Delhi High Court
Gmr Hyderabad Vijayawada ... vs National Highways Authority Of ... on 30 January, 2020
IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: January 30, 2020
+ ARB. A. (COMM.) 1/2020, CAV. 34/2020 & I.As. 443/2020,
444/2020
GMR HYDERABAD VIJAYAWADA EXPRESSWAYS LTD.
..... Petitioner
Through: Mr.Rajiv Nayar, Sr. Adv. with
Mr.Mahesh Agarwal, Mr.Rishi
Agrawala, Ms.Megha Mehta
Agrawal, Mr.Nishant Rao and
Ms.Shruti Arora, Advs.
versus
NATIONAL HIGHWAYS AUTHORITY OF INDIA
..... Respondent
Through: Mr.Manish K. Bishnoi, Mr.Umang
Raj, Mr.Anurag Sarda and Mr.Sachin
Sharma, Advs.
+ ARB. A. (COMM.) 2/2020 & I.As. 621/2020, 622/2020
NATIONAL HIGHWAYS AUTHORITY OF INDIA
..... Petitioner
Through: Mr.Manish K. Bishnoi, Mr.Umang
Raj, Mr.Anurag Sarda and Mr.Sachin
Sharma, Advs.
versus
GMR HYDERABAD VIJAYAWADA
..... Respondent
Through: Mr.Ciccu Mukhopadhyaya, Sr. Adv.
with Mr.Mahesh Agarwal, Mr.Rishi
Agrawala, Ms.Megha Mehta
Agrawal, Mr.Nishant Rao and
Ms.Shruti Arora, Advs.
ARB.A.01/2020 and connected matter Page 1 of 8
CORAM:
HON'BLE MR. JUSTICE V. KAMESWAR RAO
JUDGMENT
V. KAMESWAR RAO, J
CAV. 34/2020 IN ARB. A. (COMM.) 1/2020
Learned counsel for the caveator has put in appearance.
Caveat stands disposed of.
ARB. A. (COMM.) 1/2020 & ARB. A. (COMM.) 2/2020
1. The aforesaid two appeals have been filed by the
appellants GMR Hyderabad Vijayawada Expressways Ltd. ('M/s
GMR', for short) and National Highways Authority of India
('NHAI', for short) under Section 37 of the Arbitration and
Conciliation Act, 1996 ('Act', for short) challenging a common
order dated December 09, 2019 ('impugned order', for short)
passed by the Arbitral Tribunal wherein the learned Tribunal has
inter-alia stated as under;-
"XXXX XXXX XXXX
The Tribunal is of the considered view that while
passing any interim order of the nature prayed for,
three factors have to be taken into consideration. They
are prima facie case, balance of convenience and
irreparable loss. These factors have to be cumulatively
considered.
Obviously the merits of the case will be dealt with in
the Award to be pronounced. But taking into
consideration the consequences of the impugned letter
/ notice dated 18.11.2019 which essentially amounts to
termination of the Concession Agreement, (though it is
a suspension of the arrangement,) the Tribunal is of
the view that the Claimant has to deposit the following
amounts by the dates indicated on without prejudice
basis, as an interim measures.
1) By 31.12.2019 Rs.25 Crore
2) By 31.01.2020 Rs.25 Crore
3) By 29.02.2020 Rs.25 Crore
In case, the award is not delivered by 29.02.2020, the
matter shall be taken up thereafter for further
directions.
In case of failure to make deposit of the stipulated
amounts by the dates indicated, this order shall not be
operative.
The amounts when deposited shall be kept in a no lien
escrow account which will carry interest as per the
applicable bank rates. The utilization of the amount
would depend upon the results of the Award to be
delivered.
Ordered accordingly."
2. Some of the brief facts to be noted with regard to both the
appeals are that the parties are before the Arbitral Tribunal for
adjudication of certain disputes which arose between them. M/s
GMR is the Claimant and NHAI is the respondent. The learned
Tribunal has reserved the matter for Award.
3. While the proceedings being in that position, the NHAI
issued a communication dated November 18, 2019 to the M/s
GMR wherein they, by referring to the provisions of the
Concession Agreement date October 9, 2010 ('Concession
Agreement', for short), has by stating that M/s GMR has not paid
to NHAI concession fee since April 01, 2015, which resulted in a
severe financial distress and thereby impacting its public
obligations of building other highways, issued notice in exercise
of rights and powers conferred upon it by virtue of the provision
contained in Article 36 of the Concession Agreement to suspend
the rights of the concessionaire (M/s GMR) under the Concession
Agreement. It is this order, which resulted in an application
under Section 17 of Act, filed by the M/s GMR before the learned
Tribunal wherein the impugned order has been passed.
