Delhi High Court
National Highways Authority Of India vs Yedeshi Aurangabad Tollway Limited on 16 January, 2025
Author: C. Hari Shankar
Bench: C. Hari Shankar
$~
IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 30 July 2024
Pronounced on: 16 January 2025
+ O.M.P. (COMM) 277/2024, I.A. 32883/2024
NATIONAL HIGHWAYS AUTHORITY OF INDIA
.....Petitioner
Through: Mr. Sanjay Jain, Sr. Advocate
with Mr. Santosh Kumar, Ms. Bhabna Das,
Ms. Nidhi Rani, Mr. Devansh Malhotra, Mr.
Adithya Ramani, Mr. Yuvraj Sharma, Ms.
Palak Jain, Ms. Harshita Sukhija, Mr.
Nishank Tripathi and Ms. Jagriti Pandey,
Advocates.
versus
YEDESHI AURANGABAD TOLLWAY LIMITED
.....Respondent
Through: Mr. Vikram Nankani, Sr.
Advocate with Mr. Ritin Rai, Sr. Advocate
with Mr. Karan Bharihoke, Mr. Anirudh
Bakhru, Mr. Rishi, Mr. Ruchir Daulat, Ms.
Teressa R. Daulat, Ms. Devika Mohan, Mr.
Mohanish Patkar, Ms. Charu Shriyam Singh,
Ms. Pragya Gautam, Mr. Aalam Bir Singh
and Mr. H. Bir Singh, Advocates.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
JUDGMENT(ORAL)
% 16.01.2025
I.A. 32883/2024 in O.M.P. (COMM) 277/2024
1. This judgment disposes of IA 32883/2024, filed by the
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petitioner under Section 36(3)1 of the Arbitration and Conciliation
Act, 19962.
2. A unanimous arbitral award rendered by a learned three-
Member Arbitral Tribunal, awarding, to the respondent Yedeshi
Aurangabad Tollway Ltd3 and against the petitioner National
Highways Authority of India4, a principal amount of ₹ 1503.15 crores,
along with interest on ₹ 1357.36 crores from 20 October 2022 till
payment of the said amount, and further directs extension of the
Concession Period, as per the Concession Agreement5 dated 30 May
2014 executed between NHAI and Yedeshi by a period of 689 days,
stands assailed in the present OMP, filed by NHAI under Section 34
of the 1996 Act.
The law
1
(3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award,
the court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for
reasons to be recorded in writing:
Provided that the court shall, while considering the application for grant of stay in the case of an
arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree
under the provisions of the Code of Civil Procedure, 1908 (5 of 1908):
Provided further that where the Court is satisfied that a prima facie case is made out that,–
(a) the arbitration agreement or contract which is the basis of the award; or
(b) the making of the award,
was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the
challenge under Section 34 to the award.
Explanation. – For the removal of doubts, it is hereby clarified that the above proviso shall apply to all court
cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral or court
proceedings were commenced prior to or after the commencement of the Arbitration and Conciliation
(Amendment) Act, 2015.
2
―the 1996 Act‖ hereinafter
3
―Yedeshi‖ hereinafter
4
―NHAI‖ hereinafter
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―CA‖ hereinafter
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3. To my mind, after the orders passed by the Supreme Court in
Toyo Engineering Corporation v IOCL6 and Manish v Godawari
Marathwada Irrigation Development Corporation7, there is little
latitude with a Court dealing with an application under Section 36(3)
of the 1996 Act, in a challenge against a money award. Ordinarily,
and nearly inexorably, the challenging petitioner would have to
deposit the awarded amount with the Court as a condition for stay
against execution, and the successful litigant before the Arbitral
Tribunal would be entitled to withdraw the awarded amount, perhaps
on terms.
4. NHAI would, however, contend that there is no watertight
principle, known to law, mandating complete deposit, in every
challenge to an arbitral award which allows a money claim, of the
amount awarded. The argument is attractive to an extent, and it might
be possible to argue that, in the case of an award which is completely
arbitrary, or which, on the face of it, cannot sustain even perfunctory
judicial scrutiny, the rigour of Toyo and Manish may be relaxable. It
is for this reason that I have, in this judgement, examined, in some
detail, the covenants of the contract between the parties, and the
findings of the Arbitral Tribunal. At the same time, I am convinced
that there is no scope, while adjudicating a Section 36(3) application,
for the Court to embark on any examination of the vulnerability of the
arbitral award to challenge, as it would while dealing with a petition
under Section 34 of the 1996 Act.
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5. At the outset, it is necessary to note that the present order
adjudicates a prayer for stay of operation of the arbitral award, and not
the substantive challenge to the award. What is being decided,
therefore, is not the Section 34 petition but an application referrable to
Section 36(3) of the 1996 Act.
6. Section 36 of the 1996 Act, as it stood prior to its amendment
by Section 19 of the Arbitration and Conciliation (Amendment) Act,
20168, read thus:
―36. Enforcement. – Where the time for making an application
to set aside the arbitral award under section 34 has expired, or such
application having been made, it has been refused, the award shall
be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in
the same manner as if it were a decree of the Court.‖Thus, under the pre-amended Section 36, an Arbitral Award would be
enforceable as if it were a decree of a court only where the time for
challenging the award under Section 34 had expired or, if a petition
under Section 34, challenging the award, had been made within time,
said petition had been refused. The corollary was that, if an
application under Section 34 had been filed within time, the award
became ipso facto inexecutable. This legal position was confirmed by
the Supreme Court in its judgments in National Aluminium Company
Ltd v Pressteel and Fabrications Pvt Ltd9 and National Buildings
Construction Ltd v Lloyd Insulations India Ltd10.
8
―the 2016 Amendment Act‖ hereinafter
9
(2004) 1 SCC 540, hereinafter referred to as “NALCO”
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7. This created a situation in which, merely by filing a petition
under Section 34 of the 1996 Act within time, the Arbitral Award was
rendered unexecutable till the Section 34 Petition was decided. In the
circumstances, no separate application, for staying the execution of the
Arbitral Award was required to be filed, as the very filing of the
Section 34 Petition within time effectively stayed the execution of the
Arbitral Award.
8. This position was found to result in serious inequity.
9. In NALCO, the Supreme Court was critical of this legal
position, and observed that the effective divesting, by the said
provision, of the power with the court to consider whether the Arbitral
Award was, or was not, required to be stayed, defeated the objective
of the alternate dispute resolution system. Noting that a
recommendation had been made by the Ministry to the Parliament to
amend Section 34, to empower Civil Courts dealing with challenges to
Arbitral Awards to pass appropriate interim orders, the Supreme Court
expressed a hope that necessary steps in that regard would be taken
expeditiously.
10. Taking note of the aforesaid note of disapproval expressed by
the Supreme Court of the then existing Section 36 of the 1996 Act, the
246th Law Commission of India, in its meeting dated 5 August 2014,
observed as under:
―43. Section 36 of the Act makes it clear that an arbitral award
becomes enforceable as a decree only after the time for filing a
petition under section 34 has expired or after the section 34 petition
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has been dismissed. In other words, the pendency of a section 34
petition renders an arbitral award unenforceable. The Supreme
Court, in National Aluminum Co. Ltd. v Pressteel &
Fabrications, held that by virtue of section 36, it was
impermissible to pass an Order directing the losing party to deposit
any part of the award into Court. While this decision was in
relation to the powers of the Supreme Court to pass such an order
under section 42, the Bombay High Court in Afcons Infrastructure
Limited v The Board of Trustees, Port of Mumbai11 applied the
same principle to the powers of a Court under section 9 of the Act
as well. Admission of a section 34 petition, therefore, virtually
paralyzes the process for the winning party/award creditor.
44. The Supreme Court, in National Aluminium, has criticized
the present situation in the following words:
―However, we do notice that this automatic suspension of
the execution of the award, the moment an application
challenging the said award is filed under section 34 of the
Act leaving no discretion in the court to put the parties on
terms, in our opinion, defeats the very objective of the
alternate dispute resolution system to which arbitration
belongs. We do find that there is a recommendation made
by the concerned Ministry to the Parliament to amend
section 34 with a proposal to empower the civil court to
pass suitable interim orders in such cases. In view of the
urgency of such amendment, we sincerely hope that
necessary steps would be taken by the authorities
concerned at the earliest to bring about the required change
in law.‖
45. In order to rectify this mischief, certain amendments have
been suggested by the Commission to section 36 of the Act, which
provide that the award will not become unenforceable merely upon
the making of an application under section 34.‖
11. Following the above observations, para 19 of the Law
Commission Report recommended thus:
―19. In section 36,
(i) add numbering as sub-section (1) before the words
―where the time‖ and after the words ―Section 34 has
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made, it has been refused‖ and add the words ―then subject
to the provision of sub-section (2) hereof,‖
(ii) insert sub-section ―(2) Where an application to set
aside the arbitral award has been filed in the court under
section 34, the filing of such an application shall not by
itself render the award unenforceable, unless upon a
separate application made for that purpose, the court grants
stay of the operation of the award in accordance with the
provisions of sub-section (3) hereof;‖
(iii) insert sub-section ―(3) Upon filing of the separate
application under sub-section (2) for stay of the operation
of the award, the court may, subject to such conditions as it
may deem fit, grant stay of the operation of the award for
reasons to be recorded in writing.‖
(iv) insert proviso ―Provided that the court shall while
considering the grant of stay, in the case of an award for
money shall have due regard to the provisions for grant of
stay of money decrees under the Code of Civil Procedure,
1908.‖
[NOTE : This amendment is to ensure that the mere filing
of an application under section 34 does not operate as an
automatic stay on the enforcement of the award. The
Supreme Court in National Aluminium Co.
Ltd. v Pressteel & Fabrications (P) Ltd., recommends that
such an amendment is the need of the hour.]‖
12. The presently existing Section 36 of the 1996 Act amends the
pre-existing Section 36 in terms of the recommendations contained in
para 19 of the 246th Law Commission Report.
13. The application of Section 36 has, therefore, to be in tune with
the philosophy of the Law Commission Report, and the rationale,
forthcoming therefrom, for recommending amendment of Section 36.
14. The Court, in this case, is concerned with the first proviso to the
amended Section 36(3). The proviso requires a Court to, while
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considering an application for stay of an arbitral money award, have
due regard to the provisions for grant of stay of money decree as
existing in the CPC.
15. The provision for stay of grant of a money decree in the CPC is
to be found in Order XLI Rule 512.
16. Clause (1) of Order XLI Rule 5, which is somewhat pari
materia with Section 36(3) of the 1996 Act, ordains that the filing of
an appeal against a decree passed in a suit would not ipso facto
operate to stay the proceedings under the decree or order, except to the
extent the Appellate Court orders such stay, for sufficient cause.
Clause (3) of Order XLI Rule 5 is couched in negative terms. It
proscribes grant of any order for stay of execution of a decree under
Order XLI Rule 5(1) or (2) – of which order XLI Rule 5(1) alone is
12
5. Stay by Appellate Court. –
(1) An appeal shall not operate as a stay of proceedings under a decree or order appealed
from except so far as the Appellate Court may order, nor shall execution of a decree be stayed by
reason only of an appeal having been preferred from the decree; but the Appellate Court may for
sufficient cause order stay of execution of such decree.
Explanation. – An order by the Appellate Court for the stay of execution of the decree
shall be effective from the date of the communication of such order to the Court of first instance,
but an affidavit sworn by the appellant, based on his personal knowledge, stating that an order for
the stay of execution of the decree has been made by the Appellate Court shall, pending the receipt
from the Appellate Court of the order for the stay of execution or any order to the contrary, be acted
upon by the Court of first instance.
(2) Stay by Court which passed the decree.–Where an application is made for stay of
execution of an appealable decree before the expiration of the time allowed for appealing
therefrom, the Court which passed the decree may on sufficient cause being shown order the
execution to be stayed.
(3) No order for stay of execution shall be made under sub-rule (1) or sub-rule (2) unless the
Court making it is satisfied –
(a) that substantial loss may result to the party applying for stay of execution unless
the order is made;
(b) that the application has been made without unreasonable delay; and
(c) that security has been given by the applicant for the due performance of such
decree or order as may ultimately be binding upon him.
(4) Subject to the provisions of sub-rule (3), the Court may make an ex parte order for stay of
execution pending the hearing of the application.
(5) Notwithstanding anything contained in the foregoing sub-rules, where the appellant fails
to make the deposit or furnish the security specified in sub-rule (3) of Rule 1, the Court shall not
make an order staying the execution of the decree.
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relevant for our purpose – unless the court is satisfied that the three
conditions enumerated in sub-clauses (a), (b) and (c) of Order XLI
Rule 3 are satisfied. It is necessary to note that clauses (b) and (c) are
separated by the word ―and‖, indicating that cumulative satisfaction of
the conditions envisaged in Clauses (a) to (c) of Order XLI Rule 5(3)
is essential for a court to order stay of execution of a decree.
17. Of these, sub-clause (a) requires satisfaction, by the Court, that,
if no order of stay is passed, the stay applicant would suffer
substantial loss. Sub-clause (c) requires the court to be satisfied that
the stay applicant has given sufficient security for due performance of
the decree or order in the event it becomes binding on him.
18. I may note that, prior to the amendment of Section 36 by the
2016 Amendment Act, some courts have expressed a view that an
Arbitral Award cannot be equated with the money decree and that,
therefore, the Section 34 challenger could not be directed to deposit
the entire amount covered by the award as a condition for entertaining
the Section 34 challenge13. The High Court of Himachal Pradesh, in
fact, even held, in State of Himachal Pradesh v Surinder Singh
Sibia14, that Order XLI Rules 1 and 5 of the CPC did not apply to
appeals against Arbitral Awards. These decisions, obviously, cannot
apply after the amendment of Section 36 by the 2016 Amendment
Act, in view of the express stipulation, in the first proviso to Section
36(3) that an application for grant of stay of an arbitral money award
would have to abide by the considerations for grant of stay in such
13
Refer Aditya Fuels Ltd v BILT Chemicals Ltd, AIR 2007 Guj 140
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cases, as contained in the CPC, which, in turn, are to be found in
Clauses (1) and (5) of Order XLI Rule 5.
19. Yogeshwar Dayal, J. (as he then was) held, in Union Bank of
India v Jagan Nath Radhey Shyam15, that a conjoint reading of Order
XLI Rule 5(3) and (5) of the CPC provided that ―so long as the
decretal amount is not deposited or security is not furnished the court
shall not make order staying the execution of the decree‖. With
respect to Order XLI Rule 5(1) and (3) of the CPC, Arijit Pasayat, J.
(as he then was), sitting singly as a Judge of the Orissa High Court,
held thus, in Hadibandhu Senapati v Champamani Behera16:
―4. Rule 5 of Order 41, CPC relates to stay of proceedings and
of execution. By the Amendment Act 104 of 1976 an Explanation
has been added to sub-rule (1) to provide that an order for stay of
execution made by the appellate Court operates only from the time
it is communicated to the executing Court. After an appeal has
been filed the appellate Court may order the stay of proceedings
under the decree or of execution of such decree. Obviously the rule
will apply only when the decree under appeal is capable of
execution. The provisions of sub-rule (3) of Rule 5 are mandatory,
and therefore, conditions prescribed in clauses (a), (b) and (c)
thereof must be fulfilled before granting a stay. The power to grant
stay of execution on sufficient cause being shown is controlled by
sub-rule (3) and each of the three conditions specified therein must
be satisfied before stay is granted. Execution should not be stayed
unless the Court is satisfied that substantial loss may otherwise
result to the judgment-debtor, and the application is made without
unusual delay. The amount deposited as security under Rule 5 does
not ipso facto without an order of Court, become the property of
the decree-holder. Under sub-rule (3) of Rule 5 it is clear that no
order for stay of execution shall be made under sub-rule (1) or sub-
rule (2) unless the Court making it is satisfied about the pre-
conditions stipulated therein. One of the conditions is that the
security has been given by the appellant for the due performance of
such decree or order as may ultimately be binding upon him. There
is no force in the submission of Mr. Kar that the requirement of15
AIR 1979 Del 36
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furnishing security is applicable to money decrees and not to other
decrees. There is nothing in sub-rule (3) to support such a plea. The
language of sub-rule (3) of Rule 5 is emphatic and imperative
mandating that no order of stay of execution shall be made unless
the Court is satisfied that security has been given by the applicant
for the due performance of such decree or order as may ultimately
be binding upon him, amongst other conditions. The provision is
couched in mandatory language, and if the Court finds that no
security has been furnished by the applicant no order of stay of
execution can be made under sub-rule (1) or sub-rule (2).
5. Further case of the petitioners is that there is no
requirement for cash security. According to Mr. Misra, the amount
being relatable to arrears of rent, cash security has been rightly
directed to be furnished. There can be no doubt that the Court has
wide discretion in the matter of fixing the nature and mode of
security. There is no statutory definition of security in CPC.
Speaking generally, security is anything that makes the money
more assured in its payment or more readily recoverable. It is an
encumbrance. The purpose of a security is to ensure, or facilitate
the fulfilment or enjoyment of some other right vested in its owner.
Money paid into Court to abide the event of an action is a security
to the other litigant, who, if succeeds, becomes thereby a secured
creditor. In an appropriate case, the Court can certainly direct
deposit of cash security, and in other cases it may direct furnishing
of property security. It all depends on nature of dispute.‖
20. On the aspect of ―sufficient cause‖ within the meaning of Order
XLI Rule 5(1) and ―substantial loss‖ within the meaning of Order XLI
Rule 5(3)(a), a Division Bench of the High Court of Rajasthan has, in
Bansidhar v Pribhu Dayal17, held thus:
―5. In the present case, however, I find that the appellant has
not been able to make out sufficient cause for staying the
execution. The first ground namely that the appellant has no ready
money and that there is a general financial stringency is very vague
and unconvincing. The appellant may not be in possession of cash
but he should have disclosed his assets and liabilities or he should
have given a detailed account of his financial position for this court
to judge whether he had other property sufficient to pay up his
decretal amount without any hardship. The mere reference to
present financial stringency is to my mind of no avail for staying
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prevail then every judgment-debtor would be able to get the
execution of the decree stayed in appeal without further proving
that such execution would result in substantial loss to him. Under
Order 41, Rule 5 ―an appeal by itself does not operate as a stay of
proceedings under a decree or order appealed from except so far as
the Appellate Court may order and the section further lays down
that execution of a decree shall not be stayed by reason only of an
appeal having been preferred from the decree.‖ In other words the
ordinary rule is that an execution of the decree need not be stayed
pending an appeal unless the appellant shows good cause and the
appellate court considers it sufficient for staying the execution.
Sub-Rule 3 further provides that no order for stay of execution
shall be made under sub-rule 1 of sub-rule 2 unless the court
making it is satisfied that substantial loss may result to the party
applying for stay of execution unless the order is made.
6. In the case of Anandi Prashad v Govinda Bapu18 it was
observed by the learned Judge Vivian Bose A.J.C. that–
―It is not enough merely to repeat the words of the
Code and state that substantial loss will result; the kind
of loss must be specified, details must be given, and the
conscience of the Court must be satisfied, that such loss
will really ensue.‖
It was further observed that–
―the words “substantial loss” cannot mean the
ordinary loss to which every judgment-debtor is
necessarily subjected when he loses his case and is
deprived of his property in consequence. That is an
element which must occur in every case and since the
Code expressly prohibits stay of execution as an
ordinary rule, it is clear the words “substantial loss”
must mean something in addition to and different from
that‖.
7. It is abundantly clear that the appellant is not simply to
show the balance of convenience in his favour nor it is sufficient
for him to say that no harm would be done to the other party if the
execution is stayed. In order to get the execution the decree stayed,
the appellant must show substantial loss i.e., it should be loss more
than what should ordinarily result from the execution of the decree
in the normal circumstances. The first ground is therefore, very
vague. The second ground alleged by the appellant is equally vague
because he has not disclosed what property he has got and why it
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will not fetch a fair price.
8. The last ground of the appellant that if he is arrested and
sent to civil prison, he will lose his business and reputation is
worth consideration, but for the present there is no material before
the court to conclude that the appellant is not in a position to pay
the money and that the executing court will send him to civil
prison. The judgment debtor cannot be sent to civil prison at the
mere request of the decree-holder.
9. Sec. 51 of the Civil Procedure Code provides that where the
decree is for the payment of money, execution by detention in
prison shall not be ordered unless, after giving the judgment-debtor
an opportunity of showing cause why he should not be committed
to prison, the Court for reasons recorded in writing, is satisfied,–
(a) that the judgment-debtor, with the object or effect
of obstructing or delaying the execution of the decree,–
(i) is likely to abscond or leave the local limits
of the jurisdiction of the Court, or
(ii) has, after the institution of the suit in which
the decree was passed, dishonestly, transferred,
concealed, or removed any part of his property, or
committed any other act of bad faith in relation to
his property; or
(b) that the judgment-debtor has, or has had since the
date of the decree, the means to pay the amount of the
decree or some substantial part thereof and refuses or
neglects or has refused or neglected to pay the same.‖
10. The law has thus provided safeguards to protect an honest
judgment-debtor who is really unable to pay up the decree. Learned
counsel for the respondent has stated that in case the executing
court finds that the judgment-debtor is really not in a position to
pay the decretal amount and if it still thinks of sending the
appellant to civil prison, the appellant may apply for the stay of the
execution and the respondent will have no objection to the stay
being granted at that time. This is quite reasonable in my view. The
appellant has not been able to make sufficient cause to stay the
execution of the order at present and therefore, the order of this
court dated 29th August, 1952 is vacated and the application is
dismissed.‖
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21. In Varadaiah v Chinnapa Reddi19, K. Subba Rao, CJ (as he
then was) held that it was ―an established rule of practice that
ordinarily stay of money decrees will not be given unless there are
special circumstances‖. In Mooka Naicker v A.K. Venkatasami
Naidu20, it was noted that the appellant, in that case, obtained stay of
execution of a money decree, in an appeal, on his making a deposit of
the entire decretal amount, with a concomitant right granted to the
respondent to withdraw the amount on furnishing security.
22. In the matter of arbitral awards for payment of money, the
Supreme Court, in Toyo Engineering, observed and held as under:
―3. This Court repeatedly having held that Order XLI Rule 5
principles are to be followed in these cases, we find that largely
because public corporations are involved, discretion continues to
be exercised not on principles under Order XLI Rule 5 but only
because large amounts exist and that Government Corporations
have to pay these amounts under Arbitral Awards. Both these
considerations are irrelevant, as has been pointed out by us earlier.
As a matter of fact, the very matter referred to in the order dated
09.08.2019 and 06.03.2020, namely, O.M.P. (COMM) No.
366/2017 has resulted in a dismissal of a Section 34 petition in an
award that was granted out of one of 17 other contracts arising out
of the same general transaction. Mr. Sharma was at pains to point
out that the Section 34 petition was dismissed in that matter on
completely different grounds. Be that as it may, O.M.P. (COMM)
No. 366/2017 at the highest, therefore, would be irrelevant. This
O.M.P. (COMM) No. 366/2017 appears to be the main plank on
which an amount of ₹ 125 Crores alone was ordered to be
deposited out of an awarded amount of ₹ 662 Crores. Resultantly,
we set aside both the orders and require a 100% deposit of the
awarded amount to be made within a period of six weeks from
today. The appellants may apply to the High Court to withdraw this
amount on security.‖19
AIR 1956 AP 64
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20 Signature Not Verified
AIR 1950 Mad 807
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23. Similarly, prior to Toyo Engineering, the Supreme Court had
expressed a similar view, in the matter of grant of stay against money
awards in Arbitral Proceedings, thus, in Manish, in terse and
unmistakable terms:
―No one appears for the respondent, even though served. The
Bombay High Court has ordered 60% deposit, pending the Section
37 appeal. We have passed orders stating that since these are
money decrees there should be 100% deposit, with the respondent
being entitled to withdraw the amount deposited and furnish
solvent security to the satisfaction of the High Court.
Accordingly, we set aside the impugned orders dated 19.03.2018
and mandate a 100% deposit be made within a period of eight
weeks from today.
The Special Leave Petitions are disposed of accordingly.‖
(Emphasis supplied)
24. Though there are some cases in which the direction for 100%
deposit, as a condition for entertaining the Section 34 Petition, as
passed by the High Court, has been modified by the Supreme Court by
permitting part of the amount to be secured by way of a bank
guarantee, as in Srei Infrastructure Finance Ltd v Candor Gurgaon
Two Developers and Purchase Pvt Ltd21, I have not come across any
real departure, in any subsequent judgment or order of the Supreme
Court, from the imperative requirements set out in Manish and Toyo
Engineering. For the sake of the record, however, the order passed in
Srei Infrastructure may be thus reproduced:
―Heard learned counsel on both sides.
In the circumstances of the case, we consider it appropriate, in the
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21 Signature Not Verified
MANU/SCOR/73122/2018
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interest of justice, that the following interim order shall be in force
during the pendency of proceedings under Section 34 of the
Arbitration and Conciliation Act, 1996:- There shall be interim
stay of the award subject to the petitioner’s depositing 60% of the
amount of the decree. The remaining 40% of the amount shall be
secured by way of bank guarantee(s) of the nationalized bank
within eight weeks. The respondent shall be at liberty to withdraw
the said amount on furnishing appropriate security.
The proceedings under Section 34 of the Arbitration and
conciliation Act, 1966 may be decided as expeditiously as
possible, not later than six months. The special leave petitions are
disposed of accordingly.‖
25. The resultant position appears to be that, in the matter of stay of
execution of Arbitral Awards which unequivocally and
unconditionally directs payment of money to the successful litigant
before the Arbitral Tribunal, the entire amount awarded is required to
be deposited. Even in Srei Infrastructure, the Supreme Court has
merely mitigated the rigor of the direction for deposit by permitting
part of the deposit to be made by way of bank guarantee. Even while
doing so, the Supreme Court has clarified that the order was being
passed ―in the circumstances of the case‖. It is doubtful, therefore,
whether Srei Infrastructure can be treated as diluting the earlier
decisions in Manish and Toyo Engineering, both of which are
categorical and unequivocal in terms.
26. The present application would have to considered in the light of
the aforesaid legal position.
27. The CA was for a project of four-laning of a stretch of NH-
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21122 on BOT23 basis. The concession period was 26 years from the
Appointed Date.
28. Notice stands issued in the OMP. Arguments on the present IA,
preferred under sub-sections (2) and (3) of Section 3624 of the 1996
Act, seeking stay of operation of the impugned Award, were reserved.
This order disposes of the IA.
29. Given the magnitude of the Award, and as the petition, with
attendant annexures, runs into over 30000 pages, this order has
necessarily become somewhat prolix. However, it is clarified that
observations made herein are only prima facie, and intended to decide
NHAI’s prayer for stay of operation of the impugned Award and
would, accordingly, be so regarded, when the OMP itself is taken up
for hearing and final decision.
30. Much turns on the exchanges and correspondences that have
taken place between the parties and, therefore, a recountal thereof
22
―the Project‖ hereinafter
23
Build Operate Transfer
24
(2) Where an application to set aside the arbitral award has been filed in the court under Section 34, the
filing of such an application shall not by itself render that award unenforceable, unless the court grants an
order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3),
on a separate application made for that purpose.
(3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award,
the court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for
reasons to be recorded in writing:
Provided that the court shall, while considering the application for grant of stay in the case of an
arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree
under the provisions of the Code of Civil Procedure, 1908 (5 of 1908):
Provided further that where the Court is satisfied that a prima facie case is made out that,–
(a) the arbitration agreement or contract which is the basis of the award; or
(b) the making of the award,
was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the
challenge under Section 34 to the award.
Explanation. – For the removal of doubts, it is hereby clarified that the above proviso shall apply to
all court cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral or court
proceedings were commenced prior to or after the commencement of the Arbitration and Conciliation
(Amendment) Act, 2015.]
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becomes necessary. Before that, however, it would be necessary to
examine the legal contours within which the present application has to
be decided.
Grounds for Stay urged in the IA
31. Before proceeding to the merits of the matter, it would be
appropriate to reproduce the grounds for stay, which are to be found in
paras 11 and 12 of the present IA filed by NHAI:
―11. In view of the above, and the detailed grounds stated in the
accompanying Petition, it is submitted that the Petitioner has a
good prima facie case in their favour as the impugned Award is
patently illegal, contrary to the terms of the CA and perverse. In
the event the Petitioner is compelled to pay the amount awarded in
the impugned Award, it will be extremely difficult to recover the
same from the Respondent. The Respondent is merely an SPV and
does not have any assets or revenue apart from the toll collected
from the Project highway. On the other hand, the Petitioner is a
permanent statutory body which undertakes projects of a public
nature, and hence the Respondent can always enforce the
impugned Award in the event the present Petition is dismissed.
Therefore, balance of convenience is also in favour of the
Petitioner.
12. Irreparable harm and grave injury would be caused to the
Petitioner if it is compelled to pay the awarded amount of approx.
Rs. 1700 crores to the Respondent. The Petitioner is a statutory
body and the money involved is public money. Not only will such
an excessive payment put the Petitioner in extreme financial
difficulty and affect payments in respect of other public projects,
but this will also significantly adversely affect the State exchequer.
Similarly, the Petitioner would suffer grave prejudice and
economic crisis if it is required to deposit such a heavy sum or
furnish security for the same as a condition for stay of the
impugned Award, and the same would also be contrary to public
interest.‖
32. We may proceed, now to the facts.
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Facts
33. In 2013-14, NHAI floated a tender for the Project. Prospective
bidders were provided with a Request for Qualification25, Request for
Proposal26 (RFP), Feasibility Report and a draft CA. The successful
bidder was also required to set up a Special Purpose Vehicle27 with
whom NHAI would execute the CA.
34. The bids received by NHAI, pursuant to the Notice Inviting
Tenders28, were grant-based. IRB Infrastructure Developers Pvt Ltd29
was the successful bidder, and sought a financial grant from NHAI for
₹ 558 crores. Yedeshi was incorporated by IRB as a SPV. Subsequent
thereto, CA dated 30 May 2014 was executed between NHAI and
Yedeshi.
35. The following clauses of the CA are relevant:
―3.1 The Concession
*****
3.1.2 Subject to and in accordance with the provisions of this
Agreement, the Concession hereby granted shall oblige or entitle
(as the case may be) the Concessionaire to:
(a) Right of Way, access and licence to the Site for the
purpose of and to the extent conferred by the provisions of
this Agreement;
*****
25
RFQ
26
RFP
27
SPV
28
NIT
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29 Signature Not Verified
IRB
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4.1.2 The Concessionaire may, upon providing the Performance
Security to the Authority in accordance with Article 9, at any time
after 90 (ninety) days from the date of this Agreement or on an
earlier day acceptable to the Authority, by notice require the
Authority to satisfy any or all of the Conditions Precedent set forth
in this Clause 4.1.2 within a period of 30 (thirty) days of this
notice, or such longer period not exceeding 60 (sixty) days as may
be specified therein, and the Conditions Precedent required to be
satisfied by the Authority shall be deemed to have been fulfilled
when the Authority shall have:
*****
(e) procured all Applicable Permits relating to
environmental protection and conservation of the Site:
Provided that the Authority may from time to time by notice
extend, for up to an aggregate of 6 (six) months, the period for
procuring the approval set forth in Sub-clause (d) and/or Sub-
clause (e) above and in that event the land to be covered by
overbridges or the affected sections of the Project Highway, as the
case may be, shall be included in the Appendix referred to in
Clause 10.3 and dealt with in accordance with the provisions
thereof; and provided further that upon procurement of such
approval, the Concessionaire shall be entitled to a period of 12
(twelve) months therefrom for completion of the overbridges. For
the avoidance of doubt, the approval specified in Sub-clause (d)
and (e) above shall cease to be a Condition Precedent upon the
extension of time under this Proviso.
*****
5.1.3 Subject to the provisions of Clauses 5.1.1 and 5.1.2, the
Concessionaire shall discharge its obligations in accordance with
Good Industry Practice and as a reasonable and prudent person.
