Delhi High Court
National Highways Authority Of ... vs Essel Walahjapet Poonamalle Toll ... on 30 August, 2018
$~25
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 30.08.2018
+ O.M.P. (COMM) 369/2018
NATIONAL HIGHWAYS AUTHORITY OF INDIA ..... Petitioner
Through Ms. Gunjan Sinha Jain and Ms.
Soumya Priyadarshnee, Advs.
versus
ESSEL WALAHJAPET POONAMALLE
TOLL ROAD PVT .LTD. ..... Respondent
Through Mr. Raunak Dhillon, Ms. Gauri
Rasgotra, Mr. Vikash Kumar Jha and
Ms. Nikitha Shenoy, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J. (ORAL)
I.A. 11577/2018
1. Allowed, subject to just exceptions.
I.A. 11578/2018
2. This is an application seeking condonation of delay of one (1) day in
filing the accompanying petition.
3. For the reasons given therein, the delay is condoned.
4. The application is allowed.
O.M.P. (COMM) 369/2018
5. This is a petition whereby a challenge is laid to the award dated
9.4.2018.
6. The petitioner seeks to assail the award on two grounds:
(i) First, qua the rejection of Counter Claim no.5.
(ii) Second, with respect to the rate and the period for which interest is
granted against Counter Claim no.7.
7. Insofar as the rejection of Counter Claim no.5 is concerned, the case
of the petitioner is that the Concession Agreement dated 4.6.2012 had to be
terminated on account of breaches committed by the respondent.
8. It is further averred that a notice indicating intention to terminate
dated 30.6.2016 was served on the respondent.
9. It is the case of the petitioner that the aforementioned Concession
Agreement was terminated on 22.7.2016.
10. Furthermore, the petitioner claims that in pursuance of Article 39 of
the Concession Agreement, a joint inspection of the subject project was
conducted to ascertain as to whether there were in defects its execution
and/or performance.
11. According to the petitioner, upon a joint inspection report being
submitted, cost estimate for carrying out rectification was sought from the
Independent Engineer by the petitioner vide communication dated
18.8.2016. Consequently, cost estimate was furnished by the Independent
Engineer vide communication dated 25.8.2016.
12. According to the petitioner, the total estimate given by the
Independent Engineer with regard to rectification was a sum of
Rs.26,42,61,797/-. It is this input which propelled, it appears, the petitioner
to prefer an application to seek amendment of the Counter Claim, albeit, in
an ongoing arbitration proceeding between itself and the respondent.
13. The Arbitral Tribunal, concededly, vide order the 25.10.2016
permitted the petitioner to prefer the Counter Claim no.5 with respect to
claim for rectification work carried qua the subject project.
14. In support of Counter Claim no. 5, the petitioner filed an affidavit of
evidence of, one, Mr. M. Reddaiah, Manager (Tech), NHAI.
15. I am informed that a similar amendment was carried out vis-a-vis
Counter Claim no.7 which, as indicated above, dealt with interest.
16. Ms. Jain, who, appears on behalf of the petitioner, says that the
petitioner has, in fact, incurred rectification cost and that the Arbitral
Tribunal has wrongly rejected the Counter Claim.
17. It is the learned counsel's submission that the rectification work
commenced on 5.8.2016 and was concluded, I am told, on 15.8.2018.
18. Insofar as the Counter Claim no.7 is concerned, Ms. Jain says that the
Arbitral Tribunal failed to adhere to the provisions of clause 47.5 of the
Concession Agreement which requires the defaulting party, i.e. the
respondent herein, to pay the interest at a rate equal to 5% over and above
the bank rate.
19. Mr. Dhillon, who, appears for the respondent, argues that the award
need not be disturbed as the Arbitral Tribunal in the given circumstances has
come to a correct conclusion.
20. It is the counsel's submission that the petitioner failed to adduce
evidence with regard to the cost incurred in carrying out rectification work
and therefore, the Tribunal correctly rejected Counter Claim no.5.
21. As a matter of fact, learned counsel for the petitioner drew my
attention to page 25 of the petition to buttress the submission that the
petitioner had, in fact, averred that it was not in a position to place the
relevant evidence before the Arbitral Tribunal as the work was not
completed.
22. Insofar as the aspect of interest is concerned, learned counsel for the
respondent submits that the petitioner had in fact filed a petition under
Section 34 of the Arbitration and Conciliation Act, 1996, on 27.7.2018, in
which, the grievance with regard to interest which is sought to be articulated
at the bar now was not raised.
23. Learned counsel further submits that it is only when the petition was
re-filed after defects had been removed that such a grievance was raised. It
is submitted that since the petition was re-filed only on 27.8.2018 the plea
for interest as articulated by the learned counsel for the petitioner cannot be
entertained as on this aspect the petition is beyond the period of limitation.
