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Atlanta Infra Assets Limited vs National Highways Authority Of India on 6 April, 2022

Author: Anup Jairam Bhambhani

Bench: Anup Jairam Bhambhani

                          $~S-12

                          *     IN THE HIGH COURT OF DELHI AT NEW DELHI

                          +     O.M.P. (COMM) 152/2022 & I.A. 4978/2022

                                ATLANTA INFRA ASSETS LIMITED                      ..... Petitioner

                                                   Through:    Mr. Dayan Krishnan, Sr. Advocate
                                                               with Mr. Chirag M. Shroff,
                                                               Mr.Sanjeev  Seshadri    &   Mr.
                                                               Amandeep Mehta, Advocates.

                                                   versus

                                NATIONAL HIGHWAYS AUTHORITY OF INDIA
                                                                                   ..... Respondent
                                                   Through:    Mr. Abhishek Gusain, Advocate.


                                CORAM:
                                HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
                                        ORDER

                          %             06.04.2022
                          O.M.P. (COMM) 152/2022

By way of the present petition under section 34 of the Arbitration & Conciliation Act 1996 ('A&C Act'), the petitioner M/s Atlanta Infra Assets Limited ('Atlanta') impugns majority award dated 16.11.2021 rendered by the learned Arbitral Tribunal in disputes that arose between the petitioner and the respondent/National Highways Authority of India ('NHAI')

2. Both claims and counter-claims were placed for adjudication before the Arbitral Tribunal arising from a Concession Agreement dated 09.12.2005 which related to the improvement, operation and Signature Not Verified Digitally Signed By:NEERAJ Signing Date:08.04.2022 OMP (COMM.) 152/2022 Page 1 of 7 15:40:32 maintenance, including strengthening, widening and extending a 2- lane road to a 4-lane dual carriageway on a section of NH-6 in the state of Maharashtra on a Build-Operate-Transfer (BOT) basis.

3. By way of the arbitral award, the Arbitral Tribunal has allowed claim Nos.1 (a)(b)(c), 2, 3, 4 and 6 and counter-claim Nos 1, 2, 3, and 6; while disallowing all other claims and counter-claims.

4. Mr. Dayan Krishnan, learned senior counsel appearing for the petitioner, submits the following as the major grounds of challenge to the arbitral award :

i) Firstly, it is contended that admittedly there was delay on NHAI's part to provide land for purposes of the contract, well beyond the 12 month period provided for in the contract; which required the Tribunal to interpret what was 'reasonable period' under the stipulations of the contract, which contemplated that the project would commence "as and when land becomes available" for implementation of a supplementary agreement dated 22.09.2011 from the date of execution. On this issue, it is submitted, that the Tribunal has held that a period of 18 months from the date of execution was a reasonable period for the purpose, without however there being any basis or reasoning for coming to this figure of 18 months. It is contended that while rendering a finding that NHAI had "failed in discharging its primary responsibility of making available obstruction free additional land for execution of works" the Tribunal holds :

"71. .... In the facts and circumstances, we find that the 'reasonable period' under the stipulation 'as and when land becomes available' for implementation of Supplementary Agreement would be 18 months from the date of execution. Any delay in execution thereafter, the party in breach would be accountable and answerable for the claims."

This conclusion, it is submitted, amounts to re-writing the contract between the parties; and also to returning a finding without any reasons, in breach of section 31(3) of the A&C Act.

ii) It is further submitted that insofar as the claim for idling charges of machinery and salaries paid to its employees during the period of delay attributable to NHAI is concerned, the Tribunal has 'clubbed' both these claims, without appreciating that claims towards 'idling charges' for machinery and 'salaries' paid to employees, which fall under two separate heads of expenses, cannot be clubbed. Erroneously therefore, the Tribunal has held as under :

"74. It is pertinent to note that the Respondent has not denied that the engagement of staff and labour by the Claimant or that salaries were not paid to the workers engaged and deployed. However, in our view, the claim for extended deployment of machinery and equipment on daily basis would also include, within its fold, the salaries paid to those operating them. Accordingly, salaries payable to employees appearing at items 8 to 16 would be included under Claim No.1(b) wherein the claim is made for extended deployment of machines and equipment. The Signature Not Verified Digitally Signed By:NEERAJ Signing Date:08.04.2022 OMP (COMM.) 152/2022 Page 3 of 7 15:40:32 said claim would also include the salaries being paid to those operating the said machines and equipments. Accordingly, Claimant's entitlement under Claim No.1(a) is restricted to the salaries claimed for employees at items number 1 to 7 and 17& 18."

