Delhi High Court
Pink City Expressway Private ... vs National Highway Authority Of ... on 15 June, 2022
$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 15th June, 2022
+ FAO(OS) (COMM) 158/2022
PINK CITY EXPRESSWAY PRIVATE LIMITED ..... Appellant
Through: Mr. Manoj Swarup, Senior Advocate
with Mr. Suryadeep Singh, Ms. Radha R. Tarkar,
Ms. Vidisha Swarup, Ms. Kriti Dan g, Mr. Aaron
Shaw and Mr. Kaustabh, Advocates
versus
NATIONAL HIGHWAYS AUTHORITY
OF INDIA & ANR. ..... Respondents
Through: Mr. Parag P. Tripathi, Senior
Advocate with Mr. Ankur Mittal, Mr. Abhay
Gupta and Mr. Debojyoti Sengupta, Advocates for
R-1.
Mr. Raunak Dhillon and Ms. Ananya Dhar
Choudhury, Advocates for R-2.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
HON'BLE MR. JUSTICE ANOOP KUMAR MENDIRATTA
JUDGEMENT
JYOTI SINGH, J. (ORAL)
CM APPL. 28396/2022 (Exemption)
1. Allowed, subject to all just exceptions.
2. Application stands disposed of.
FAO(OS) (COMM) 158/2022 & CM APPL. 28395/2022 (Interim relief)
3. Present appeal arises from the impugned judgment dated 03.06.2022,
passed by the learned Single Judge in O.M.P.(I) (COMM.) 166/2022 filed
by the Appellant under Section 9 of the Arbitration an d Con ciliation Act ,
1996 (hereinafter referred to as the 'Act').
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4. A brief narrative of the facts, to the extent necessary and relevant for
disposal of the present appeal, is that the Appellant is a Special Purpose
Vehicle promoted and incorporated specifically for the purpose of executing
the work of Six-Laning of Gurgaon-Kotputli-Jaipur Sect ion of NH-8 from
KM 42.70 to KM 273.00 on Build, Operate and Transfer ('BOT') basis
awarded by National Highways Authority of India (hereinafter referred to as
the 'Respondent'), in terms of Concession Agreement ('CA') dated
06.06.2008.
5. As per the case set up by the Appellant, on 25.07.2018 Respondent
conducted a Traffic Sample Survey in accordance with Article 29.1.1 of t h e
CA, for the years 2016, 2017 and 2018, whereby it was est ablished t hat as
on the Target Date, the Actual Traffic h ad fallen sh ort by 14.86% of t h e
Target Traffic and accordingly, Respondent wrote to the Independent
Engineer ('IE') for factual determination qua modification in the CA.
6. Pursuant to a determination by the IE on 01.08.2018, the Concession
Period was deemed extended by 28 months and 24 days, i.e., upto
26.08.2023. Even though the factual determination was made by the IE, t he
Senior Lenders/Respondent No.2 herein, wanted a form al let ter from t he
Respondent acknowledging the extension upto 26.08.2023, before
considering the Resolution Plan of the Appellant. Accordingly, t he Senior
Lenders and the Appellant requested the Respondent to issue a formal let ter
according administrative approval. However, despite assu rances, a form al
letter was not issued and in absence thereof, the Senior Lenders started
considering initiation of debt recovery proceedings against the Appellant.
7. In light thereof, the Appellant approached this Court in
W.P.(C) 6693/2020 seeking a direction to the Respondent to give its
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administrative approval in accordance with the determination made by
the IE. Vide order dated 21.09.2020, Court directed the Respondent to
communicate its stand within 4 weeks t o t h e Appellant. On 10.12.2020,
Respondent communicated its acknowledgement for an interim extension of
14 months out of the total 28 months and 24 days.
8. Between January 2021 to February 2022, Senior Lenders also wrot e
to the Respondent to communicate its approval for t he en tire period of 28
months and 24 days as per Article 29 of the CA, however, du e t o t he rigid
stand of the Respondent, they refused to consider the Resolution Plan and on
10.12.2021, initiated debt recovery proceedings against the Appellant and its
promoter companies before the DRT in O.A. No.926/2021.
