Rajasthan High Court
Udaipur Tollway Limited vs Union Of India on 25 August, 2021
Bench: Indrajit Mahanty, Satish Kumar Sharma
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Writ Petition No. 11042/2020
1. Udaipur Tollway Limited
Registered Office At 1101 Hiranandani Knowledge Park,
11th Floow, Technology Street, Hill Side Avenue, Opp.
Hiranandani Hospital, Powai, Mumbai-400 076 and
Regional Office at Barkheda Chandlai Toll Plaza, Main Tonk
Road, NH-12, Near Shivdaspura, Tehsil-Chaksu Distt.
Jaipur-303903 (Rajasthan)
2. CG Tollway Limited
Registered Office At 1101 Hiranandani Knowledge Park,
11th Floow, Technology Street, Hill Side Avenue, Opp.
Hiranandani Hospital, Powai, Mumbai-400 076 and
Regional Office at Barkheda Chandlai Toll Plaza, Main Tonk
Road, NH-12, Near Shivdaspura, Tehsil-Chaksu Distt.
Jaipur-303903 (Rajasthan)
3. Kishangarh Gulabpura Tollway Limited
Registered Office At 1101 Hiranandani Knowledge Park,
11th Floow, Technology Street, Hill Side Avenue, Opp.
Hiranandani Hospital, Powai, Mumbai-400 076 and
Regional Office at Barkheda Chandlai Toll Plaza, Main Tonk
Road, NH-12, Near Shivdaspura, Tehsil-Chaksu Distt.
Jaipur-303903 (Rajasthan)
Through Mr. Ajay Kumar Dhiman, S/o Shri Ranjit Singh
aged about 49 Years Residing at T-896, Block-24, Rangoli
Gardens, Near Vaishali Nagar, Jaipur (Rajasthan) PIN-
302034
----Petitioners
Versus
1. Union Of India, through Secretary,
Ministry Of Road Transport And Highways, Transport
Bhawan, 1, Parliament Street, New Delhi - 110 001
2. National Highways Authority Of India (Nhai),
Through Chairman,
Having Office At G-5 & 6, Sector 10, Dwarka, New Delhi-
110075
----Respondents
(Downloaded on 25/08/2021 at 10:18:12 PM)
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For Petitioner(s) : Mr. Vikram Nankani, Senior Advocate
Mr. Saurabh Kripal, Senior Advocate
assisted by Mr. Sarthak Sachdev
Mr.Vinod Menon,
Ms. Teresa Daulat
(Through V.C.)
Mr. P.C. Sharma
For Respondent(s) : Mr. R.D. Rastogi, Additional Solicitor
General assisted by Mr. C.S. Sinha
Mr. Sudhir Gupta, Senior Advocate
assisted by Mr. Umang Gupta
(Through V.C.)
Ms. Priyal Kothari
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SATISH KUMAR SHARMA
Judgment Reserved on :: 28/07/2021
Judgment Pronounce on :: 25/08/2021
BY THE COURT (PER HON'BLE THE CHIEF JUSTICE):
1. The petitioners have impugned Rule 4(9) of the National
Highways Fee (Determination of Rates and Collection) Rules,
2008, issued under Section 9 of the National Highways Act, 1956,
in the peculiar facts of the case. The petitioners have also
impugned Office Memorandum dated 18.05.2020 issued by the
Central Government for implementation inter alia by the Ministry
of Road Transport & Highways and NHAI, and the consequent
Policy Guidelines/BOT (Toll)/2020 dated 26.05.2020 issued by
NHAI. That apart the petitioners have also prayed for directing the
NHAI to maintain the same time gap of six months between the
Revised Completion Date/ Date of Toll Tariff Revision and date of
commencement of payment of premium, under the respective
Concession Agreements (with the approved EOT); or in the event
this Court comes to a conclusion that aforesaid prayer cannot be
(3 of 22) [CW-11042/2020]
granted, to restrict the premium amount till the end of six months
from the Revised Completion Date, to such balance amount from
the fee collected in each of the previous months, which remains in
Escrow Account after payment of monthly operation and
maintenance charges and monthly debt servicing etc. as per the
waterfall mechanism provided in Article 31 of the Model
Concession Agreement, read with Section 8A of the National
Highways Act, 1956 and Rule 7(1) of the National Highways Fee
(Determination of Rates & Collection) Rules, 2008, and to refrain
NHAI from taking any coercive action against the petitioners for
the said period.
