Rajasthan High Court - Jaipur
Udaipur Tollway Limited vs Union Of India on 25 August, 2021
Bench: Chief Justice, Satish Kumar Sharma
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Writ Petition No. 11042/2020
1. Udaipur Tollway Limited
Registered Office At 1101 Hiranandani Knowledge Park,
11th Floow, Technology Street, Hill Side Avenue, Opp.
Hiranandani Hospital, Powai, Mumbai-400 076 and
Regional Office at Barkheda Chandlai Toll Plaza, Main Tonk
Road, NH-12, Near Shivdaspura, Tehsil-Chaksu Distt.
Jaipur-303903 (Rajasthan)
2. CG Tollway Limited
Registered Office At 1101 Hiranandani Knowledge Park,
11th Floow, Technology Street, Hill Side Avenue, Opp.
Hiranandani Hospital, Powai, Mumbai-400 076 and
Regional Office at Barkheda Chandlai Toll Plaza, Main Tonk
Road, NH-12, Near Shivdaspura, Tehsil-Chaksu Distt.
Jaipur-303903 (Rajasthan)
3. Kishangarh Gulabpura Tollway Limited
Registered Office At 1101 Hiranandani Knowledge Park,
11th Floow, Technology Street, Hill Side Avenue, Opp.
Hiranandani Hospital, Powai, Mumbai-400 076 and
Regional Office at Barkheda Chandlai Toll Plaza, Main Tonk
Road, NH-12, Near Shivdaspura, Tehsil-Chaksu Distt.
Jaipur-303903 (Rajasthan)
Through Mr. Ajay Kumar Dhiman, S/o Shri Ranjit Singh
aged about 49 Years Residing at T-896, Block-24, Rangoli
Gardens, Near Vaishali Nagar, Jaipur (Rajasthan) PIN-
302034
----Petitioners
Versus
1. Union Of India, through Secretary,
Ministry Of Road Transport And Highways, Transport
Bhawan, 1, Parliament Street, New Delhi - 110 001
2. National Highways Authority Of India (Nhai),
Through Chairman,
Having Office At G-5 & 6, Sector 10, Dwarka, New Delhi-
110075
----Respondents
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For Petitioner(s) : Mr. Vikram Nankani, Senior Advocate
Mr. Saurabh Kripal, Senior Advocate
assisted by Mr. Sarthak Sachdev
Mr.Vinod Menon,
Ms. Teresa Daulat
(Through V.C.)
Mr. P.C. Sharma
For Respondent(s) : Mr. R.D. Rastogi, Additional Solicitor
General assisted by Mr. C.S. Sinha
Mr. Sudhir Gupta, Senior Advocate
assisted by Mr. Umang Gupta
(Through V.C.)
Ms. Priyal Kothari
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SATISH KUMAR SHARMA
Judgment Reserved on :: 28/07/2021
Judgment Pronounce on :: 25/08/2021
BY THE COURT (PER HON'BLE THE CHIEF JUSTICE):
1. The petitioners have impugned Rule 4(9) of the National Highways Fee (Determination of Rates and Collection) Rules, 2008, issued under Section 9 of the National Highways Act, 1956, in the peculiar facts of the case. The petitioners have also impugned Office Memorandum dated 18.05.2020 issued by the Central Government for implementation inter alia by the Ministry of Road Transport & Highways and NHAI, and the consequent Policy Guidelines/BOT (Toll)/2020 dated 26.05.2020 issued by NHAI. That apart the petitioners have also prayed for directing the NHAI to maintain the same time gap of six months between the Revised Completion Date/ Date of Toll Tariff Revision and date of commencement of payment of premium, under the respective Concession Agreements (with the approved EOT); or in the event this Court comes to a conclusion that aforesaid prayer cannot be (Downloaded on 25/08/2021 at 10:18:12 PM) (3 of 22) [CW-11042/2020] granted, to restrict the premium amount till the end of six months from the Revised Completion Date, to such balance amount from the fee collected in each of the previous months, which remains in Escrow Account after payment of monthly operation and maintenance charges and monthly debt servicing etc. as per the waterfall mechanism provided in Article 31 of the Model Concession Agreement, read with Section 8A of the National Highways Act, 1956 and Rule 7(1) of the National Highways Fee (Determination of Rates & Collection) Rules, 2008, and to refrain NHAI from taking any coercive action against the petitioners for the said period.
