Jharkhand High Court
The Court On Its Own Motion vs . on 9 August, 2018
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh, Anil Kumar Choudhary
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (PIL) No. 3503 of 2014
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The Court on its Own Motion Versus.
1. The Union of India through its Secretary, Ministry of Road Transport And Highways, New Delhi
2. The Union of India represented by its Secretary, Ministry of Environment and Forest, New Delhi
3. The National Highways Authority of India represented by its Chairman
4. The State of Jharkhand through Principal Secretary, Road Construction Department, Govt. of Jharkhand
5. Principal Secretary, Department of Forest and Environment, Govt. of Jharkhand
6. Chief Executive Officer, Municipal Corporation, Ranchi
7. Subha Jha
8. Arbind Kumar Jha
9. Narendra Mishra
10. Ranchi Express Limited, Hyderabad
11. D.G,M., M/s Canara Bank, Prima Corporate Branch, Secunderabad, Telangana State
12. Ministry of Corporate Affairs through its Secretary, Govt. of India
13. The Serious Fraud Investigation Office through its Director under the Ministry of Corporate Affairs, Govt. of India
14. Ministry of Surface Transport & Highways through its Secretary,Govt. of India
15. Central Bureau of Investigation through its Director
--- --- Respondents With W.P.(PIL) No. 2470 of 2015
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The Court on its Own Motion Versus The State of Jharkhand & others
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CORAM: Hon'ble Mr. Justice Aparesh Kumar Singh Hon'ble Mr. Justice Anil Kumar Choudhary
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Amicus Curiae: Mr. Nipun Bakshi For the Resp - State: M/s Ajit Kumar, AG, Rajeev Ranjan Mishra, GP-II For the Resp - UOI: M/s Rajiv Sinha, ASGI, Niraj Kumar, JC to ASGI For the Res -NHAI: M/s Anil Kr. Sinha, Sr. Advocate, Sweety Topno, Advocate For the Resp No. 10: M/s Parag Tripathy, Sr. Advocate, Anoop Kr. Mehta, Amitabh Chaturvedi, Himesh Thakur, Mishika Bajpai, Advocates For the Resp-Bank: M/s Jai Prakash, Sr. Advocate, P.A.S.Pati, Advocate
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58/ 09.08.2018 Having considered the reasons stated in the interlocutory application (I.A. No. 7047/2018), the Managing Director of Respondent No. 10 Company Mr. K. Srinivasa Rao is granted exemption from appearance for today. He has assured to remain present on the next dates. I.A. stands disposed of.
2. Pursuant to the order dated 25.07.2018, learned ASGI submits that CBI has instituted a Preliminary Enquiry No. 02(A)/2018-R on 07.08.2018. Copy of the communication dated 07.08.2018 enclosing the Preliminary Enquiry Registration Report be kept on record.
3. On 25.07.2018 NHAI had filed an interlocutory application being 6613/2018 seeking permission to terminate the Concession Agreement on 2 account of default of the Concessionaire without following the procedure prescribed as per agreement given, the past conduct of the Concessionaire and sufferings of the public at large. Both the Respondent Concessionaire and the Lead Bank i.e. Canara Bank took time to respond to it. Respondent No. 10 Ranchi Expressways Limited has filed its response on 06.08.2010. Respondent No. 7 Canara Bank has also filed a counter affidavit on 09.08.2018.
4. It is also relevant to mention here that an interlocutory application bearing no. 7006/2018 has also been filed by the State. It has sought to convey that the Ring Road is being constructed by the State around the periphery of the city of Ranchi. Ranchi Bye-pass road was originally part of Ranchi Ring Road as Section I and II. This section I and II was incorporated as Ranchi Bye-pass in NHAI 163.5 km NH-33 Ranchi-Rargaon-Mahulia four lane project. It further states that Section III, IV, V and VI of Ranchi Ring Road are operational since the year 2012 while section VII is likely to be opened to traffic in next three months. However, Section I and II, presently part of Ranchi-Rargaon-Mahulia four lane project, is incomplete. The object of 85 km Ranchi Ring Road would not be achieved without its completion. State Government is also desirous to undertake implementation of Section I and II of Ranchi Ring Road on its own. Therefore, it has made a request for directing the NHAI to de-link Section I and II of the Ranchi Bye-pass from Ranchi-Rargaon-Mahulia four lane project on NH-33 with immediate effect so that the State Government may take up the work of Ranchi Bye-pass on its own.
