Full Text
HIGH COURT OF DELHI
Date of Decision: June 03, 2022
PINK CITY EXPRESSWAY PRIVATE LIMITED..... Petitioner
Through: Mr. Amit Sibal, Sr. Adv. with Mr. Suryadeep Singh, Mr. Sidhant Dwibedi, Mr. Rishabh Sharma, Mr. Vinay Tripathi, Mr. Darpan Sachdeva, Mr. Rishahh Sharaia, Ms. Radha R. Tarkar, Ms. Aishwaiya Kumar and Mr. Aaron Shaw, Advs.
Through: Mr. Parag Tripathi, Sr. Adv. with Mr. Ankur Mittal, Mr. Abhay Gupta, Mr. Yash Kapoor and Ms. Vishakha Nagraj, Advs. for NHAI/R-1
Mr. Sandeep Sethi, Sr. Adv. with Mr. Raunak Dhillon, Ms. Madhavi Khanna and Ms. Ananya Dhar
Choudhury, Advs. for R-2
JUDGMENT
1. The present petition has been filed by the petitioner with the following prayers:- “a) To hold that as an interim measure; the Petitioner shall be entitled to operate the Toll plazas as per the recommendation of 2022:DHC:2228 O.M.P.(I) (COMM.) 166/2022 Page 2 Independent Engineer upto 26.08.2023 as per Article-29 of the Concession Agreement determination done by the Independent Engineer vide letter dated 01.08.2018. b) Allow the Petitioner to operate the toll plazas as per the Concession Agreement dated 06.06.2008 and Tri-partite Agreement dated 16.03.2017. c) Pass such further order/orders as this Hon’ble Court may deem fit and proper under the facts and circumstances of the case.”
2. It is the case of the petitioner and so contended by Mr. Amit Sibal, learned Senior Counsel appearing for Pink City Expressway Private Limited (hereinafter referred to as „petitioner‟ and „concessionaire‟ interchangeably) that the petitioner and the respondent NHAI entered into a Concession Agreement dated June 6, 2008 with regard to widening (six laning) of Gurgaon-Kotputli- Jaipur section of National Highway No.8 from KM 42.70 to KM
273.00 (length of 225.60 km) in the State of Haryana and Rajasthan („Project Highway‟, hereinafter) on Build Operate and Transfer („BOT‟, for short) basis.
3. The petitioner has completed approximately 96% of the widening of the Project Highway. He states that this aspect has been accepted by the respondent / NHAI. It was also agreed that the concession period shall be extended till August 2023 for recovering the deferred premium. In the month of September 2017, owing to shortage of funds and non completion of the project, a One Time Fund Infusion Scheme („OTFIS‟, for short) of ₹354 Crore was allowed for the completion of the pending works. O.M.P.(I) (COMM.) 166/2022 Page 3 He stated, it was also agreed by the NHAI that the petitioner has in no way defaulted in executing the above work. A Review Committee of the lenders was constituted and the respondent NHAI with the power to impose and approve sanctions in case of default by the concessionaire / petitioner in getting the above amounts released. According to him, as per Article 29 of the Concession Agreement, the concession is deemed to have been extended, if the actual traffic at the Project Highway has fallen short of the specific target traffic (79,835 PCUs per day) on the target date. The petitioner as well as the respondent NHAI have conducted their respective traffic surveys and have reached the conclusion that the actual traffic has fallen short of the target by more than 2.5% on the target date thereby leading to deemed extension as per Article 29.1.[2] of the Concession Agreement. In fact, he stated that actual traffic has fallen short by 14.87% as per the survey conducted by the petitioner. Even as per the survey conducted by the respondent NHAI, the actual traffic has fallen short by 14.86% of the target traffic. The respondent NHAI wrote to an Independent Engineer and requested appropriate recommendation regarding modification in the concession period. He stated that after thorough examination of both the abovementioned traffic sampling survey studies, the Independent Engineer on August 01, 2018 determined and recommended an extension of the concession period by 28 months and 24 days i.e., from April 03, 2021 to August 26, 2023. Accordingly, the Project Director, Jaipur, verified and reaffirmed the recommendation of O.M.P.(I) (COMM.) 166/2022 Page 4 the Independent Engineer and also suggested extension of the concession period by 28 months and 24 days i.e. from April 03, 21 to August 26, 23. As no action was taken by the respondent NHAI, the petitioner requested the respondent NHAI to expedite the process. Due to the delay, the Senior Lenders were threatening the petitioner with initiation of debt recovery proceedings, but were pacified by the assurances of the respondent NHAI that due approval would be granted. Mr. Sibal stated that the Senior Lenders had also, on April 10, 2019 issued a letter to the respondent NHAI requesting for an administrative approval of the extension of the concession period. A similar request was made by the petitioner on April 12, 2019 for administrative approval for extension of the concession period. According to Mr. Sibal, on April 14, 2019, even the regional office of NHAI wrote to NHAI, HQ and recommended the extension of concession period in line with the recommendation of the Independent Engineer and the Project Director, NHAI. In fact, several meetings were held between the parties during which the respondent NHAI informed the representative of the consortium of banks that the approval of the competent authority is in progress and the outcome of the same shall be informed in an expeditious manner. He stated that in the subsequent meetings it was informed that the increase of concession period upto August 26, 2023 had reached an advanced stage and the approval of the competent authority shall be conveyed to all the parties concerned. Similarly, he made a reference to a letter dated May 14, 2020 issued by the NHAI to the O.M.P.(I) (COMM.) 166/2022 Page 5 representative of the consortium of banks (IDBI Bank) stating that the proposal for extension of concession period has been initiated and the approval thereof shall be intimated shortly.
