Delhi High Court - Orders
Pwd, Government Of Karnataka vs Bangalore Elevated Toll Way Private ... on 14 January, 2022
Author: C. Hari Shankar
Bench: C. Hari Shankar
$~32 (Original)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (COMM) 378/2021 & I.A. 17228/2021-s-36(2), I.A.
17229/2021, I.A. 17230/2021, I.A. 17231/2021
PWD, GOVERNMENT OF KARNATAKA ..... Petitioner
Through Mr. Jayant Mehta, Sr. Adv.
with Mr. Shubhranshu Padhi,Mr. Aman
Varma, Mr. Rakshit Jain, Advs.
versus
BANGALORE ELEVATED TOLL WAY PRIVATE
LIMITED & ANR. ..... Respondents
Through Dr. Amit George, Mr. Amol
Acharya, Mr. Rayadurgam Bharat and Mr.
Piyo Harold Jaimon, Advs. for R-1
Mr. Uday Chauhan and Mrs. Sunita Bansal,
Adv. for R-2
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
ORDER
% 14.01.2022 (By Video Conference on account of COVID-19) IA 17231/2021 in OMP (COMM) 378/2021
1. Delay in re-filing the petition is condoned.
2. The application is allowed accordingly.
IA 17230/2021 in OMP (COMM) 378/2021
3. Subject to the petitioner filing legible copies of any dim or illegible documents on which it may seek to place reliance with a period of four weeks from today, exemption is granted for the present.
Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 1 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:534. The application stands disposed of.
IA 17229/2021 in OMP (COMM) 378/2021
5. The Registry is directed to requisition from the learned Arbitral Tribunal the arbitral record in an electronic format and to provide an electronic copy thereof to learned Counsel for the parties.
6. The application is disposed of.
OMP (COMM) 378/2021
7. This petition is directed against an Award dated 12th February, 2021, passed by a three-member Arbitral Tribunal.
8. The agreement, whereunder the award has come to be passed, is a State Support Agreement (SSA) dated 20th March, 2007 executed between the National Highways Authority of India (NHAI), Bangalore Elevated Tollway Pvt. Ltd. (BETPL) and the petitioner- Public Works Department, Government of Karnataka.
9. This agreement was essentially a sequel to an earlier Concession Agreement dated 25th January, 2006, executed between between the NHAI and BETPL. The Concession Agreement required BETPL to construct an elevated highway project on NH-7. The covenants of the Concession Agreement need not detain us, as they are not of particular relevance to the controversy in issue.
Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 2 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:5310. Under the SSA, the petitioner undertook to provide support for the implementation of the project.
11. Sub-clauses (vi) and (viii) of Clause 3, Clause 6.1 and Clause 7 of the SSA are relevant and may be reproduced thus:
"3. SUPPORT OF GOK 3 .1 Upon and with effect from the date hereof, GOK agrees *****
(vi) provide the Concessionaire with police assistance in the form of dedicated highway patrol parties against payment of prescribed costs and charges, if any, for patrolling and provision of security on the Project Highway;
*****
(viii) support, cooperate with and facilitate NHAI and the Concessionaire in the implementation of the Project;
6. SOVEREIGN IMMUNITY 6.1 GOK hereto unconditionally and irrevocably:
(i) Agrees that the execution, delivery and performance by it of this Agreement do not constitute sovereign acts;
(ii) Agrees that should any proceeding be brought against it or its assets in relation to this Agreement or any transaction contemplated by this Agreement, no sovereign immunity from such proceedings, execution, attachment or other legal process shall be claimed by or in behalf of itself or with respect to any of its assets, to the extent permitted by law ; and
(iii) to the extent permitted by law, waives any right Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 3 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 of sovereign immunity, which it or its assets now has or may acquire in the future.
7. Breach and Compensation 7.1 In case GOK is in breach of its obligation under this agreement, other than those, substantially pertaining to facilitating rote to which no specific monitorable performance parameters can be ascribed, which breach is not cured within 30 days of receipt of a notice in writing from the Concessioner to GOK and NHAI and which has not occurred as a result of Concessionaire's breach of its obligations under this agreement or the Concession Agreement, GOK shall pay to the Concessionaire, all direct additional costs suffered or incurred by the Concessioner, determined by NHAI as arising out of such material default by GOK.
