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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION

I.A. Nos.363-364, I.A NO.425 IN I.A. NO.364 IN  I.A. NOS.344, 355, 362  

IN  WRIT PETITION (CIVIL) No.13029/1985

M.C.MEHTA                               ...Appellant

Versus

UNION OF INDIA & ORS.                       ...Respondents

IDBI BANK LIMITED AND STATE BANK OF INDIA      …Applicants  

J U D G M E N T

Interlocutory applications No.363 and 364 of 2015 have

been filed by the Consortium of Banks seeking direction from this

Court that the rights of the Consortium of Banks who has financed

the  Kundli-Manesar-Palwal  Expressway  (‘BOT’)  in  the  State  of

Haryana  and  has  outstanding  dues  approximately  Rs.1419.15

crores as on 28.02.2015 are not prejudiced by this Court’s order

dated 30.01.2015 passed in I.As. No.344, 355 and 362 in W.P.(C)

No.13029 of 1985.

2. Shorn  of  unnecessary  details,  facts  leading  to  the

present applications are as follows: Haryana State Industrial and

Infrastructure  Development  Corporation Limited  (HSIIDC)  invited

bids  for  developing  of  135.650  kms long  Kundli-Manesar-Palwal

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Expressway  in  the  State  of  Haryana.  Following  the  bidding

process,  three  companies  viz.,  M/s.  Madhucon Projects  Limited,

M/s. D.S. Construction Limited and M/s. Appolo Enterprises set

up  a  Special  Purpose  Vehicle  (SPV)  named  ‘KMP  Expressways

Limited’ (“concessionaire”) and letter of acceptance was issued on

14.11.2005.  The  concessionaire  and  HSIIDC  entered  into  a

concession agreement dated 31.01.2006 and the same was for a

period of twenty three years and nine months from the appointed

date.

3. The  concessionaire  raised  a  loan  from consortium of

banks comprising of the banks namely IDBI Bank, State Bank of

India, the applicants herein and other banks such as State Bank of

Mysore, State Bank of Travancore, State Bank of Patiala, Canara

Bank, Dena Bank, United Bank of India, UCO Bank, Vijaya Bank

and India Infrastructure Finance Company Ltd. The original project

cost of Rs.1915.00 crores was proposed to be financed by way of

equity  capital  of  Rs.766.00  crores  and  Rupee  Term  Loan  of

Rs.1149.00  crores.  The  lender  banks  have  disbursed  sums

aggregating to Rs.1075.03 crores for the project.  On 08.01.2007, a

loan  agreement  was  executed  between  the  lender  banks  and

concessionaire recognizing and strengthening the lenders’ security

interest  over  the  concession  agreement.  In  terms  of  loan

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agreement, concessionaire had  inter alia agreed to create security

interest over various documents like all project documents which

include concession agreement and all other assets and properties of

the  existing  concessionaire.  The  concessionaire  executed  the

indenture of  mortgage dated 09.01.2007 securing the interest of

the lenders as per the requirement of the loan agreement.  In order

to further secure the interest of the lender banks, on the same date

i.e.  08.01.2007,  a  tripartite  agreement  was  also  entered  into

between HSIIDC, the concessionaire and the IDBI Bank as lenders’

agent.   

4. Proposed  Kundli-Manesar-Palwal  Expressway135.650

kms long takes off from NH-1 near Kundli, crosses NH-10 in the

west of Bahadurgarh, crosses NH-8 near Manesar and finally joins

NH-2 near Palwal.  As the project is  being developed around the

national capital, Delhi, by an order of this Court dated 18.08.2005

in IA No. 182-183 in W.P. (C) No. 13029/1985 titled as ‘M.C. Mehta

v. Union  of  India’  the  same  is  being  monitored  by  a  special

monitoring  committee  under  the  chairmanship  of  Secretary,

Ministry of Road Transport and Highways with Chief Secretaries of

Delhi,  Haryana  and  U.P.,  Chairman,  NHAI  and  Chairman,

Environmental  Pollution  Control  Authority  (EPCA)  as  members.