2. The respondents filed their replies opposing each of the
prayers. It is submitted that the writ petition is not maintainable
being related to purely contractual obligation and the challenge to
the rules etc. is misconceived. Reliance is placed on the following
observations in the judgment of the Hon'ble Supreme Court in
JWS Infrastructure Vs. Kakinada Seaports Ltd., (2017) 14
SCC 170-
"thus it is apparent that in contractual matters,
the writ courts should not interfere unless the
decision taken is totally arbitrary, perverse or mala
fide."
It is the contention of the respondents that each of the
petitioners is bound by Article 44 of the agreement providing for a
Three Tier Dispute Resolution Mechanism. The attempt of the
petitioners to link payment of premium to collection of fees is
untenable and devoid of merits. Vide Article 25.4 of the
agreement the petitioners have acknowledged and agreed to pay
each year the premium as per Article 26.2.1 of the agreement.
(4 of 22) [CW-11042/2020]
They have agreed to pay premium from 03.09.2020, 04.11.2020
and 21.02.2021 i.e. after 3rd anniversay year of commercial
operation dated 03.09.2017, 04.11.2017 and 21.02.2018. Article
12.4 provides for 910th day from the appointed date to be
scheduled date for completion of six-laning. It was contended that
agreements provide for extension of completion date, but not for
date for payment of premium. The payment of premium is wholly
independent of toll fee collection. Article 27 and Rules, 2008 have
no co-relation with the payment of premium. Challenge to the
Rules is liable to the dismissed, as the presumption is always in
the favour of validity of a statute. It is further contended that
COVID-19 being a pandemic, is a non-political event as per Article
34.2, and not a political event as stated by the petitioners.
Therefore, as per Article 34.7.2, the parties have to bear their
respective force majeure costs. No grave harm, loss and prejudice
is caused towards petitioners by the impugned Office
Memorandum and Policy Guidelines. It was also suggested that
the petitioners have given up the challenge to the constitutionality
of the rule. Writ Petition aims to nullify the contract. Petitioners
have waived their past claims by signing agreement for
settlement. It is contended that petition should also be dismissed
for want of territorial jurisdiction, and for filing one common
petition. It was thus contended on behalf of the respondents that
the writ petition should be dismissed, and the petitioners should
be directed to pay the due premium with interest.
3. An "Additional Affidavit" dated 14.02.2021 was filed by the
petitioners, to bring on record that post filing of the instant writ
petition the respondents have already made appropriate revision
(5 of 22) [CW-11042/2020]
in Clause 26.2.1 of the 'Model Concession Agreement for
Capacity Augmentation of Projects under Tolling (6 laning BOT-Toll
Projects) issued on 09.12.2020 on the website of Ministry of Road
Transport & Highways, Government of India. AS per the revised
Clause 26.2.1, now the obligation under such statutory contracts
to pay premium from the Toll fee collection would commence only
"after the first (1st ) anniversary of the Projection Completion
Date, for every year of the remaining Concession Period, to be
calculated on total Realisable Fee". The earlier gap of "six months"
between the completion date and date of obligation to pay
premium is thus also revised as "one year". Cash Flow Charts
certified by Statutory Auditor were also placed on record showing
that cumulatively about Rs.5,000/- crores had been invested by
them in the construction of these projects of NHAI including from
promoter's/ sponsor contribution and finances availed. It further
shows that the deposits into project account from the Toll Fee
collection is significantly lower than what was appraised in view of
impugned Rule 4(9) as well as effect of restrictions imposed on
movements vide various orders issued pursuance to the Covid
pandemic. The withdrawals from the project account, which are to
be done sequentially in the order given in waterfall mechanism
agreed between the parties, also show that till date not a single
Rupee has been withdrawn by any of the petitioners either
towards any reasonable return on investment or to gradually
recover the capital contribution. It was also submitted that the
entire capital amount already invested from the promoter's
contribution sufficiently safeguards the interests of the NHAI
towards disputed premium liability.
(6 of 22) [CW-11042/2020]
4. The respondents submit that the petition is not maintainable,
inter alia, in view of arbitration agreement. It is contended that
interim protection should not be extended and the petition should
be dismissed.