The argument being that while re-filing the petitioner changed the prayer
clause. To be noted, this aspect was not refuted by Ms. Jain
24. I have heard the learned counsel for the parties and perused the
record.
25. Insofar as the grievance with regard to the Counter Claim no.5 is
concerned, it has been dealt with by the Arbitral Tribunal in paragraph 399
to 404 of the award.
26. The relevant observations made by the Arbitral Tribunal are as
follows:
"399. The Counter Claimant contends that as per Article 39 of
the CA the Concessionaire shall be responsible for all defects
and deficiencies in the project highway for a period of 120
days after the termination and it shall have the obligation to
repair and rectify at its own cost all defects and deficiencies
observed by the Independent Engineer.
400. The IE pursuant to the request made by the Counter
Claimant in terms of its letter dated 18.8.2016 submitted its
cost estimate to the effect that the Claimant is liable to
Rs.26,42,61,797/-.
401. The said report dated 25.8.2016 is contained in Annexure
R-17.
402. The Claimant, however, does not deny or dispute that it
had not carried out the repair of the Highway for a period six
months from the date of termination of the Concession
Agreement. The obligation on the part of the Claimant to
maintain the road in terms of Article 39 is absolute. The
Claimant did not however, participate in the matter of
estimation of cost by the IE.
403. The Counter Claimant, however, has not adduced any
evidence to show that it had actually made any expenditure by
carrying out the repairs. It has also not examined the IE as a
witness.
404. The Counter Claimant, therefore, cannot be said to have
proved its counter claim. The said Counter Claim is
dismissed."
(emphasis is mine)
27. Furthermore, if one were to peruse the Clause 39.1, it enures in the
petitioner the right to seek reimbursement of all cost incurred by it. A close
perusal of Clause 39.1 would show costs used therein would only mean
actual cost. What the petitioner placed before the Arbitral Tribunal, as is
evident on reading of the affidavit filed by Mr. M. Reddaiah, was only an
estimate of the of costs likely to be incurred.
28. As noted above, rectification work was carried on beyond the date on
which the Arbitral Tribunal reserved the matter for rendering the award.
29. I am informed by Ms. Jain that the matter was reserved by the Arbitral
Tribunal for rendering the award on 14.10.2017. Even according to the
learned counsel, the rectification work which commenced on 5.8.2016,
concluded only on 15.8.2018.
30. To my mind, the petitioner, at that stage, had an option not to prefer
the Counter claim if it did not have the requisite evidence available readily
with it. In the alternative, the petitioner ought to have to placed before the
Arbitral Tribunal whatever evidence it had available with it which would
have established the costs incurred by it in carrying out the rectification
work at least till a particular stage.
31. Concededly, neither option was availed of by the petitioner.
Therefore, in my view, the Arbitral Tribunal was correct in reaching the
conclusion that since the necessary material was not placed before it Counter
Claim no.5 could not be sustained. I find no error of the law or fact in the
conclusion reached by the Arbitral Tribunal in that behalf.
32. This brings me to other aspect which is as to whether there is any
basis in the grievance raised by the petitioner with regard to interest not
being granted by the Arbitral Tribunal at the rate provided in Clause 47.5.
Concededly, the Arbitral Tribunal has granted interest at the rate of 9% per
annum for the period spanning between 30.8.2016 and the date of the award.
33. It is Ms. Jain's submission that the interest ought to have been granted
from the date of termination of the Concession Agreement, i.e. the date
when the cause of action arose, which is 22.7.2016.
34. I had queried Ms. Jain as to whether any demand for interest had been
made in terms of clause 47.5 of the Concession Agreement.
35. Ms. Jain fairly concedes that no specific demand in that behalf was
made.
36. Ms. Jain, though, says that it was suggested in the termination notice
that they would be raising a demand in terms of the Concession Agreement.
37. Be that as it may, it is not disputed before me by Ms. Jain that no
material was placed before the Arbitral Tribunal as to what was the bank
rate at the relevant point of time.
38. Ms. Jain says that the prevailing bank rate is common knowledge and,
therefore, the Arbitral Tribunal should have applied the measure provided in
Clause 47.5 of the Concession Agreement.
39. I tend to disagree with the submission made by the learned counsel in
this behalf. What may be common knowledge to one may not be so common
to the other. The petitioner was required to, in my view, prove the then
prevailing rate of interest.
40. Accordingly, in my view, no case is made out for interference with
the award.
41. The petition is consequently dismissed.
RAJIV SHAKDHER
(JUDGE)
AUGUST 30, 2018
rb
