National Highway Authority Of ... vs M/S Gmr Pochanpalli Expressways ...
2022 Latest Caselaw 963 Del

                            $~
                            *     IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                                Reserved on: 16th November, 2021
                                                                       Decided on: 6th April, 2022


                            +     O.M.P. (COMM) 433/2020, IA 4775/2020 and IA 8408/2021

                                  M/S GMR POCHANPALLI
                                  EXPRESSWAYS LTD                          ..... Petitioner
                                               Through     Mr. Atul Sharma, Ms. Milanka
                                               Chaudhury, Mr. Abhinav Agnihotri and Ms.
                                               Harshita Agarwal, Advs.

                                                      versus

                                  NATIONAL HIGHWAY
                                  AUTHORITY OF INDIA                       ..... Respondent
                                               Through    Mr. Dayan Krishnan, Sr.
                                               Advocate with Mr. Ankur Mittal, Mr. Abhay
                                               Gupta and Ms. Sukrit, Advs.

                            +     O.M.P. (COMM) 449/2020, I.A. 6682/2020 and I.A. 6683/2020

                                  NATIONAL HIGHWAY
                                  AUTHORITY OF INDIA                       ..... Petitioner
                                               Through    Mr. Dayan Krishnan, Sr.
                                               Advocate with Mr. Ankur Mittal, Mr. Abhay
                                               Gupta and Ms.Sukrit, Advs.

                                                      versus

                                  M/S GMR POCHANPALLI
                                  EXPRESSWAYS LTD                        ..... Respondent
                                               Through     Mr. Atul Sharma, Ms. Milanka
                                               Chaudhury, Mr. Abhinav Agnihotri and Ms.
                                               Harshita Agarwal, Advs.


Signature Not Verified      O.M.P. (COMM) 433/2020 & contd. matters                   Page 1 of 72
Digitally Signed By:SUNIL
SINGH NEGI
Signing Date:07.04.2022
21:28:14
                             CORAM:
                            HON'BLE MR. JUSTICE C. HARI SHANKAR

                            %                  JUDGMENT
                                                 06.04.2022

                            1.    Both these petitions, under Section 34 of the Arbitration and
                            Conciliation Act, 1996, ("the 1996 Act") assail an award dated 14th
                            January, 2020, passed by a learned three member Arbitral Tribunal.
                            The award was passed by a majority of two learned members to one.
                            GMR Pochanpalli Expressways Ltd ("GMR") was the claimant before
                            the learned Arbitral Tribunal and National Highway Authority of India
                            ("NHAI") was the respondent. GMR preferred five claims, whereas
                            NHAI preferred a single counter-claim for the costs of the arbitration.
                            Of the five claims preferred by GMR, the learned Arbitral Tribunal,
                            per majority, rejected Claims 1, 3 and 4 and allowed Claims 2 and 5.
                            As Claim 5 of GMR pertains to awarding of costs as per actuals,
                            allowing of the said claim also resulted in the rejection of the counter-
                            claim of NHAI. The minority award rejected all five claims of GMR.


                            2.    GMR and NHAI have both assailed the impugned award, to the
                            extent that the award has rejected their respective claims/counter-
                            claims and allowed the claim of the opposite party.


                            A Prefatory Note


                            3.    During the course of arguments, in this case, Mr. Atul Sharma,
                            learned counsel for GMR, drew the attention of the Court to the fact
                            that, in an earlier award dated 21st August 2019 between NHAI and
Signature Not Verified      O.M.P. (COMM) 433/2020 & contd. matters                     Page 2 of 72
Digitally Signed By:SUNIL
SINGH NEGI
Signing Date:07.04.2022
21:28:14
                             Nirmal BOT Ltd, another contractor, in similar circumstances and
                            involving an identically worded contract, the very issues which
                            constituted subject matter of Claim 1 of GMR in the present case had
                            arisen for consideration before another three member Arbitral
                            Tribunal. The award in that case, which was rendered prior in point of
                            time to the impugned award, has been placed on record. Paras 8.2.9 to
                            8.2.20 of the said award indicate that the learned Arbitral Tribunal,
                            which was in seisin of the dispute in that case has interpreted the very
                            clauses with which the learned Arbitral Tribunal in the present case
                            was concerned and that the interpretations of the relevant clauses in
                            the two awards are diametrically opposed to each other.


                            4.         This does not appear to be an isolated phenomenon. The
                            Supreme Court, in NHAI v. Progressive-MVR (JV)1, observed, in
                            para 15 of the report, thus:
                                       "15. Thus, the main reason because of which the NHAI lost
                                       in those proceedings was that two possible interpretations
                                       could be given to the Clause in question and, therefore, the
                                       recourse taken by the Arbitral Tribunal by adopting one
                                       particular interpretation was not required to be interfered
                                       with. SLP against that was dismissed. In a situation like this,
                                       this Court would not have undertaken further exercise in the
                                       matter. However, another Arbitral Tribunal in the case of
                                       M/s. Ssangyong Engineering and Construction Co. Ltd. has
                                       accepted the other view, which goes in favour of the NHAI. It
                                       leads to an anomalous situation. The NHAI has entered into
                                       multiple contracts with different parties containing the same
                                       clauses of price variation. Once we find that Arbitral
                                       Tribunals are taking different views, and the view taken in
                                       favour of the NHAI is also one of the possible interpretations,
                                       the effect thereof would be to uphold both kinds of awards
                                       even when they are conflicting in nature in respect of the

                            1   (2018) 14 SSC 688
Signature Not Verified      O.M.P. (COMM) 433/2020 & contd. matters                             Page 3 of 72
Digitally Signed By:SUNIL
SINGH NEGI
Signing Date:07.04.2022
21:28:14
                                   same contractual provision. It may not be appropriate to
                                  countenance such a situation which needs to be remedied.
                                  Therefore, under this peculiar situation, we deem it proper to
                                  go into the exercise of interpreting the said Clause so that
                                  there is a uniformity in the approach of the Arbitral Tribunals
                                  dealing with this particular dispute and a sense of certainty is
                                  attached in the outcomes."


                            5.    NHAI is possibly the only Public Sector Enterprise involved in
                            the largest number of arbitrations, nearly all of which involved
                            substantial claims and counter-claims. The possibility of diverse views
                            being taken by different Arbitral Tribunals in respect of identical
                            contractual clauses, as happened in NHAI v. Progressive-MVR (JV)1
                            and as has happened in the present case, always looms large. In such
                            circumstances, it would be the duty of the NHAI to inform a later
                            Arbitral Tribunal, before which the same issue as has already been
                            considered and decided by an earlier Arbitral Tribunal in identical
                            circumstances, arises, of the earlier award, so that the later Arbitral
                            Tribunal is aware of the view of the earlier Arbitral Tribunal. This
                            fosters uniformity of views, as also public faith in the administration
                            of arbitral justice. Of course, arbitral awards are not binding
                            precedents, and it is always open to the later Arbitral Tribunal to take
                            a different view. At the same time, the import of para 15 of NHAI v.
                            Progressive-MVR (JV)1, which advocates uniformity in arbitral
                            awards involving identical issues cannot be ignored. If, therefore, the
                            later Arbitral Tribunal is to depart from the view of the earlier Arbitral
                            Tribunal, one would expect that it would be for good and cogent
                            reasons, and that, if the later Arbitral Tribunal is of the view that the
                            earlier Arbitral Tribunal has wrongly decided the issue, the reasons for

Signature Not Verified      O.M.P. (COMM) 433/2020 & contd. matters                         Page 4 of 72
Digitally Signed By:SUNIL
SINGH NEGI
Signing Date:07.04.2022
21:28:14
                             that view would be forthcoming in the arbitral award.


                            6.    NHAI having failed to inform the learned Arbitral Tribunal in
                            the present case of the award passed in the case of Nirmal BOT, two
                            contradictory arbitral awards, both by three-member Arbitral
                            Tribunals, having come to be passed. Applying the principle in NHAI
                            v. Progressive-MVR (JV)1, the Court is bound to enunciate what, in its
                            opinion, is the correct legal position. To that extent, I am in agreement
                            with the submissions of Mr. Atul Sharma, learned counsel for NHAI,
                            that the situation envisaged in para 15 of NHAI v. Progressive-MVR
                            (JV)1 constitutes an exception to the general principle of rectitude and
                            reticence, which is required to inform the Section 34 Court.

                            7.           Though Mr. Dayan Krishnan, learned Senior Counsel for
                            GMR sought to contend that NHAI v. Progressive-MVR (JV)1 was
                            rendered under Article 142 of the Constitution and could not constitute
                            a binding precedent, I cannot agree. The judgment in NHAI v.
                            Progressive-MVR (JV)1 does not indicate and it was rendered under
                            Article 142 of the Constitution. It is well settled that courts lower in
                            the judicial hierarchy should not desist from following decisions of the
                            Supreme Court by regarding them as having been rendered in the
                            context of Article 142, unless the precedent in question unmistakably
                            so indicates. Madras Bar Association v. U.O.I.2, in fact, goes to the
                            extent of holding that "the directions issued under Article 142 of the
                            Constitution, are binding on every Court in terms of Article 141 of the
                            Constitution". NHAI v. Progressive-MVR (JV)1 does not purport to
                            have been rendered under Article 142. The contention of Mr. Dayan

Signature Not Verified      O.M.P. (COMM) 433/2020 & contd. matters                     Page 5 of 72
Digitally Signed By:SUNIL
SINGH NEGI
Signing Date:07.04.2022
21:28:14
                             Krishnan that NHAI v. Progressive-MVR (JV)1 should be treated as
                            having been rendered under Article 142 of the Constitution and is not,
                            therefore, binding, is, accordingly, rejected.

                            Facts

                            8.      With the above prefatory note, one may proceed to the facts in
                            which the present dispute arises.


                            9.      The present dispute involves a contract for "Design,
                            Construction, Development, Finance, Operation and Maintenance of
                            k.m. 367.000 (Adloor Yellareddy) to k.m. 447.000 (Kalkallu) covering
                            85.745 kilometres, and Improvement, Operation and Maintenance of
                            k.m. 447.000 (Kalkallu) - 464.000 (Gundla Pochanpali) covering
                            17.000 kilometres on National Highway No.7 (NH·7) in the State of
                            Andhra Pradesh" ("the Project", hereinafter).

                            10.     A notice, inviting proposals from contractors interested in
                            undertaking the Project was issued by NHAI on 27th May, 2005.
                            Letter of Acceptance was issued to a consortium of GMR Energy Ltd
                            and GMR Infrastructure Ltd on 30th December, 2005. GMR
                            Pochanpalli Expressways Ltd was incorporated as a Special Purpose
                            Vehicle (SPV) to undertake the project.

                            11.     Consequent thereupon, a Concession Agreement (CA), dated
                            31st March, 2006 was executed between GMR and NHAI. The
                            following clauses of the Concession Agreement are relevant to the
                            present dispute:

Signature Not Verified      O.M.P. (COMM) 433/2020 & contd. matters                   Page 6 of 72
Digitally Signed By:SUNIL
SINGH NEGI
Signing Date:07.04.2022
21:28:14
                                   "1.2 In this Agreement, unless the context otherwise
                                  requires:
                                                        *****

(k) the Schedules to this Agreement form an integral part of this Agreement and will be in full force and effect as though they were expressly set out in the body of this Agreement;

*****

2.1 The Project shall be executed on the Site; which is described in Schedule 'A' of this Agreement. The scope of the Project shall include performance and execution by the Concessionaire of all design, engineering, financing, procurement, construction, completion, operation and maintenance of the Project-Hjghway as described in Schedule 'B' and Schedule 'C' of this Agreement. It shall Include (brief description of the project) in accordance with the Specifications and Standards set forth in Schedule 'D' and operation and maintenance thereof in accordance with Schedule L. It shall also include the performance and fulfillment of other obligations by the Concessionaire under this Agreement.

The Concessionaire shall undertake its obligations at its own cost and risk.