5. On inquiring about possibility to explore alternate dispute
resolution, the petitioners prayed to decide the petition on merits.
However, without prejudice to the contentions made in the
petition, the petitioners have placed on record an Order dated
16.04.2019 in Writ Petition No.3415/2019- IRB Ahmedabad
Vadodara Super Express Tollway Pvt. Ltd. Vs. Union of
India & Ors., filed by another Group Company of the petitioners,
wherein the Bombay High Court considering prima facie case,
while exercising writ jurisdiction under Article 226 of the
Constitution of India and while relegating the parties for
arbitration, was pleased to grant the interim protection for limited
period of three months. The entitlement of the petitioner therein
to claim further appropriate interim reliefs under Section 9 and 17
of the Arbitration & Conciliation Act, 1996 was also kept open. This
interim relief was subject to the undertaking to the Court by the
petitioner therein that in the event it is unsuccessful in the
arbitration, the premium for the subject period shall be payable by
it on the principle of "premium deferment scheme". Vide orders
dated 29.04.2019 and 11.09.2019 respectively, SLP (C)
No.10741/2019 filed by the petitioner therein as well as SLP (C)
No.21315/2019 filed by NHAI, against the said order dated
16.04.2019 were both dismissed by the Hon'ble Supreme Court.
The interim protection granted by the Bombay High Court and the
undertaking given by the petitioner therein were thereafter
(7 of 22) [CW-11042/2020]
extended by the Delhi High Court vide an order dated 14.10.2019
in OMP(I)(Comm.) No.247/2019, till the decision of the Application
under Section 17 of the Act by the Arbitral Tribunal. The
petitioners submit that the balance of convenience is in their
favour. Reliefs, if not granted/extended, would lead to undue
hardship, drastic unwarranted consequences and irreparable loss
to the petitioners. No loss would be caused to the respondents on
the other hand if the reliefs are granted or extended.
6. The respondents submit that the petitioners ought to be
relegated for arbitration. However, it is contended that no interim
protection should be granted.
7. An application for vacating ad-interim order dated
18.09.2020 was also filed. However, both sides agreed to finally
dispose of the petition itself.
8. All the parties have been heard at considerable length.
Parties were permitted to file their written submissions. We have
perused the records and carefully considered the submissions and
plethora of case cited by all the parties.
9. All three petitioners in the instant writ petition are
subsidiaries/ SPVs of the original bidder M/s IRB Infrastructure
Developers Limited (IRB). All three SPVs have entered into
respective Concession Agreement with the respondent No.2 NHAI,
for development of four to six laning of respective Highway
Projects in the State of Rajasthan. Undoubtedly these three
National Highways Projects are in the interest of people residing in
the entire State of Rajasthan. Huge investments have been made
by the petitioners from private sources or borrowings in these
projects of NHAI in the State. It is also not in dispute that regional
(8 of 22) [CW-11042/2020]
office of all three petitioners is in Jaipur. We are thus satisfied that
substantial cause of action, therefore, is in State of Rajasthan to
confer territorial jurisdiction to consider this writ petition filed
jointly by teh three SPVs of IRB on its own merits.
10. As per Section 5 of the National Highways Act, 1956, it shall
be the responsibility of the Central and State Government to
develop and maintain in proper repair all national highways.
However, Section 8A of the said Act, inserted w.e.f. 16.06.1995,
private investments were permitted by entering into an agreement
with any person. Section 8A reads as under:
"8A. Power of Central Government to
enter into agreements for development and
maintenance of national highways.-
Notwithstanding anything contained in this Act,
the Central Government may enter into an
agreement with any person in relation to the
development and maintenance of the whole or
any part of a national highway.
(2) Notwithstanding anything contained in
section 7, the person referred to in sub-section
(1) is entitled to collect and retain fees at such
rate, for services or benefits rendered by him as
the Central Government may, by notification in
the Official Gazette, specify having regard to the
expenditure involved in building, maintenance,
management and operation of the whole or part
of such national highway, interest on the capital
invested, reasonable return, the volume of traffic
and the period of such agreement.
(3) A person referred to in sub-section (1) shall
have powers to regulate and control the traffic in
accordance with the provisions contained in
Chapter VIII of the Motor Vehicles Act, 1988 (59
of 1988) on the national highway forming
subject-matter of such agreement, for proper
management thereof."