4. Mr. Sibal stated in the month of August 2020, during a meeting with the Senior Lenders, the petitioner submitted a resolution plan to reassure the Senior Lenders with regard to recovery of their pending dues. However, the Senior Lenders refused to consider the resolution plan submitted by the petitioner in the absence of an administrative approval from the respondent NHAI. Resultantly, on October 31, 2020 the representative of the consortium of banks (IDBI Bank) issued a loan recall notice being aggrieved by the delay and laches of the respondent. The petitioner being aggrieved by the administrative delay in extension of the concession period, approached this Court by way of a writ petition being W.P.(C) 6693/2020. The said writ petition was disposed of directing the respondent NHAI to take a decision on the extension of concession period within a period of four weeks from the said date. It was only on December 10, 2020 the respondent NHAI intimated the petitioner that the concession period has been extended by an interim period of 14 months from the date of expiry of original concession period and also stated that the denial of the balance extension has been done only to recover the OTFIS. He stated that the IDBI requested the NHAI for extension of concession period, as the criteria under Article 29 has been fulfilled. In other words, it is his submission that IDBI has also objected to the interim extension of concession period stating the O.M.P.(I) (COMM.) 166/2022 Page 6 extension of said concession period to be beyond the contractual terms. It requested that an extension be given as per the recommendation of the Independent Engineer, the Project Director (NHAI) and the Regional Office, NHAI. Moreover, the recovery of OTFIS amount cannot be made the criteria for blocking the assessed period of deemed extension in the absence of any covenant to the said effect in the Concession Agreement as well as the Tri-partite Agreement („TPA‟ for short) signed, by allowing the payment of amount under OTFIS. According to Mr. Sibal, the respondent NHAI rather than intimating its stand with regard to extension for the balance period of 15 months till August 2023, gave its reply on April 12, 2021 with regard to the interim extension and skipped any reply with regard to the remaining months. Surprisingly, the respondent NHAI rather than replying to such extension had blamed the petitioner for not completing the Project Highway during the extended period. He stated that this stand of the respondent NHAI is contrary to the record inasmuch as the respondent NHAI had itself failed in providing the entire site for execution of the work. Rather, the delay in execution of the additional work, though is attributable to NHAI, has no bearing on the extension of the concession period which is a deemed extension and requested the respondent NHAI to grant extension of the entire period as per Article 29 and in terms of the recommendations referred to above. He stated that the NHAI had filed a statement of defence before the Arbitral Tribunal constituted for adjudicating the disputes raised by the petitioner, O.M.P.(I) (COMM.) 166/2022 Page 7 wherein it had submitted various claims, which had not even developed into disputes, including the recovery of OTFIS amount, as well as dues on non maintenance of the Project Highway. Under these circumstances, the petitioner had approached this Court by way of W.P.(C) No.4151/2022 praying therein for a direction to allow the petitioner to operate the toll plazas constructed under the contract till August 26, 2023. The said writ petition was disposed of vide order dated March 25, 2022 directing the respondent NHAI to take a decision on the final extension sought by the petitioner. Pursuant thereto, a communication dated April 29, 2022 was issued by the respondent NHAI denying any further extension to the petitioner and intimated that the interim concession period granted till June 2, 2022 is full and final extension. While denying the same, the respondent NHAI alleged that the petitioner has failed to reimburse the amount granted as OTFIS and also failed to take up maintenance work at certain chainages. He has drawn my attention to a communication dated May 5, 2022 made by the petitioner to the respondent NHAI wherein the petitioner has intimated that the hindrances for completing the project are still persisting at the site and toll collection has suffered due to factors not attributable to the petitioner. The petitioner also intimated that the extension under Article 29 is a deemed extension, hence the alleged non recovery of OTFIS amount as well as non maintenance of the road cannot be reasons for denial of the same. Moreover, the recovery of the OTFIS amount and losses suffered by the respondent has been raised as a counter claim before a duly constituted Arbitral O.M.P.(I) (COMM.) 166/2022 Page 8 Tribunal and the denial of extension is akin to approbating and reprobating simultaneously.
5. Mr. Sibal stated that, a combined reading of Articles 29.1.[2] and 29.2.[1] would show that the extension of concession period is automatic, once it is factually determined that the actual traffic is less than the target traffic during the concession period. He stated that Article 23.2.[1] read with Article 3.1(vii) of Schedule Q would show that the factual determination under Article 29 is to be done by the Independent Engineer. Thus, in this case, as the Independent Engineer has factually determined that the concession period is extendable by 28 months and 24 days, the concession period is deemed to have been modified. There is no further scope for approval from the NHAI.
6. He stated that on a combined reading of Article 23.[6] and the last lines of Article 29.1.[2] would show if either party is not agreeable to the factual determination made by the Independent Engineer, the dispute resolution mechanism has to be invoked. In the present case, the NHAI, had admitted the factual determination. Hence, there is a prima facie case that the concession period has been automatically extended till August 26, 2023. He also stated that NHAI has not terminated the Concession Agreement under Article 37, therefore, in view of the fact that the automatic extension provided under Article 29 is up till August 26, 2023, the NHAI cannot unilaterally take over the highway on June 02, 2022 contrary to the legal arrangement. O.M.P.(I) (COMM.) 166/2022 Page 9
7. He further stated that Article 37 of the Concession Agreement relates to the termination of the agreement. Article 37.1.[1] provides for various defaults on which the NHAI can terminate the Concession Agreement. All the three grounds mentioned in the NHAI letter dated April 29, 2022 are specifically mentioned therein under sub-clauses (c)(g) and (h). Further, Article 37.1.[1] provides for cure period notice of 60 days to be issued. Thereafter, if the defaults are not cured, the NHAI has right to issue notice of intention to terminate under Article 37.1.[2] and grant 15 days time to the petitioner to make representation and grant 15 days time to lenders to exercise their right to substitute the concessionaire under Article 37.1.3. Therefore, the lenders have a right to substitute the petitioner or seek 180 days time to cure the defaults. However, if the lenders do not substitute the petitioner or defaults are not cured, the NHAI has right to terminate the Concession Agreement on account of concessionaire‟s default.
8. According to Mr. Sibal, rather than following the above procedure, the NHAI is attempting to circumvent Article 37.1.[2] and Article 37.1.[3] by indirectly terminating the Concession Agreement on the purported ground on expiry of concession period. He stated that the intent of NHAI to circumvent Article 37.[1] is twofold; firstly, it is indisputable that NHAI has been in default to its primary and material obligations since the beginning. Hence, NHAI is well aware that its termination of the Concession Agreement on purported ground of concessionaire‟s default would not be sustainable in law. Secondly, in case of termination, NHAI O.M.P.(I) (COMM.) 166/2022 Page 10 would have to pay 90% of the debt due to the lenders under Article 37.[3] of the Concession Agreement. Thus, in order to circumvent the above, the NHAI has taken an illegal stand by not agreeing to the automatic extension under Article 29 of the Concession Agreement.
9. He stated, it is well settled that one cannot do something indirectly which cannot be done directly. Mr. Sibal has also contested the ground taken by the NHAI in its communication dated April 29, 2022 as incorrect on merits as well. In this regard, he stated that the defaults are of NHAI. The project was prolonged due to financial difficulties. Therefore, it was agreed between the parties that the NHAI would infuse OTFIS of ₹347 Crores. Accordingly, TPA dated March 16, 2017 was entered into as per which it was inter alia agreed that the toll collected would be disbursed in the waterfall mechanism enshrined under Article 6(h).
10. He also stated that the NHAI does not have the first charge over the principal. A combined reading of clause 3.2(b)(f) and clause 6(h) of the TPA would show the NHAI does not have the first right to the OTFIS from the toll. However, the NHAI is relying on selected portions of the TPA to claim first right over the toll to be collected post June 02, 2022 to recover OTFIS and misappropriate the amount to which the lenders are entitled to.
11. That apart, he stated that the NHAI by relying upon clause 3.1(b), (e) and (l) of the TPA is attempting to circumvent the commercial understanding between the parties and taking over the highway at the detriment of all others. The clauses are generic and O.M.P.(I) (COMM.) 166/2022 Page 11 cannot supercede specific provisions relating to OTFIS in terms of TPA. Further, the said clause only provides that the NHAI can impose any further condition to ensure recovery of OTFIS.
12. Therefore, those conditions could be in addition to the existing conditions but not contrary to them. In the garb of those provisions NHAI cannot nullify the Concession Agreement and TPA completely. Even assuming otherwise, terms of the TPA cannot supercede Article 29 of the Concession Agreement. In fact, a perusal of the Supplementary Agreement dated April 03, 2017 between the NHAI and the petitioner, it would be clear that the provision of the Concession Agreement have not been altered by the TPA. Hence, at most, the remedy of the NHAI is to seek recovery of OTFIS amount from the petitioner by invoking the dispute resolution mechanism under the Concession Agreement. It cannot rather invoke Article 29 redundantly, arbitrarily and unilaterally. Further, NHAI has already invoked the dispute resolution mechanism.
