plant &
Machinery and manpower, finalization of quarries for which,
preliminary surveys have already been carried Out, and
setting up of Camps. As you are aware, drawings for bridges
have already been submitted to you for review, Plan & Profile
drawings are also ready for the entire length of the project
road and will be submitted to you very soon."
Letter dated 24th August, 2011
"We once again request you to expedite the negotiations with
the State Government and issue us the Appointed Date for the
Project since our Manpower and Machinery are ready since
the last one year to start the work."
(emphasis supplied)
Analysis
77. The position in law, as regards the scope of interference by a
Court, exercising jurisdiction under Section 34 of the 1996 Act, with
an arbitral award is, by now, fossilised through a number of judicial
authorities, of which one may take due stock of the judgments in
Sangyong Engineering & Construction Co. Ltd v. N.H.A.I.4 and
Delhi Airport Metro Express Pvt Ltd v. D.M.R.C.5 These decisions
clearly hold that the Court, exercising jurisdiction under Section 34, is
to interfere only in cases of "patent illegality" or perversity in the
Award under challenge. Mistakes of fact or law, or the predilection of
the Section 34 Court to incline to a view contrary to that expressed by
4 (2019) 15 SCC 131
5 (2022) 1 SCC 131
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the Arbitral Tribunal, cannot constitute a basis for interference. The
Section 34 Court does not substitute its subjective view in place of the
view of the Arbitral Tribunal.
78. The present case, however, is one where the Court does not
really have to invoke the law laid down in these decisions, as the
reasoning and finding of the learned Arbitral Tribunal is eminently
acceptable even as per the terms of the CA, and the contentions of
NHAI, to the contrary, as raised before the Arbitral Tribunal and as
reiterated before this Court, have rightly been rejected in the
impugned Award.
79. Inasmuch as the reasoning in the impugned Award, regarding
the entitlement of the respondent to damages in accordance with
Clause 37.3.2 of the CA, completely commends itself to acceptance by
this Court, a brief recapitulation thereof would be more than sufficient.
80. The reliance, by Mr. Nandakumar, on the letter dated 20 th July,
2009 from IIDL to NHAI, and the reference, in the said
communication, to the indemnity granted to NHAI, is completely
misconceived. In the first place, the stipulations in the letter
exhausted themselves with the execution of the CA. Once the CA
stood executed, any indemnity would have to be in terms of the CA
and not outside it. There is, as the learned Arbitral Tribunal correctly
holds, no corresponding indemnity clause in the CA.
81. That apart, the provision for indemnity, in the letter dated 20 th
July, 2009, was only "for any delay caused with respect to signing of
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Concession Agreement due to delay arising out of completion of 3D
process for 80% land acquisition". The learned Arbitral Tribunal
correctly holds that Clause 37.3.2, under which the respondent was
seeking damages, was not on account of delay in signing of the CA,
but on account of termination of the CA on the ground of NHAI
default. The claim of the respondent, which was relatable to Clause
37.3.2 had, therefore, nothing to do with the indemnity granted by the
letter dated 20th July, 2009. Expressed otherwise, the letter dated 20th
July, 2009, does not indemnity NHAI from its liability under Clause
37.3.2 of the CA - which had, moreover, not even been executed at
that point of time.
82. The reliance on the letter dated 20th July, 2009, by NHAI, is,
therefore, fundamentally misconceived, and has been rightly rejected
by the learned Arbitral Tribunal.
83. The learned Arbitral Tribunal has also correctly noted that
NHAI and the respondent were both, apparently, harbouring a
misconception regarding the fixation of the "Appointed Date". The
definition of "Appointed Date", as contained in the CA, is clear and
categorical. The Appointed Date is the date on which financial close
is achieved or any earlier date that the parties may by mutual consent
determine. The definition also deems the Appointed Date to be the
date of commencement of the Concession Period. It is not in dispute
that no date, prior to achievement of financial close by the respondent,
was fixed by the parties by mutual consent. As such, per definition,
the date of achievement of financial close was the Appointed Date.
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84. NHAI, both in its letter dated 22nd October, 2010, as well as in
their written statement filed before the learned Arbitral Tribunal,
admitted that the financial close had been achieved by the respondent,
on 3rd September, 2010. The finding of the learned Arbitral Tribunal
that, in view of the said admission, it could not lie in the mouth of
NHAI to contend otherwise and that financial close had necessarily to
be treated as having been achieved by the respondent on 3rd
September, 2010 is, therefore, clearly unexceptionable. By definition,
therefore, 3rd September, 2010 became the Appointed Date within the
meaning of the CA. The finding of the learned Arbitral Tribunal, in
this regard, is also perfectly in order, and the reliance by Mr.