9. Constrained by the said proceedings, Appellant approached this Court
on 10.03.2022 in W.P.(C) 4151/2022, seeking a direction to the Respondent
to grant the administrative approval, in accordance with Article 29 of
the CA. Vide order dated 25.03.2022, this Court directed the Respondent t o
duly evaluate the prayer and communicate a decision in respect t hereof t o
the Appellant. Letter dated 29.04.2022, was sent by the Respondent t o t he
Appellant communicating its stand that the interim extension gran ted u pto
02.06.2022 was full and final and also threatened to forcibly t akeover t he
toll plazas on 02.06.2022. Respondent also issued Notice Inviting Ten ders
('NITs') on 14.05.2022, calling for bids from third-parties to collect the t oll
for the period post 02.06.2022.
10. The aforesaid action of the Respondent triggered filing of a
writ petition being W.P.(C) 7806/2022 by the Senior Lenders, seeking a
direction for extension of the Concession Period. Appellant, on t he ot her
hand, filed a petition under Section 9 of the Act on 20.05.2022, seeking
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interim protection of its rights as a Concessionaire, pending arbitral
proceedings.
11. On 24.05.2022, Respondent issued Letters of Awards ('LOAs')
whereby selected entities were to pay a fixed lump-sum amount to the
Respondent, irrespective of the actual toll collection. As per th e Appellant,
under the LOAs, the amounts quoted by the highest bidders are substantially
lower than what was being collected/undertaken as minimum gu arantee by
the Appellant. Being aggrieved, Appellant filed W.P.(C) 8321/2022
challenging the tendering process, which was, however, dismissed as
withdrawn on 25.05.2022, on account of pendency of the Section 9 petition.
12. The learned Single Judge vide judgment dated 03.06.2022 dismissed
the Section 9 petition and the Respondent forcibly took possession of the toll
plazas on 03.06.2022 itself, ousting the Appellant and compelling the
Appellant to file the present appeal, assailing the said judgment.
13. The arguments made on behalf of the Appellant by the learned Senior
Counsel can be encapsulated as follows:-
a. As per Article 29 of the CA, concession is deem ed t o h ave been
extended if the Actual Traffic at Project Highway falls short of the
specific target traffic per day on the Target Date. Respective
traffic surveys conducted by the Appellant an d t he Respondent
reveal that the Actual Traffic had fallen short of the target by more
than 2.5% on the Target Date, leading to deemed extension under
Article 29.1.2 of the CA. After thorough examination of the
surveys, the IE on 01.08.2018 determined and recommended
extension of the Concession period upto 26.08.2023, wh ich was
reaffirmed by the Project Director, Jaipur. Even the Regional
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Office of the Respondent wrote to its Headquarters on 14.06.2019
and recommended extension of the Concession Period. Th e rigid
stand of the Respondent in refusing t o ext end t he period for 28
months and 24 days is contrary to Article 29 of the CA and
overlooks the fact that the Appellant has not faulted in executing
the work and had completed approximately 96 per cent of the
work of widening of the Project Highway.
b. A combined reading of Articles 29.1.2 and 29.2.1 would show that
the extension of Concession Period is automatic on a mere
determination that the Actual Traffic is less than the Target Traffic
during the Concession Period. Once the IE has factually
determined the extension, there was no scope for further approval
from the Respondent.
c. Article 37 of the CA provides for termination of t h e Agreement
and Article 37.1.1 provides the various defaults on which t he CA
can be terminated by the Respondent. All the three grounds
mentioned in Respondent's letter dated 29.04.2022 are covered
under sub-clauses (c), (g) and (h). A cure period notice of 60 days
is required to be issued and if the defaults are not cured,
Respondent has a right to issue Notice of Term ination granting
time to the Appellant to make a representation as well as t im e t o
the lenders to exercise their rights to substitute the Concessionaire.