                                                              *****

                                  6.4    Payment Mechanism

                                         (a)    Submission of Invoice

The Concessionaire shall at least month prior to the relevant Annuity Payment Date submit to the Independent Consultant, its invoice (addressed to NHAI) for payment of Annuity duly adjusted for Non- availability, if any, in accordance with the preceding Article 6.3. The independent Consultant shall after verification and certification of the amount claimed in

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 the invoice forward the invoice to NHAI with necessary recommendation for payment thereof so as to reach NHAI at least one week prior to the relevant Annuity Payment Date.

(b) Payment of Annuity

Upon receipt of the invoice together with recommendation for payment forwarded by the Independent Consultant, 'NHAI shall take all necessary steps and ensure payment of Annuity on the relevant Annuity Payment Date. The mode of payment of Annuity shall be as provided in Article 23.

For avoidance of doubt, the Parties agree that notwithstanding arty dispute which either of them may have as to the amount of invoice/Annuity certified and recommended for payment by the Independent Consultant; the Annuity payable on the relevant Annuity Payment Date shall be that certified by the Independent Consultant. Provided such payment shall be without prejudice to a final adjustment according to the terms on which such dispute is resolved whether amicably or through arbitration in accordance with the provisions of Article 39.

*****

18.2 The Concessionaire shall in consultation with the Independent Consultant prepare not later than 180 (one hundred and eighty) days before the Scheduled Project Completion Date, the repair and maintenance manual (the "Maintenance Manual") for the regular and periodic maintenance, and shall ensure and procure that at all times during the Operations Period, the Project Highway is maintained in a manner that it complies with the Specifications and Standards and the minimum maintenance requirements set forth in Schedule L. The Concessionaire shall supply, at least two months before the COD, 10 (ten) copies of the Maintenance Manual to NHAI and 3 (three) copies each to Government of Andhra Pradesh and Independent Consultant. Copies of the Maintenance Manual shall also be made available by the Concessionaire for public

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 inspection during office hours at a conspicuous place on the Project Highway.

*****

18.12 In the event the Concessionaire does not maintain and/or repair the Project Highway or a part thereof upto and in accordance with the Specifications and Standards and/or in accordance with the Maintenance Programme or the Maintenance Manual, and shall have failed to commence remedial works within 30 (thirty) days of receipt of notice in this behalf from NHAI or the Independent Consultant, or the O&M Inspection Report, as the case may be, NHAI shall, without prejudice to its rights under. this Agreement, including Termination thereof, be entitled to undertake the repair and maintenance Of the Project Highway at the risk and cost of the Concessionaire and to recover the same from the Concessionaire. In addition to recovery of the aforesaid cost of repair and maintenance by NHAI, a sum equal to 25% (twenty five per cent) of such cost shall also be recovered by NHAI from the Concessionaire as Damages. NHAI· shall have the right and the Concessionaire hereby expressly grants to NHAI the right to recover the same directly from the Escrow Account and for that purpose the Concessionaire hereby expressly authorises NHAI and hereby gives irrevocable instructions to the Escrow 'Bank to make payment from the Escrow Account in accordance with the instructions of NHAJ under this Clause.

18.13 In the event NHAI does not exercise its option to undertake the required repair and maintenance after expiry of the 30 (thirty) days period stipulated in Clause 18.12 it shall recover Damages from the Concessionaire for default in operating and maintaining the Project Highway in conformity with this Agreement. Such Damages shall be payable after the aforesaid period 30 (thirty) days and until the default is cured. The amount of Damages shall be calculated for each day of default at the higher of the following, namely (a) Rs.10,000 (Rs. Ten thousand), and (b) 0.1% (zero point one per cent) of the cost of such repair as estimated by the Independent Consultant. Recovery of such Damages shall be without prejudice to the rights of NHAI under this Agreement, including Termination thereof.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 18.14 If the Concessionaire commences any works for curing any defects or deficiencies in the Project Highway, it shall complete such works expeditiously in accordance with Good Industry Practice. If such works are carried out in a manner that results in a delay of more than 30 (thirty) days as compared to the time required in accordance with Good Industry Practice, NHAI shall recover Damages from the Concessionaire as if a default had occurred under Clause 18.13.

*****

XIX MONITORING AND SUPERVISION DURING OPERATION

19.1 The Concessionaire shall undertake periodic (at least once every calendar month but once every week during monsoons) inspection of the Project Highway to determine the condition of the Project Highway including its compliance or otherwise with the Maintenance Manual; the Maintenance Programme Specifications and Standards and the maintenance required and shall submit reports of such inspection ("Maintenance Reports") to NHAI and the Independent Consultant.

19.2 The Independent Consultant shall review the Maintenance Reports and inspect the Project Highway at least once a month during the Operations Period and make out an Inspection Report of such inspection (the "O&M Inspection Report"). The Independent Consultant shall send a copy of its O&M Inspection Report to NHAI and the Concessionaire, The Concessionaire shall within 30 (thirty) days of the receipt of the O&M Inspection Report remedy the defects and deficiencies, if any, set forth in such O&M Inspection Report and submit its report in respect thereof to the Independent Consultant and NHAI within the said 30 (thirty) days period. Where the remedying of such defects or deficiencies is likely to take more than 30 (thirty) days in accordance with Good Industry Practice, the Concessionaire shall undertake the works in accordance with such practice and submit progress reports of such works every fortnight. The O&M Inspection

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 Report may also require the Concessionaire to undertake such tests as may be specified by the Independent Consultant for the purpose of determining that the Project Highway is at all times in conformity with the Specifications and Standards. The Concessionaire shall undertake such Tests without any delay and furnish a copy of the results thereof to the Independent Consultant and NHAI along with a written statement specifying in reasonable detail the measures, if any, that it proposes to undertake for curing the defaults or deficiencies indicated in such results. Such inspection or submission of O&M Inspection Report by the Independent Consultant or submission of O&M Inspection Compliance Report by the Concessionaire shall not relieve or absolve the Concessionaire of its obligations and liabilities hereunder in any manner whatsoever.

*****

XX. INDEPENDENT CONSULTANT

20.1 NHAI shall appoint a consulting engineering firm or body corporate in accordance with the selection process' set forth in Schedule 'N' to be the Independent Consultant to undertake and perform the duties, work, services and activities set forth in Schedule 'O'. In addition NHAI, at any time during the Concession Period at its own cost, may appoint a Technical Auditor in the nature of a Proof Consultant to review the work carried out by the Independent- Consultant.

***** SCHEDULE 'B'

SCOPE OF THE PROJECT

1. GENERAL

The following sections of this Schedule briefly highlight the scope of the work of the Project Highway pertaining to construction package from km 367.00 to 447.00 for the information of the Concessionaire. The descriptions of the requirements for the various elements of the Project Highway given herein under arc the bare minimum requirements that

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 the Concessionaire needs to undertake/provide for improvement of the same.

The Concessionaire shall also do the value addition for improving safety by providing safety items and also provide road furniture for this BOT package, after handing over to him to bring it to specified standard· of Project Highway as per specifications and standards mentioned in Schedule D and Schedule L.

The designs for different Project facilities shall follow the locations and indicative designs given in Schedule C and shall comply with design, specifications and standards outlined in Schedule D. The maintenance of the different elements of Project Highway and facilities thereon shall follow the minimum maintenance requirements as described in Schedule L. All the designs and drawings shall be reviewed by the Independent Consultant prior to execution.

*****

SCHEDULE 'D'

SPECIFICATIONS AND STANDARDS

1. INTRODUCTION

*****

1.6 All works related to the Project Highway shall conform to the Guidelines and Special Publications as applicable 10 National Highways and Ministry of Shipping, Road Transport and Highway earlier Ministry of Road Transport and Highway (MORT&H) Specifications and Indian Roads Congress (IRC) standards, Codes, with all updates till 30 days before the date of bid submission by the Concessionaire. In the absence of any definite provisions on any particular issue related to the Specifications and/or standards, reference may be made to the latest codes and Specifications of Bureau of Indian Standards, British Standards, AASHTO, ASTM or any other International standard in that order. But, where even these are silent, the construction and completion of the works shall conform to

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 sound engineering practice with the approval of the Independent Consultant/NHAI.

1.7 Amendments and/or modifications carried out by the Ministry of Road Transport and Highway in the MORT&H Specifications and IRC standards, and codes and available to public 30 days before the date of receipt of bids shall be applicable.

1.8 Whenever any specific provision for any building works is given in the MORT&H Specifications, IRC standards and codes, those shall apply. All building works shall conform to Central Public Works Department (CPWD) Specifications for class 1 building works or standards given in the National Building Code (NBC) as amended and/or modified from time to time. For the purpose of this clause, building works shall be deemed to include road furniture, landscape elements and/or any other works incidental to the building works.

***** SCHEDULE L

OPERATION AND MAINTENANCE REQUIREMENTS

2. Operation and Maintenance (O&M) Requirements

*****

2.6 Operation and Maintenance Stage

2.6.1 This is applicable for the entire Operations Period for the Project Highway during the entire Concession Period. Various important activities to be carried out during this stage are:

a) Regular periodic maintenance activities:

i) Renewal of the wearing surface of the road pavement once every 5 years;

ii) Strengthening course to be provided on 'as required' basis.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14

b) Maintenance activities arising out of the specific need(s) on account of the site Conditions are:

i. Strengthening course required on account at the Benkelman Beam Deflection (B.B.D) values in excess of the prescribed criteria obtained during regular testing as per the Concession Agreement requirement:

ii. Wearing course required on account of the IRI values higher than the prescribed criteria obtained during regular testing as per· the Concession Agreement) requirement;

iii. Localized repairs in short lengths less than 500 m on account of pot holes, racking, subsidence in isolated spots or in scattered areas.

*****

4. MAINTENANCE

*****

4.2 Maintenance Section of Maintenance Manual

*****

4.2.1. Regular Maintenance

It consists of the routine maintenance and periodic maintenance throughout the Concession Period and extension thereof, if any, for all elements of the Project Highway.

                                                              *****

                                  4.3    Periodic Maintenance of Pavement

The framework of activities relating to pavement maintenance and rehabilitation in respect of flexible and rigid pavement are given in the flow charts in Appendix 3.1 and Appendix 3.2 respectively. The Concessionaire shall set forth in the Operations and Maintenance Manual the detailed procedures

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 to be followed under each of these activities and also choose the operational and performance criteria from the performance standards set forth in this Schedule.

*****

4.3.1 Pavement Riding Quality

The riding quality of the pavement shall be ensured by satisfying the minimum requirements given herein under.

i) Surface roughness of the Project Highway on completion of construction shall be 2000 mm/km as measured by vehicle mounted Bump Integrator.

ii) Surface roughness shall not exceed 3000 mm/km during the service life of pavement at any time. A renewal coat of bituminous concrete shall be laid every 5 years after initial construction or where the roughness value reaches 3000 mm/km whichever is earlier to bring it to the initial value of2000 mm/km.

4.3.2. Structural Condition of the Pavement

I) The structural condition of the flexible pavement of the Project Highway shall be assessed every year by taking Benkelman Beam Deflections and working out characteristic deflections of homogeneous sections of the Project Highway as per IRC-81-1997. Wherever the characteristic deflection exceeds 1.2 mm a bituminous overlay shall be provided appropriately designed according to IRC-81-1997 or its latest versions or amendments to it.

II) Recycling of existing crust using milling as an option can be explored by the Concessionaire in consultation with the IC to maintain the FRL at the same level throughout the concession period. However, while adopting such measures, the residual strength of existing pavement shall be estimated and equivalent thickness of new material added before laying the designed overlay. The design of profile with altered pavement treatments shall be finalised in

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 consultation with IC.

III) In the case of cement concrete pavement, joints shall be thoroughly inspected every year and the loss of sealing compounds made good.

***** 4.4. Minimum Requirements of Maintenance Activities 4.4.1. Major Breaches in the Roadway Major breaches in the roadway of any type endanger safety of traffic and cause obstruction in movement of vehicles. These breaches shall be repaired urgently. Steps as mentioned in O&M manual shall be followed by the Concessionaire tor repairing the breaches.

The Concessionaire shall ensure speedy restoration of traffic and take immediate action to repair the damages as permanent measures for the Project Highway. The restoration of traffic shall be made within 24 hours of its occurrence. The permanent measures shall be completed within a period of one week.