Nandakumar on the communications exchanged before the parties
which betrayed confusion regarding the fixing of the Appointed Date
is completely without merit.
85. The grievance, repeatedly voiced by Mr Nandakumar, about the
respondent never having commenced work is also, in the
circumstances, misconceived. The Commencement Date was, per
definition in the CA, the Appointed Date. Though the Appointed Date
stood fixed with the achievement of financial close by the respondent,
NHAI never disabused the respondent in that regard. Rather, NHAI,
perhaps bona fide, kept writing to the respondent, calling on the
respondent to accede to its requests, so that it could fix the Appointed
Date. The learned Arbitral Tribunal has correctly held that these
communications were without basis, as the CA does not even
obliquely contemplate fixation or determination of the Appointed Date
by NHAI. Having, thus, kept the respondent under the impression that
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the Appointed Date had yet to be "fixed" by NHAI, and given the fact
that the Concession Period, per definition in the CA, commenced with
the Appointed Date, NHAI can hardly fault the respondent for not
having commenced work. Rather, the communications from the
respondent to NHAI in this regard betray considerable anxiety on this
score, as the resources mobilized by the respondent were idling.
86. Proceeding, now, to the aspect of termination of the CA, the
letter, dated 23rd November, 2011, whereby NHAI terminated the CA,
is also clear in its terms. It is obvious from a plain reading of the said
letter that the CA was terminated only on the ground that, despite its
best efforts, NHAI was not able to source the requisite approvals from
the Government of Goa. The submission of Mr. Nandakumar to the
effect that the termination was on the ground of default on the part of
NHAI as well as on the part of the respondent merely requires to be
stated to be rejected, as it is directly in the teeth of the recitals
contained in the letter of termination dated 23 rd November, 2011. The
learned Arbitral Tribunal has correctly held that termination was only
on the ground of default on the part of NHAI and that there is not even
a whisper of an averment in the letter dated 23 rd November, 2011 of
the termination being attributable to any default on the part of the
respondent.
87. The sequitur, in the form of Clause 37.3.2, had inexorably to
follow. Clause 37.3.2 clearly holds that, were the CA to be terminated
on the ground of "Authority default", i.e. on the ground of default on
the part of NHAI, the Concessionaire, i.e. the respondent, is entitled to
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the "Debt Due" alongwith 150% of the Adjusted Equity. This is an
absolute dispensation in the CA, which brooks no exception or
relaxation whatsoever. The termination of the CA being solely on the
ground of NHAI default, the respondent was, by operation of Clause
37.3.2 entitled, ipso facto, to the Debt Due as well as 150% of
Adjusted Equity. The respondent not having claimed the debt due, the
learned Arbitral Tribunal cannot be faulted for having held the
respondent entitled to 150% of the Adjusted Equity.
88. In that view of the matter, the entire grievance, voiced by Mr.
Nandakumar, regarding the respondent having defaulted in paying
damages @ 0.1 % per day for delay in achieving financial close, under
Clause 24.1.1, completely loses significance. Clause 24.1.1 does not
make achievement of financial close conditional on the said payment.
In any event, once the NHAI had itself acknowledged that financial
close stood achieved by the respondent on 3rd September, 2010, the
achievement of financial close could not be made conditional on
payment of damages by NHAI.
89. NHAI, arguendo, may have had a case for claiming damages by
way of a counter claim. The learned Arbitral Tribunal has correctly
held that no such counter claim was preferred by it. It is too late in the
date, therefore, for NHAI to now complain that the respondent did not
pay damages as required by Clause 24.1.1.
90. Financial close having been achieved by NHAI on 3rd
September, 2010 which, therefore, was the Appointed Date within the
meaning of the CA, and the contract having been terminated after the
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Appointed Date on the ground of default on the part of NHAI, the
learned Arbitral Tribunal was entirely justified in awarding, to the
respondent, 150% of Adjusted Equity, under Clause 37.3.2 of the CA.
