Delhi High Court
Jaintia Highway Private Limited vs National Highway Authority Of ... on 6 January, 2015
Author: Pradeep Nandrajog
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment Reserved on: November 27, 2014
% Judgment Delivered on: January 06, 2015
+ FAO (OS) 489/2014
JAINTIA HIGHWAY PRIVATE LIMITED ..... Appellant
Represented by: Mr.Sandeep Sethi, Sr.Advocate and
Mr.Kirti Uppal, Sr.Advocate
instructed by Mr.Rakesh Sinha,
Mr.Sourav Ghosh and Mr.Samrat
Sengupta, Advocates
versus
NATIONAL HIGHWAY AUTHORITY
OF INDIA ..... Respondent
Represented by: Mr.Pradeep K.Bakshi, Advocate with
Ms.Prachi V.Sharma and Kushagra
Pandit, Advocates
CORAM:
HON'BLE MR. JUSTICE PARDEEP NANDRAJOG
HON'BLE MS. JUSTICE MUKTA GUPTA
PARDEEP NANDRAJOG, J.
1. Petition filed by the appellant under Section 9 of the Arbitration and
Conciliation Act, 1996 seeking a restraint order against the respondent to
invoke Performance Bank Guarantee No.11640100001232 dated December
01, 2012 in sum of `19,58,00,000/- (Rupees Nineteen Crores Fifty Eight
Lacs only) has been dismissed by the learned Single Judge vide impugned
order dated November 19, 2014.
2. It may be stated at the outset that when the petition was filed before
the learned Single Judge the bank guarantee in question had not been
invoked and it is apparent that the petition was filed in anticipation. Thus,
there are no pleadings concerning the issue whether the invocation of the
bank guarantee is in terms of the guarantee. After the learned Single Judge
dismissed the petition and before the appeal was filed, the bank guarantee
has been invoked and the issuing bank has paid the money to the respondent.
Pithily stated, the pleadings in the petition would be that since, as per the
contract, the construction period did not commence, which was the condition
precedent for the obligation of the appellant to comply with its obligations
under the contract, the performance guarantee could not be invoked for the
reason default could be attributed to the appellant only when the construction
period commenced. The plea of fraudulent invocation, as noted by the
learned Single Judge, was sought to be weaved with aforenoted submission,
being that, if the construction period did not commence, the respondents
would have no right to invoke and thereupon encash the bank guarantee and
any invocation thereof would be an act of fraud.
3. Article 4, Article 6, Article 9 and Article 10 of the Agreement dated
June 05, 2012, which fell for consideration before the learned Single Judge,
have been noted by the learned Single Judge, and the finding has been
returned against the appellant. In a nut shell the finding returned is that the
trigger of date called the Appointed date by which date 80% access of the
Right of Way, which as per the appellant had not come into being, was a
plea based on highly disputed question of fact and since under the terms of
the bank guarantee NHAI was the sole Judge, no case was made out to grant
the interim injunction prayed for.
4. Since same contentions which were advanced before the learned
Single Judge were urged before us in appeal, we would begin our journey by
noting relevant sub- Articles of Articles 4, 9 and 10 of the Agreement as also
the definition of the Appointed date.
5. Article 4, under the caption 'Condition Precedent' reads as under:-
"4.1 Conditions Precedent
4.1.1 Save and except as expressly provided in Articles 4, 9,
10, 24, 34, 44 and 47, or unless the context otherwise requires,
the respective rights and obligations of the Parties under this
Agreement shall be subject to the satisfaction in full of the
conditions precedent specified in this Clause 4.1 (the
"Conditions Precedent").