*****
7.2 Representations and warranties of the Authority
The Authority represents and warrants to the Concessionaire that:
(a) it has full power and authority to execute, deliver
and perform its obligations under this Agreement and to
carry out the transactions contemplated herein and that it
has taken all actions necessary to execute this Agreement,
exercise its rights and perform its obligations, under this
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Agreement; Signature Not Verified
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(b) it has taken all necessary actions under the
Applicable Laws to authorise the execution, delivery and
performance of this Agreement;
*****
(h) it has good and valid right to the Site, and has power
and authority to grant a licence in respect thereto to the
Concessionaire.
*****
10.1 The Site
The site of the Project Highway shall comprise the real
estate described in Schedule-A and in respect of which the
Right of Way shall be provided and granted by the
Authority to the Concessionaire as a licensee under and in
accordance with this Agreement (the “Site”). For the
avoidance of doubt, itis hereby acknowledged and agreed
that references to the Site shall be construed as references
to the real estate required for Four-Laning of the Project
Highway as set forth in Schedule-A.
10.2 Licence, Access and Right of Way
10.2.1 The Authority hereby grants to the Concessionaire access to
the Site for carrying out any surveys, investigations and soil tests
that the Concessionaire may deem necessary during the
Development Period, it being expressly agreed and understood that
the Authority shall have no liability whatsoever in respect of
survey, investigations and tests carried out or work undertaken by
the Concessionaire on or about the Site pursuant hereto in the event
of Termination or otherwise.
10.2.2 In consideration of the Concession Fee, this Agreement
and the covenants and warranties on the part of the Concessionaire
herein contained, the Authority, in accordance with the terms and
conditions set forth herein, hereby grants to the Concessionaire,
commencing from the Appointed Date, leave and licence rights in
respect of all the land (along with any buildings, constructions or
immovable assets, if any, thereon) comprising the Site which is
described, delineated and shown in Schedule-A hereto (the
“Licensed Premises”), on an “as is where is” basis, free of any
Encumbrances, to develop, operate and maintain the said Licensed
Premises, together with all and singular rights, liberties, privileges,
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easements and appurtenances whatsoever to the said Licensed Signature Not Verified
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Premises, hereditaments or premises or any part thereof belonging
to or in any way appurtenant thereto or enjoyed therewith, for the
duration of the Concession Period and, for the purposes permitted
under this Agreement, and for no other purpose whatsoever.
*****
10.3.1 Pursuant to the notice specified in Clause 4.1.2, the
Authority Representative and the Concessionaire shall, on a
mutually agreed date and time, inspect the Site and prepare a
memorandum containing an inventory of the Site including the
vacant and unencumbered land, buildings, structures, roadworks,
trees and any other immovable property on or attached to the Site.
Such memorandum shall have appended thereto an appendix (the
“Appendix”) specifying in reasonable detail those parts of the Site
to which vacant access and Right of Way has not been granted to
the Concessionaire. Signing of the memorandum, in two
counterparts (each of which shall constitute an original), by the
authorised representatives of the Parties shall, subject to the
provisions of Clause 10.2.2, be deemed to constitute a valid licence
and Right of Way to the Concessionaire for free and unrestricted
use and development of the vacant and unencumbered Site during
the Concession Period under and in accordance with the provisions
of this Agreement and for no other purpose whatsoever. For the
avoidance of doubt, it is agreed that valid licence and Right of Way
with respect to the parts of the Site as set forth in the Appendix
shall be deemed to have been granted to the Concessionaire upon
vacant access thereto being provided by the Authority to the
Concessionaire.
10.3.2 Without prejudice to the provisions of Clause 10.3.1, the
Parties hereto agree that on or prior to the Appointed Date, the
Authority shall have granted vacant access and Right of Way such
that the Appendix shall not include more than 20% (twenty per
cent) of the total area of the Site required and necessary for the
Four-Lane Project Highway, and in the event Financial Close is
delayed solely on account of delay in grant of such vacant access
and Right of Way, the Authority shall be liable to payment of
Damages under and in accordance with the provisions of Clause
4.2.
10.3.4 The Authority shall make best efforts to procure and grant,
no later than 90(ninety) days from the Appointed Date, the Right of
Way to the Concessionaire in respect of all land included in the
Appendix, and in the event of delay for any reason other than Force
Majeure or breach of this Agreement by the Concessionaire, it shall
pay to the Concessionaire Damages in a sum calculated at the rate
of Rs. 50 (Rupees fifty) per day for every 1 ,000 (one thousand)
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square metres or part thereof, commencing from the 91st (ninety Signature Not Verified
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first) day of the Appointed Date and until such Right of Way is
procured.
10.3.5 Upon receiving Right of Way in respect of any land
included in the Appendix, the Concessionaire shall complete the
Construction Works thereon within a reasonable period to be
determined by the Independent Engineer in accordance with Good
Industry Practice; provided that the issue of Provisional Certificate
shall not be affected or delayed on account of vacant access to any
part of the Site not being granted to the Concessionaire or any
construction on such part of the Site remaining incomplete on the
date of Tests on account of the delay or denial of such access
thereto. For the avoidance of doubt, it is expressly agreed that
Construction Works on all lands for which Right of Way is granted
within 90 (ninety) days of the Appointed Date shall be completed
before the Project Completion Date. It is further agreed that the
obligation of the Concessionaire to complete the affected
Construction Works shall subsist so long as the Authority
continues to pay the Damages specified herein, and upon the
Authority ceasing to pay such Damages after giving 60 (sixty)
days’ notice thereof to the Concessionaire, the obligation of the
Concessionaire to complete such works on such part of the Site
shall cease forthwith. It is also expressly agreed that completion of
the respective Construction Works within the time determined by
the Independent Engineer hereunder shall be deemed to be Project
Milestones for the purposes of levy and recovery of Damages
under and in accordance with the provisions of Clause 12.4.2.
*****
11.2 Shifting of obstructing utilities
The Concessionaire shall, subject to Applicable Laws and with
assistance of the Authority, undertake shifting of any utility
including electric lines, waterpipes and telephone cables, to an
appropriate location or alignment within or outside the Site if and
only if such utility causes or shall cause a material adverse effect
on the construction, operation or maintenance of the Project
Highway. The cost of such shifting shall be borne by the Authority
or by the entity owning such utility, if the Authority so directs, and
in the event of any delay in shifting thereof, the Concessionaire
shall be excused for failure to perform any of its obligations
hereunder if such failure is a direct consequence of delay on the
part of the entity owning such electric lines, water pipes or
telephone cables, as the case may be.
*****
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11.4 Felling of trees
The Authority shall assist the Concessionaire in obtaining the
Applicable Permits for felling of trees to be identified by the
Authority for this purpose if and only if such trees cause a material
adverse effect on the construction, operation or maintenance of the
Project Highway. The cost of such felling shall be borne by the
Authority, and in the event of any delay in felling thereof for
reasons beyond the control of the Concessionaire, it shall be
excused for failure to perform any of its obligations hereunder if
such failure is a direct consequence of delay in the felling of trees.
For the avoidance of doubt, the· Parties hereto agree that the felled
trees shall be deemed to be owned by the Authority and shall be
disposed in such manner and subject to such conditions as the
Authority may in its sole discretion deem appropriate.
*****
12.1 Obligations prior to commencement of construction
Prior to commencement of Construction Works, the
Concessionaire shall:
(a) submit to the Authority and the Independent
Engineer its detailed design, construction methodology,
quality assurance procedures, and the procurement,
engineering and construction time schedule for completion
of the Project in accordance with the Project Completion
Schedule as set forth in Schedule-G;
(b) appoint its representative duly autorised to deal with
the Authority in respect of all matters under or arising out
of or relating to this Agreement;
(c) undertake, do and perform all such acts, deeds and
things as may be necessary or required before
commencement of construction under and in· accordance
with this Agreement, the Applicable Laws and Applicable
Permits; and
(d) make its own arrangements for quarrying of
materials needed for the Project Highway under and in
accordance with the Applicable Laws and Applicable
Permits.
*****
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12.4.2 The Concessionaire shall construct the Project Highway in Signature Not Verified
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accordance with the Project Completion Schedule set forth in
Schedule-G. In the event that the Concessionaire fails to achieve
any Project Milestone within a period of 90 (ninety) days from the
date set forth for such Milestone in Schedule-G, unless such failure
has occurred due to Force Majeure or for reasons solely
attributable to the Authority, it shall pay Damages to the Authority
in a sum calculated at the rate of 0.1 % (zero point one per cent) of
the amount of Performance Security for delay of each day until
such Milestone is achieved; provided that if any or all Project
Milestones or the Scheduled Four-Laning Date are extended in
accordance with the provisions of this Agreement, the dates set
forth in Schedule-G shall be deemed to be modified accordingly
and the provisions of this Agreement shall apply as if Schedule-G
has been amended as above; provided further that in the event
Project Completion Date is achieved on or before· the Scheduled
Four-Laning Date, the Damages paid under this Clause 12.4.2 shall
be refunded by the Authority to the Concessionaire, but without
any interest thereon. For the avoidance of doubt, it is agreed that
recovery of Damages under this Clause 12.4.2 shall be without
prejudice to the rights of the Authority under this Agreement,
including the right of Termination thereof.
*****
14.1.2 All Tests shall be conducted in accordance with Schedule-I.
The Independent Engineer shall observe, monitor and review the
results of the Tests to determine compliance of the Project
Highway with Specifications and Standards and if it is reasonably
anticipated or determined by the Independent Engineer during the
course of any Test that the performance of the Project Highway or
any part thereof does not meet the Specifications and Standards, it
shall have the right to suspend or delay such Test and require the
Concessionaire to remedy and rectify the defects or deficiencies.
Upon completion of each Test, the Independent Engineer shall
provide to the Concessionaire and the Authority copies of all Test
data including detailed Test results. For the avoidance of doubt, it
is expressly agreed that the Independent Engineer may require the
Concessionaire to carry out or cause to be carried out additional
Tests, in accordance with Good Industry Practice, for determining
the compliance of the Project Highway with Specifications and
Standards.
*****
24.1 Financial Close
24.1.1 The Concessionaire hereby agrees and undertakes that it
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shall achieve Financial Close within 180 (one hundred and eighty) Signature Not Verified
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days from the date of this Agreement and in the event of delay, it
shall be entitled to a further period not exceeding 120 (one hundred
and twenty) days, subject to payment of Damages to the Authority
in a sum calculated at the rate of 0.1 % (zero point one per cent) of
the Performance Security for each day of delay, or for a further
period not exceeding 200 (two hundred) days, subject to payment
of Damages specified in Clause 4.3; provided that the Damages
specified herein shall be payable every week in advance and the
period beyond the said 180 (one hundred and eighty) days shall be
granted only to the extent of Damages so paid; provided further
that no Damages shall be payable if such delay in Financial Close
has occurred solely as a result of any default or delay by the
Authority in procuring satisfaction of the Conditions Precedent
specified in Clause 4.1.2 or due to Force Majeure. For the
avoidance of doubt, the Damages payable hereunder by the
Concessionaire shall be in addition to the Damages, if any, due and
payable under the provisions of Clause 4.3.
24.1.2 The Concessionaire shall, upon occurrence of Financial
Close, notify the Authority forthwith, and shall have provided to
the Authority, at least 2 (two) days prior to Financial Close, 3
(three) true copies of the Financial Package and the Financial
Model, duly attested by a Director of the Concessionaire, along
with 3 (three) soft copies of the Financial Model in MS Excel
version or any substitute thereof, which is acceptable to the Senior
Lenders.
*****
31.1 Escrow Account
31.1.1 The Concessionaire shall, prior to the Appointed Date, open
and establish an Escrow Account with a Bank (the “Escrow Bank”)
in accordance with this Agreement read with the Escrow
Agreement.
31.1.2 The nature and scope of the Escrow Account are fully
described in the agreement (the “Escrow Agreement”) to be entered
into amongst the Concessionaire, the Authority, the Escrow Bank
and the Senior Lenders through the Lenders’ Representative, which
shall be substantially in the form set forth in Schedule-S.
*****
34.4 Political Event
A Political Event shall mean one or more of the following
acts or events by or an account of any Government
Instrumentality:
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*****
(b) compulsory acquisition in national interest or
expropriation of any Project Assets or rights of the
Concessionaire or of the Contractors;
34.6.2 At any time after the Appointed Date, if any Force Majeure
Event occurs:
*****
(b) after COD, whereupon the Concessionaire is unable
to collect Fee despite making best efforts or it is directed by
the Authority to suspend the collection thereof during the
subsistence of such Force Majeure Event, the Concession
Period shall be extended by a period, equal in length to the
period during which the Concessionaire was prevented
from collection of Fee on account thereof; provided that in
the event of partial collection of Fee where the daily
collection is less than 90% (ninety per cent) of the Average
Daily Fee, the Authority shall extend the Concession Period
in proportion to the loss of Fee on a daily basis. For the
avoidance of doubt, loss of 25% (twenty-five per cent) in
collection of Fee as compared to the Average Daily Fee for
four days shall entitle the Concessionaire to extension of
one day in the Concession Period.
34.7 Allocation of costs arising out of Force Majeure
34.7.1 Upon occurrence of any Force Majeure Event prior to the
Appointed Date, the Parties shall bear their respective costs and no
Party shall be required to pay to the other Party any costs thereof.
34.7.2 Upon occurrence of a Force Majeure Event after the
Appointed Date, the costs incurred and attributable to such event
and directly relating to the Project (the “Force Majeure Costs”)
shall be allocated and paid as follows:
*****
(b) upon occurrence of an Indirect Political Event, all
Force Majeure Costs attributable to such Indirect Political
Event, and not exceeding the Insurance Cover for such
Indirect Political Event, shall be borne by the
Concessionaire, and to the extent Force Majeure Costs
exceed such Insurance Cover, one half of such excess
amount shall be reimbursed by the Authority to the
Concessionaire; and
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 27 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
(c) upon occurrence of a Political Event, all Force
Majeure Costsattributable to such Political Event shall be
reimbursed by the Authority to the Concessionaire.
For the avoidance of doubt, Force Majeure Costs may include
interest payment on debt, O&M Expenses, any increase in the cost
of Construction Works on account of inflation and all other costs
directly attributable to the Force Majeure Event, but shall not
include loss of Fee revenues or debt repayment obligations, and for
determining such costs, information contained in the Financial
Package may be relied upon to the extent that such information is
relevant
*****
35.2 Compensation for default by the Authority
Subject to the provisions of Clause 35.6, in the event of the
Authority being in material default or breach of this
Agreement at any time after the Appointed Date, it shall
pay to the Concessionaire by way of compensation, all
direct costs suffered or incurred by the Concessionaire as a
consequence of such material default or breach within 30
(thirty) days of receipt of the demand supported by
necessary particulars thereof; provided that no such
compensation shall be payable for any material breach or
default in respect of which Damages have been expressly
specified in this Agreement. For the avoidance of doubt,
compensation payable may include interest payments on
debt, O&M Expenses, any increase in capital costs on
account of inflation and all other costs directly attributable
to such material breach or default but shall not include loss
of Fee revenues, debt repayment obligations or other
consequential losses, and for determining such
compensation, information contained in the Financial
Package and the Financial Model may be relied upon to the
extent it is relevant.
35.3 Extension of Concession Period
Subject to the provisions of Clause 35.6, in the event that a
material default or breach of this Agreement set forth in
Clause 35.2 causes delay in achieving COD or leads to
suspension of or reduction in collection of Fee, as the case
may be, the Authority shall, in addition to payment of
compensation under Clause 35.2, extend the Concession
Period, such extension being equal in duration to the period
by which COD was delayed or the collection of Fee
Signature Not Verified
remained suspended on account thereof, as the case may be; Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 28 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
and in the event of reduction in collection of Fee where the
daily collection is less than 90%(ninety per cent) of the
Average Daily Fee, the Authority shall, in addition to
payment of compensation under Clause 35.2, extend the
Concession Period in proportion to the loss of Fee on a
daily basis. For the avoidance of doubt, loss of 25% (twenty
five per cent) in collection of Fee as compared to the
Average Daily days shall entitle the Concessionaire to
extension of one day in the Concession Period.
*****
47.10 Entire Agreement
This Agreement and the Schedules together constitute a
complete and exclusive statement of the terms of the
agreement between the Parties on the subject hereof, and no
amendment or modification hereto shall be valid and
effective unless such modification or amendment is agreed
to in writing by the Parties and duly executed by persons
especially empowered in this behalf by the respective
Parties. All prior written or oral understandings, offers or
other communications of every kind pertaining to this
Agreement are abrogated and withdrawn. For the avoidance
of doubt, the Parties hereto agree that any obligations of the
Concessionaire arising from the Request for Qualification
or Request for Proposals, as the case may be, shall be
deemed to form part of this Agreement and treated as such.
36. The following position emerges, from various clauses of the
CA, as is also noted in the impugned Award:
(i) The Scheduled Four Laning Date, as per the CA, was 26
December 2017, whereafter Yedeshi was entitled to start
collecting toll from users of the Project Highway. The
concession period was for 26 years, to expire on 30 June 2041.
(ii) The CA required NHAI to acquire sufficient land for the
Project and to grant encumbrance free vacant possession andSignature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 29 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Right Of Way30 to Yedeshi to access the land, build the
highway, operate and maintain it, in lieu of toll collection
rights.
(iii) As per the CA, NHAI was to have acquired/procured
land on or before the Appointed Date. Prior to the said date,
Yedeshi was also required to have achieved financial closure
with its lenders and complied with other conditions precedents
such as obtaining applicable permissions and was to be in a
position to commence construction. On fulfillment of these
conditions precedent, the CA envisaged handing over of
unencumbered land by NHAI to Yedeshi on the Appointed
Date, and kicking off of the Project.
37. Yedeshi furnished performance security to NHAI on 24
November 2014 and submitted drafts of the financing agreements by
17 October 2014.
38. On 6 January 2015, Yedeshi wrote to NHAI, pointing out that
various Conditions Precedents as per Clause 4.1.2 of the CA, were yet
to be complied with by NHAI, which including making of ROW
available to Yedeshi. It was further pointed that the process envisaged
in Section 3G31 of the National Highways Act 195632 had, till then,
been achieved only in respect of 29.18% of the Project land.
30
ROW
31
3-G. Determination of amount payable as compensation. –
(1) Where any land is acquired under this Act, there shall be paid an amount which shall be
determined by an order of the competent authority.
(2) Where the right of user or any right in the nature of an easement on, any land is acquired
under this Act, there shall be paid an amount to the owner and any other person whose right of
enjoyment in that land has been affected in any manner whatsoever by reason of such acquisition an
Signature Not Verified Signature Not Verified
amount calculated at ten per cent, of the amount determined under sub-section (1), for that land.
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 30 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
39. NHAI did not respond to this letter.
40. Yedeshi, thereafter, wrote to NHAI on 30 January 2015,
reiterating the above defaults on NHAI’s part and pointing out that,
though the Project debt had been sanctioned by IDBI Bank Ltd., the
lead banker, the Senior lenders of Yedeshi were reluctant to execute
financing agreements and declare financial close till the Conditions
Precedent were complied with by NHAI. As such, it was alleged that
delay in achieving financial close was owing to reasons attributable to
NHAI and that, therefore, no damages were payable by Yedeshi in
terms of Clause 24.1 of the CA.
41. NHAI did not respond to this letter either.
42. Subsequently, financial agreements were executed by the Senior
Lenders of Yedeshi and, on 16 March 2015, financial close was
(3) Before proceeding to determine the amount under sub-section (1) or sub-section (2), the
competent authority shall give a public notice published in two local newspapers, one of which will
be in a vernacular language inviting claims from all persons interested in the land to be acquired.
(4) Such notice shall state the particulars of the land and shall require all persons interested in
such land to appear in person or by an agent or by a legal practitioner referred to in sub-section (2)
of Section 3-C, before the competent authority, at a time and place and to state the nature of their
respective interest in such land.
(5) If the amount determined by the competent authority under sub-section (1) or sub-section
(2) is not acceptable to either of the parties, the amount shall, on an application by either of the
parties, be determined by the arbitrator to be appointed by the Central Government–
(6) Subject to the provisions of this Act, the provisions of the Arbitration and Conciliation
Act, 1996 (26 of 1996) shall apply to every arbitration under this Act.
(7) The competent authority or the arbitrator while determining the amount under sub-section
(1) or sub-section (5), as the case may be, shall take into consideration–
(a) the market value of the land on the date of publication of the notification under
Section 3-A;
(b) the damage, if any, sustained by the person interested at the time of taking
possession of the land, by reason of the severing of such land from other land;
(c) the damage, if any, sustained by the person interested at the time of taking
possession of the land, by reason of the acquisition injuriously affecting his other
immovable property in any manner, or his earnings;
(d) if, in consequences of the acquisition of the land, the person interested is
compelled to change his residence or place of business, the reasonable expenses, if any,
incidental to such change.
Signature Not Verified 32 Signature Not Verified ―the NHAI Act‖, hereinafter Digitally Signed Digitally Signed By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR Page 31 of 170 AN HARI SHANKAR Signing Signing Date:26.01.2025 Date:26.01.2025 22:25 22:24
obtained, as confirmed by NHAI vide letter dated 19 Mach 2015,
addressed to Yedeshi.
43. On 24 April 2015, Yedeshi wrote to NHAI, setting out the
status of completion, by Yedeshi, of the Conditions Precedent and
seeking declaration of an Appointed Date.
44. NHAI did not respond.
45. Thereafter, Yedeshi, vide letter dated 8 June 2015, addressed to
NHAI, recorded the agreement, of NHAI and Yedeshi, to mutually
waive off damages payable for delay in fulfilling Conditions
Precedent as per Clause 4.1.2 and 4.1.3 of the CA. The request for
declaration of appointed date was reiterated.
46. Pursuant thereto, NHAI, vide letter dated 29 June 2015,
addressed to Yedeshi, communicated the approval of the competent
authority for declaration of 1 July 2015 as the Appointed Date.
47. Consequent thereon, on 1 July 2015, NHAI and Yedeshi signed
a Memorandum of Inventory33 and Appendix in terms of Clause
10.3.1 of the CA, recording the status of the Project Site as on that
date. As per the MOI-I, the Project Site was bifurcated into 563.859
Hectares34 as the existing road and 683.99 Ha as land to be acquired,
by NHAI. It was also recorded, in the MOI-I, that notification, in
33
―the MOI-I‖ hereinafter
Signature Not Verified
34 Signature Not Verified
―Ha‖ hereinafter
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 32 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
terms of Section 3-D35 of the NH Act stood published in respect of
575.94 Ha, equivalent to 84.2% of the area.
48. A further MOI36 was communicated by Yedeshi to NHAI,
reflecting the status as on 30 September 2015, vide letter dated 13
October 2015. As per the MOI-II, the land, in respect of which Section
3D notification stood issued stood reduced to 953.044 Ha, equivalent
to 76.37 %. The MOI-II also recorded that compensation had been
paid, in terms of Section 3H37 of the NHAI Act only in respect of
166.56 Ha.
49. NHAI did not dispute this memorandum contemporaneously.
35
3-D.Declaration of acquisition. –
(1) Where no objection under sub-section (1) of Section 3-C has been made to the competent
authority within the period specified therein or where the competent authority has disallowed the
objection under subsection (2) of that section, the competent authority shall, as soon as may be,
submit a report accordingly to the Central Government and on receipt of such report, the Central
Government shall declare, by notification in the Official Gazette, that the land should be acquired
for the purpose or purposes mentioned in sub-section (1) of Section 3-A.
(2) On the publication of the declaration under sub-section (1), the land shall vest absolutely
in the Central Government free from all encumbrances.
(3) Where in respect of any land, a notification has been published under sub-section (1) of
Section 3-A for its acquisition but no declaration under sub-section (1) has been published within a
period of one year from the date of publication of that notification, the said notification shall cease
to have any effect:
Provided that in computing the said period of one year, the period or periods during
which any action or proceedings to be taken in pursuance of the notification issued under sub-
section (1) of Section 3-A is stayed by an order of a court shall be excluded.
(4) A declaration made by the Central Government under sub-section (1) shall not be called
in question in any court or by any other authority.
36
―the MOI-II‖ hereinafter
37
3-H. Deposit and payment of amount. –
(1) The amount determined under Section 3-G shall be deposited by the Central Government
in such manner as may be laid down by rules made in this behalf by that Government, with the
competent authority before taking possession of the land.
(2) As soon as may be after the amount has been deposited under sub-section (1), the
competent authority shall on behalf of the Central Government pay the amount to the person or
persons entitled thereto.
(3) Where several persons claim to be interested in the amount deposited under sub-section
(1), the competent authority shall determine the persons who in its opinion are entitled to receive
the amount payable to each of them
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 33 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
50. On 23 October 2015, Yedeshi, in terms of Article 12.1 of the
CA, read with Schedule G of the CA, submitted a detailed
construction schedule. As per this schedule, Yedeshi intended to
complete the entire construction and commence collection of toll
within 24 months from the Appointed Date i.e. by 30 June 2017. The
impugned Award notes that NHAI did not produce, even before the
Arbitral Tribunal, any evidence to show that, even on this date, NHAI
had refuted Yedeshi’s request to comply with the NHAI’s obligation
under Article 10 of the CA, which included grant of vacant access,
valid license and ROW of the Project Site to Yedeshi, or state that it
had complied with the said obligation and granted vacant
encumbrance free access to Yedeshi of the Project Site.
51. By 30 November 2015, Yedeshi had complied with Project
Milestone 1 and had expended 10% of the total Project cost. Project
Milestone 1 had been achieved before the date fixed by Article 12.4.2
of the CA, which was 180 days from the Appointed Date i.e., by 28
December 2015. The fact of achieving Project Milestone 1 before the
contractual cut-off date was communicated by Yedeshi to NHAI vide
letter dated 19 December 2015, supported by a certificate of its
Statutory Auditory dated 10 December 2015.
52. NHAI did not dispute this fact and, in fact, admitted it in its
Statement of Defence38 before the Arbitral Tribunal.
53. A third MOI39 was submitted by Yedeshi to NHAI, under letter
dated 24 February 2016, consequent on expiry of 237 days from the
Signature Not Verified
38 Signature Not Verified
―SOD‖ hereinafter
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 34 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Appointed Date on 22 February 2016. In the said MOI, it was pointed
out that, even till that date, only 30.07% of the Project Site,
corresponding to 70.22 km, in respect of which Section 3H
compliance was complete, had been made available for construction.
NHAI’s attention was invited to its contractual obligation to hand over
the entire land to Yedeshi on or before the expiry of 90 days from the
Appointed Date. It was pointed out that non-availability of the
unhindered/unencumbered land was adversely affecting the progress
of the Project. The MOI recorded that Section 3D compliance was
complete in respect of only 877.146 Ha, equivalent to 70.29 % of the
Project Site, and Section 3H compliance was yet awaited in respect of
478.341 Ha equivalent to 38.33% of the Project Site.
54. No contemporaneous document or record, refuting these facts,
was produced by NHAI before the Arbitral Tribunal.
55. A fourth MOI40 was submitted by Yedeshi to NHAI on 20 May
2016, after 320 days from the Appointed Date had expired on 18 May
2016. The MOI pointed out that, even as on that date, Section 3H
compliance had been completed only in respect of 44.79% of the area,
corresponding to 97.63 Kms and that 20.81% of the land was still
encumbered. NHAI’s contractual obligations to hand over the entire
land by the expiry of 90 days from the Appointed date was reiterated,
and it was again submitted that, owing to non-availability of
unencumbered and unhindered Project land, performance of the
Project was suffering. The MOI further recorded that, as per Section
39
―MOI-III‖ hereinafter
Signature Not Verified
40 Signature Not Verified
―MOI-IV‖ hereinafter
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 35 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
3D status, the total land available was 922.007 Ha, equivalent to
73.64% and that 813.651 Ha, equivalent to 64.99%, was Section 3H
compliant.
56. NHAI did not produce any contemporaneous document or
correspondence, refuting this position.
57. On 29 June 2016, i.e. on the 365th day from the Appointed Date,
Yedeshi achieved Project Milestone-2, by which date 45.71% of the
Project Cost, of ₹ 1452.243 crores, stood expended. Yedeshi informed
NHAI accordingly on 4 July 2015. The letter also intimated NHAI
that certain works could not be completed owing to reasons
attributable not to Yedeshi, but either to NHAI or to third parties.
58. NHAI sought the view of the IE in this regard, vide letter dated
6 July 2016.
59. The IE responded to NHAI vide two letters dated 25 July 2016,
the relevant paragraphs of which may be reproduced thus:
First letter dated 25 July 2016
―We were requested to examine/verify the details submitted by the
Concessionaire to ascertain the achievement of Mile Stone-2, the
Concessionaire has notified that he had achieved Project Mile
Stone-2 by expanding 45.71 % of total capital cost up to 29th June
2016 against Schedule date of 29.06.2016. In this regard it is
inform you that as per clause 3, Schedule-G of Concessionaire
Agreement the Project Mile Stone-2 shall occur on the date falling
on the 365th day from Appointed date and prior to the occurrence
of Project Mile Stone-2, Concessionaire shall commenced
construction of all bridges and expanded not less than of total
capital cost set forth in the Financial Package. Concessionaire
failing to commence the all bridges mentioned as per clause 3.2 of
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 36 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Schedule-G of CA, for this our Observations/Comments as
mentioned below:
1. Commencement of construction of all Bridges:
Construction of all bridges means Major, Minor bridges and all
structures should have been commenced, it means all Structures
such as Underpasses (VUP,PUP,CUP),Fly Over Bridges also to be
considered. The detail review of these structures with status is
tabulated in Annexure-‘A’.
i) Major Bridges: Commencement of all (5 nos) Major
Bridges taken place.
ii) Minor Bridges: Out of 50(MCW) + 9(SR) nos of
minor bridges, 41(MCW) + 2(SR) nos are commenced and
9(MCW) + 7(SR) nos could not be commenced due to Land
Acquisition problem.
iii) Vehicular Underpasses: Out of 15 nos of YUP, 12
nos are commenced and 3 nos could not be commenced due
to Land Acquisition problem.
iv) Pedestrian Underpass: Out of 16 nos of PUP, 8 nos
are commenced and 8 nos could not be commenced due to
Land Acquisition problem.
v) Cattle Underpass: Out of 2 nos of CUP, 1 no has
commenced and 1 no could not be commenced due to Land
Acquisition problem.
vi) Fly Over Bridges: Out of 5 nos of EO, 4 nos are
commenced and 1 no could not be commenced due to Land
Acquisition problem.
The Performance of this Mile Stone-2 is as per Original scope
mentioned as per Schedule-B of CA. The Items of COS are not
considered since same is not yet approved by Authority.
2. Total expenditure in Project till end ofMay-2016:
As per enclosed certificate of expenditure, duly certified by
statutory, Auditor MIs MKPS & Associates, Mumbai.
Concessionaire has expended total Rs.1,452.243 Crore which is
45.71 % of capital cost set forth in Financial Package submitted by
Concessionaire.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 37 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
As Concessionaire has achieved financial Mile Stone-2 and started
constructions of all bridges where ever land is available with them,
Concessionaire could not started the construction of Bridges where
ever there is land acquisition issues, which is beyond the control of
concessionaire.
In view of above, we recommend to accept and consider
achievement of Mile Stone-2 as concessionaire has full filled their
obligation financially & physically where ever land available with
them.‖
Second letter dated 25 July 2016
―As per enclosed certificate of expenditure, duly certified by
statutory, Auditor M/s MKPS & Associates, Mumbai.
Concessionaire has expended total Rs.1,452.243 Crore which is
45.71 % of capital cost set f01tl1 in Financial Package submitted
by Concessionaire.
