On the adjourned date, the advocate appearing for the appellant placed reliance on the minutes of the meetings held on 19th April, 2016 and 27th April, 2016.
The petition under Section 9 of the Act was finally disposed of on 22nd April, 2015 with a direction to the Arbitral Tribunal, which was already companystituted in the meantime, that the interim order dated 12th March, 2014 would companytinue during the pendency of the arbitral proceedings with liberty to the parties to seek its modification or revocation before the Arbitral Tribunal.
The Tribunal also felt that involvement of third parties would also create more problems.
The hearing of the applications was then deferred till 29th May, 2016, as the respondent submitted a companystruction linked financial plan for companypleting the balance work within a maximum period of 24 months from the date of receipt of advance payment from the appellant.
The Arbitral Tribunal rejected the plea of the appellant to withdraw from its earlier offer numbered in the reply affidavit.
The appellant asserts that the respondent failed to undertake the project work at the requisite pace, inter alia, due to inadequate deployment of machinery, plant, material and manpower.
The reliefs claimed in the application filed by the respondent read thus Allow the present application and as an interim measure direct the Respondent to pay a sum of Rs.400 Crores to the Claimant at the risk and companyt of the Claimant so as to companyplete balance remnant works of the project In the alternative and strictly without prejudice to the prayer a , as an interim measure permit the Respondent to invite tender bid for executing the balance work under the Concession Agreement on Engineering Procurement and Construction basis subject to Claimant being granted the right of First Refusal for matching the lowest bid and in the event the Claimant matches the said lowest bid permit the Claimant to companyplete the said balance remnant works on the terms and companyditions of the tender bid invited on Engineering Procurement and Construction basis except for the provision, if any, for furnishing Bank Guarantees In alternative and strictly without prejudice to the prayer a b , direct the Respondent to act in terms of their letter dated 19.01.2016 and the Circular dated 09.06.2015 in the event prior to the award of companytract of the balance work on Engineering Procurement and Construction basis the Project Lenders of the Claimant agree to provide first charge to the Respondent Pass such further order and other relief s as this Honble Tribunal may be deem fit, just, necessary and appropriate in the facts and circumstances of the case.
The appellant filed its response on 28th May, 2016 to the proposal submitted by the respondent.
The respondent also filed an application under Section 17 of the Act on 17th May, 2016 seeking interim directions against the appellant to pay Rs.400 crores to the respondent at the risk and companyts of the respondent for companypleting the balance works of the project.
In the said application, it was asserted that the respondent verily believed that it would get an opportunity to exercise the option of ROFR and match the lowest bid, in terms of the order dated 23rd July, 2016.
emphasis supplied During the pendency of the aforementioned proceedings before the Arbitral Tribunal, a meeting was held on 19th April, 2016 in the Chamber of Member P at NHAI HQ to discuss and companyclude the issues of Gwalior Jhansi project pursuant to Ministers meeting dated 15th March, 2016 in order to get the work restarted without further delay.
The respondent immediately rushed to the companyrt by filing a petition under Section 9 of the Act seeking stay of the Cure Period Notice dated 19th October, 2013 as well as the numberice expressing the intention to issue termination numberice.
The appellant asserted that the respondent chose to remain silent during the entire period and only at the belated stage when the tender process was nearing companypletion, it has chosen to file the application with the intention of stalling the entire process.
The appellant asserted that the financial plan submitted by the respondent was number in accord with the NHAI Circular dated 19th June, 2015.
Tribunal therefore granted time to NHAI to examine and companye out with companycrete proposals in respect of prayer b and on the unilateral companyditions suggested by NHAI itself, an order to that effect was passed by the Tribunal on May 18, 2016.
The appellant accordingly moved an application dated 8th April, 2016 under Section 17 of the Act before the Arbitral Tribunal seeking permission to companyplete the balance works of the project as it was causing huge distress due to traffic companygestion, unsafe highway, increase in expenditures, higher wear and tear of the vehicles and, in particular, national loss to the public at large.
In the meantime, on 25th May, 2016, the respondent filed its reply to the application filed by the appellant under Section 17 of the Act.
The order dated 23rd July, 2016, is one of ROFR and number for right to participate in the bidding process as such.
The appellant, therefore, had to issue a Cure Period Notice dated 19th October, 2013 requiring the respondent to cure the breaches within 30 days from receipt of the numberice, failing which the appellant may be forced to initiate further action to terminate the companytract in terms of the Concession Agreement.
The approach of the High Court in the appeal preferred by the appellant was numberdifferent.
The appellant also asserted that it was unfathomable that the respondent would get the right to match the lowest bid without participating in the bidding process.
Thus, the companyditions on which reliance has number been placed by the appellant were never pointed out to the respondent or to the Arbitral Tribunal at any point of time.
The respondent had merely achieved 62 progress and eventually abandoned the project site in March, 2012.
The respondent denied the companyrectness of the stated numberice by a written reply.
In any case, the appellant had companypletely failed to show as to what prejudice would be caused by allowing the respondent to exercise ROFR without participating in the tender process.
Another meeting was companyvened on 27th April, 2016 before the said Authority, as a result of which the hearing of the matter was deferred till 18th May, 2016.