5. Learned Advocate General while pressing this interlocutory application also stated that the State Government would not be claiming annuity in lieu of construction of the stretch of Section I and II of Ranchi Ring Road if it is allowed to undertake its completion.
6. Affidavit of Respondent No. 10 is in parts. The first part relates to the background of the case starting from the award of the work of four laning of Ranchi-Rargaon-Jamshedpur section on NH-33 under DBFOT Annuity basis. Various terms of the Agreement, delay in execution of the project have been sought to be explained. Other part starting from para-29 onwards is in reply to the I.A. No. 6613/2018. It has sought to answer some of the comments made by the SFIO in its report. It has also sought to convey that the decision of the NHAI to terminate the Concession Agreement is not justified. The fault lies also with the NHAI. Respondent No. 10 has invested a sum of Rs. 484.49 crores and also mobilized machinery at sites apart from other incidental expenditure. It cannot be deprived of its right to be heard before any action is taken. The request made by the NHAI for termination of the agreement without 3 following the procedure prescribed under the agreement such as cure period notice, etc. is not in consonance with the terms of the Agreement and the principles of natural justice. It should not be allowed by this Court. According to him, lenders have released debt of Rs. 1026.98 crores. NHAI had approved OTFI of Rs. 223.85 crore, as per the guidelines of CCEA and its own Circulars dated 09.06.2015 and 09.09.2015 on completion of 50% of physical work. 50% of the physical work stands completed. Lenders have also submitted NOC giving first charge to NHAI. Therefore, NHAI cannot take U-turn by refusing to provide OFTI. It would therefore be not proper to terminate the Concession Agreement and get the balance work completed on EPC mode.
7. Learned Senior Counsel for the Respondent No. 10 Concessionaire has, however at the outset, expressed that leaving apart blame game, the whole object of this public interest litigation is to ensure that four laning work of NH- 33 at Ranchi-Rargaon-Mahulia Section should not suffer and gets completed as expeditiously as possible. Termination of the Agreement would ultimately lead to the loss of public money expended by the Bankers towards execution of the project as it would not be able to recover anything out of it. Apart from it, Concessionaire would be completely destroyed in the sense that the loan advanced by the Banks would be recoverable from its securities and pledges and would ultimately affect at least 08-10 other important works being executed by the promoters of this Agency. Having said that, he has come out with a proposal that keeping the Agreement alive, NHAI may appoint a new Engineers Procurement Contractor (EPC) to execute the remaining 50% of the work. The New EPC contractor may make use of the plant and machinery and any other assistance from the Concessionaire which it would be more than willing to offer. The Concessionaire would not come in the way of execution of the project or create any hurdles. The Concessionaire will have no issues if the NHAI and the new EPC contractor does not require any of its plant, machinery or assistance. NHAI should infuse OTFI to the tune of Rs. 223.85 crores for execution of the project through the new EPC contractor and infuse further funds to get it executed. The Concessionaire would not have any claim regarding execution of the remaining work. Since the Bank has already given No Objection Certificate and conceded first charge to the NHAI towards infusion of OFTI, NHAI would recover the expenditure made through the annuity. If the Agreement survives, the lender Bank would also be in a position to recover the public money advanced towards this project. The present Concessionaire would come at the bottom of the pile. Irrespective of the disputes that the Concessionaire may have with the NHAI, so far the stage till 4 which the work has been executed and subject to the legal remedies available to it in respect thereof, execution of the remaining part of the project should not suffer. Termination of the Agreement would entail further litigation, which may affect the execution of the remaining project. Even after termination of the Concession Agreement, the NHAI will have to go for appointment of a new EPC contractor for execution of the balance portion of the work. Learned Senior Counsel submits that these proposals have been made on clear instructions of his client and it would be put on affidavit by 13.08.2018.