13. Insofar as the aforesaid issues are concerned, he stated that the multi clause contract has to be read as a whole and interpreted in a harmonious manner. Further, one provision of the contract cannot be in variance to another part of the contract. In this regard, he has relied upon the judgment in the cases of Nabha Power Limited v. Punjab State Power Corporation and Ors., (2018) 11 SCC 508 and South East Asia Marine Engineering and Constructions Limited v. Oil Limited, (2020) 5 SCC 164. O.M.P.(I) (COMM.) 166/2022 Page 12
14. He also contested the ground of the NHAI of non maintenance of the Project Highway by stating that the petitioner has complied with all obligations under the Concession Agreement. Without prejudice, he has stated that the NHAI has already made a claim in that regard before the Arbitral Tribunal. In so far as the plea of non-completion of Project Highway is concerned, he lays stress on the fact that 96% of the work has been completed. Further, 4% of the balance work has not been completed due to the failure of the NHAI in handing over the highway / removing hindrances. He reiterated that the NHAI has already raised a counter claim before the Arbitral Tribunal in that regard. It is his case that the action of the NHAI is mala fide and high riding, and being a statutory body, it is duty bound to act fairly and not in an arbitrary manner especially when it has been the biggest beneficiary of the project. In this regard, he relied upon the judgment of this Court in the case of Atlas Interactive (India) Private Limited v. Bharat Sanchar Nigam Limited & Anr., OMP 482/2004, decided on February 17, 2005. He states that around ₹1350 Crores is still outstanding to the lenders from the petitioner. If the petitioner is not allowed to continue as the concessionaire, it would be in default of its obligation qua the lenders and there would be loss of public monies on account of the arbitrary and unilateral conduct of NHAI.
15. He also laid stress on the fact that the NHAI calling bids from third parties to collect toll post June 02, 2022 brings a loss to the public exchequer to the extent of ₹11238.75 Lacs. Hence, the O.M.P.(I) (COMM.) 166/2022 Page 13 action of the NHAI is totally unilateral, arbitrary and illegal. He also states that the appropriate remedy for the petitioner is to approach this Court under Section 9 of the Arbitration and Conciliation Act, 1996. In other words, Application under Section 17 would not be efficacious for the reason that; (i) there is a dispute resolution mechanism, inasmuch as the dispute has to be referred to conciliation; (ii) NHAI has already made an arrangement for collection of toll by appointing a third party; (iii) third parties are involved and Arbitral Tribunal would not have the jurisdiction; (iv) vide letter dated May 12, 2022, the Arbitral Tribunal has conveyed its disinclination to continue the arbitral proceedings on the ground of inadequate arbitral fee, as being insisted upon by the NHAI under the SAROD Rules.
16. He also stated that there is a prima facie case in favour of the petitioner and balance of convenience is also in its favour and the damages would be unquantifiable even if the petitioner is successful in arbitration. He contested all the submissions made by Mr. Tripathi and sought the prayers as made in the petition.
17. Mr. Parag P. Tripathi, learned Senior Counsel for NHAI would contest the very maintainability of the petition in view of the fact there is no challenge to the letter of rejection dated April 29,
2022. He stated that the claim of the petitioner for extension of concession period for further period of 15 months under Article 29 of the Concession Agreement cannot be granted. That apart, he stated that the petitioner had also earlier filed W.P.(C) 6693/2020 seeking a writ of mandamus to direct the respondent NHAI to O.M.P.(I) (COMM.) 166/2022 Page 14 decide extension of concession period under Article 29 of the Concession Agreement as recommended by the Independent Engineer. The said petition was disposed of by this Court as way on September 21, 2020 directing the NHAI to take a decision on the extension of concession period. The subsequent writ petition being W.P.(C) 4151/2022, wherein the petitioner has alleged contentions regarding deemed extension, was also disposed of by directing the NHAI to duly evaluate the prayer as made and communicate the decision thereof expeditiously. He stated that it is clear that the NHAI was permitted to evaluate the extension of concession period under Article 29 and as such the contention of the petitioner regarding deemed extension was not accepted. He further stated that the petitioner has also not challenged the orders dated September 21, 2020 and March 25, 2020 before an Appellate Forum and resultantly it does not lie with the petitioner now to contend that respondent NHAI‟s decision is of no significance and the plea that the extension is automatic need to be rejected. He stated, in the absence of any challenge to the communication dated April 29, 2022, the prayers as made by the petitioner for it to be allowed to operate the toll plaza cannot be granted. That apart, he stated that the petitioner has also not challenged the interim extension given on December 10, 2020 wherein the NHAI has expressly put a condition that OTFIS is to be paid within 15 months which admittedly has not been paid till now. So, according to him, the plea of Mr. Sibal to the effect that there is some sort of automatic extension is belied by the very conduct of the petitioner O.M.P.(I) (COMM.) 166/2022 Page 15 as well the interim extension by NHAI expressly imposing the condition of repayment of OTFIS amount. He stated whether or not such a condition could have been stipulated or what is the effect thereof, is a matter of dispute to be adjudicated by the Arbitral Tribunal which is in place. In any case, the petitioner cannot claim relief in the nature of specific performance and interim mandamus today.
18. It was his submission that the petitioner has not approached this Court with clean hands inasmuch as in W.P.(C) 8321/21 filed before the Division Bench-I of this Court, it was categorically stated that the letter dated April 29, 2022 has been challenged in the petition under Section 9 of the Arbitration and Conciliation Act, 1996. In this regard, a reference is made to paragraph 7.23 of the writ petition wherein the petitioner has stated “petitioner has also challenged the said decision”. According to Mr. Tripathi, in the said writ petition also, the petitioner has pleaded that there is deemed extension under Article 29 and did not challenge the letter dated April 29, 2022. He stated, rather the petitioner went on to file the petition challenging the LOA issued for toll collecting agencies.
19. Mr. Tripathi‟s submission without admitting there is any conflict, is that the TPA dated March 16, 2017 executed subsequent to the Concession Agreement dated June 6, 2008 expressly provide that in case of conflict between TPA and Concession Agreement, the provisions of the TPA shall prevail. In this regard, he has stated the following: O.M.P.(I) (COMM.) 166/2022 Page 16
1. Clauses 3.1(b), (e) and (l) of the TPA provide for right of NHAI to impose further conditions to ensure “project completion” and “recovery of NHAI loan”.
2. NHAI OTFIS was to be repaid by March 31, 2020 by petitioner. It was not dependent on toll collection, as alleged by petitioner. The Escrow mechanism only provides the waterfall mechanism, but does not release the concessionaire of its obligations to pay OTFIS within the time permitted.
3. On December 10, 2020, while granting interim extension, NHAI expressly put a condition that OTFIS is to be paid within 15 months, which admittedly has not been paid till now.
4. Reference by the petitioner to Clause 3.[1] of the TPA to refer to “revival package” to suggest that the conditions in Clause 3 are only related to the revival package and cannot be read in context of the Concession Agreement, is baseless. The revival package is by way of OTFIS loan, which admittedly has been disbursed and utilised by the petitioner. Clause 3.1. and various sub-clauses thereof, provides for mutual rights and obligations of parties including for project completion and recovery of OTFIS loan.