As Concessionaire has achieved financial Mile Stone-2 and started
constructions of all bridges where ever land is available with them,
Concessionaire could not started the construction of Bridges where
ever there is land acquisition issues, which is beyond the control of
concessionaire.‖
In view of above, we recommend to accept and consider
achievement of Mile Stone-2 as concessionaire has full filled their
obligation financially & physically where ever land available with
them.‖
60. The above facts were admitted by NHAI in its SOD.
61. A fifth MOI41 was forwarded by Yedeshi to NHAI on 2
November 2016, after 472 days from the Appointed Date had expired
on 15 October 2016. As per this MOI, only 55.78% of the land,
corresponding to 105.5 Kms, was Section 3H compliant. The MOI
again reiterated NHAI’s contractual obligation to provide the entire
land to Yedeshi before the expiry of 90 days from the Appointed Date
Signature Not Verified
41 Signature Not Verified
―MOI-V‖ hereinafter
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 38 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
and again submitted that, owing to non-availability of unencumbered
land, the Project development was being affected. The MOI further
recorded that 972.186 Ha, equivalent to 77.26% of the Project Area
was Section 3D compliant and 916.124 Ha, equivalent to 72.80% of
the Project Area, was Section 3H compliant. NHAI did not produce
any contemporaneous document or correspondence refuting this
position. The SOD of NHAI also did not deal with this
communication. Nor did it clarify how much of vacant or
unencumbered land had been provided to Yedeshi by that date.
62. A Project Review Meeting was held on 15 December 2016. The
following details of the discussions during the said project meeting
and the decision taken thereon are relevant:
S. Issues Description Decision
No Taken/Remarks
.
3 Land 1. 1. IE to submit review
Acquisition and Concessionaire report on status &
review of status conveyed that ―Memorandum &
of status of Appendix‖ at the end
―Memorandum Memorandum of October 2016,
& Appendix" as Appendix at the submitted by
per Article 10 end of October Concessionaire.
of Concession 2016 was
Agreement. submitted by 2.Concessionaire,
Concessionaire with help of
on 02.11.2016. Authority, to follow
In earlier up with local
Progress Review administration to
Meeting dated resolve compensation
22.11.2016, it dispute.
was decided that
IE team shall 3. Authority to ensure
review / verify early resolution of
the status issues in NHAI - HQ
submitted by related LA work
Signature Not Verified Concessionaire. Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 39 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Review is still 4.Authority. through
pending. their Counselor to
expedite Court Case
2. for land in Dhotra
Concessionaire Village (Aurangabad
further pointed end of Chausala
out that apart Bypass)
from slow LA
activities, there 5. Concessionaire to
are some submit details of
corridor lengths additional land
where land is required for proper
acquired but construction of toll
locals are not plaza buildings.
allowing work
citing issues in
LA
award/compensa
tion. PD NHAI
Conveyed that
due to change in
some system at
NHAI-HQ, LA
process is
affected
presently but
same shall be
cleared at the
earliest. Also,
NHAI is helping
Concessionaire
to get help from
local
Administration
to clear land for
which
compensation is
paid but there
are cost dispute.
3.
Concessionaire
conveyed that
due to court case
pending since
long. land is not
available for
Signature Not Verified construction in Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 40 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Dhotra village,
near petrol
pump
Concessionaire
requested
Authority to
expedite court
case for final
discussion to
commence
construction
Work there
accordingly.
Authority
assured for
necessary
instruction to
their advocate to
expedite
court case.
4.
Concessionaire
conveyed that
for proper
construction
of toll plaza
building along
with all required
amenities,
some additional
land is required.
NHAI suggested
to
detail additional
land and prepare
documents to
initiate
procurement of
additional land.
6. Consideration of Concessionaire 1. IE to submit review
work requested for on submission of
under "Change confirmation of Concessionaire to
of Scope" "Change of consider construction
as per Article 16 Scope" as per of 02 HP culverts at
of provision in Gobindbari road
Signature Not Verified Concession Article 16 of crossing of Georai Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 41 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Agreement. Concession Bypass (near PUP)
Agreement, for for confirmation of
following works ―Change of Scope‖.
-
1. Construction 2. Construction of
of 02 Nos. HP Irrigation siphons, not
culvert at given in Schedule B,
crossing of shall be considered
Gobindbari road in" Change of Scope".
in Georai bypass Concessionaire to
(near PUP submit further details
location). of these siphons in
Concessionaire confirmation to
already Article 16 of
submitted it Concession
through Agreement.
letter for
consideration 3.Concessionaire to
under "Change submit estimate for
of Scope" as relocation of entry
same is not gate of "Khazana
mentioned in Well" in Pali Village
Scope of work beyond PROW, for
defined in consideration.
Schedule - B of
Concession
Agreement.
2. Construction
of some
siphonic
culverts of
irrigation
Departments
observed at site,
construction of
which are not
covered in
Scope of work
as per Schedule
B. Further, local
representative of
Irrigation Dept
.conveyed to
ensure
serviceability of
these siphones.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 42 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
3.
Concessionaire
conveyed that
entry gate of
"Khazana well"
in Pali village
need be
relocated.
Authority
suggested
Concessionaire
to submit
estimate for
same for
consideration.
Authority
confirms that all
the above work,
not covered in
Schedule S&C
of Concession
Agreement and
required to be
constructed as
per site
condition, are
covered under
"Change of
Scope" as per
provision in
Article 16 of
Concession
Agreement.
Concessionaire
is suggested to
submit further
details
pertaining to
subject.
8. Confirmation of Following work, 1.Authority confirmed
work under duly "Change of Scope", as
"Change of recommended per provision in
Scope" as per by IE to Article 16 of
Article 16 of consider Concession
Concession under "Change Agreement, for
Signature Not Verified Agreement. of Scope" as per subject work Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 43 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Article 16 of discussed in meeting
Concession and detailed under this
Agreement, was point in of this
discussed and minute.
Authority
confirmed
execution of 2. Concessionaire to
these work submit financial
under "Change implications for
of Scope" - provision of additional
vent both
1. Additional side of VUP in
vents in both Wadigodri (CA
side of VUP in design Ch. 232+927)
Wadigodri (CA as per Article 16 of
design Ch. Concession
232+927)- Agreement.
a. Additional 3. Flyover in
vent towards Shahgarh to be
Aurangabad side relocated without any
to begiven @ change in span
Km 233+031 arrangement (as
(near School provided in CA). No
gate, as per financial implication
letter No. 169 dt shall be considered for
06.12.2016 of such change in
IE). location of flyover.
b. Additional
vent towards
Solapur side to
be given at
suitable location
to avoid
modification of
Road Profile
already
reviewed by IE.
2. Relocation of
flyover in
Shahgarh from
Km
219+745(CA
design Ch.) to
Km 219+830
Signature Not Verified (CA design Ch.) Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 44 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
with same span
arrangement as
defined in CA.
13. Smaller
vent of Solapur
side of f1yover
to be placed in
front of Solapur
side gate of bus
stand in
Shagarh.
9. Approval of Concessionaire Drawings enlisted in
drawings submitted that it Annexure to this
submitted by is required to MOM is approved by
Concessionaire execute Authority and IE.
for work some of the
under ―Change items under Concessionaire to
of "Change of execute work
Scope‖ Scope" without accordingly.
waiting for
financial
approval of
same as per
directive in
Article 16 of
Concession
Agreement, to
avoid time over-
run of Project
Completion
Mile stones. For
this, drawings
being submitted
for work under
"Change of
Scope" need be
approved,
pending
financial
approval of
COS, to enable
Concessionaire
to proceed
construction
activities
accordingly and
Signature Not Verified to avoid any Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 45 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
rework on
account of
issues
in design.
Representatives
of IE and
Authority
agreed for same.
Concessionaire
presented details
of drawings
submitted by
Concessionaire
vide various
letters for works
under
"Change of
Scope". Same is
enclosed as
Annexure-1 of
this MOM for
ready reference.
IE conveyed
that same are
reviewed and
found in line
with
requirement and
can be approved
to proceed for
execution
accordingly.
Authority
confirmed
approval of all
drawings
enlisted in
―Annexure-1‖ of
this MOM and
suggested
Concessionaire
to execute work
accordingly.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 46 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Thus, NHAI acknowledged, during the said meeting, that various
issues, including acquisition of land, were still pending and that there
were also delays in providing approvals for the estimates provided by
Yedeshi.
63. Project Milestone 3 was achieved by Yedeshi on 31 May 2017
and communicated to NHAI on 30 June 2017, which was certified by
the IE, vide letter dated 4 July 2017 addressed to NHAI, thus:
―6. Concessionaire has incurred 73 .525% of the total capital
cost as against the required of70% as on 31.05.2017 as certified by
the Statutory Auditor M/s MKPS & Associates (Copy Enclosed).
7. The Schedule Date of Milestone-III is 10.04.2017,
however, Concessionaire has expended more than desired
expenditure of 70% as on 31.05.2017 which is within grace period
of 90 days as per Clause 12.4.2 of Concession Agreement.
8. As per detail enclosed by the Concessionaire vide letter no.
YABOT/C&SC/NHAI/2017/581 dated 19.04.2017 work of all
Project Facilities as specified in Schedule – C have been
commenced.
9. In view of above, the Independent Engineer hereby opined
that Project Milestone III has been achieved by the concessionaire
on date 31.05.2017 as per the provision set forth in the concession
Agreement.‖
64. On 16 June 2017, Yedeshi wrote to NHAI, setting out the
following status of acquisition of land in a tabular statement and
further asserting thus:
District Length Land to 3D 3G 3H % 3H
acquire compl- complet- complet-
eted ed ed
Kms Area in SQM
Osman- 40.7 136.39 110.66 17.66 9.61 7.02 %
Signature Not Verified
abad Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 47 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
District
Beed 78.5 317.77 260.30 80.26 38.70 12.18%
District
Jalna 33.3 91.02 82.78 59.32 - 0
District
Auran- 36.88 142.05 122.20 114.05 86.95 61.21%
gabad
District
Total of 189.38 687.23 575.94 271.28 135.26 19.68%
all
district
Post Appointed Date, the Concessionaire commenced construction
activities to complete project development in accordance to
Construction Plan submitted, with an expectation from the
Authority for completion of land acquisition within 90 days from
Appointed Date (i.e. upto28.09.2015), as per Sub-clause 10.3.4 of
the Concession Agreement, as detailed above.
However, Land acquisition is/has been delayed unexpectedly,
affecting construction progress in following manner –
1. Non-availability of land for construction work as
per construction plan.
2. Inadequate continuity of available construction
length, affecting machinery movement and restricting road
diversion etc.
3. Non-availability of land for construction of
structures, including minor bridges, flyovers, underpasses
and culverts.
4. Non-availability of land affecting adversely utility
relocation, in turn affecting road construction activities.
We wish to notify the Authority that due to the reasons detailed
above (unexpected delay in Land Acquisition), project construction
activities, as planned, has been hampered to the extent that
completion of balance work as on date is not possible within
planned / balance duration. In view of the above, the revision of
Project Four Laning Schedule is inevitable. Presently, we are
evaluating the effect of delays and preparing revised construction
schedule accordingly for your review and approval. The same shall
be submitted in due course.‖
65.
Signature Not Verified NHAI did not respond to this letter. Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 48 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
66. On 15 July 2017, Yedeshi wrote to NHAI, submitting, inter
alia, thus:
―The Concessionaire had commenced the work at site immediately
upon declaration of the Appointed Date by deploying adequate
resources i.e. plants, materials, manpower, machinery &Equipment
etc., with a target to complete the project much before the
scheduled date of completion so as to take advantage of early
tolling by a minimum period of 6 months.
When we entered at site for the execution of works immediately
after appointed date, it is noticed that even in the areas, where
disbursement of payment had been done for the land acquisition,
many of the land losers refused to allow construction work,
demanding higher compensation rates. In many cases, the
compensation was not paid for the buildings / structures and other
immovable properties, which were in existence in their land since
the valuation of these structures was missed out by the valuer
appointed by the Authority.
Apart from above, non-approval and/or delay in approval of
estimates for utility shifting added to the woes of the
Concessionaire. Due to this double blow, the work fronts were not
available in continuation but were in bits & pieces, hence, the
available resources could not be utilized to its capacity and
progress of works got affected badly.
In spite of the above mentioned difficulties, the Concessionaire
continued all the resources deployed i.e. plants, materials,
manpower, machinery & Equipment etc. since appointed date, with
a target to complete the project on the scheduled date of
completion considering that the Authority would fulfill their
obligations stipulated under Article 10 and other clauses of the
Concession Agreement to provide entire unhindered/unencumbered
land to Concessionaire within 90 days from the appointed date.
But, the Authority has entirely failed to fulfil their said obligations
in-spite of best efforts of Authority and all assistance given by the
Concessionaire to expedite the land acquisition. Since the land
acquisition and utility shifting got further delayed due to reasons
NOT at all attributable to the Concessionaire, the progress as was
targeted could not be achieved and hence it is essential to modify
the Scheduled Four Laning Date in accordance to the stipulations
of Schedule G of the Concession Agreement. Also, accordingly the
concession period of the project needs to be extended.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 49 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Mentioned below are the major reasons for delay in completion of
the project, which are solely attributable to the Authority, State
Government and third parties etc.
1. Slow Progress of Land Acquisition and disbursement of
Payment by the Authority Delays by 23 months as on end of
May’2017, Still continuingImmediately after the Appointed Date, the Concessionaire had
mobilized adequate resources and commenced the construction
activities at all the cleared lands made available by the Authority.
Unfortunately, during the execution, most of the land losers at
various stretches had virtually stopped the construction works
stating that NO work/ activity would be allowed by them in their
land until unless appropriate compensation is paid to them. Time
and again, these incidences were reported to the Authority and
Independent Engineer through letters as well as in meetings/site
visits held from time to time with a request to the Authority to
resolve the issues and expedite the land acquisition process and
disbursement of payment.
The following reasons having adverse affect on the land acquisition
process, causing exorbitant delay in Land acquisition –
a. Constant Delays in preparation of valuations of
properties i.e. structures, houses, shops, trees, water
structures etc. Despite clear instructions given by the
concerned Collectors& their senior officials to the
personnel involved in preparation of valuations.
b. Frequent Change of Competent Authority of Land
Acquisition (CALA): CALA were transferred very often in
all the Districts except Aurangabad, because of which there
have been considerable delays in process of land
acquisition.
c. Additional responsibility to CALA: The respective
CALA are having/had additional administrative
responsibilities, because of which they are most of the time
they are busy in administrative works in-spite of giving
much time for Land Acquisition activities, resulted
considerable delay in process of land acquisition. Also,
during elections of various bodies of the state Government,
these CALA were exclusively given the election duties
leading to further delay in LA process.
d. Delay in publications of 3A & 3D in Gazette
Signature Not Verified
notifications: Publications of many notifications (“3A” and Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 50 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
“3D”) delayed considerably, affecting Land Acquisition
Process. Further, there have been significant delays in
approval of awards and deposition of compensation
amount. This issues have been raised with the CALA in
various meetings and requested Authority to expedite the
approvals.
e. Revision in preparation of award due to
enforcement of New Act: One of the main causes, which
have adversely affected the process of Land Acquisition
after “Appointed Date” of the Project, was introduction of
new NH Act for preparation of awards. Due to enforcement
of this act, Land owners to whom compensation was
already made as per the old act and who handed over their
land for construction activities started obstructing ongoing
construction activities demanding revision in award and for
receiving disbursement as per new Act. This process of
revision in award took considerable time, which
commenced after due clearance from NHAI through
circular.
f. Change/revision in banking process for
disbursement of compensation: Recently a Centralized land
acquisition bank account system is introduced by NHAI for
disbursement of compensation. All the amount, balance in
the account of CALA for disbursement of compensation
were returned and new centralized account is opened at
NHAI, HQ in another bank, through which disbursement of
compensation is being paid to the land losers after
declaration of awards and confirmation by CALA for
payment. Because of this, the disbursement of
compensation is delaying badly.
Kindly refer Clause 10.3.4 of Article 10 of the Concession
Agreement, which states that “the total land enlisted in the
Memorandum shall be handed over by Authority within 90 days
from the appointed date to Concessionaire and in the event of delay
in handing over of land, the Authority shall pay to the
Concessionaire damages in a sum calculated at the rate of Rs.
50(Rupees Fifty) per day for every 1000 sqm or part thereof
commencing from the 91st (Ninety first) day of the appointed date
and until such Right of Way is procured”.
The successive memorandums, appended with the appendices,
containing the availability of land, have been submitted from time
to time to the Authority as well as Independent Engineer by the
Concessionaire. Memorandum signed on Appointed Date and
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 51 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
revised Memorandums submitted by the Concessionaire on various
dates are enclosed herewith (Please refer Annexure -1).
All the necessary assistance has been / is being provided to the
Authority by the Concessionaire in pursuant to Clause 5.1.3 of
Article 5 of the Concession Agreement to expedite acquisition by
providing staff to the respective land acquisition officers, who have
been specially deployed for the purpose and are entirely working in
accordance to the instructions given by the respective CALA/
Authority.
In-spite of all the best Efforts by the Authority as well as the
Concessionaire, the disbursement of payments and land acquisition
process has delayed considerably, resulting in receiving
unhindered/unencumbered discontinuous land stretches. This
hampered the progress significantly and ultimately resulting delay
in Project completion schedule.
Even after expiry of about 23 months from the Appointed date (at
the end of May’2017), the Concessionaire is encountering several
issues due to Land Acquisition in various villages, which are still
hampering the work progress. It is essential to resolve these issues
by the Authority on TOP PRIORITY even for the Provisional
Completion of the project.
Issue related to slow progress of Land Acquisition activities were
conveyed / reminded to the Authority from time to time during
several meetings held at all levels. The same was conveyed during
the Progress Review Meeting held on dated 15.12.2016. (Copy of
the Minutes of Meeting enclosed under Annexure -2).
Even in the lands made available in Bits & Pieces, the
Concessionaire was not able to take up any work due to issues
pertaining to removal of Utility lines, Court Cases etc. including
resistance from land owners due to dispute in amount of award
declared Le. rate of evaluation, incomplete valuation of immovable
properties etc.‖
The letter further submitted a revised work schedule and also
intimated that extension of the Concession Period was required in
such circumstances.
67. NHAI forwarded the aforesaid communication dated 15 July
Signature Not Verified
2017 of Yedeshi to the IE for its comments. The IE, vide reply dated Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 52 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
4 September 2017, confirmed the schedule of the project completion
status, in terms of Schedule G to the CA:
Project Occurr- Details as Achieve- Remarks
Milest- ence on per Schedule ment
one G Status
th
MS-1 180 day 1. MS-1 Letter No.
from Commenced achieved. YABOT/C&
Appointed construction SC/NHAI/
Date i.e. 2015/138
27.12.2015 2. Expended dated
not less than 19.12.2015,
10% of total confirming
capital cost achievement
of MS-l is
submitted to
Authority
MS-2 365th day 1. MS-2 Letter No. Y
from Commenced achieved. ABOT/C&S
Appointed construction C/NHAI/
Date i.e. of all bridges 2016/315
29.06.2016 wherever dated
land acquired 04.07.2016,
for confirming
construction achievement
work. of MS-2 is
submitted to
2. Expended Authority.
not less than
35% of total IE
capital cost recommend-
ed vide letter
no SAICPL-
DCSPL/NHA
I/ IE/NH-
211/2016/057
Dt. 25.07.16
MS-3 650th day 1. MS-3 Letter No. Y
from Commenced achieved ABOT/C&S
Appointed construction within C/NHAI/
Date i.e. of project curing 2017/622
10.04.2017 facilities period dated
19.06.2017,
2. Expended confirming
not less than achievement
Signature Not Verified 70% of total of MS-3 is Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 53 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
capital cost submitted to
Authority. IE
confirmed
achievement
of MS-3 vide
letter No-
SAICPL -
DCSPL/NHA
I/IE/NH-
211/2017/370
dated
04.07.2017
Schedu 910th day Completed 4- Under Concessiona-
-led 4- from Laning progress ire has
Lane Appointed submitted
date Date i.e. request for
26.12.2017 Extension of
Time.
The communication further clarified that, despite best efforts by
NHAI and Yedeshi, the land acquisition process had been delayed,
and desired physical progress could not be achieved on account of
constant delays in valuation of properties despite clear instructions
given to the concerned collectors and senior officials, frequent change
of the Competent Authority Of Land Acquisition42, additional
administrative responsibilities cast on the CALA, delay in
publications of Section 3A and 3D notifications, revision in the
manner of preparation of the awards relating to land acquisition and
change/revision in the process followed by the banks for disbursement
of compensation. Besides, the communication also noted that there
were still hinderances available at the site and that, by the end of
August 2017, compensation was yet to be disbursed in respect of 46
Kms. of the acquired land. As a result, the letter concluded that, of the
total project length, 62.85 Kms. out of 189 Kms., constituting 24.34%
Signature Not Verified
42 Signature Not Verified
―CALA‖ hereinafter
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 54 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
of the project road, was not available for construction even by the end
of August 2017. It was noted that Yedeshi had, in these circumstances,
sought Extension of Time43 to complete the Project and had submitted
a revised work programme under letter dated 15 July 2017, envisaging
completion of the Project by June 2019, subject to providing of
unhindered and unencumbered land by NHAI and resolution of all
issues by 30 November 2017. After considering all facts and taking
into account Clauses 10.3.2, 10.3.4, 10.4, 12.4.1 and 12.4.2 as well as
Clause 6 of Schedule G of the CA, the IE recommended thus:
―Considering the all above, the Independent Engineer has reviewed
the submission of the Concessionaire and evaluated the delay on
the basis of hindered length and available length for the work with
the Concessionaire on weighted average basis as explained in
Annexure-B. The delay days of 458 days has been worked out at
Annexure-B on weighted average basis due to delay in handing
over the land. The balance works involve PUP/CUP/Major
Bridges/VUP/Box Culverts and Road works along the whole
stretch. Service road / Toll Plaza works, Electrical and other
facilities works also to be completed.
As per NHAI policy matters Circular-Technical No. 11
04/218/2007-Admn dated 19.01.2016, one year time period may
be considered as a reasonable period for construction of the
balance activities including minor structure like PUP. The
aforesaid period may be increased by another 3 months in case of
Rainy season falls in the extended delay period. Accordingly,
Independent Engineer is also of the opinion that one year
construction may be extended for complete the balance work
assuming that balance land will be handed over to the
Concessionaire by 30.09.2017.
In view of above, the Independent Engineer hereby
recommends for approval of Extension of Time for 365 days
i.e. upto 26th Dec,2018 as per Article 12 and Schedule-G of
Concession Agreement to the Concessionaire for approval by
the Competent Authority of NHAI.
Accordingly the revised completion date shall be‖
Signature Not Verified
43 Signature Not Verified
―EOT‖ hereinafter
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 55 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Milestone Scheduled Delay Days Revised
Four-Laning completion of
date as per Four Laning date
Scheduled-G
Completion 26th Dec, 2017 365 days 26th Dec, 2018‖
Four-Laning
Date
(Emphasis in original)
68. The Project Director, NHAI, vide letter dated 4 October 2017,
addressed to its Regional Officer, with a copy marked to Yedeshi,
accepted, in toto, the contents of the letter dated 20 July 2017 of the IE
and, based thereon, recommended for approval of extension of EOT of
365 days to Yedeshi, i.e. up to 26 December 2018, as per Article 2
read with Schedule G to the CA, for approval by the Competent
Authority in the NHAI.
69. However, the Deputy General Manager44, NHAI, vide response
dated 21 December 2017 addressed to the Project Director, approved
EOT only for six months. The relevant part of the letter read thus:
―Sir,
Please refer above cited letter recommending for granting
Extension for 365 days to Schedule Four laning Date in pursuant to
Article 12 of Schedule G of the Concession Agreement work
mentioned in the subject matter.
2. The above cited proposal has been examined in this office
and following observations are brought out –
(i) The position of Land Acquisition at the time of
appointed date on strip chart.
Signature Not Verified
44 Signature Not Verified
―DGM‖ hereinafter
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 56 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
(ii) Land position at the time of initiating EOT proposal on
strip chart showing work affected with specific structures.
(iii) Specific comments on works affected by Land
Acquisition/ flyover/VUP/ M.B./ROB affected.
(iv) The clear cut recommendation in light of provision of
circular dated 19.01.2016 from IR and PD.
As per present recommendation the EOT qualifies only for
6 months.
In this regard, it is requested to furnish the proper
justification / detailed comments to this office for process the
proposal.‖
70. The Project Director, NHAI, forwarded the aforesaid response
dated 21 December 2017, of the DGM to the IE under cover of a letter
dated 27 December 2017, with a copy marked to Yedeshi. Yedeshi
responded vide letter dated 29 December 2017. This response was
forwarded by NHAI to the IE under cover of a letter dated 8 January
2018. The IE, vide response dated 10 January 2018 addressed to the
Project Director, NHAI, observed that it had already furnished its
clear-cut recommendations, after accepting and confirming the stand
taken by Yedeshi. The recommendation for grant of EOT for 365
days was, therefore, reiterated. Accepting this recommendation of the
IE, the Project Director, NHAI, wrote to the Regional Director, NHAI,
once again recommending grant of EOT of 365 days.
71. However, despite this, as no final approval for grant of EOT of
365 days was accorded by the NHAI, Yedeshi wrote to the Project
Director, NHAI, on 25 July 2018, as under:
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 57 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
―Dear Sir,
Further to the letters referred above, we would like to state that till
date we did not receive any decision on the extension of time
(EOT) for the project highway.
As Scheduled four laning date was 26.12.2017, our Board of
Directors & Lenders are insisting to get the approved EOT letters
of the Authority for further disbursement of payment for the
project.
In view of the same, it is requested that necessary comfort letter to
our Board of Directors may be issued intimating expected date &
time of EOT.
Thanking you and assuring our best services.‖
72. NHAI responded on the very same day, i.e. 25 July 2018, to
Yedeshi, thus:
―Sirs,
This has reference to above regarding Granting ‘Extension
to Scheduled Four Laning Date’ in pursuant to Article 12 and
Schedule G of Concession Agreement for four laning of Yedeshi to
Aurangabad section of NH-211. The Concessionaire has requested
for a comfort letter vide letter under ref. (v) dt.25/07/2018 that is to
be addressed to the Board of Directors intimating expected date &
time of Extension of Time (EoT).
2. In this regard, it is to inform that, the scheduled four laning
date of the project was 26/12/2017, but the completion could not be
achieved on the scheduled date. The proposal for extension of time
has been proposed & recommended by IE of the project which has
been further endorsed & recommended by PIU & RO of NHAI for
the approval of EoT of 1 Year (365 days) i.e. up to 26/12/2018 in
accordance with the Policy Matter Circular Technical
1104/218/2007-Admn dated 19/01/2016. The proposal is under
consideration @ NHAI HQ which is underway for scrutiny &
compliance.
3. This comfort letter is issued on specific request of the
Concessionaire i.e. M/s Yedshi Aurangabad Tollway Pvt. Ltd.
Signature Not Verified
This is for your information.‖ Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 58 of 170 AN HARI SHANKAR
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Date:26.01.2025 22:25 22:24
73. Apparently, thereafter, the NHAI Headquarters insisted that
Yedeshi submitted an undertaking that it would not raise any claim on
the Project cost due to shifting of Project Milestone-4, i.e. the
Scheduled Four Laning Date45, subject to grant of EOT as sought by
Yedeshi. Mr. Rajiv Ranjan Shrivastava appended his signature to the
said undertaking, on behalf of Yedeshi on 27 August 2018.
74. The 359th Meeting of the Executive Committee46 of the NHAI
was convened on 5 September 2018. The minutes of the said meeting
disclose the following admissions and acknowledgements, in the
various agenda items for consideration:
(a) Except for the condition relating to applicable permits,
which had been fulfilled in part, Yedeshi had virtually complied
with all the Conditions Precedent. As against this, NHAI had
not complied with any of the Conditions Precedent with which
it was required to be compliant.
(b) Yedeshi had achieved Milestones 1, 2 and 3 within the
scheduled period. The scheduled completion date for 4-laning
of the Project Highway had been delayed owing to factors such
as delays in preparation of valuation of properties, frequent
change of the CALA, delays in publications of the Section 3A
and Section 3D notifications in the Gazette, revision and
preparation of the awards relating to acquisition of land and45
―SFLD‖ hereinafter
Signature Not Verified
46 Signature Not Verified
―EC‖ hereinafter
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 59 of 170 AN HARI SHANKAR
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change/revision in the banking process for disbursement.
(c) The issue of grant of EOT had been discussed by the EC
in its 353rd Meeting held on 24 July 2018. The Technical
Division of NHAI was directed to work out the EOT based on
stretches in which execution was delayed on account of NHAI’s
default.
(d) By 30 July 2018, 181 km alone had been made available
out of 189 km. Of the aforesaid 181 km, there were
hinderances or land acquisition issues in respect of at least 25
km. Thus, as per the agenda for the 353rd meeting, even as late
as on 30 July 2018, by which time more than three years from
the Appointed Date had lapsed, unhindered land provided to
Yedeshi for construction was only around 156 km.
(e) The agenda also noted the comments of the Technical
Division that, even after the lapse of the SFLD, NHAI had
failed in its obligation to provide 80% land to Yedeshi, thereby
entitling Yedeshi to claim compensation. The Technical
Division had also recommended grant of EOT of 365 days. The
comments of the Technical Division, therefore, clearly
indicated that NHAI had failed to meet its contractual
obligations under the CA to hand over vacant unencumbered
land to Yedeshi.
75. However, the EC, while discussing the agenda and approving
the proposal for grant of EOT of 365 days to Yedeshi, caveated it with
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 60 of 170 AN HARI SHANKAR
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Date:26.01.2025 22:25 22:24
a condition that both parties should waive off any claims attributable
to delay.
76. On 6 December 2018, NHAI wrote to Yedeshi, confirming the
approval of the Comptent Authority for grant of EOT of 365 days in
the following terms:
―Sir,
Please refer to above mentioned letters w.r.t. proposal of
Extension of Time (EOT)/shifting of Scheduled Four- Laning Date
Extension of Time (EQT). In this regard, it is to inform that
Competent Authority has accepted the proposal of EOT for 365
days (i.e. upto 26.12.2018) for Scheduled Four – Laning Date,
subject to following condition:
(i) The Scheduled Four – Laning Date has been
extended by 365 days and revised Scheduled Four- Laning
Date shall be 26.12.2018.
(ii) Authority and the Concessionaire shall waive off all
delays on both sides, whatever they be, and the same would
not lead to any claims whatsoever from either side on
account of EOT for Scheduled Four- Laning Date.
(iii) EOT for Scheduled Four – Laning Date, does not
automatically lead to extension of the Concession Period by
corresponding period.
2. You are requested to sign the Supplementary Agreement
(Copy enclosed) in this regard.
3. You are requested to take necessary action, accordingly.‖
Annexed to the letter was a Supplementary Agreement recording the
aforesaid terms.
77. The Supplementary Agreement was, however, never signed by
Yedeshi.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 61 of 170 AN HARI SHANKAR
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Date:26.01.2025 22:25 22:24
78. On 17 December 2018, Yedeshi again wrote to NHAI, alleging
that the entire land for the Project had not yet been handed over to it,
despite the period of 365 days, for which EOT had been granted,
being due to expire on 26 December 2018. This, it was submitted,
necessitated further revision of the Project Completion Date.
79. On 26 December 2018, Yedeshi again applied for EOT of 196
days beyond the grant of the first EOT, thereby seeking extension
uptil 10 July 2019 for completion of the remaining work subject to
unencumbered hinderance free right of way being made available by
NHAI. The following paragraphs from the said communication are
relevant:
―…Vide our letter No. 1051 (at Ref- 8 above), we notified your
good office that due to the issues not attributable to the
Concessionaire, Project completion could not be achieved in the
extended period of 365 days, i.e. latest by 26.12.2018. Major
reasons, forcing further delay of the “Extended 4-Laning Date” are
as below-
1. Incomplete or delayed Land procurement required
for project development.
2. Intermittent disturbance to ongoing construction
work in acquired land by villagers due to non-resolution of
their grievances in land under acquisition.
As on 15.12.2018, Status of work completion are tabulated in
Table -1 (Summary Progress of Highway Work as on 15.12.2018)
and Table – 2 (Summary Progress of Structural Work as on
15.12.2018), for your perusal. Strip chart showing status of Project
Construction Activities is annexed as Annexure – 1 for ready
reference.
Details of locations where construction work are not completed /
cannot be completed within the extended period of construction
(i.e. upto 26.12.2018) are tabulated in Table – 3 (based on
Signature Not Verified Signature Not Verified
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Page 62 of 170 AN HARI SHANKAR
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Date:26.01.2025 22:25 22:24
completion of DBM layer) along with reasons causing
noncompletion.