                                                                 *****




                                                                 *****
                                  Schedule L                                    Appendix 3


Digitally Signed By:SUNIL
SINGH NEGI
Signing Date:07.04.2022
21:28:14
                                   Schedule L                                      Appendix 3.1


                                                 Equivalent Rating Conditions

                                      Category                  Status               Rating

                                  Condition           specification and
                                                      standards


                                  condition           minor maintenance

                                                      major maintenance

                                  condition           minor maintenance

                                                      major maintenance
                                  Poor Condition      Repair or rehabilitation         3
                                                      required immediately

                                                      rehabilitation is urgent.
                                                      Facility should be
                                                      closed until the
                                                      indicated repair is
                                                      complete
                                  Very Critical       Facility is closed. Study        1
                                  condition           should determine the
                                                      feasibility for repair
                                  Unserviceable       Facility is closed and is        0
                                                      beyond repair

                                  Sufficiency Rating System

                                  1.     Load Performance
                                  2.     Safety Performance
                                  3.     Remaining Life"

12. The contract was performed in time by GMR, as it is not in dispute that the Appointed Date for the Project was 25th September,

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 2006, and GMR had achieved the Provisional Commercial Operation Date (PCOD) and obtained the Final Completion Certificate on 25th July, 2009. The dispute pertains to the operations stage of the contract, after obtaining of the Final Completion Certificate and, primarily, to the interpretation of Clauses 4.3.1 and 4.3.2 read with Appendix 3.1, vis-à-vis Clause 2.6.1, of Schedule L to the CA.

13. On 22nd October, 2012, GMR wrote to MSV International, the Highway Maintenance Engineer/Independent Contractor ("the IC", hereinafter), with a copy marked to NHAI, drawing attention to the requirement of testing of the pavement riding quality, as contained in Clause 4.3.1 of Schedule L to the CA and enclosing, with the letter, the test reports for the year 2012-13 with respect to the project highway. The test reports indicated that the average Roughness Index was, at all points in the highway, found to be less than 2000 mm/km.

14. A similar letter, dated 2nd November, 2013, was addressed by GMR to the IC, enclosing the pavement riding quality/Roughness Index test reports for the year 2013, in respect of the Project Highway. As in the case of the test reports for the year 2012, the Roughness Index was found, at all stretches of the highway, to be less than 2000 mm/km.

15. The average Roughness Index for the years 2012 and 2013 were 1749 mm/km and 1788 mm/km, respectively.

16. These facts are not in dispute.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14

17. Vide letters dated 24th August, 2013 and 23rd September, 2013, the IC wrote to the Project Director, NHAI, drawing attention to Clause 4.3.1 of the CA and pointing out that, both during 2012 and 2013, the Roughness Index of the project highway was less than 2000 mm/km. The relevant recitals, in the letter dated 23rd September, 2013, may be reproduced thus:

"Roughness Index of the Road:

As per Schedule L of Operations And Maintenance Requirements, Clause 4.3.1 Pavement Riding Quality, surface roughness shall not exceed 3000 mm/km during the service life of pavement at any time. A renewal coat of bituminous concrete shall be laid every 5 years after initial construction or where the roughness value reaches 3000 mm/km whichever is earlier to bring it to the initial value of 2000 mm/km.

In compliance of above concession agreement clause the Roughness Index of the road has been tested by the Concessionaire on 09.08.2010 and 22.10.2012.

As per the report the maximum Roughness Index on 09.08.2010 is 1745 mm/km and on 22.10.2012 is 1889 mm/km. In general the Roughness Index of the Project Road is within the permissible limits of 3000 mm/km as per Cl 4.3.1 of Schedule L of Operation And Maintenance Requirements of the Concession Agreement."

18. On 31st October, 2013, the Project Director, NHAI, wrote to the IC with the copy marked to GMR, essentially seeking to state that Clause 4.3.1 of Schedule L to the CA mandatorily required fixing of an application of renewal coat of bituminous concrete (alternatively referred to as "overlay") every five years after initial construction.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 The Project Director opined that the requirement of five yearly overlay was independent of the Roughness Index of the highway. Appendix 3.1 of Schedule L to the CA was, it was observed in the said letter, required to be read in conjunction with Clause 4.3.1(ii), which required five yearly mandatory laying of a renewal coat. Thus viewed, the communication observed that the first renewal coat was required to be laid on 25th March, 2014.

19. On 14th November, 2013, GMR wrote to the IC, with a copy marked to the Project Director, NHAI, pointing out that the tests conducted in October, 2013 indicated that the Roughness Index, at all places on the project highway, was less than 2000 mm/km and that, therefore, Appendix 3.1 of Schedule L to the CA required GMR to "do nothing". The relevant paragraphs from the said communication may be reproduced thus:

"With reference to the above we wish to bring the following to your kind notice regarding the periodic maintenance:

The periodic maintenance is mentioned under clause 4.3 of Schedule "L" of Concession Agreement. Clause 4.3 says, "The framework of activities relating to pavement maintenance and rehabilitation in respect of flexible and rigid pavement are given in the flow charts in Appendix 3.1 and Appendix 3.2 respectively." Hence as per 4.3, the first step shall be as per the framework mentioned in appendix 3.1 and 3.2

As per appendix 3.1, the first step to be carried out under periodic maintenance is the periodic inspection. The periodic inspection should be carried out through Roughness survey and Benkelman bream deflection measurement. Such test measurements should be compared with the operation/performance criteria. If the test measurements are within the operation/performance criteria, appendix 3.1 says

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 "Do nothing". If the test measurements are beyond operation/performance criteria, appendix 3.1 says "Renewal/Overlay".

Thus Clause 4.3.1 and the Appendix 3.1 are the same criteria for deciding the periodic maintenance requirement. Clause 4.3.1 and 4.3.2 only specify the performance criteria for comparison purpose under Appendix 3.1. The performance criteria for surface roughness are specified as 3000 mm/km under maintenance period and up to 2000 mm/km construction as well as after periodic maintenance. Thus, if existing surface is already below 2000 mm/km, the same is classified under "Do nothing" as per Appendix 3.1

The surface roughness as measured during Oct 13 is below 2000 mm/km at all places. Hence there is no need to carryout periodic maintenance as there is no need to improve the surface roughness. Since the test is carried out regularly, we confirm that we shall carry out the periodic maintenance of the stretches as and when surface roughness reaches 3000mm/km under these criteria."

20. Apparently influenced by the view expressed by the Project Director, NHAI, in his letter dated 31st October, 2013 supra, the IC, on 18th November, 2013, wrote to GMR, echoing the view of the Project Director to the effect that GMR was required to do renewals/overlay of the highway every five years after construction, irrespective of the Roughness Index of the highway. GMR was, therefore, advised to take up the exercise of renewal/overlay of the highway as per schedule w.e.f. 25th March, 2014.

21. The Project Director, NHAI also wrote to GMR on 5th December, 2013, requiring GMR to submit its programme for laying of the renewal coat on the Project stretch of about 103 km without delay and threatening, in the alternative, to withhold the annuity

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 payable to GMR for March, 2014.

22. GMR avers that thus pressurized and under duress, a programme for laying of renewal coat was communicated by GMR to NHAI vide letter dated 14th December, 2013, even while objecting to the interpretation of Clause 4.3.1 of schedule L to the CA as advanced by NHAI and reiterating that the said clause required laying of a renewal coat only if the Roughness Index fell below 2000 mm/km.

23. This was followed by a further communication dated 18 th February, 2014 from GMR to the IC, in which GMR informed that it had already submitted the periodic maintenance programme for milling and replacement vide its letter dt. 14.12.2013 (supra). Further details, as requisitioned by the IC, were also provided. It was further informed, in the said communication, that GMR would be disposing of milled bituminous material away from the site of the project at identified locations. Consent for commencement of periodic maintenance activity, as per the programme intimated by GMR was, therefore, sought.

24. The petition avers that, without responding to the communications dated 14th December, 2013, 12th February, 2014 and 18th February, 2014, the IC, on 28th February, 2014, objected to GMR having carried out the renewal work using a milling schedule without prior consultation with the IC. It was also noted, in the said letter, that no programme for milling had been submitted to the IC for approval. Renewal of the bituminous coat via milling having been conducted by GMR purportedly without the knowledge of the IC, the

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 communication stated that the activity was undertaken at the risk and cost of GMR.

25. Though the IC and the Project Director recommended release of annuity to GMR, it is alleged that the Chief General Manager, NHAI, in violation of Clause 6.4 (b) of the CA, stopped payment of annuity to GMR.

26. On 27th March, 2014, NHAI wrote to GMR, objecting to the delay, on the part of GMR, in undertaking renewal work for the entire stretch of the project highway, which according to NHAI, would constitute a material breach of the CA. GMR, was, therefore, granted an opportunity to demonstrate that it was making diligent efforts in making all arrangements to take up the renewal work in the entire stretch of 103 km comprising the project highway, without further delay. On the same date, GMR responded to NHAI pointing out that renewal work on the project highway had commenced on 26 th March, 2014 and had already been completed for part of the stretch of the Project highway. GMR, nonetheless, sought an opportunity of being heard on the proper interpretation to be accorded to Clause 4.3.1 of the CA, regarding the requirement of renewal/overlay work on the highway, even where the Roughness Index was found to be less than 2000 mm/km.

27. Subsequent to the said communication from GMR to NHAI, the annuity was released on 30th March, 2014.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14

28. As a result of the above communications, GMR submits that it was constrained to undertake overlay work without milling, despite Clause 4.3.2 (ii) of Schedule L which granted the concessionaire an option of milling and recycling for carrying out the renewal work.

29. On 6th May, 2014, GMR again wrote to the IC proposing a methodology for recycling of the bituminous pavement by milling, for the review and approval of the IC, assuring that, in the interregnum, GMR would continue periodic maintenance as per the earlier approved methodology. It was further stated, in the said communication, that the date of commencement of recycling of the bituminous pavement would be intimated to the IC.

30. By a letter dated 12th October, 2014, the IC wrote to GMR, stating that it had never approved the proposal for recycling and directing GMR "to continue the renewal of the wearing course of the road pavement pursuant to Clause 2.6.1, 2.6.2 and Cl 4.3.1 under Schedule L of the Concession Agreement of the subject project".

31. The renewal/overlay work was completed by the petitioner on 30th December, 2014, after a delay of 250 days.

32. On 8th June, 2016, the IC wrote to NHAI, recommending raising of a demand, on GMR, of ₹ 10,31,50,520/- as delay damages for delay in executing periodical renewal coat on the project highway. A copy of the letter was also addressed to GMR.

33. GMR, in turn, wrote, on 19th July, 2016, to NHAI, opposing the

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 proposal to charge delay damages from it. GMR, in turn, claimed an amount of ₹ 104,47,80,462/- from NHAI, which include idling cost of milling and recycling machinery owing to delay in grant of approval by the IC for conducting the renewal by milling. This amount, it was stated, principally included the expenses incurred by GMR towards the periodic maintenance carried out, by it under duress, though, according to GMR, Clause 4.3.1 of Schedule L to the CA did not require it to do so.

34. Reference was made, in the said communication, to letters dated 25th August, 2014 and 10th October, 2014 from GMR to the IC, informing the IC that it was undertaking recycling work, to which the IC responded only on 12th October, 2014, rejecting the recycling proposal.

35. Vide communication dated 23rd August, 2016, NHAI rejected the claims of GMR as contained in its letter dated 19th July, 2016.

36. GMR, in the circumstances, wrote to NHAI on 9th September, 2016, raising a dispute and seeking reference of the dispute to the Chairman, NHAI and the Chairman of the Board of Directors of GMR for an amicable resolution in terms of Clause 39.1(b) of the CA.

37. On 15th March, 2018, K & J Projects Pvt. Ltd. (who had replaced MSV International as the IC) wrote to the Project Director, NHAI, conveying its opinion that Clause 18.1.3 of the CA empowered NHAI to recover damages from the Concessionaire for default in

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 operating and maintaining the project highway in conformity with the CA. Following this, vide letter dated 27th March, 2018, addressed to GMR, NHAI conveyed its decision to deduct, from the annuity payable to GMR, ₹ 10.78 crores as damages.