2. The respondents filed their replies opposing each of the prayers. It is submitted that the writ petition is not maintainable being related to purely contractual obligation and the challenge to the rules etc. is misconceived. Reliance is placed on the following observations in the judgment of the Hon'ble Supreme Court in JWS Infrastructure Vs. Kakinada Seaports Ltd., (2017) 14 SCC 170-
"thus it is apparent that in contractual matters, the writ courts should not interfere unless the decision taken is totally arbitrary, perverse or mala fide."
It is the contention of the respondents that each of the petitioners is bound by Article 44 of the agreement providing for a Three Tier Dispute Resolution Mechanism. The attempt of the petitioners to link payment of premium to collection of fees is untenable and devoid of merits. Vide Article 25.4 of the agreement the petitioners have acknowledged and agreed to pay each year the premium as per Article 26.2.1 of the agreement. (Downloaded on 25/08/2021 at 10:18:12 PM)
(4 of 22) [CW-11042/2020] They have agreed to pay premium from 03.09.2020, 04.11.2020 and 21.02.2021 i.e. after 3rd anniversay year of commercial operation dated 03.09.2017, 04.11.2017 and 21.02.2018. Article 12.4 provides for 910th day from the appointed date to be scheduled date for completion of six-laning. It was contended that agreements provide for extension of completion date, but not for date for payment of premium. The payment of premium is wholly independent of toll fee collection. Article 27 and Rules, 2008 have no co-relation with the payment of premium. Challenge to the Rules is liable to the dismissed, as the presumption is always in the favour of validity of a statute. It is further contended that COVID-19 being a pandemic, is a non-political event as per Article 34.2, and not a political event as stated by the petitioners. Therefore, as per Article 34.7.2, the parties have to bear their respective force majeure costs. No grave harm, loss and prejudice is caused towards petitioners by the impugned Office Memorandum and Policy Guidelines. It was also suggested that the petitioners have given up the challenge to the constitutionality of the rule. Writ Petition aims to nullify the contract. Petitioners have waived their past claims by signing agreement for settlement. It is contended that petition should also be dismissed for want of territorial jurisdiction, and for filing one common petition. It was thus contended on behalf of the respondents that the writ petition should be dismissed, and the petitioners should be directed to pay the due premium with interest.
3. An "Additional Affidavit" dated 14.02.2021 was filed by the petitioners, to bring on record that post filing of the instant writ petition the respondents have already made appropriate revision (Downloaded on 25/08/2021 at 10:18:12 PM) (5 of 22) [CW-11042/2020] in Clause 26.2.1 of the 'Model Concession Agreement for Capacity Augmentation of Projects under Tolling (6 laning BOT-Toll Projects) issued on 09.12.2020 on the website of Ministry of Road Transport & Highways, Government of India. AS per the revised Clause 26.2.1, now the obligation under such statutory contracts to pay premium from the Toll fee collection would commence only "after the first (1st ) anniversary of the Projection Completion Date, for every year of the remaining Concession Period, to be calculated on total Realisable Fee". The earlier gap of "six months"
between the completion date and date of obligation to pay premium is thus also revised as "one year". Cash Flow Charts certified by Statutory Auditor were also placed on record showing that cumulatively about Rs.5,000/- crores had been invested by them in the construction of these projects of NHAI including from promoter's/ sponsor contribution and finances availed. It further shows that the deposits into project account from the Toll Fee collection is significantly lower than what was appraised in view of impugned Rule 4(9) as well as effect of restrictions imposed on movements vide various orders issued pursuance to the Covid pandemic. The withdrawals from the project account, which are to be done sequentially in the order given in waterfall mechanism agreed between the parties, also show that till date not a single Rupee has been withdrawn by any of the petitioners either towards any reasonable return on investment or to gradually recover the capital contribution. It was also submitted that the entire capital amount already invested from the promoter's contribution sufficiently safeguards the interests of the NHAI towards disputed premium liability.
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4. The respondents submit that the petition is not maintainable, inter alia, in view of arbitration agreement. It is contended that interim protection should not be extended and the petition should be dismissed.