7.2 In case of any dispute by GOK on admissibility of the claim or extent of compensation determined by NHAI the claim shall be settled as per provisions of the Dispute Settlement mechanism provided in Article IX of this Agreement.
7.3 Any such compensation payable shall be paid to the Concessionaire in one lumpsum within 90 (ninety) days of receiving NHAI's determination of compensation."
12. It appears that, in the execution of the contracted work, there was certain disruptions owing to security breaches and other interruptions from local miscreants and other elements. Respondent 1 alleged that the petitioner had failed to abide by the obligations cast on it by sub-clauses (vi) and (viii) of Clause 3 of the SSA, by providing adequate security to ensure that the work was not disrupted.
13. This allegation has been found to be correct by the learned Arbitral Tribunal which has, consequently, awarded the amount with which the petitioner is aggrieved, under Clause 7 of the SSA.
Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 4 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:5314. One may, for the present, reproduce paras, 66, 67, 76, 133,148 to 156 of the the impugned award, thus:
"66. It is quite clear that it was and is the continuing obligation of GoK to ensure that law and order is maintained and in doing so, it is under an obligation to ensure that user fee in terms of the notification dated 24th December, 2009 is paid by everybody, except those who are exempted. In this, GOK has failed since it is not-in dispute that many locals and commercial vehicles did not and do not pay the user fee required by the notification.
67. It was contended that GoK is under no obligation to ensure that user fee is paid by everybody (except exempted persons) since it is the responsibility of the Claimant to collect user fee. It is not the job of GoK to assist the Claimant in collecting user fee. If the Claimant fails to collect user fee, it has to bear the consequences and it cannot foist a responsibility on GoK when it is not postulated by the SSA. This submission really begs the question whether by signing the SSA, has GoK surrendered its responsibility as far as the project highway is concerned. It is true that it is the responsibility of the Claimant to collect user fee but if it is unable to do so, for justifiable reasons relating to law and order, then it can and must point out to GoK that the law is being flouted and GoK must step in to ensure adherence to and compliance of the law. Merely by signing the SSA, it is not as if GoK has mortgaged its obligations under the Constitution and the laws to the Claimant. This would be too far-fetched a submission to accept.
*****
76. There is, therefore, no doubt that as a sovereign body and as a contracting party under the SSA, it is the obligation of GoK to regulate traffic on the project highway through its police powers and thereby assist the Claimant in collecting user fee from recalcitrant persons such as locals or commercial vehicles.
*****
133. Regulation of traffic cannot be limited to events or incidents occurring at the toll plaza only. Regulation of traffic Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 5 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 runs through the entire highway but more or less culminates at the toll plaza. If traffic is not regulated at the toll plaza there is a possibility of a law and order situation arising which may have adverse consequences on the staff of the Claimant. In fact, these situations arose on more than one occasion and at one time, even the Deputy Commissioner took the law into his own hands and carried out a demolition exercise which was not supported even by learned counsel appearing for GoK. Therefore, it is not possible to look at security on the Project Highway as distinct from regulation of traffic and vice versa. If the entire issue is considered in this light and in a holistic manner, there is no escape from the conclusion that the facts of the case indicate non-compliance by GoK of the provisions of clause 3(v) and clause 3 (vi) of the SSA.
*****
148. It is true that police assistance was provided to the Claimant almost on every occasion whenever it was asked but there were some lapses in this regard on the part of GoK as the correspondence shows and proves. But without going into this question, it must be noted that when a law and order situation arises, it is only the police that can gauge the extent of the breakdown and take appropriate remedial measures. Neither the Claimant nor NHAI have the expertise in this regard and the onus is heavily on GoK to ensure that law-and order is maintained at all times and at all costs. The correspondence indicates the failure of the police and GoK to gauge the extent of resistance from the locals and others and therefore, without a clear understanding of the ground situation, GoK and the police were unable to take remedial steps and contain the violation of law consistently and over a prolonged period of time. The Claimant cannot be faulted for this under any circumstance.