38. GMR, in the circumstances, invoked Clause 39.2 of the CA, which provided for resolution of disputes by arbitration, and appointed its nominee arbitrator, while requesting the Indian Council of Arbitration (ICA) to constitute the Arbitral Tribunal.

39. While matters stood thus, GMR petitioned this Court under Section 9 of the 1996 Act by way of OMP (I) (Comm) 421/2018, which came to be disposed of, by a Coordinate Bench, vide order dated 2nd November, 2018. This Court noted, at the outset, the contention of GMR "that the only dispute between the parties is whether in the terms of Clause 4.3 of Schedule L to the Concession Agreement dated 31.03.2006 executed between the parties, the petitioner is under an application to relay the surface and bituminous concrete only because the five years period has expired though the surface roughness is of the prescribed measure". Having so noted, this Court disposed of the petition with a direction to the ICA to constitute an Arbitral Tribunal within one week, and with a direction to the Arbitral Tribunal, so constituted, to adjudicate OMP (I) (Comm) 421/2018 treating it as an application under Section 17 of the 1996 Act.

40. Needless to say, as the learned Arbitral Tribunal has passed a

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 final Award, which is under challenge, the subject matter of OMP (I) (Comm) 421/2018 is no longer of significance.

The Award

41. Before the learned Arbitral Tribunal, GMR advanced the following five claims:

"Claim No.1: Claim for a sum of ₹ 104,47,80,462 on account of (i) reimbursement of costs incurred for relaying the pavement at the end of the fifth year, and (ii) extra costs incurred due to the decision not to allow recycling of milled material.

Claim No.2: Claim for a sum of ₹ 10,78,61,864/- in respect of deductions made by the Respondent on account of damages.

Claim No.3: Claim for a direction to the Respondent not to insist upon relaying of the surface in the 10th year or thereafter if the roughness criterion as set out in the contract is met.

Claim No.4: Claim for interest @ 5% over SBI PLR on the above claims from the due date of payment till the actual date of payment.

Claim No.5: Claim for costs [as per actual]"

42. NHAI, per contra, advanced only one counter claim, for costs

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 incurred in the arbitral process.

Contentions of GMR before the learned Arbitral Tribunal

43. GMR contended, before the learned Arbitral Tribunal, that the clauses of the CA could not be read in isolation or dissociated from one another and that, read in conjunction, GMR was required to do the overlay work only if the Roughness Index of the highway, at any point, exceeded the stipulated minimum level of 2000 mm/km. Commercial contracts, it was submitted, were required to be commercially construed. Clause 4.3 of Schedule L to the CA read with Appendix 3.1 of Schedule L to the CA, submitted GMR, clearly indicated that the stringent pre-conditions stipulated for carrying out of overlay work had to be strictly adhered to. Where the Roughness Index was below 2000 mm/km, there was no requirement for carrying out overlay work every five years. As a result of such unnecessary overlay work that GMR had, under duress, to carry out, it had suffered huge losses which NHAI was duty bound to recompense.

44. GMR also questioned the relevance of Clause 2.6.1 of Schedule L to the CA to the issue in controversy. It was submitted that Clause 2.6.1 merely set out the various activities to be performed by the Concessionaire, and could not override Clause 4.3 of Schedule L to the CA. Reliance was also placed by GMR on Clause 2.6.1 (b) (ii) of Schedule L to the CA which provided, among the maintenance activities to be carried out by GMR, "wearing course required on account of the RI values higher than the prescribed criteria obtained

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 during regular testing as per the Concession Agreement requirement". Reliance was also placed on the flow chart scheme contained in Appendix 3.1 in Schedule L to the CA, which envisaged that, while carrying out periodic maintenance and inspection of the highway, a roughness survey was to be conducted and, if the Roughness Index favourably compared with the stipulated operations/performance criteria, GMR was to "do nothing".

45. GMR further disputed the legitimacy of the objection, belatedly raised by NHAI to the carrying out of the overlay/renewal work, by the petitioner, using the milling process. For the entire expense that GMR had to suffer, on the above account, GMR claimed ₹ 104,47,80,462/-.

46. Additionally, GMR contested the recovery, by NHAI, of damages of ₹ 10,78,61,864/-. Damages, under Clauses 18.12, 18.13 and 18.14 of the CA, it was submitted, could only follow on breach, by GMR, of its obligations thereunder, and on failure, by GMR, to rectify the breach within the period allowed by NHAI. GMR having completed the project work within the stipulated period, it was submitted that NHAI had no justifiable reason to levy damages. The deducted damages of ₹ 10,78,61,864/- were, therefore, refundable to GMR.

47. GMR, additionally, also claimed interest and costs.

NHAI's submissions before the learned Arbitral Tribunal

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14

48. NHAI contested the interpretation placed by GMR on Clause 4.3.1 of Schedule L to the CA. It was submitted that the said clause did not envisage any condition precedent for carrying out renewal work and did not contain the expression "exceeds 2000 mm/km". Apropos Appendix 3.1 in Schedule L to the CA, NHAI submitted that Clauses 2.6.1 and 4.3.1 of Schedule L to the CA, being substantive provisions, could not cede place to Appendix 3.1 in Schedule L to the CA. Besides, it was pointed out, Appendix 3.1 in Schedule L to the CA did not stipulate any prescribed Roughness Index value, as the basis for deciding whether renewal/overlay work was required to be done or not. Specifically drawing attention to Clause 2.6.1 of Schedule L to the CA, NHAI submitted that the said Clause unequivocally required GMR to undertake maintenance using a bituminous coat for renewal of the road pavement once every five years. Clause 2.6.1 of Schedule L to the CA, it was submitted, was unambiguous and not admitting of any two interpretations. It was not conditional upon the Roughness Index of the highway. The lower the Roughness Index, the better, it was submitted, would be the riding quality of the pavement.

49. The words "to bring it to the initial value of 2000 mm/km" in Clause 4.3.1 of Schedule L to the CA, it was submitted, were to be read with the immediately preceding stipulation of the Roughness Index exceeding 3000 mm/km. Where the Roughness Index exceeded 3000 mm/km, therefore, according to NHAI, the overlay work was required to bring the Roughness Index below 2000 mm/km. This did not derogate from the responsibility of GMR to, in any event, carry

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 out overlay work every five years. NHAI also relied on GMR's letter dated 21st March, 2014 supra to contend that the recitals in the said letter amounted to a concession, by GMR, to the interpretation of Clause 4.3.1 of Schedule L to the CA, as advanced by NHAI.

50. Emphasis was laid, by GMR, on the words "whichever is earlier" in Clause 4.3.1(ii) of Schedule L to the CA to contend that overlay work, in any event, was to be done at the end of every 5 years. This stipulation, as it figures in the said sub-Clause was a contractual obligation, without any condition precedent. If, for example, the Roughness Index was 2999 mm/km, accepting the contention of NHAI would exempt GMR from the requirement of doing any overlay work even under routine maintenance, which would result in the riding quality of the road being merely 'average' whereas, periodic renewal work carried out even when the Roughness Index was below 2000 mm/km, the roughness would be further reduced, thereby improving riding quality.

51. Reliance was placed, by NHAI, on the 'Cash Flow Projection' chart filed by GMR at the time of the financial bid. It was pointed out that, under the heading 'projected periodic maintenance', the cost of periodic maintenance had been included for June 2013, June 2018 and June 2022, without the cost of periodic maintenance being mentioned against any other year. As such, in the chart, the cost of carrying out overlay work had been provided for. No occasion, it was submitted, arose for GMR to do so, if carrying out of overlay work was subject to the condition of Roughness Index of the highway.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14

52. In fact, contended NHAI, GMR had raised the demand for compensation only in July 2016, when damages were imposed by NHAI. This demand, therefore, it was submitted, was essentially in the nature of a counterblast to the imposition of damages on GMR.

53. NHAI further contended that the initial opinion of the IC could not be regarded as sacrosanct and was subject to scrutiny. Even if, based on the test results of 2012, the IC had not advised periodic renewal, that, submitted NHAI, did not exonerate GMR of the obligation to periodically carry out overlay work.

54. These submissions, contended NHAI, also discredited Claim 3 of GMR.

55. Apropos the right, of GMR, to recycle the existing crust of the road using milling as an option, NHAI submitted that Clause 4.3.2(ii) of Schedule L to the CA permitted GMR to do so only in consultation with the IC, to maintain FRL. GMR could not do so unilaterally. It had, however, proceeded to do so, as was clear from GMR's letter dated 19th July, 2016, which draws reference to GMR's letter dated 12th February, 2014 wherein the IC was informed about the scheduled commencement of the milling of the existing pavement from 15 th February, 2014. The unilateral communication from GMR on 6th May, 2014, it was submitted, did not confer any right on GMR to start recycling of the milled material. The absence of any response from the IC did not indicate that the methodology adopted by GMR had been

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 approved. Rather, vide letter dated 28th February, 2014, the IC had categorically stated that as option of milling is exercised by the Concessionaire without the consent of the IC, resulting in damage to the project, the cost of damages to the project shall be borne by the Concessionaire. Reference was also made, in this context, to the communication dated 7th March, 2014, from the IC to GMR, wherein the IC had clearly communicated to GMR that no milling operation was to be done without its approval and GMR's response dated 20th March 2014 thereto, wherein GMR had admitted that milling was not agreed by the IC or NHAI. NHAI was, therefore, it was submitted, entitled, under Clause 30.1 of the CA, to suspend or any of the contractual rights of GMR, including payment of annuity.

The Impugned Award

56. The findings of the learned Arbitral Tribunal, qua the issues that arose for determination, may be distilled, claim-wise, thus.

Re. Claim 1 - for ₹ 104,47,80,462/- towards (i) reimbursement of costs incurred for relaying the pavement at the end of the fifth year and (ii) extra costs incurred on account of NHAI refusing permission to allow recycling of milled material.

57. The learned Arbitral Tribunal commences its discussion, in Claim 1 of GMR, by referring to the basic principles regarding interpretation of contracts and citing, in that context, various decisions of the Supreme Court and authoritative texts. Therefrom, the learned Arbitral Tribunal, after observing that, if there is any ambiguity in the

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 terms of a commercial contract, an interpretation which accords with business common sense is to be preferred, holds, with respect to Clause 4.3.1 of Schedule L to the CA, that the words "to bring it to the initial value of 2000 mm/km" did not qualify the requirement of laying new renewal coat after every 5 years, but were, instead, used only in respect of the phrase "where the roughness value reaches 3000 mm/km". In other words, according to the learned Arbitral Tribunal, "if the renewal coat is required to be laid down because the roughness value has reached 3000 mm/km, the same is laid down to bring the surface roughness value to 2000 mm/km". The words "to bring it to the initial value of 2000 mm/km", it was observed, were not used with respect to the words "every 5 years after initial construction". Overlay work was in the nature of regular periodic maintenance activity, to be done every 5 years, and was not dependent on the surface Roughness Index.

58. To support its interpretation, the learned Arbitral Tribunal also places reliance on Clause 2.6.1 of Schedule L to the CA which, according to the learned Arbitral Tribunal, unequivocally envisages periodic renewal every 5 years with no condition precedent. The contention, of GMR, that Clause 2.6.1 of Schedule L to the CA related only to traffic management and land closure was rejected by relying on Clause1.2 (d) of the CA, whereunder it was stipulated that the Headings of the contractual clauses would not cover their contents. Clause 1.4.2(i) of the CA, which stipulated that, in the event of ambiguity between clauses in the CA, the specific clause would prevail over other clauses, it was felt, would also not apply, as Clause

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 2.6.1 of Schedule L to the CA could not be regarded as a specific clause, so as to be accorded primacy. The word "after", in Clause 4.3.1(ii) of Schedule L to the CA, it was noted, was placed before "initial construction" and not "every 5 years", thereby indicating that the work was required to be done once every 5 years after initial construction. The use of the word "laid", it was held, meant that the renewal work was required to be completed once every 5 years.

