Delhi High Court: In a case wherein a petition was filed under Section 9 of the Arbitration and Conciliation Act, 1996 (‘Act’) by Roadway Solutions India Infra Ltd. seeking an order to stay the operation and effect of the Notice of Intent to terminate (‘NITT’) the Contract issued by NHAI, a Single Judge Bench of Chandra Dhari Singh, J.* opined that the petitioner by way of present petition had sought for stay of NITT and any such stay would result into petitioner continuing the project, which would be tantamount to granting of final relief that could not be granted by this Court in the instant proceedings under Section 9 of the Act. The Court further opined that Section 20-A and 41(ha) of the Specific Relief Act, 1963 (‘SRA’) would apply to the present case and an injunction would be tantamount to further delaying the infrastructure project.
Background
The petitioner was a construction company having wide experience in the construction of roadways. The respondent was set up under NHAI Act, 1988, as an autonomous agency of the Government of India and had invited bids for strengthening/overlaying on Six Lane of NH-48 (Old NH-8) and additionally, both sides of service road project in the State of Rajasthan at the risk and cost of Concessionaire on item rate basis (percentage basis project). In 2021, the petitioner took part in said bid and being the lowest bidder, the Letter of Award was issued in favour of the petitioner. In 2022, the petitioner and respondent entered into item rate Contract/Agreement, thereby materializing the terms and conditions to carry out the works under the project. Thereafter, the petitioner submitted the mixed design of Reclaimed/Recycled Asphalt Pavement (RAP) along with the Construction Methodology of RAP for review and approval of the respondent. The petitioner sent a reminder letter to the respondent seeking review and approval of the RAP methodology for laying the road, but the respondent rejected the proposal for use of RAP. The respondent further rejected the use of RAP material for Dense Bituminous Macadam (‘DBM’) works stating that the same was not part of the Bill of Quantities (‘BOQ’) under the Contract.
The petitioner was not satisfied with the decision by which the use of RAP material was rejected, hence, the petitioner issued the Mediation Notice and the Disputes Notice to the respondent as per the Contract. The petitioner also raised objections towards rejection of the use of RAP material for DBM works by the respondent. The petitioner, in terms of Clause 60 of the Contract and Sub-Clause 60 of the Conditions of Particular Application (‘CoPA’), had submitted the Interim Payment Certificate (IPC-01) seeking release of 75% of the net payment for the works done by the petitioner. The respondent did not consider the request for releasing the payment to the petitioner in terms of Sub-Clause 60.2 of CoPA and only released 50% of the amount. The 50% of the amount was accepted by the petitioner.
The respondent issued a notice of termination under Clause 63.1 of CoPA, giving notice of 14 days, upon the expiry of which the respondent was automatically entitled to terminate the contract. Thereafter disputes arose between the parties. It was the respondent’s case that due to non-performance on the part of the petitioner which showed no progress in executing works even after lapse of six months and after repeated reminders, the respondent was left with no option but to issue NITT. Thus, the petitioner, aggrieved by such action, had approached this Court through the present petition.
Analysis, Law, and Decision
The Court opined that if the petitioner was aggrieved by the NITT of the Contract and was advised to challenge the validity thereof, the petitioner could always invoke the arbitration clause to claim damages, if any, suffered by the petitioner. The Court further opined that “under Section 9 of the Act, the Court could not give direction to a party for not terminating the contract or to continue with the Contract. If the Contract was terminated, the applicant/petitioner would have rights as available to it under law. It was the right of a party not to continue with a Contract and the Court could not force a Contract on somebody under Section 9 of the Act irrespective of it being terminated in accordance with the terms of the Contract or not which was for the Arbitral Tribunal to determine”.