11. These are the private investment projects permitted under
Section 8A of National Highways Act, 1956 and are not "public
projects" of NHAI. The Concession Agreements entered with the
(9 of 22) [CW-11042/2020]
petitioners are thus pursuance to the statutory power conferred
upon the Central Government under Section 8A in larger public
interest. The fee for services or benefits rendered by the
petitioners is specified by Central Government vide notification
having regard to the expenditure involved in building,
maintenance, management and operation of the whole or part of
respective national highway, interest on the capital invested,
reasonable return, the volume of traffic and the period of such
agreement. The payment of "premium" is not envisaged in Section
8A for specifying the fee.
12. The scheme of the agreement is such that the
Concessionaire first invests its own capital and constructs the
National Highway for the respondent. The entire fee collected
thereafter from such constructed project also gets deposited into
an Escrow Account. Only permitted withdrawals already agreed in
the Concession Agreement are allowed to be done sequentially by
appropriation from the said Escrow Account. As per Article 31.3,
a waterfall mechanism is provided in the agreement for permitted
withdrawals from Escrow Account where all fee and receivables
are deposited.
13. It is not in dispute that the toll fee to be collected is
governed by the National Highways Fee (Determination of Rates &
Collection) Rules, 2008.
14. As per Article 27.1.1, on and from the COD till the Transfer
Date, the concessionaire has the right to demand, collect and
appropriate fee from the users subject to and in accordance with
the Agreement and the National Highways Fee (Determination of
Rates and Collection) Rules, 2008. The fee levied at rate specified
(10 of 22) [CW-11042/2020]
by the Central Government shall be appropriated by the
concessionaire in accordance with the provisions of and for the
performance of its obligations under the agreement entered into
by such concessionaire, as envisaged in second proviso of Rule
7(1) of the National Highways Fee (Determination of Rates &
Collection) Rules, 2008. The payment of premium is an obligation
under the Concession Agreement. Second proviso to Rule 7(1)
reads as under-
"7. Remittance and appropriation of fee:
(1) In case of public funded projects,.......
Provided that.........
Provided further that in case of "private
investment projects", the fee collected
under the provisions of these rules shall be
appropriated by the concessionaire in
accordance with the provisions of and for
the performance of its obligations under
the agreement entered into by such
concessionaire."
(emphasis supplied)
15. Therefore, performance of obligation to pay premium under
the agreement in case of "private investment projects", is to be
discharged by appropriating the fee collected in accordance with
the agreement read with the National Highways Fee
(Determination of Rates & Collection) Rules, 2008.
16. The respondents contended that revenue share concept is
not envisaged for payment of premium. However, the Appendix
provided by NHAI at the time of Bidding, relied upon by the
petitioners states-
"I/We hereby submit our Bid and offer a
premium in the form of Rs.------- (in words)
out of the gross revenues of the Project as
share of the Authority/require a Grant of
Rs.------ (Rupees ---------only)."
(11 of 22) [CW-11042/2020]
Article 25.4 of the agreement also imposes liability to pay
premium offered as per the Bid. The "revenues sharing concept"
also finds support from second proviso to Rule 7(1).
17. Therefore, prima facie, we are unable to agree with the
contention of the respondents that the payment of premium is
wholly independent of toll fee collection, and that Article 27 and
the Rules, 2008 have no co-relation with the payment of premium.
18. The impugned Rule 4(9) of the said National Highways Fee
(Determination of Rates & Collection) Rules, 2008 reads as
follows-
"(9) The rate of fee for a section of a four lance
highway shall on and from the commencement of
work relating to upgradation to six laning, be
seventy-five percent of the fee applicable on the
date of commencement of the National Highways
Fee (Determination of Rates & Collection)
Amendment Rules, 2013, till the completion of
the project without any annual revision:
Provided that no user fee shall be levied for
the delayed period between the date of
completion as per the agreement entered into
with the concessionaire and the date of actual
completion of the project.
Explanation: For the purpose of this rule, any
provisional completion of the project shall not be
treated as completion of the project."