91. Mr Nandakumar also pleads force majeure and invokes, for the
purpose, Clause 34.4(c) of the CA. It is apparent, at a bare glance of
the said provision, that it has no application whatsoever. Clause
34.4(c) at the cost of repetition, reads thus:
"34.4 Political Event
A Political Event shall mean one or more of the following acts
or events by or on account of any Government
Instrumentality:
****
(c) unlawful or unauthorised or without jurisdiction
revocation of, or refusal to renew or grant without
valid cause, any clearance, licence, permit,
authorisation, no objection certificate, consent,
approval or exemption required by the Concessionaire
or any of the contractors to perform their respective
obligations under this Agreement and the Project
Agreements; provided that such delay, modification,
denial, refusal or revocation did not result from the
Concessionaire's or any Contractor's inability or failure
to comply with any condition relating to grant,
maintenance or renewal of such clearance, licence,
authorisation, no objection certificate, exemption,
consent, approval or permit;"
92. On its plain reading, Clause 34.4(c) applies in the case of
failure, on the part of the authorities, to grant authorization, etc., as
required by the Concessionaire or any of the contractors to perform
their respective obligations. It does not, therefore, apply where the
default in granting approval was consequent on a request made by
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NHAI. Had there been a default in grant of approval consequent to a
requirement of the respondent, Clause 34.4(c) may have applied. The
delay in approval by the Government of Goa being in response to a
request made by NHAI, Clause 34.4(c) has been rightly held by the
learned Arbitral Tribunal to have no application whatsoever.
93. Though, in view of this contractual position, the plea of force
majeure does not really survive for consideration. I also find myself
in agreement with the learned Arbitral Tribunal that, having failed to
issue prior notice as required by Clause 34.5 of the CA, the NHAI
could, in any event, not plead force majeure.
94. There is also substance in the contention of Mr. Kirpal that, by
operation of Clause 34.9.3, where the termination was on account of a
political event, NHAI would make a termination payment to the
Concessionaire in an amount payable under Clause 37.3.2 as if it were
a default on the part of the NHAI. This, in fact, reinforces the
position that Clause 34.4(c) applies only where the default was in
granting approval as sought by the Concessionaire, i.e. by the
respondent. Clause 34.4(c), in conjunction with Clause 34.9.3, is
reflective of the contractual intent. What is intended by these clauses,
seen vis-à-vis and in conjunction, is that, where the Concessionaire
applies for grant of statutory approval from the governmental
authorities, and the governmental authorities fail in granting such
statutory approval, it would be treated as a "political event" for which
the Concessionaire cannot be held responsible and, in such event,
Clause 34.9.3 compensats the Concessionaire by making NHAI liable
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to pay the Concessionaire as though it were an "Authority default"
under Clause 37.3.2.
95. The invocation by NHAI, of force majeure was, therefore,
thoroughly misconceived.
96. For all the aforesaid reasons, no infirmity whatsoever can be
found, in the decision of the learned Arbitral Tribunal, that the
respondent was entitled to 150% of Adjusted Equity in terms of
Clause 37.3.2 of the CA.
97. Apropos the aspect of computation, Mr. Kirpal is correct that,
not having raised any dispute regarding computation either before the
learned Arbitral Tribunal or even before this Court in its Section 34
petition, NHAI cannot seek to argue in Court that the computation
was erroneous. Section 34 of the 1996 Act6 envisages setting aside of
6
"34. Application for setting aside arbitral award. -
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside
such award in accordance with sub-section (2) and sub-section (3)
(2) An arbitral award may be set aside by the Court only if--
(a) the party making the application 1 [establishes on the basis of the record of the arbitral tribunal that]--
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing
any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of
the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on matters beyond the scope of the submission to
arbitration:
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the
agreement of the parties, unless such agreement was in conflict with a provision of this Part from which
the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that--
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time
being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be
set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the
award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by
reappreciation of evidence.]"
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the arbitral award on grounds to be pleaded by the applicant [Section
34(2)(a)] or as found by the Court [Section 34(2)(b) and Section 34(2-
A)]. No doubt, "patent illegality", as a ground to set aside the award,
finds mention in Section 34(2-A). That, however, does not mean that
the Court can proceed to interfere with the award consequent on a suo
motu exercise, sans any plea to that effect by either part, of seeking to
ferret out errors in the award. Such an approach would stand
discountenanced by Section 34(1), which permits setting aside of an
arbitral award only on an application by the aggrieved party. The
grounds for setting aside the award have, therefore, to be pleaded by
the party so praying before the Court, in its application under Section
34(1). Once such grounds are pleaded, and the Court finds them to be
made out, the Court would proceed to set aside the award. De hors
and in excess of the grounds urged in the Section 34 petition,
therefore, the Court would be acting in excess of its jurisdiction if it
were to set aside the award. Even if "patent illegality" were the
ground cited for setting aside the arbitral award, the basis for urging
"patent illegality" has to be forthcoming in the Section 34(1)
application. The challenger would remain bound by the contents
thereof, and the pleas raised therein.
98. That apart, even during arguments and in written submissions,
NHAI has provided no ground whatsoever to discountenance the
manner in which the learned Arbitral Tribunal has computed the
Adjusted Equity. The only reliance placed is on a paragraph from the
decision of the descending member, which computes the Adjusted
Equity without adjustment.