5. On inquiring about possibility to explore alternate dispute resolution, the petitioners prayed to decide the petition on merits. However, without prejudice to the contentions made in the petition, the petitioners have placed on record an Order dated 16.04.2019 in Writ Petition No.3415/2019- IRB Ahmedabad Vadodara Super Express Tollway Pvt. Ltd. Vs. Union of India & Ors., filed by another Group Company of the petitioners, wherein the Bombay High Court considering prima facie case, while exercising writ jurisdiction under Article 226 of the Constitution of India and while relegating the parties for arbitration, was pleased to grant the interim protection for limited period of three months. The entitlement of the petitioner therein to claim further appropriate interim reliefs under Section 9 and 17 of the Arbitration & Conciliation Act, 1996 was also kept open. This interim relief was subject to the undertaking to the Court by the petitioner therein that in the event it is unsuccessful in the arbitration, the premium for the subject period shall be payable by it on the principle of "premium deferment scheme". Vide orders dated 29.04.2019 and 11.09.2019 respectively, SLP (C) No.10741/2019 filed by the petitioner therein as well as SLP (C) No.21315/2019 filed by NHAI, against the said order dated 16.04.2019 were both dismissed by the Hon'ble Supreme Court. The interim protection granted by the Bombay High Court and the undertaking given by the petitioner therein were thereafter (Downloaded on 25/08/2021 at 10:18:12 PM) (7 of 22) [CW-11042/2020] extended by the Delhi High Court vide an order dated 14.10.2019 in OMP(I)(Comm.) No.247/2019, till the decision of the Application under Section 17 of the Act by the Arbitral Tribunal. The petitioners submit that the balance of convenience is in their favour. Reliefs, if not granted/extended, would lead to undue hardship, drastic unwarranted consequences and irreparable loss to the petitioners. No loss would be caused to the respondents on the other hand if the reliefs are granted or extended.
6. The respondents submit that the petitioners ought to be relegated for arbitration. However, it is contended that no interim protection should be granted.
7. An application for vacating ad-interim order dated 18.09.2020 was also filed. However, both sides agreed to finally dispose of the petition itself.
8. All the parties have been heard at considerable length. Parties were permitted to file their written submissions. We have perused the records and carefully considered the submissions and plethora of case cited by all the parties.
9. All three petitioners in the instant writ petition are subsidiaries/ SPVs of the original bidder M/s IRB Infrastructure Developers Limited (IRB). All three SPVs have entered into respective Concession Agreement with the respondent No.2 NHAI, for development of four to six laning of respective Highway Projects in the State of Rajasthan. Undoubtedly these three National Highways Projects are in the interest of people residing in the entire State of Rajasthan. Huge investments have been made by the petitioners from private sources or borrowings in these projects of NHAI in the State. It is also not in dispute that regional (Downloaded on 25/08/2021 at 10:18:12 PM) (8 of 22) [CW-11042/2020] office of all three petitioners is in Jaipur. We are thus satisfied that substantial cause of action, therefore, is in State of Rajasthan to confer territorial jurisdiction to consider this writ petition filed jointly by teh three SPVs of IRB on its own merits.
10. As per Section 5 of the National Highways Act, 1956, it shall be the responsibility of the Central and State Government to develop and maintain in proper repair all national highways. However, Section 8A of the said Act, inserted w.e.f. 16.06.1995, private investments were permitted by entering into an agreement with any person. Section 8A reads as under:
"8A. Power of Central Government to enter into agreements for development and maintenance of national highways.- Notwithstanding anything contained in this Act, the Central Government may enter into an agreement with any person in relation to the development and maintenance of the whole or any part of a national highway.
(2) Notwithstanding anything contained in section 7, the person referred to in sub-section (1) is entitled to collect and retain fees at such rate, for services or benefits rendered by him as the Central Government may, by notification in the Official Gazette, specify having regard to the expenditure involved in building, maintenance, management and operation of the whole or part of such national highway, interest on the capital invested, reasonable return, the volume of traffic and the period of such agreement.
(3) A person referred to in sub-section (1) shall have powers to regulate and control the traffic in accordance with the provisions contained in Chapter VIII of the Motor Vehicles Act, 1988 (59 of 1988) on the national highway forming subject-matter of such agreement, for proper management thereof."