59. The learned Arbitral Tribunal also held Clauses 6.1 and 6.2 of IRC:82, on which GMR relied, not to be applicable. Reliance was, instead, placed by the learned Arbitral Tribunal on the communications from the Project Director, NHAI to GMR, requiring GMR to take steps and furnish the program for immediate periodic maintenance/renewal, "irrespective of whether the roughness reaches 3000 mm/km or not, as per Clause 2.6.1 and Clause 4.3.1 of Schedule L of Concession Agreement". 5 yearly renewal work being part of the contractual stipulations, the learned Arbitral Tribunal held that GMR was not entitled to claim any extra payment therefor. The claim of ₹ 100,67,80,462/- was, therefore, held to be "absolutely unsustainable".

60. The learned Arbitral Tribunal, thereafter, proceeded to deal with GMR's claim for extra costs incurred owing to NHAI's refusal to allow recycling of milled material. Clause 4.3.2 (ii) of Schedule L to the CA was cited, to hold that recycling of the existing crust using milling was permissible only in consultation with the IC, to maintain the same level of FRL throughout the concession period. It was observed that there was no material on record to indicate that any

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 attempt at deliberation or discussion with the IC, regarding the milling of the existing crust, had been undertaken by GMR. GMR had commenced milling on its own. The assertion that the IC had, initially, supervised the milling operation, it was found, was also not supported by any material. The letter, dated 12th February, 2014, from GMR to the IC, stating that GMR was planning to start milling work on 15th February, 2014, did not refer to any requirement of consultation with the IC. Further communications from GMR to the IC, too, acknowledged the requirement of consultation. The IC, vide letter dated 28th February, 2014, informed GMR that, while proposing milling operations before the start of maintenance activities, GMR had not specified the reasons therefor; also, no program for milling was submitted to the IC. As such, the IC stated that GMR had undertaken milling without the knowledge of the IC, contrary to the stipulations in the CA. The learned Arbitral Tribunal held that GMR could not unilaterally decide to carry out milling operations. In view thereof, it was held that GMR could not claim, from NHAI, the costs incurred on account of want of approval, by GMR, for recycling of the milled material, or for idling of machinery on that count.

Re. Claim 2 - for ₹ 10,78,61,864/- towards deductions made by NHAI against damages

61. The learned Arbitral Tribunal noted that Clause 18.12 of the CA entitled NHAI to recover damages in the event of GMR failing to maintain and/or repair the Project Highway, or any part thereof, in accordance with the Maintenance Program or the Maintenance Manual

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 and having failed to commence remedial works within 30 days of receipt of notice in that behalf from NHAI. The learned Arbitral Tribunal noted that no notice, as required by Clause 18.12 of the CA, for failure to commence the work, had been served by NHAI on GMR. The contention of NHAI that a notice to undertake periodic maintenance activities was inbuilt in the clauses of the CA such as Clause 2.6.1 and 4.3.1 of Schedule L to the CA was rejected by the learned Arbitral Tribunal on the ground that a written notice was a condition precedent for imposition of damages under Clauses 18.12, 18.13 and 18.14 of the CA. This position, it was noted, was also acknowledged by the IC in his letter dated 15 th March, 2018, which deducted, from the total number of days of delay to calculate liquidated damages, the 30 day notice period. The communications from NHAI to GMR, calling upon GMR to submit the work program and threatening not to process annuity, too, it was observed, did not envisage recovery of damages. These communications, specifically the letters dated 21st August, 2013, 18th November, 2013 and 5th December, 2013, it was held, could not be regarded as notices as stipulated by Clause 18.12 of the CA. In fact, GMR had continued the periodic maintenance work and completed the work by December 2014. The delay, if any, on the part of GMR, it was observed, did not elicit any protest from NHAI. In these circumstances, the learned Arbitral Tribunal held the imposition of damages, by NHAI on GMR, to be unwarranted.

62. The learned Arbitral Tribunal held, additionally, that damages could not be levied in terms of Illustration (iii) in para 4.4 of the

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 Policy Circular dated 5th February, 2018 of NHAI, as it would amount to a unilateral amendment, by NHAI, of the terms of the CA, which was impermissible in law.

63. For all these reasons, the learned Arbitral Tribunal allowed GMR's claim for ₹ 107,861,864/-, being the amount recovered by NHAI by way of damages, from the annuity payable to GMR.

Re. Claim 3 - For directing NHAI not to insist upon relaying of the surface in the 10th year or thereafter, if the Roughness Index was 2000 mm/km or less

64. In view of its preceding findings, especially with respect to Claim 1, the learned Arbitral Tribunal directed that the second and third cycles of overlay work be completed by the 11 th and 16th years of the contract. The renewal work for the second cycle was directed to commence on or before 1st April, 2020 and be completed by the end of 2020 and, for the third cycle, to be completed by 1st April, 2025.

Re. Claim 4 - For interest

65. Noting the fact that, on different occasions, Courts had granted different rates of interest, the learned Arbitral Tribunal held that, in the facts and circumstances of the case, it would be appropriate to award, to GMR, interest @ 12% p.a. on the awarded amount of ₹ 107,861,864/-, from the date of deduction of the said amount, by NHAI, as damages, i.e. from 27th March 2018, till the date of payment.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 Re. Counter-claim by NHAI

66. NHAI's counterclaim, which was limited to costs, was rejected by the learned Arbitral Tribunal.

Rival Submissions and Analysis

67. I have heard Mr. Atul Sharma on behalf of GMR and Mr. Dayan Krishnan, learned Senior Counsel, along with Mr. Ankur Mittal, on behalf of NHAI, at length.

Re: Claims 1 and 3

68. Mr. Sharma contends that the interpretation, placed by the learned Arbitral Tribunal on the covenants of the CA, is, ex facie, perverse and, not one which any person, conversant with the law, would arrive at. On a plain reading, according to Mr. Sharma, Clause 4.3.1 (ii) of Schedule L to the CA required laying of a renewal coat of bituminous concrete only where the Roughness Index was above 2000 mm/km.

69. This, he submits, was the purpose of laying the renewal coat. He relies, for this purpose, on Clauses 1.2 (i) and (k) of the CA, 4.9.2 and 2.1 of the CA, Clause (1) "scope of the project" in Schedule B to the CA and Clauses 2.6.1, 4.2 and 4.3 of Schedule L to the CA, read with Appendices 3.1 and 3.4 thereto. Read conjointly, Mr. Sharma

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 submits that these clauses left no manner of doubt that, unless and until the Roughness Index fell below 2000 mm/km, GMR was to "do nothing". The interpretation placed by the learned Arbitral Tribunal on Clause 4.3.1 of Schedule L to the CA, he submits, would militate against all other clauses in the CA and could not, therefore, be said to be reasonably acceptable. He also submits that Clause 2.6.1(a) of Schedule L to the CA has to be read along with Clause 4.3.1 of Schedule L to the CA, and clearly sets out the activities which were required to be done, the specifications in respect whereof were to be found in Clause 4.3.1 of Schedule L to the CA.

70. Appendix 3.1 of Schedule L to the CA, Mr. Sharma submits, requires yearly estimation of Roughness Index to be undertaken. If, on comparison, the Roughness Index throughout the highway was in accordance with the operation/performance criterion stipulated in Appendix 3.4 read with Clause 4.3.1(i) and (ii) of Schedule L to the CA, the concessionaire was to "do nothing". Periodic maintenance was required, if at all, only where the Roughness Index exceeded 2000 mm/km.

71. Admittedly, the Roughness Index throughout the highway was, at all times, below 2000 mm/km. The trigger point for carrying out periodic maintenance was, therefore, never reached. "No repairs" were, therefore, "required", as per Appendix 3.1 of Schedule L to the CA, and GMR was required to "do nothing". The fact that the Roughness Index was below 2000 mm/km at all points in the project highway also stands acknowledged in the impugned award of the

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 learned Arbitral Tribunal. It was, for this reason that the IC, vide letter dated 23rd September, 2013, communicated to NHAI that renewal coat was not necessary.

72. Clause 4.3 of Schedule L to the CA, points out Mr. Sharma, required activities relating to pavement maintenance and rehabilitation, in respect of flexible and rigid pavement to be undertaken as per the flow charts in Appendix 3.1 and 3.2 to Schedule L to the CA. This provision, being anterior to Clause 4.3.1 of Schedule L to the CA, would prevail over Clause 4.3.1 of Schedule L to the CA, assuming there was any ambiguity in the latter provision. Any other interpretation, submits Mr. Sharma, would render Appendices 3.1 and 3.4 of Schedule L to the CA nugatory and redundant.

73. Mr. Sharma also faulted the learned Arbitral Tribunal for having brushed aside the reliance, by GMR, on the IRC specifications, which were binding on the parties under the CA.

74. Mr. Sharma points out that, in its award in Nirmal BOT, the learned Arbitral Tribunal which was in seisin of that dispute had interpreted the various clauses of the CA in accordance with the submissions advanced by him in the present case.

75. As against this, Mr. Dayan Krishnan, learned Senior Counsel for NHAI, submits that Clause 2.6.1(b) of the Schedule L to the CA relates to regular maintenance activities, which have nothing to do with periodic activities. He points out that Clause 2.6.1(a)(i) of the

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 Schedule L to the CA, which requires five yearly renewal coat to be laid does not condition the said requirement by any caveat. Clause 4.3.1 of Schedule L to the CA, according to Mr. Dayan Krishnan, only stipulates a minimum criterion.

76. Mr. Dayan Krishnan submits that, in the absence of any "operation/performance criteria", Appendix 3.1 of Schedule L to the CA would have no application. He also disputes the applicability of Appendix 3.4 of Schedule L to the CA, as he submits that laying of the renewal coat did not amount to "repairs". The Roughness Index, he submits, only tested the riding quality. Bituminous concrete overlay served two functions. It improved the riding quality of the pavement and also provided a protective layer protecting the underlying Dense Bituminous Macaderm. As such, he submits that GMR is not justified in its contention that, if the Roughness Index was above 2000 mm/km, no overlay was required.

77. Mr. Dayan Krishnan submits that the mandate of Clause 2.6.1(a)(i) of Schedule L to the CA was clear and unequivocal, in requiring renewal of the wearing surface of the road pavement to mandatorily be undertaken "once every five years". Clause 2.6.1 of Schedule L to the CA, he submits, governs Clause 4.3.1 of Schedule L to the CA and would apply as it applied throughout the contract period. Clause 4.3 of Schedule L to the CA only referred to periodic inspection for the purpose of maintenance. Without prejudice, Mr. Dayan Krishnan submits that word "or" between the two parts of the sentence, "a renewal coat of bituminous concrete shall be laid every

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 five years after initial construction" and "where the Roughness value reached 3000 mm/km, whichever is earlier, to bring to the initial value of 2000 mm/km", clearly indicated that the two parts of the clause were to be read disjunctively and that, irrespective of whether the second part of the sentence applied, or did not apply, a renewal coat of bituminous concrete was mandatorily required to be laid every five years after initial construction. Any other interpretation, he submits, would be unrealistic and would amount to ignoring normal wear and tear that the highway surface would suffer. The findings of the learned Arbitral Tribunal, submits Mr. Dayan Krishnan, were entirely in order, and did not call for any interference by this Court.

78. In such circumstances, Mr. Dayan Krishnan submits that no occasion arises for this Court to interfere with the impugned award. He relies, for this purpose, on the judgment of the Supreme Court in Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd2. Mr. Dayan Krishnan has, in this context, specifically invited my attention to Section 34(2A)3 of the 1996 Act which permits, interference by a Court, with the arbitral award, only in the case of "patent illegality".

79. The interpretation postulated by him, submits Mr. Dayan Krishnan, was in line with the view expressed by a coordinate Bench

2 (2022) 1 SCC 131 3 34. Application for setting aside arbitral awards. -

***** (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 of this Court in NHAI v. Patel KNR Infrastructure Ltd.4 (Mr. Sharma, on the other hand, seeks to distinguish the decision in Patel KNR Infrastructure Ltd.4 on facts). He points out that, in para 28 of the report, the coordinate Bench has clearly observed that the intent of the parties was to ensure that the riding quality of the pavement does not fall below the specified minimum standard. Besides, para 20 of the report in that case indicated that the de minimis Roughness Index was 3000 mm/km and not 2000 mm/km.