149. It is not that NHAI, the police and GoK were unaware of the problem. They had been reminded of this on several occasions by the Claimant as well as by NHAI in which, on its part, issued some stem letters to the concerned officials in GoK. Several meetings were held by senior officers of GoK including the concerned Principal Secretary as well as the Chief Secretary. In fact, action taken report so called for from the district authorities but there was no response from the Deputy Commissioner. On the contrary, on an earlier Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 6 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 occasion the Deputy Commissioner went to the extent of ordering demolition of a portion of the toll plaza without any justification. It is to the credit of learned counsel for GoK that it was frankly submitted that not only was the demolition unwarranted but that the Claimant was entitled to compensation -for the unwarranted demolition.
150. Under these circumstances, it is abundantly clear that the Claimant was severely constrained in the matter of collecting user fee. It was willing to accommodate the concerns of the locals to an extent and had even offered on several occasions to permit free passage to some locals but the demands made on their behalf were expropriated in the sense that while the Claimant was willing to issue passes to about 300 vehicles, the demand made on behalf of the locals was for 3000 vehicles. Naturally, this was not acceptable to the Claimant. It may be noted here that exemption from payment of user fee is permissible only as per the notification issued on 24th December, 2009 but the Claimant was willing to go a step forward in the interest of peace and orderly management of traffic. Unfortunately, this was not acceptable to the decision- making authorities.
151. A proposal floated by GoK and which appeared to the Tribunal as quite reasonable, was to extend the concession period so that the locals and the owners of other commercial vehicles would not be inconvenienced nor would GoK suffer any loss. Unfortunately, this proposal was turn down by NHAI during the course of submissions. This is being mentioned only for the purpose of indicating that the Claimant was prepared to walk an extra step but avoidable hurdles and obstacles were created by GoK and NHAI at different points of time. These hurdles and obstacles are sought to be utilised by NHAI and GoK to deny to the Claimant what it was entitled to, namely, user fee from those using the project highway, and collection of that user fee by the Claimant was justified as a matter of right by virtue of a notification, which is law.
152. If blame for the unfortunate state of affairs is to be placed on the shoulders of anybody, it must be placed on the shoulders of NHAI and GoK. Both were fully aware of the problem confronting the Claimant. NHAI ought to have acted upon the several requests made by the Claimant for Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 7 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 determination and certification of the loss suffered and communicated it to GoK. It failed to do so. It is quite possible that if NHAI had acknowledged its responsibility and obligation in time, the present situation would not have come to pass. As far as GoK is concerned, it failed to maintain law and order at the Attibele toll plaza and must bear the consequences.
(v) Additional cost
153. Clause 7 of the SSA provides that GoK shall pay to the concessionaire or direct additional costs suffered or incurred by the concessionaire and as determined by NHAI. It was submitted by learned counsel for NHAI that the expression Hall direct additional costs" refers only to damages sought in addition to the usual cost of the project and is devoid of any proposed or presumptive profit.
154. It is not possible to accept the submission of learned counsel. The entire purpose of the project on a BOT basis was that the Claimant would mobilize and expend its funds for the construction of the highway and recover the cost by collecting user fee from those using the highway.