Also,  the  progress  of  the  project  was  being  reviewed  by  a  High

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Powered Committee established under the chairmanship of Chief

Secretary, Haryana and others. There was delay in execution of the

work and the concessionaire was unable to achieve the commercial

operation of the project.  Consequently, this Court appointed the

Environmental  Protection Control Authority Committee (EPCA) to

expedite the project.  Several meetings were held between EPCA,

HSIIDC,  the concessionaire and the lender banks,  the details  of

which may not be relevant for the issue raised before us. Suffice to

note that it was agreed that an amicable substitution of the existing

concessionaire shall be made so as to expedite the project. It was

further  agreed  that  in  terms of  the  contract,  the  concessionaire

would  be  paid  Rs.1300.00  crores  as  termination  payment  for

utilization towards payment of  the debts due.  However,  HSIIDC

vide its letter dated 28.01.2015 addressed to EPCA informed that it

had revoked the arrangement of  making termination payment to

the  concessionaire  and  approval  for  payment  of  the  same  was

withdrawn.  At  the  same  time,  HSIIDC  issued  a  notice  dated

28.01.2015  to  the  then  existing  concessionaire  conveying  its

intention to terminate the Concession agreement, subject to a cure

period of one month for curing the defaults.   

5. At this juncture, applications being I.As. No.344/2012

and 362/2014 were filed by the amicus curie and I.A.No.355/2014

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filed by Government of  NCT of  Delhi  in WP (C)  No.13029/1985.

This Court vide its order dated 30.01.2015, directed the State of

Haryana  to  replace  the  existing  concessionaire  by  following  due

procedure. The operative part of the order dated 30.01.2015 reads

as under:-

“In the meanwhile, the State of Haryana will ensure that appropriate steps would be taken to award the contract for the project to the new concessionaire  within  two  months’  time  from  today.   The  new concessionaire  shall  commence  the  work  within  a  month’s  time thereafter.”

6. Later, vide a letter dated 13.02.2015, HSIIDC informed

IDBI Bank that in view of the order of the Supreme Court dated

30.01.2015, the process of selecting a new concessionaire through

its own efforts is under process and that if lender banks propose to

bring a new concessionaire, the lenders would have to adhere to

the time frame fixed by the Supreme Court. Vide its letter dated

16.02.2015,  IDBI  intimated  HSIIDC  that  in  order  to  facilitate

compliance with the order of the Supreme Court, the senior lenders

have  agreed  that  the  entity  selected  by  HSIIDC  shall  be  the

‘selectee’  of  the  lenders  for  the  purposes  of  the  substitution

agreement.  However, lender banks asked HSIIDC to ensure that

the  new concessionaire  takes  over  the  debt  due  to  the  lenders.

Applicant  No.1-IDBI  Bank  vide  letters  dated  16.02.2015,

25.02.2015, 27.02.2015, 05.03.2015, 16.04.2015 and 02.05.2015

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repeatedly  asked  HSIIDC  to  comply  with  clause  3.5  (i)  of  the

substitution agreement and to ensure that the new concessionaire

takes over the senior lenders’ debt dues.  

7. Subsequently, HSIIDC issued tender dated 20.02.2015

and  subsequent  addendum  dated  10.03.2015  and  13.03.2015

inviting  bids  ‘for execution  of  development  of  access  controlled

Kundli-Manesar-Palwal  Expressway Section  (Manesar  RD.  83.320

km to Palwal RD 135.650 kms) (Balance Work) on Item Rate Mode

amounting to  Rs.4,01,49,97,931.00’.  Bid submitted by M/s.  KCC

Buildcon Pvt. Ltd.-Dilip Buildcon Ltd. (JV) was accepted by HSIIDC

on 28.03.2015  for  execution  and  development  of  the  project  on

‘Item Rate Mode’ for the said stretch of the road project of 52.33 km

(Manesar-Palwal) (Balance Work).  Subsequently, in the first week

of April, 2015, HSIIDC issued invitation for bids for development of

access controlled six lane Kundli-Manesar Section (km 0.00 to km

83.320) valued at Rs.1774.00 crores on ‘BOT’ (annuity basis).  After

evaluation of the bids from the qualified bidders, HSIIDC accepted

the  bid  of  ESSEL on  ‘BOT’  (annuity  basis)  and  issued  letter  of

acceptance on 31.07.2015 with a project cost of Rs.1863.00 crores.