4. The submissions of Mr. Manish K. Bishnoi, in support of
the appeal filed by the NHAI are, that the Tribunal in the
impugned order directed M/s GMR to make deposit of Rs.25
crores each in three months, which amounts were to be kept in a
no-lien escrow account as an interim-measure, is too meager and
insignificant an amount considering the outstanding premium
obligations of the M/s GMR being around `554.84 Crores and
that the impugned order is prejudicial to the NHAI, as it
effectively bars the NHAI from recovering its admitted dues
under the Concession Agreement and from exercising its rights
under the Concession Agreement. He stated that the learned
Tribunal has not considered the factors namely prima facie case,
balance of convenience and irreparable loss being caused to the
parties. He further stated that the Tribunal has failed to
appreciate the claim raised by the M/s GMR is still in the nature
of a 'Claim' only and no debt liability „eo instanti‟ arises in
praesenti in its favour till it has been adjudicated and an award
passed is in its favour. He has relied upon the judgment of the
Supreme Court in the case of Union of India vs. Raman Iron
Foundry (1974) 2 SCC 231. He also relied upon Clause 44.3.5
of the Concession Agreement to contend that the Concession
Agreement provides, rights and obligations of the parties shall
remain in full force and effect, pending the Award in any
arbitration proceedings there under. Thus, he submitted M/s
GMR cannot say that it will not pay premium amount citing
pendency of arbitration proceedings. It was also his submission,
by drawing my attention to Clauses like 26.2, 26.3 and 26.4 of
the Concession Agreement that, on a conjoint reading it is clear
that the premium is part of the concession fee and liability to pay
the premium is independent of revenue generation. He further
stated that the Tribunal failed to appreciate the fact that the
amount claimed by NHAI is around `554.84 Crores and the
liability to deposit the premium was a quantified amount flowing
from the Concession Agreement. He has drawn my attention to
various applications filed by M/s GMR from time to time and the
orders passed by the Tribunal on those applications to contend
that the NHAI has been making efforts to claim the premium
payable as per the Concession Agreement but could not recover
the same in view of the those orders. To sum up, it was his
submission that the Tribunal could not have exercised the
jurisdiction when M/s GMR is in breach of Concession
Agreement. He has also relied upon the following two judgments
in support of his contentions:-
(i) (2007) 7 SCC 125 Adhunik Steels Ltd. v. Orissa
Manganese and Minerals (P) Ltd.;
(ii) (2016) 11 SCC 720 Gangotri Enterprises Limited v.
Union of India and Others;
5. On the other hand Mr. Ciccu Mukhopadhyaya, learned
Senior Counsel has stated that the commercial operation date was
achieved on December 20, 2012. The first claim letter in respect
of change in law / claim was issued on July 06, 2013. He stated
that the plea of Mr. Bishnoi that there is no claim in praesenti is a
mis-conceived argument, as the claim arises from the Concession
Agreement. In other words, he stated that the claim of M/s GMR
is not for damages, which can only be paid upon determination.
He stated that the claim of the M/s GMR is for an amount of
`1341 Crores whereas the claim of NHAI in terms of letter dated
November 18, 2019 is only for `554.84 Crores, which according
to M/s GMR is not payable at all. Alternatively, the amount
being much less, can be set off against the amount to be granted
in favour of M/s GMR.
6. According to him, M/s GMR is aggrieved by the
impugned order as the same shall have disastrous consequences
affecting the subject matter of the arbitration. The Arbitral
Tribunal ought to have appreciated that the arguments have
concluded in the proceedings and the matter has been reserved
for Award and status quo should have been maintained. He laid
stress on the fact that almost entire amount of toll collection has
been utilized for payment to the lenders and small percentage
utilized for operation and maintenance. There is no surplus
available for payment of premium. In the last, he stated that the
dates on which payments have been directed to be made by the
learned Tribunal be deferred as there is a likelihood that Award
may come by that time.
7. Having heard the learned counsel for the parties, from the
submissions made, it is noted that the grievance of NHAI is
primarily (i) the impugned order has the effect of staying its
claim of `554.84 Crores; and (ii) staying the suspension of the
Concession Agreement.
8. On the other hand, the grievance of GMR is, that pending
adjudication of the dispute between the parties, the Tribunal
could not have directed the GMR to deposit `25 Crores each, in
the month of December 2019, January 2020 and February 2020.
9. I have already reproduced the operative part of the
impugned order. It is a conceded case of the parties that the
application filed by the GMR under Section 17 of the Act has not
been disposed of.
10. The order passed by the learned Tribunal is pending
adjudication of the dispute between the parties. The Tribunal has
stated that the merits of the case will be dealt with in the Award.
Pending pronouncement of the Award, it directed M/s GMR to
deposit the amount, as per the schedule laid therein. No doubt
and it is a conceded case of the parties that the order has the
effect of NHAI being unable to claim the amount of `554.84
Crores and staying the suspension of the Concession Agreement
but the Tribunal's order is primarily on the ground that it is
adjudicating the dispute between the parties and merits of the
case shall be dealt with in the Award and also making it clear that
if the Award is not delivered by February 29, 2020, the matter
shall be taken up for further directions and also in case of failure
to make deposit of the stipulated amount by the dates indicated,
the order shall not be operative. In view of such a conclusion,
this Court holds that the impugned order does not require any
interference at the behest of both the parties.
11. The appeals are dismissed. No costs.
I.As. 443/2020 & 444/2020 in ARB. A. (COMM.) 1/2020
I.As. 621/2020 & 622/2020 in ARB. A. (COMM.) 2/2020
Dismissed as infructuous.
V. KAMESWAR RAO, J
JANUARY 30, 2020/ak