155. The government of India issued notification dated 24th December, 2009 with the sole purpose of enabling concessionaires like the Claimant to recover the cost incurred on constructing a highway or a section of a highway. In other words, collection of toll fee which is essentially a sovereign function is delegated by law to concessionaires. Therefore, while no guarantee is provided to a concessionaire that the government of India or any State Government will make sure that every user pays the user fee of the toll fee, there is an implied assurance that all support will be given to the concessionaire in collecting the user fee. It is not as if the concessionaire is left to fend for itself The concept of "all direct additional costs" is required to be understood in this context, where there is an implied assurance that all assistance will be given to a concessionaire to collect the user fee (and that is why a State Support Agreement is entered into by the State Government with a concessionaire) and the State Government will bear the additional cost that a concessionaire may suffer or incur in the event of a breach in the State Support Agreement by the concerned State Government.Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 8 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53
156. There are two aspects to this issue that require consideration. Firstly, the Claimant suffers a loss of revenue through non-payment of user fee by exempted vehicles, such as those having VIP symbol and several other categories of vehicles mentioned in the notification dated 24th December, 2009. Similarly, the Claimant would also suffer loss of revenue due to non-payment of user fee by those not exempted such as locals and commercial vehicles refusing to pay the user fee. These are not costs accounted for in the Concession Agreement or SSA, but are additional costs that are "suffered or incurred" by a concessionaire such as the Claimant. Secondly, in view of section 73 of the Contract Act, 1872 the Claimant is liable to be compensated for a breach of contract by GoK provided the loss is not remote or indirect. In the present case, there can be no doubt that the loss suffered or incurred by the Claimant due to refusal to pay user fee by locals and commercial vehicles on a daily basis is neither remote nor indirect. Since the breaches occurred and continued to occur due to the default of GoK (and the refusal of NHAI to acknowledge it) the Claimant is entitled to be compensated in terms of the SSA."
15. Having thus held that the petitioner had breached its obligations under sub-clause (v) and (vi) of Clause 3 of the SSA, the learned Arbitral Tribunal went on to award the impugned amounts to Respondent 1 under Clause 7 of SSA.
16. It was sought to be canvassed, before learned Arbitral Tribunal, that the expression "all direct additional costs suffered or incurred", as contained in Clause 7.1 of the SSA, would only include damages suffered by Respondent 1 and that, in the absence of proof of damages, no amount would be awarded to the Respondent 1 under this Clause. This submission has been rejected by the learned Arbitral Tribunal in para 155 of the impugned award, in which it is held thus:
"155. ....The concept of "all direct additional costs" is Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 9 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 required to be understood in this context, where there is an implied assurance that all assistance will be given to a concessionaire to collect the user fee (and that is why a State Support Agreement is entered into by the State Government with a concessionaire) and the State Government will bear the additional cost that a concessionaire may suffer or incur in the event of a breach in the State Support Agreement by the concerned State Government."
17. Having thus held, learned Arbitral Tribunal proceeded to examine the issue of quantification of the claim of Respondent 1. Paras 163 to 170 of the impugned award read thus:
"163. The Tribunal has considered the three available options: (a) To require NHAI to quantify the loss suffered by the Claimant due to nonpayment of user fee. This quantification would be permissible under the SSA between the parties. After the quantification is carried out and certified by NHAI the result would be forwarded to GoK for payment to the Claimant. However, since NHAI has taken the categorical stand that nothing is due to the Claimant, this option is not really viable. (b) In view of the stand taken by NHAI to the effect that absolutely nothing is due to the Claimant, an independent person or institution should be appointed to quantify the loss suffered by the Claimant due to non-payment of user fee. In GMR llyderabad Vijayawada Expressway Pvt. Ltd. v. National Highways Authority of lndia , the Delhi High Court had appointed an independent "Sole Abitrator'' to determine the compensation payable to GMR by NHAI under somewhat similar circumstances. It may be mentioned that this decision is under appeal before a Division Bench of the Delhi High Court. This may prolong the debate and discussion with the report of the "Sole Arbitrator'' being challenged or adversely commented upon.
(c) The Arbitral Tribunal may quantify the loss suffered by the Claimant on the basis of the materials before it. The Tribunal can assess on the basis of data available on record which has been duly scrutinized, verified, tested and analysed either by NHAI or an independent authority appointed in this behalf. Such tested data could definitely be used as the basis for arriving at an assessment of direct additional costs suffered by the Claimant on pro-rata basis, even for the period Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 10 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 from September 2013 to December 2018. In fact, this computation is based on hard facts and figures tested, verified and proved and therefore, this Tribunal considers such data trustworthy and reliable. If this course of action is followed the dispute amongst the parties would be brought to a closure for the period upto December 2018.
164. The Tribunal has discussed and deliberated upon all three options and is of the view that since the controversy has been pending since sometime in 2010, it would be in the interest of all concerned if there is a finality and the matter is concluded. Accordingly, the Tribunal is of the view that option (c) is the most appropriate option to be exercised in the present circumstances. Following this, the quantification is given below.