The Court opined that the contention of petitioner that present Contract was not determinable was misconceived as the language of Clause 63.1 left no manner of doubt that the agreement could be terminated by the respondent. The Court relied on National Highway Authority of India v. Panipat Jalandhar NH-Tollway (P) Ltd., 2021 SCC OnLine Del 2632, wherein in a similar contract provision, the Division Bench of this Court while dealing with Jumbo World Holdings Limited v. Embassy Property Developments (P) Ltd., 2020 SCC OnLine Mad 61, held “the Articles and Clauses of the CA left no manner of doubt that the CA was determinable. Various time periods ranging from 15 days to 90 days had been provided under Clauses for removal of defaults by the defaulting party, and the failure to remove such defaults within the time specified would give the other party a right to issue a termination notice of 15 days”.
Thus, the Court opined that even in the present case, NHAI could terminate the Contract for default of petitioner, therefore, contract was certainly determinable and no interference as such was warranted in the facts of the case. The Court also relied on Inter Ads Exhibition (P) Ltd. v. Busworld International Cooperatieve Vennootschap Met Beperkte Anasprakelijkheid, 2020 SCC OnLine Del 2485, wherein the Division Bench of this Court held the contract to be determinable by holding that “the agreement was terminable and therefore, the conclusion arrived that specific performance of the Contract could not be granted and nor could any injunction be issued restraining the respondent from giving effect to the notice dated 15-3-2019, as that would in effect amount to enforcement of the contract beyond the said date, that is, 15-3-2019, could not be faulted”.
The Court observed that “Sections 20A and 41(ha) of the SRA expressed the legislative intent to not grant injunctions relating to infrastructure projects where delay might be caused by such an injunction. The whole purpose and objective introduced this provision by way of amendment was to promote foreign investment and build investor confidence in the infrastructure sector of India. Public Private Partnerships had long suffered due to the prolonged delays and cost-overruns in timely execution of infrastructure projects. Further, any public work must progress without interruption. Thereby, the role of Courts in this exercise was to interfere to the minimum extent so that public work projects were not impeded or stalled”. Thus, the Court opined that Section 20A and 41(ha) of the SRA would apply to the present case and an injunction would be tantamount to further delaying the infrastructure project.
The Court further relied on Hari Ram Nagar v. Delhi Development Authority, 2019 SCC OnLine Del 9747, wherein it was held that whenever suit or proceedings where an injunction was sought might lead to delay in the subject Infrastructure Projects, the operation of the SRA gets attracted and that Courts should in normal course grant no injunction. The Court noted that in the present case, the scheduled targets of progress had not been achieved and in a period of more than eight months, only about 10.47 km (one side) of main carriage way out of 322.4 km (both side) of the works had been carried out, thus, the Court opined that if any injunction was granted and petitioner was allowed to continue, such continuance would cause impediment and delay in the progress or completion of infrastructure project.
The Court noted that under the present Contract, it was necessary for the respondent to issue a NITT at least 14 days prior to the termination. Thus, the Court observed that a stay on the NITT would mean stay on termination, inasmuch as, unless NITT was issued, the respondent in such contracts would never be able to terminate the Contract. The Court opined that the petitioner could not seek to achieve something indirectly which it could not achieve directly.
The Court opined that the petitioner by way of present petition had sought for stay of NITT and any such stay would result into petitioner continuing the project and would be tantamount to granting of final relief which could not be granted by this Court in the instant proceedings under Section 9 of the Act. The Court also opined that neither the balance of convenience was in favour of the petitioner, nor would the petitioner suffer any irreparable loss in case the reliefs as sought were not granted. The Court dismissed the present petition and further opined that the petitioner had miserably failed to make out any case for granting interim injunction in the instant matter.
[Roadway Solutions India Infra Ltd. v. NHAI, O.M.P.(I) (COMM.) 41 of 2023, decided on 24-5-2023]
Advocates who appeared in this case:
For the Petitioner: Rajiv Nayar, Senior Advocate; Nirav Shah, Sourabh Seth, Prachi Garg, Varun Kalra, Krishan Kumar, Saurabh Seth, Advocates;
For the Respondent: Parag P. Tripathi, Senior Advocate; Ankur Mittal, Abhay Gupta, Vasundhara, Raushal Kumar, Advocates.
*Judgment authored by: Justice Chandra Dhari Singh