From the details in the table, it is clear that the work is not
completed at locations where either land procurement is not done,
or delayed (giving less construction time) or hindered by locals
citing their grievances towards compensation amount.‖
The request for EOT of 196 days, it was clarified, was subject to
NHAI ensuring that the required access, license and ROW was
provided to Yedeshi latest by 30 December 2018 and an assurance that
there would be no hinderances on the site.
80. The aforesaid request of Yedeshi was forwarded by NHAI to
the IE. The IE, vide response dated 13 February 2019, opined and
approved as under:
―4. Initial “Extension of Time” approved:
4.1. Envisaging that construction work can’t be completed
within the period as stipulated in Article 12 & Schedule G of the
Concession Agreement, for the reason not attributable to the
Concessionaire, vide letter No. 638 dated 15.07.2017, the
Concessionaire had applied for “Extension of Time” of 547 days
(18 Months) for completion of balance work, substantiating his
application with reasons causing delay.
4.2. The application of the Concessionaire was reviewed by the
Independent Engineer, and, after verifying sufficiency of the
reasons of delay submitted by the Concessionaire, vide his letter
No. 6467 dated 04.09.2017, the Independent Engineer, based on
the merit of the case, had recommended for “Extension of the time”
for 01 (one) year, to be increased for further 03 (three) months in
case rainy season falls within the “EOT period”.
4.3. Recommendation of the Independent Engineer was further
reviewed by the Authority and, after satisfying with the application
of the Concessionaire & review (and recommendation) of the
Independent Engineer, the Authority, vide his letter no. 2330 dated
06.12.2018, approved an “Extension of Time” for 01 (one) year,
Signature Not Verified ending on 26.12.2018 Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 63 of 170 AN HARI SHANKAR
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Date:26.01.2025 22:25 22:24
5. Application of the Concessionaire for further
“Extension of Time” beyond earlier approved “EOT” of 01
(one) years – The initial “EOT” of 01 (one) year was based on
assumption that all the land required for Project construction shall
be made available to the Concessionaire latest by 30.09.2017.
However, procurement of required land was / is delayed due to
various reasons, not attributable to the Concessionaire, and, in spite
of best efforts by the Authority and the Concessionaire, there are
following various reasons due to which land acquisition process
have been delayed and desired physical progress could not be
achieved.
5.1. Constant Delays in preparation of valuations of
properties i.e. structures, houses, shops, trees, water structures etc.
Despite clear instructions given by the concerned Collectors &
their senior officials to the personnel involved in preparation of
valuations.
5.2. Frequent Change of Competent Authority of Land
Acquisition (CALA): CALA were transferred very often in all the
Districts except Aurangabad, which resulted considerable delays in
process of land acquisition.
5.3. Additional responsibility to CALA: The respective
CALA are having/had additional administrative responsibilities,
keeping them most of the time busy in administrative works in-
spite of giving much time for Land Acquisition activities, which
has resulted considerable delays in process of land acquisition.
Also, during elections of various bodies of the state Government,
these CALA were exclusively given the election duties leading to
further delays in LA process.
5.4. Delay in publications of 3A & 3D in Gazette
notifications: Publications of many notifications (“3A” and “3D”)
delayed considerably, affecting Land Acquisition Process. Further,
there have been significant delays in approval of awards and
deposition of compensation amount. These issues have been raised
with the CALA in various meetings and requested Authority to
expedite the approvals.
5.5. Revision in preparation of awards due to enforcement
of New Act: One of the main causes, which have adversely
affected the process of Land Acquisition after “Appointed Date” of
the Project, was introduction of new NH Act for preparation of
awards. Due to enforcement of this act, Land owners to whom
compensation was already made as per the old act and who handed
Signature Not Verified
over their land for construction activities started obstructing Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 64 of 170 AN HARI SHANKAR
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ongoing construction activities demanding revision in award and
for receiving disbursement as per new Act. This process of revision
in award took considerable time, which commenced after due
clearance from NHAI through circular.
5.6. Change / revision in banking process for disbursement
of compensation: Recently a Centralized land acquisition bank
account system is introduced by NHAI for disbursement of
compensation. All the amount, balance in the account of CALA for
disbursement of compensation were returned and new centralized
account is opened at NHAI, HQ in another bank, through which
disbursement of compensation is being paid to the land losers after
declaration of awards and confirmation by CALA for payment.
Because of this, the disbursement of compensation is delaying
badly.
6. Based on above detailed issues, summarized details of
land availability for construction work at the end of December
2018 is as below-
*****
From the above table, it is clear that
a) Disbursement of compensation is still balance for 64.46
Hect (2.163 Kms) out of 714.71 Hect (189.023 Kms).
b) Due to various disputes of awards / compensation, 6.00
Kms of land for which disbursement is completed, is not available
for construction work.
As per above, total project length, not available for construction at
the end of December 2018 is 8.163 Kms out of 189.023 Kms of
project corridor length.
*****
8. Application of the Concessionaire for “further
Extension of Time” Considering the all above facts, and
envisaging that the balance work can’t be completed in the
“Approved Extension of Time of 365 days”, the Concessionaire
(M/s Yedeshi Aurangabad Tollways Private Limited) has requested
for granting further Extension of Scheduled Completion Date in
Pursuant to Article 12 and Schedule G of Concession Agreement
up to 10.07.2019 vide letter No. YABOT/EOT/NHAI/2018/1059
dated 26.12.2018, subject to that unhindered / unencumbered land
as well as all issues shall be resolved by Authority by end of
Signature Not Verified
31.12.2018. Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 65 of 170 AN HARI SHANKAR
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*****
Considering nature of balance construction work (VUP, PUP
Service Roads, Main Carriageway with RE wall, RCC drains along
service roads etc.), construction completion proposal of 196 days,
submitted by the Concessionaire is reasonable and hence
recommended for consideration. This is in line with NHAI policy
matters Circular-Technical No. 1104/218/2007-Admin dated
19.01.2016.
In view of above, the Independent Engineer hereby recommends
for approval of further Extension of Time for 196 days i.e. up to
10.07.2019 as per Article 12 and Schedule-G of Concession
Agreement in the bona fide interest of project completion to the
Concessionaire for approval by the Competent Authority of NHAI.
Accordingly the revised completion date shall be;
Milestone Scheduled EOT-I EOT-II Revised
Four-Laning Already proposed Completi-
date as per approved Now on of
Scheduled-G Four
Laning
Date
Construc 26th Dec 2017 365 days 196 days 10th July
-tion (upto 25th 2019
Completi Dec-
-on - 2018)
Four
Laning
Date
Thanking you and assuring our best attention at all times.‖
In its SOD, NHAI sought to contend that the IE had recommended
grant of EOT of 196 days only in the interest of timely completion of
the Project and keeping in mind the fact that Yedeshi was significantly
way behind schedule and was unable to utilize the land made available
to it.
81. In the meanwhile, Yedeshi continued to work on the Project.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 66 of 170 AN HARI SHANKAR
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By mid-February, it had completed more than 75% of the Project
construction work. On 16 Febraury 2019, Yedeshi applied to the IE in
terms of Article 14 of the CA for grant of Provisional Completion
Certificate47 for a length of 161.72 Kms. and requested the IE to
conduct the necessary tests in that regard.
82. In terms of Article 14 of the CA, the requisite tests were
conducted by the IE as per Schedule I of the CA in the presence of the
representatives of NHAI and Yedeshi. The conducting of the tests and
the fact that the work done by Yedeshi was found to be as per the
specifications and standards envisaged in the CA were confirmed by
the IE vide letter dated 6 March 2019, the relevant paragraphs of
which may be reproduced thus:
―3. The Concessionaire has already achieved Project
Milestone-I, Project Milestone-II and Project Milestone-III. The
details of milestone are described as below.
Mile Stone Scheduled date Actual/ Revised Date
Mile Stone I 27.12.2015 19.12.2015
Mile Stone II 29.06.2016 04.07.2016
Mile Stone III 10.04.2017 31.05.2017
*****
4. The Concessionaire has already completed MCW of four
laning for 161.870 Km. length out of the entire Project length of
189.023 Km except the works listed in Punch List, Appendix-III.
As per scope of project as specified in Schedule -B, together with
provision for Project Facilities as specified in Schedule G and in
conformity with the Specification and Standards set forth in
schedule-D. The completed length of 161.870 km forms 85.65% of
the Total Project Length of 189.023 Km. against minimum length
of 75% as specified in Clause 14.3.2 of Concession Agreement.
The tests required as per Schedule-I of the Concession Agreement
have been conducted and witnessed by the representatives of
Signature Not Verified
47 Signature Not Verified
―PCC‖ hereinafter
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 67 of 170 AN HARI SHANKAR
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Concessionaire, Authority and Independent Engineer and found
meeting the Specifications and Standards, have been deliberated in
the following Para.
5. Details of Tests:
Details of the tests conducted thereupon in accordance with Article
14, clause 14.1 sub clause 14.1.2 ‘Test’ (Schedule-I) of the
Concession Agreement, are as follows,5.1 Visual and Physical Test:
The representative of NHAI, Concessionaire and Independent
Engineer has carried out the visual and physical check of the
Project Highway and all works and equipment, except the items
mentioned in Punch List Appendix-Ill, are found conforming the
provisions of the Concession Agreement. The results of tests are
enclosed at Appendix V. Annexure-I.5.2 Test Drive:
The representative of Independent Engineer along with the
Authority’s representative and Concessionaire’s representative have
taken the Test drive of the Project Highway stretch under
consideration by a Car and a fully loaded Truck. The quality of
service was found to be satisfactory and conforming to the
provision of the Concession Agreement.
The results of the tests are enclosed at Appendix-V, Annexnre-II.
5.3 Ridding Quality Test:
Ridding Quality Test of each lane of the carriageway was jointly
conducted by the representative of IE/NHAI, Independent Engineer
and the Concessionaire with Bump Integrator. The unevenness
index of the Pavement was found to be within Allowable Tolerance
limit (1800mm/Km). the result of the Bump Integrator test are
enclosed at Appendix-V, Annexure-III.
5.4 Pavement Composition Test:
The thickness and composition of the pavement layers were
checked jointly by the representative of NHAI, Independent
Engineer and the Concessionaire by digging pits at an interval of 5
Km in each direction of travel randomly selected in each stretch of
the Project Highway i.e. 161.870 km (70nos) locations in total on
various dates from 23.02.2019 to 04.03.2019. The crust thickens at
test locations were to be as per Concessionaire’s design proposal.
Signature Not Verified The test results are enclosed at Appendix-V, Annexure-IV. Signature Not Verified Digitally Signed Digitally Signed By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR Page 68 of 170 AN HARI SHANKAR Signing Signing Date:26.01.2025 Date:26.01.2025 22:25 22:24 5.5 Cross Section Test:
The cross sections of the project Highway were checked jointly by
the representative of NHAI, Independent Engineer and the
Concessionaire through physical measurement of the dimensions at
an interval of 1 km for the Bridge portion, one spot has been
selected randomly in each span of the bridge. The measurements of
all the cross sections were found to be complying with standard
design requirements. The Test results are enclosed at Appendix-V,
Annexure-V5.6 Structural Test for Bridges:
All new bridges at different locations were tested tor Ultrasonic
Pulse Velocity Test and Rebound Hammers Test by the Third Party
agency, M/s Concrete Structural Forensic Consultants Bangalore
(NAHL approved Laboratory) in the presence of the Independent
Engineer, NHAl and the Concessionaire in accordance with the
procedure described in Special Report No.17:1996 of the IRC
Highway Research Board on Non-destructive Testing Techniques
and IS 13311 (Part 2):1992 at two spots in every span chosen
randomly by the Independent Engineer. The results were found to
be complying with design requirements. The test result are
enclosed at Appendix V, Annexure-VI.
5.7 Load test of a Bridge Superstructure:
Load test over the spans of length more or equal to 15 meter length
have been conducted by the Third parity agency M/s Concrete
Structural Forensic Consultants Bangalore before the structures
were put into operation and successfully completed along with
representatives with information to the Authority, Independent
Engineer is considering these Test result as part of test under
Schedule-I the result were found to be complying with standard
design requirements. The test results are enclosed at Appendix V,
Annexure-VII.
5.8 Environmental Audit:
The Independent Engineer has carried out: the Environmental
Audit of the Project Highway on 28/02/2019. The Independent
Engineer report is attached as Appendix-VI. The Concessionaire
has also submitted the Environmental Monitoring Test report
videletter No. YABOT /ENV //IE/2019/1113 dated 26.02.2019.
Further, the Concessionaire has submitted undertaking vide letter
no. 1119 dated 03.03.2019 that ‘”we have paid all the necessary
Signature Not Verified
royalty and mining charges for the material incorporated in Signature Not Verified
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permanent work as per scope of work of the Concession Agreement
for the captioned project. We also undertake to pay any amount
outstanding on this account, if any.”
Concessionaire has also submitted undertaking vide letter no. 1119
dated 03.03.2019 that “we are paying all labour cess on our
agreement works as and when it is required and there are no dues
on this account.”
5. 9 Safety Review
The Authority, NHAI vide letter no. NHAl/RSC/Misc/2018/4434
dated 14/02/2019 has appointed “Road Safety Expert’; Kothi
No.6, Sector-10, Dwarka, New Delhi -110075 as Safety
Consultant to conduct the Safety Audit as per requirement of
Schedule -‘L’ for project Yedeshi (Km 100) to Aurangabad (Km
290.200) of NH-211. Accordingly Deputy Team Leader and TT
Expert of “Road Safety Expert” have visited the site on 19.02.2019
and 20.02.2019 along with representative from the Authority,
Independent Engineer and the Concessionaire.
Road Safety Expert has submitted the observation vide email dated
26.02.2019. Concessionaire vide letter No. Camp-Aurangabad
dated 28/02/2019 has submitted compliance report on observations
made by the Road Safety Expert. The compliance report submitted
by the Concessionaire is under review by the “Road Safety
Expert”. Final report is awaited towards the safety and reliability of
the section proposed for PCOD from the “Road Safety Expert”.
Audit report and its compliance by the concessionaire are enclosed
as Appendix-IX.
However the Concessionaire has also submitted under taking vide
letter no. 1119 dated 03.03.2019 that “the Concessionaire wish to
confirm our adherence to all necessary safety norms as per
provision of contract Agreement required for safety and reliability
of the completed stretch. The necessary third party safety audit as
per the instructions of the Authority has already been conducted
and we do not find any non compliance on our part. However, we
wish to undertake that any outstanding issue brought to our notice
will be promptly attended by us”
5.10 Status of NCR is as per Appendix-VII: All NCR closed
with respect to compliance submitted by Concessionaire
satisfactorily.
5.11 Project Inventory for the section under consideration for
Signature Not Verified
Provisional Completion is attached as Appendix-XII. Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
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5.12 The Concessionaire has conducted all relevant and necessary
tests as provided in IRC codes, Manual and IS codes during the
construction of the Project Highway and has also given an
undertaking that “all necessary obligations required for
maintaining the Quality Assurance and Quality Control of Project
Highway have been duly complied by us and nothing is
outstanding.”\5.13 Independent Engineer solicited clarification and conducted
additional tests to arrive at satisfaction level before subn1itting his
recornn1endation as mentioned in above referred letters.
Independent Engineer has requested the Concessionaire to submit
various undertakings related to payments of royalty/cess, frequency
to test/methodology and safety audit compliance. Undertaking
submitted by the Concessionaire are placed at Appendix-VIII,
Annexure (1) to (6)
6. Punch List/Balance Work:
Tentative list of balance works under punch list which are to be
completed within 90 days from PCOD are listed in Appendix-3,
Annexure-1, however the same shall be updated/revised at the
time of issuing of PCOD.
The balance works which cannot be completed within 90 days
from PCOD due to delayed handing over of the land or non-
handing over of the land are listed in Appendix-3, Annexure-2.
7. Change of Scope:
Status of Change of Scope items are summarized below:
COS No. Description of Items Present Status/
Approval
COS-1 Construction of bridge across COS order
Bindusara river in Beed City received.
COS-2 Dismantling of Old bridge in COS notice yet to
Hirapur village at Ch. 191 be issued.
+200 of Corridor
COS-3 Various additional items over PIU submitted his
and above scope of work recommendation
defined in the Concession to RO for
Agreement. approval.
COS-4 Construction of Bandhara @ In principal
Ch. 282+339(CA Ch. 282 + approved.
700)
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
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COS-5 Further to above (COS- 1 to Estimate
4), Various additional items recommended by
over and above scope of work IE.
defined in the Concession
Agreement
*****
―10. The request of the Concessionaire to issue the Provisional
Certificate for the completed length of 161.870 Km of project
length forming 85.63% of the Total Project Length except the
works listed in Appendix-III (Punch list and balance works) may
be considered. Independent Engineer intends to issue Provisional
Certificate to the Concessionaire for the completed stretches.
11. As per NHAI, HQ letter No
NHAl/CGM/(CMC)/2015/75902 dated 21.12.2015 Para 5(ii)
Independent Engineer hereby notify his intention to issue
Provisional Certificate to the Concessionaire for the subject
highway except for work listed in Appendix-III subjected to
completion of work listed in Appendix-I, Annexure-III and
satisfactory final report by the Safety Consultant.
12. Further, it is requested to kindly inspect the Project
Highway and convey your observations on the proposal of
Independent Engineer to enable us to proceed with issue
Provisional Completion Certificate after completion of work listed
in Appendix – I, Annexure – III.
13. Draft Provisional Certificate is attached for your Kind
perusal as Appendix – II.‖
83. On 14 March 2019, Yedeshi wrote to the IE. In the said letter,
the fact that, pursuant to the IE’s recommendation dated 6 March
2019, the Project site was visited and examined by the IE and the
Project Director of NHAI was noted. After recording the status of the
work completed, the letter dated 14 March 2019 sought issuance of
PCC for 161.87 Kms.
84. The IE, vide letter dated 15 March 2019, addressed to Yedeshi,
with a copy marked to NHAI, issued a PCC with effect from 15 Signature Not Verified
Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 72 of 170 AN HARI SHANKAR
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Date:26.01.2025 22:25 22:24
March 2019 for the completed length of 161.87 Kms. of the Project
Highway in terms of Clause 14.3 of the CA. The letter clearly records
satisfactory results of the tests as per Schedule I to the CA.
85. On 3 May 2019, Yedeshi wrote to NHAI, forwarding, with the
letter, the PCC issued on 15 March 2019 as well as the fact that
Yedeshi had sought extension of time till 10 July 2019 subject to
resolution of issues relating to availability of the Project land on or
before 30 December 2018. It was pointed out that, even till that date,
various factors, not attributable to Yedeshi, were impeding progress of
the Project.
86. Vide a subsequent letter dated 10 July 2019, addressed to the
Project Director, NHAI, Yedeshi sought further extension of the
SFLD till 15 November 2019. The communication once again
highlighted the reasons for work not being completed as per schedule.
It was pointed out that, apart from delay in procuring land for the
Project and making it available, in unencumbered state, to Yedeshi,
NHAI was also defaulting in making timely payments/reimbursement
of expenses incurred by Yedeshi, which included loss due to rental
value of the land, equipment and resources idling for long periods of
time, additional interests payable for the idling periods on the finance
borrowed for the work, mounting overhead expenses for the idling
periods, re-working of the executed work during recommencement
after the idling period and various mobilization and de-mobilization
expenses. A summary of balance payments, as on 8 July 2019, was
enclosed, indicating that NHAI owed, to Yedeshi, as on 8 July 2019, ₹
62,88,76,498/-.
Signature Not Verified It was also pointed out that there was scarcity of Signature Not Verified
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Page 73 of 170 AN HARI SHANKAR
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water in the project corridor and that the project area of Marathwada
had been declared as a drought area by the Maharashtra Government.
87. Following the aforesaid communication, NHAI visited the
Project Site on 4 September 2019 and instructed Yedeshi to submit a
work completion plan for the balance work. A modified work
completion plan was, therefore, prepared jointly by Yedeshi and the
IE forwarded to NHAI, under letter dated 11 September 2019 of the
IE. As per this modified work completion plan, it was estimated that
the balance works would be completed by October 2019. It was
clarified, however, below the proposed plan, as under:
―Note
1. Completion as per the plan can be achieved based on timely
availability of fund
2. Completion of some of the work having some LA issues is
based considering its redressal latest by 15.09.2019.
3. Release of payment towards the awaiting COS proposals
under consideration by the Authority will facilitate achieving the
target.
4. Completion as per the plan can be achieved based on timely
resolution of issues pertaining to utility lines of MJP Beed, latest
by 15.09.2019
5. Revised estimates of utility lines (revision for GST) be
confirmed at the earliest. Target date – 20.09.2015
6. Completion plan can be achieved considering rainy period
ends on or before 15.09.2019‖
88. Vide letter dated 27 September 2019, Yedeshi updated the IE
regarding the status of works as on 25 September 2019. The letter
Signature Not Verified Signature Not Verified
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Page 74 of 170 AN HARI SHANKAR
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contained the following table:
TABLE – 1 : STATUS OF CONDITIONS FOR VIABILITY OF
COMPLETION PROGRAMSr. Conditions for Status of Remarks
No. viability of conditions as on
Construction 25.09.2019
completion
program
1. Timely Considerable delay Details of
availability of in due payments / pending
fund for cash non-payment from payments as on
flow maintenance Authority still date and delay
persists, affecting in payments
cash flow made are
adversely. enclosed as
Table – 1
& 2 for read
reference.
2. Redressal / LA issues still not Details of
mitigation of all resolved at some unresolved LA
LA related issues locations issues affecting
latest by completion of
15.09.2019 balance work
shall be
submitted
separately.
3. Release of Pending approval Details of value
payment towards of COS proposals, of completed
works completed payment could not work under
under various be initiated by COS-I, III, V &
COS proposals Authority till dated VI are enclosed
for works executed as Table-3 for
under COS-III & ready reference.
COS-V proposal.
4. Resolution of 1.Work Invoice for
issues pertaining measurement of
executed work
to utility lines of executed work for for K-7 line
Beed MJP latest supply line (K- 7 submitted vide
by 15.09.2019 line) to Beed city our letter No.
initiated. YABOT/
UTI(WAT)/IE/2
2. Revised estimate 019/ 1298 dated
for water supply 24/09/2019.
line (K-9 line) not
Signature Not Verified Signature Not Verified
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yet received.
5. Confirmation of Confirmation still Details of
revised estimates awaited. estimates under
of utility lines revision were
(revision pending submitted vide
for GST) our letter No.
YABOT
/UTI/NHAI/201
9/1274 dated
17/08/2019.
6. Termination of Rains still Day wise
rainy season continued in larger rainfall data
latest by part of the project collected at rain
15.09.2019 length, affecting gauge stations in
construction of project camps
balance work. are enclosed as
Table – 4A & 4B
for ready
reference.
This was followed by a communication dated 28 September 2019
from the IE to the Project Director, NHAI, which took stock of the
contents of the aforesaid letter dated 27 September 2019 of Yedeshi
and requested thus:
―To complete the project work in scheduled time. The remaining
issues needs to resolved by the concerned department/authority, the
earliest please.‖
89. The IE, thereafter, wrote to the Project Director, NHAI, on 17
October 2019. The status of the Project was captured in the following
table, contained in the said letter:
Project Occurrence Details as Achievem Remarks
Milestone on per e-nt status
Schedule G
MS-1 180th day 1. MS-1 Letter No.
From Commenced achieved YABOT/C&S
Appointed Construction C/NHAI/2015/
Date i.e. 138 dated
Signature Not Verified 27.12.2015 2. Expended 19.12.2015, Signature Not Verified
Digitally Signed Digitally Signed
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Page 76 of 170 AN HARI SHANKAR
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not less than confirming
10% of total achievement of
capital cost MS-1 is
submitted to
Authority
MS-2 365th day 1. MS-2 Letter No.
from Commenced Achieved YABOT/C&S
Appointed construction C/NHAI/2016/
Date i.e. of 315 dated
29.06.2016 All bridges 04.07.2016,
wherever confirming
land achievement of
acquired for MS-2 is
construction submitted to
work. Authority.
2.Expended IE
not less than recommended
35% of total vide letter no
capital cost SAICPLDCSP
L/NHAI
/IE/NH-
211/2016/057
Dt. 25.07.16
MS-3 650th day 1. MS-3 Letter No.
From Commenced achieved YABOT/C&S
Appointed construction within C/
Date i.e. of project curing NHAI/2017/62
10.04.2017 Facilities period 2 dated
19.06.2017,
2. Expended confirming
not less than achievement of
70% of total MS-3 is
capital cost submitted to
Authority. IE
confirmed
achievement of
MS-3 vide
letter No-
SAICPL -
DCSPL/NHAI/
IE/NH-
211/2017/370
dated
04.07.2017
Scheduled 910th day Completed PCOD48 IE issued
Signature Not Verified
48 Signature Not Verified
Provisional Commercial Operation Date
Digitally Signed Digitally Signed
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4-Lane from 4-Laning provisional
Appointed completion
Date I.e. certificate vide
26.12.2017 letter No. 8821
dated15.03.201
9. Accordingly,
PCOD
occurred on
17.03.2019.
After capturing the various hindrances which had been faced from
time to time in proceeding with performance of the contract, and after
referring to the relevant contractual provisions, the communication
concluded thus:
―9. Time required for Completion of Balance Work:
Out of total balance work, critical area which shall require
substantial completion time for the balance work, are as below –
Sr. Location From Ch. To Ch. Balance works
No.
1 Terkheda Km Km l. Service Roads
103.000 105.000
2. RE wall work
3. Main
Carriageway
(after completion
of RE wall)
4. RCC drains.
Pali 1. PUP
2. Minor Bridge –
Reconstruction
3. Service road
4. RE wall work
5. Main
Carriageway
(after completion
of RE wall)
2. Shahgad Km Km 6. Shahgad –
Signature Not Verified & 221.500 228.000 a. Approaches of Signature Not Verified
Digitally Signed Digitally Signed By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR Page 78 of 170 AN HARI SHANKAR Signing Signing Date:26.01.2025 Date:26.01.2025 22:25 22:24 Mahakala Major Bridge Across Godavari river - nearly completed - delayed due to Kabrastan issue. b. RE wall work - nearly completed. c. Main Carriageway In progress d. New PUP @ Walkeshwar Road - Finalised in Dec'2018 end, constructed under COS. 7. Mahakala - a. Aurangabad side Approaches (with RE wall) of VUP @ Km 226+460 - One Masjid removed in December 2018. 3. Wadigodri Km Km 1. Osmanabad 230.000 233.500 side approach of flyover @ Jalna Phata @ Km 231+337 2. VUP in Wadigodri 3. Service Road in Wadigodri 4. Re wall and MainCarriageway in Wadigodri 5. PUP in Signature Not Verified Wadigori (under Signature Not Verified Digitally Signed Digitally Signed By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR Page 79 of 170 AN HARI SHANKAR Signing Signing Date:26.01.2025 Date:26.01.2025 22:25 22:24 COS)
Progress of Construction works were observed slow than required.
As submitted by the Concessionaire, the reasons for slow progress
during past 3 months are mainly due to;
a) Disturbance in construction activities in the available land, by
the locals owing to issues in payment towards land acquisition –
This disturbed /disturbs the work force causing;
a. Considerable demobilization and remobilization of
resources as per site condition.
b: Issues in arrangement of work force and machineries for
remobilization.
In view of above to resolve the various aforesaid issues;
There shall be no further disturbance to work force and continuity
of work period shall be maintained.
Considering the above facts the recommendations /comments of
the Independent Engineer are as below;
Considering the quantum of balance work and the ongoing
monsoon period, further extension date of time upto 15.11.2019 for
completion of balance works which couldn’t completed within 90
days from provisional completion due to delayed handing over of
the land or Non-handing over of the land as per Appendix-III
Annexure-2 of the Punch List (Balance work).
Milestone Scheduled Approved Recommendation for further
Four- Extension of extension over and above
Laning time (EOT-I) approved extension
date as Earlier Present Revised
per recommendation recommendation
Scheduled
-G
Construction 26thDec20 365 days 196 days (upto 324 days (Upto
Completion- 17 (upto 10th July 2019) 15th Nov 2019)
Balance 26thDec
works. 2018)
Thanking you and assuring our best attention at all the times.‖
90. Thus, in the letter dated 17 October 2019, the IE again noted
that frequent EOTs had to be sought by Yedeshi owing to delays in
Signature Not Verified
preparation of valuation for properties, frequent change of CALA, Signature Not Verified
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Page 80 of 170 AN HARI SHANKAR
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delay in publications of Section 3A and Section 3D notifications in the
Official Gazette, revision in preparation of awards and
change/revision in the disbursement process followed by the bank,
none of which were attributable to Yedeshi. It was further noted that,
even as in December 2018, the entire Project land had not been
handed over to Yedeshi.
91. Vide its further communication dated 23 October 2019 and 31
December 2019, Yedeshi sought further extension of time to complete
the remaining work. These requests were forwarded by NHAI to the
IE. The IE, after considering the circumstances highlighted by
Yedeshi, recommended, vide its letter dated 8 January 2020, addressed
to Yedeshi with a copy to the Project Director, NHAI, grant of EOT
till 31 March 2020, subject to resolution of all remaining hindrances
by January 2020. Yedeshi was also, therefore, directed to submit a
revised work plan, to NHAI, for review and recommendation by IE.
92. Yedeshi, by its letter dated 15 February 2020, informed as
under:
―Dear Sir,
1. Refer letter No. 8821 of the Independent Engineer, vide
which “Provisional Certificate” for the Project was issued. Along
with “Provisional Certificate”, this letter was appended with
followings also –
a. Annexure – 1 of Appendix-III : Punch List items to
be completed within 90 days of issuance of “Provisional
Certificate‖
b. Annexure – 2 of Appendix-III : List of balance works
which can not be completed within 90 days of issuance of
“Provisional Certificate‖ due to delayed procurement of
Signature Not Verified land required for construction.‖ Signature Not Verified
Digitally Signed Digitally Signed
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Page 81 of 170 AN HARI SHANKAR
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2. Completion status of works under Punch List (Annexure – 1
of Appendix-III of” Provisional Certificate”)
a. From time to time, the Concessionaire intimated the
progress report of completion of items under “Punch list”
along with issues, not attributable to the concessionaire,
affecting the work progress / completion, with a request to
the Authority and the Independent Engineer to resolve the
issues at the earliest.
b. Pending resolution of the issues from the Authority /
the independent Engineer, the Concessionaire, vide letter
1312, conveyed “Completion of the Punch List items to the
extent work was / were not affected by the issues not
attributable to the Concessionaire.
c. The work status (as on 13.10.2019), communicated
vide letter 1312 of the Concessionaire, was further revised
as on 15.01.2020, vide letter no. 1381, and the
Concessionaire requested for Closure of the Punch List &
Shifting of balance work (due to the reason not attributable
to the Concessionaire) from Punch List
3. Completion status of works having delayed land
procurement -.
a. Since, due to delayed land procurement, works
could not be completed within approved EOT (upto
26.12.2018), the Concessionaire, vide letter No. 1059,
submitted request for further extension of Scheduled Four
Laning Date of the Project (EOT-2). Submission of the
Concessionaire was reviewed and recommended by the
Independent Engineer vide their letter No. 8636 dated
13.02.2019. The completion program was based on certain
conditions to be fulfilled by the Authority.
b. Pending fulfilment of obligations of the Authority,
EOT-2 proposal further requested to be revised vide letter
No. 1237 of the Concessionaire. The Independent Engineer,
vide their letter No. 1368, submitted revised “Work
Completion Program” for the balance works in project
corridor.
c. The fulfilment of obligation of the Authority is still
pending, further affecting the Project completion plan.
Details of the unfulfilled obligations of the Authority viz-a-
Signature Not Verified Signature Not Verified
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viz major balance activities affected due to unfulfilled
obligations of the Authority are tabulated below-
Details of unfulfilled Details of major
obligations affected activities
(Approx quantity as on
15.02.2020)
1. Delayed procurement 1. Main Carriageway
of land. (with RE walls) – 6,000
Rmt
2. Delay in utility
relocation 2. Service roads – 9,000
Rmt
a. Shifting of HT line in
Chitte Pimplegaon 3. RCC side drains –
7,100 Rmt
b. Shifting of water
utility lines pending due 4. Footpaths – 15,125
to non- provision of Rmt
approved estimates in
GST regime.