ESSEL incorporated M/s. Kundli-Manesar Expressways Limited as

a  limited  liability  company  and  the  concession  agreement  was

executed  by  HSIIDC  with  M/s.  Kundli-Manesar  Expressways

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Limited  on  03.09.2015  for  execution  of  work  of  development  of

access controlled six lane Kundli-Manesar Section km 0.00 to km

83.320 in the State of  Haryana on ‘BOT’  (annuity basis).   Be it

noted, in the tender as well as the concession agreement with the

ESSEL, there was neither mention of debts due to the lender banks

nor any clause was incorporated to secure the loans of the lender

banks.

8. In this factual background, the lender banks have come

before us by these applications inter alia seeking various directions:

(a) To  direct  HSIIDC to  amend the  concession  agreement  between HSIIDC and ESSEL so as to include a suitable condition to take over the notice and other amounts owed to the senior lenders;  

(b) To direct HSIIDC to take over the balance loan and other amounts owed to the lenders under the financing documents proportionate to the 52.33 kms of the project road which is constructed and completed by the new EPCA Director and subsequently taken over by the HSIIDC;  

(c) To direct HSIIDC to ensure that new concessionaire/ ESSEL who would  substitute  the  existing  concessionaire  to  assume all  the existing liabilities  and obligations of  the existing concessionaire towards the senior lenders proportionate to 83.320 kms.;  

(d) To direct HSIIDC to enter into a supplementary agreement with the ESSEL so as to include a suitable condition to ensure that the rights of senior lenders under the substitution agreement are duly protected;  

(e) To direct  and collect  all  tax levy from both the sections of  the project road i.e. Kundli-Manesar Section (83.320 kms) awarded to ESSEL and Mensar-Palwal of 52.33 kms as taken over by HSIIDC are deposited into Escrow Account to be opened with applicant No.1 the lead bank  

9. Grievance of the lender banks is that though the rights

of  the senior lenders were acknowledged by HSIIDC in its  letter

dated  13.02.2015,  HSIIDC  proceeded  with  the  bid  without

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disclosing to the new concessionaire that it will have to take upon

debts due to the lender banks.  On behalf  of  the appellants,  the

learned Attorney General, Mr. Mukul Rohtagi appearing along with

Additional  Solicitor  General  of  India,  Mr.  Neeraj  Kishan  Kaul

submitted that inspite of repeated letters by banks asking HSIIDC

to act in terms of substitution agreement, HSIIDC has ignored the

request of lenders and has gone ahead with the appointment of new

concessionaire without acknowledging the rights of the lenders and

thus HSIIDC failed to act in terms of  the contract,  in particular

clause 3.5 (i) of the substitution agreement.  

10. Contention  of  the  lender  banks  is  that  in  terms  of

clause 3.5 (i) of the substitution agreement while substituting the

concessionaire by ESSEL, HSIIDC ought to have taken into account

lenders’ dues and ought to have incorporated necessary clause in

the  concession  agreement  obligating  the  Selectee to  take  over

lender  banks’  dues.  It  is  contended  that  HSIIDC  is  bound  to

execute a substitution agreement with the  Selectee  on the same

terms and conditions as  provided in  the substitution agreement

dated  08.01.2007  and  that  HSIIDC  has  committed  breach  of

contract.  Further grievance of the lender banks is that unilateral

revocation of HSIIDC’s commitment to make termination payment

of  Rs.1300.00  crores  for  utilization  towards  payment  of  dues

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payable to the lender banks has caused serious prejudice to the

rights of  the lender banks.   Yet  another grievance of  the lender

banks is  that  corresponding to  clause  3.5.(i)  of  the substitution

agreement,  no clause  was  shown  in  the  advertisement  for

development  of  six  lane  access  controlled  Kundli-Manesar

Expressway km 0.00 to km 83.320 nor the same was incorporated

in the concession agreement which was awarded to ESSEL for the

development  of  six  lane  access  controlled  Kundli-Manesar

Expressway from km 0.00 to km 83.320.  It was submitted that

while awarding the work to ESSEL, HSIIDC ought to have acted in

accordance  with  the  terms  of  substitution/tripartite  agreement

dated 08.01.2007 and HSIIDC committed breach of contract by not

incorporating  the  suitable  condition  in  the  new  concession

agreement for the payment or take over of lenders’ dues by the new

concessionaire/ESSEL.  It  was  further  argued  that  unilateral

revocation  of  consensus  arrived  at  between  HSIIDC  and  lender

banks  to  make  termination  payment  of  Rs.1300.00  crores  for

utilization towards payment of  dues to the lender banks was in

breach of HSIIDC’s contractual obligations and the same caused

serious prejudice to the rights of the banks.