5. Similarly, the word “further” employed in Clause 3.1(e) does not mean “similar” as suggest by Mr. Sibal during arguments. Further, it implies such additional terms, as NHAI would deem fit for the purpose of achieving project completion and recovery of OTFIS loan. O.M.P.(I) (COMM.) 166/2022 Page 17 That apart, he contested the submission made by Mr. Sethi that IDBI had carried out funding in the project based on NHAI promise in the meeting held on April 17, 2020 is factually incorrect. According to him, the lenders have not funded the project beyond 2017. The account became Non-Performing Asset („NPA‟, for short) in December, 2018. Similarly, the submission of Mr.Sethi about the release of ₹52 Crores by IDBI is also misplaced. The lenders released ₹52 Crores against maintenance expenses of more than ₹70 Crores incurred by the NHAI, which ought to have been incurred by the petitioner. Even otherwise, the said amount of ₹52 Crores was also released from escrow account as O&M expenses and proceeds in the waterfall mechanism under Clause 6(h) of the TPA. No new loan was granted by IDBI or other lenders.
20. He contested the plea of Mr. Sibal and Mr. Sethi on termination payment as being completely misplaced. The Agreement comes to an end by efflux of time and there is no question of termination payment. The lenders admittedly, did not issue notice of financial default to the petitioner, despite the fact that the account was NPA since 2018. No attempt was made by lenders for substitution of the concessionaire.
21. Mr. Tripathi highlighted the fact that NHAI had not guaranteed recovery of the Senior Lenders‟ loan. The lenders entered into the arrangement with open eyes, knowing that only a limited component of the toll collected would accrue to them. The petitioner has already filed claims worth ₹4200/- Crore or so before the Arbitral Tribunal, which are more than sufficient to secure the lenders‟ dues. Insofar as O.M.P.(I) (COMM.) 166/2022 Page 18 the reference made by Mr. Sibal on the petitioner‟s reply dated May 5, 2022, he stated that the same is also without any merit for the following reasons:-
1. Insofar as completion of work is concerned, the petitioner was appointed for widening (six laning) the existing four lane highway. The stretch of highway is about 225 KM. The petitioner has not been maintaining the highway, and the NHAI has recently awarded contracts worth more than ₹600 Crores to third parties towards maintenance and balance work. This is in addition to maintenance work undertaken by NHAI from 2017 onwards at the risk and cost of the petitioner.
2. Admittedly there is default in repayment of OTFIS loan. The petitioner alleged that it can be repaid only if money comes from toll collection. But the recovery of NHAI is not dependent on toll collection, and as such, the averment of petitioner is completely misplaced.
3. For the balance work, the reference to the letter of the Independent Engineer dated June 25, 2021 is completely misplaced. The chart reflects multiple locations where work can commence. Utility shifting is the responsibility of petitioner, and for which NHAI cannot be held responsible.
4. Reference to the letter dated May 04, 2022 is also completely misplaced. Without admitting the document, even the said letter allegedly reflects meagre maintenance on a meagre stretch as recent as April 2022. There is no document shown by petitioner that he has been maintaining the road regularly. O.M.P.(I) (COMM.) 166/2022 Page 19 Admittedly, NHAI has been carrying out work on risk and cost of the concessionaire through third party. The total maintenance cost incurred by the petitioner in last 3-4 years is only meagre ₹17 Crore, against a running Project Highway of approx. 225 kms. The highway is in pathetic condition. NHAI has rolled out tenders of more than ₹600 Crores towards maintenance and balance work.
5. Mr. Tripathi stated that the plea of Mr.Sibal of mandatory conciliatory period of 30 days before invoking arbitration is also completely misplaced. According to him, as per Article 44.[2] of the Concession Agreement, the dispute can be referred to the Chairman of NHAI and on such reference, a meeting is to take place within seven days. If no meeting takes place in seven days or the dispute is not settled within 15 days, reference to arbitration can be made. Therefore, there was no impediment for the petitioner to immediately take steps challenging letter dated April 29, 2022. In any case, there is no precondition that petition under Section 9 cannot be filed before or during conciliation. The present petition is filed at the eleventh hour hoping that the lenders will be able to get relief for petitioner and in the meantime, taking further recourse to filing a writ petition by the petitioner itself, does not gel well with the purported urgency shown now. In any case, the submission of Mr. Tripathi is that the petitioner has already raised claim for extension in arbitration, which takes into account extension under Article 29. He qualifies his submission by stating that O.M.P.(I) (COMM.) 166/2022 Page 20 there is an ongoing arbitration between the parties presided over by Justice (Retd) Deepak Gupta, wherein the petitioner has sought extension of time till March 25, 2031, which includes the extension of 28 months and 24 days as well.
22. That apart, no specific performance can be granted in the present case inasmuch as, the case of the petitioner is seeking specific performance under Article 29. It is the petitioner‟s interpretation that extension of concession period is automatic under Article 29, which has been disputed by the NHAI. The interpretation involve disputed questions of fact and law inasmuch as the past conduct of the petitioner is also to be examined in the present case, which demonstrates that the same is not automatic and also the fact whether the extension of concession period is a subject matter of dispute before the Arbitral Tribunal cannot be adjudicated in a petition under Section 9. Further, on account of Sections 14(b), 16(c), 41(e), 41(h) of the Specific Relief Act, 1963, his submission is that; (i) the contract requires the petitioner to carry out repair and construction upon payment of OTFIS and the same cannot be supervised by the Court on a day to day basis; (ii) the petitioner has not shown its readiness to maintain the highway and carry out balance work. In fact no challenge has been made by the petitioner to tenders worth around ₹650 Crores for maintenance and balance work by NHAI which shows petitioner is here only for toll collection and for nothing more; (iii) The Court cannot prevent a breach of contract. Further, no specific performance and final relief be granted by Court even if the case is admitted, as the same is within the jurisdiction of Arbitral Tribunal (Ref. National Highways Authority O.M.P.(I) (COMM.) 166/2022 Page 21 of India v Bhubaneswar Expressways Pvt. Ltd., 2019 SCC OnLine Del 2421). It is also his submission, no specific relief can be granted in view of Section 20A and Section 41(ha) inasmuch as the intent is to ensure that infrastructure projects are not delayed on account of pendency of Court proceedings with respect thereto and/or on account of orders in such Court proceedings and hence, the relief sought in the present case cannot be granted.