4.1.2 The Concessionaire may, upon providing the
Performance Security to the Authority in accordance with
Article 9, at any time after 90 (ninety) days from the date of this
Agreement or on an earlier day acceptable to the Authority, by
notice require the Authority to satisfy any or all of the
Conditions Precedent set forth in this Clause 4.1.2 within a
period of 30 (thirty) days of the notice, or such longer period
not exceeding 60 (sixty) days as may be specified therein, and
the Conditions Precedent required to be satisfied by the
Authority shall be deemed to have been fulfilled when the
Authority shall have:
(a) procured for the Concessionaire the Right of Way to the
Site in accordance with the provisions of Clause 10.3.1;
(b) issued the Fee Notification;
(c) Deleted
(d) procured approval of the Railway authorities in the form
of a general arrangement drawing that would enable the
Concessionaire to construct road overbridges/underbridges at
level crossings on the Project Highway in accordance with the
Specifications and Standards and subject to the terms and
conditions specified in such approval;
and
(e) procured all Applicable Permits relating to
environmental protection and conservation of the Site:
Provided that the Authority may from time to time by notice
extend, for up to an aggregate of 6 (six) months, the period for
procuring the approval set forth in Sub-clause (d) and/or Sub-
clause (e) above and in that event the land to be covered by
overbridges or the affected sections of the Project Highway, as
the case may be, shall be included in the Appendix referred to
in Clause 10.3 and dealt with in accordance with the provisions
thereof; and provided further than upon procurement of such
approval, the Concessionaire shall be entitled to a period of 12
(twelve) months therefrom for completion of the overbridges.
For the avoidance of doubt, the approval specified in Sub-
clauses (d) and (e) above shall cease to be a Condition
Precedent upon the extension of time under this Proviso."
6. Article 9 of the Concession Agreement reads as under:-
" 9.1 Performance Security
9.1.1 The Concessionaire shall, for the performance of its
obligations hereunder during the Construction Period, provide
to the Authority no later than 180 (one hundred and eighty)
days from the date of this Agreement, an irrevocable and
unconditional guarantee from a Bank for a sum equivalent to
`19.58 crores (Rupees Nineteen Crores and Fifty Eight Lakhs
only) in the form set forth in Schedule-F (the "Performance
Security"). Until such time the Performance Security is
provided by the Concessionaire pursuant hereto and the same
comes into effect, the Bid Security shall remain in force and
effect, and upon such provision of the Performance Security
pursuant hereto, the Authority shall release the Bid Security to
the Concessionaire."
7. Article 10 of the Concession Agreement under the caption 'Right of
Way', reads as under:-
" 10.1 The Site
The Site of the Project Highway shall comprise the real estate
described in Schedule-A and in respect of which the Right of
Way shall be provided and granted by the Authority to the
Concessionaire as a licensee under and in accordance with this
Agreement (the "Site"). For the avoidance of doubt, it is
hereby acknowledged and agreed that references to the Site
shall be construed as references to the real estate required for
Two-Laning of the Project Highway as set forth in Schedule-A.
x x x x
10.3 Procurement of the Site
10.3.1 Pursuant to the notice specified in Clause 4.1.2,
the Authority Representative and the Concessionaire shall, on a
mutually agreed date and time, inspect the Site and prepare a
memorandum containing an inventory of the Site including the
vacant and unencumbered land, buildings, structures, road
works, trees and any other immovable property on or attached
to the Site. Such memorandum shall have appended thereto an
appendix (the "Appendix") specifying in reasonable detail
those parts of the Site to which vacant access and Right of Way
has not been granted to the Concessionaire. Signing of the
memorandum, in two counterparts (each of which shall
constitute an original), by the authorised representatives of the
Parties shall, subject to the provisions of Clause 10.2.2, be
deemed to constitute a valid licence and Right of Way to the
Concessionaire for free and unrestricted use and development
of the vacant and unencumbered Site during the Concession
Period under and in accordance with the provisions of this
Agreement and for no other purpose whatsoever. For the
avoidance of doubt, it is agreed that valid licence and Right of
Way with respect to the parts of the Site as set forth in the
Appendix shall be deemed to have been granted to the
Concessionaire upon vacant access thereto being provided by
the Authority to the Concessionaire.
10.3.2 Without prejudice to the provisions of Clause
10.3.1, the Parties hereto agree that on or prior to the
Appointed Date, the Authority shall have granted vacant access
and Right of Way such that the Appendix shall not include more
than 20% (twenty per cent) of the total area of the Site required
and necessary for the Two-Lane Project Highway, and in the
event Financial Close is delayed solely on account of delay in
grant of such vacant access and Right of Way, the Authority
shall be liable to payment of Damages under and in accordance
with the provisions of Clause 4.2."