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99. "Adjusted Equity", per definition, was relatable to the costs
incurred by the respondent in the project. This costs incurred stood
certified by the statutory auditor. The statutory auditor had been
appointed with the concurrence of the NHAI in terms of Clause 33.2.1
of the CA. The certification of the claim by the statutory auditor was
also accorded contractual sanctity in Clause 33.3 of the CA. That
apart, the claim of the respondent also stood certified by the
respondent's own Chartered Accountant, vide Certificate dated 9th
December, 2011. No attempt was made by NHAI, before the learned
Arbitral Tribunal, to question the correctness of the certification either
by the statutory auditor or by the Chartered Accountant.
100. If, therefore, the learned Arbitral Tribunal proceeded on the
basis of the certificate of the Statutory Auditor and the Chartered
Accountant of the respondent in awarding Claim 1, no "patent
illegality" can be said to have been committed.
101. Having said that, there does appear to be some want of clarity
in the manner in which the learned Arbitral Tribunal has, in para 133
of the impugned award, proceeded to hold the respondent entitled to ₹
196.38 crores, after rejecting the calculation given by the statutory
auditor in para 132. That, however, would have been an issue for the
NHAI to raise either before learned Arbitral Tribunal or before this
Court. It has not chosen to do so. No objection to the said finding of
the learned Arbitral Tribunal is contained either in the Section 34
petition or in the written submissions filed by the NHAI before this
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Court, or even in the oral arguments advanced at the bar by Mr.
Nandakumar. No occasion for the respondent to explain this aspect,
therefore, arose either. Even if it did, an excursive exercise into this
issue, by the Court, might teeter perilously on the edge of the
provisory precipice in Section 34(2A), which proscribes setting aside
of an arbitral award by reappreciating evidence.
102. Given the limited scope of the jurisdiction of this Court vested
in it by Section 34 of the 1996 Act, no occasion arises for this Court to
revisit the said findings of the learned Arbitral Tribunal on the basis of
the case set up by NHAI before this Court.
103. In view thereof, the challenge, by NHAI, to the award of the
learned Arbitral Tribunal, qua Claim 1 in the impugned award, has
necessarily to be rejected.
104. Claim 2, as raised by the respondent before the learned Arbitral
Tribunal, was on the ground predicated on Clause 4.2 of the
Concession Agreement, which envisaged payment of damages by
NHAI for delay in fulfillment of the conditions precedent set out in
Clause 4.1.2 of the CA, not attributable to force majeure.
105. There appears to be substance in the contentions of Mr.
Nandakumar that, having awarded damages to the respondent under
Clause 37.3.2, which was also attributable to termination on the
ground of default on the part of the NHAI in fulfilling its contractual
obligations within the stipulated time, the learned Arbitral Tribunal
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could not, all over again, award damages on the ground of default in
providing Right of Way within the period stipulated in the CA. This
finding, on the part of the learned Arbitral Tribunal, thus, prima facie,
amounts to a doubling of the damages awarded to the respondent. The
learned Arbitral Tribunal does not appear to have noticed this fact.
106. In view thereof, I am of the opinion that, having awarded Claim
1 to the respondent under Clause 37.3.2 of the CA, the learned
Arbitral Tribunal was in patent error in again awarding damages to the
respondent, albeit under Clause 4.2 of the CA, which was again
attributable to delay on the part of the NHAI.
107. The respondent cannot be permitted to be enriched twice over
for the same default on the part of the NHAI.
108. In view thereof, the award of the learned Arbitral Tribunal, qua
Claim 2 as raised by the respondent, cannot, in my view, sustain on
facts or in law. It deserves, accordingly, to be set aside.
Conclusion
109. In view of the aforesaid discussion, the impugned award is
upheld to the extent it awards Claim 1, both with respect to the
principal amount as well as the amount of interest awarded thereon,
but is set aside qua Claim 2. As the two claims are severable, it is
open to this Court in exercise of Section 34 jurisdiction to uphold the
award qua one claim and set it aside qua the other, in view of the law
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laid down in M. P. Power Generation Co. Ltd v. Ansaldo Energia
SPA7.
110. The petition accordingly stands partly allowed to the aforesaid
extent with no orders as to costs.
C. HARI SHANKAR, J.
st FEBRUARY 21 , 2022 kr/dsn/r bararia 7 (2018) 16 SCC 661 Signature Not Verified O.M.P. (COMM) 349/2016 Page 55 of 55 Digitally Signed By:SUNIL SINGH NEGI Signing Date:21.02.2022 15:25:58