11. These are the private investment projects permitted under Section 8A of National Highways Act, 1956 and are not "public projects" of NHAI. The Concession Agreements entered with the (Downloaded on 25/08/2021 at 10:18:12 PM) (9 of 22) [CW-11042/2020] petitioners are thus pursuance to the statutory power conferred upon the Central Government under Section 8A in larger public interest. The fee for services or benefits rendered by the petitioners is specified by Central Government vide notification having regard to the expenditure involved in building, maintenance, management and operation of the whole or part of respective national highway, interest on the capital invested, reasonable return, the volume of traffic and the period of such agreement. The payment of "premium" is not envisaged in Section 8A for specifying the fee.
12. The scheme of the agreement is such that the Concessionaire first invests its own capital and constructs the National Highway for the respondent. The entire fee collected thereafter from such constructed project also gets deposited into an Escrow Account. Only permitted withdrawals already agreed in the Concession Agreement are allowed to be done sequentially by appropriation from the said Escrow Account. As per Article 31.3, a waterfall mechanism is provided in the agreement for permitted withdrawals from Escrow Account where all fee and receivables are deposited.
13. It is not in dispute that the toll fee to be collected is governed by the National Highways Fee (Determination of Rates & Collection) Rules, 2008.
14. As per Article 27.1.1, on and from the COD till the Transfer Date, the concessionaire has the right to demand, collect and appropriate fee from the users subject to and in accordance with the Agreement and the National Highways Fee (Determination of Rates and Collection) Rules, 2008. The fee levied at rate specified (Downloaded on 25/08/2021 at 10:18:12 PM) (10 of 22) [CW-11042/2020] by the Central Government shall be appropriated by the concessionaire in accordance with the provisions of and for the performance of its obligations under the agreement entered into by such concessionaire, as envisaged in second proviso of Rule 7(1) of the National Highways Fee (Determination of Rates & Collection) Rules, 2008. The payment of premium is an obligation under the Concession Agreement. Second proviso to Rule 7(1) reads as under-
"7. Remittance and appropriation of fee:
(1) In case of public funded projects,.......
Provided that.........
Provided further that in case of "private investment projects", the fee collected under the provisions of these rules shall be appropriated by the concessionaire in accordance with the provisions of and for the performance of its obligations under the agreement entered into by such concessionaire."
(emphasis supplied)
15. Therefore, performance of obligation to pay premium under the agreement in case of "private investment projects", is to be discharged by appropriating the fee collected in accordance with the agreement read with the National Highways Fee (Determination of Rates & Collection) Rules, 2008.
16. The respondents contended that revenue share concept is not envisaged for payment of premium. However, the Appendix provided by NHAI at the time of Bidding, relied upon by the petitioners states-
"I/We hereby submit our Bid and offer a premium in the form of Rs.------- (in words) out of the gross revenues of the Project as share of the Authority/require a Grant of Rs.------ (Rupees ---------only)."
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(11 of 22) [CW-11042/2020] Article 25.4 of the agreement also imposes liability to pay premium offered as per the Bid. The "revenues sharing concept"
also finds support from second proviso to Rule 7(1).
17. Therefore, prima facie, we are unable to agree with the contention of the respondents that the payment of premium is wholly independent of toll fee collection, and that Article 27 and the Rules, 2008 have no co-relation with the payment of premium.
18. The impugned Rule 4(9) of the said National Highways Fee (Determination of Rates & Collection) Rules, 2008 reads as follows-
"(9) The rate of fee for a section of a four lance highway shall on and from the commencement of work relating to upgradation to six laning, be seventy-five percent of the fee applicable on the date of commencement of the National Highways Fee (Determination of Rates & Collection) Amendment Rules, 2013, till the completion of the project without any annual revision:
Provided that no user fee shall be levied for the delayed period between the date of completion as per the agreement entered into with the concessionaire and the date of actual completion of the project.
Explanation: For the purpose of this rule, any provisional completion of the project shall not be treated as completion of the project."
19. Impugned Sub-rule(9) of Rule 4 in particular, and the Fee Rules in general, do not define or explain the expressions "the commencement of the work" as well as "till the completion of the project." Fee Rules are also silent about payment of additional concession fee or the premium to NHAI. In our prima facie view, in case of a "private investment project", the commercial relationship between the parties is governed by the Fee Rules and the agreements which are to be harmoniously construed. The (Downloaded on 25/08/2021 at 10:18:12 PM) (12 of 22) [CW-11042/2020] impugned Rule 4(9) prima facie appears to be in public interest with an aim not to burden the user of the highway with fee at 100% rate, till the four lane to six lane upgradation is not complete.