19. Impugned Sub-rule(9) of Rule 4 in particular, and the Fee
Rules in general, do not define or explain the expressions "the
commencement of the work" as well as "till the completion of the
project." Fee Rules are also silent about payment of additional
concession fee or the premium to NHAI. In our prima facie view,
in case of a "private investment project", the commercial
relationship between the parties is governed by the Fee Rules and
the agreements which are to be harmoniously construed. The
(12 of 22) [CW-11042/2020]
impugned Rule 4(9) prima facie appears to be in public interest
with an aim not to burden the user of the highway with fee at
100% rate, till the four lane to six lane upgradation is not
complete.
20. These agreements in "private investment projects", on Build,
Finance, Operate & Transfer (DBFOT) basis, different milestones to
be achieved with obligations and entitlements thereupon, are
categorically mentioned and computed from the Appointed
Date/Commercial Operation Date. As per Article 10.3.4 and
10.3.5, the Right of Way in respect of concerned land is to be
provided by NHAI to the concessionaire within 120 days from
COD. Thereafter, as per Article 12.4.1, the construction is to be
completed by the Concessionaire within 910 days from COD.
Thereafter, as per Article 25.4 read with Article 26.2.1, as set
forth in the Bid, the obligation to pay premium commences
immediately after the third anniversary year of COD i.e. on
completion of 3 years from COD.
21. Accordingly, the agreement read with rules envisaged "right
of way" to be provided by NHAI within 120 days from COD, to
enable the petitioners to complete upgradation of 4 lane highway
to six lane highway within 910 days from COD. The premium
payment to NHAI, under Article 26 of the Concession Agreement,
was envisaged to commence on completion of three years from
COD. Thus, prima facie, a consistent gap of about six months was
envisaged in each of the agreements between the date of
'completion' and the date of commencement of obligation to pay
premium.
(13 of 22) [CW-11042/2020]
22. In the aforesaid statutory and contractual scheme in such
projects of public interest, the issue that arises for consideration is
whether NHAI compelling the petitioner to perform obligation to
pay premium on completion of 3 years from COD would be
manifestly arbitrary and violative of Article 14 of the Constitution
of India, if having first failed in its obligation to give complete
"right of way" within 120 days from COD, the NHAI has itself
extended the date of completion beyond 910 days from COD.
23. It is undisputed position on record that as per the
agreements, the Appointed Date/Commercial Operation Date
(COD) in respect of the project of petitioner Nos.1 to 3 are
03.09.2017, 04.11.2017 and 21.02.2018 respectively. The Right
of Way was to be provided by NHAI in 120 days from COD i.e. on
01.01.2018, 04.03.2018 and 18.06.2018 respectively. The
upgradation of project highways from 4 to 6 lanes was to be
completed by the petitioners on 910 days from COD i.e. on
29.02.2020, 02.05.2020 and 18.08.2020 respectively. Thereafter,
as per the Concession Agreements the obligation of the petitioners
to pay premium was to commence on expiry of 3 years from COD
i.e. on 03.09.2020, 04.11.2020 and 21.02.2021, thereby
maintaining a consistent gap of about six months between the
date of 'completion' and the date of commencement of obligation
to pay premium. In the peculiar facts of the case, for various
reasons the handing over of the right of way could not be
completed by NHAI within 120 days. Consequently, the originally
scheduled "Completion Dates" were initially extended by NHAI to
30.11.2020, 31.01.2021 and 09.09.2021 respectively, and finally,
to 31.05.2021, 30.07.2021 and 09.09.2021 respectively. During
(14 of 22) [CW-11042/2020]
the pendency of the petition, petitioner No.1 completed the
construction on 31.05.2021. (1st Project)
24. Respondents contend that till these revised completion dates
the petitioners are entitled to collect fee at 75% rate from the
users in view of impugned Rule 4(9), and that the petitioners
would be bound to discharge obligation to pay premium to NHAI
on completion of 3 years from COD, notwithstanding failure to
give "right to way" within 120 days and extension of completion
date by NHAI itself. According to the petitioners this approach of
the respondents is manifestly arbitrary.
25. After filing of the instant petition impugning the Rule 4(9),
the respondents have themselves issued revised Model Concession
Agreement, wherein the premium obligation under Article 26.2.1
would commence only after expiry of one year from the Project
Completion Date. The petitioners contend that such revision in the
model contract, which is statutory in nature, is clarificatory and
shall apply retrospectively. The respondents have argued that the
same applies only prospectively and has no impact on the
agreements already entered.