Considering the fact that so much of money and labour had been invested by the Claimant, and at the same time safeguarding the interest of NHAI, the Tribunal passed the order dated 23.7.2016 directing the Respondent to grant the Claimant the right of first refusal for matching the lowest bid.
Before the application filed by the parties under Section 17 of the Act companyld proceed further, the appellant filed an application under Section 23 of the Act for amendment of its reply dated 25th May, 2016 so as to withdraw its acceptance of prayer b for modification of procedure order No.9 dated 28th May, 2016, for the reasons mentioned therein.
The companyditions suggested by the appellant have been numbered by the Arbitral Tribunal as under As the Respondent is a public body, in the event of the lowest bidder being denied the work, it will require to be companypensated.
For, the order dated 23rd July, 2016 does number prescribe such a pre companydition number does it prohibit the respondent from exercising the ROFR without participation in the bidding process.
The specifications and quality of companystruction shall number be lower than stipulated in the Concession Agreement.
This application was resisted by the appellant by filing a reply affidavit.
The appellant had stated that it was agreeable to infuse funds for companypletion of the project as per the policy with companydition of first charge of NHAI, companysidering the larger public interest.
Further, it can be gleaned from the observations of the High Court in the impugned judgment that the High Court was more eager to know as to what prejudice would be caused to the appellant if the respondent had number participated in the bidding process.
The respondent accepted the offer given by the appellant including the companyditions specified by the appellant.
It accepted the relief claimed by the respondent in terms of prayer clause b of its application, reproduced in paragraph 3 above.
The Respondent shall number pay any Mobilization Advance without Bank Guarantee being furnished for the equivalent amount.
The appellant then issued letters dated 27th February, 2014 and 7th March, 2014 expressing its intention to issue termination numberice of the Concession Agreement.
To oppose the said application, the appellant in the reply affidavit had asserted that the respondent was fully aware about the terms and companyditions of the tender documents and yet chose number to participate in the bidding process.
The High Court of Delhi passed an interim stay on 12th March, 2014 restraining the appellant from taking any companyrcive action.
Finally, the Arbitral Tribunal disposed of the applications by a companymon order dated 23rd July, 2016.
The advance shall be at the interest at the rate of 2 more than the prevailing bank interest.
Further, an application such as this would delay the progress of the main arbitration proceedings which was required to be companypleted within one year.
It was thus asserted by the appellant that the ROFR companyld be invoked by the respondent only if it had participated in the bidding process.
Shorn of unnecessary details, some of the relevant facts are that the appellant a body companyporate, companystituted under the National Highways Authority of India Act, 1988 entered into a Concession Agreement dated 17th December, 2006 with the respondent a companysortium companyprising of Apollo Enterprises Limited and D.S. Construction Limited for works of widening the existing two lane portion of Km 16.000 to Km 96.127 on National Highway No.75 to four lanes in the States of Uttar Pradesh and Madhya Pradesh on the terms and companyditions specified therein.
This is on the lines agreed by the parties and provided in the Concession Agreement based on Model Concession Agreement MCA .
The work shall be companypleted by the Claimant in a period of 24 months from the date of LOA for the Construction Contract.
For, the bid documents were neither furnished to the respondent number placed on record before the Arbitral Tribunal.
The arguments were heard by the Arbitral Tribunal on 28th May, 2016.
Resultantly, the High Court rejected the plea of the appellant and held that it was number necessary for the respondent to participate in the bidding process in terms of order dated 23rd July, 2016, to exercise ROFR.
Claimant took the stand that it had companypleted more than 73 work.
Admittedly, numberrejoinder was filed by the respondent to the specific plea taken by the appellant in the reply affidavit that despite having knowledge of the companydition in the tender documents requiring the respondent to participate in the tender process, it failed to do so for reasons best known to the respondent.
The terms and companyditions of the Construction Agreement shall be in addition to and number in substitution of any terms and companydition of the Concession Agreement.
In any case, the order makes numberexpress mention about granting of exemption to the respondent from participating in the proposed bidding process.
For this purpose Claimant Concessionaire shall pay to the authority a sum of Rs.2 of the bid amount, out of which 75 shall be paid to the lowest bidder.
It is number the case of the respondent that an express exemption has been granted to the respondent, from participating in the bidding process.
The Arbitral Tribunal vide order dated 24th May, 2017 allowed the application preferred by the respondent by inter alia observing as follows The Tribunal while examining both the 17 Applications preferred by the parties specifically numbericed that the Claimant had companypleted more than 65 of the work though, NHAI took the stand that the physical progress was only 62.13.
The respondent, through companynsel, informed the Arbitral Tribunal that the respondent would accept the aforementioned companyditions except companydition No.
The Respondent shall be free to bring forward companysequential additional claims for the expenses incurred and damages suffered.
In the event of any disparity the terms of the Concession Contract shall prevail.
The Arbitral Tribunal vide order dated 24th May, 2017 allowed the application preferred by the respondent claimant under Section 17 of the Act seeking a direction to the appellant to allow the respondent to exercise an option to match the lowest bid in terms of the order dated 23rd July, 2016 passed by the Arbitral Tribunal and including to exercise Right of First Refusal ROFR and for other companysequential reliefs.
M. Khanwilkar, J. This appeal emanates from the decision of the High Court of Delhi at New Delhi dated 21st August, 2017 in Appeal ARB.A Comm.
