Delhi High Court
Nirmal Bot Ltd. vs National Highway Authority Of ... on 3 October, 2018
$~14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 03.10.2018
+ O.M.P.(I) (COMM.) 198/2018
NIRMAL BOT LTD. ..... Petitioner
Through: Mr. Dayan Krishnan, Sr. Adv. with
Mr. Sanjeev Seshadari,
Mr. Rishi Agrawala,
Mr. Pranjit Bhattacharya &
Ms. Shruti Arora, Advs.
versus
NATIONAL HIGHWAY AUTHORITY OF INDIA ..... Respondent
Through: Ms. Gunjan Sinha Jain with
Ms. Soumya Priyadarshinee, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J. (ORAL)
1. This is a petition in which the following substantive prayer is sought:-
"(i) Restrain the Respondent from recovering / making any
deductions from the 17th Contractual Annuity Payment of
Rs.28,30,00,000 or Petitioner's Escrow Account towards
alleged damages or any other amount, during the pendency
of the dispute before the Ld. Arbitral Tribunal;"
2. Briefly, the record of the case shows that the captioned petition came
to be filed in the background of following facts and circumstances.
2.1 The petitioner entered into a Concession Agreement (in short 'C.A.')
dated 04.05.2007 with the respondent. The C.A. required the petitioner to
O.M.P. (I) (COMM) 198/2018 Page 1
design, construct, develop, finance, operate and maintain National Highway
No.7 (KM-278 to KM-308) located in the State of Andhra Pradesh in the
North-South Corridor NHDH Phase-II (hereinafter referred to as 'Project').
2.2. The petitioner was issued a provisional certificate of completion by
the respondent on 22.07.2009. Under the C.A., according to the petitioner,
maintenance obligation accrued upon it after completion of a period of five
years. In pursuance of the same, the petitioner, apparently, submitted plans
for the maintenance operation between February-April, 2014. The petitioner
states that the maintenance work commenced in July, 2014. It is also the
petitioner's case that the respondent accepted the renewal operations plan
vide its letter dated 05.04.2014.
2.3 Apparently, there was delay in carrying out maintenance operation
which, according to the petitioner, was beyond its control. This fact was
indicated by the petitioner to the respondent on 07.04.2015.
2.4 The respondent, however, called upon the petitioner to pay liquidated
damages under Clause 18.13 of the CA. The respondent demanded from the
petitioner a sum of Rs.10,55,39,148/-. As indicated above, this amount was
demanded by the respondent for alleged delay in completion of the renewal
of the wearing surface of the road pavement made, in pursuance to Clauses
18.12 and 18.13 of the C.A.
2.5. On 23.1.2017, the petitioner submitted a detailed justification qua the
demand raised by the respondent.
3. In view of the aforesaid circumstances, the petitioner, apparently, also
issued a notice under Clause 39.1(a) of the C.A.
3.1 Furthermore, a claim for reimbursement of expenses was also made
by the petitioner in the sum of Rs.41.38 crores. This notice is dated
O.M.P. (I) (COMM) 198/2018 Page 2
24.8.2017.
3.2. The respondent, however, rejected the demand for reimbursement of
the expenses made by the petitioner on 3.10.2017.
4. In terms of the provisions of Clause 39.1(b) of the C.A., as required,
the petitioner also proposed amicable settlement of the inter se disputes.
5. The aforesaid was followed by issuance of a notice of arbitration
dated 12.1.2018.
6. The position which obtains today is that both the petitioner as well as
the respondent have appointed their respective nominee Arbitrators.
7. On the previous date i.e. 10.09.2018, I had asked counsel for the
respondent to obtain instructions qua the appointment of the Presiding
Arbitrator. This direction was issued with the view that if the Arbitral
Tribunal was constituted, the captioned dispute could be dealt with by the
Arbitral Tribunal.
7.1. However, counsel for the parties mutually agree that this aspect could
be left to the nominee Arbitrators, as insofar as the constitution of the
Arbitrator Agreement is concerned, the onus, presently, is on the nominee
Arbitrators.
7.2 Accordingly, the nominee Arbitrators are directed to appoint the
Presiding Arbitrator within one week of the receipt of the copy of the order.
8. The other issue which has come before this Court and which is
principally required to be adjudicated upon by way of the instant petition is
that the respondent has chosen to retain a sum of Rs.7,12,07,270/- from the
17th Annuity payment which is payable to the petitioner. Against this
annuity the petitioner is to receive a sum of Rs.23,80,00,000/-.
9. This Court on being approached by the petitioner vide order dated
O.M.P. (I) (COMM) 198/2018 Page 3
02.05.2018 directed the respondent to deposit the money with the Registry
of this Court.
9.1 I have been informed by Ms. Jain, counsel for the respondent, that the
direction issued by the Court has been complied with.
10 A perusal of order dated 02.05.2018 would show that on that date the
respondent in defence of its action of retaining the aforementioned sum had
relied upon Clause 6.4(b) of the C.A..
10.1 Ms. Jain, learned counsel for the respondent, has once again defended
the retention of the sum of Rs.7,12,07,270/- by placing reliance on Clause
6.4(b) of C.A. In addition thereto, today, Ms. Jain also relies upon Clause
6.2 of the C.A.
11. According to me, neither the provisions of Clause 6.2 nor that of
Clause 6.4(b) of the C.A. would justify the retention of the amount by the
respondent.
11.1 Clause 6.2 provides for payment of bonus annuity or reduction in
annuity qua the concession which is based on the formula given in Clause
6.2(c). Working of the formula is dependent on the ascertainment of 'X'
factor which is determined by the Independent Consultant (in short 'I.C.').
I.C. is required to determine the aggregate number of days of delays, if any,
caused in the execution the concerned project.
12. Mr. Krishnan, learned senior counsel, on behalf of the petitioner
has drawn my attention to letters dated 07.03.2018 and 24.04.2018. These
letters have been addressed by the I.C. to the respondent.
12.1 In the first letter, the I.C. has, undoubtedly, quantified the damages
that the petitioner, according to him, was required to pay. The I.C. has
pegged the damages to a sum of Rs.7,12,07,270/-. However, as correctly
O.M.P. (I) (COMM) 198/2018 Page 4
pointed out by Mr. Krishnan, the I.C. has thereafter clarified in the
subsequent letter that the said amount cannot be retained under Clause 6.4 of
the C.A.
12.2 Thus, having regard to the aforesaid, it is quite clear that, at this stage,
the respondent cannot retain the money.
13. Ms. Jain, learned counsel for the respondent, states that if the money
is released the respondent will have no security. Ms. Jain's contention is
that the financial health of the petitioner company is tenuous.
14. Mr. Krishnan, on the other hand, states that he does not agree with the
assertion made by the respondent with regard to the financial health of the
petitioner and in order to allay apprehension of the respondent has offered to
furnish a bank guarantee for an equivalent sum.
15. Accordingly, the petition is disposed of with the direction that the
Registry will have the sum of Rs.7,12,07,270/- along with accrued interest
deposited in the Escrow Account No.004103000025869.
15.1. The counsel for the parties will assist the Registry in that behalf.
16. Needless to say that any observation made hereinabove will not come
in the way of final determination of disputes obtaining between the parties.
RAJIV SHAKDHER, J
OCTOBER 03, 2018
Ak
O.M.P. (I) (COMM) 198/2018 Page 5