8. The Appointed date under the Concession Agreement dated June 05,
2012 is defined as under:-
"Appointed Date" means the date on which Financial Close is
achieved or an earlier date that the Parties may by mutual
consent determine, and shall be deemed to be the date of
commencement of the Concession Period. For the avoidance of
doubt, every Condition Precedent shall have been satisfied or
waived prior to the Appointed Date and in the event all
Conditions Precedent are not satisfied or waived, as the case
may be, the Appointed Date shall be deemed to occur only
when each and every Condition Precedent is either satisfied or
waived, as the case may be;"
9. The term 'Financial Close' has been defined as under:-
"Financial Close" means the fulfilment of all conditions
precedent to the initial availability of funds under the
Financing Agreements,"
10. The performance guarantee dated January 12, 2012 reads as under:-
"PERFORMANCE SECURITY
The Chairman,
National Highways Authority of India
New Delhi
WHEREAS:
JAINTIA HIGHWAY PRIVATE LIMITED (the
"Concessionaire") and the Chairman, National Highways
Authority of India (the "Authority") have entered into
Concession Agreement dated 05.06.2012 (the "Agreement")
whereby the Authority has agreed to the Concessionaire
undertaking Two-Laning of the Jowai-Meghalaya/Assam
Boarder section of National Highway No.44 on design, build,
finance, operate and transfer ("DBFOT") basis, subject to and
in accordance with the provisions of the Agreement.
The Agreement requires the Concessionaire to furnish a
Performance Security to the Authority in a sum of Rs.19.58
cr.(Rupees Nineteen Crore and Fifty eight lakhs) ( the
"Guarantee Amount") as security for due and faithful
performance of its obligations, under and in accordance with
the Agreement, during the construction period (as defined in
the Agreement).
We, through our Branch at (the "Bank") have agreed to furnish
this Bank Guarantee by way of Performance Security.
NOW, THEREFORE, the Bank hereby, unconditionally and
irrevocably, guarantees and affirms as follows:
The Bank hereby unconditionally and irrevocably guarantees
the due and faithful performance of the Concessionaire's
obligations during the construction period, under and in
accordance with the Agreement, and agrees and undertakes to
pay to the Authority, upon its mere first written demand, and
without any demur, reservation, recourse, contest or protest,
and without any reference to the concessionaire, such sum or
sums upto an aggregate sum of the Guarantee Amount as the
Authority shall claim, without the Authority being required to
prove to show grounds or reasons for its demand and/or for the
sum specified therein.
A letter from the Authority, under the hand of an Officer not
below the rank of General Manager in the National Highways
Authority of India, that the Concessionaire has committed
default in the due and faithful performance of all or any of its
obligations under and in accordance with the Agreement shall
be conclusive, final and binding on Bank. The Bank further
agrees that the Authority shall be the sole judge as to whether
the Concessionaire is in default in due and faithful performance
of its obligations during the Construction Period under the
Agreement and its decision that the Concessionaire is in default
shall be final, and binding on the Bank, notwithstanding any
differences between the Authority and the Concessionaire, or
any dispute between them pending before any court, tribunal,
arbitrators or any other authority or body, or by the discharge
of the Concessionaire for any reason whatsoever.
In order to give effect to this Guarantee, the Authority shall be
entitled to act as if the Bank were the principal debtor and any
change in the constitution of the Concessionaire and/or the
Bank, whether by their absorption with any other body or
corporation or otherwise, shall not in any way or manner affect
the liability or obligation of the Bank under this Guarantee.
It shall not be necessary, and the Bank hereby waives any
necessity, for the Authority to proceed against the
Concessionaire before presenting to the Bank its demand under
this Guarantee. The Authority shall have the liberty, without
affecting in any manner the liability of the Bank under this
Guarantee, to vary at any time, the terms and conditions of the
Agreement or to extend the time or period for the compliance
with, fulfillment and/or performance of all or any of the
obligations of the Concessionaire contained in the Agreement
or to postpone for any time, and from time to time, any of the
rights and powers exercisable by the Authority against the
Concessionaire, and either to enforce or forbear from
enforcing any of the terms and conditions contained in the
Agreement and/or the securities available to the Authority, and
the Bank shall not be released from its liability and obligation
under these presents by any exercise by the Authority of the
liberty with reference to the matters aforesaid or by reason of
time being given to the Concessionaire or any other
forbearance, indulgence, act or omission on the part of the
Authority or of any other matter or thing whatsoever which
under any law relating to sureties and guarantors would but for
this provision have the effect of releasing the Bank from its
liability and obligation under this Guarantee and the Bank
hereby waives all of its rights under any such law.