Analysis

80. Ordinarily, a Section 34 Court would not interfere with the interpretation adopted by an Arbitral Tribunal with respect to a contractual covenant. This proscription is, however, not absolute. Where it appears to the Court that the interpretation placed by the Arbitral Tribunal on the contractual clauses is not one which can be adopted by any reasonable person, the Court can interfere. In deciding whether the interpretation, placed by the learned Arbitral Tribunal on the contractual covenants is, or is not, reasonable, the Court would be required to examine all relevant covenants in the contract. An interpretation of a particular clause, which stands alone and is unconditioned by any other clause in the contract would be less vulnerable to interference by a Court, apropos the interpretation that an Arbitral Tribunal may choose to place on it. Where, however, a contractual covenant is interlinked to other covenants in the contract, or where there are more than one covenants in a contract dealing with

4 2021 SCC Online Del 4152

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 a particular exigency, then, if the Arbitral Tribunal interprets one of the covenants in such a manner as would frustrate the intent of the other covenants, or in a manner in which is not in sync with the other covenants, a Court would be bound to interfere.

81. Equally, if an Arbitral Tribunal does not consider a particular relevant covenant, despite its attention having been invited thereto, the Court would be justified in interfering. In this context one may refer to para 61 of the report in Ssangyong Engg. & Construction Co. Ltd. v. NHAI5 in which the Supreme Court addressed the question of the amenability to interference of an arbitral award, on the ground that a contention raised by a party was not considered. The Supreme Court approved the following passage from the decision of the Singapore Court of Appeal in CRW Joint Operation v. PT Perusahaan Gas Negara (Persero) TBK6 which, in turn, relied on the following enunciation of the law in "Redfern and Hunter on International Arbitration" (Oxford University Press, 5th Edn., 2009):

"The significance of the issues that were not dealt with has to be considered in relation to the award as a whole. For example, it is not difficult to envisage a situation in which the issues that were overlooked were of such importance that, if they had been dealt with, the whole balance of the award would have been altered and its effect would have been different."

The Court, faced with a submission by an aggrieved litigant that the Arbitral Tribunal had failed to consider a contention advanced before

5 (2019) 15 SCC 131 6 2011 SGCA 33

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 it is, therefore, required to examine whether, if the Arbitral Tribunal would have considered the contention, the outcome may have been different. If the answer to this query is in the negative, no cause for interference exists, merely because the Arbitral Tribunal has not considered the contention. If, however, the Court comes to the conclusion that, were the contention to be considered, the outcome of the proceedings might have been different, the failure, on the part of the Arbitral Tribunal, in considering the contention, would imperil the award.

82. An important decision, in this context, is the pronouncement of the Supreme Court, through Ramana J (as the Hon'ble Chief Justice then was) in South East Asia Marine Engineering & Constructions Ltd. v. Oil India Ltd.7 The issue before the Supreme Court was with respect to the interpretation, by the Arbitral Tribunal, with a "change in law" clause in the contract, in which event Oil India Ltd (OIL), the respondent before the Supreme Court, became liable to re-imburse South East Maritime Constructions Ltd. (SEAMEC), the appellant before the Supreme Court. SEAMEC claimed that the increase in price of High Speed Diesel (HSD), an item essential to carry out the contract, constituted "change in law" and, thereby, entitled SEAMEC to re-imbursement. The learned Arbitral Tribunal, per majority, allowed the claim, albeit by holding that the increase in price of HSD was not a "change in law" stricto senso. Nonetheless, the learned Arbitral Tribunal held that it had the "force of law" and was also,

7 2020 5 SCC 164

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 therefore, covered by the "change in law" clause.

83. The High Court, however, reversed the decision of the learned Arbitral Tribunal, holding that the manner in which the learned Arbitral Tribunal had interpreted the clauses of the contract was contrary to public policy and amounted to patent illegality.

84. The Supreme Court, in appeal, first noted the position, in law, as enunciated in Dyna Technologies Pvt. Ltd v. Crompton Greaves Ltd.8, that the mere possibility of an alternative interpretation of the contractual covenants would not justify interference with arbitral award under Section 34 of the 1996 Act. The need for deference and caution, by Courts seized with Section 34 challenges, was also underscored in the said decision.

85. Having so noticed, the Supreme Court in South East Asia Marine Engineering & Constructions7, in para 14 of the report, framed the issue arising before it for consideration as "whether the interpretation provided to the contract in the award of the tribunal was reasonable and fair, so that the same passes the muster under Section 34 of the Arbitration Act".

86. Having thus framed the issue that arose for consideration, the Supreme Court disapproved the interpretation of the contract, both by the learned Arbitral Tribunal as well as by the High Court. In so far as

8 (2019) 20 SCC 1

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 the reasoning of the learned Arbitral Tribunal was concerned, the Supreme Court held, significantly, that "although the Arbitral Tribunal correctly held that a contract needs to be interpreted taking into consideration all the clauses of the contract, it failed to apply the same standard while interpreting Clause 23 of the contract".

87. Having thus set out the legal position, the Supreme Court held that, while interpreting the "change in law" clause in the contract, the Arbitral Tribunal was required to take into account other contractual terms such as Item 1 of List II which indicated that fuel would be supplied by the contractor at his expense. If other contractual terms were taken into account, the Supreme Court held that the interpretation, accorded to the "change in law" clause in the contract by the Arbitral Tribunal, could not sustain.

88. While examining the vulnerability of the decision of the learned Arbitral Tribunal, on Claim 1 of GMR, to interference under Section 34 of the 1996 Act, this Court would, applying the law enunciated in South East Asia Marine Engineering & Constructions 7, have to examine whether the interpretation of the covenants of the CA, by the learned Arbitral Tribunal, is reasonable and fair. In doing so, no doubt, the Court is required to bear in mind the constraints that operate on it, as a Court exercising jurisdiction under Section 34 of the 1996 Act, in the matter of interference with the manner in which the Arbitral Tribunal has chosen to interpret the contract. If, however, the Court finds that the learned Arbitral Tribunal has not taken into account all relevant clauses, or that the manner in which the learned Arbitral

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 Tribunal has interpreted the contract is disharmonious with other clauses, the Court would have necessarily to interfere.

89. This is apart from the fact that applying the law in NHAI v. Progressive-MVR (JV)1, the same clauses having been subjected to mutual conflicting interpretations by two Arbitral Tribunals, this Court would, in any case, be duty bound to set out what, in its estimation, is the correct interpretation.

90. A bare reading of the impugned award reveals that it proceeds on two basic premises. The first is that the requirement of renewal of the wearing surface of the road pavement every five years was, as per Clause 2.6.1(a)(i) of Schedule L to the CA, mandatory and non- negotiable, irrespective of the Roughness Index of the Project Highway.

91. The second is that the words, "to bring it to the initial value of 2000 mm/km", in Clause 4.3.1(ii) of Schedule L to the CA would have to be read with the latter part of the second sentence in the said clause, i.e., with the immediately preceding stipulation which reads, "where the roughness value reaches 3000 mm/km". According to the learned Arbitral Tribunal, the stipulation, "to bring it to the initial value of 2000 mm/km", in Clause 4.3.1 (ii) of Schedule L of the CA would not apply to the initial part of the sentence which reads, "shall be laid every five years after initial construction".

92. In my opinion, the manner in which the learned Arbitral

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 Tribunal has interpreted Clause 4.3.1(ii) of Schedule L to the CA appears to be contrary to the wording of the clause itself. The clause states that "a renewal coat of bituminous concrete shall be laid every 5 years after initial construction or where the roughness value reaches 3000 mm/km whichever is earlier to bring it to the initial value of 2000 mm/km".

93. The question is as to how this clause would apply in a case such as the present when the roughness value/Roughness Index never exceeded 2000 mm/km. Laying of a renewal coat of bituminous concrete, in such a situation, would result in the Roughness Index falling even below the level at which it already stood. In the facts of the present case, for example, the Roughness Index was found, on two tests, to be 1749 mm/km and 1788 mm/km. At all times, therefore, the Roughness Index was in any event below 2000 mm/km. Laying of a renewal coat could never, therefore, bring the roughness value to 2000 mm/km. In fact, laying of a renewal coat would reduce the roughness value even further away from the standard of 2000 mm/km stipulated in Clause 4.3.1(ii) of Schedule L to the CA. Requiring GMR to undertake overlay work in such circumstances, therefore, ex-facie, violates Clause 4.3.1(ii) of Schedule L to the CA which envisages bringing of the roughness value, as a consequence of such overlay work, "to the initial value of 2000 mm/km".

94. The learned Arbitral Tribunal has, however, chosen to interpret Clause 4.3.1(ii) of Schedule L to the CA by reading the initial part of the second sentence of the said clause, which reads "a renewal of

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 bituminous concrete shall be laid every 5 years after initial construction" as a stand-alone stipulation, completely unrelated to the latter part of the same sentence and, particularly, unrelated to the stipulation that the roughness value is to be brought to the initial value of 2000 mm/km.

95. There is, prima facie, substance in the contention of Mr. Sharma that, at the very least, according to such an interpretation would result in reducing, to a superfluous redundancy, the words "to bring it to the initial value of 2000 mm/km".

96. Even if one were to read the stipulations, in Clause 4.3.1(ii) of Schedule L to the CA of the requirement of laying the renewal coat "every 5 years after initial construction" and "where the roughness value reaches 3000 mm/km" distinctively - as the word "or" between these two clauses would seem to indicate - the concluding stipulation that the laying of the renewal coat is to bring the roughness value to the initial value of 2000 mm/km would nonetheless apply to both stipulations. The emphasis, by Mr Dayan Krishnan, on the use of the word "or" in Clause 4.3.1 (ii) of Schedule L to the CA, between "shall be laid every 5 years after initial construction" and "where the roughness value reaches 3000 mm/km" does not, therefore, advance the interpretation of the clause that he seeks to advocate. In either case, the renewal coat is to be laid to ensure that the Roughness Index/roughness value is brought to the initial value of 2000 mm/km. Bringing of the Roughness Index to 2000 mm/km is the purpose of laying the renewal coat. This stipulation would, therefore, apply to the

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 entirety of Clause 4.3.1(ii) of Schedule L to the CA, and not merely to the latter part of the second sentence therein.

97. I have deliberated on whether, in so holding, this Court would be interfering, without due justification, with the interpretation placed by the learned Arbitral Tribunal on Clause 4.3.1(ii) of the Schedule L to the CA or the other contractual covenants, or would, thereby, be breaching the boundaries of Section 34 of the 1996 Act. On a holistic appreciation of the issue, I am inclined to feel that I would not. 2000 mm/km is the optimum Roughness Index, for maintaining good pavement riding quality. An increase in Roughness Index, undisputedly, reduces pavement riding quality. Overlay/renewal work reduces Roughness Index. On these, there is no dispute; indeed, the submissions of Mr Dayan Krishnan were predicated on these premises. It is for this purpose that Clause 4.3.1(ii) of Schedule L to the CA envisages laying of a renewal coat, so that the Roughness Index remains at 2000 mm/km or below, and pavement riding quality is optimum. Overlay work for bringing the Roughness Index to 2000 mm/km is, therefore, envisaged, by Clause 4.3.1(ii) of Schedule L to the CA in two situations; either every five years or whenever the Roughness Index exceeds 3000 mm/km. In either case, the objective is to ensure that the Roughness Index of the Project Highway does not exceed 2000 mm/km.

98. Per sequitur, where the Roughness Index is already below 2000 mm/km, on a plain interpretation of Clause 4.3.1(ii) of Schedule L to the CA, no overlay/renewal work by the Concessionaire would be

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 warranted. The manner in which the learned Arbitral Tribunal has chosen to interpret the clause appears, with deepest respect to the eminent members of the learned Arbitral Tribunal, opposed to commercial common sense. Commercial contracts have, it is trite, to be commercially construed, as the learned Arbitral Tribunal has itself observed in the impugned Award. In Mumbai Metropolitan Region Development Authority v. Unity Infraproject Ltd.9, Dr Chandrachud, J. (as he then was) tellingly exposited this principle thus:

"In interpreting a contract, the Court cannot place emphasis on an isolated provision divorced from the context and unrelated to the other provisions which govern contractual obligations. Contracts represent business understandings between the parties. Commercial dealings between persons who are well versed in the transaction of business are regulated by contracts which parties opt to govern themselves. The law regulates those contracts and provides an ordered framework in which business dealings can be implemented. The duty of the Court when called upon to assess where the balance lies in a contractual dispute, is to read the contract as a whole in order to understand the business meaning which the parties attributed to their obligations. Interpretation in law must ensure in commercial matters that the view which the Court takes records the sense, which the parties to an arms length transaction attribute to the terms which they incorporate. The law is not divorced from business realities nor can the vision of the Judge who interprets the law be disjointed from the modem necessities to make business sense to business dealings."