20. These agreements in "private investment projects", on Build, Finance, Operate & Transfer (DBFOT) basis, different milestones to be achieved with obligations and entitlements thereupon, are categorically mentioned and computed from the Appointed Date/Commercial Operation Date. As per Article 10.3.4 and 10.3.5, the Right of Way in respect of concerned land is to be provided by NHAI to the concessionaire within 120 days from COD. Thereafter, as per Article 12.4.1, the construction is to be completed by the Concessionaire within 910 days from COD. Thereafter, as per Article 25.4 read with Article 26.2.1, as set forth in the Bid, the obligation to pay premium commences immediately after the third anniversary year of COD i.e. on completion of 3 years from COD.
21. Accordingly, the agreement read with rules envisaged "right of way" to be provided by NHAI within 120 days from COD, to enable the petitioners to complete upgradation of 4 lane highway to six lane highway within 910 days from COD. The premium payment to NHAI, under Article 26 of the Concession Agreement, was envisaged to commence on completion of three years from COD. Thus, prima facie, a consistent gap of about six months was envisaged in each of the agreements between the date of 'completion' and the date of commencement of obligation to pay premium.
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22. In the aforesaid statutory and contractual scheme in such projects of public interest, the issue that arises for consideration is whether NHAI compelling the petitioner to perform obligation to pay premium on completion of 3 years from COD would be manifestly arbitrary and violative of Article 14 of the Constitution of India, if having first failed in its obligation to give complete "right of way" within 120 days from COD, the NHAI has itself extended the date of completion beyond 910 days from COD.
23. It is undisputed position on record that as per the agreements, the Appointed Date/Commercial Operation Date (COD) in respect of the project of petitioner Nos.1 to 3 are 03.09.2017, 04.11.2017 and 21.02.2018 respectively. The Right of Way was to be provided by NHAI in 120 days from COD i.e. on 01.01.2018, 04.03.2018 and 18.06.2018 respectively. The upgradation of project highways from 4 to 6 lanes was to be completed by the petitioners on 910 days from COD i.e. on 29.02.2020, 02.05.2020 and 18.08.2020 respectively. Thereafter, as per the Concession Agreements the obligation of the petitioners to pay premium was to commence on expiry of 3 years from COD i.e. on 03.09.2020, 04.11.2020 and 21.02.2021, thereby maintaining a consistent gap of about six months between the date of 'completion' and the date of commencement of obligation to pay premium. In the peculiar facts of the case, for various reasons the handing over of the right of way could not be completed by NHAI within 120 days. Consequently, the originally scheduled "Completion Dates" were initially extended by NHAI to 30.11.2020, 31.01.2021 and 09.09.2021 respectively, and finally, to 31.05.2021, 30.07.2021 and 09.09.2021 respectively. During (Downloaded on 25/08/2021 at 10:18:12 PM) (14 of 22) [CW-11042/2020] the pendency of the petition, petitioner No.1 completed the construction on 31.05.2021. (1st Project)
24. Respondents contend that till these revised completion dates the petitioners are entitled to collect fee at 75% rate from the users in view of impugned Rule 4(9), and that the petitioners would be bound to discharge obligation to pay premium to NHAI on completion of 3 years from COD, notwithstanding failure to give "right to way" within 120 days and extension of completion date by NHAI itself. According to the petitioners this approach of the respondents is manifestly arbitrary.
25. After filing of the instant petition impugning the Rule 4(9), the respondents have themselves issued revised Model Concession Agreement, wherein the premium obligation under Article 26.2.1 would commence only after expiry of one year from the Project Completion Date. The petitioners contend that such revision in the model contract, which is statutory in nature, is clarificatory and shall apply retrospectively. The respondents have argued that the same applies only prospectively and has no impact on the agreements already entered.