6. This Guarantee is in addition to and not in substitution of
any other guarantee or security now or which may hereafter
be held by the Authority in respect of or relating to the
Agreement or for the fulfillment, compliance and/or
performance of all or any of the obligations of the
Concessionaire under the Agreement.
7. Notwithstanding anything contained hereinbefore, the
liability of the Bank under this Guarantee is restricted to the
Guarantee Amount and this Guarantee will remain in force
until the earlier of the 1st (first) anniversary of the Appointed
Date or compliance of the conditions specified in paragraph 8
below and unless a demand or claim in writing is made by the
Authority on the Bank under this Guarantee, no later than 6
(six) months from the date of expiry of this Guarantee, all rights
of the Authority under this Guarantee shall be forfeited and the
Bank shall be relieved from its liabilities hereunder.
8. The Performance Security shall cease to be in force and
effect when the Concessionaire shall have expended on Project
construction an aggregate sum not less than 20% (twenty per
cent) of the total Project Cost which is deemed to be Rs.78.15
Crores (Rupees Seventy eight crores and fifteen lakhs) for the
purposes of this Guarantee, and provided the Concessionaire is
not in breach of this Agreement. Upon request made by the
concessionaire for release of the Performance Security along
with the particulars required hereunder, duly certified by a
statutory auditor of the Concessionaire, the Authority shall
release the Performance Security forthwith.
9. The Bank undertakes not to revoke this Guarantee during
its currency, except with the previous express consent of the
Authority in writing and declares and warrants that it has the
power to issue this Guarantee and the undersigned has full
power to do so on behalf of the Bank.
10. Any notice by way of request, demand or otherwise
hereunder may be sent by post addressed to the Bank at its
above referred Branch, which shall be deemed to have been
duly authorized to receive such notice and to affect payment
thereof forthwith, and if sent by post it shall be deemed to have
been given at the time when it ought to have been delivered in
due course of post and in proving such notice, when given by
post, it shall be sufficient to prove that the envelope containing
the notice was posted and certificate signed by an officer of the
Authority that the envelope was so posted shall be conclusive.
11. This Guarantee shall come into force with immediate
effect and shall remain in force and effect for a period of one
year and six months or until it is released earlier by the
Authority pursuant to the provisions of the Agreement."
11. A company named Simplex Infrastructure Limited had submitted an
offer when NHAI floated tenders for augmenting the existing road from
chainage K.M. 69.2 K.M. to K.M.173.2 on the Jowai - Meghalaya Assam
border on NH-44. It was declared the successful bidder and Letter of Award
was issued on March 20, 2012, requiring the formation of a special purpose
vehicle, and this led to the incorporation of the appellant. Thereafter the
appellant and NHAI executed the Concession Agreement dated June 05,
2012, containing, inter-alia, aforenoted Articles.
12. Relevant would it be to note that under Article 9, a performance
security, by way of an irrevocable and unconditional bank guarantee had to
be issued in favour of NHAI and it is in pursuance of this term of the
agreement that at the asking of the appellant the performance guarantee in
question was issued by Axis Bank Limited. A perusal of Article 4.1.2
would reveal that once the appellant provided the performance security, it
was authorized to require NHAI to satisfy the condition precedents within a
period of 30 days and upon fulfilment thereof by NHAI would appellant's
liability commence under the agreement. Sub-Clause (a) of Article 4.1.2
specifies one condition precedent required to be fulfilled by NHAI : to
procure the Right of Way to the site as per Article 10.3.1, which would mean
that in compliance with Article 10.3.1, which would embrace Article 10.3.2,
NHAI was obliged to procure at least 80% of the Right of Way to the site.
13. The dispute therefore essentially centres around whether NHAI had
provided at least 80% of the Right of Way to the site or not. Whereas
appellant contends that NHAI did not do so, NHAI asserted to the contrary.
14. The learned Single Judge was not to decide whether NHAI had
provided at least 80% of the Right of Way or not, for the reason at base the
issue concerned a bank guarantee, and if it was found that this issue was a
highly disputed question of fact, no injunction as prayed for could be issued.