(Emphasis supplied)

99. The emphasis laid by the learned Arbitral Tribunal on Clause 2.6.1(a)(i) of Schedule L to the CA cannot, either, be said to be justified. A bare reading of Clause 2.6.1 of Schedule L to the CA indicates that the various clauses that follow merely set out the

9 2008 (4) Arb LR 313 (Bom)

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 activities which are required to be carried out by GMR. Amongst the activities envisages in the CA is, undoubtedly, renewal of the wearing surfaces of road pavements once every 5 years. It is obviously for that purpose that the said activity finds mention in Clause 2.6.1(a)(i) of Schedule L to the CA.

100. The specifications and stipulations relating to the manner in which, and the circumstances in which, such activity would have to be undertaken, however, specifically finds place in Clause 4.3.1 of Schedule L of the CA. Clause 2.6.1 of Schedule L of the CA would, therefore, have to be read subject to Clause 4.3.1 of Schedule L to the CA and not vice-versa. More specifically, the circumstances in which renewal coat would be required to be laid have necessarily to be gleaned from Clause 4.3.1 of Schedule L to the CA, and not from Clause 2.6.1(a) of Schedule L to the CA.

101. Clause 1.4.2(i) of the CA specifically provides that, in the event of ambiguity between clauses, the specific clause would prevail over other clauses. This is the contractual avatar of the generalia specialibus non derogant principle of statutory interpretation.

102. The learned Arbitral Tribunal has dismissed the reliance, by GMR, on Clause 1.4.2 (i) by a simple finding that Clause 4.3.1 of Schedule L to the CA could not be regarded as specific in nature. No reason for this finding is forthcoming in the impugned award. On a bare reading of Clause 2.6.1 and Clause 4.3.1 of Schedule L to the CA, it is apparent, ex facie, that the latter is specific and the former

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 general, clause and that, therefore, in the event of any ambiguity between the two, Clause 4.3.1 of Schedule L to the CA would prevail.

103. Had these been the only issues, perhaps, it might have been possible to argue - though I sincerely doubt whether the argument would be sustainable - that the matter related to the realm of arbitral interpretation of contractual covenants and may not, therefore, be amenable to Section 34 interference.

104. The matter, however, does not rest there. The manner in which the learned Arbitral Tribunal has chosen to interpret Clause 4.3.1 (ii) of Schedule L to the CA is directly contrary to other relevant clauses of the CA, the most important among them being Appendix 3.1 read with Clause 4.3 of Schedule L to the CA. Clause 4.3 of Schedule L to the CA clearly states that the framework of activities relating to pavement, maintenance and rehabilitation in respect of flexible and rigid pavement are given in the flow charts in Appendix 3.1 and Appendix 3.2 of Schedule L to the CA respectively.

105. The flow chart in Appendix 3.1 of Schedule L to the CA ordains that, in the matter of periodic maintenance of the highway surface, apropos Roughness Survey, the Concessionaire is required to compare the Roughness Index with the operation/performance criteria and either "do nothing" or renew the surface. It is obvious that, if the Roughness Index of the highway surface was in accordance with the operation/performance criteria, GMR was to do nothing.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14

106. Mr Dayan Krishnan has sought to contend that there were no stipulated "operational/performance criteria" for the Roughness Index, to enable a comparison, as envisaged by Appendix 3.1 to Schedule L of the CA, to be made. I am unable to agree. The stipulated Roughness Index, as per Clause 4.3.1(i) of Schedule to the CA, was 2000 mm/km. The NHAI itself contends, during arguments, that the lower the Roughness Index, the higher would be the riding quality of the pavement. Where, therefore, the Roughness Index was already below 2000 mm/km, and the stipulated operation/performance criterion was 2000 mm/km, Appendix 3.1 to Schedule L to the CA is categorical in envisaging that the Concessionaire would "do nothing". Appendix 3.1 of Schedule L to the CA was binding on GMR in view of Clause 4.3 of Schedule L to the CA. Clause 4.3.1 of Schedule L to the CA, being a sub-clause of Clause 4.3, would necessarily have to be read in accordance with Clause 4.3, and not contrary thereto. Thus read, the Roughness Index of the highway having been always below 2000 mm/km, there could be no question of the CA having required GMR to carry out further overlay work on the highway surface.

107. This is also supported by Appendix 3.4 to Schedule L of the CA, reproduced supra. The said appendix clearly states that, if the condition of the road is "good", no repairs were needed. Mr. Dayan Krishnan has sought to contend that overlay work/laying of the renewal coat on the surface, would not constitute "repair work". There is, however, nothing to support this submission.

108. The CA does not define "repair work". In Sir Shadi Lal and

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 Sons v. IT Commissioner10, the Supreme Court has held that "restoration of stability or safety of subordinate or subsidiary part of a portion of a building is repair but not the reconstruction of the entirety of the building". In Hansraj Tiratharam Hans v. Jammu Municipality11, the High Court of Jammu & Kashmir had refined "repair" thus:

"The expression 'repair' signifies restoration to the original condition. Anything which substantially improves or materially alters a thing from its original condition cannot be said to be merely a repair of that thing."

"Restoration of the stability or safety of a subordinate or subsidiary part of a building" has also been held to be repair by the High Court of Mysore in Ullal Dinkar Rao v. M. Ratna Bai12.

109. Clause 4.3.1(ii) of Schedule L to the CA envisages laying of a renewal coat of bituminous concrete to bring the Roughness Index to the original value of 2000 mm/km. Clearly, therefore, the activity constitutes "repair".

110. Where the condition of the road is "good", therefore, such overlay work would not be required as per Appendix 3.4 of Schedule L of the CA.

111. The Roughness Index of the project highway, as per roughness

AIR 1988 SC 424 11 AIR 1963 J&K 18

AIR 1958 Mys. 77

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 survey carried out during the period 22 nd to 27th January, 2020, using bump integrator, available on record, specifically certifies that, at all points on the highway, "as per the obtained values at site, the road condition is good". That being so, even applying Appendix 3.4 to Schedule L to the CA, there was no requirement for any overlay work to be done on the project highway by GMR.

112. The dismissal of the learned Arbitral Tribunal, in para 90 of the impugned award, of the prescribed IRC standards as having "no relevance to the determination of the controversy at hand" is also, in my opinion, not sustainable in law. No reason is forthcoming on record as to why the IRC standards have no relevance to determining the controversy at hand. Clause 4.2.1.1 of the Schedule L to the CA, on the other hand, makes the IRC standards binding on the Concessionaire.

113. Clause 6 of IRC: 82 (reproduced in para 88 of the impugned award) specifically deals with periodic renewals of pavements and maintenance of pavement quality and read thus:

"6. Periodic Renewals

6.1 Need and importance of Periodic renewals

Periodic renewals consist of the provisions of a surfacing layer over the pavement at regular intervals of time, so as to preserve the required characteristics of the pavement and the offset the wear and tear caused by traffic, weathering, etc. In effect, periodic renewals represent preventive maintenance which is needed to prevent deterioration of the pavement of characteristics and to ensure that initial qualities

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 are kept up for the future requirement of traffic during the design life of the pavement. Early detection and repair of noticeable defects can prevent a major break-down of the surface. For example, if symptoms like hungry surface, ravelling etc. are noticed at an early stage and suitable preventive action by way of renewal of surface is taken to arrest further deterioration, the life of pavement can be prolonged.

6.2 Planning and Programming of Renewals

The general practice in this country is to finalise renewal program on an annual basis. In order that necessary steps leading to the laying of renewal layer on the road could be taken in proper time, the renewal programme for each section of a road should be decided well in advance. Once the programme is finalised, steps could be taken to secure the required allocations and start the preliminary filed action such as collection of material etc.

While the nomenclature "Periodic Renewal" would imply that the renewal treatment be carried out a fixed and pre-determined frequency, it would neither be practicable nor desirable to follow implicitly any specified frequency irrespective of the condition of the road surface proposed to be renewed. The most effective way to plan a renewal programme is to carry out inspections of the road surface at suitable intervals. Visual inspection of the road as detailed in Section 3 of this Code should be carried out. In addition, special inspections also are necessary before and after the rains as to assess the need for patching and other remedial measures required to be carried out either in advance or together with the renewal treatment"

(Emphasis supplied) Clearly, therefore, IRC: 82 envisages periodic renewals, to prevent deterioration of the pavement and to ensure maintenance of initial qualities for future traffic requirements during the design life of the pavements. The IRC is binding as per Clause 4.2.1.1 of Schedule L to the CA. The relevance of the IRC cannot, therefore, be gainsaid.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 Clause 5, 5.1 and 5.2 of IRC:SP:16:2004 read thus:

"5. Recommended Standard for roughness values

5.1 The maximum permissible values of surface roughness measured with a bump integrator for different surfaces are given in Table 3.

5.2 Newly constructed surfaces are expected to given roughness values corresponding to 'Good' category while the values under 'Average' and 'Poor' category indicate level-of- service and intervention level for maintenance. Surfaces with very low roughness value skid resistance and are not desirable from safety considerations. Such surfacing should receive prompt attention for restoring frictional resistance."

(Emphasis supplied)

114. Clause 5.2 of IRC:SP:16:2004, therefore, envisages intervention, for maintenance, where the roughness values of newly constructed surfaces was "average" or "poor" and specifically discountenances the need for such intervention where the surface quality was "good". This harmonises, in its entirety, with Appendix 3.4 of Schedule L to the CA. The learned Arbitral Tribunal has, without returning any finding on the said standards, merely held them not to be relevant to determination of the controversy before it. This, in my considered opinion, cannot sustain.

115. As has already been noted hereinabove, where submissions advanced by the parties before it are either not considered or considered and rejected without any reasons, the Section 34 court would be justified in interfering where consideration of the said

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 submissions would result in materially altering the outcome of arbitral process. The learned Arbitral Tribunal, in the impugned award, confined its consideration to its interpretation of Clause 4.3.1(ii) of Schedule L to the CA, in support of which it has relied on Clause 2.6(1)(a)(i) of Schedule L to the CA. The interpretation accorded, by the learned Arbitral Tribunal, to Clause 4.3.1(ii) of Schedule L to the CA, is, even on a reading of the said clause, not reasonable or an interpretation which is in accordance with the wording of the clause. Moreover, such an interpretation would also be contrary to Clause 4.3.1 (i) of Schedule L to the CA.

116. The interpretation accorded by the learned Arbitral Tribunal to Clause 4.3.1(ii) of Schedule L to the CA would also be out of sync with Clause 4.3 of Schedule L to the CA read with Appendix 3.1 thereto, Appendix 3.4 and Clause 5.2 of IRC:SP:16:2004 read with Clauses 6.1 and 6.2 of IRC:82 which, as per Clause 4.2.1.1 of the Schedule L to the CA, had necessarily to govern the execution of operations by the concessionaire i.e., GMR.

117. I cannot, therefore, concur with the finding, of the learned Arbitral Tribunal, that, though the Roughness Index, at all points of time, below 2000 mm/km, GMR was, nonetheless, required to carry out renewal/overlay work.

118. The manner in which the learned Arbitral Tribunal has come to the said conclusion is, in my respectful opinion, contrary to several binding clauses of the CA and is also not sustainable on a plain

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 reading of Clause 4.3.1 (ii) of Schedule L to the CA itself. It is, therefore, "patently illegal" within the meaning of Section 34(2A) 4 of the 1996 Act.

119. GMR was constrained to carry out overlay work on the insistence of NHAI which, from time to time, threatened to withhold its annuity payment in the event the work was not carried out. Even otherwise, once the work was carried out at the insistence of NHAI, despite GMR protesting, in writing, in that regard, if the work was not within the work contemplated by the contract, GMR is entitled, in law, to additional payment.

