Jharkhand High Court
The Court On Its Own Motion vs . on 29 August, 2018
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh, Anil Kumar Choudhary
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 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. Ashutosh Anand & Mr. Nipun Bakshi For the Resp - State: M/s Ajit Kumar, AG, Rajeev Ranjan Mishra, GP-II For the Res -NHAI: Mr. Anil Kumar Sinha, Sr.Adv.
Mrs. Sweety Topno, Advocate For the Resp No. 10: M/s Parag Tripathy, Sr. Adv, Anoop Kr. Mehta, Amitabh Chaturvedi, Lalltaksh Joshi, Advocates For the Resp-Bank: M/s Jai Prakash, Sr. Adv., P.A.S. Pati, Advocate For the C.B.I. : M/s Rajiv Sinha, A.S.G.I., B.K. Prasad 2
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60/29.08.2018 Reference may be made to the orders dated 09.08.2018 and 23.08.2018. To recapitulate, it only needs to be mentioned here that for the detailed reasons recorded in the orders dated 09.07.2018 and 25.07.2018, the Central Bureau of Investigation was directed to conduct an enquiry and investigation in the matter in the light of the findings of the Serious Fraud Investigation Office that public money expended through the public sector banks and financial institutions prima facie appeared to have been diverted to other individuals, entities and companies. In this background, NHAI through an Interlocutory Application bearing No.6613 of 2018 sought permission to terminate the concession agreement on account of default of the concessionaire without following the prescribed procedure as per the agreement. Upon taking note of the response of the bank and the respondent No.10, the concessionaire on the said prayer by order dated 09.08.2018, this Court asked the NHAI to take an informed decision in the matter keeping in mind the upper most 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. The relevant extract of the order dated 09.08.2018 are quoted hereunder:
"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 3 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."
2. NHAI responded on the next date i.e. 23.08.2018 in the following manner:-
3. It did not find favour with the option of restoring the concession agreement after completion of the balance work, recover investment of NHAI along with interest from the annuity payable and then allow lenders/ concessionaire to recover whatever they could from the balance annuity. However, the authority was of the view that the termination of the project may lead to endless litigation and the authority could remain engaged with all sorts of litigation and claims/counter claims in respect of the project for an indefinite period. Keeping this in mind, the authority has taken an alternative decision to foreclose the concession with an offer of One Time Settlement (OTS) of the matter. According to the OTS arrangement, the authority would be agreeable to pay the amount of capital deployed in the project (i.e. value of the work done on the project) as assessed and certified by the independent engineer as a full and final settlement. The amount so determined, would be paid under the project Escrow Account, apportionment of which may be settled between the lenders and concessionaire at their end. Lenders and concessionaire would have no claim against NHAI whatsoever with this proposed settlement. In the event of acceptance of proposed OTS, a tripartite agreement would be executed amongst the parties. NHAI would execute the balance project work through separate EPC bids/contracts. If the settlement proposal is not acceptable to the lenders and/or concessionaire, the authority would proceed with the termination of the concession agreement keeping in view that cure period notice issued earlier had not yielded any result and the lenders were not interested in substitution of the concessionaire. Concessionaire would not be eligible to participate in the bids for the works to 4 be taken in EPC mode or through any of its associates/subsidiaries. The respondent bank and the concessionaire expressed their views on the instant decision of the NHAI which have been referred to in the order dated 23.08.2018.