To this extent the approach to the issue by the learned Single Judge is in
conformity with law. The reason being that the bank guarantee makes NHAI
the sole Judge of the dispute, and surely it would not be expected of the bank
which had issued the bank guarantee to have decided, if found to be a highly
disputed question of fact, whether NHAI had complied with said condition
precedent obligation.
15. The performance guarantee in question was issued on December 01,
2012 and on the same date the appellant served a notice upon NHAI
envisaged by Article 4.1.2 of the Concession Agreement to, inter-alia,
comply with its condition precedent obligation under sub-Clause (a) of
Article 4.1.2, i.e. make available access to at least 80% of the Right of Way.
Ordinarily the notice period would have expired after 30 days, subject to a
maximum of 60 days as provided in Article 10.3.2. But the appellant did not
raise any issue for quite some time and from the correspondence exchanged
between the parties it is apparent that their representatives jointly visited the
sites on different dates. As per a Detailed Project Report submitted by an
independent consultant the total land required for construction of the
Highway was 141.13 hectares, out of which admittedly 132.74 hectares was
available at the inception. It appears that additional 5.6 hectares of land was
found to be required. As per NHAI since 132.74 hectares land was made
available, even keeping in view the additional 5.6 hectares of land, more
than 80% of the Right of Way was made available. Later on, due to
realignments, more land was required and the dispute pertained to whether
80% area was available keeping in view the additional land required.
16. As per the appellant the total land required was about 186.02 hectares,
and for which the appellant heavily relied upon a letter dated November 19,
2013 written by NHAI to it, which reads as under:-
"NHAI/BOT/11012/36/2003/77 Dated: 19.11.2013
To,
M/s Jaintia Highway Private Limited
C/O M/S Simplex Infrastructure Ltd.
Simplex House, 27-Shakespeare Sarani,
Kolkata-700017
Sub: Two laning of Jowai-Meghalaya/Assam Border section of
NH-44 (km.69.200 to km.173.200) in the state of Meghalaya to
be executed on BOT (Toll) project on DBFOT pattern under
NHDP Phase-III project: Appointed Date regd.
Sir,
This has reference to your letter
no.JHPL/CL/NHAI/Jowai/2013/001 dated 22.10.2013
addressed to RO, Guwahati.
2. RO, Guwahati has intimated that Government of
Meghalaya is providing advance possession of approximately
14 hact. Of land required for 2 toll plazas, ways side amenities,
Truck Lay Byes and improvement of junctions as projected vide
your letter dated 22.10.2013 & 13.09.2013. RO, Guwahati in
view of the above confirmed the availability of land more than
80% as under:-
S.No. Area (hact.) Remarks
1 132.75 ha/130 Confirmed by DPR
ha(available) Consultant/Concessionai
re.
2 5.6 ha Made available
subsequently during joint
inspection
3 14.00 ha Made available by State
Government for advance
possession.
4 Total available : 152.35 ha (81.89% 149.60 ha
. (available 80.42)
4. The status of Conditions Precedent to be fulfilled by
authority as per Article-4 as under:
Sl.No Conditions Precedent Status
1 (a) Procured for the About 186.02 Ha
Concessionaire the Right of land is required
Way to the Site in out of which
accordance with the 149.60 HA (i
provisions of Clause 10.3.1 80.42%) land
available
2 (b) Issued the Fee Fee notification
Notification; has been
published vie
S.O.2921 (E)
dated 26.09.2013
3 (d) Procured approval of the N.A.
Railway authorities in the
form of a general
arrangement drawing that
would enable the
Concessionaire to construct
road over-bridges/under-
bridges at level crossings on
the Project Highway in
accordance with the
Specifications and Standards
& Subject to the terms and
conditions specified in such
approvals;
4 (e) procured all Applicable Environment
Permits relating to clearance has
environmental protection and been accorded by
Conservation of the Site MOEF vide letter
No.F.No.10-
35/2012-IA-iii
dated 21.03.2013
5. The documents submitted by concessionaire regarding
financial close have been examined by Fin.Div. NHAI. The
Fin.Div. vide their letter dated 06.08.2013 has raised
observation to the ICICI Bank, which is to be complied by the
concessionaire, so that Fin.Div. may finalized the F.C., the
compliance of the above observation is still awaited.