26. So far as the initial period of 910 days from COD is concerned, the petitioners have not raised any grievance raised any grievance regarding the levy of fee at 75% rate under the impugned Rule 4(9). The grievance raised is for reduced rate of fee for the agreed extended period beyond 910 days. This grievance is raised particularly in the light that on one hand without any default on their part even after completion of 910 days from COD, by virtue of impugned Rule 4(9) the petitioners are being permitted to levy toll fee only at rate reduced to 75% (Downloaded on 25/08/2021 at 10:18:12 PM) (15 of 22) [CW-11042/2020] with extension of completion date by NHAI, and on other hand premium is being demanded on completion of 3 years from COD, without maintaining the envisaged gap of six months from the Completion Date or excluding the period of extension in completion date.
27. We find prima facie merit in the submission that the agreement envisaged that on timely completion of project as per the originally agreed completion date i.e. from 910 th day from COD, the petitioners would have levied and collected 100% Toll Fee for a period of six months. The premium would have been appropriated from such Toll Fee collected as per second proviso to Rule 7, only after 3 year from COD. This six months gap between date of completion and date of premium envisaged in the Agreement would have generated fund flow of fee at 100% rate for six months, before commencing appropriation of premium from such Toll Fee collected. The payment of "premium" would have commenced only on revenue sharing concept, after having collected substantial fee revenue .There would have been much higher balance in the Escrow Account wherein fee gets deposited, after appropriation towards monthly Operation and Maintenance charges, monthly debt servicing, taxes etc., to appropriate premium, as per the waterfall mechanism provided in Article 31.
28. The agreed completion date is revised by NHAI beyond 910 days from COD, for reasons such as delay in handing over the land which was envisaged within 120 days of COD. Despite the same, the petitioners are being compelled to pay premium from 3 years from COD, without maintaining a gap of about six months from the completion date. On one hand, in view of Rule 4(9), the (Downloaded on 25/08/2021 at 10:18:12 PM) (16 of 22) [CW-11042/2020] petitioners are permitted to levy Toll Fee reduced to 75% in the agreed extended period, on the other hand they are being compelled to not only appropriate the fee collected for payment of premium, but are being asked to bring more funds only to pay premium without actual collection of adequate fee. In the aforsaid peculiar circumstances, prima facie, we are of the view that such action of the respondents would be wholly unfair, unreasonable, discriminatory and manifestly arbitrary on the vice of Article 14 and 19 of the Constitution of India and would cause palpable injustice to the petitioners.
29. During the pendnecy of this petition, the respondents have themselves issued revised Model Concession Agreement by clarificatory and beneficial revision in Clause 26.2.1 and have not only linked the commencement of premium obligation with the date of completion of the project, but have also extended the gap between the two dates to 1 years from earlier six months.
30. Various judgments of Hon'ble Supreme Court viz. Tata Cellular Vs. Union of India, (1994) 6 SCC 651, Jamshed Hormusji Wadia Vs. Board of Trustee, Port of Mumbai, (2004) 3 SCC 214, ABL International Ltd. Vs. ECGC, (2004) 3 SCC 553, Kumari Shrilekha Vidyarthi Vs. State of U.P., (1991) 1 SCC 212 and Unitech Ltd. Vs. Telangana State Industrial Infrastructure Corporation, 2021 SCC Online SC 99, permit judicial review in writ jurisdiction even in contractual matters, if the State or its Instrumentality acts in such arbitrary manner which are in breach of Article 14 of the Constitution of India. None of the judgments relied upon by the respondents completely oust exercise of writ jurisdiction in contractual matters (Downloaded on 25/08/2021 at 10:18:12 PM) (17 of 22) [CW-11042/2020] in such peculiar circumstances. Further, in Nabha Power Ltd. Vs. Punjab State Power Corporation Ltd. & Anr. , (2018) 11 SCC 508, it was held to the effect that a contract must be read to give effect to the bargain between the parties in a commercial sensible manner.
31. NHAI was unable to perform its obligation concerning Right of Way within 120 days from COD, and thus the date of completion was extended by it beyond 910 days from COD. In such circumstances, the demand of premium from 3 years from COD, while restricting the petitioners' entitlement to collect fee at 75% rate, prima facie appears to be manifestly arbitrary, discriminatory, unreasonable and violative of Article 14.