23. That apart, no irreparable loss is going to be caused to the petitioner as the petitioner can always be compensated by way of damages, and as such no case for specific performance is made out by the petitioner. He stated that even if it is assumed that as per the Independent Engineer‟s report dated August 1, 2018 and Clause 29.1.[2] of the Concession Agreement that there was actual shortfall of traffic, the NHAI has right to impose further obligations as per the TPA, inasmuch as in case of conflict between the TPA and the Concession Agreement /Substitution Agreement / Escrow Agreement or any other Agreement, the TPA will prevail. He highlighted the fact that the interim extension was granted vide letter dated December 10, 2020 wherein it was categorically stated that 15 months are sufficient for amount of ₹321 Crore which was outstanding on that date. He contested the plea of Mr. Sibal that the petitioner has given more than ₹3000 Crores to NHAI from toll collection since inception, but conceals that the Project Highway of 4 lanes was already in existence from the very first day, and that the Concessionaire was permitted to collect toll from the inception i.e. April 03, 2009. The NHAI has given to petitioner an already built 4 lane highway, unlike any other project O.M.P.(I) (COMM.) 166/2022 Page 22 wherein concessionaire has to complete the construction and then he would be able to collect toll. In the present case, petitioner has started collecting from day one (April 03, 2009), therefore, it is not petitioner who has given money, in fact, it is NHAI who has given more than Rs. 3000 crores to lenders/concessionaire. The petitioner herein, i.e., the Concessionaire was engaged for widening 6 laning of the existing highway. He contested the plea of Mr. Sibal that the petitioner is not in default and no cure period notice has been issued by stating that the petitioner since August 2018 apart from collecting toll, has virtually abandoned the project inasmuch as, no maintenance activity or construction activity has been carried out by the petitioner. The cure period notice was issued on February 22, 2021. Since the petitioner has failed to maintain the project and complete the balance work, NHAI was constrained to invite tender for ₹450 Crores for Rajasthan section and ₹200 Crores for Haryana section. Currently, 3 LOAs have been awarded for toll collecting agencies for 3 toll plazas and 2 LOAs for maintenance and balance work in Rajasthan and Haryana section. For other purposes, financial bids are under evaluation. Not for once, has the petitioner stated it is ready to maintain and construct. The only reason why it wants to continue in the contract is to collect toll and for nothing more. Therefore, particularly for this reason, amongst others, no case is made out for interim relief. In any case, same can be compensated by way of damages. He opposed the submission of Mr.Sibal that because the NHAI had, in 2016, mentioned about the delay in handing over, the issue should be attributed to the NHAI. All these issues are pending before Arbitral Tribunal where there are O.M.P.(I) (COMM.) 166/2022 Page 23 claims and counter claims. Further, the allegation to the effect that new toll collection LOAs have been given at ₹1.76 Crores and allegedly much lower than the collection / commitment of concessionaire is also baseless for the following reasons:-
1. Average annual daily collection for FY 2021-2022 by the concessionaire was ₹1.61 Crore only and not ₹2.06 Crore. Out of the said amount, the petitioner was taking away about ₹88 Lac per month as toll collection agency. New toll collecting agencies are offering NHAI ₹1.76 Crore per day.
2. The petitioner is cleverly showing figures of only last four months and deliberately concealing figures of toll collection for last one year. The toll collections are awarded on APC and not based on last four months of collection.
3. The petitioner was not stopped from bidding in the project; if it felt that it can collect more money or could give a better bid, it could have participated.
24. The plea regarding alleged 96% completion of work is also completely misplaced. The petitioner is collecting toll from inception, and as a part of its obligation under Articles 12 and 17 of the Concession Agreement is required to maintain the Highway as well. It cannot be the petitioner‟s case that its obligation comes to an end soon after the work is completed without having to maintain it for the tenure of concession period. The highway runs into 225 KMs and needs continuous maintenance, else it would continue to deteriorate. The highway is in pathetic condition and even in 2014 and 2019, NHAI got the work of maintenance done by a third party and again NHAI has O.M.P.(I) (COMM.) 166/2022 Page 24 floated tenders for maintenance from third parties for ₹600 Crores. Also, there are other work such as lighting, painting, kerbs etc., which does not have any issue of land or other hindrances, and the petitioner is not even doing that work.
25. Mr. Sandeep Sethi, learned counsel for the respondent No.2 / IDBI Bank has submitted that the project, commissioned on BOT basis between the NHAI and the concessionaire / petitioner has been constructed primarily using funds of upto ₹1876.37 Crores infused by the Senior Lenders, of which ₹1325 Crores excluding interest, penal interest and other charges, are still outstanding to the Senior Lenders. The role and requirement of Senior Lenders and the interplay and dependency on the financing agreement and substitution agreements are highlighted in the Concession Agreement itself. In this regard, he has referred to the following provisions:- (a) Article 3.1.[2] entitles the Concessionaire to “demand, collect and appropriate fee from vehicles and persons liable for payment of fee for using the Project Highway of any part thereof and refuse entry of any vehicle if the fee is not paid.” i.e. the Toll; (b) Article 4.1.[3] for instance requires execution and procurement of the Escrow Agreement, Substitution Agreement, and Financing Agreements, each of which protects the Senior Lenders‟ rights in various forms and manner, as a condition precedent to the appointed date;
(c) Similarly, Article 5.1.[4] requires the Concessionaire to perform and fulfil its obligations under the Financing Agreements; O.M.P.(I) (COMM.) 166/2022 Page 25
(d) Article 5.2.[2] requires the Concessionaire to provide to NHAI, drafts of all the Project Agreements, which would include the Substitution Agreement, the Escrow Agreement and all the Financing Agreements; (e) Article 5.2.[3] mandates that the Concessionaire shall not make any amendments to the Financing Agreements, without the consent of NHAI. Therefore, NHAI was always aware that the Project was largely funded by the facility provided by the Senior Lenders as per the Financing Agreements; (f) Article 23.[1] read with Schedule Q provides for appointment of an Independent Engineer and it is the duty of the Independent Engineer to determine any request for extension of the concession period; (g) Further, the Concession Agreement under Article 24 mandates achievement of financial close, i.e., fulfilment of all conditions precedent to the initial availability of funds under the Financing Agreements including creating security interest in favour of the Senior Lenders; (h) Article 29.2.[1] provides for the extension of the concession period when the actual traffic falls short of Target Traffic;
(i) Article 31 extensively deals with the establishment, deposits and withdrawals from the Escrow Account including withdrawals by the Senior Lenders for satisfaction of their debt due; (j) Article 37.1.[3] provides for the Senior Lenders‟ right to substitute the Concessionaire in accordance with the Substitution O.M.P.(I) (COMM.) 166/2022 Page 26 Agreement in the event NHAI intends to terminate the Concession Agreement; (k) Article 40.[3] also sets up the Substitution Agreement in the Concession Agreement itself;
(l) Article 47.10 states that the Concession Agreement as well as the schedules therein, which includes the Substitution Agreement, constitutes an „Entire Agreement‟;
(m) Even the Definition clauses in the Concession Agreement, for instance terms defined as „Debt Due‟, „ Financial Package‟ „Financing Agreements‟, „Financial Close‟, clearly indicate that the Project Cost has been largely funded by the Senior Lenders and has been recognised under the Concession Agreement.
26. He states, that the scheme of the Concession Agreement being to protect the dues of the Senior Lenders, it cannot be disputed that the Senior Lenders are necessary party to a dispute arising under the Concession Agreement which has direct consequence on their rights. Further, the Concession Agreement forms a part of the Tripartite Substitution Agreement of which the Senior Lenders, the petitioner and the NHAI are a party. He has relied upon the following clauses to demonstrate the overlapping and intertwining of the Agreements: (a) Recital A – provides that the Concession Agreement is annexed to the Substitution Agreement and forms a part of the same. This is in furtherance to the object and intent manifest in Article 40.[3] of the Concession Agreement; (b) Recital C - provides that the Substitution Agreement is securing Senior Lenders interest through assignment, transfer and O.M.P.(I) (COMM.) 166/2022 Page 27 substitution of the Concession to a nominated company in accordance with the provisions of the Substitution Agreement and the Concession Agreement.