However, the said procedure has been circumvented by indirectly
terminating the CA as the Respondent is fully aware that its
termination on the alleged default of the Appellant would be
unsustainable in law and secondly, on t ermination, Respondent
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would have not pay 90% of the debt due to the lenders under
Article 37.1 of the CA.
d. Parties are ad idem that the project was prolonged due to defaults
of the Respondent and financial difficulties and, therefore, it was
agreed that Respondent would infuse OTFIS of Rs.347 crores an d
thus, a TPA was entered into for disbursing the toll collected in a
waterfall mechanism enshrined under Article 6(h).
e. Respondent has called bids from third-parties t o collect t he t oll
post 02.06.2022, which is illegal and Appellant cannot be ou sted
in wake of the fact that the CA is con t inuing and h as n ot been
terminated. Appellant has admittedly completed 96% of th e work
and its promoters have invested Rs.735 crores without any returns.
Appellant has paid Rs.3810 crores to the Respondent from toll
collections as revenue share and is strictly following the waterfall
mechanism. It has also paid interest on OTFIS and the balance of
convenience lies in the favour of the Appellant, as further
collection of the toll is the only way for the Appellant to recoup its
investment and service the debt of Senior Lenders.
f. Learned Single Judge erred in holding that the extension was n ot
automatic as the Appellant has not challenged the communication
dated 10.12.2020, whereby Respondent communicated its
extension for 14 months. In view of Article 29, Appellant was n ot
required to challenge the said communication and was only
required to protect its rights till 26.08.2023, once a threat was
extended for taking over the Project Highway vide letter dated
29.04.2022, which was done by filing the section 9 petition.
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g. Even assuming otherwise in arguendo, the letter dated
10.12.2020, was only an interim stand of t h e Respondent an d it
was never the case of the Respondent that this was its final
position.
h. Learned Single Judge erred in holding that because the writ
petition challenging the issue of LOAs dated 24.05.2022, awarded
in favour of third-parties, was withdrawn by t h e Appellant, t he
tendering process has attained finality. Th e pet ition was clearly
withdrawn on account of pendency of the Section 9 petition and in
any case, calling tenders from third-parties cannot curtail the
rights of the Appellant under the CA.
i. It cannot be overlooked that the Appellant was collecting over
Rs.2.06 crores per day till 19.05.2022 and had assured a Minimum
Guarantee of Rs.1.87 crore per day. However, third-parties h ave
been engaged on a fixed/lump-sum remittance system at a rat e of
Rs.1.75 crore per day and thus there is a direct loss of Rs.112
crore annually to the public exchequer which is against public
interest.
j. Learned Single Judge erred in holding that grant of the relief
sought by the Appellant would amount to extending the CA,
overlooking that the Appellant was only seeking status quo
pending further orders by the Arbitral Tribunal.
14. Learned Senior Counsel appearing on behalf of the Respondent raised
the following objections:-
a. Vide letter dated 29.04.2022, Respondent had conveyed its
decision to the Appellant not to grant any further extension in t he
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Concession Period and that the same shall come to an end on
02.06.2022. Appellant, however, chose not to ch allenge t he said
decision and thus, no extension for a further period of 15 m on ths
can even be sought.
b. Appellant had earlier filed W.P.(C) 6693/2020, seeking directions
to the Respondent to decide the extension of the Concession
Period under Article 29 of the CA, as recommended by the IE an d
the same was disposed of on 21.09.2020 directing the Respondent
to take a decision with respect to the extension, t hus leavin g t he
discretion to extend with the Respondent. The second writ petition
being W.P.(C) 4151/2022, where the contention of deemed
extension was raised by the Appellant, was also disposed of,
leaving it to the Respondent to take a decision thereon. Pursuant to
the directions of the Court, Respondent decided not to extend t he
Concession Period. Pertinently, there is no challenge to the
aforesaid two orders and it is not open, therefore, to the Appellant
to plead automatic extension.
c. Appellant has failed to challenge the communication dated
10.12.2020, whereby a limited extension was granted with a
caveat that the OTFIS infused by the Respondent would be
refunded. Acceptance of the communication is evidence to the fact
that the Appellant understood that there was no automatic
extension and in fact, even the said amount has not been refunded
by the Appellant.
d. Insofar as the award of LOAs to the third-parties is concerned,
Appellant filed a writ petition being W.P.(C) 8321/2022
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challenging the award of the LOAs but chose to withdraw the
same on account of pendency of the Section 9 petition.