4. Upon hearing the parties, this Court was of the view that at this stage a workable solution had to be found out for execution of the four-laning work of NH-33 in an expeditious and time bound manner in the larger public interest. For better appreciation paragraph-6 and 7 of the order dated 23.08.2018 is extracted hereunder:
"6. Upon hearing all the parties on the intricacies involving execution of the remaining 50% of the work, we are of the view that at this stage, a workable solution has to be found out for execution of the four laning work of NH-33 in an expeditious and time bound manner in the larger public interest. Project delays often lead to complications which, if not resolved in true spirit, result in the project itself suffering for indefinite period of time leading to immense suffering to the public at large. As on date, about 50.24% of the work stands executed under the agreement dated 20.04.2011 where the stipulated period of completion was 04.06.2015. As such, the project has overrun and completed only half of the work more than three years after stipulated date of completion. The parties may have claims / counter claims against each other for non-completion of the balance work within the stipulated time. Rival claims of the parties however should not come into the way of execution of the remaining portion of the work. OTS Scheme has not been accepted unconditionally by the Bank and the Concessionaire. The option to terminate the agreement lies with the NHAI, but it is fraught with the risk of further litigations. Litigation may withhold or delay the execution of the remaining 50% of the work. Under OTS Scheme or earlier proposal submitted by the NHAI through its interlocutory application (I.A. No. 6613/2018), NHAI has shown its commitment to execute the remaining portion of the work. Rival claims / counter claims between the parties should not come into the way of executing the remaining 50% of the work.
7. Concessionaire on its part had conveyed its intent not to come in any way in execution of the remaining portion of the work under a proposal submitted by it on affidavit on 13.08.2018. The Bank which has made considerable advances towards execution of the project, also wants to protect its interest. However, for reasons attributable to any of the parties, upon which we do not intend to make any comment at this stage, the work remains incomplete till 5 date. Parties may work out their rights and remedies over their claims only towards the executed portion of the work, as may be permissible under the terms and conditions of the agreement. This should not entitle them to withhold the execution of the remaining 50% of the work. As such, a solution can be worked out if parties are willing and ready. NHAI can go ahead with the execution of the remaining 50% of the work. It may not be required to enter into any One Time Settlement also. Parties would be free to raise their claims / counter claims in respect of the executed portion of the work, as per the terms and conditions provided under the agreement. Returns from execution of the remaining portion of the work could go to NHAI as per a structured mechanism e.g. collection from tolls. Adjudication on rival claims / counter claims of the respective parties on the 50% of the work already executed would determine their respective rights and liabilities and the manner in which any dues could be recoverable, as per law. The agreement provides for Dispute Redressal Mechanism under which such claims / counter claims can be raised. This could be a viable solution if acceptable to the parties. It may avoid litigation in respect of execution of the remaining portion of the work. In case such a course is unacceptable, the option of termination of the agreement is always open to the NHAI."
5. On behalf of the NHAI, today the learned Senior Counsel has submitted on instruction that NHAI is in a position to go ahead with the appointment of an independent contractor within a short time and take steps for termination of the concession agreement with the respondent no.10 if One Time Settlement is not acceptable.
6. Bank has filed an affidavit today. Learned senior counsel representing the Bank submits that a meeting was held on 27 th August 2018 with all the 13 lenders. Upon deliberation of the issues and the complexities involved in the matter they unanimously agreed that the balance project may be executed in the larger public interest as deemed fit including EPC mode by NHAI, provided the interest of lenders is duly protected. Further they have arrived at a consensus that they are open and keen to examine the OTS proposal offered by NHAI. They have no objection for execution of the balance project in EPC mode by NHAI subject to the following :-
(a) Lenders are agreeable to examine the One time Settlement [OTS] offer made by NHAI in the matter towards full and final settlement once the specific offer amount is indicated by NHAI (In the 6 affidavit filed by NHAI on 23.08.2018, the specific amount of OTS offer was not furnished). The lenders would like to examine the OTS proposal by mutual negotiations with the NHAI. It is humbly submitted that, since there are 13 lenders, including the Lead Bank (Canara Bank) spread across the country, as such banks may be provided with reasonable time of 3 weeks to take up the matter with the respective sanctioning authorities of 13 lenders seeking approvals for the OTS proposal submitted by NHAI.
(b) The interest of the lenders and the interest of the concessionaire so far as relating to the lenders, shall be protected in respect of the executed portion of the project work, as per the terms and conditions contained in the agreement so that NHAI can proceed with the execution of the remaining 50% of the project work.