3. Delay in various
payments due to the
Concessionaire since
long acutely affecting
Cash Flow for balance
construction works
d. Considering the present status of fulfilment of
obligations of the Authority causing issues in cash flow
and utility relocation works. the “Project Completion
Date” is envisaged as 31.05.2020.
e. We humbly request the Authority to provide us time
line for fulfilment of their part of obligations (i.e.
mitigation of LA issues, confirmation of provision of
various utility estimates and release of due payments) so
as to enable us to ensure adherence to “Project Completion
Date” envisaged presently.
f. Considering the issues of the Authority be resolved
latest by 29.02.2020, a tentative work completion program
is prepared for the major balance works as on date. Work
Program is enclosed herewith for the reference and record.
Thanking you and assuring our best services all the time.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
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Page 83 of 170 AN HARI SHANKAR
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For Yedeshi Aurangabad Tollway Ltd.
The proposed Project Completion date of 31 May 2020 was, therefore,
subject to resolution, by the NHAI, of all pending issues by 29
February 2020.
93. The aforesaid request of Yedeshi was forwarded by NHAI to
the IE which, by letter dated 10 April 2020, addressed to the Project
Director, NHAI, again reviewed the entire status of the Project and the
factors to which Yedeshi had referred in its letter dated 15 February
2020, and, after referring to the various contractual provisions,
concluded thus:
―9. Time required for Completion of Balance Work:
Out of total balance work, critical area which shall require
substantial completion time for the balance work are as below –
Sr. Location From Ch. To Ch. Balance works
No.
1 Wadigodri Km Km 233.500 1. RE wall and
230.000 Main Carriageway.
2 Bagpimpalgaon Km. Km. 1. RE Wall work.
213+780 216+500 2.Maincarriageway
(2.25 Km).
3. Service road.
3 Thapti Tanda Km. Km. 1. RE wall work
266+900 268+100 2. Main
carriageway (LHS)
3. Service road.
4. RCC Drain.
5. Foot Path.
4 Chitte Km. Km. 1. RE wall work
Pimpalgaon 281+000 282+500 2. Main
carriageway.
3. Service road.
4. Foot Path.
5 Rest Area Km. - 1. Internal roads.
Development. 164+635 2. Toilet Blocks.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
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Page 84 of 170 AN HARI SHANKAR
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& 262+500 3. Cafeteria.
Considering the above facts the recommendations / comments
of the Independent Engineer areas below;
Considering the status of the land procurement for the project,
various land issues and quantum of balance work and considering
various provisions in the Concession Agreement on the subject,
further extension of time upto 31.05.2020 for completion of
balance works which couldn’t completed due to delayed handing
over of the land or Non-handing over of the land is recommended
as follows;
Milesto Sched Approved Recommendation for further
ne -uled Extension extension over and above
Four- of time approved extension
Lanin (EOT) Earlier Present
g date recommendat Revised
as per ion recommendat
Sched ion
-uled-
G
Constructi 26thD 365 days 324 days (upto 522 days
th
on ec201 (upto 15 November (Upto
Completio 7 26thDec 2019) 31.05.2020)
n- 2018)
Balance
works.
Thanking you and assuring our best attention at all the times.‖
94. NHAI, however, responded to the aforesaid communication
dated 10 April 2020 of the IE, apropos the request for EOT by
Yedeshi vide its letter dated 15 February 2020, on 6 June 2020, after
31 May 2020, till which date EOT had been sought and
recommended, had elapsed. Interestingly, the NHAI observed, in the
said communication, that, as the recommended EOT date of 31 May
2020 had elapsed, and Project completion had not been achieved, the
proposal for grant of EOT could not be submitted to the competent
authority.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
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Page 85 of 170 AN HARI SHANKAR
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95. Following this, the IE, by letter dated 11 June 2020, required
Yedeshi to submit a fresh proposal for EOT.
96. As requested by the IE, Yedeshi, by letter dated 9 July 2020,
submitted a fresh request for EOT till 30 September 2020. In the said
letter, the Yedeshi also underscored the intervening Covid-19
pandemic, which was entitled to be treated as a force majeure event,
as well as the consequent lockdown imposed by the Government and
various guidelines issued by the Government from time-to-time
enforcing restriction on movement of labour, strength of labour,
working time, availability of machinery etc.
97. The aforesaid request of Yedeshi for EOT was forwarded by
NHAI to the IE. The IE, vide letter dated 21 July 2020, noted the
various issues raised by Yedeshi and concluded, in para 9 of the
communication, thus:
―9. Present Application of the Concessionaire for revision in
“further Extension of Time” beyond recommended time limit, for
completion of balance work:
Since the consideration of the issues of the Authority be resolved
latest by 29.02.2020 was not fulfilled and due to imposition of
lockdown condition since 22 March 2020 the work could not
completed within the recommended time line of 31 May 2020.
i. From the above table the status of the land procurement at
the end of Feb -2020 is as follows;
a) Disbursement of compensation was still balance for
32.14 Hect. out of 714.71Hect.
b) Total length not available for construction was 2.49
Km. out of 189.023 Km.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
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ii. From the above table the status of the land procurement at
the end of May -2020 is as follows;
a) Disbursement of compensation was still balance for
32.14 Hect. out of 714.71Hect.
b) Total length not available for construction was 0.76
Km. out of 189.023 Km.‖
iii. The Concessionaire vide letter at ref - 32 (ltr. No. 1482
dt.09.07.2020) above has informed that due to the effect of the
pandemic and the lockdown, a major chunk of labourers have
moved to their native places and there is a shortage of manpower at
the site which is hampering the scheduled progress badly and also,
supply chain of materials has got hampered.
The Concessionaire vide above letter submitted the revised
proposal of extension of time by considering the reduced
productivity due to COVID-19 situation based on the following
considerations;
1. Reduced labour strength (Skilled/Semi skilled) due to
migration of labour.
2. Reduced working time to comply with the norms of
working during lockdown Period.
3. Reduced strength of operators.
4. Reduced working at site to maintain ‗social distancing’
while working.
5. Issues in availability of machinery spare parts for repairing
of off-road/breakdown machinery.
6. The Manson in the project corridor.
Further to above, it is also submitted that Covid-19 situation has
been declared Force Majeure event by the Ministry of Home
Affaire and Authority vide its office memorandum no.
NHAI/Covid-19/Road Map/CMD/2020 (CN 5788) dated
08/06/2020 has approved following measures for providing urgent
relief to the Contractors, concessionaires, find developers of road
sector in view of the prevailing situation due to Covid-19 for
immediate implementation by all the concerned agencies;
(iii) Extension of Time to Contractor/Concessionaire for
meeting their obligation under Contract for 03 months to up to 6
months depending on site conditions”
Further, another clarification issued by the NHAI vide
Signature Not Verified NHAI/Policy Guidelines /Atmnirbhar Bharat Policy No. Signature Not Verified
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18.46/2020 dated 22/06/2020, in this regard, it is submitted that the
Concessionaire vide letter under ref. 20 &21 (ltr. No. 21881 &
1419 dtd. 24.03.2020) & on regular basis has notified the Force
Majeure event pursuant to clause 34.5 of the Concession
Agreement to the Authority and the IE due to prevailing situation
due to the Covid-19.
However, the Concessionaire requested for extension upto
30.09.2020 under present situation, in support of this,
Concessionaire mentioned the non-availability of labours and the
regular material supply. But, it is not seen that material supply is
being regularised and labour also being returning on the works.
Presently, 3 months passed since the imposition of the lockdown
i.e. Since March 22,2020. Hence, IE feels that extension of time
upto 30.09.2020 is justifiable under the present circumstance.
iv. Time required for Completion of Balance Work:
The Concessionaire submitted the work Completion
Program according to which the remaining works including
finishing works will be completed by August -2020.Though
the quantum of balance work is less considering the Present
scenario due to spread of Corona Virus (COVID-19) the
time of completion may extend upto 30.09.2020.
v. Considering the above facts the recommendations
/comments of the Independent Engineer are as below;
In view of above the Independent Engineer hereby recommends the
EOT-2 upto 30.09.2020which is 04 months beyond the previously
recommended EOT which is within the period allowed by the
Authority vide above referred office Memorandum for providing
urgent relief to the Concessionaires in view of the prevailing
situation due to Covid-19 for immediate implementation subjected
to submission of undertaking from the Contractor that will not raise
any financial claim against Manpower, Machineries and other
liabilities etc. for this EOT due to Covid-19 pandemic.
MilestoneSched- Approved Recommendation for further
uled Extension extension over and above approved
Four- of time extension
Laning (EOT) Earlier Present
date as recommendation Revised
per recommendati
Sched- on
uled-G
Construction 26thDec 365 days 522 days (upto 31st 644 days (Upto
Completion- 2017 (upto May 2020) 30.09.2020)
Balance 26thDec
Signature Not Verified works. 2018) Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 88 of 170 AN HARI SHANKAR
Signing Signing Date:26.01.2025
Date:26.01.2025 22:25 22:24
Thanking you and assuring our best attention at all the times.‖
98. As a substantial part of the Project Site stood completed by it,
Yedeshi, by letter dated 20 August 2020, addressed to the IE, sought
issuance of a Completion Certificate. It was pointed out, in the said
letter, that Yedeshi had completed all constructions activities on the
land which was made available to it. The main carriageway had been
completed throughout the entire Project length. Balance works which
remained to be completed were held up due to land procurement
issues. It was also pointed out that, complete testing of the Project
highway in terms of Article 14 and Schedule 1 of the CA had been
completed. In the circumstances, Yedeshi sought that the said balance
works be de-linked from the Project work and a Completion
Certificate, in terms of Article 14 of the CA, be issued.
99. The IE, in turn, wrote to the Regional Officer, NHAI, on 9
September 2020, paras 4 to 9 of which reads thus:
―4. Now, the Concessionaire vide letter under ref. 3(v)
informed that the Punch list-2/ balance works are completed except
following works as listed in table-1;
Table -1
Sr. Item/work Construction Side Length Remarks
no Chainage (Mts.)
From To
1. Construction Pargaon Tollplaza at
of loop and km.133+395 on
ramp for LHS
Static weigh LA
bridge of Maliwadi Tollplaza issue
Toll Plazas at km. 254+ 150 on
LHS
2. Completion 201+540 201+650 RHS 110
of service
Signature Not Verified Signature Not Verified
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Page 89 of 170 AN HARI SHANKAR
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Date:26.01.2025 22:25 22:24
road 214+240 214+350 LHS 110
214+600 214+640 LHS 40
231+ 232+ 100 LHS 160
940
Total 420
3. Service 262+370 262+430 RHS 60
Road in Rest
Area
Completion of above listed works depends on resolution of LA
related issues/problems. The Concessionaire submitted that the
works listed in Table-I above be de-linked from “Completion
Certification” and further submitted undertaking that “the works
listed in Table-1 shall be completed within reasonable time as per
standard industrial practice, after resolution of LA related
issue/problems.”
100. The NHAI, in turn, wrote to the IE, thus, on 23 September
2020:
―NHAl/RO/ NGP/7/7/COD/Y-A-211/2020-21/1133
Date: 23.09.2020To,
M/s SAICPL – DCSPL,
1101A, 11thFloor, Tower A-II, Corporate Park,
Plot No.7A/1, Sector – 142 Noida – 201301.
[email protected]Kind Att. Shri. Saurav Shekhar, IE
Sub: Four laning of Aurangabad-Yedeshi Section of NH-211
from Km 100.000 to Km.290.200 under NHDP Phase –
IVB in the state of Maharashtra on DBFOT(Toll) Basis –
Intention to issue completion certificate under clause-
14.2 of Concession Agreement -Reg.
Ref.: IE’s letter No. 12149 dated 09.09.2020.
Sir,
Please refer to the Engineer’s letter dated 09.09.2020
submitting there with the Intention of Engineer to issue
“Completion Certificate” in accordance with clause 14.2of
Signature Not Verified
Concession Agreement. Where in, it is also certified by ‘Engineer’ Signature Not Verified
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Page 90 of 170 AN HARI SHANKAR
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Date:26.01.2025 22:25 22:24
that all the work on available land has been completed as per CA
and test have been conducted as per Concession Agreement, whose
results are found satisfactory. The Safety Audit have also been
carried out by Govt. Collage of Engineering, Aurangabad dated
23.08.2020,25.08.2020 & 29.08.2020 and compliance of Safety
Audit Report has been submitted by Concessionaire vide letter
dated 06.09.2020. The same is verified by Engineer and found in
order.
2. In this regard, the project site was inspected by GM (Tech)
Regional Office, Nagpur on 17.09.2020. Accordingly, the
concurrence of this office to issue “Completion Certificate” for a
project length of 189.023 Km, is here by conveyed as detailed in
above mentioned letter of IE in conformity to the provisions of the
Concession Agreement.
Yours faithfully,
(Rajeev Agrawal)
CGM (Tech) & RO Nagpur‖
101. Following thus, the IE, on 24 September 2020, issued the
following Completion Certificate to Yedeshi:
―1. I, M/s SA Infrastructure Consultants Pvt. Limited in association
with M/s Dhruv Consultancy Services Pvt. Ltd., acting as
Independent Engineer, under and in accordance with the
Concession Agreement dated May 30th 2014 (the
“Agreement”),for Four-Laning of the Yedeshi-Aurangabad section
Km 100.000 to Km 290.200 (Total Length 189.023 km.) of
National Highway No. 211 in the State of Maharashtra under
NHDP Phase-IVB through Public Private Partnership (the “Project
Highway”)on design, build, finance, operate and transfer (DBFOT)
basis, through M/s Yedeshi Aurangabad Tollway Private Limited,
(Now, M/s Yedeshi Aurangabad Tollway Limited) hereby certify
that the Tests specified in Article 14 and Schedule-I of the
Agreement have been successfully undertaken to determine
compliance of the Project Highway with the provisions of the
Agreement, and I am satisfied that the Project Highway can be
safely and reliably placed in commercial service of the Users
thereof.
2. It is certified that, in terms of the aforesaid Agreement, all
works forming part of Four-Laning have been completed, and the
Project Highway is hereby declared fit for entry into commercial
Signature Not Verified
operation on this the 24thday of September 2020. Signature Not Verified
Digitally Signed Digitally Signed
By:AJIT KUMAR O.M.P. (COMM) 277/2024 By:CHANDRASHEKHAR
Page 91 of 170 AN HARI SHANKAR
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SIGNED, SEALED AND DELIVERED
For and on behalf of
SA Infrastructure Consultants Pvt. Ltd.
In association with Dhruv Consultancy
Service Pvt. Ltd. by:
SAURAV SHEKHAR
Independent Engineer
Address: 1101A, 11th Floor, Tower-A2,
Corporate Park, Plot No. 7A/1,
Sector-142, Noida, UP-201301‖
102. Thus, Yedeshi was entitled to collect complete toll from usage
of the Project highway w.e.f. 24 September 2020.
103. On 12 March 2021, Yedeshi wrote to NHAI, submitting its
entitlement to EOT, under Clause 35.3 of the CA, of 831.08 days and
reimbursement of losses suffered by it, in terms of Clause 35.2 of the
CA, of ₹ 1501.84 crores. A certificate of the Statutory Auditor, in
terms of Article 33 of the CA, supporting these claims, was also
enclosed. The justification for the aforesaid claims, as contained in
the said letter, deserves to be reproduced thus:
―It is evident from the above table that the Concessionaire had
complied with all the three milestones in terms of Schedule G of
CA, but NHAI failed to fulfil their obligation pursuant to Article 6,
10 of the CA. While the Concessionaire continuously kept
requesting for handing over of the balance encumbrance free land/
RoW in terms of Clause stipulated under Article 6, 10, 11 and
other relevant clauses of the CA since this had clear and direct
impact on the fulfilment of the reciprocal obligation of the
Concessionaire with regard to timely completion of the
construction of the Project and subsequent commencement of
tolling. Even after numerous follow ups in this regard, NHAI
miserably failed to acquire the RoW listed in the appendix
appended to the memorandum within 90 days from the AD in
Signature Not Verified
terms of clause 10.3.4 of the CA. The consequent delay in Signature Not Verified
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Page 92 of 170 AN HARI SHANKAR
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construction on this account had adversely affected the timely
completion of the Project Highway resulting in to idling and/or
underutilization of resources i.e., manpower, plant & machinery’s
etc. deployed at Site since the inception of the Project. In
accordance with Clause 10.3.5 of the CA, the Concessionaire is
liable to complete the works in the vacant/ unhindered land made
available to them by NHAI within 90 days from the AD. It is
imperative that, in the instant case, the issuance of the Provisional/
Completion Certificate would not have been delayed as the reasons
for delay in construction of the Project were solely attributable to
NHAI/ Government Instrumentalities.
The inordinate delay in handing over of vacant Ro W was one of
the major reason for delay in completion of construction, while
there were other reasons affecting the progress such as delay in
acquisition of forest land, frequent change of Competent Authority
of Land Acquisition (CALA) and additional administrative
responsibility al located to CALA, revisions in preparation of
award due to enforcement of new NH Act for land acquisition,
change/ revision in banking process for disbursement of
compensation to the affected land owners, delay in approval of
Change of Scope (COS) works, delay in shifting of electrical
utilities, delay in relocation of HT/EHV utility lines/ water supply
utility lines and the Court cases by aggrieved land owners due to
which the land owners not allowing the construction. These
reasons causing delay were solely attributable to NHAI/
Government Instrumentalities. In spite of the aforementioned
difficulties, the Concessionaire achieved Milestone I to III as
stipulated in Schedule G of the CA well within the timeframe
described therein except for the Scheduled Completion Date/
Scheduled Four Laning Date for which the request of Extension of
Time (EOT) was expressed vide letter cited at (42).
The Concessionaire started construction with a target to complete
the project much before the Scheduled completion Date so as to
take advantage of early tolling by a minimum period of 6 months.
However, the construction of the Project was delayed for various
reasons solely attributable to NHAI/ Government Instrumentalities.
Therefore; on account of the non-fulfilment of obligation by
NHAI, a material default occurred in terms of provision of CA and
the Concessionaire requested for 1st EOT vide letter cited at (39) to
grant extension pursuant to Article 12 and Schedule G of CA upto
26/06/2019. In addition to this, the Concessionaire also requested
to extend the Concession Period by an equivalent period since the
delay was solely attributable to NHAI and also in accordance with
the NHAI Policy Circular no.: Policy Matter-Technical (195/2016)
issued vide NHAI letter no. 11041/218/2007/ Admin, dated
Signature Not Verified
19/01/2016. The said request was examined and EOT of 365 days Signature Not Verified
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i.e., up to 26/12/2018 was recommended by Independent Engineer
(IE) vide letter cited at (37) as per Article 12 and Schedule G of
CA for approval of the Competent Authority of NHAI subject to
the condition that the balance land would be handed over to the
Concessionaire by 30/09/2017. The Project Director (PD), NHAI
further recommended the 1st EOT upto26/12/2018 without any
financial implication vide letter cited at (36)
As recorded by IE, the project length not available for construction
at the end of December’2018 was 8.163 Kms out of 189.023 Kms
of the Project Highway. Upon Concessionaire’s request for further
extension over and above the approved 1st EOT upto 26/18/2018
and in terms of various CA provisions under Clause10.3.2, 10.3.4,
10.4, 12.4.1, 12.4.2 & Clause 6 of Schedule G, IE further
recommended 2nd EOT upto 10/07/2019 (i.e., 196 days beyond 1st
EOT) vide letter cited at (23) based on the condition that all the
lands need to be procured by NHAI and made available to the
Concessionaire latest by 31/12/2018.
Meanwhile, the Concessionaire requested NHAI to issue the
Provisional Certificate for the Project Highway since the
commencement of tolling was delayed substantially resulting into
huge revenue loss vide letter cited at (22). IE verified the said
request of the Concessionaire and issued the Provisional Certificate
with effect from 17 /03/20 I 9 in terms of Clause 14.3 of the CA for
a completed length of 161.87 Km of Project Highway along with
the Punch List items and thus, the Concessionaire could commence
the tolling on 17/03/2019, but only for the partial length of i.e.,
161.87 km section of the Project Highway. Thus, the revenue loss
continued on the Project.
The balance Project length as on date of issuance of Provisional
Certificate was 27.153 Km which led to substantial loss of toll
revenue (since tolling could not commence on this section) and
also increased capital expenditures on account of the material
default of NHAI. The Concessionaire further requested for the
grant of revised EOT (over and above approved 1st EOT). After
examining the request of the Concessionaire, IE after considering
the quantum of balance work due to delayed handing over of the
land or non-handing over of the land, not attributable to the
Concessionaire, revised its earlier recommendation of 2nd EOT of
196 days (i.e., up to 10/07/2019) to 324 days beyond approved 1st
EOT i.e., upto 15/11/2019 (Refer letter cited at 14). However, since
the default of NHAI was continuing on account of the delay in
procurement of land, delay in utility shifting and delay in payments
due to the Concessionaire which were attributable solely to NHAI,
the Concessionaire had to further request for revised 2nd EOT vide
Signature Not Verified
letter no (11) for completion of the balance work of the Project. In Signature Not Verified
Digitally Signed Digitally Signed
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Page 94 of 170 AN HARI SHANKAR
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response, subsequently, IE again examined the request and
recommended revised 2nd EOT up to 31 /05/2020 (522 days
beyond 1st EOT) to complete the balance work subject to the
resolution of the issues by NHAI by 29.02.2020. (Refer letter at 9).
During this period, the Govt. of India declared the viral spread of
COVID-19, a pandemic, as a Force Majeure Event vide
Notification no F/18/4/2020-PPD dated 19/02/2020. Consequently,
a state-wide/nationwide lockdown was imposed causing complete
closure of the Project (construction, operation and maintenance
activities, etc.) with effect from 22/03/2020. The Concessionaire
notified the said event as the Force Majeure Event in terms of the
CA vide letter cited at (10). However, under the instructions of
NHAI, the work at Site resumed from 20/04/2020 but due to
various social /health advisories issued by the Government and the
related factors arose during the lockdown; the progress of the
works at Site was severely hampered. After taking cognizance of
the developments and requirements during the lockdown, Govt. of
India /NHAI issued various policy guidelines (refer 7 & 5)
wherein, as a relief measure, the instruction was issued to grant
extension of three months of Construction Period without
imposition of any cost and penalty. Accordingly, referring to the
aforesaid policy guidelines and pursuant to Article 12, Schedule G
and other stipulated provisions of the CA, the Concessionaire
requested for final revision in 2nd EOT i.e., upto 30/09/2020 vide
letter cited at (4) to complete the construction of the Project
Highway. In due course, IE examined this request and
recommended for final revision in 2nd EOT over and above the
approved extension i.e., upto 30/09/2020 (644 days beyond 1st
EOT) vide letter cited at (3).
The Concessionaire, having completed the Project construction,
then requested IE for issuance of Completion Certificate in terms
of Article 14 of the CA vide letter at (2). Accordingly, IE with the
concurrence of NHAI, issued the “Completion Certificate” in the
form set forth in Schedule-J with effect from 24/09/2020 (Refer
letter cited at 1). Thus, it is evident from the above that after the
delay of 1912 days from the AD and 557 days from the date of
issuance of PCC, the Concessionaire could commence the tolling
on entire length of the Project Highway i.e., 189.023 km with
effect from 24/09/2020.
From the above, it is pertinent to note that the reasons for the
resultant delays were duly examined and verified by the IE and the
1st EOT was approved by NHAI as 26/12/2018. It is evident from
the various correspondences referred herein that that these delays
were not attributable to the Concessionaire and were solely
Signature Not Verified
attributable to NHAI/Government Instrumentalities and occurrence Signature Not Verified
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of the Force Majeure Event. It is also to be noted that at the time of
Scheduled Completion Date, neither the provisions of Clause
10.3.5, 14.3 of the CA nor the provisions of NHAI
circularNo.11041/218/2007-Admn dated 19/01/2016 were
followed for issuance of Provisional Certificate. Hence the
Concessionaire had to suffer revenue losses and had to bear
additional financial burden/losses by means of idling/
underutilisation of the resources such as manpower, machineries &
equipment deployed at Site, extended site establishment, interest
during construction, O&M expenses, overheads and escalation. As
such, there has been a contractual material default by NHAI. As a
consequence of this default, the Concessionaire is eligible for
compensation in terms of Clause 35.2 and 35.3 of the CA with
effect from 30/06/2017 i.e., the scheduled completion date as per
the work programme submitted to IE/ NHAI vide letter no. (52).
Accordingly, the extension to Concession Period has been
computed as 831.08 days pursuant to Clause 35.3 of CA as
certified by the Statutory Auditor. The actual loss suffered by the
Concessionaire due to the default of NHAI in terms of Clause 35.2
of CA has also been computed as Rs.1,501.84 Crore duly certified
by the Statutory Auditor in terms of Article 33 of the CA is
enclosed. The Statutory Auditor certificates and details of
computations are enclosed herewith.
In view of the above, we hereby humbly request to take a fair
decision on this matter and arrange to settle our claims at the
earliest.
Thanking you and assuring of best of our services at all times.‖
104. Yedeshi’s letter dated 12 March 2021 and 5 April 2021 were
forwarded by the NHAI to the IE for review and comments.
105. The IE responded to the Project Director, NHAI, on 17 June
2021. In para 1 of the response, the IE clarified that it had reviewed
NHAI’s claims ―broadly particularly in respect of Concession
Agreement Provisions and submission of Concessionaire’s desire
document‖. The letter divided the claims of the Yedeshi into Part-A,
being the financial claims totaling ₹ 1501.84 crores and Part-B, being
Signature Not Verified
the claim for extension of concession period of 831.08 days. Referring Signature Not Verified
Digitally Signed Digitally Signed
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the claims in Part-A, the IE recommended thus:
―3.3) Concessionaire has submitted Statutory Auditor’s
Report/Certificate as per provision of cl.33.3 of Concession
Agreement states that “Any claim or document provided by the
Concessionaire to the Authority in connection with or relating to
receipts, income, payments, costs, expenses, accounts or audit, and
any matter incidental thereof shall be valid and effective only if
certified by its Statutory Auditors. For the avoidance of doubt, such
certification shall not be required for exchange of information in
the normal course of business including the submission of Monthly
Fee Statements under Clause 19.5.”
Accordingly, Statutory Auditor has certify the value of the Claim
of Rs. l,501.84Crs. However in the concluding para by Statutory
Auditor “M/s MKPS & Associates” state that:
i) “The amount of Claim, as considered in Annexure-1
amounting to Rs.1,501.84Crs. is not properly extracted
from the data compiled by the management and that the
same is not arithmetically accurate; and
ii) the number of days as computed in Annexure-11of
831.08 days and the basis of their computation as stated in
the annexure is not properly extracted from the relevant
data and is not arithmetically correct. ”
As noted by the Statutory Auditor the data provided by the
Concessionaire are not arithmetically correct, thus Independent
Engineer is not in position to consider these data for their analysis
/review. Thus, financial data must be reviewed again by the
Statutory Auditor for its correctness.
3.4) The financial Claim submitted by the Concessionaire is not
in the line with the provision of cl. 35.2, Concessionaire has to
submit additional cost incurred w.r.t. the provisions kept in
financial package for the project.
3.5) As per cl. 35.6 of CA, “The Affected Party shall make all
reasonable efforts to mitigate or limit the costs and damage arising
out of or as a result of breach of Agreement by the other Party.”
Concessionaire is requested to submit the details of mitigation
measures taken by them to reduce the additional cost for the
project.
Signature Not Verified Signature Not Verified
Digitally Signed Digitally Signed
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3.6) As per cl. 35.2 of CA, ” ………… ………………. that no such
compensation shall be payable for any material breach or default
in respect of which Damages have been expressly specified in this
Agreement .. …. … ………………….. . …… … … ….. ”
For non-handing over/hindered length provision of compensation is
already given in cl.10.3.4 of Concession Agreement which states
that “The Authority shall make best efforts to procure, no later than
90 (ninety) days from the Appointed Date, the Right of Way to the
Concessionaire in respect of all land included in the Appendix, and
in the event of delay for any reason other than Force Majeure of
breach of this Agreement by the Concessionaire, if shall pay to the
Concessionaire Damages in a sum calculated at the rate of Rs. 50
(Rupees fifty) per day for every 1,000 (one thousand) square
metres or part thereof, commencing from the 91st (ninety first) day
of the Appointed Date and until such Right of Way is procured. ”
Thus, Concessionaire is requested to submit the details of land
handed over and the compensation to be paid as per cl. 10.3.4.
Thus Claim raised under cl. 35.2 for delay in handing over of
land/provide encumbrance free land, is not payable and can’t be
considered.
3.7) Furthermore, Concessionaire vide letter no.
YABOT/C&SC/NHAI/2018/949 dated 27.08.2018 has submitted
Undertaking stating that “We hereby undertake that we shall have
no claims on the project cost due to shifting of Milestone-IV as per
Schedule-G of the Concession Agreement. This undertaking is
subject to the condition that Extension of Time (EOT) shall be
accepted by the Authority/Independent Engineer. “Thus, Claim
raised by the Concessionaire is not as per Good Industrial Practice
and thus not to be considered. If Concessionaire is not in position
to honor their Undertaking given to the Authority in that case
Authority is also having liberty to make their counter claim like
penalty /damages for delay in completion /Additional IE Fee/
Overhead of the Authority etc.‖
Regarding the claim for extension of the concession period in Part-B,
the IE observed as under:
―4.2) Further, in the above para it is clearly mention that “in the
event that a material default or breach of this Agreement set forth
in Clause 35.2.” which states that cl. 35.2 of CA,”… . . . . . . . . . . . .
. . . . . . . . . . . . . . . . that no such compensation shall be payable for
Signature Not Verified any material breach or default in respect of which Damages have Signature Not Verified
Digitally Signed Digitally Signed
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been expressly specified in this Agreement ……. ….. … … … ….. . .. ..
……. .. ….. …. .
For non-handing over/hindered length provision of compensation is
already given in cl.10.3.4 of Concession Agreement. “The
Authority shall make best efforts to procure, no later than 90
(ninety) days from the Appointed Date, the Right of Way to the
Concessionaire in respect of all land included in the Appendix, and
in the event of delay for any reason other than Force Majeure of
breach of this Agreement by the Concessionaire, it shall pay to the
Concessionaire Damages in a sum calculated at the rate of Rs. 50
(Rupees fifty) per day for every 1,000 (one thousand) square
metres or part thereof, commencing from the 91st (ninety first) day
of the Appointed Date and until such Right of Way is procured. ”
Thus, Concessionaire is requested to submit the details of land
handed over and the compensation to be paid as per cl. 10.3.4.
4.3) The Claim under Force Majeure Event period shall be
considered for compensation as per cl. 34.6.2 & 34.7.
4.4) Concessionaire has submitted Average Daily Fee
calculation for FY 2018-19 purpose for the same is not understood.
4.5) While calculation for Average Daily Fee calculation for FY
2018-19 rate has been increased 27% for 100% Tolling Length.
Calculation or methodology of increasing 27% to be submitted.
4.6) While calculation for Average Daily Fee calculation for FY
2020-21 rate has been increased by 29% for 100% Tolling Length.
Calculation or methodology of increasing 29% to be submitted.
4.7) Approval letter of Extension of Time and its condition to be
adhere by the Concessionaire. Copy of all Extension of Time
granted by the Authority to be provided.
4.8) Delay by the Concessionaire in completion after handing
over of the land w.r.t. reasonable time required /original work
programme to be submitted.
4.9) Calculation for extension of Concession Period is
calculated from 01.07.2017 whereas Scheduled Completion Date
as per Concession Agreement is 16.12.2017. This can’t be
accepted.