8. Learned Senior Counsel representing the Canara bank has referred to their counter affidavit. He also refers to the decision of NHAI to sanction OFTI on completion of the project once 50% of physical progress is achieved. Affidavit also seeks to highlight several defaults on the part of NHAI. The Bank has got a number of comments on the report of SFIO, regarding which we do not propose to make any comment. As per the stand of the Respondent Bank, proposal of the NHAI to seek termination of Concession Agreement straightway in view of the past conduct of the Concessionaire without going through the formalities prescribed, would not be correct. Learned Senior Counsel has reiterated the stand of the Bank, as reflected at para-4 of the order dated 17.05.2018. The lead Bank has permitted NOC on 03.05.2018. All the 13 banks have issued their NOC and Consent to Sign tripartite agreement, which has been forwarded to the NHAI on 14.05.2018. NHAI was also informed on 15.05.2018 that the lender banks have authorized Canara bank to execute tripartite agreement extending priority charge on cash flows, as requested by the NHAI, subject to the three conditions:
a. No additional funding by the existing lenders b. NHAI agreeing to fund the balance cost over and above the OTIF of Rs. 223.85 crore for completion of the project.
c. Details of litigants including the litigations are to be furnished in the tripartite agreement.
9. Learned senior counsel for the Bank submits that NHAI should not have any confusion in relation to the stand of the Bank any more. The Bank, however, is of the considered opinion that its interests are to be protected so that recovery of the public money made through advances towards the project can be made. This is possible if the agreement survives. The Bank, as of now, does not intend to go for any substitution of the present Concessionaire as permissible under the Agreement.
10. Learned senior counsel representing the NHAI and the Member (Project) Mr. A.K. Singh, both have sought to convey that NHAI is committed towards execution of the remaining portion of the project. The proposal which has 5 come forward from the Concessionaire today is a development over which NHAI Board is authorized to take a decision. The Board is going to hold its next meeting on 16.08.2018.
11. Different alternative course of action have been discussed during the course of submission on the part of the NHAI. It has emerged from the discussion made that the Respondent Bank would have no issue if the remaining part of the project is executed by NHAI through new EPC contractor. Its commitment to concede first charge in that event also stands. This, of course, is subject to the survival of the main agreement itself. The issues, which have been thrown up at this stage of the proceedings are such where NHAI is required to take an informed decision keeping in mind the uppermost consideration of completing the remaining part of four laning project of Ranchi-Rargaon-Mahulia Section under NH-33 as early as possible in the larger public interest. NHAI would also be required to take a call on the request of the State Government to de-scope Section I and II of Ranchi Ring Road which now forms part of NH 33 Four Laning Project.
12. Learned Advocate General has conveyed that the State Government would not be interested in claiming annuity in lieu of the work under Section I and II, if it is allowed to execute it. Decision on these complex issues involves consideration of a number of factors including finances, physical resources and the terms and conditions under which it is to be carried out. NHAI, if required, would call upon the Concessionaire, the Bank and also the representatives of the State Government for taking a considered decision. It goes without saying that the Lead Bank (Canara Bank), Respondent no. 10 and the State Government would cooperate with the NHAI. We make it clear that this Court has not expressed any opinion either way on the instant issue. NHAI is at liberty to take a decision on its own merits.
13. Having regard to the fact that the Board of NHAI is going to meet on 16.08.2018, proposals suggested on behalf of the Concessionaire be brought on record through affidavit by 13th August, 2018 and also conveyed to NHAI by that date.
14. Let the matter appear on 23.08.2018 at 2:15 pm as unfixed case.
15. Let a copy of the order be handed over to the learned counsel for NHAI, Bank and the State Government.
(Aparesh Kumar Singh, J) (Anil Kumar Choudhary, J) Ranjeet/AKT