27. That apart, he states that the waterfall mechanism as provided under the Escrow Agreement provides for payment of „Debt Due‟ which is defined under the Concession Agreement to largely mean the facility that has been provided by the Senior Lenders to finance the Project. The toll collected, therefore, formed an integral security for the repayment of the loans advanced by the Senior Lenders, which is an essential element of the overall scheme of the Concession Agreement. Therefore, it is evident beyond doubt that the entire Concession Agreement, including the time period of the concession, was devised in a manner such that it would result in recovery of monies advanced by the Senior Lenders to finance the Project. He further submitted that the Senior Lenders had followed the existing trade practices while designating the tolls received by the Concessionaire as its primary security for the loans extended. The Reserve Bank of India in „Master Circular - Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances‟ of July 1, 2014, while noting a rise in Concession Agreements, has recognised toll collection as a valid tangible security for loans. He has relied upon the judgment of the Supreme Court in the case of Rapid Metro Rail Gurgaon Limited v. Haryana Mass Transport Corporation Limited & Ors., being Civil Appeal No. 925-926 of 2021, wherein it was observed as under:- O.M.P.(I) (COMM.) 166/2022 Page 28 “financing arrangements entered into by financial institutions towards fulfilling infrastructure projects, based on the sanctity of the commercial contracts, are to be duly observed. This facet has to be emphasized since it embodies a vital element of public interest as well. Commentators have noted that, “deterioration in loan recovery not only leads to higher provisions and diminished profitability but also constrains banks’ lending capacity, thus affecting the economy adversely”. Unless the dues which are assured to financial institutions as part of the arrangements which are envisaged in Concession Agreements are duly enforced, the structure of financing for infrastructure projects may well be in jeopardy.”
28. Further, it is his case that refusal to grant an extension of the concession period by NHAI vide letter dated April 29, 2022 is a coercive tactic, in order to restrain the Senior Lenders from exercising their right of substitution as per the Substitution Agreement, which happens to be the primary security of the Senior Lenders (in addition to the toll receivables) under the Project. Refusal to grant extension of the concession period, has rendered the right of substitution as inoperable for all practical purposes and the Senior Lenders are left without recourse against the arbitrary actions of NHAI. He states, while the Senior Lenders may not be a party to the Concession Agreement, certain rights thereunder are invariably created in favour of the Senior Lenders. The performance of the Concession Agreement in a manner O.M.P.(I) (COMM.) 166/2022 Page 29 which is not arbitrary towards such rights of the Senior Lenders therefore becomes a vested interest for the Senior Lenders in order to protect the larger public interest/public monies which the banks are investing in such projects. He further stated that Article 29 of the Agreement provides for an extension of the concession period in circumstances enumerated therein which occur beyond the control of the Concessionaire but affect the construction and operation of the Project Highway. The underlying rationale for the same being to (a) ensure the completion of the Project Highway; and (b) to extend the period during which toll may be collected to ensure the repayment of financing provided by the Senior Lenders. Therefore, the Concession Agreement itself has various checks and balances in place, to ensure that the right of the Senior Lenders to recover from the toll collected and seek recovery of their dues is not vitally prejudiced. Further, NHAI‟s letter dated April 29, 2022 does not address any of the submissions that have been made, particularly for extension under Article 29 of the Concession Agreement, but the same is extraneous, extra contractual and cites reasons that have no bearing on the extension of the concession period.
29. Mr. Sethi further stated that the Project in question is one of national importance given that it seeks to better public facilities on one of the busiest highways in India. NHAI‟s arbitrary and thoughtless action of not according an extension of the concession period is not only contrary to public welfare but is also ultimately going to result in depletion / losses of public monies, whether incurred by NHAI or Senior Lenders, which is contrary to NHAI‟s duty as a public body. O.M.P.(I) (COMM.) 166/2022 Page 30
30. That apart, he stated that by refusing to extend the concession period in terms of the Concession Agreement, NHAI has effectively taken away the right of the Senior Lenders to receive the amounts collected as toll and to substitute the Concessionaire. The delay in granting extension of the concession period and thereafter belatedly refusing such extension has reduced the toll collection period thereby resulting in a reduction in the toll collection which is the prime security for the Senior Lenders to recover their dues. Therefore, he states, the takeover of the toll collection by a new entity on behalf of NHAI will lead to the Concessionaire being unable to repay the Senior Lenders‟ dues and also defeat the Senior Lenders‟ security interest in toll receivables, thus causing huge loss of public monies. It is his case that the rights of Senior Lenders are directly prejudiced by refusal of NHAI to grant an extension in terms of the Concession Agreement. He prays, therefore the Concessionaire must be permitted to collect tolls till August 26, 2023 so that the Senior Lenders are able to recover their debt due. Further, the Concessionaire has already initiated arbitration against NHAI seeking extension of the concession period in terms of the Concession Agreement, therefore, in the interim, the Concessionaire may be permitted to collect toll.
31. Further, he stated that in the event that the present petition is not allowed, the following consequences shall ensue: a) Project constructed largely with the funds of the Senior Lenders would be taken over by NHAI; b) The toll would now be collected by NHAI; O.M.P.(I) (COMM.) 166/2022 Page 31 c) NHAI would recover its dues and further unjustly enrich itself by collection of tolls thereafter while the Senior Lenders‟ vital security namely recovery from tolls and the substitution right would be taken away; d) Failure to recover dues by the Senior Lenders would result in huge loss of public monies and impact public interest.
32. Insofar as the order of this Court in W.P.(C) No. 7806/2022 vide order dated June 01, 2022 is concerned, he states that the learned Single Judge had recognised that the Concession Agreement, Escrow Agreement and Substitution Agreement form a cohesive, composite and interlinked repository of the bargain between the parties. The only reason the said Writ Petition was not allowed was on the ground that the reliefs sought therein for extension of the concession period could not have been sustained by the Senior Lenders independent of the Concessionaire. He states, the learned Single Judge had acknowledged the fact that the non extension of the Concession Agreement would undoubtedly impact the rights of the lenders to recover the credit extended or recoup the loans sanctioned to the petitioner.
33. Mr. Sethi has further submitted that the correspondence between NHAI and Senior Lenders further establishes NHAI‟s understanding of the vital interest that the Senior Lenders hold under the Concession Agreement. His submissions in this regard are as follows:-
1. As per Clause 3 in Schedule Q of the Concession Agreement, it is the duty of the Independent Engineer to determine any requests for extension of the concession period. Accordingly, a request as O.M.P.(I) (COMM.) 166/2022 Page 32 per Article 29 of the Concession Agreement for extension of the concession period was made on behalf of the Concessionaire vide letter dated July 5, 2018, which was then forwarded by NHAI to the Independent Engineer vide letter dated July 25, 2018. The same was assessed by the Independent Engineer vide letter dated August 01, 2018 and the concession period was deemed for an extension for a total period of 28 months and 24 days i.e. till August 26, 2023.
2. A letter dated August 13, 2018 was issued by the Project Director, NHAI to the Regional Office, NHAI stating that it is “recommended to increase the concession period of said Project by 28 months and 24 days (876 days) i.e. from 03.04.2021 to 26.08.2023 as per provisions of Article 29 of Concession Agreement based on the Traffic Survey conducted by NHAI through IHMCL in the years 2016, 2017 & 2018”.