4.10) Thus Concessionaire is requested to submit details of Force
Majeure Event and period for considering revenue loss, so that
Signature Not Verified allocation of cost can be determined as per cl. 34.7.‖ Signature Not Verified
Digitally Signed Digitally Signed
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The IE, thus, accepted the contractual data and the dates provided by
Yedeshi in its letter dated 12 March 2021 and 5 April 2021, to be
matters of record. Following the aforesaid, the IE concluded, in its
letter dated 17 June 2021, that Yedeshi’s claim could not be accepted
as submitted and opined that Yedeshi was required to be requested to
submit documents or claims within the provisions of the CA.
106. In view of the aforesaid recommendation of the IE, the NHAI
wrote to Yedeshi, on 22 June 2021, stating that Yedeshi’s claim was
not tenable and was, therefore, rejected.
107. On 23 June 2021, Yedeshi wrote to NHAI, pointing out that, as
it had not received any response to the claim raised by it, a dispute had
crystallized, of which it sough reference to conciliation in terms of
Article 44 of the CA.
108. On receiving the communication dated 22 June 2021, issued by
NHAI, Yedeshi, by letter dated 30 June 2021, pointed out that the IE
had misread the concluding paragraph of the Statutory Auditor’s
certificate dated 3 June 2021. It was pointed out that, in fact, the
Statutory Auditor had stated that nothing had come to its attention
which caused it to believe that the data had not been properly
extracted by Yedeshi. It was further submitted that the IE had misread
Article 10.3.4 of the CA and had wrongly excluded the compensation
payable under Article 35.2 thereof. The undertaking dated 27 August
2019, it was submitted, had been furnished under economic duress, as
in order to obtain approval for the EOT, which was, in fact, Yedeshi’s Signature Not Verified
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due contractual entitlement. It was also sought to be contended that
the representative who had signed the undertaking was not authorized
to do so within the meaning of Article 47.10 of the CA. His
authorization was only for dealing with routine correspondence with
the NHAI. The undertaking amounted to modification or amendment
of the CA, in respect of which the said signatory was not authorized.
A copy of Power of Attorney issued to the said signatory was also
enclosed.
109. As matters had arrived at a stalemate, Yedeshi issued a notice
under Section 21 of the Arbitration and Conciliation Act 199649, to the
NHAI, on 9 March 2022 invoking the provision for arbitration
contained in Article 44.3 of the CA and nominating Hon’ble Mr.
Justice Pankaj Jaiswal, a retired Judge of the High Court of Allahabad,
as its arbitrator. NHAI was requested to nominate its arbitrator.
110. Yedeshi followed up this communication with a further letter
dated 6 June 2022.
111. In the meanwhile, the COVID-19 pandemic struck. Vide the
OM dated 19 February 2020, the Ministry of Finance declared the
Covid-19 pandemic as a force majeure event and permitted invocation
of force majeure clause in contracts.
112. Following this, the Government of Maharashtra imposed a
complete lockdown as a result of which Yedeshi was directed to
discontinue all Project work including toll collection.
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113. Following this, on 24 March 2020, Yedeshi wrote to the Project
Director, NHAI, drawing his attention to the notifications issued by
the Central Government, the declaration, by the World Health
Organization50 of the Covid-19 outbreak as a global pandemic and the
invocation by the Govt. of India, of the Epidemic Diseases Act on 12
March 2020. Inasmuch as the Covid-19 pandemic was a factor beyond
the control of Yedeshi, and had resulted in a material adverse effect on
the operation of the project, Yedeshi, in terms of Clause 34.5 of the
CA, notified the occurrence of non-political force majeure event w.e.f.
12 March 2020.
114. Pursuant to directions issued by the Ministry of Road Transport
and Highways51, NHAI, vide order dated 25 March 2020, directed
Yedeshi to suspend tolling operations on the Project highway w.e.f. 26
March 2020. Compliance, with the said direction, was effected and
NHAI informed, accordingly, by Yedeshi, vide letter dated 27 March
2020.
115. To cope with the Covid-19 pandemic, a nationwide lockdown
was declared till 14 April 2020, which was further extended till 3 May
2020. Pursuant thereto, Yedeshi, by e-mail dated 16 April 2020,
notified the continuance of the political force majeure event. By a
further communication dated 18 April 2020, Yedeshi submitted to
NHAI that the direction to discontinue collection of toll, as issued by
the Government, amounted to expropriation of Yedeshi’s right,
50
WHO
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51 Signature Not Verified
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thereby triggering political force majeure event within the meaning of
Article 34.4 (b) of the CA. As a result, Yedeshi claimed to be entitled
to be compensated in terms of Article 34.6.2(b) and Article 34.7.2 of
the CA. It was claimed that Yedeshi was entitled to be reimbursed
interest on debts taken by it and operation and maintenance costs and
all other costs which were directly attributable to the COVID-19
pandemic as well as for extension of the concession period in terms of
Clause 34.6.2 (b) of the CA. Even though NHAI had allowed
recommencing of tolling from 20 April 2020, it was submitted that the
revenue collected thereby was negligible as the state of lockdown
continued and only essential goods could be moved from one place to
another. Ergo, it was submitted that the impact of the political force
majeure even continued till 3 May 2020. A claim for reimbursement/
losses aggregating ₹ 26.77 crores was, therefore, submitted along with
a claim for extension of the concession period by 41.09 days with a
request to NHAI to execute a supplementary agreement extending the
concession period accordingly.
116. The aforesaid request of the Yedeshi was forwarded by NHAI
to the IE on 30 April 2020, for review and comments.
117. Vide Office Memorandum dated 13 May 2020 the Government
of India, while reiterating its directions that the Covid-19 pandemic be
treated as force majeure, clarified that invocation of force majeure
would be valid only where the parties to the contract were not in
default of their contractual obligations as on 19 February 2020.
118.
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NHAI, by policy circular dated 26 May 2020, resolved and agreed to
grant extension of the concession period and proportionate reduction
in premium payment to all concessionaires affected by the COVID-19
pandemic and restrictions imposed consequent thereto. The circular
further provided that extension of the concession period in proportion
to the loss of fee on a daily basis with loss of 25% in collection of fee,
as compared to the average daily fee, for four days, entitling a
concessionaire to extension of one day in the concession period. It
was further clarified that invocation of the force majeure clause would
be justified only where the parties to the contract were not in default
of their contractual obligations as on 19 February 2020. The
concessionaire who sought the benefit of the force majeure clause
were also directed to comply with the conditions/provisions contained
in the Model Concession Agreement.
119. On 18 July 2020, Yedeshi submitted its force majeure claim for
extension of the concession period from 22 March 2020 to 25 March
2020 and from 26 March 2020 to 19 April 2020. Extension of the
concession period by 51.54 days was, therefore, claimed. Inasmuch as
the policy of NHAI entitled the claimant to a minimum extension of
90 days, Yedeshi sought three months, i.e., 90 days extension in the
concession period. The Statutory Auditor’s certificate, supporting the
claim, was enclosed.
120. Vide communication dated 9 September 2020, Yedeshi
submitted a further claim for extension of the concession period for
9.58 days in July and August 2020, thereby making the claim for
extension for a total of 61.12 days.
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121. In and around April 2021, the second wave of the COVID-19
pandemic struck. Toll collection was again affected. The daily toll
collection was less than 90% of the average daily fees. As such,
Yedeshi, by its letters dated 6 April 2021 and 15 April 2021 again
intimated NHAI of the occurrence of a political force majeure event
within the meaning of Clauses 34.6.2(b) and 34.7.2(c) of the CA.
122. This was followed by the third wave of COVID-19 Pandemic,
involving the Omicron variant. Immediate restrictions were imposed
by the States of Maharashtra and Karnataka. Resultantly, on 24
January 2022, Yedeshi once again wrote to the NHAI notifying the
occurrence of a political force majeure event within the meaning of
Clause 34.5 of the CA.
123. The communication of Yedeshi to NHAI was forwarded by
NHAI to its IE on 2 February 2022 for comments and review.
124. As no response was received from NHAI regarding Yedeshi’s
claims for extension of the Concession Period, Yedeshi reiterated the
said claim by communication dated 7 February 2022 addressed to
NHAI, for grant of approval of extension of the Concession Period by
90 days on account of the first wave of COVID-19 Pandemic.
125. On 9 February 2022, the IE opined that Yedeshi had not
provided the pre-COVID average daily fees, the duration for which it
was seeking the benefit of force majeure or the consequent losses
suffered
Signature Not Verified by it on account of force majeure. The IE expressed its Signature Not Verified
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inability to submit any comments on Yedeshi’s claims till these details
were provided. NHAI communicated the said decision of the IE to
Yedeshi vide letter dated 21 February 2022.
126. On 1 July 2022, Yedeshi submitted its claim for extension of
the Concession Period on account of force majeure due to the second
wave of COVID-19 Pandemic, in terms of Clause 34.6.2 of the CA,
for the period April to September 2021 of 38.33 days. A total claim
for 128.33 days’ extension of time on account of the COVID-19
Pandemic was, therefore, submitted. Yedeshi also enclosed a
certificate of the Statutory Auditor in support of its claims for
extension of its Concession Period.
127. Yedeshi’s letter dated 1 July 2022 was forwarded by NHAI to
the IE on 15 July 2022.
128. No further correspondence was on record.
Arbitral proceedings, and the impugned Award
129. An Arbitral Tribunal, to adjudicate on the disputes between the
parties, came to be constituted on 1 August 2022. The said impugned
award stands rendered by the Arbitral Tribunal.
130. The Arbitral Tribunal framed the following issues as arising for
determination:
―(i) Whether the Claimant or the Respondent is in material
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under which Terms and Concession Agreement?
(ii) Whether the Claimant is entitled for compensation under
the Concession Agreement including under Article 35.2 of the
Concession Agreement, as claimed under Claim No.2 for breach or
default by the Respondent? If yes, what is the quantum?
(iii) Whether the Claimant is entitled for extension of
Concession Period under the Concession Agreement including
Article 34.6.2(b) of the Concession Agreement on account of force
majeure as claimed under Claim No.5 and under Article 35.3 as
claimed under Claim No.5 for the breach or default by the
Respondent? If yes, what is the quantum?
(iv) Whether the Claimant is entitled to compensation under
clause 34.7.2(c) towards force majeure cost, as claimed under
Claim No.4? If yes, what is the quantum?
(v) Whether the Claimant is responsible for the delay caused in
completion of the project of four laning of Yedeshi (km 1 00.000)
to Aurangabad (km 290.200) of NH-52 (old NH-211)?
(vi) Whether Claim Nos. 2 & 5 of the Claimant towards
compensation and extension of Concession Period are non-
maintainable, being contrary to the terms of the Contract, including
Article 35.2, 35.3 and 10.3.4 of the Concession Agreement and in
view of the undertaking dated 27.08.2018 issued by the Claimant?
(vii) Whether Claim Nos. 4 & 5 of the Claimant for
compensation towards force majeure cost under Article 34.7.2(c)
and extension of Concession Period under Article 34.6.2(b) of the
Concession Agreement made by the Claimant are non-
maintainable, in view of the terms and conditions of Article 34 of
the Concession Agreement?
(viii) Whether the claims raised by the Claimant are arbitrary,
fictitious and devoid of any merit, and thus, liable to be rejected in
entirety?
(ix) Whether the successful party is entitled for the interest
and/or cost of arbitration?
(x) What relief, if any?‖
131. Yedeshi let the evidence of two witnesses, i.e., Mr. Vinod
Kumar Menon, its authorized representative and Mr. Narendra
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Khandal, its Statutory Auditor. NHAI let the evidence of one witness,
namely, Mr. Ravindra S. Ingole, its Project Director. The witnesses
were examined and cross examined. Arguments were heard at length
and the impugned award came to be rendered on 27 January 2024.
132. The impugned Award of the Arbitral Tribunal may be
summarized as under.
132.1 Re. Issues Nos. 1 and 5
132.1.1 Yedeshi contended that NHAI was in breach of its
obligations to provide the site required for carrying out the Project.
132.1.2 Admittedly, 1 July 2015 was declared as the Appointed
Date.
132.1.3 The scheme of the CA was such that, before the
Appointed Date, NHAI had to grant Yedeshi valid license and vacant
access to the entire site required for the Project. Articles 3.1.1 and
3.1.2 (a) entitled Yedeshi to the Right of Way, access and license to
the site. ―Site‖ was defined in Article 10.1 as the entire real estate
required for Four-lanning as set out in Schedule A to the CA. Article
10.2.2 further stipulated that, commencing from the Appointed Date,
NHAI granted to Yedeshi leave and license rights in respect of all the
land comprising the site described in Schedule A, free of
encumbrances, on ―as is where is basis‖. Such license, concession and
Right of Way had necessarily implied actual physical vacant access to
site,
Signature Not Verified free of encumbrances and hindrances. Article 10.3.1 also Signature Not Verified
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required NHAI to grant, to Yedeshi, a valid license, vacant access and
ROW to the vacant and encumbered site.
132.1.4 Article 10.3.2 further mandatorily required NHAI to
grant, on the Appointed Date, valid license, vacant access and ROW
in respect of at least 80% of the site. This was an obligation which
NHAI could not defer. It was a material obligation of paramount
importance, as it was necessary for Yedeshi to undertake timely
construction of the Project Highway.
132.1.5 Article 10.3.4 required NHAI to grant valid license and
ROW in respect of the balance 20% of the site no later than 90 days
from the Appointed Date.
132.1.6 Thus, on the Appointed Date, NHAI was ideally to
handover the entire Project Site free of encumbrances or at the very
least 80% thereof, with the balance 20% being handed over within 90
days of the Appointed Date.
132.1.7 Consequently, Article 12.4.1 required Yedeshi to
commence construction and complete the entire Four-Lanning
construction work of the Project within 910 days from the Appointed
Date, which was the Scheduled Four-Lanning Date.
132.1.8 Admittedly, NHAI did not grant valid license, access and
ROW in respect of the entire site or even of 80% thereof on the
Appointed Date of 1 July 2015, free of encumbrances, despite this
being a mandatory obligation of NHAI.
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132.1.9 As per the first MOI, signed by Yedeshi and NHAI, only
77.13% of the site, after including the existing site, was Section 3D
compliant. NHAI was, therefore, in default of its obligation under the
CA. The MOI dated 1 July 2015 was not disputed by the NHAI.
Neither did NHAI dispute the assertion, in the said MOI, that Section
3D compliant access was available only in respect of 77.13% of the
site. Even before the Arbitral Tribunal, NHAI did not lead any
positive case to show that, on the Appointed Date, it had granted
actual physical access, valid license or ROW to Yedeshi even in
respect of 80% of the Project Site.
132.1.10 NHAI relies on the first MOI dated 1 July 2015 to
contend that it had handed over 77.13% of the Project Site, free of
encumbrances, to Yedeshi and that Section 3D notification had been
published by NHAI in respect of 84.20% of the total site which was
required to be acquired. Solely on the basis of the said Section 3D
notification, NHAI seeks to contend that it had granted ROW to
Yedeshi in respect of more than 80% of the Project Site on the
Appointed Date, in accordance with the CA. NHAI’s contention is
that, upon publication of a Section 3D notification, the land vested in
the Central Government, free of encumbrances and that, in view of
Section 3F of the NHAI Act, Yedeshi could have lawfully taken
possession of the Project Site. NHAI also relied on the definition of
Right of Way, as contained in the CA, as constructive possession of
the Project Site. Consequent on issuance of the Section 3D
notification and resultant vesting of more than 80% of the Project Site
in the Central Government, NHAI obtained a valid right to issue a Signature Not Verified
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license to Yedeshi which, according to NHAI, resulted in fulfilment of
its obligation under the CA.
132.1.11 NHAI’s contention is an afterthought. It is a matter of
record that, on the Appointed Date, even 80% of the Project Site had
not been handed over by NHAI to Yedeshi, let alone 100%. Even the
MOI stated that the total area of the land available, considering
Section 3D status, was 77.13% which was less than 80%. Moreover,
in arriving at the figure 77.13%, the operation of the Project Site, with
respect to which, though Section 3G compliance had been effected,
the farmers had not vacated the site, was also taken into consideration.
In subsequent correspondences, it was seen that the IE as well as the
NHAI itself, in assessing the extent to which the Project Site had been
handed over to Yedeshi, had considered availability of land in terms
of Section 3H, relating to payment of compensation, which was a
stage after Section 3D and Section 3G. The agenda notes relating to
the 359th Meeting also excluded, from consideration, lands in which
there were hindrances due to non-payment of compensation under
Section 3H, physical obstructions issue to compensation disputes or
even land which was subject to litigation, while assessing the extent to
which the vacant access and ROW in respect of the Project Site had
been handed over to Yedeshi. Thus, even as per the understanding of
the IE and of NHAI, mere publication of a Section 3D notification did
not result in grant of ROW to Yedeshi in accordance with the CA.
What was required was actual grant of vacant access, physical
possession free from encumbrances and hindrances. The obligation of
NHAI under the CA was not merely publication of a Section 3D
notification.
Signature Not Verified The entire procedure envisaged by Section 3D, Section Signature Not Verified
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3G and Section 3H had to be completed and the land handed over to
Yedeshi, in vacant and encumbrance free form, for NHAI to be said to
have adhered to its contractual obligations.
132.1.12 Were the interpretation of NHAI to be accepted, Article
10 of the CA would have specifically stated that ROW would be
deemed to have been granted to Yedeshi on issuance of Section 3D
notification in respect of Project Site. It did not, however, say so.
132.1.13 Article 10.3.1, in fact, stated that it was only when vacant
access has been granted to Yedeshi that valid license and ROW would
be deemed to have been granted. As such, in addition to a valid
license and ROW, grant of vacant access is also mandatory.
132.1.14 Article 48 defined ―Right of Way‖ as ―constructive
possession of the site, together with all way leaves, easements,
unrestricted access and other rights of way, howsoever described,
necessary for construction, operation and maintenance of the Project
Highway in accordance with this agreement‖. Thus, constructive
possession, necessary for construction, operation and maintenance,
had to mean actual physical possession and access to vacant
unencumbered land without hindrances and interruptions. It was
absurd to expect that, without grant of free actual physical possession,
Yedeshi would be able to carry out construction work on the Project
Highway. The CA was a commercial contract and has to be
interpreted in a commercial fashion. As such, NHAI’s contention that
its contractual obligation was only to give paper possession and not
actual physical possession, could not be accepted.
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132.1.15 Similarly, NHAI's contention that, once the Section 3D
notification had been issued, Yedeshi could have taken possession of
the site in accordance with Section 3F and that, therefore, the site was
available to Yedeshi, was not acceptable. The CA required NHAI to
put Yedeshi in physical possession of the site. Yedeshi was a private
party, who could not forcibly enter on the site and evict persons
therefrom. Section 3F itself contemplated that, once the land vested in
the Central Government pursuant to the issuance of the Section 3D
notification, it would be lawful for the Central Government or a
person authorized by the Central Government to enter upon the land.
The person authorized by the Central Government would necessarily
be NHAI, and not Yedeshi, which was a private party. Accepting
NHAI’s contention would amount to allowing Yedeshi to take law
into its own hands and forcibly enter into the Project Site. That could
not be regarded as the intent either of Section 3F or of the CA.
132.1.16 Nor had NHAI shown that it had, in any manner, actually
authorized Yedeshi to enter upon the Project Site or directed Yedeshi
to take forceful possession of the Project Site, or even informed
Yedeshi that, as the Section 3D notification had been published,
Yedeshi could enter upon the site and take possession thereof. The
words ―grant‖ and ―vacant access‖ in a commercial contract for
construction could only be construed as envisaging actual physical
possession or actual physical access to an unencumbered and
unhindered site. The correspondences produced by NHAI also showed
that, as per the accepted procedure, possession of any portion of the
site under Section 3F had first to be taken by NHAI and, thereafter, Signature Not Verified
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handed over to Yedeshi after encumbrances therefrom were removed.
It was only thereafter that NHAI could call upon Yedeshi to submit its
work programme for carrying out construction work on such parcels
of land. This procedure was also acknowledged by NHAI’s witness in
cross examination.
132.1.17 Within 90 days from the Appointed Date, NHAI had
failed to grant vacant access, license and ROW to Yedeshi even in
respect of 80% of the Project Site, free from encumbrance. As per the
MOI dated 30 September 2015, even if one were to consider Section
3D compliant land, only 76.37% of the total site was covered. Thus,
even within 90 days from the Appointed Date, NHAI had failed to
grant vacant and unencumbered access to Yedeshi in respect of 80%
of the Project Site.
132.1.18 NHAI sought to contend that the MOI dated 30
September 2015 had not been signed by NHAI, as required by Article
10.3.1 of the CA and that, therefore, the Arbitral Tribunal could not
rely on the said Memorandum. Even if this were so, NHAI had not
disputed the MOI. The MOI was submitted by Yedeshi to NHAI
under Yedeshi’s letter dated 13 October 2015. No contemporaneous
document by NHAI, disputing the contents of the MOI, had been
placed on record. Nor did NHAI prepare its own MOI, recording
what it deemed to be correct possession of site availability. In view
thereof, the mere fact that NHAI had not signed the MOI dated 30
September 2015 would not detract from its credibility or correctness.
132.1.19
Signature Not Verified The subsequent MOIs also reflected the same position. Signature Not Verified
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Even long after the Appointed Date, NHAI failed to handover and
grant vacant access, to Yedeshi, of even 80% of the Project Site, free
from encumbrances and hindrances. Even 322 days after the
Appointed Date, i.e. on 18 May 2016, only 73.64% of the Project Site
was Section 3D compliant and only 64.99% was available,
considering Section 3H. Thus, even after almost half the construction
period had elapsed, only 77.26% of the site was Section 3D compliant
and 72.80% of the site was Section 3H compliant. These memoranda
also note the submission, of Yedeshi, regarding encumbrances and
hindrances on the site as a result of failure, on NHAI’s part, to
complete Section 3H compliance and pay compensation to the persons
whose land had been acquired.
132.1.20 NHAI did not dispute these MOIs contemporaneously.
Nor did NHAI lead any positive evidence to reflect the actual site
availability at the relevant time or to indicate that it was more than
was reflected in these memoranda.
132.1.21 Yedeshi repeatedly informed NHAI about non-
availability of the land. This position was never contemporaneously
disputed by NHAI. Nor did NHAI assert that it had granted valid
license, vacant access and ROW as per the CA or provide any revised
calculation of the land available for construction.
132.1.22 Ultimately, Yedeshi was constrained to seek 547 days’
EOT, which was 18 months beyond the SFLD. Clause 12.4.1 of the
CA stipulated that this would result in extension of the SFLD. The IE
recommended
Signature Not Verified grant of EOT of 365 days for construction with Signature Not Verified
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additional three months on account of monsoon, thereby shifting the
SFLD to 26 December 2018. Most importantly, however, the IE,
while so recommending, arrived at a determination that vacant land,
free from encumbrances, had not been made available for
construction, which resulted in delay in the Project. The IE further
recorded that there were still hindrances on the Project Site. The
number of days of EOT recommended was worked out on the basis of
weighted average, by tabulating the month wise length of highway
available for construction. The recommendation noted that, on the
Appointed Date, about 156.36 km, out of total length of 189 km of the
Project Highway, was unavailable for construction, which worked out
to more than 50%. It further recorded that, even within 90 days from
the Appointed Date, i.e. in September 2015, 151.94 km of the Project
Highway was unavailable.
132.1.23 NHAI had not disputed these facts. Nor did NHAI
produce, before the Arbitral Tribunal, anything to show that land, in
excess of that noted by the IE, was, in fact, available for construction.
132.1.24 The IE specifically recorded that, even in August 2017,
more than 24% land was not available. This fact was stood admitted
by NHAI in paragraph 36 of its SOD, by the averment that ―more than
75% of the total project length was made available by end of August
2017.‖ Thus, even after a lapse of 760 days from the Appointed Date,
on which date NHAI was required contractually to provide 80% of
vacant unencumbered Project Site available to Yedeshi, the said 80%
of Project Site had not been made available.
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132.1.25 Given the fact that Yedeshi was required to fulfil its
obligation to complete construction within 910 days of the Appointed
Date, on which date 80% of the vacant unencumbered land was
required to have been made available by NHAI, the default by NHAI
in doing so even after 760 days from the Appointed Date, clearly
constituted a material breach on its part.
132.1.26 Further, the land was handed over by NHAI in a
disjointed and piecemeal manner. There were also encumbrances on
the land. This affected construction. The Arbitral Tribunal agreed
with the contention of Yedeshi that handing over of the land in a
piecemeal and disjointed manner was bound to affect the pace of
construction. NHAI was contractually bound to provide continuous
parcels of land with vacant access thereto. It was in anticipation
thereof that the CA fixed a timeline of 910 days from the Appointed
Date for performance of the CA. The IE, too, while assessing
availability of the land for construction, deducted areas where
continuity in land sections was of less than 200 m.
132.1.27 Further, the recommendation of the IE, in September
2017, for grant of 365 days’ EOT was expressly conditional on NHAI
handing over the balance land to Yedeshi by 30 September 2017.
132.1.28 The correspondences between Yedeshi, the IE and NHAI
bore out the fact that construction works had been directly affected
due to absence of vacant access and ROW to the site, delay in handing
over of site, non-provision of the site in continuous stretches and
existence,
Signature Not Verified on the site of various encumbrances and hindrances. Signature Not Verified
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Yedeshi and the IE provided a voluminous record manifesting factors
which affected the construction progress, including land acquisition
issues, tree cutting, utility shifting, delay in Change of Scope Orders
etc. Yedeshi as well as the IE stated that, for these reasons, Yedeshi
was entitled to EOT. These factors were not contemporaneously
disputed by NHAI. Nor did NHAI produce, before the Arbitral
Tribunal, any evidence to contradict these assertions. The Project
Director of NHAI also repeatedly confirmed these facts. Even the
regional office of the NHAI endorsed the recommendation of the IE
and the Project Director, thereby admitting the reasons for requiring
EOT to be granted and Yedeshi’s entitlement to EOT. Despite this,
the EC of the NHAI unreasonably kept the approval, of the Project
Director, for grant of EOT on hold even after the SFLD had passed.
132.1.29 Even after the lapse of 910 days from the Appointed
Date, NHAI had neither approved the first EOT of 365 days from the
original Scheduled Four-Lanning Date nor handed over the entire
balance encumbrance free and hindrance free site to Yedeshi.
Approval of the first EOT was granted by NHAI only on 6 December
2018, communicated to Yedeshi on 11 December 2018, a mere 15
days before the SFLD of 26 December 2018. Significantly, the EOT
granted was of 365 days, as recommended by the IE and the Project
Director.
132.1.30 Article 12.4.2 of the CA read with Schedule Q thereto
rendered the IE the sole authority to determine and grant EOT. The
IE, therefore, was not required to seek the approval of the Project
Director or any other authority in the NHAI for grant of EOT, and Signature Not Verified
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action of the IE in seeking such approval was beyond the CA.
132.1.31 The Arbitral Tribunal agreed with Yedeshi’s contention
that the CA did not empower NHAI either to grant EOT or approve
the EOT granted by the IE. The IE had also not referred to any
provision of the CA which required it to seek approval from the NHAI
for grant of the EOT recommended by it. Nor had NHAI, before the
Arbitral Tribunal, drawn attention to any such provision. Articles
47.10 and 48 of the CA clearly stated that the CA, its recitals and
schedules and amendments to the CA, constituted the agreement
between the parties. The NHAI, therefore, had no authority to
withhold approval of EOT as recommended by IE. This withholding
of approval amounted to a material breach of the CA and default, by
NHAI, in complying with its obligations under the CA.
132.1.32 The minutes of the 359th Meeting of the EC of the NHAI
and the agenda notes of the Technical Committee of the NHAI which
followed, constituted clinching documents of admission, by the NHAI
that it was in material breach and default of its obligations under the
CA.
132.1.33 Significantly, the agenda notes were prepared by the
CGM (T) of the NHAI on 27 August 2018, which was the same date
on which Yedeshi submitted its undertaking not to claim damages. In
the agenda notes, NHAI unequivocally admitted that it had been in
breach of the CA since inception. The agenda also recorded that a
considerable length of the Project Highway had not been handed over
to Yedeshi on the Appointed Date and that, even on 30 July 2018, Signature Not Verified
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three years after the Appointed Date, 23.98 km out of the total of
181.8 km had not been made available and that 0.98 km lacked
continuity. It was also admitted, by the Technical Division of the
NHAI that, even till date, NHAI could not hand over the entire Project
land, even after the Scheduled Four-Lanning Date had elapsed. The
agenda also recorded the admission and realization by NHAI that, on
account of the said failure on its part, NHAI was liable to pay
damages to Yedeshi. This was a material admission on NHAI’s part.
132.1.34 Para 6.2 of the agenda notes acknowledged the fact that
NHAI was contractually required to provide 80% of the Project land
on the Appointed Date and the remaining 20% within 90 days from
the Appointed Date. Till date, NHAI had not handed over the entire
land.
132.1.35 There was no allegation in the entire agenda note, by
NHAI, that Yedeshi was in default at any point. Rather, para 6.3 of
the agenda note recorded thus:
―It is evident that authority could not fulfil its conditions precedent,
till date (i.e. even after lapse of the scheduled completion.) The
concessionaire may demand the claims for the delay in future,
either by way of Arbitration or request the authority to compensate
the damages on account of authority’s default in fulfilling its
conditions precedent.‖Para 6.5 of the agenda note also recorded the IE’s finding in its letter
dated 5 July 2018, that the concessionaire was fulfilling its obligations
under Article 5 of the CA and that there was no breach of the CA
within the meaning of Article 35 thereof, till date. As NHAI had not
been
Signature Not Verified able to provide the entire land to Yedeshi till then, the IE Signature Not Verified
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recommended shifting of Project Milestone-IV, i.e. the Scheduled
Four-Lanning Date, by 365 days, i.e. upto 26 December 2018.
132.1.36 Despite these clear admissions by its own officers and by
the IE, the EC conjured up a finding, without any basis, that Yedeshi
had also delayed construction.
132.1.37 Yedeshi, significantly, did not execute the supplementary
agreement.
132.1.38 Thus, NHAI unreasonably delayed granting approval of
the first EOT of 365 days and also failed to adhere to the requirement
of handing over the entire balance land to Yedeshi by 30 September
2017. As a result, the construction period was required to be further
extended. The record produced by Yedeshi and the IE’s observations
and reasons for recommending grant of EOT, therein, revealed that
one of the main reasons for delay in completion of construction, even
after the issuance of the PCC, was the delay by NHAI in handing over
the Project Site free from encumbrances and hindrances and granting
vacant access and ROW to Yedeshi within the stipulated time period.
Even the fixation of additional time for completion of construction
was conditional on NHAI ensuring that there would be no further
encumbrances or hindrances affecting construction and that it would
hand over the balance land within the time stipulated in the EOT
applications. The record, however, revealed that NHAI could not
handover the balance land within the stipulated period, resulting in
further delay in completion of construction. Thus, it was evident that
NHAI was in continued breach of its material obligations under the Signature Not Verified
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CA and that it was on account of the said material breach that
construction was delayed.
132.1.39 These facts had not been contemporaneously disputed by
NHAI. Nor had NHAI laid any evidence before the Arbitral Tribunal
to contradict the status of balance land handing over or the
obstructions faced by Yedeshi on account of land acquisition issues
and encumbrances and hindrances on the site which affected
construction, and were not attributable to Yedeshi.
132.1.40 NHAI only sought to contend, firstly, that Yedeshi had
also delayed in completing the work after PCC had been issued, as
observed by the IE and, secondly, the delay in acquiring land was not
attributable solely to NHAI.
132.1.41 Thus, NHAI did not dispute that there was, in fact, delay
in handing over the encumbrance free Project Site, resulting in delay
in completion of construction. All that it sought to contend was that
this entire delay could not be attributed to NHAI. An undeniable fact,
however, remained that, even after almost a year from the PCC, which
was of 15 March 2019, the entire encumbrance free Project Site had
not been made available to Yedeshi, to the extent that, even on the
date of issuance of Completion Certificate on 24 September 2020,
certain works were required to be delinked as they could not be
completed owing to land acquisition issues. This fact was also noted
by the IE in its intimation to NHAI, conveying its intention to issue
the Completion Certificate. NHAI, too, by letter dated 23 September
2020, accorded its consent, resulting in issuance of the Completion Signature Not Verified
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Certificate by the IE with effect from 24 September 2020.