32. For the above reasons, we find prima facie merit in the contention of the petitioners that six months gap would have to be maintained between Completion Date and commencement of obligation to pay premium. Thus, prima facie, if NHAI extends the completion date, the period of such extension shall be excluded while computing three years from the COD for commencement of obligation to pay premium. We are of the prima facie view that while computing three years from Appointed Date/Commercial Operation Date for commencement of obligation to pay premium under Article 26.2.1, the number of days between the originally agreed completion dates and the revised completion dates subsequently agreed by NHAI, would have to be excluded, so as to maintain six months gap between the completion date and commencement of obligation to pay premium.
33. The impugned Rule 4(9) is statutory in character, and the presumption is always in the favour of validity of a statute. The (Downloaded on 25/08/2021 at 10:18:12 PM) (18 of 22) [CW-11042/2020] petitioners have impugned Rule 4(9), and the challenge to thesame was never given up expressly or impliedly, in writing or orally. Alternate prayer to read down the rule to save it from unconstitutionality, do not amount to giving up the challenge. The impugned Rule 4(9) appears to be in public interest with an aim not to burden the user of the highway with fee at 100% rate, till the four lane to six lane upgradation is not complete. It has been brought to our knowledge that the respondents have themselves introduced during the pendency of this petition, a revised Model Concession Agreement, which removes the peculiar situation in which the instant petition has been filed. The respondents now during pendency of this petition have themselves revised the statutory contracts by clarificatory and beneficial revision in Clause 26.2.1 and have not only linked the commencement of premium obligation with the date of completion of the project, but have also extended the gap between the two dates to 1 year from earlier six months. We, therefore, find that now the challenge to the Rule no more survives. Accordingly, the challenge to Rule 4(9) is dismissed.
34. The Office Memorandum dated 18.05.2020 and the consequent Guidelines dated 26.05.2020 are challenged on the touchstone of Article 14 and 19(1)(g) of the Constitution of India. Certain directions are also sought by the petitioners for consideration by NHAI. We do not find anything in the impugned OM or the Guidelines which can come in the way of claiming any compensation for the material adverse impact of force majeure provided in Article 34 of the Concession Agreement on its own merits. In-fact, Para (v) of the impugned guidelines issued by (Downloaded on 25/08/2021 at 10:18:12 PM) (19 of 22) [CW-11042/2020] NHAI for the relief measures inter alia records that, if provisions in the Concession Agreement are different, the provisions of the Concession Agreement shall prevail. It would be for the authority to consider as to for what period any Order or Instructions of Government or its authority curtailed the traffic, and for what period the traffic was curtailed only because of pandemic, but not for any such Order/Instructions. Merely because OM or Guidelines issued thereafter are silent on this aspect, it would not mean that the request for adjudication of entitlement already provided in the Agreement would not be considered on its own merits. We, therefore, do not find any infirmity in these Office Memorandum dated 18.05.2020 and the consequent Guidelines dated 26.05.2020. If after the Authority communicates its view and the petitioners are aggrieved with the same, the petitioners can have recourse to arbitration.
35. In view of being satisfied with the prima facie case, we are persuaded to deem it appropriate to exercise writ jurisdiction under Article 226 in the aforesaid peculiar circumstances for the limited purpose of interim protection while relegating the parties to arbitration. With the above prima facie observations, we are inclined to direct the petitioners and NHAI to explore the arbitration for final decision on merits of their case. To secure the ends of justice, and for reasons recorded herein, we deem it just and expedient to protect the petitioners in the meanwhile.
36. We are of the view that apart from having prima facie case in their favour, the petitioners have already invested huge amounts in their respective projects. They have also shown bona fides by offering adequate security by way of their proposed undertaking (Downloaded on 25/08/2021 at 10:18:12 PM) (20 of 22) [CW-11042/2020] to secure the interests of NHAI. The respondents have even previously for various stressed projects agreed to defer even the undisputed premium payment obligations, on the condition of such deferred premium being repaid at the end of the deferment period with interest. Vide an order dated 16.04.2019, a Division Bench of the Bombay High Court in a Writ Petition No.3415/2019, had observed as under:-
"10. The matter though requires detailed adjudication of facts, it is very much apparent that the petitioner is suffering huge losses in view of the actual volume of traffic being far less than projected. The possible diversion of traffic as framed by the petitioner, therefore, prima facie cannot be ruled out.