3. In the meeting dated April 17, 2020 held between NHAI, IDBI, the Independent Engineer and the petitioner, it was decided that NHAI would issue a comfort letter as an interim measure to the Senior Lenders regarding extension in concession period up to August 26, 2023 in view of Article 29 of the Concession Agreement and expedite the issuance of a formal extension.
4. NHAI vide its letter bearing No. NHAI/ NHDP-V/ MC-II/ BOT/ Concessionaire/ 152284 dated May 14, 2020 informed that the proposal for extension of concession period under Article 29 of the Concession Agreement had been initiated and the decision O.M.P.(I) (COMM.) 166/2022 Page 33 of the board shall be intimated shortly. A similarly worded letter was sent again on July 07, 2020.
5. NHAI vide letter dated December 10, 2020 decided to completely disregard the recommendations of the Independent Engineer and informed the Senior Lenders of their arbitrary decision to grant an „interim extension‟ to the concession period of merely 14 months from the date of the expiry of original concession period, i.e., till June 02, 2022.
34. Mr. Sethi stated that therefore, the communications addressed by NHAI to the Senior Lenders, particularly the comfort letters dated July 07, 2020 and May 14, 2020 stating that the proposal for extension under Article 29 has been considered favourably, further establishes NHAI‟s own understanding of the vital interest that the Senior Lenders have with respect to the extension of the concession period.
CONCLUSION
35. Having heard the learned counsel for the parties and perused the record, the only issue which arises for consideration is whether the petitioner should be allowed to operate the toll plaza on the Project Highway on the ground that the petitioner is entitled to automatic extension of the concession period under Article 29.1.[2] of the Concession Agreement.
36. It is the conceded case of the petitioner that it has been demanding a decision of the NHAI on the recommendation of the Independent Engineer for extension of the concession period by 28 months and 24 days from April 03, 2021 to August 26, 2023. The petitioner had initially filed a Writ Petition being W.P.(C) 6693/2020, O.M.P.(I) (COMM.) 166/2022 Page 34 seeking a writ of mandamus, directing the NHAI to decide extension of the concession period under Article 29. The writ petition was disposed of directing the NHAI to take a decision on the extension of the concession period. Even the subsequent Writ Petition being W.P.(C) 4151/2022, the prayer was for a direction to the NHAI to accord approval to the request of the petitioner for extension of the concession period in terms of Article 29 of the Concession Agreement. The Court had recorded the submission of Mr. Tripathi that the competent authority would duly evaluate the prayer as made and communicate the decision to the petitioner.
37. Suffice to state, the plea of Mr. Tripathi is that there is no automatic extension of the concession period as an extension presupposes approval of the Competent Authority. This plea is prima facie appealing more so it is the case of the petitioner in the writ petitions that NHAI should take a decision on extension and in fact directions in that regard were given by the Court. So, what has been contended by Mr. Sibal is contrary to the stand taken in the earlier writ petitions.
38. Further, despite having orders from this Court in the above writ petitions that a decision shall be taken by the respondent NHAI on extension of the concession period in terms of Article 29 of the Concession Agreement, the petitioner has not challenged the decision of the respondent NHAI as conveyed vide communication dated April 29, 2022, not to grant any further extension in the concession period. The said communication unequivocally reads that the concession period shall come to an end on June 02, 2022. In the absence of any challenge to the communication dated April 29, 2022 in this petition, O.M.P.(I) (COMM.) 166/2022 Page 35 despite liberty having been granted to the petitioner in the order of this Court dated March 25, 2022, the prayer as sought for by the petitioner cannot be granted.
39. That apart, the petitioner has also not challenged the communication dated December 10, 2020, whereby the petitioner was granted interim extension of the concession period for 14 months only on the ground that it had not refunded the principal of OTFIS amount of ₹321 Crore and not on the ground of Article 29 of the Concession Agreement that extension is automatic. If the extension of 14 months was not under Article 29, then the petitioner cannot say that the extension is automatic, having not challenged the decision.
40. Having said so, on merit, the plea of Mr. Sibal is by relying upon Articles 29.1.2, 29.2.[1] and 23.2.1, to state that the extension of the concession period is automatic. Whereas Mr. Tripathi has relied upon Clause 3.[1] of the TPA to contend that the NHAI has the right to impose further conditions to ensure project completion and recovery of NHAI loans. He has also stated that in case of conflict between the TPA and the Concession Agreement, the provision of the TPA shall prevail. The submission and the stand of the parties is at variance, which itself is an issue which need to be adjudicated, for granting the relief as sought for by the petitioner in this petition. This is only permissible before the Authority as agreed to by the parties in the Concession Agreement and not before this Court. This I say so, because the matters of construction of contract primarily fall within the domain of the Arbitrator. Therefore, the judgments relied upon by Mr. O.M.P.(I) (COMM.) 166/2022 Page 36 Sibal in Nabha Power Limited (supra) and South East Asia Marine Engineering and Constructions Limited (supra) may not be gone into.
41. Now, coming to the plea of Mr. Sibal that the reasons given in the communication dated April 29, 2022 are incorrect and the NHAI was required to follow the procedure under Article 37 of the Concession Agreement, which admittedly has not been done. This plea was opposed by Mr. Tripathi by stating that the NHAI has not terminated the Concession Agreement as sought to be alleged by Mr. Sibal. He qualifies his submission by stating that the Concession Agreement has come to an end with the efflux of time, inasmuch the 12 years had come to an end to April 03, 2021. The period was extended by only 14 months, that too, for recovering the principal of the OTFIS of ₹321 Crore, which period has also come to an end on June 02, 2022. The words contained, i.e., “not to grant any further extension” presupposes the concession period has come to an end, which cannot be extended. In any case, this in itself, a dispute whether the letter of April 29, 2022 (though not challenged), is a termination of the Concession Agreement which pre-supposes the procedure contemplated under Article 37 need to be followed.
42. There is one more aspect which shall disentitle the prayers sought for by the petitioner, inasmuch as, concedingly, the petitioner had challenged the issuance of tenders for toll collection by way of a writ petition before this Court. The said writ petition was withdrawn. It follows the very issuance of tenders has attained finality.
43. I have been informed that three LOAs have been awarded to the toll collecting agencies for three toll plazas and two LOAs for O.M.P.(I) (COMM.) 166/2022 Page 37 maintenance and balance work in Rajasthan and Haryana. The said entities are not parties in the present petition possibly for the reason that they are not parties to the Concession Agreement. But this Court cannot overlook the fact that any order sought for by the petitioner shall surely affect the rights of those entities and hence, the prayer sought for cannot be granted in a petition under Section 9 of the Act.
44. It was also the submission of Mr. Sibal that the issuance of LOAs shall cause loss to the public exchequer. This submission of Mr. Sibal has been contested by the respondent NHAI. In any case, such a plea is misplaced as grant of LOAs shall have no bearing on the decision of the NHAI not to extend the concession period beyond June 02, 2022 as the decision to issue LOAs was a decision following the decision of NHAI dated April 29, 2022. In any case, it is the submission of Mr. Tripathi that the new toll agencies are offering NHAI ₹1.76 Crore per day.
45. Insofar as the reliance placed by Mr. Sibal on the judgment in the case of Atlas Interactive (India) Private Limited (supra) is concerned more specifically in paragraph 17 the Court had held as under:
46. Suffice to state, in the said judgment, this Court was concerned with the termination of the contract, unlike the present case where it is the stand of the respondent that the agreement has come to an end by efflux of time. The judgment is clearly distinguishable.