132.1.42 This clearly indicates that the delay could not be
attributed solely to force majeure in the form of the COVID-19
Pandemic.
132.1.43 NHAI also delayed in granting various approvals, which
affected construction. Among these was delay caused in shifting of
the utility lines. Article 11.2 of the CA required Yedeshi to shift
utility lines, which caused or could cause a material adverse effect on
the construction, operation or maintenance of the Project Highway, to
an appropriate place within or outside the State. The Arbitral Tribunal
agreed with Yedeshi’s submission that, as the utilities were in the
form of electrical lines, water pipelines, high tension lines, telephone
lines and fixtures pertaining to other essential services, relocation of
the utilities required NHAI’s assistance and approval of the area to
which they were to be relocated. The record produced by Yedeshi,
and the testimony of CW-1 revealed that, with respect to several
utility lines, particularly electrical and water utilities, NHAI delayed in
approving the cost of shifting and in depositing supervision charges
and approving plans for shifting of the utilities. It was evident that,
without such approvals granted by NHAI and deposition, by NHAI, of
the supervision charges, Yedeshi was in no possession to relocate the
utilities. In several cases, the site for relocating the utilities was also
not available. Inability to shift the utilities to other appropriate sites
further resulted in inability in Yedeshi being able to carry out the
Project work.
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132.1.44 NHAI did not deny the fact that it had delayed in granting
approvals and in depositing supervision charges for relocation of the
utilities. It only sought to rely on certain correspondences between
NHAI and the utility owning authorities, and certain comments in the
MPRs by the IE that shifting of the utilities by Yedeshi was slow.
132.1.45 Construction of the Project was further delayed because
of delay on NHAI’s part in obtaining forest clearance. 1.621 hectares
of forest land passed through the Project corridor, in eight locations.
NHAI obtained first stage approval for acquisition of the said forest
land only on 11 September 2015 for Osmanabad District and on 19
November 2015 for Beed District. The compensation amount, for
felling trees in the forest land, was deposited by NHAI only on 22
February 2016 and 31 March 2016. This resulted in delay in grant of
approval by the Chief Conservator of Forests and consequent delay in
clearing of trees from the said areas. The second stage approval for the
Beed District and Osmanabad Districts were received by NHAI only
on 29 November 2017 and 10 March 2019, respectively. Clearly,
therefore, there was considerable delay by NHAI in obtaining the said
approvals.
132.1.46 Article 4.1.2 (e) read with Schedule E of the CA required
NHAI to procure all applicable permits for environmental protection
and conservation of the Project Site even prior to the Appointed Date.
In the present case, however, even several years after the Appointed
Date, NHAI had failed to obtain the requisite permits and clearances.
The Arbitral Tribunal expressed its agreement with Yedeshi that this
constituted a breach of NHAI’s obligations under Article 6 of the CA, Signature Not Verified
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particularly obligations (g) and (h) and also breach of NHAI’s
representations and warranties under Article 7.2 (a), (b) and (h).
132.1.47 Another incidence of delay on NHAI’s part was with
respect to felling of trees, covered by Article 11.4 of the CA. NHAI
approved the estimates of tree felling only on 25 June 2015. The
requisite fees for felling of trees was deposited by Yedeshi with NHAI
on the very next day. Based on the instructions of the Collector, tree
felling commenced on 30 November 2015. Within a month thereof,
NHAI directed Yedeshi to stop tree felling and instead carry out
transplantation. CW-1 clearly testified that tree transplantation was
beyond the scope of work of Yedeshi in the CA. It was imperative,
therefore, that the estimates in that regard be approved by NHAI.
NHAI delayed in granting the said approval, which resulted in delay
in tree transplantation. On the other hand, NHAI did not produce any
evidence to contradict the said contention. The documents on record
and the testimony of CW-1 disclosed that it was only subsequently
that NHAI decided to get the transplantation work done by an
independent agency. Even thereafter, despite Yedeshi repeatedly
requesting NHAI to expedite the process of tree transplantation, there
was gross delay on NHAI’s part. NHAI did not produce, even before
the Arbitral Tribunal, any evidence to contradict the material produced
by Yedeshi, manifesting the said delay. The delay in tree felling and
tree transplantation was also attributable, therefore, to NHAI and
constituted one of the reasons for delay in completion of construction.
132.1.48 There was also delay on NHAI’s part in grant of approval
for Change of Scope, as well as for issuing Change of Scope Orders. Signature Not Verified
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Article 16 of the CA specifically stated that, if Yedeshi was to be
made to carry out any additional work, beyond the original Scope of
Work in the CA, NHAI was required to issue a Change of Scope
Order. The additional works were further required to be carried out at
the cost of NHAI. The documents produced by Yedeshi, and the
testimony of CW-1 disclosed that NHAI delayed in approving cost
estimates for such additional works and approving alignment and
scope of the said works. NHAI further delayed in issuing final
Change of Scope Orders. Only in principle approvals were granted,
belatedly, with a request to Yedeshi to carry out the said works. The
nature of these additional works and the uncertainty around
finalization thereof affected several portions of main construction of
the Project Highway.
132.1.49 Most importantly, NHAI was in breach of its most
fundamental obligation of granting Yedeshi vacant access, valid
license and ROW to the entire Project Site, in accordance with its
obligations under Article 6 and representations and warranties under
Article 7.2 of the CA.
132.1.50 It further transpired that NHAI did not have good or valid
right to the Project Site, so as to perform its obligation under the CA
and also did not possess power and authority to deliver and perform its
obligations or carryout transactions under the CA. Even till the date of
issuance of the Completion Certificate on 24 September 2020, NHAI
was unable to grant vacant access to parts of the Site.
132.1.51
Signature Not Verified Forest clearances, for certain parts of the Site, had been Signature Not Verified
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obtained as late as in 2019.
132.1.52 The Arbitral Tribunal found that Yedeshi had sufficiently
established that each of these factors had affected the availability of
free, vacant and unobstructed continuous stretches of land for
construction of the Project Highway and had resulted in delay in
completion of construction. These factors, as well as other delays by
NHAI, and corroborative documents and strip charts were all analysed
by the IE. To specific queries raised by the NHAI in this regard, the
IE specifically enumerated all these factors as encumbrances and
hindrances in completion of construction, none of which were
attributable to Yedeshi.
132.2 Whether Yedeshi was in material breach or default of its
obligations
132.2.1 In view of the aforesaid, the Arbitral Tribunal held that it
was unable to agree with NHAI’s contention that Yedeshi was
responsible for delay in completion of the Project.
132.2.2 NHAI had drawn the attention of the Arbitral Tribunal to
certain extracts of the MPRs for the period July 2015 to December
2017 and some observations made by IE in the said MPRs regarding
slow progress of the work by Yedeshi. However, when considered in
conjunction with other documentary evidence, particularly, the IE’s
findings at the time of recommending EOT to Yedeshi, the delays on
Yedeshi’s part, regarding which the IE had made observations in the
MPRs,
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What was relevant was whether the delays on Yedeshi’s part resulted
in extending the construction period, so as to arrive at a finding that
Yedeshi was responsible for delay in construction.
132.2.3 Every document, which recommended grant of EOT and
the approval by the NHAI in that regard, repeatedly emphasized that
the Project work could not be completed and constructions had been
delayed, on account of issues involving handing over of the Project
Site or other reasons attributable to NHAI. There was no observation,
in any of the said documents, regarding concurrent delay on Yedeshi’s
part, or that EOT was being granted because of Yedeshi’s delays.
Even in September 2017, when the IE recommended grant of EOT-1
of 365 days, the IE specifically found that construction was delayed
on account of issues relating to handing over of the Site and other
issues, none of which was attributable to Yedeshi. There was no
mention of delay in construction because of Yedeshi. Nor was there
any contemporaneous correspondence by NHAI, disputing this
position. Rather, the record overwhelmingly reflected admission, by
NHAI, of its breach.
132.2.4 In February 2019, while recommending further EOT of
196 days, the IE again recorded that delay in completion of
construction was on account of issues relating to handing over of
Project Site and other issues, none of which were attributable to
Yedeshi. Again, there was no contemporaneous denial, by NHAI, of
the said fact or any assertion that delay in construction was
attributable to Yedeshi.
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132.2.5 It was true that in the MPRs, the IE had entered certain
observations regarding slow progress, by Yedeshi, of certain works
between March 2018 and March 2019. Even so, in its letter of intent
to issue PCC, in March 2019, the IE categorically recorded that while
Yedeshi had completed more than 85% of the Project work, certain
works could not be completed due to issues relating to delayed
handing over and non-availability of the Project Site.
132.2.6 Schedule J of the CA contained the draft of the PCC, to
be issued under Clause 14.3 thereof. Para 2 of the draft PCC reads
thus:
―2. Construction Works that were found to be incomplete
and/or deficient have been specified in the Punch List appended
hereto, and the Concessionaire has agreed and accepted that it shall
complete and/or rectify all such works in the time and manner set
forth in the Agreement. (Some of the incomplete works have been
delayed as a result of reasons attributable to the Authority or due to
Force Majeure and the Provisional Certificate cannot be withheld
on this account. Though the remaining incomplete works have
been delayed as a result of reasons attributable to the
Concessionaire,)@ I am satisfied that having regard to the nature
and extent of such incomplete works, it would not be prudent to
withhold commercial operation of the Project Highway, pending
completion thereof.
3. In view of the foregoing, I am satisfied that the Project
Highway can be safely and reliably placed in commercial service
of the Users thereof, and in terms of the Agreement, the Project
Highway is hereby provisionally declared fit for entry into
commercial operation on this the ………… day of ……….. 20 ….. .
@ Strike out if not applicable.‖
When this draft PCC was compared with the final PCC issued by the
IE, which was also accepted by NHAI, it was seen that the IE had, in
accordance with the footnote accompanying ―@‖, struck off the
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sentence ―though the remaining incomplete works have been delayed
as a result of reasons attributable to the Concessionaire‖. It was the
draft PCC, after the striking out this sentence, which was sent to
NHAI, by the IE, with its letter dated 6 March 2019, conveying the
intention of the IE to issue PCC in that form. NHAI never objected to
the striking off of the said sentence or disputed the assertion of the IE
that Yedeshi was not in default in complying with the obligations
under the CA. Nor was there any communication by NHAI, to the IE,
asserting that Yedeshi was in fact in such default.
132.2.7 Further, even while approving the request for grant of
EOT in October 2019 and April 2020, the IE determined that the delay
in procurement of the Site, free from encumbrances, and failure on
NHAI’s part to hand over the balance Site to Yedeshi within the
prescribed time was the reason for delay in completion of
construction, which necessitated grant of further EOT till 31 May
2020. This was specifically recorded in the recommendations of the IE
contained in its letter dated 10 April 2020.
132.2.8 NHAI had not contemporaneously disputed the said
determination, by the IE, of the cause of delay in completion of the
construction. Neither had NHAI produced, before the Arbitral
Tribunal, any compelling evidence on the basis of which it could be
held that delay in completion of construction was owing to reasons
attributable to Yedeshi. The observations of the IE, in the MPRs,
regarding slow progress in certain works by Yedeshi, could not,
therefore, be treated as a determination, by the IE, of delay on
Yedeshi’s part in completion of work or as indicative of breach, by Signature Not Verified
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Yedeshi, of its obligation under the CA. In fact, at Item No. 4, under
the head ―status of compliance‖, the IE, while recommending issuance
of completion certificate, had recorded thus:
―Milestone-IV (Four-Lanning) could not be achieved due to
reasons not attributable to Concessionaire and accordingly
extension of time has been recommended.‖NHAI, by its letter dated 23 September 2020, consented to the grant of
Completion Certificate, thereby acknowledging the correctness of the
assertions contained in the letter of recommendations by the IE.
132.2.9 NHAI sought to rely, before the Arbitral Tribunal, on a
table showing a comparison between the length of Project highway
made available to Yedeshi on a particular date and commensurate
work carried out by Yedeshi by the said date. The reliance, on the
said comparison, for contending that Yedeshi was responsible for
delay in completion of the Project work, was completely misplaced.
The table did not take into account the break in continuity of the land
parcels handed over by NHAI to Yedeshi. Nor did it take into account
the hindrances faced by Yedeshi. The Arbitral Tribunal agreed with
Yedeshi’s contention that the CA required that, after receiving vacant
access, ROW and valid license in respect of at least 80% of the Project
Site, free from encumbrances and hindrances, on the Appointed Date,
and 100% of the Site within 90 days Yedeshi had, with it, 910 days
from the Appointed Date for completing construction.\
132.2.10 The CA did not stipulate that Yedeshi was liable to carry
out work commensurate with the land handed over to it by NHAI.
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Having failed to perform its part of the contract, NHAI could not seek
performance from Yedeshi. Article 10.3.5 of the CA did not obligate
Yedeshi to construct on land handed over to it by NHAI more than 90
days after the Appointed Date. Even as per the table on which NHAI
sought to rely, only 47.73 Kms of the Project highway had been
handed over to Yedeshi within 90 days from the Appointed Date.
Yedeshi had completed the work on the said stretch even prior to the
original SFLD, i.e. within 90 days from the Appointed Date. There
was no way in which Yedeshi could, therefore, be held responsible for
delay in completing of construction.
132.2.11 In letter dated 17 October 2019, the IE accepted that the
reasons for slow progress of work was owing to disturbance to the
workforce due to obstructions created by locals and landowners,
owing to non-resolution of land acquisition issues, including grant of
compensation, with NHAI.
132.2.12 In letter dated 8 January 2020 from the IE, while there
was a stray reference that there was delay in completion of work due
to non-deployment of sufficient resources, ultimately EOT was
granted subject to NHAI removing all hindrances on the Project Site
and handing over the balance site to Yedeshi. This indicated that the
delay, on NHAI’s part, in failure to remove hindrances and handing
over of the hindrance and encumbrance free site to Yedeshi was far
greater than any delay on Yedeshi’s part in complying with its
obligation. It was obvious that, in the absence of a hindrance free site,
Yedeshi could not complete construction.
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132.2.13 Besides, every delay did not amount to material breach or
default of the CA. Intermittent reference to slow progress by Yedeshi,
or issuance of directions to Yedeshi to infuse more resources, did not
reflect any material breach of the CA by Yedeshi. There was no
record or pleadings on the basis of which any finding of such material
breach of the CA by Yedeshi could be returned.
132.2.14 The Arbitral Tribunal was also not in agreement with
NHAI’s contention that Yedeshi had infracted Article 10.3.5 of the
CA by not completing all works on the 77.13% of the Project Site
which had been handed over to it on the Appointed Date, within the
original construction period of 910 days. The Arbitral Tribunal noted
that the estimation of the said 77.13 % being available on the
Appointed Date was solely on the basis of Section 3D compliance.
Section 3D compliance did not meet NHAI’s obligation under the CA.
The NHAI had itself admitted that, on the Appointed Date, it had not
granted vacant access, ROW and valid license to Yedeshi of even 40%
of the Project Site.
132.2.15 Article 10.3.5 of the CA could not be interpreted to mean
that, whenever and howsoever land was handed over by NHAI to
Yedeshi, Yedeshi was required to complete works on the said land
within 910 days. Such an interpretation would be absurd. Article
10.3.5 stated that, by the SFLD, Yedeshi would complete the works
on all lands handed over within 90 days of the Appointed Date. More
significantly, it was an admitted position that even the lands which
were handed over to Yedeshi on the Appointed Date within 90 days
thereof
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encumbrance free site had not been handed over to Yedeshi, even by
the date of the completion certificate. As such, as per Article 10.3.1
read with Article 10.2.2 and Article 3 of the CA, it could not be
construed that even 40% of Project Site had been handed over to
Yedeshi on the appointed date, in accordance with the CA.
132.2.16 As per NHAI’s own showing, on the Appointed Date,
only 36.7 Kms or 136.66 Kms of the land was available. Yedeshi had
completed construction of the Project on the said land prior to the
expiry of 910 days from the Appointed Date.
132.2.17 NHAI further sought to contend before the Arbitral
Tribunal that Yedeshi had failed to achieve Financial Close within 180
days of execution of the CA and was, therefore, in material breach and
default of its obligation under the CA. This submission was also
unacceptable. The documentary evidence and oral testimony of CW-1,
unshaken in cross-examination, clearly manifested that delay in
achieving Financial Close, by Yedeshi, was owing to reasons
attributable to NHAI. The said delay did not, therefore, amount to a
breach by Yedeshi in terms of Article 24.1 of the CA. No damages
would be payable by Yedeshi on that score.
132.2.18 In any event, on 16 March 2015, which was prior to the
Appointed Date, Yedeshi achieved Financial Close.
132.2.19 Moreover, NHAI had not filed any counter claim seeking
damages under Article 24.1 or otherwise, against Yedeshi. NHAI’s
contention in this regard was, therefore, irrelevant.
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132.2.20 In the circumstances, the Arbitral Tribunal agreed with
Yedeshi’s contention that the issue of any material breach or default of
the CA by Yedeshi was irrelevant to the adjudication of the issues in
controversy. While Yedeshi had claimed damages under Articles 35.2
and 35.3 of the CA, apart from the claim on the ground of force
majeure, following the Covid-19 Pandemic, no counter claim had
been filed by NHAI. The language of Articles 35.2 and 35.3 was clear.
132.2.21 Under Article 35.2, the scope of inquiry was only
whether NHAI was in material breach or default of its obligations
under the CA. The article did not require the Arbitral Tribunal to
enquire as to whether NHAI was solely in material breach or default.
Nor did it absolve NHAI of its liability to pay compensation on the
ground that, in addition to its own default, Yedeshi was also in
material breach or default of its obligations. Accepting NHAI’s
contention in this regard would require the Arbitral Tribunal to add the
word ―solely‖ into Articles 35.2 and 35.3 of the CA. Had the intention
of the parties, while executing the CA, been that Yedeshi would not be
entitled to any compensation under Articles 35.2 and 35.3 in the event
of any contributory default on its part, they would have so provided.
132.2.22 In fact, Articles 31.1 of the CA specifically provided for
Yedeshi’s liability in the event of material breach or default on its
part.
132.2.23 Similarly, the scope of inquiry under Article 35.3 of the
CA was limited to examining whether there was any material breach Signature Not Verified
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or default of NHAI. It did not contemplate any inquiry into whether
the delay in COD or suspension or reduction in toll revenue was
owing to sole material breach or default of NHAI. Once it was
established out that COD was delayed on account of material breach
or default of NHAI, or that, for that reason, toll revenues were
suspended or reduced, NHAI was liable to extend the concession
period. The liability of NHAI to extend the concession period did not
stand absolved merely because there was contributory material breach
or default on Yedeshi’s part in delaying COD or suspension or
reduction in toll revenues.
132.2.24 In fact, the CA specifically provided elsewhere for the
consequences of Yedeshi’s material breach or default, including the
right of NHAI to terminate the CA.
132.2.25 Though, therefore, the Arbitral Tribunal was not required
to enter into the issue of whether there was any material breach or
default of the CA on Yedeshi’s part, nonetheless, in view of the
preceding discussions, it was held that there was in fact no material
breach or default of the CA by Yedeshi.
132.2.26 NHAI also sought to shift the burden of the delay in land
acquisition to the shoulders of the CALA. This submission was not
acceptable, as it was de hors the terms of the CA. The CA obligated
NHAI to procure and grant vacant access, valid license and ROW to
Yedeshi. It did not provide for discharge of the said obligation by
CALA or that any delay by CALA in that regard could be cited by
NHAI as an excuse. There was no caveat, in Article 3, 6 or 10 of the Signature Not Verified
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CA, whereby NHAI’s obligation to procure and hand over the Project
Site, free from encumbrances, or the consequences thereof, could be
executed on the ground of delay on account of CALA or for any other
reason.
132.2.27 Under Article 12, Yedeshi was not liable to pay damages
to NHAI in the event of failure to achieve milestones, if the delay was
for reasons attributable to NHAI or because of force majeure. The
delay by CALA in procurement of land was not a contractually
envisaged force majeure event. Neither was any force majeure notice
issued by NHAI in that regard.
132.2.28 Under the CA, procurement of Site, grant of license to
Yedeshi to carry out the Project construction on the site and grant, to
Yedeshi, of vacant access, valid license and ROW for the purpose of
construction were the most material obligations of NHAI.
132.2.29 Delay on the part of the CALA could not excuse non-
fulfilment, by NHAI, of its obligations under the CA. NHAI sought to
rely on the cross-examination of CW1 in reply to question 30 put to
him, to the effect that delays in preparation of valuation of properties,
frequent change of the CALA, delay in publications of the Sections
3A and 3D Notifications etc. were attributable to the CALA and not to
NHAI. The Arbitral Tribunal did not agree. In any event, the decision
of whether responsibility was of the CALA or of NHAI was to be
decided by the Arbitral Tribunal and could not be dependent on the
statement of CW-1. It was noted that CW-1 in his testimony had in
fact stated that there was no mention of the CALA in the CA and that Signature Not Verified
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the obligations were to be fulfilled by NHAI.
132.2.30 The NHAI also contended that the CALA was an
independent authority appointed by the Central Government under
Section 3(a) of the NH Act, which did not work under the control or
supervision of NHAI. The Arbitral Tribunal found this difficult to
accept. Besides, the obligation to ensure that the CALA completed the
land acquisition process in a timely manner, as envisaged in the CA,
was of NHAI. NHAI’s failure to procure such performance by the
CALA was itself a material breach and default by NHAI, of Articles 6,
10 and 7.2 of the CA, which had a material adverse impact on
performance of the CA.
132.2.31 NHAI further relied on Articles 5.1.4 and 10.5 of the CA
to submit that facilitation of land acquisition and removal of
occupations, encroachments and encumbrances from the project site
was a joint obligation of Yedeshi and NHAI. The Arbitral Tribunal did
not accept this contention either. The CA clearly placed the obligation
to procure the site and grant to Yedeshi a valid licence, vacant access
and ROW free from encumbrances, squarely on NHAI. This, in fact,
was the NHAI’s main obligation under the CA. Article 5.1.4 only
required Yedeshi to make reasonable efforts to facilitate land
acquisition. This did not ipso facto render the obligation to procure
and hand over the vacant encumbrance free site, a joint obligation of
Yedeshi and NHAI. Yedeshi could, at best, provide assistance to
NHAI, when called upon to do so.
132.2.32
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facets, could not be undertaken by Yedeshi. RW-1 admitted this fact
in cross-examination. He further admitted that the assistance to be
provided by Yedeshi with respect to land acquisition was after
payment of compensation, if the land owners did not vacate the site,
by contacting such land owners. Yedeshi’s further obligation was to
point out any missing land parcels or khasras or any structures or
obstructions which may have been left out by NHAI. NHAI did not
point out any instance of failure, on the part of Yedeshi, to make
reasonable efforts to facilitate acquisition. The documentary evidence
led by Yedeshi showed that it had repeatedly pointed out these facts to
NHAI.
132.2.33 Further, Article 10.5 applies only after NHAI granted
Yedeshi vacant access and ROW to the site, free from encumbrances,
as envisaged by Articles 10.2.2, 10.3.1, 10.3.2, 10.3.4 and 10.4 of the
CA. Specifically, Article 10.4 stated that the project site would be
made available by NHAI to Yedeshi free from all encumbrances and
occupations. The obligation of Yedeshi under Article 10.5 was to
protect the site from encroachment. This obligation could be
performed only after the site had been handed over by NHAI to
Yedeshi in the manner envisaged by article 10.2.2, 10.3.1, 10.3.2,
10.3.4 and 10.4.
132.2.34 In view of the aforesaid, the Arbitral Tribunal concluded
that NHAI was in material breach and default of its obligations under
the CA, and that the said material breach and default had resulted in
material adverse impact on the performance, by Yedeshi, of the CA.
Apart from delay in handing over of the land, the staggered manner in Signature Not Verified
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which NHAI had handed over the project site to Yedeshi, absence of
contiguity in the site and existence of various encumbrances and
hindrances materially contributed to delay in completion of
construction.
132.2.35 Issues 1 and 5 were, therefore, answered by holding that
NHAI was in material breach of default of its obligations,
representations and warranties under the CA, and not Yedeshi.
Yedeshi was found not responsible for the delay caused in completion
of the project.
132.3 Re: Issue Nos. 2 and 6
132.3.1 The next issue which arose for consideration was whether
Yedeshi was entitled to claim compensation under the CA, inter alia,
under Article 35.2.
132.3.2 Owning to breach and default by the NHAI of its
obligations under the CA, the original construction period of 910 days,
contemplated in the CA, had temporarily got prolonged to 1912 days.
Due to such prolongation of the construction period, Yedeshi had
suffered or incurred additional costs and was deprived of commencing
toll collection much beyond the originally contemplated date of said
commencement.
132.3.3 In view thereof, Yedeshi raised a claim of additional costs
incurred or suffered by it, under Article 35.2 of the CA.
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in the event of material breach or default of the CA having occurred at
its end.
132.3.5 NHAI sought to contend that by letter dated 8 June 2015,
Yedeshi had waived the damages payable for delay in fulfilment of
Conditions Precedent by NHAI under Article 4.1.2 of the CA, which
included the Condition Precedent of procuring ROW. NHAI,
therefore, sought to contend that Yedeshi could not now seek
compensation for delay in that regard. The Arbitral Tribunal did not
agree. The wavier of damages for delay in fulfilment of Condition
Precedent did not absolve NHAI of its liability under the CA forever.
Nor did the letter dated 8 June 2015 estop Yedeshi from claiming
damages under Article 35.2 for material breach or default of the CA on
the part of the NHAI. What was waived by Yedeshi was the claim of
damages under Article 4.2 for delay in fulfilment of Conditions
Precedent under Article 4.1.2. Yedeshi’s claim before the Arbitral
Tribunal was not under Article 4.2 and, therefore, NHAI reliance on
the letter dated 8 June 2015 was misplaced.
132.3.6 Moreover, the waiver was for the limited purpose of
declaration of Appointed Date. The definition of ―Appointed Date‖ in
Article 48 of the CA included a condition that Conditions Precedent
were to be fulfilled by both parties for declaring the Appointed Date,
unless satisfied or waived. Thus, Article 48 itself envisaged the waiver
of the Conditions Precedent for the purpose of declaration of the
Appointed Date. In the letter dated 8 June 2015 after recording the
mutual
Signature Not Verified waiver, Yedeshi requested for declaration of the Appointed Signature Not Verified
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Date. Thus, the mutual waiver which was recorded in the letter was in
the context of such declaration of the Appointed Date. It could not be
interpreted to mean that the entire obligation of NHAI under the CA,
with respect to handing over the project site to Yedeshi, free from
encumbrances, stood waived. It was only the performance of the
obligations under Article 4.1.2, as a Condition Precedent to
declaration of the Appointed Date, which stood waived. This
understanding was also confirmed by the testimony of CW-1 in
examination, which went uncontroverted.
132.3.7 Accepting the interpretation canvassed by NHAI would
mean that in the guise of waiver of damages for fulfilment of
Conditions Precedent, NHAI could simply hand over 5% of the site
and delay in handing over the remaining 95% and claim absolution
from payment of damages. This would render the CA unperformable
as handing over of the site was the most material obligation of NHAI.
132.3.8 Yedeshi relied on Article 47.6 of the CA. The reliance
was apt. Article 47.6 clarified that waiver in respect of any particular
obligation under the CA, could not be construed as a waiver of other
obligations or of subsequent defaults. The waiver, therefore, would
only be of the NHAI’s obligations to perform certain acts as a
Condition Precedent prior to the Appointed Date and nothing more. It
did not absolve NHAI of its obligation to otherwise hand over the site
on the Appointed Date, nor did it condone the defaults for the period
from the Appointed Date. Nor did it absolve NHAI of its liabilities
resulting from defaults in respect of other provisions of the CA.
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132.3.9 NHAI sought to contend that the waiver applied to
Article 4.1.2 (a) whereunder NHAI had to procure for Yedeshi, ROW
to the site in accordance with Clause 10.3.1. The Arbitral Tribunal
found merit in Yedeshi’s contention that clause 4.1.2 (a) did not refer
to clause 10.3.2 or any other clause under Article 10 except Article
10.3.1. There was, therefore, no waiver of NHAI’s obligations under
Article 3 or Clause 10.2.2 to grant NHAI valid licence, vacant access
and ROW to the entire site, or of NHAI’s obligations under Clause
10.3.2 to grant valid licence, vacant access and ROW to at least 80%
of the unencumbered site on the Appointed Date and to the balance
20% within 90 days from the Appointed Date. Nor did the waiver
operate in respect of any other obligation of NHAI with respect to the
project site or otherwise.
132.3.10 Yedeshi had fulfilled all its Conditions Precedent prior to
the Appointed Date, except the requirement of obtaining applicable
terms which was partially fulfilled. Yedeshi’s contention was that the
remaining applicable permits would be required only subsequently.
NHAI had not disputed this contention.
132.3.11 The delay in fulfilling Conditions Precedent which were
tied up with obtaining the Financial Close was also owing to reasons
attributable to NHAI. The documents produced by Yedeshi and the
oral testimony of CW-1 showed that, while Yedeshi had submitted the
draft Financing Agreements well within time and obtained sanction of
the debt for the project, the lenders were reluctant to execute the
Financing Agreements owning to NHAI’s delay in fulfilling its
Conditions Precedent, particularly clause 4.1.2 (a). That the Financing Signature Not Verified
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Agreements could be executed only after fulfilment of its Conditions
Precedent by NHAI was not disputed by NHAI.
132.3.12 Yedeshi relied on P. Dasa Muni Reddy v Appa Rao52, to
contend that waiver could only be of a known right. The learned
Arbitral Tribunal agreed with the contention. Yedeshi could not have
conceivably predicted that NHAI would not be in a position to hand
over the site for years to come. The waiver of damages for delay in
fulfilling Conditions Precedent could not therefore operate as waiver
of damages for all times to come in respect of delay in handing over of
the site.
132.3.13 NHAI thereafter relied on the No Claim Undertaking
dated 27 August 2018 furnished by Yedeshi and contended that, in
view of the said undertaking, Yedeshi could not maintain any claim
for damages or loss under Clauses 35.2 or 35.3 of the CA.
132.3.14 The Arbitral Tribunal noted that, in the undertaking,
Yedeshi had not specifically stated that it would not raise any claim
under Clause 35.2 or 35.3 of the CA for material breaches or defaults
on the part of NHAI. Moreover, Schedule G to the CA, did not contain
any Milestone-IV. The undertaking did not contain any specific
mention to the effect that Yedeshi was waiving its claims under
Clauses 35.2 and 35.3 for material breaches of the CA by NHAI. In
the absence of any such specific reference to Clauses 35.2 and 35.3 in
the undertaking, the undertaking could not operate as a
relinquishment, by Yedeshi, of its right to claim damages or loss from
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NHAI under the said clauses. The undertaking, therefore, appeared to
be meaningless and even for that reason appeared to have been issued
under economic duress.
132.3.15 The conduct of the parties also indicated that, even in
NHAI’s understanding, the undertaking dated 27 August 2018 had no
binding effect and did not result in waiver of Yedeshi’s right to claim
damages under Clauses 35.2 or 35.3 or any other Clauses of the CA.
This was apparent from the fact that, even after furnishing of the said
undertaking, the EC of NHAI insisted on Yedeshi executing a
Supplementary Agreement specifically waiving delays by NHAI and
all claims against NHAI on account of shifting of the SFLD, i.e.
Milestone-IV.
132.3.16 In fact, by letter dated 6 December 2018, NHAI had
demanded that Yedeshi agreed to waive off delays and claims on
account of EOT for the SFLD and execute a Supplementary
Agreement to that effect. Prior thereto, in the internal meeting of the
EC of the NHAI held on 5 September 2018, while considering the
request of Yedeshi for grant of the first EOT, the EC stated that while
it was willing to grant EOT, it expected a similar reciprocal response
from Yedeshi. This also indicated that even in NHAI’s understanding,
the undertaking dated 27 August 2018 was not binding on its own and
it was essential for the parties to execute a Supplementary Agreement.
Undisputedly, no such Supplementary Agreement was executed
between the parties. The refusal of Yedeshi to execute such a
Supplementary Agreement itself indicated its intent not to be bound by
the undertaking.