7. They further stated that the concession agreement provides for substitution by the lenders. Under the dispute resolution mechanism of the concession agreement either party has an opportunity to notify the other party of any dispute at the first instance to make an attempt to resolve the same amicably in accordance with the conciliation procedure set forth. Any hasty decision would not be in the best interest of all the parties concerned which will also jeopardize the interest of the lenders. The lenders have prayed for a reasonable time of three weeks to enable them to examine the OTS offer made by NHAI from the date of receipt of offer duly indicating the amount and other terms and conditions and negotiate with them. Thereafter, sanction from the appropriate authority could also be taken.
8. Learned counsel representing the concessionaire has filed a supplementary counter affidavit today. He has once again made efforts to explain reasons for delay in execution of the work over the last six years and attributes certain faults on the NHAI as well. Learned senior counsel for the concessionaire submits that concessionaire is not in any manner objecting to the appointment of a new EPC contractor for execution of the balance portion of the work however, termination of the agreement would not only entail serious adverse consequences upon it but also would foreclose all the avenues for the lender bank to realise the public money advanced towards this project recoverable from the annuity on completion of the project. Learned senior 7 counsel has affirmatively stated that the uppermost consideration in the minds of all the parties including NHAI is to execute the remaining portion of the work in the larger public interest. In the light of the intent shown by the NHAI for the appointment of an independent EPC contractor for execution of the balance portion of the work, the concessionaire reiterates that it would have no objection to it on the understanding that the concession agreement is surviving. NHAI may go ahead with the appointment of an independent contractor and in the meantime agree to negotiate with the lender banks to find out the possible solution where the interest of the lender banks is duly protected. The lender banks have also conveyed their intent to enter into negotiation to work out the OTS with the NHAI within a reasonable time. Such negotiation should not delay or withhold the appointment of a new contractor by the NHAI. Such decision may be taken within a stipulated period and brought to the notice of the Court depending upon which further course of action may be taken by the parties. This would obviate the urgency to terminate the contract immediately as a pre-condition for appointment of an independent contractor. NHAI, the bank and the concessionaire may therefore be allowed reasonable time to work out a solution in this regard.
9. Learned senior counsel for the concessionaire has tried to point out that according to its records the actual work executed is beyond 50.24%. It is however pertinent to mention here that physical progress of the work as brought out from the affidavits filed by the NHAI have been taken note of in the orders passed from time to time.
10. The timely completion of the four laning project of NH-33 of Ranchi-Rargaon-Mahulia Section in the larger public interest is the concern with which this Court is seized in the matter over a period of time. Deliberations over the last two dates show that the parties appear to have been stuck up on a viable workable solution. However, all the parties are in unison that their mutual wrangling should not delay execution of the balance portion of the work. NH-33 is said to be the commercial lifeline of the State. Figures provided by the State Government show that near about 900 accidents took place during a period of 6 years up to January 2017 wherein 587 persons have died and 896 persons have injured in this stretch of NH-33. The situation continues to be grim even today. Many more accidents may have claimed 8 unfortunate victims since then. Execution of the remaining portion of the work therefore brooks no further delay. In such circumstances we are of the opinion that some headway has to be made out of this imbroglio. Given the stand of the parties noted above, NHAI can go ahead with the process for appointment of an independent EPC contractor for execution of the balance portion of the work. The process of tender and allotment of such a nature of work is itself time consuming.
11. Considering the stand of the respondent- lender Bank, it would still be not late for the NHAI to sit across a negotiating table to work out one time settlement. NHAI would call upon the senior lender bank and/or its associates as also the concessionaire for this purpose within a period of three weeks. It would be in the best interest of the parties that a workable solution could be found out which could prevent litigations which all the parties including the NHAI also want to avoid. The conciliation exercise on the part of the NHAI in no way should be meant to be understood as closing other option available under the terms and conditions of the agreement. The lead bank and other members of the consortium as well as the concessionaire would cooperate in the exercise.
12. Prayer for exemption made through I.A. No. 7845/2018 of the Member (Project), NHAI Mr. Anand Kumar Singh is allowed for the reasons stated in the instant application. Accordingly, this I.A. stands disposed of.
13. Let the matter appear after three weeks on 26th September 2018 at 3.30 P.M. as unfixed case.
(Aparesh Kumar Singh, J.) (Anil Kumar Choudhary, J.) Shamim/ Animesh