iii) Furthermore, it is submitted, that exceeding its remit and yet again re-writing the contract, the Tribunal has also, by a stroke of the pen, rendered a finding in relation to the numbers of tippers, transit mixtures and other similar equipment deployed by Atlanta, even though no objection in that behalf was raised by NHAI; nor was this aspect put to Atlanta, for it to be able to offer an explanation as to the requirement for such equipment. In this regard, the Tribunal has inter-alia held:

"88. .....Coming next to the vehicles, mixtures, tankers and equipment required, we have taken into consideration the quantum of remaining work required to be executed and as also T&P, equipment needed for executing this work (commensurate with the quantum of balance work). It may not be out of place to mentioned that ready-mix concrete (RMC) was allowed to be used for Kondhali flyover by the Respondent on the request of the Claimant. Accordingly, there was no occasion for using any transit mixtures leave aside two, as claimed solely for Kondhali flyover. Nevertheless giving the Claimant the benefit that Ready-Mix-Concrete (RMC) may not have covered the entirety of the remaining work, we have taken into assessment only 1 tipper.

Only 1 tipper, 1 hydra, 1 excavator, batching plant and 1x125 KVA D.G. generator set can be said to have been lying idle till 17.04.2014. Toyota Qualis, Water Tanker, Signature Not Verified Digitally Signed By:NEERAJ Signing Date:08.04.2022 OMP (COMM.) 152/2022 Page 4 of 7 15:40:32 D.G. Generator set at site, transit mixture were required for Operation & Maintenance (O&M) of the Project Highway. Keeping the above factors in mind, we have reasonably assessed and computed the Claimant's entitlement for idling in respect of Kondhali flyover work as per the following table:"

***** "90. From the list of equipment reproduced hereinabove, items appearing at item no.8 (Bitument Sprayer), item no.9 (Water Tanker), item no.16 (Loader), item no.18 (Loader), item no.19(500 KVA DG Set), item no.20 (125KVA DG Heating Bitumen) and item no.21(Hot Mix Plant 160 TPH) are to be excluded as the same were essentially required for Operations and Maintenance of the Project Highway which was a continuing obligation for a period of 20 years on the Concessionaire. Hence, these have been excluded from consideration. As regards two JCBs claimed, we have allowed one. Similarly, for item no.12, 13, 14, 15 & 17 being five nos. rollers, we consider maximum requirement of three nos. As against two crushers claimed by the Claimant, one according to us appears to be reasonable.

The Claimant has taken 07 tippers in his computation whereas in our view two were more than sufficient. The original Concession Agreement does not provide for any specific minimum requirement of tippers for the entire contract work costing Rs.168 Crores, whereas remaining work to be executed was less than 10% thereof.

The period considered for calculation is after excluding 18 months which has been held to be reasonable period for Signature Not Verified Digitally Signed By:NEERAJ Signing Date:08.04.2022 OMP (COMM.) 152/2022 Page 5 of 7 15:40:32 handing over of additional ROW under the Supplementary Agreement. Accordingly, the entitlement of the Claimant under this head of Claim No.1(b) is : ... "

***** "Therefore, in view of the foregoing paras, the total entitlement of the Claimant against Claim No.1(b) is 6,00,78,816/- being the total of amounts payable as per the total figures (A) and (B) shown above. In assessing the above compensation, we have taken into account MORT&H Standard Data Book 92001-02) which has found judicial approval in several cases, Respondent's failure to handover land within reasonable time and the said plant and machinery in our assessment optimally being required for execution of the work, which was delayed due to the Respondent's own shortcomings."

iv) Additionally, it is also argued that the Tribunal has, without any basis or reasoning, made a 100% deduction on account of deployment of shared resources for the Operations and Maintenance work for some of the items, instead of a 40% deduction, deriving from a 40-60 sharing ratio for IC Fee payable as was agreed to between the claimant and the respondent. It is contended that this, again, amounts to re-writing the contract and returning a finding without any basis or reason.

5. On a prima facie consideration of the foregoing submissions, issue notice on the petition.

6. Mr. Abhishek Gusain, learned counsel for the respondent, accepts notice; and prays for time to file reply.

7. Let reply be filed within 06 weeks; rejoinder thereto, if any, be filed within 03 weeks thereafter, after exchanging copies with opposing counsel.

8. List for consideration on 19th July 2022.

ANUP JAIRAM BHAMBHANI, J.

APRIL 06, 2022 Ne Signature Not Verified Digitally Signed By:NEERAJ Signing Date:08.04.2022 OMP (COMM.) 152/2022 Page 7 of 7 15:40:32