165. For the purposes of quantification, there are four options available to the Tribunal.
(i) In the Report given by the Independent Engineer dated 3rd October, 2013 it has come on record that according to the Claimant for three days, that is, 26th, 27th and 29th August, 2013 it had suffered a per day revenue loss of Rs.3,88,800/while according to the Independent Engineer the per day revenue loss suffered by the Claimant was to the extent of Rs. 3,35,397/-.
Two conclusions are possible from this finding. (a) That the loss suffered by the Claimant (as per the Independent Engineer) is to the extent of Rs. 3,35,397/- per day and not Rs. 3,88,800/- per day (as per the Claimant). (b) There is a variation of 15.92% between the data provided by the Claimant and arrived at by the Independent Engineer, that is to say that the loss claimed by the Claimant is higher by 15.92%.
(ii) As per the Report dated 3rd October, 2013 of the Independent Engineer the loss of revenue suffered by the Claimant over a period of 40 months (from May 2010 to August 2013) is Rs. 24,97,95,876/- This works out to Rs.62,44,897/- per month or Rs. 2,05,224/- per day.
Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 11 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53(iii) The data has been updated by the Claimant in its letter dated 27th June, 2017 sent to the NHAI. The period covered in this letter is from May 2010 to May 2017, that is, 85 months. The loss of revenue suffered by the Claimant over a period of 85 months (from May 2010 to May 2017) comes to Rs. 64,63,43,460/-. This works out to Rs.76,04,040/- per month or Rs.2,49, 313/- per day.
(iv) In its letter dated 24th January, 2019 the Claimant informed the Project Director of NHAI that the loss suffered by it up to 31st December, 2018 is to the extent of Rs. 80,99,09,290/- that is for a period of 104 months (from May 2010 to December 2018). This works out to Rs. 77,87,589/per month or Rs. 2,51,212/- per day.
166. This may be placed in a tabulated form as below:
Period Total loss Loss per Loss per
claimed in month in day in
Rs Rs Rs
Report of 10,06,190 3,35,397
3rd (by IE) (by IE)
October,
2013 for
three days
Report of 24,97,95,876 62,44,897 2,05,224
3rd Claimant
October,
2013 for 40
months
Letter of 64,63,43,460 76,04,040 2,49,313
th
27 June, Claimant
2017 for 85
months
Letter of 80,99,09,290 77,87,589 2,51,212
24th June, Claimant
2019 for
Signature Not Verified
Digitally Signed O.M.P. (COMM) 378/2021 Page 12 of 20
By:SUNIL SINGH NEGI
Signing Date:11.02.2022
12:46:53
104 months
(ii) Selection of options
167. As far as option (i) is concerned, a study by the Independent Engineer over a period of three days is not good enough to arrive at any conclusion whether the daily loss over three days will consistent over a period of several years. Similarly, a percentage discrepancy of 15.92% over a period of three days as mentioned in the Report does not reflect a consistent discrepancy of 15.92% over a period of several years. However, the daily loss as reflected by the Independent Engineer is clearly far too low as is quite evident from the chart showing the daily loss over several months. It certainly cannot be a rational or reasonable basis for quantifying the loss suffered by the Claimant. But, as far as the percentage loss of 15.92% is concerned, in the absence of any other empirical evidence available before the Tribunal, there is no option but to accept it. There is nothing to show any variation in the percentage discrepancy at any other given time, mainly because the NHAI did not make any other reference to the Independent Engineer. It could be higher or it could be lower, but in the absence of any other material before us (unlike in the case of daily loss) the Tribunal has no option but to accept the discrepancy of 15.92%. Option (i) is partly accepted only to the extent of the discrepancy percentage of 15.92%.
168. As regards option (ii), that is the only empirically accepted evidence available on record, in the sense that it has not been objected to by the Independent Engineer, an expert authority engaged by NHAI itself, except to the percentage discrepancy of 15.92%.