6. It may be mentioned that as per the Article 48,
"Appointed Date" means the date on which Financial Close is
achieved or an earlier date that the Parties may by mutual
consent determine, and shall be deemed to be the date of
commencement of the Concession Period. For the avoidance of
doubt every Condition Precedent shall have been satisfied or
waived prior to the Appointed Date and in the event all
Conditions Precedent are not satisfied or waived, as the case
may be, the Appointed Date shall be deemed to occur only
when each and every Condition Precedent is either satisfied or
waived, as the case may be;"
7. As the all the Conditions Precedent to be fulfilled by
authority as per the C.A. have been achieved as elaborated
above, it is requested that the status of the Conditions
Precedent to be fulfilled by concessionaire as per Article-4 of
C.A. may be submitted for declaration of the Appointed Date in
accordance with Article-48 urgently."
17. The correspondence exchanged between the parties, being the letters
dated September 13, 2013 addressed by the appellant to NHAI, NHAI's
communication dated October 08, 2013, appellant's letter dated October 27,
2013 and NHAI's letter dated November 14, 2013, would bring out that
NHAI took the stand that as per the independent consultant appointed only
141.13 hectares of land was required and out of which Right of Way was
available for 132.75 hectares of land and that the letter dated November 19,
2013 was written with respect to appellant's claim that for construction of
the Highway 186.02 hectares land was required. As per NHAI even if it
was to be treated that 186.02 hectares land was required, 152.3 hectares of
land with Right of Way was available, being : 132.75 hectares as confirmed
by DPR Consultant. 5.6 hectares made available subsequently joint
inspection and 14 hectares made available by State Government of
Meghalaya.
18. A perusal of the letter dated November 19, 2013, heavily relied upon
by the appellant would bring out aforesaid position taken by NHAI in its
letter dated November 19, 2013.
19. As per the appellant, the Government of the State of Meghalaya had
not made available the 14 hectare land proposed to be made available in the
territory of State of Meghalaya and for which the appellant relied upon a
letter dated November 21, 2013 written by the authorized representative of
the State of Meghalaya to urge that said letter would show that as regards the
current status of the land there were houses, petrol pump and a coal depot
hindering the Right of Way. Thus, as per the appellant, the 14 hectares land
was not made available free from hindrances and in that manner 80% of free
access to the Right of Way was not available.
20. In its letter dated December 05, 2013, the appellant, inter-alia, wrote
as under:-
"The Chief General Manager/RO Dated 05.12.2013
National Highway Authority of India
NEDFI House, Dispur,
Guwahati-781006, Assam.
Project: Two laning of Jowai-Meghalaya/Assam Border
Section of NH-44 (km.69.200 to Km.173.200) in
the State of Meghalaya to be executed as BOT
(Toll) project on DBFOT pattern under NHDP
Phase III Project.
Ref: 1. Concession Agreement dated 05th June
2012.
2. Concessionaire's letter JHPL/
CL/NHAI/Jowai/2013/0001 dated 22.10.2013
3. NHAI letter to M/s ICT-
NHAI/PIU/SHL/2013/JOWAI-RATRACHERRA
(LA)/A2/1583 dated 29.10.2013.
4. NHAI letter NHAI/BOT/11012/36/2003/77
dated 19.11.2013.
Dear Sir,
We are in receipt of NHAI letter cited under reference 4 above,
wherein details of Condition Precedent to be fulfilled by the
Authority have been furnished with a conclusion that the
Authority has fulfilled the Condition Precedent as per C.A. In
the said communiqué, the Concessionaire has been requested
for the status on Condition Precedent to be fulfilled by them to
facilitate declaration of the Appointed Date on a priority basis.
In the aforesaid letter, it is mentioned that RO/Guwahati is of
the view that slightly more than 80% of land is available.
However, we do not agree to this view and the total land
available is about 72.89% and not 80.42% as per our
computation. However, we furnish hereunder our observations
on the details provided by NHAI and also the facts and
circumstances prevailing over the project for your kind
information and necessary considerations.
Sl.No. Area (ha) Authority's Concessionaire's Remarks
Remarks
1 132.75 Confirmed by Concessionaire confirmed the
ha/130 ha DPR availability of 130 ha of land.