Significantly, neither was there a ch allenge t o t he LOAs in t he
Section 9 petition already pending nor was the same amended
subsequently to incorporate a challenge and therefore, no
arguments can be addressed on this issue by the Appellant.
e. The plea regarding 96% completion of work is misplaced. In an y
case, no specific performance can be granted in a Section 9
petition on account of the provisions of sections 14(b), 16(c),
41(e) and 41(h) of the Specific Relief Act, 1963. In case the
Appellant succeeds before the Arbitral Tribunal, it can be
compensated by way of damages.
15. After hearing the parties at length, the learned Single Ju dge framed
the only question arising for consideration as to whether the Appellant
should be allowed to operate the toll plaza on the Project Highway, on t he
ground that Article 29.1.2 of the CA contemplated automatic extension of
the Concession Period. Learned Single Judge was of t h e prima facie view
that there is no automatic extension of the Concession Period, m ore so, as
the Appellant had itself filed two writ petitions for a direction to the
Respondent to accord approval for extension in terms of Art icle 29 of t h e
CA and the Court had directed the Respondent to take a decision t hereon.
The plea raised by the Appellant of automatic extension did not find favour
with the learned Single Judge also on the ground that the Appellant did n ot
challenge the communication dated 10.12.2020, whereby extension was
granted only for 14 months and even the subsequent communication dated
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29.04.2022 categorically informing the Appellant that the Concession Period
shall come to an end on 02.06.2022, was unchallenged.
16. The learned Single Judge took note of the fact t hat t hree LOAs h ad
been awarded to toll collecting agencies for three toll plazas and t wo LOAs
for maintenance and balance work in Rajasthan and Haryana an d t he writ
petition challenging the award of the LOAs, filed by the Appellant was
withdrawn. Moreover, the third-parties were not impleaded in the Section 9
petition and therefore, the issuance of tenders has attained finality. The relief
sought by the Appellant was also denied on the ground that grant of the said
relief in a Section 9 petition shall amount to extending the contract con trary
to the decision dated 29.04.2022 as well as provisions of the Specific Relief
Act. Reliance was placed by the learned Single Judge on t he ju dgments of
the Division Benches of this Court in C.V. Rao v. Strategic Port
Investments KPC Ltd., 2014 SCC OnLine Del 4441; DLF Ltd. v. Leighton
India Contractors Private Ltd. & Anr., 2021 SCC OnLine Del 3772 and on
the judgment of the learned Single Judge passed in O.M.P.(I) (COMM.)
144/2020 titled as West Haryana Highway Projects Private Limited v.
National Highways Authority of India & Ors.
17. We have heard the learned Senior Counsels for the parties and
examined their rival contentions.
18. It is an undisputed fact before us that the Appellant h ad filed a writ
petition being W.P.(C) 6693/2020 seeking directions to t he Respondent t o
decide the issue of extension of the Concession Period, invoking Art icle 29
of the CA. Vide order dated 21.09.2020, Court directed t he Respondent t o
take a decision on the extension and communicate its stand to the Appellant
within 4 weeks. Vide letter dated 10.12.2020, Respondent communicated it s
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stand to the Appellant that in terms of the decision of t h e EC, t aken in it s
449th Meeting, interim extension in the Concession Period was granted on ly
for 14 months from the date of expiry of the origin al Con cession Period.
This communication was not challenged by the Appellant. In fact, Appellant
filed another writ petition being W.P.(C) 4151/2022 for a direct ion t o t he
Respondent to accord approval to the prayer of the Appellant for extension,
in accordance with the assessment and determination made by t he IE. Th is
petition was also disposed on 25.03.2022, leaving the decision to the
Respondent after duly evaluating the prayer. Vide letter dat ed 29.04.2022,
Appellant was unequivocally informed that no further ext ension could be
granted and the extended Concession Period of the project shall come t o an
end on 02.06.2022. Even this decision was not challenged by the Appellant.