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132.3.17 Moreover, Clause 47.10 of the CA specifically stipulated
that no modification or amendment to the terms of the CA would be
valid or effective unless it was agreed to in writing by the parties and
duly executed by persons specifically empowered by the parties in that
regard. The requirement of a Supplementary Agreement signed by
authorised representatives of the parties was underscored by this
Clause. The undertaking dated 27 August 2018 did not constitute a
Supplementary Agreement in terms of Clause 47.6 of the CA. In the
absence of any such Supplementary Agreement, the No Claim
Undertaking could not operate as an impediment to Yedeshi seeking
compensation for material breach and default of the CA by NHAI.
132.3.18 Moreover, the undertaking was not conditioned by any
valid consideration. There was no reason why Yedeshi would seek to
give up its claim against NHAI merely to obtain EOT-I, when it was
entitled to the EOT-I as also determined by the IE, even as per the
terms of the CA. The IE, who was contractually, the sole authority to
determine and grant EOT, had already determined that Yedeshi was
entitled to EOT-I and accordingly as per the terms of the CA, the
SFLD had been revised. As such, the undertaking was ex facie without
consideration, unconscionable, void and not binding.
132.3.19 Yedeshi further contended that the undertaking had been
executed under grave economic duress. NHAI submitted, per contra,
that the plea of economic duress was taken belatedly and was
unsupported by any particulars or documentary evidence.
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132.3.20 Addressing this submission, the Arbitral Tribunal noted
that it was clear that, due to material breach and default of NHAI,
completion of construction was delayed and that Yedeshi was entitled
to EOT. Clause 12.4.2 of the CA envisaged deemed revision of the
SFLD by the period for which EOT was granted. Yedeshi’s obligation
under the CA was to complete the entire four lanning by the SFLD.
The revision of the SFLD was, therefore, essential for Yedeshi. The
consequence on Yedeshi, were EOT not to be granted and the SFLD
consequently not revised was, therefore, far reaching.
132.3.21 Yedeshi, therefore, had no real reason for giving the
undertaking. On the other hand, NHAI sat over the request for
approval for grant of EOT, made by Yedeshi, even beyond the original
SFLD. Long after the expiry of the EOT-I of 365 days, which was
even beyond 270 days from the original SFLD, the NHAI did not
grant approval for EOT-II, despite the IE, the Project Director, the
Regional Officer and the Technical Committee of NHAI holding
Yedeshi to be entitled to EOT and specifically stating that delay in
completion of construction was owning to delay in handing over of
the site.
132.3.22 Clause 12.4.3 of the CA clearly stated that if the four
laning work was not complete within 270 days of the SFLD, NHAI
could terminate the CA. In the absence of grant of EOT, as the
completion of actual construction would have carried on beyond 270
days, there was every possibility of NHAI terminating the CA. In
these circumstances, the testimony of CW-1 that NHAI was under
constant threat of termination, was believable. Termination of the CA Signature Not Verified
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at that juncture would have resulted a grave and irreparable loss of
valuable rights of Yedeshi, resulting in far reaching consequences to
it.
132.3.23 As per the testimony of CW-1, which was not denied by
NHAI, Yedeshi had, by this juncture, already invested ₹ 3178 Crores
in the project, of which ₹ 1697 Crores was in the form of Debt.
Admittedly, by the stage of Milestone-III, Yedeshi had incurred an
expenditure of ₹ 2335.882 Crores. This was confirmed by the IE in its
letter dated 4 July 2017 and accepted by NHAI. Despite having
expended such a huge amount, Yedeshi had not been able to
commence toll collection owning to delay in completion of
construction. Were the CA to have been terminated at that point, the
entire investment of Yedeshi would have been laid to waste. As the
concession period and rate of toll were fixed in the CA, delay in
commencement of toll collection directly impacted the total period for
which toll could be collected and, therefore, the total revenue earning
capacity of the project. Additionally, Yedeshi also faced the wrath of
its lenders, whose debt had to be repaid from the toll revenues. Even
prior to the commencement of toll collection, therefore, Yedeshi was
in a position in which there was possible termination of the CA, unless
the EOT was approved by the NHAI. These factors, too, indicated that
Yedeshi was under extreme economic pressure not only to speedily
complete the work but to procure approval of the EOT so that
performance of the CA could continue.
132.3.24 The fact that the lenders were apprehending that the CA
would not be completed was also reflected by the request, by Yedeshi Signature Not Verified
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in its letter dated 25 July 2018 to NHAI, requesting that a comfort
letter be issued to quell the apprehension of the lenders. This written
request corroborated the oral testimony of CW-1, to the same effect.
The said testimony remained unshaken in cross-examination. NHAI,
by its default in granting approval for EOT-I had, therefore, placed
Yedeshi in a state of extreme economic duress.
132.3.25 The comfort letter which ultimately came to be issued by
NHAI evidenced that NHAI was also aware of the pressure being put
by the lenders. The language of the said letter suggested that NHAI
assured the lenders and Yedeshi’s BOD that the EOT had already been
approved and was only awaiting completion of formalities at the
headquarters of the NHAI.
132.3.26 Except for such economic duress, there was no other
reason for Yedeshi to give the said undertaking, waiving its claims.
Nor had NHAI provided any reason for such an undertaking being
given by Yedeshi. There was no prior correspondence, explaining the
said undertaking.
132.3.27 In these circumstances, it was clear that NHAI, by
misusing its dominant position, withheld and delayed grant of
approval for EOT to Yedeshi, thereby constraining Yedeshi to execute
the no claim undertaking. NHAI placed Yedeshi in a position in which
it had no practical option but to give the no claim undertaking, failing
which it faced termination or suspension. In these circumstances, the
undertaking could not be binding on Yedeshi or act as a bar to it
raising a claim against NHAI under Clauses 35.2 and 35.3 of the CA.
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132.3.28 The Arbitral Tribunal did not accept NHAI's contention
that Yedeshi’s letter dated 17 December 2018, read with NHAI’s letter
dated 6 December 2018, showed the waiver granted by the
undertaking to be consensual. By the time EOT was approved by
NHAI, the EOT-I of 365 days sought by Yedeshi had become
meaningless, and Yedeshi required an additional EOT of 196 days.
The mere fact that at that time, Yedeshi did not protest against the
undertaking, would not render the undertaking consensual or divest
Yedeshi of its right to seek compensation from NHAI.
132.3.29 NHAI’s contention that Yedeshi had accepted the letter
dated 6 December 2018 by NHAI, approving the grant of EOT subject
to waiver of delays and claims by both parties, in its entirety, was also
not accepted. The Tribunal found the conduct of the parties and the
record to indicate that Yedeshi had not accepted the letter in its
entirety. The letter envisaged waiver being executed by Yedeshi,
thereafter, by way of a Supplementary Agreement. No such
Supplementary Agreement was executed by Yedeshi. No protest in
that regard was lodged by NHAI at any point of time.
132.3.30 In fact, Yedeshi was always entitled to be granted EOT. It
was NHAI which was wrongly withholding approval. This, therefore,
was not a case of the claimant electing something which was
profitable to it.
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132.3.31 Besides in its EOT application itself, Yedeshi had
reserved its right to claim damages. Thus, the said right could not be
denied to it.
132.3.32 Both parties, particularly NHAI, treated the undertaking
as not being binding and as requiring the execution of a subsequent
Supplementary Agreement. In view thereof, the omission of Yedeshi
to retract the undertaking, would be of no consequence, in view of its
refusal to sign the Supplementary Agreement. No plea of estoppel
could therefore operate against Yedeshi.
132.3.33 NHAI further sought to contend that Yedeshi had not led
evidence of the author of the undertaking; no documentary evidence
had been produced in support of the testimony of CW-1, regarding the
meeting of the Project Director of NHAI with Mr. Shrivastava, in
which purportedly the Project Director had exerted pressure on Mr.
Shrivastava and that no material particulars substantiating the plea of
duress were forthcoming.
132.3.34 The Arbitral Tribunal did not find these to be vitiating
circumstances. It observed that, after considering all attendant facts
and circumstances, the documents on record and the unshaken
testimony of CW-1 regarding the existence of pressurising
circumstances of Yedeshi, it had arrived at its conclusion of economic
duress. In that view of the matter, the fact that Yedeshi had not led the
evidence of the author of the undertaking did not make any substantial
difference. The duress in the present case was not owing to anything
which transpired between Mr. Shrivastava and the Project Director, Signature Not Verified
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NHAI but owing to the circumstances in which Yedeshi found itself,
in which it had no choice but to provide the undertaking as sought.
Substantial evidence to that effect had been led by Yedeshi.
132.3.35 Thus, the preponderance of probability clearly favoured
the conclusion that the undertaking was vitiated by duress.
132.3.36 In these circumstances, the Arbitral Tribunal held that the
undertaking could not debar Yedeshi from seeking compensation from
NHAI under Clauses 35.2 and 35.3 of the CA.
132.3.37 Besides it was well settled that such a no claim
undertaking would not bar legitimate claims arising under the
contract. Reference was made to Ambica Construction v UOI53 and
NHAI v Madhucon Project Ltd54.
132.3.38 In view of the aforesaid, the Tribunal held that No Claim
Undertaking provided by Yedeshi did not estop it from claiming
damages under Clauses 35.2 and 35.3 of the CA.
132.3.39 NHAI further sought to rely on the proviso to Clause 35.2
of the CA to contend that it proscribed a claim for compensation for
any breach for which the CA expressly provided for damages.
Inasmuch as Clause 10.3.4 of the CA provided for liquidated damages
for delay in handing over ROW, NHAI contended that no claim for
compensation would lie.
53
(2006) 13 SCC 475
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132.3.40 The Arbitral Tribunal did not agree. Conjointly reading
Clauses 10.3.2 and 10.3.4 of the CA, it held that Clause 10.3.4 was
only referable to the Appendix to the CA which related to less than
20% of the Project Land. The damages envisaged by Clause 10.3.4, it
was held, were contemplated only in the event of failure of NHAI to
grant vacant access to any part of the said 20% of balance land, de
hors the obligation to make 80% of the land available by the
Appointed Date. Else, the impugned Award holds, it would be
impossible for Yedeshi to ever complete 75% of the Project, which
was an essential requirement for the PCC to be issued, as per Clause
14.3.2 of the CA.
132.3.41 The entitlement of Yedeshi to damages arises, as per the
impugned Award, not merely under Clause 10.3.4, but under Clauses
10.3.1, 10.3.2, 10.3.4, 10.2.2, 3, 6, 7.2, 11 and 16 of the CA. These
multiple breaches resulted in the construction period becoming
unreasonably prolonged, resulting, further, in Yedeshi incurring
additional costs obtaining the PCC much after the expiry of the SFLD.
132.3.42 Following the above discussion, the Arbitral Tribunal
holds Yedeshi to be entitled for compensation as well as extension of
the Concession Period.
132.3.43 The Arbitral Tribunal therefore held that a claim for
damages would lie and would not stand foreclosed by Clause 10.3.4 of
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the CA. For this, the Arbitral Tribunal also relied on the judgement of
this Court in NHAI v D.S. Toll Road Ltd55.
132.4 Entitlement to compensation and EOT
132.4.1 The Arbitral Tribunal, thereafter, examined the quantum
of compensation and EOT to which Yedeshi was entitled.
132.4.2 Clause 35.2 of the CA entitled Yedeshi to claim all direct
costs suffered or incurred by it as a consequence of material breach or
default, by way of compensation, from NHAI.
132.4.3 Yedeshi quantified its claim for compensation as
₹1717.08 crores, being the aggregate of principal of ₹1501.84 crores
and interest of ₹215.24 crores. Thus, actual loss suffered as claimed
as ₹1501.84 crores. This loss was certified and verified by the
Statutory Auditor in terms of Article 33 of the CA. Besides, Yedeshi
submitted a tabular statement showing summary of losses under
various heads, aggregating to ₹1501.84 crores.
132.4.4 The losses claimed by Yedeshi included costs incurred by
its Associate EPC Contractor Modern Road Makers Pvt. Ltd.56, which
MRMPL had claimed from Yedeshi. It was contended that MRMPL
had been appointed on a fixed cost, fixed time basis, and as it had
incurred additional costs on account of delayed period of construction,
it had raised claims in that regard on Yedeshi by letter dated 30
55
2023 SCC OnLine Del 5833
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September 2020. Inasmuch as Article 35.2 allowed Yedeshi to claim
all direct costs suffered or incurred by it, the amount claimed from
Yedeshi by MRMPL would be part of the costs that Yedeshi incurred.
132.4.5 The Statutory Auditor’s certificate was supported by over
20,000 pages of back up documents including the statements of plant
and machinery deployed, extracts of MPRs, salary statements, wage
slips, pay slips, bills and invoices of contractors, attendance logs of
workers, details of TDS, leave and license agreements, vehicle logs,
lease agreements for plants, vehicle hire invoices, bank statements,
loan account statements and extracts from IE reports on the status of
progress of work etc. The Statutory Auditor also confirmed, in
evidence, that these documents were taken into account by it while
certifying Yedeshi’s claim under Article 35.2 of the CA. The Statutory
Auditor also personally deposed and confirmed the contents of his
certificate.
132.4.6 NHAI, per contra, submitted that Yedeshi had not placed
on record, invoices, purchase orders, rental agreements, payment
proofs, etc. in support of its claims.
132.4.7 It was further submitted that, based on the judgment of
the Supreme Court in State of Orissa v Samantary Construction Pvt.
Ltd.57 that Yedeshi could not raise a claim based on working costs /
hourly hire charges of plant and machinery instead of ownership cost.
NHAI further contended that Yedeshi could not claim the loss incurred
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by MRMPL which was not a party to the CA and could not saddle
NHAI with such third-party costs.
132.4.8 It was further submitted that Yedeshi had not placed on
record any invoices or proofs of payment by or to MRMPL.
132.4.9 NHAI further contended that the claim towards escalation
/ incremental cost was fictitious and fabricated, and that the costs of
escalation was factored in the bid of Yedeshi and was not separately
payable. For this purpose, NHAI relied on clause 9(b) of the EPC
contract dated 19 August 2014. The rate of escalation was also
disputed.
132.4.10 NHAI further contended that Yedeshi erred in claiming
towards fixed overheads on the basis of a fixed monthly figure instead
of a progressively declining figure as work neared completion.
Further, as the said claim had not been paid by Yedeshi, it could not be
claimed from NHAI. Relying on the judgment of the Bombay High
Court in Essar Procurement Services Ltd. v Paramount
Constructions58, NHAI contended that Yedeshi could not claim
overhead losses merely on the basis of Hudson’s Formula unsupported
by evidence. Yedeshi’s claim to interest was also disputed.
132.4.11 Dealing with these submissions, the Arbitral Tribunal
noted that there was no dispute about the delay of 1912 days from the
Appointed Date, and of the fact that Yedeshi had in fact completed the
project highway. There had, therefore, clearly been a delay in
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completion of the project, which would have incurred costs. The
Arbitral Tribunal had already found the delay to have been attributable
to NHAI owing to default on its part in complying with its obligations
under the CA, including handing over of the site. Despite this, Yedeshi
achieved the first three Project Milestones, as well as the attendant
financial targets.
132.4.12 The IE had itself confirmed, in its letter dated 4 July 2017
that, by the time it achieved Milestone 3, Yedeshi had spent amount of
₹2336 crores.
132.4.13 The delay of 1912 days would invariable have led to
huge costs towards deployment and mobilisation of manpower and
machinery and colossal standby charges. Yedeshi could not be
expected to have a retired its plant, machinery and manpower
periodically after completing work on certain parts of the project and
rehire them after additional land was made available.
132.4.14 Yedeshi had led voluminous evidence in support of its
claim. NHAI neither dealt with it nor pointed any defects therein.
132.4.15 The Arbitral Tribunal held that Yedeshi was correct in its
submission that, so long as it had incurred costs, it was entitled to be
recompensed the said costs. No analysis had been made by NHAI of
the 20,000 pages of data provided by Yedeshi which included all the
elements noted in para 132.4.5 (supra).
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132.4.16 Insofar as the claim for costs incurred by MRMPL and
claimed from Yedeshi was concerned, the Arbitral Tribunal noted that,
as far as back as on 16 March 2015, Yedeshi had informed NHAI that
MRMPL had been appointed as the Associate EPC Contractor. As
such, NHAI was aware that MRMPL was an Associate EPC
Contractor, implementing part of the project work. It could not feign
ignorance of MRMPL.
132.4.17 CW-1, on behalf of Yedeshi had deposed on the
methodology to compute each head of claim and explained the basis
thereof. NHAI had not chosen to cross-examine CW-1 on this aspect.
Nor had NHAI pleaded any alternate methodology or examined any
auditor or financial witness who could discredit the methodology
adopted by Yedeshi.
132.4.18 The Arbitral Tribunal also noted that the Statutory
Auditor had been appointed in accordance with the provisions of the
CA, from the panel maintained by NHAI. The certificates of the
Statutory Auditor could not, therefore, be dislodged in the absence of
substantial proof or challenge by way of evidence of an alternate
financial expert. There had never been any dispute by NHAI
throughout the construction period when the Statutory Auditor had
certified achievement of Milestones and financial targets on the basis
of the same principles. The judgment in Samantary Construction was
found not to be applicable, as it pertained to a claim for loss of profit
owing to idleness or underutilisation of machinery which had been
wrongfully seized. In such a case, it had been held that the damages
suffered by the person could be offset by purchasing a new machinery Signature Not Verified
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and putting it to use and had, therefore to be limited to the cost of the
new machine. In the present case, Yedeshi had claimed compensation
for prolongation of heir charges, as the duration for which the
machines had to continue to remain hired had increased exponentially
owing to NHAI’s delay.
132.4.19 The Arbitral Tribunal further held that Yedeshi could not
be entitled to any costs claims for the period prior to the SFLD. After
deducting ₹331.83 crores towards interest during construction, from
the total claim of ₹1501.84 crores, the balance remaining was
₹1170.01 crores. As this claim was for 1182 days, the costs per day
worked out to ₹0.99 crores. For a period of 180 days, therefore, the
compensation worked out to ₹178.20 crores. Inasmuch as the Arbitral
Tribunal had held that Yedeshi was not entitled to compensation for
this period of 180 days, the figure of 178.2 crores was required to be
reduced from the total claim of ₹1501.84 crores, leaving ₹1323.64
crores.
132.4.20 Article 47.5 of the CA itself envisaged the rate of interest
on delayed payments as Bank Rate plus 5%. The Statutory Auditor
had worked out the interest rate at 9.25% to 10.65%, which was
reasonable. NHAI had not disputed the bank rate plus 5% as
mentioned in the Statutory Auditor’s certificate which, therefore, had
to be treated as correct. Interest had, therefore, to be awarded at the
said rate both during and post award.
132.4.21 Thus, the Arbitral Tribunal found NHAI entitled to cost
claim of ₹1323.64 crores and interest of ₹179.51 crores.
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132.5 Claim on account of force majeure
132.5.1 Claim towards force majeure was raised by Yedeshi on
the basis of the COVID-19 pandemic, which commenced from March
2020 and continued till April 2022.
132.5.2 The Arbitral Tribunal found that Article 37 of the CA
clearly indicated that the COVID-19 pandemic, coupled with the
notifications issued by the government as a consequence thereof,
amounted to a Political Force Majeure Event59, though the COVID-19
pandemic by itself may have been a non Political Force Majeure
Event. These circulars and notifications also amounted to a Change in
Law within the meaning of the CA. Yedeshi had notified NHAI of the
existence of a PFME on 24 March 2020, 6 April 2021 and 24 January
2022. NHAI did not, on any of these occasions, take a stand that the
notification was wrong.
132.5.3 As a direct consequence, Yedeshi became entitled to
claim costs compensation on account of the occurrence of a PFME in
terms of Clause 34.7.2(c) of the CA.
132.5.4 Yedeshi had raised a claim of costs compensation
towards PFME of ₹ 33.72 crores, comprising ₹ 6.83 crores towards O
& M expenses and ₹ 26.89 crores towards interest on debt as cost
incurred owing to the PFME. This was supported by a certificate
issued by the Statutory Auditor who, in his evidence, had vouchsafed
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the certificate. In his evidence, the Statutory Auditor had stated that
he had quantified the claim on the basis of vouchers, invoices and
bank statements which were available on record.
132.5.5 NHAI, on the other hand, had failed to fault the
procedure followed by the Statutory Auditor. No other auditor or
financial witness had been examined by NHAI to contradict the
certificate of the Statutory Auditor.
132.5.6 In that view of the matter, the Arbitral Tribunal held that
the testimony of the Statutory Auditor had gone effectively
uncontroverted.
132.5.7 Yedeshi was, therefore, found to be entitled to
compensation of ₹ 33.72 crores as expenses on account of the PFME.
132.5.8 As a result, the Arbitral Tribunal quantified the total
amount payable to Yedeshi to be ₹ 1503.15 crores, as the sum of ₹
1323.64 crores as principal and interest of ₹ 179.51 crores, apart from
PFME costs of ₹ 33.72 crores.
133. Analysis and Observations
134. I have deemed it appropriate, at the expense of brevity, to set
out the findings of the Arbitral Tribunal in some detail, for the reason
that they clearly indicate that the Arbitral Tribunal has, threadbare,
analyzed all aspects of the matter and has come to specific findings
and reasons as to why it finds NHAI to be in material default of its Signature Not Verified
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obligations, and that there is no such default on the part of Yedeshi.
While the extent to which these observations and findings can merit
interference, even under Section 34 of the 1996 Act, may be arguable,
I am of the opinion that, within the limited confines of Section 36(3)
of the 1996 Act, NHAI cannot be said to have made out a case of any
such patent infirmity in the said findings as would justify any
relaxation from the rigour of the decisions of the Supreme Court in
Manish and Toyo Engineering. To reiterate, the Supreme Court has,
in the said decisions, held that, in the case of a money award, deposit
of the entire awarded amount, inclusive of interest, is the norm. If one
were to read Manish and Toyo Engineering, plainly as they have
been rendered, there does not in fact appear to be any scope for
relaxation from the requirement of such complete deposit.
135. Even if one were, for the sake of argument, to presume that the
Section 36(3) applicant could seek a waiver from the requirement of
such complete deposit, that could only be in a case where there was
transparent and patent illegality in the arbitral award. The standard, in
that regard, in my considered opinion, would be much higher than the
standard which has to be satisfied while dealing with a Section 34
challenge. All the arguments which may be available while contesting
the sustainability of the arbitral award under Section 34, would not, in
my opinion, be available while arguing an application under Section
36(3), seeking a stay of the arbitral award and, for that purpose, a
relaxation from the requirement of depositing the amount awarded.
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of this application, as that might amount to a preemptive judicial
opinion regarding the merits of NHAI’s Section 34 challenge. I may,
however, note that NHAI’s contentions are, primarily, that
(i) Clause 35.2 of the CA only contemplated compensation
for direct costs, suffered or incurred by the Concessionaire,
(ii) the amount of ₹ 1323.64 crores awarded as damages to
Yedeshi was based on no evidence,
(iii) the amounts claimed pertained either to IRB or MRMPL,
without any document demonstrating that Yedeshi actually paid
or reimbursed these amounts to IRB or MRMPL,
(iv) Yedeshi had failed to place on record any bank
statements, receipts of payment or invoices raised upon it in
support of its claims,
(v) no idling costs could be claimed in the absence of
evidence,
(vi) the Arbitral Tribunal had failed to address the issue of
whether the document of a third party would constitute proof of
direct costs suffered or incurred by Yedeshi, in terms of Article
35.2 of the CA,
(vii) in support of its claim of idling, no rent agreement,
invoices, receipts or bank statements had been produced,
evidencing the payment of higher charges by Yedeshi or its sub-
contractors,
(viii) Yedeshi had not produced any log books or other
documents to indicate the number of working/utilized and non-
working/unutilized hours of the plant and machinery,
(ix) it could not be assumed that the entire plant and
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2017 to September 2020, as if no ROW was available during
the said period,
(x) the report of the Statutory Auditor only verified
arithmetical accuracy of the statement of compensation for
additional costs, escalation and interest expenditure incurred or
account of delay in completion of the Project, without any proof
of direct costs,
(xi) the MPRs indicated that Yedeshi was unable to fully
utilize the work front available with the resources deployed by
it, as a result of which there was no question of plant,
machinery or manpower being idle,
(xii) the work done by Yedeshi was not commensurate with
the length of Project Highway made available to it,
(xiii) Yedeshi had failed to mitigate its losses,
(xiv) Yedeshi had waived its claim for damages by its no claim
undertaking dated 27 August 2018, and
(xv) Yedeshi was not entitled to any costs on account of force
majeure, as the COVID-19 pandemic was a non-political force
majeure event, and not a political force majeure event.
137. Insofar as the aspect of material breach and default by NHAI in
failure to provide vacant and unencumbered land and ROW to Yedeshi
was concerned, Yedeshi contends that
(i) ROW was defined as ―constructive possession of the
site‖,
(ii) ―encumbrances‖ were defined as ―mortgage, charge,
pledge, lien, hypothecation, security interest, assignment,
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privilege or priority of any kind having the effect of security or
other obligations…..but excluding utilities‖,
(iii) Section 3D(2) of the NH Act provided that, on
publication of declaration under 3D(1), the land would vest
absolutely in the Central Government, free from all
encumbrances,
(iv) as such, consequent to the Section 3D notification,
Yedeshi could have entered the site and proceeded with
construction of the highway as per Section 3F of the NH Act,
(v) NHAI had no obligation to remove any encumbrances,
encroachments or interruptions, as these did not constitute
―encumbrances‖, and
(vi) in any event, as Yedeshi was never able to fully utilize the
available land, it could not be said to have suffered any loss on
account of any delay of NHAI.
138. None of these contentions, in my considered opinion, make out
a case for any waiver from the requirement of deposit, by NHAI, of
the awarded amount.
139. In the first place, these are all contentions which have been
advanced before, and addressed by, the Arbitral Tribunal. There is not
a single contention, amongst all the contentions enumerated supra,
which has been raised and not considered by the Arbitral Tribunal.
Essentially, therefore, NHAI is not pleading non-application of mind
by the Arbitral Tribunal, but is faulting the findings of the Arbitral
Tribunal on the contentions advanced by it.
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140. In my view, while these arguments may be available to NHAI
while arguing its substantive Section 34 petition, they cannot be said
to be so fatal to the impugned Arbitral Award as would justify
dispensation with the requirement of deposit of the awarded amount.
141. Besides, even on merits, the submissions, at the very highest,
amount to contesting the legality of the impugned award on merits, by
requiring a re-appreciation of evidence or an alternate understanding
of the clauses of the contract, to wit,
(i) the Arbitral Tribunal has addressed Clause 35.2 and
interpreted the expression ―direct costs suffered or incurred‖,
(ii) the Arbitral Tribunal has also justified inclusion, in the
costs payable to Yedeshi, of the expenses borne by MRMPL,
which were claimed by MRMPL from Yedeshi,
(iii) NHAI’s contention that Yedeshi had failed to place on
record any bank statements, receipts of payment or invoices in
support of its claim is clearly incorrect; rather the material
produced by Yedeshi, which is also on record before this Court,
includes details of MPRs, statements of plant & machinery
deployed, salary statement, wage slips/pay-slips, bills and
invoices of contractors, attendance logs of workers, vehicles
logs, lease agreements, loan account statements and perhaps
most prominently, reports of NHAI’s own Independent
Engineer regarding the status of the progress of the work at the
site and the costs which were, from time to time, incurred by
Yedeshi,
(iv) the certificate of the Statutory Auditor has been sought to
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Statutory Auditor in examination and cross-examination, in
which he had vouchsafed the contents of the certificate,
(v) the argument that Yedeshi had not caried out work
proportionate to the land which was made available to it from
time to time was also not tenable as a ground under Section
36(3) of the 1996 Act, especially as the learned Arbitral
Tribunal had itself found that the CA did not contain any
obligation on Yedeshi to perform the work on the land which
was, from time to time, made available.
(vi) the Arbitral Tribunal has dealt, in detail, with the No
Claim Undertaking provided by Yedeshi and has specifically
found that the undertaking could not be treated as voluntary and
as having been tendered under economic duress, which, at the
highest could be examined only at the stage of final argument of
the Section 34 petition, and
(vii) NHAI has not advanced any substantial ground to contest
the finding of the learned Arbitral Tribunal that, even if the
COVID-19 pandemic by itself could be treated as a non-
political force majeure event, the pandemic along with the
circulars and directives issued by Government constituted a
political force majeure event.
142. Most significantly, NHAI has, at least at this stage, not been
able to deal, to any substantial extent, with the Arbitral Tribunal’s
finding that there was material breach and default on its part in
complying with its obligations under the Agreement. Prima facie, it
cannot be disputed that Yedeshi could not be expected to carry out
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though NHAI has sought to advance, in this context, an involved
argument based on the definition of ―encumbrance‖. That, in my view,
would be a submission which would have to be examined only when
the Section 34 petition is finally argued.
143. Besides, there is not a whisper of a defence, by NHAI, to the
finding of the Arbitral Tribunal that there was clear breach, by the
NHAI, of its obligation to make 80% of the Project Land available by
the Appointed Date and the entire 100% of the Project Land available
within 90 days from the Appointed Date. Once this breach, and the
findings of the Arbitral Tribunal thereon, is not substantially
contested, then, at the stage of interim relief, it cannot be said that a
clear prima facie case has been made out by the petitioner, as would
justify dispensation with the requirement of deposit of the amount
awarded.
144. The Tribunal has found that the Project Land made available to
Yedeshi even after 90 days from the Appointed Date was a miniscule
portion of that which NHAI had to make available and that the entire
project land had not been made available to Yedeshi even long after 90
days from the Appointed Date had passed. This had resulted in
Yedeshi having to repeatedly ask for extension of the Project
Completion date. In each case, the IE justified Yedeshi’s claim and
found the delays on the part of NHAI to be the main factor which
resulted in delay in the project proceeding and achieving completion.
As many as 1912 days delay was occasioned in this process and, as
the Arbitral Tribunal has correctly held that the delay was attributable
entirely to NHAI and not to Yedeshi.
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145. On the substantive finding of breach, by NHAI, of its
obligations under the CA, therefore, I am of the opinion that, at least
at this stage, even a prima facie case has not been made out by NHAI.
146. At the very highest, the submissions of NHAI may be regarded
as arguable only on the aspect of computation. Even in that regard, the
Arbitral Tribunal has relied on cogent material and the Statutory
Auditor’s certificates along with the material in support thereof, which
had been placed on record by Yedeshi. Neither before the Arbitral
Tribunal, nor before this Court, has NHAI pointed out any error in the
said material. There is not a single submission, with respect to any of
the material that has been placed on record by Yedeshi, advanced by
NHAI in the present case before this Court.
Conclusion
147. On a holistic appreciation of all the material on record and the
submissions advanced by the NHAI by way of contest to the
impugned arbitral award, I am of the opinion that, keeping in view the
judgments of the Supreme Court in Toyo Engineering and Manish,
there shall be a stay of execution of the impugned award subject to the
NHAI depositing, with the learned Registrar General of this Court, the
entire awarded amount within a period of six weeks from the date of
uploading of this judgment on the website of this Court. In order,
however, to protect the interests of NHAI, the release of the said
amount to the respondent shall be subject to the respondent furnishing
a bank guarantee/corporate guarantee, to the satisfaction of the learned Signature Not Verified
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Registrar General for an equivalent amount. This would also be in
sync with the view expressed by the Supreme Court in Manish60. On
such bank guarantee/corporate guarantee being furnished, the
deposited amount would be released to the respondent, subject to the
outcome of the OMP.
148. The application is disposed of in the aforesaid terms.
149. Needless to say, observations in the above order are limited to
deciding the prayer for interim relief and are not intended to be a final
expression of opinion on the merits of the disputes between the
parties.
150. The Registry is directed to e-mail a copy of this judgment to
learned Counsel for all parties as soon as it is uploaded.
C. HARI SHANKAR, J.
JANUARY 16, 2025
dsn/ar/aky/yg
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Refer para 23 supra
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