169. Option (iii) and (iv) suffer from the absence of being tested and/or independently verified. There is also a considerable variation in the monthly loss of revenue, for which there is no explanation. It could be because of better management of traffic or some other reason which the Tribunal cannot guess. Therefore, option (iii) and (iv) would have to be disregarded.
170. Under the circumstances, the Tribunal accepts the quantification based on option (ii) as the only reasonable Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 13 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 option available. The quantification of loss suffered by the Claimant [based on option (ii)] works out as follows:
Period Calculation Total in Total less Rs 15.92 % in Rs May, 40 Months 249795876 21,00,28,373 2010 to August, 2013 Sep, 122 X 25037328 21,10,51,386 2013 to 205224 Dec 2013 (122 days) Jan 365 x 74906760 6,29,81,605 2014 to 205224 Dec 2014 Jan 365 x 74906760 6,29,81,605 2015 to 205224 Dec 2015 Jan 365 x 74906760 6,29,81,605 2016 to 205224 Dec 2016 Jan 365 x 74906760 6,29,81,605 2017 to 205224 Dec 2017 Jan 365 x 74906760 6,29,81,605 2018 to 205224 Dec 2018 Total 54,59,87,784
18. The learned Arbitral Tribunal has, therefore, awarded, to the Respondent 1, ₹ 54,59,87,784/- for the period May, 2010 to 31st Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 14 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 December, 2018. This award forms subject matter of challenge in the present proceedings initiated by the petitioner-State of Karnataka under Section 34 of The Arbitration and Conciliation Act, 1996 (1996 Act).
19. I have heard Mr. Jayant Mehta, learned Senior Counsel for the petitioner at considerable length. Mr. Mehta submits that the amount awarded is in the teeth of the contractual covenants. He has invited my attention to Clause 6 of the SSA and submits that the concluding observations in para 67 of the impugned award and the observations in para 76 of the impugned award are directly contrary to Clause 6.1 of the SSA. At the cost of repetition, one may reproduce the observations of learned Arbitral Tribunal which, according to Mr. Mehta, infract Clause 6.1(i):
"67. It is true that it is the responsibility of the Claimant to collect user fee but if it is unable to do so, for justifiable reasons relating to law and order, then it can and must point out to GoK that the law is being flouted and GoK must step in to ensure adherence to and compliance of the law. Merely by signing the SSA, it is not as if GoK has mortgaged its obligations under the Constitution and the laws to the Claimant. This would be too far-fetched a submission to accept.
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76. There is, therefore, no doubt that as a sovereign body and as a contracting party under the SSA, it is the obligation of GoK to regulate traffic on the project highway through its police powers and thereby assist the Claimant in collecting user fee from recalcitrant persons such as locals or commercial vehicles."
20. Prima facie, this submission does not commend itself to Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 15 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 acceptance. What Clause 6.1(i) states is that execution, delivery and performance of the SSA would not constitute a sovereign act. There is no finding, by the learned Arbitral Tribunal, that, in performing the contract, the petitioner was engaged in a sovereign act. The purpose for such a covenant is self-evident, as the consequences and sequelae, in the case of performance of sovereign acts, are distinct. Quite obviously, what was intended to be conveyed by this Clause was that the obligations of the petitioner qua Respondent 1 were, under the SSA, contractual, rather than sovereign, in nature.
21. The learned Arbitral Tribunal has not held that execution of the agreement, or performance thereof, was a sovereign act. At the same time, it cannot be said that there had been an agreement, between the parties, that all sovereign responsibilities of the petitioner stood abdicated by the execution of the afore-stated agreement. The learned Arbitral Tribunal has interpreted Clause 3.1 (v), (vi) and (viii) of the SSA to indicate that the petitioner was, as part of the sovereign responsibilities cast on it, as the concerned State government, as also by sub-Clauses (v), (vi) and (viii) of Clause 3 of the SSA, bound to ensure by use of its security and police machinery, that interruptions in the performance of the SSA were obviated.
22. In this respect, paras 133 and 148 to 152 of the impugned award find the petitioner to be remiss.
23. These findings essentially involve interpretation of Clause 3.1
(v), (vi) and (viii) of the SSA, vis-à-vis the facts available on ground.
Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 16 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53It cannot be said that they are, prima facie, vitiated by patent illegality or are such as would not be arrived at by any reasonable person conversant with the facts of the case and the law in that regard .
24. Mr. Mehta has also submitted, with emphasis, that, in order to entitle it to any relief under Clause 7.1, Respondent 1 was required to provide evidence of "direct additional costs suffered and incurred" by it consequent on the alleged breach of its obligations by the petitioner. No such evidence, he submits, had been led by Respondent 1. He has also pointed out that Clause 7.1 refers to the direct costs suffered or incurred by Respondent 1, as determined by the NHAI. NHAI, too, he submits, has not determined the amount awarded to Respondent 1 as payable to it. Even if, arguendo, the learned Arbitral Tribunal were competent to determine any amount under Clause 7.1, it is Mr. Mehta's submission that that determination would have to be founded on solid data and evidence by Respondent 1 of the costs suffered or incurred by it, which was wanting in the present case.
25. This submission of Mr. Mehta, prima facie, stands answered by paras 163 to 167 of the impugned award. The learned Arbitral Tribunal has examined the various options available to it, in para 163. Of these, the learned Arbitral Tribunal has, with due reason and justification, found option (c) to be the most viable option, which could result in a quietus to the controversy. It has applied option (c) on the basis of data which was on record and has worked out the revenue loss suffered by the respondent. It is on that basis that the impugned award has come to be passed.
Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 17 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:5326. The vulnerability of the impugned award to challenge is, in my consideration opinion, therefore, seriously questionable.
27. Mr. Mehta has advanced, as a third ground of challenge, the issue of limitation.
28. An issue of limitation, it is settled, is a mixed question of fact and law. That part, the learned Arbitral Tribunal has dealt with the aspect of limitation in considerable detail and has concluded, from paras 36 to 51 of the impugned award and has concluded in para 51, that the claim of the clamant was based on a continuous cause of action which had not been resolved by the petitioner.
29. In these circumstances, it is difficult for me to hold that, prima facie, the submissions advanced by Mr. Mehta make out a case for interference with the impugned award. Mr. Mehta seeks leave to advance detailed submissions when the matter is finally heard and restricts his submission for today, to the application for stay under Section 36(2) of the 1996 Act filed with the present petition.
30. Given the aforesaid, I am of the opinion that the petitioner has not made out any case for absolute stay and has to be subjected to a deposit.
31. In view thereof, issue notice in OMP (COMM) 378/2021.
32. Notice is accepted, on behalf of the respondent, by Dr. Amit Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 18 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 George.
33. Reply, if any, be filed within four weeks with advance copy to learned counsel for petitioner, who may file rejoinder thereto, if any, before the next date of hearing.
34. Given the amount involved and the fact that the petitioner is the State Government of Karnataka, list for disposal at the end of the Board on 4th April, 2022.
35. Both sides are directed to file short notes of their respective submissions, in addition to the submissions already filed, if they so choose, at least 48 hours in advance of the next date of hearing after exchanging copies with each other.
36. Additionally, should learned Counsel deem it necessary, they may file compilations of judicial authorities on which they seek to place reliance, duly indexed, with the relevant paragraphs numbers mentioned in the index accompanying the compilation.
IA 17228/2021 (u/S 36(2)) in OMP (COMM) 378/2021
37. IA 17228/2021 has been preferred under Section 36(2) of the 1996 Act, seeking stay of operation of the impugned award.
38. The application is disposed of by staying the operation of the impugned award, pending disposal of the petition, subject to the Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 19 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53 petitioner depositing, with the Registry of this Court, the principal amount awarded by the learned Arbitral Tribunal, being ₹ 54,59,87,784/- within a period of eight weeks from today.
39. Needless to say, observations in this order are prima facie and only intended to dispose of the application for stay and shall not bind the court when the matter is finally heard.
C. HARI SHANKAR, J JANUARY 14, 2022 dsn Signature Not Verified Digitally Signed O.M.P. (COMM) 378/2021 Page 20 of 20 By:SUNIL SINGH NEGI Signing Date:11.02.2022 12:46:53