47. Now coming to the submission of Mr. Sandeep Sethi, learned Senior Counsel appearing for the respondent No.2, he has stated that the Senior Lenders are necessary parties under the scheme of the Concession Agreement, and are liable to be protected with regard to their dues, and any dispute arising under the Concession Agreement has a direct consequence on their rights and hence the prayers as sought O.M.P.(I) (COMM.) 166/2022 Page 39 need to be granted is concerned, suffice to state, the respondent No.2 having filed a petition being W.P.(C) 7806/2022 in this Court with the following prayers, which has been decided by holding that the prayers (a) to (e) and (g) therein are not maintainable, the plea of Mr. Sethi cannot be accepted: “a) Issue a writ in the nature of Mandamus, or any other appropriate writ, order or direction, thereby, directing the Respondent No. 1 (NHAI) to give its administrative approval for extension of the concession period till at least August 26, 2023 (a total period of 28 months and 24 days commencing the expiry of the original concession period) in accordance with Article 29 of the Concession Agreement dated July 06, 2008 as per the assessment done by the Independent Engineer vide letter dated August 01, 2018; b) Issue a writ in the nature of Mandamus, or any other Respondent No.1 (NHAI) to give its administrative approval for extension of the concession period in accordance with Article 34 of the Concession Agreement dated July 06, 2008 for a period of 63, 94 days and 364 days for Covid 19 and Kisan andolan respectively; c) Issue a writ in the nature of Mandamus, or any other Respondent No. 1 (NHAI) to give its administrative approval for extension of the concession period in O.M.P.(I) (COMM.) 166/2022 Page 40 accordance with Article 35 of the Concession Agreement dated July 06, 2008 for a total period of 10 years and 2 months (approximately) from the expiry of the original concession period; d) Pass any other order or direction requiring the Respondent No.1 to fulfil its obligations under the Concession Agreement dated July 06, 2008 and/or any other obligations qua the Senior Lenders which are required to be fulfilled and/or would aid in completion of the Project and extend its cooperation for achieving the same; e) Issue a writ in the nature of Mandamus, or any other appropriate writ, order or direction, thereby, quashing the letter dated April 29, 2022 issued by Respondent No.1 (NHAI), refusing to grant extension of the concession period and deeming the concession period to expire on June 02, 2022; f) In the alternative to prayers (a) to (d) hereinabove, classify the Project as a Stuck Project under the office memorandum dated March 9, 20 19, and direct NHAI to pay full and final payment as settlement to the Senior Lenders in terms of the aforesaid notification; and g) Pending hearing and final disposal of the present Writ Petition, pass an order or direction extending the O.M.P.(I) (COMM.) 166/2022 Page 41 concession period to beyond June 02, 2022 and/or pass an order directing that the concession period shall not expire on June 02, 2022;”
48. If the submission is accepted, the same shall mean that the respondent No.2 shall get similar relief as prayed for in the petition which was held to be not maintainable. That apart, if it is held that the petitioner in the present petition is not entitled to any relief, then it must necessarily flow that the respondent too cannot be entitled to the same.
49. Insofar as the judgment in the case of Rapid Metro Rail Gurgaon Limited etc. v. Haryana Mass Rapid Transport Corporation Limited & Ors., relied upon by Mr. Sethi the Supreme Court has in paragraph 57 held as under:
50. The judgment has no applicability to the facts which arise in this petition. That apart, the observation of the Supreme Court regarding arbitrariness was made upon concession granted by the Haryana Mass Rapid Transport Corporation agreeing to pay 80% of the debt due upon independent verification by the Comptroller and Auditor General.
51. Further, this Court is of the view that the prayer made by the petitioner in this petition under Section 9 of the Arbitration and Conciliation Act, 1996 cannot be granted as the same shall amount to extending the contract contrary to the decision dated April 29, 2022. In this regard, I must refer to the judgment of the Division Bench of this O.M.P.(I) (COMM.) 166/2022 Page 43 Court in the case of C.V. Rao v. Strategic Port Investments KPC Ltd., FAO (OS) No.203/2014, decided on September 01, 2014 wherein in paragraph 42 it was held as under:
52. The aforesaid judgment was followed by another Division Bench of this Court in the case of DLF Ltd. v. Leighton India O.M.P.(I) (COMM.) 166/2022 Page 44 Contractors Private Ltd. & Anr., FAO (OS) (COMM) 63/2020, decided on July 22, 2021 by holding in paragraph 40 as under:
53. It is also settled law that in terms of the judgment of the Coordinate Bench of this Court in West Haryana Highway Projects Private Limited v. National Highways Authority of India & Ors., O.M.P. (I) (COMM.) 144/2020, dated October 07, 2020, wherein the Court considering the provision of the Specific Relief Act, 1963 has held as under: “46. On the other hand, I find merit in the contention of respondent no.1 that if the petitioner, notwithstanding the O.M.P.(I) (COMM.) 166/2022 Page 45 protestations of respondent no.1, were directed to carry out maintenance work, such a direction would undoubtedly involve an element of supervision from this Court, which is neither feasible nor permissible in the light of Sections 14(b) read with Section 41(e) of the Specific Relief Act. At this point, it is important to ask – then who shall carry out the repair and maintenance work under the Concession Agreement? The answer to this query lies in Article 17.9.[1] of the Concession Agreement which vests respondent no.1 with the power to carry out remedial, operation and maintenance works on the Project Highway at the risk and cost of the petitioner, even during the subsistence of the agreement. Evidently, the impugned NITs were issued by respondent no.1 in pursuance of this power. Keeping in view the fact that there is a serious dispute between the parties regarding the quality of work rendered by the petitioner, any injunction granted upon these NITs could possibly impede or delay the repair and maintenance work on the highway as also have a direct impact on its safety and condition. For this reason, granting such an injunction, as rightly contended by respondent no.1, would fall foul of Section 20A of the Specific Relief Act and operate against public interest. Thus, keeping in view the fact that the NITs dated 17.04.2020 and 05.05.2020 issued by the respondent no.1 solely pertain to the execution of repair and maintenance works of the stretch of highway which O.M.P.(I) (COMM.) 166/2022 Page 46 comprise of the Delhi/Haryana border to Rohtak Section of NH10 from Km 29.700 to Km 87.000, I find no reason to restrain these NITs. For this reason, all the reliefs sought in the first petition as also the petitioner’s prayer in the second petition seeking to restrain the respondent no.1 from issuing any notice/letter with regard to repair and maintenance, cannot be granted. However, it is made clear that this Court is not expressing any opinion on whether respondent no.1 is justified in issuing these NITs or whether the quality of petitioner’s repair and maintenance work is adequate or not; these issues can only be determined in arbitration. Therefore, it would be open for the petitioner to agitate these issues in arbitration.” (emphasis supplied)
54. It is made clear that the above is a prima facie view and must not be construed as a final opinion on any issue which has arisen for consideration in this petition. No case is made out for the grant of relief as prayed for by the petitioner. Liberty is with the petitioner to seek such remedy as available in law, if any cause exits. I do not see any reason to grant the relief as prayed for by the petitioner in this petition. The petition is dismissed. No costs.
V. KAMESWAR RAO, J