11. However, since we have noted that the petitioner is in arduous situation on account of existing statutory scheme which we have set out briefly in above paragraph, we deem it appropriate to exercise our jurisdiction conferred under Article 226 of the Constitution of India and for limited period we protect the petitioner Company from being faced with an action of termination of agreement in the contingency of default in payment of premium to the NHAI for the period of three months subject to the petitioners undertaking to the Court within the period of one week that in the event the petitioner is unsuccessful in the arbitration, the premium for above period shall be payable by the petitioner on the principle of "premium deferment scheme" of the Central Government earlier agreed in supplementary agreement dated 06.06.2014 with applicable interest. Needless to state that the petitioner would be entitled to claim further appropriate interim relief under the provisions of Sections 9 and 17 of the Arbitration & Conciliation Act, 1996.
We make it clear that we have not deliberated on the issue on the merits of the matter and the opinion expressed by us is prima facie and the Board of Arbitrators would be at liberty to resolve the dispute strictly within the four corners of the agreement and the existing Statutory Scheme. As regards the challenge of the petitioner to Rule 7(1) of the National Highways Fee (Determination of Rates and (Downloaded on 25/08/2021 at 10:18:12 PM) (21 of 22) [CW-11042/2020] Collection) Rules, 2008, we leave the said challenge open without going into the merits of the same at this stage. In the light of the aforesaid directions the Writ Petition stands disposed of."
37. Vide an order dated 11.09.2019, the said order of Bombay High Court was upheld by the Hon'ble Supreme Court while dismissing SLP(C) No. 21315/2019 filed by NHAI.
38. Accordingly, we pass the following order:-
(i) The challenge of the petitioners to Rule 4(9) of the National Highways Fee (Determination of Rates and Collection) Rules, 2008 is dismissed.
(ii) Challenge to the Office Memorandum dated 18.05.2020 and Policy Guidelines dated 26.05.2020 is dismissed.
(iii) The petitioners are permitted to invoke arbitration proceedings within a period of four weeks, and parties are free to raise all contractual disputes before the Arbitral Tribunal for their decision on merits.
(iv) NHAI shall within two weeks communicate to the petitioners their decision on petitioners' claim for compensation for force majeure or extension. If aggrieved with the same, the petitioners would have remedy in arbitration, wherein all contentions of the parties in this regard would remain open.
(v) Considering prima facie case, for a limited period of three months from issuance of this order or till the date of completion of the project whichever is earlier, the alleged obligation of the petitioners to pay premium under Article 26.2.1 shall remain stayed. This stay is subject to the petitioners furnishing undertaking to this Court within a period of one week that in the event the petitioners are unsuccessful in the (Downloaded on 25/08/2021 at 10:18:12 PM) (22 of 22) [CW-11042/2020] arbitration, the disputed premium shall be payable by the petitioners with interest on the principle of "premium deferment scheme" (referred in the aforesaid order dated 16.04.2019 of the Bombay High Court in Writ Petition No.3415/2019, upheld by the Hon'ble Supreme Court vide order dated 11.09.2019 dismissing SLP(C) No.21315/2019 filed by NHAI. The petitioners would also undertake that after appropriating the monthly liabilities sequentially towards taxes, payment towards construction, O&M Expenses and Debt Servicing in the order already given in Article 31, entire balance amount from the Toll Fee collected would remain available in the Escrow Account, which would be subject to the decision in Section 9 and/or 17 of the Arbitration & Conciliation Act, 1996, as the case may be.
(vi) Needless to state that the petitioner would be entitled to claim further appropriate interim relief under the provisions of Section 9 and/or 17 of the Arbitration & Conciliation Act, 1996.
39. We make it absolutely clear that the observations made hereinabove are only prima facie and we have not deliberated on the issue on the merits of the matter. The Arbitral Tribunal would resolve the disputes in accordance with law and the observations made herein would not bind the Arbitral Tribunal.
40. The writ petition is disposed of accordingly.
41. In view of the disposal of the writ petition, all pending applications hereby stand disposed of.
(SATISH KUMAR SHARMA),J (INDRAJIT MAHANTY),CJ KAMLESH KUMAR /Reserved (Downloaded on 25/08/2021 at 10:18:12 PM) Powered by TCPDF (www.tcpdf.org)