(available) Consultant/Conce
ssionaire
2 5.6 ha Made available The on-site verification of such
subsequently available land of area 5.6 ha in
during joint
totality together with corresponding
inspection coordinate recording is still
presently under progress. However,
the exact availability of 5.6 ha
would be confirmed only upon
plotting the available and in Auto
CAD and computation of area
thereof.
3 14.00 ha Made available We understand from the said
by State communiqué that State Government
Government for is providing advance possession of
advance 14 ha of land. We do not
possession understand the exact meaning of
"Advance Possession" and its
implication. However, same can be
considered as available land, only
when Authority hands over to the
Concessionaire as per Concession
Agreement.
4 Total 149.60 (available As such, the total available land as
available 80.42%) per our computation stands at 135.6
Ha (130 HA +5.6 HA), if we
consider the land area of 5.6 Ha as
per authority's statement and not
149.6 ha. Hence, the total available
land is only 72.89% of the total
required land.
As regards to fulfilment of Condition Precedent by NHAI, we
put forth our observations as under:
a) The total available land works out to be 136.5 ha, which is
approximately 72.89% of the total required land as
mentioned above.
b) The copy of Fee Notification, published on 26.09.2013 as
mentioned in your above referred letter, has not been made
available to us.
c) The Authority claims that the applicable Permits relating to
Environmental and Conservation of the Site in the form of
EC has been made available by MOEF in the month of
March 2013 vide their letter no.F.No.10-35/2012-IA-III
dated 21.03.2013 in respect of entire stretch. However, it is
pertinent to be noted here that during the joint visit, held on
20th & 21st May 2013, wherein representatives of all the
parties were present, the stretch for a length of 27 KM
between Ch.114.5 KM and 141.5 KM has been designated
as un-classified forest, the status on requisite clearance from
the concerned authority is still awaited, which we had
sought through our letter Ref.No.22nd October 2013.
From the above, it is conspicuous that the Authority has failed
to fulfilling the conditions precedent even on passage of almost
18 months from the date of signing of concession agreement
which the Authority should have been complied within the time,
as it is stipulated under Cl.4.1.2 of Article 4 of Concession
Agreement (CA)."
21. On January 08, 2014, NHAI took the stand that the financial closer for
the project has been achieved. On January 10, 2014 NHAI declared the
Appointed date as the date of the letter. On January 20, 2014 NHAI required
the appellant to mobilize its staff to execute the work at site. On January 30,
2014 NHAI wrote that 149.6 hectares of unencumbered land was available
which included 135.97 hectares of existing Right of Way. As expected
appellant took the stand in its letter dated February 05, 2014 the appellant
took the stand that the minimum 80% of Right of Way, free from
encumbrance was not available.
22. Admittedly the bids were required to be furnished on Design, Bill,
Finance Operate and Transfer (in short DBFOT) basis. Admittedly, when
tenders were floated it was indicated that as per NHAI around 141.13
hectares land was required. It appears that when the actual drawings were
prepared land required got enhanced to 186.02 hectares and this envisaged
enhancement did not take place at one go. It got increased from time to
time. Thus, even if we were to take that the total land required would be
186.02 hectares, we find that prima-facie NHAI had made available in the
very least 149.06 hectares, which would come to 80.42% of land being made
available. (80% of 186.02 hectares = 148.816 hectares)
23. The learned Single Judge has, in para 11, 11.1, 11.2, 11.3 and 11.4 of
the impugned decision, opined as under:-
"11. I have heard the learned counsels for the parties. What
emerges from the record, is that, that a dispute has arisen
between the parties herein as to whether or not the conditions
precedent as prescribed in clause 4.1.2 have been fulfilled. Mr
Sethi's contention that since 80% of the ROW was not
available, the condition precedent stands unfulfilled, is a
contention which is disputed by NHAI. But what clearly
surfaces from the record, is that, even according to the
petitioner, 135 Ha of land was available. This is stated in no
uncertain terms in paragraph 34 of the petition. The relevant
portion reads as follows:-
".....34. The petitioner however refuted each and
every contention of the respondent since as per the
petitioner only 135.6 hectares of land has been
made available by the respondent to them which
was much less than 80% of the total area
professed to be made available to the
petitioner...."