26. So far as the initial period of 910 days from COD is
concerned, the petitioners have not raised any grievance raised
any grievance regarding the levy of fee at 75% rate under the
impugned Rule 4(9). The grievance raised is for reduced rate of
fee for the agreed extended period beyond 910 days. This
grievance is raised particularly in the light that on one hand
without any default on their part even after completion of 910
days from COD, by virtue of impugned Rule 4(9) the petitioners
are being permitted to levy toll fee only at rate reduced to 75%
(15 of 22) [CW-11042/2020]
with extension of completion date by NHAI, and on other hand
premium is being demanded on completion of 3 years from COD,
without maintaining the envisaged gap of six months from the
Completion Date or excluding the period of extension in
completion date.
27. We find prima facie merit in the submission that the
agreement envisaged that on timely completion of project as per
the originally agreed completion date i.e. from 910 th day from
COD, the petitioners would have levied and collected 100% Toll
Fee for a period of six months. The premium would have been
appropriated from such Toll Fee collected as per second proviso to
Rule 7, only after 3 year from COD. This six months gap between
date of completion and date of premium envisaged in the
Agreement would have generated fund flow of fee at 100% rate
for six months, before commencing appropriation of premium
from such Toll Fee collected. The payment of "premium" would
have commenced only on revenue sharing concept, after having
collected substantial fee revenue .There would have been much
higher balance in the Escrow Account wherein fee gets deposited,
after appropriation towards monthly Operation and Maintenance
charges, monthly debt servicing, taxes etc., to appropriate
premium, as per the waterfall mechanism provided in Article 31.
28. The agreed completion date is revised by NHAI beyond 910
days from COD, for reasons such as delay in handing over the land
which was envisaged within 120 days of COD. Despite the same,
the petitioners are being compelled to pay premium from 3 years
from COD, without maintaining a gap of about six months from
the completion date. On one hand, in view of Rule 4(9), the
(16 of 22) [CW-11042/2020]
petitioners are permitted to levy Toll Fee reduced to 75% in the
agreed extended period, on the other hand they are being
compelled to not only appropriate the fee collected for payment of
premium, but are being asked to bring more funds only to pay
premium without actual collection of adequate fee. In the aforsaid
peculiar circumstances, prima facie, we are of the view that such
action of the respondents would be wholly unfair, unreasonable,
discriminatory and manifestly arbitrary on the vice of Article 14
and 19 of the Constitution of India and would cause palpable
injustice to the petitioners.
29. During the pendnecy of this petition, the respondents have
themselves issued revised Model Concession Agreement by
clarificatory and beneficial revision in Clause 26.2.1 and have not
only linked the commencement of premium obligation with the
date of completion of the project, but have also extended the gap
between the two dates to 1 years from earlier six months.
30. Various judgments of Hon'ble Supreme Court viz. Tata
Cellular Vs. Union of India, (1994) 6 SCC 651, Jamshed
Hormusji Wadia Vs. Board of Trustee, Port of Mumbai,
(2004) 3 SCC 214, ABL International Ltd. Vs. ECGC, (2004)
3 SCC 553, Kumari Shrilekha Vidyarthi Vs. State of U.P.,
(1991) 1 SCC 212 and Unitech Ltd. Vs. Telangana State
Industrial Infrastructure Corporation, 2021 SCC Online SC
99, permit judicial review in writ jurisdiction even in contractual
matters, if the State or its Instrumentality acts in such arbitrary
manner which are in breach of Article 14 of the Constitution of
India. None of the judgments relied upon by the respondents
completely oust exercise of writ jurisdiction in contractual matters
(17 of 22) [CW-11042/2020]
in such peculiar circumstances. Further, in Nabha Power Ltd. Vs.
Punjab State Power Corporation Ltd. & Anr. , (2018) 11 SCC
508, it was held to the effect that a contract must be read to give
effect to the bargain between the parties in a commercial sensible
manner.
31. NHAI was unable to perform its obligation concerning Right
of Way within 120 days from COD, and thus the date of
completion was extended by it beyond 910 days from COD. In
such circumstances, the demand of premium from 3 years from
COD, while restricting the petitioners' entitlement to collect fee at
75% rate, prima facie appears to be manifestly arbitrary,
discriminatory, unreasonable and violative of Article 14.