11. Lender banks relied upon clause 7.1.2 of the Common

Rupee Term Loan Agreement dated 08.01.2007 between the lender

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banks and concessionaire where right of the lenders to receive toll

collections  from the  project,  deposited  in  an  escrow  account  is

recognised.  Lender banks rely upon various clauses in tripartite

agreement/substitution  agreement  dated  08.01.2007  between

HSIIDC,  the  concessionaire  and the  lenders’  agent.   As  per  the

substitution  agreement/tripartite  agreement,  obligation  of  the

HSIIDC to inform the lenders’ agent about any notice of termination

of  the  concession  agreement  is  provided  in  clause  5.1  of  the

substitution agreement.   In case of default, right is given to lender

banks  to  substitute  the  concessionaire  by  a  Selectee subject  to

approval  of  such  ‘Selectee’  by  HSIIDC.  Clause  2.1  of  the

substitution  agreement  provides  for  substitution  of  the

concessionaire  by  a  ‘Selectee’.  Clause  3  of  the  substitution

agreement provides the modality for substitution of the Selectee by

the lender banks. On behalf of the banks, much emphasis is laid

upon clause 3.5.1 to  contend that  as  per  clause 3.5.1 it  is  the

responsibility  of  HSIIDC  to  ensure  that  a  suitable  condition

acceptable to the lenders’  agent is provided for payment or take

over  of  the  lenders’  dues.  Clause  3.5  (i)  of  the  substitution

agreement very much relied by the banks reads as under:-

“3.5 (i)  If  HSIIDC decides to  substitute  the Concessionaire  by any other person (“HSIIDC Nominee”), it shall take into account the Senior Lender’s Dues while considering offers from such persons and shall include a suitable condition as agreed to  by the lenders’  agent on

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behalf of the Senior Lenders for payment or take over of such dues by such HSIIDC Nominee to the extent agreed by the lenders’ agent while substituting the Concessionaire by the HSIIDC Nominee.  The HSIIDC Nominee shall similarly be bound to execute a supplementary/fresh substitution agreement on the same terms and conditions as provided herein.”

12. Having regard to the nature of the order we propose to

pass,  it  is  not  necessary  for  us  to  go  into  the  merits  of  the

submission of the banks and interpretation of the various clauses

relied  upon  by  the  lender  banks.  Suffice  to  notice  the  facts

emerging and the material on record and the need to protect the

interest of the lender banks by an interim order.

13. (a)  Delay  in  Completion  of  Work  and  Substitution  of

Concessionaire  thereafter: As  brought  on  record  that  though

concessionaire had executed part of the work, progress of the work

by  the  concessionaire  was  delayed  and  the  concessionaire  was

unable to achieve the work target. The lender banks served a notice

of  occurrence  of  default  dated  13.08.2013 to  the  concessionaire

asking him to cure the defects within a period of thirty days from

the date of delivery of the notice.  The concessionaire replied to the

default  notice  vide  its  reply  dated  17.09.2013  stating  that  the

payment default  was on account  of  delay by HSIIDC in making

payments  to  the  concessionaire.  On  13.01.2014,  substitution

notice  was  served  on concessionaire  by the  lender  banks  under

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article 2.2 of the substitution agreement which was objected by the

concessionaire vide its letter dated 03.02.2014.   

(b) Termination Payment and Unilateral Revocation of the same by

HSIIDC: While hearing I.A. No.344 of 2012, an interim order dated

10.03.2014  was  passed  by  this  Court,  thereby  authorizing

Environmental Protection Control Authority (EPCA) to proceed with

the proposal  of  replacing the concessionaire.  Accordingly  several

meetings were held between the lenders,  HSIIDC and the EPCA.