120. Claim 1 also covered a claim for extra costs incurred by GMR, on account of NHAI refusing permission to allow recycling of milled material. The learned Arbitral Tribunal, in this context, held that milling, as an option, was available, under Clause 4.3.2 (ii) of Schedule L to the CA, only in consultation with the IC. It is specifically held that there was no material on record to indicate that any attempt or deliberation or discussion with the IC, regarding milling of the existing crust, had been undertaken by GMR, which had proceeded to commence milling on its own. The letter dated 12 th February, 2014, from GMR to the IC, stating that GMR was intending to carry out milling activity, did not seek any consultation with the IC, as per the impugned award. GMR having undertaken the milling exercise without consultation with the IC, learned Arbitral Tribunal has found GMR not to be entitled to the expense involved in recycling of the milled crust.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14

121. The finding, of the learned Arbitral Tribunal, that the milling exercise have been undertaken without due consultation with the IC and that, therefore, GMR would not be entitled to any expense incurred on account of recycling of the milled crust has to be examined in the light of the actual situation on ground and the communications exchanged between the parties.

122. In its letter dated 5th December, 2013, addressed by NHAI to GMR, NHAI specifically stated thus:

"4. Since the 5 years period is getting completed by 25/03/2014 after construction, the first surface overlay is to be provided immediately, irrespective of whether the Roughness reaches 3000 mm/km or not, as per CL. 2.6.1 & CL 4.3.1 of Schedule 'L' of Concession Agreement.

5. As the project stretch is about 103 km and carrying out renewal coat on 4 lanes takes significant time, it is requested to furnish the programme as sought by PD, NHAI & IC, to take up the renewal coat with BC and complete by 25/03/2014, within 10 days positively, otherwise your next annuity (10th) which is due in March 2014 will not be processed."

123. In view of the urgency expressed by NHAI, GMR with its response dated 14th December, 2013, submitted the schedule for taking up periodic maintenance by carrying out overlay work, as required by NHAI. Clause 4.3.2 (ii) of Schedule L to the CA clearly permits, the exploring, by the Concessionaire, of recycling of the existing crust using milling as an option, only requiring that the Concessionaire has to consult with the IC before doing so. The entitlement, of the

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 Concessionaire to, recycle the crust used by milling cannot, therefore, be gainsaid and is an entitlement of the Concessionaire under the CA.

124. The learned Arbitral Tribunal has, nonetheless, held GMR not to be entitled to the extra costs incurred for recycling of the milled material on the ground that, before carrying out renewal work by milling, there was no "consultation" with the IC. The communications from GMR to the IC, according to the learned Arbitral Tribunal, did not propose any "consultation".

125. How sustainable is this finding?

126. As has already been noticed, consequent to the Project Director of NHAI writing, to GMR, on 5th December, 2015, requiring GMR to immediately undertake overlay work and threatening GMR with the possibility of withholding of annuity payable to it in the alternative, GMR submitted its work programme to the IC vide its communication 14th December, 2013. The programme annexed to the communication clearly shows that renewal would involve "milling of BC surface" for a period of 61 days, from 1st February, 2014 to 2nd April, 2014.

127. Following this, on 12th February, 2014, GMR again wrote to IC, informing IC that it was commencing milling work on 15th February, 2014 and enclosing, with the letter, the plan for diversion of traffic, which would be occasioned as a result of the work. Following this, on 18th February, 2014, GMR again wrote to IC, seeking its approval for milling activity undertaken by it and seeking, further,

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 approval for disposal of milled bituminous material. A copy of the said letter was also forwarded to NHAI.

128. NHAI remained silent throughout, not condescending to respond to any of these communications. It was only on 28th February, 2014, that the IC wrote to NHAI, with a copy to GMR, objecting to GMR having carried out renewal work by milling without prior consultation with it. Immediately on this communication being received by GMR, it discontinued milling, as the method for overlay work.

129. In the backdrop of these communications, the finding, of the learned Arbitral Tribunal, that GMR would not be entitled to the expenses incurred for recycling of the mild material, I am constrained to observe, is patently unreasonable. The communication dated 5th December, 2013 compelled GMR, under threat of withholding annuity payable to it, to immediately commence overlay work. In order to comply with the requirement of consultation with the IC, GMR addressed as many as three communications to the IC on 14th December, 2013, 12th February, 2014 and 18th February, 2014, informing the IC of carrying out of the renewal work using milling as an option. The IC, at no point, disapproved this course of action. Having compelled GMR to carry out renewal work immediately and GMR having communicated, to NHAI, its intent to carry out the work by milling, NHAI cannot, either in law or in equity, be permitted to take advantage of its silence and refusal to respond to the communications of GMR as a ground to fault GMR for having carried

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 out milling without proper consultation. This would amount to NHAI being permitted to take advantage of its own wrong which, it is well settled in law, is not permissible. The learned Arbitral Tribunal has, in my view, erred in failing to take stock of the fact that, given the urgency expressed by NHAI in its communication dated 5th December, 2013 and the threat held out therein, GMR could not have waited for approval of the IC before carrying out the renewal work using milling, which was an option contractually available to GMR vide under Clause 4.3.2 (ii) of Schedule L to the CA. Significantly, GMR ceased renewal work using milling immediately on being informed by the IC that it was not permissible.

130. In these circumstances, the finding, of the learned Arbitral Tribunal, that GMR would not be entitled to the costs incurred on account of the recycling of the mild material is also, in my view, "patently illegal" within the meaning of Section 34(2A) 4 of the 1996 Act.

131. The offshoot of the above discussion is that GMR would be entitled to be recompensed for carrying out the overlay work by renewal of the highway coat using bituminous concrete, as, under the CA, this was not required to be done. It qualifies, therefore, as "extra work", for which GMR is entitled to extra payment. GMR is also entitled to the costs of recycling of the mild material.

132. In view thereof, the finding of learned Arbitral Tribunal, qua the claim of GMR for ₹ 104,47,80,462/-, that it was not entitled to the

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 said claim, as the overlay work carried out by it, under the instructions of NHAI, was within the work contemplated by the CA, cannot sustain and has necessarily to be set aside.

133. Having said that, it is not open to this Court to, straightway, allow Claim 1 of GMR on this ground alone, as the quantification of the said claim by GMR has not been examined by the learned Arbitral Tribunal, which proceeded on the basis that the claim itself was not allowable.

134. As this Court has held the claim to be allowable, the quantification of the claim would necessarily have to be assessed afresh, for which purpose this Court intends to appoint a suitable arbitrator.

Re. Claim 3

135. As I have held that GMR was not contractually required to carry out renewal/overlay work of the project highway, as the roughness index was, at all points, on the highway, below 2000 mm/km, Claim 3 of the contractor, which sought an injunction against NHAI from insisting of relaying of the surface every five years, if the roughness index was 2000 mm/km or less, would have to be allowed. The award of the learned Arbitral Tribunal qua the said claim is also, therefore, set aside.

Re: Claim 2

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14

136. The learned Arbitral Tribunal has allowed Claim 2 of GMR, for ₹ 10,78,61,864/-, recovered by NHAI towards damages. The damages were recovered, by NHAI, under Clause 18.12 of the CA. GMR, vide Claim 2 before the learned Arbitral Tribunal, sought reimbursement of the damages. A reading of letter dated 8th June, 2016 from the IC to the Project Director of NHAI, which proposes recovery of damages from GMR, makes it clear that the recovery was on account of GMR's perceived default in carrying out overlay work by renewal of the bituminous coat on the highway surface. The learned Arbitral Tribunal has held that NHAI was entitled to recover damages, but has allowed GMR's claim on the ground that, prior to recovering damages, NHAI had not issued, to GMR, the requisite notice under Clauses 18.12 and 18.13 of the CA.

137. That issue, however, pales into insignificance, in view of the finding, hereinabove, that GMR was not, in fact, required, under the CA, to carry out the overlay/renewal work as desired by NHAI. The delay in carrying out the said work was, as is apparent from the communications between GMR and NHAI, only because of the repeated attempts of GMR to convince NHAI that, as the roughness index of the highway was, at all points, less than 2000 mm/km, overlay/renewal work was not required to be done, and NHAI's stoic refusal to accede to this position. As the work that NHAI called upon GMR to do was itself outside the CA, and the delay in performing the work was only because of NHAI's refusal to accept this plain contractual position, it is obvious that NHAI could not claim any

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 damages from GMR for the said delay.

138. As such, the question of issuance of notice under Clauses 18.12 and 18.13 of the CA does not arise for consideration, NHAI not having been entitled in law, at all, to recover damages from GMR. The decision of the learned Arbitral Tribunal to allow Claim 2 of GMR has, therefore, to be upheld, albeit on different grounds.

Re: Claim 4 - Award of interest to GMR

139. The only ground on which NHAI has, in OMP(Comm) 449/2020, challenged the award of interest to GMR by the learned Arbitral Tribunal is that, as GMR had delayed completion of overlay work by almost nine months and had, therefore, breached its obligations under the CA, no interest could have been awarded to it.

140. In view of the finding, hereinabove, that there was, in fact, no breach of contract by GMR, carrying out of overlay/renewal work not being a contractual obligation under the CA, the submission of NHAI, in response of the award of interest to GMR, cannot sustain.

141. The award of the learned Arbitral Tribunal with respect to Claim 4 of GMR is, therefore, upheld.

Re: Claim 5 of GMR and Counter-claim 1 of NHAI

142. GMR and NHAI, by their respective Claim 5 and Counter-claim

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 1, claimed the costs of the arbitration. The learned Arbitral Tribunal awarded costs to GMR. NHAI's contention, against the said decision is that, having rejected GMR's principal Claim 1 for ₹ 104,47,80,462/- , the costs of the arbitration should not have been awarded to GMR.

143. As the decision to reject GMR's Claim 1 for ₹ 104,47,80,462/- has been reversed by me hereinabove, no occasion arises for this Court to interfere with the impugned award of the learned Arbitral Tribunal insofar as it deals with Claim 5 of GMR and Counter-claim 1 of NHAI.

Conclusion

144. In view of the aforesaid, these petitions are disposed of in the following terms:

                                  (i)     OMP(Comm) 449/2020 is dismissed.

                                  (ii)    The award of the learned Arbitral Tribunal, qua Claims 2,
                                  4 and 5 of GMR, is upheld.

(iii) The award of the learned Arbitral Tribunal qua Claims 4 and 5 is set aside, holding that GMR was entitled to extra payment for having carried out overlay work over the project highway by renewal of the bituminous surface, as the said work was not required, contractually, to be carried out under the CA, the roughness index of the project highway, at all points, and at

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14 all times, having been below 2000 mm/km. The decision of the learned Arbitral Tribunal, with respect to Claims 1 and 3 of GMR, holding GMR was not entitled to extra payment for carrying out the said overlay/renewal work is, therefore, set aside, as suffering from patent illegality.

(iv) This Court requests Hon'ble Mr Justice D.K. Jain, an eminent former judge of the Supreme Court of India, to arbitrate on the sustainability of the claim of GMR to the extent of ₹ 1,04,47,80,462/-, claimed by it, as there has been no prior arbitral adjudication of the quantum of the said claim or entitlement of GMR thereto, to the extent claimed. It shall be open to NHAI, in the said arbitral proceedings, to contest the quantification of the claim by GMR, though GMR's entitlement to extra payment would not be open for debate, having been concluded by this judgement.

(v) The learned arbitrator is requested to furnish the requisite disclosure under Section 12(2) of the 1996 Act within a week of entering on reference.

(vii) The learned sole arbitrator would be entitled to the fees which were being paid to the learned presiding arbitrator in the proceedings which culminated in the rendition of the impugned award, or as otherwise finalized by the learned Arbitrator in consultation with the parties.

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14

(viii) OMP(Comm) 433/2020 stands allowed in the aforesaid terms.

145. There will be no order as to costs. Miscellaneous applications also stand disposed of.

C. HARI SHANKAR, J.

APRIL 6th, 2022 r.bararia/kr/SS/dsn

Digitally Signed By:SUNIL SINGH NEGI Signing Date:07.04.2022 21:28:14