32. For the above reasons, we find prima facie merit in the
contention of the petitioners that six months gap would have to be
maintained between Completion Date and commencement of
obligation to pay premium. Thus, prima facie, if NHAI extends the
completion date, the period of such extension shall be excluded
while computing three years from the COD for commencement of
obligation to pay premium. We are of the prima facie view that
while computing three years from Appointed Date/Commercial
Operation Date for commencement of obligation to pay premium
under Article 26.2.1, the number of days between the originally
agreed completion dates and the revised completion dates
subsequently agreed by NHAI, would have to be excluded, so as
to maintain six months gap between the completion date and
commencement of obligation to pay premium.
33. The impugned Rule 4(9) is statutory in character, and the
presumption is always in the favour of validity of a statute. The
(18 of 22) [CW-11042/2020]
petitioners have impugned Rule 4(9), and the challenge to
thesame was never given up expressly or impliedly, in writing or
orally. Alternate prayer to read down the rule to save it from
unconstitutionality, do not amount to giving up the challenge. The
impugned Rule 4(9) appears to be in public interest with an aim
not to burden the user of the highway with fee at 100% rate, till
the four lane to six lane upgradation is not complete. It has been
brought to our knowledge that the respondents have themselves
introduced during the pendency of this petition, a revised Model
Concession Agreement, which removes the peculiar situation in
which the instant petition has been filed. The respondents now
during pendency of this petition have themselves revised the
statutory contracts by clarificatory and beneficial revision in
Clause 26.2.1 and have not only linked the commencement of
premium obligation with the date of completion of the project, but
have also extended the gap between the two dates to 1 year from
earlier six months. We, therefore, find that now the challenge to
the Rule no more survives. Accordingly, the challenge to Rule 4(9)
is dismissed.
34. The Office Memorandum dated 18.05.2020 and the
consequent Guidelines dated 26.05.2020 are challenged on the
touchstone of Article 14 and 19(1)(g) of the Constitution of India.
Certain directions are also sought by the petitioners for
consideration by NHAI. We do not find anything in the impugned
OM or the Guidelines which can come in the way of claiming any
compensation for the material adverse impact of force majeure
provided in Article 34 of the Concession Agreement on its own
merits. In-fact, Para (v) of the impugned guidelines issued by
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NHAI for the relief measures inter alia records that, if provisions in
the Concession Agreement are different, the provisions of the
Concession Agreement shall prevail. It would be for the authority
to consider as to for what period any Order or Instructions of
Government or its authority curtailed the traffic, and for what
period the traffic was curtailed only because of pandemic, but not
for any such Order/Instructions. Merely because OM or Guidelines
issued thereafter are silent on this aspect, it would not mean that
the request for adjudication of entitlement already provided in the
Agreement would not be considered on its own merits. We,
therefore, do not find any infirmity in these Office Memorandum
dated 18.05.2020 and the consequent Guidelines dated
26.05.2020. If after the Authority communicates its view and the
petitioners are aggrieved with the same, the petitioners can have
recourse to arbitration.
35. In view of being satisfied with the prima facie case, we are
persuaded to deem it appropriate to exercise writ jurisdiction
under Article 226 in the aforesaid peculiar circumstances for the
limited purpose of interim protection while relegating the parties
to arbitration. With the above prima facie observations, we are
inclined to direct the petitioners and NHAI to explore the
arbitration for final decision on merits of their case. To secure the
ends of justice, and for reasons recorded herein, we deem it just
and expedient to protect the petitioners in the meanwhile.
36. We are of the view that apart from having prima facie case in
their favour, the petitioners have already invested huge amounts
in their respective projects. They have also shown bona fides by
offering adequate security by way of their proposed undertaking
(20 of 22) [CW-11042/2020]
to secure the interests of NHAI. The respondents have even
previously for various stressed projects agreed to defer even the
undisputed premium payment obligations, on the condition of such
deferred premium being repaid at the end of the deferment period
with interest. Vide an order dated 16.04.2019, a Division Bench of
the Bombay High Court in a Writ Petition No.3415/2019, had
observed as under:-
"10. The matter though requires detailed
adjudication of facts, it is very much apparent
that the petitioner is suffering huge losses in view
of the actual volume of traffic being far less than
projected. The possible diversion of traffic as
framed by the petitioner, therefore, prima facie
cannot be ruled out.