In this view of the matter, there is no infirmity in the prima facie view taken
by the learned Single Judge that there is no automatic extension of the
Concession Period and the extension pre-supposes approval of the
Competent Authority. It is also rightly observed that in absence of challenge
to the communication dated 29.04.2022, it was not open to the Appellant t o
seek extension of the Concession Period beyond the 14 months granted vide
the said letter.
19. Law on the scope of interference in a Section 9 petition is n o lon ger
res integra. The learned Single Judge has held that the prayer m ade by t h e
Appellant in the Section 9 petition cannot be granted as that would am ount
to extending the contract contrary to the decision dated 29.04.2022. It is
well-settled that powers under Section 9 can only be exercised for
preservation of the subject matter of the dispute till the decision of the
Arbitral Tribunal and cannot be extended to directing specific performance
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of the contract itself. The learned Single Judge has in this context relied on
the judgment of the Division Bench in C.V. Rao (supra) an d in ou r view
rightly so. Reliance was also placed on the ju dgment of an other Division
Bench in DLF Ltd. (supra). We find no infirmity in t he prima facie view
that directing the Respondent to extend the con tract for a fu rt her period,
beyond 14 months extension granted, would am ount t o granting specific
relief of the contract and is beyond the scope of t h e powers of t he Cou rt
under Section 9 of the Act. For a ready reference, we may allude t o para 40
of the judgment in DLF Ltd. (supra), as follows:-
"40. In C.V. Rao & Ors. v. Strategic Port Investments KPC
Ltd. & Ors. 2014 SCC OnLine Del 4441, this Court had held
that while exercising jurisdiction under Section 9 of the A&C
Act, the Court cannot ignore the underlying principles which
govern the analogous powers conferred under Order XXXIX
Rules 1 & 2 CPC and Order XXXVIII Rule 5 CPC. Not only is
the court required to be satisfied that a valid arbitration
agreement existed between the parties, but the powers under
Section 9 of the A&C Act could be exercised only for orders of
an interim measure of protection in respect of the matters
specified in Section 9 (ii)(a) to (e) of the A&C Act. In other
words, the orders must relate to preservation of the property,
which is the subject matter of the dispute, till the Arbitral
Tribunal decides the same. The scope of relief under Section 9
of the A&C Act cannot be extended to directing specific
performance of the contract itself."
20. Insofar as the issuance of LOAs in favour of third-parties is
concerned, in our view, Appellant is disentitled from raising t he said issu e
on two-fold grounds. Firstly, Appellant had filed a writ petition being
W.P.(C) 8321/2022 seeking a writ of certiorari quashing the Notice Inviting
Tenders for collection of user-fee (toll) from third-party toll collection
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agencies and a writ of mandamus directing Respondent not to issue LOAs or
take any other action pursuant to the said NITs. Admittedly, the writ petition
was withdrawn by the Appellant on 25.05.2022, before the Division Ben ch,
on the ground that Section 9 petition was pen ding. We fin d m erit in t he
contention of the Respondent that having withdrawn the writ petition, it is
not open to the Appellant to raise a challenge to the award of LOAs in
favour of third-parties. Significantly, Appellant had not challenged the
NITs/LOAs in the Section 9 petition and even subsequent to the withdrawal
of the writ petition, no amendment was sought.
21. For all the aforesaid reasons, we do not find any merit in t he present
appeal. The view expressed by the learned Single Judge is clearly a prima
facie view and Appellant has been granted the liberty to seek such remedies
as may be available in law.
22. The appeal is accordingly dismissed along with the pending
application.
JYOTI SINGH, J
(VACATION JUDGE)
ANOOP KUMAR MENDIRATTA, J
(VACATION JUDGE)
JUNE 15, 2022/rk
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