11.1 The moot question then is: what is the total area against
which the available land is to be squared up with. It is NHAI's
case that the initial requirement, as ascertained by its
consultant, was only 141.13 Ha, which subsequently got
enhanced to 186.02 Ha. Undoubtedly, the petitioner's letter
dated 13.09.2013, is indicative of the fact that this aspect was
overlooked, and that, upon a revisit, it was found necessary to
acquire another 56Ha of land for factoring in amenities and
facilities. A clear indicator, qua this aspect, is found in a letter
dated 28.08.2013 issued by the petitioner, which preceded its
letter dated 13.09.2013. In this letter, in no uncertain terms, the
petitioner stated that the: "total available existing land, within
EROW was 130 Ha, whereas total additional land required as
43.09 Ha." Therefore, according to the petitioner, only 75.10%
of land was available, at that point in time.
11.2 Between that date and the communication dated
13.09.2013, the petitioner realized that its requirement for land
had increased from 173.09 Ha to 186.02 Ha. There has,
therefore, even according to the petitioner, been a variation in
what was required in terms of land area, for execution of the
project.
11.3 NHAI, on the other hand, quite clearly has taken the stand
that the initial proposal was for 141.13 Ha, which got enhanced
to 186.02 Ha and as against that what was available was
152.35 Ha, or in the very least, 149.06 Ha. Either way, in
percentage terms, according to NHAI, the availability of ROW,
varies between 80.42% to 81.89%, even if the total area is
taken as 186.02 Ha.
11.4 In my view, these are disputes, which can only be agitated
in a properly lodged action by the aggrieved party. This aspect,
cannot be debated upon or examined by the concerned bank,
which has furnished the bank guarantee in issue. The terms of
the bank guarantee, clearly stipulate that the sole judge as to
whether the concessionaire (i.e., the petitioner) is in default, in
the due and faithful performance of its obligation during the
construction period as prescribed under the CA is NHAI.
Therefore, all that the concerned bank has to see, is as to
whether according to NHAI, the construction period has
commenced. The NHAI, before me, has at least prima facie
established that at every given stage the minimum ROW,
equivalent to 80%, was made available to the petitioner. The
fact that the requirement of land, according to the petitioner,
got enhanced, as due to oversight, land required for amenities
and/or facilities was not included, does not obviate the position
that conditions precedent were fulfilled. The NHAI, insists that
all conditions, which includes environmental clearances etc.
are in place; this is an aspect which the concerned bank cannot
be called upon to examine. It, in my view, would be putting an
unacceptable burden on the bank, and if permitted, would
defeat the very purpose for which bank guarantees are
furnished. Bank guarantees are furnished to strengthen and
cement commercial dealings. Interference by a court on
grounds other than a case of established fraud known to the
concerned bank or irretrievable injury or failure to fulfil
conditions prescribed in the bank guarantee, at the stage of
invocation, would lead to collapse of trade and commerce. As
to whether conditions prescribed in the bank guarantee are
fulfilled, much would depend on the words and expression used.
Suffice it to say, in finding out whether a condition given in the
bank guarantee stand fulfilled, the concerned bank is not
required to carry out a forensic analysis. It is this approach
that the court has to adopt when faced with such a submission"
24. We concur with the reasoning of the learned Single Judge that the
disputes can only be agitated in a properly lodged action by the aggrieved
party and cannot be debated upon or examined by the concerned bank, which
has furnished the bank guarantee.
25. Before bringing the curtain formally down, we may note that after the
impugned decision was pronounced, the bank guarantee was invoked by the
respondents and money realized by it. CM No.19537/2014 was filed in the
appeal to urge additional grounds in the appeal and a feeble attempt was
made to urge that the invocation of the guarantee is not in conformity with
the bank guarantee, an argument which we need to deal with for the reason
there are no properly constituted pleadings before us on said aspect and
secondly for the reason once the bank guarantee is invoked and money
realized under the bank guarantee, the question of issuing any injunction
concerning the bank guarantee would not survive. Any issue concerning the
money realized after invoking the bank guarantee has to be in a properly
constituted recovery proceedings, which in the instant case would be the fora
of arbitration available under the contract. It would be thus open for the
appellant to seek appropriate relief from the Arbitral Tribunal required to be
constituted as per the contract between the parties.
26. The appeal is dismissed but without any order as to costs.
(PARDEEP NANDRAJOG)
JUDGE
(MUKTA GUPTA)
JUDGE
JANUARY 06, 2015
skb/mamta