11. However, since we have noted that the
petitioner is in arduous situation on account of
existing statutory scheme which we have set out
briefly in above paragraph, we deem it
appropriate to exercise our jurisdiction conferred
under Article 226 of the Constitution of India and
for limited period we protect the petitioner
Company from being faced with an action of
termination of agreement in the contingency of
default in payment of premium to the NHAI for
the period of three months subject to the
petitioners undertaking to the Court within the
period of one week that in the event the
petitioner is unsuccessful in the arbitration, the
premium for above period shall be payable by the
petitioner on the principle of "premium deferment
scheme" of the Central Government earlier
agreed in supplementary agreement dated
06.06.2014 with applicable interest. Needless to
state that the petitioner would be entitled to claim
further appropriate interim relief under the
provisions of Sections 9 and 17 of the Arbitration
& Conciliation Act, 1996.
We make it clear that we have not
deliberated on the issue on the merits of the
matter and the opinion expressed by us is prima
facie and the Board of Arbitrators would be at
liberty to resolve the dispute strictly within the
four corners of the agreement and the existing
Statutory Scheme. As regards the challenge of
the petitioner to Rule 7(1) of the National
Highways Fee (Determination of Rates and
(21 of 22) [CW-11042/2020]
Collection) Rules, 2008, we leave the said
challenge open without going into the merits of
the same at this stage. In the light of the
aforesaid directions the Writ Petition stands
disposed of."
37. Vide an order dated 11.09.2019, the said order of Bombay
High Court was upheld by the Hon'ble Supreme Court while
dismissing SLP(C) No. 21315/2019 filed by NHAI.
38. Accordingly, we pass the following order:-
(i) The challenge of the petitioners to Rule 4(9) of the
National Highways Fee (Determination of Rates and Collection)
Rules, 2008 is dismissed.
(ii) Challenge to the Office Memorandum dated 18.05.2020
and Policy Guidelines dated 26.05.2020 is dismissed.
(iii) The petitioners are permitted to invoke arbitration
proceedings within a period of four weeks, and parties are free to
raise all contractual disputes before the Arbitral Tribunal for their
decision on merits.
(iv) NHAI shall within two weeks communicate to the
petitioners their decision on petitioners' claim for compensation for
force majeure or extension. If aggrieved with the same, the
petitioners would have remedy in arbitration, wherein all
contentions of the parties in this regard would remain open.
(v) Considering prima facie case, for a limited period of
three months from issuance of this order or till the date of
completion of the project whichever is earlier, the alleged
obligation of the petitioners to pay premium under Article 26.2.1
shall remain stayed. This stay is subject to the petitioners
furnishing undertaking to this Court within a period of one week
that in the event the petitioners are unsuccessful in the
(22 of 22) [CW-11042/2020]
arbitration, the disputed premium shall be payable by the
petitioners with interest on the principle of "premium deferment
scheme" (referred in the aforesaid order dated 16.04.2019 of the
Bombay High Court in Writ Petition No.3415/2019, upheld by the
Hon'ble Supreme Court vide order dated 11.09.2019 dismissing
SLP(C) No.21315/2019 filed by NHAI. The petitioners would also
undertake that after appropriating the monthly liabilities
sequentially towards taxes, payment towards construction, O&M
Expenses and Debt Servicing in the order already given in Article
31, entire balance amount from the Toll Fee collected would
remain available in the Escrow Account, which would be subject to
the decision in Section 9 and/or 17 of the Arbitration &
Conciliation Act, 1996, as the case may be.
(vi) Needless to state that the petitioner would be entitled
to claim further appropriate interim relief under the provisions of
Section 9 and/or 17 of the Arbitration & Conciliation Act, 1996.
39. We make it absolutely clear that the observations made
hereinabove are only prima facie and we have not deliberated on
the issue on the merits of the matter. The Arbitral Tribunal would
resolve the disputes in accordance with law and the observations
made herein would not bind the Arbitral Tribunal.
40. The writ petition is disposed of accordingly.
41. In view of the disposal of the writ petition, all pending
applications hereby stand disposed of.
(SATISH KUMAR SHARMA),J (INDRAJIT MAHANTY),CJ
KAMLESH KUMAR /Reserved
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