Vide letter dated 01.07.2014, EPCA recorded its comments to the

Government  of  Haryana  on  the  proposal  regarding  fixation  of

amount  of  ‘consideration  for  work  done’  sent  to  EPCA  by  the

lenders.  The lender banks sought termination payment to the tune

of  Rs.1711.38  crores.  However,  HSIIDC  vide  its  letter  dated

05.08.2014 conveyed its  decision to pay Rs.1300.00 crores as a

settlement/termination payment and the same was maintained in

the  EPCA meeting  on  09.08.2014.  In  the  said  meeting,  HSIIDC

informed that termination payment of Rs.1300.00 crores has been

approved by its highest authority and HSIIDC cannot accede to the

lenders request to increase the amount to Rs. 1711.38 crores.  In

the EPCA meeting dated 01.11.2014 HSIIDC informed that in view

of formation of the new government in the State of Haryana, a fresh

approval  from  the  new  government  would  be  required  on  the

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amount  of  Rs.1300.00  crores  fixed  to  be  paid  as  termination

payment.  According  to  the  lender  banks  in  its  letter  dated

05.08.2014 (Annx. R-3), HSIIDC stated that:

“it  has  been  decided  that  INR  1300  crore  (is)  the  most  reasonable amount  out  of  different  valuations  done  by  the  Lenders’  Engineer, Independent  Consultant,  Lenders’  Consultant  and  Lead Lenders”…….“while conveying as above, I  would also like to assure full  support  and  co-operation  of  the  State  Government  in  your endeavour for getting the Project implemented.”

Later,  HSIIDC is  said  to  have unilaterally  revoked its  consent  to

termination  payment  of  Rs.1300.00  crores  vide  its  letter  dated

28.01.2015 to EPCA while simultaneously issuing notice of default

to the concessionaire.  According to lender banks, HSIIDC had not

kept  up  its  commitment  and  has  not  honoured  the  consensus

arrived  at  between  the  lender  banks  and  HSIIDC  regarding  the

termination payment of Rs.1300.00 crores and committed breach of

contract.

(c) Order of  this Court  dated 30.01.2015:  As noticed earlier,  by

order dated 30.01.2015, this Court directed HSIIDC to appoint a

new concessionaire.  On behalf of the applicants, it was submitted

that the above developments and various communications between

the  lender  banks  and  HSIIDC  and  concessionaire,  consensus

arrived  at  between  the  parties  to  pay  termination  payment  of

Rs.1300.00  crores  and  the  rights  of  the  lender  banks  were  not

brought to the notice of this Court.  It was submitted that in order

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to  facilitate  compliance  of  the  order  of  this  Court,  lenders  vide

letters dated 16.02.2015 and 25.02.2015 intimated HSIIDC that the

Selectee by HSIIDC is acceptable to the lenders as  Selectee  for the

purpose  of  substitution  agreement.  However,  lender  banks

repeatedly  requested  HSIIDC  to  ensure  that  the  Selectee/

concessionaire takes over the debts due to lender banks and secure

the same by incorporating  appropriate  clauses in the concession

agreement.   

(d)  Proceedings before the Debt Recovery Tribunal:  As seen from

the  material  on  record,  the  consortium  of  banks  has  filed  an

application before the Debts Recovery Tribunal for recovery of their

dues of Rs.1607,97,51,108 against the previous concessionaire and

others.  It is brought on record that in the said proceeding, by order

dated 23.12.2015, the Debts Recovery Tribunal restrained outgoing

concessionaire M/s. KMP Expressways Limited from receiving any

amount/fee/charges from the Government of Haryana or any other

authority in respect of refund/transfer of KMP Expressway Project

without  permission  of  Debts  Recovery  Tribunal.  This  was

communicated by the lender banks to HSIIDC vide its letter dated

27.01.2016 calling upon HSIIDC not to make any payment to the

outgoing concessionaire.   

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(e) Arbitration  Proceedings:  As  seen  from  legal  notice  dated

03.07.2015,  M/s.  KMP Expressways  Limited  invoked  arbitration

clause  contained  in  clause  39.2  of  the  concession  agreement.

Arbitration claim is pending before the Arbitral Tribunal comprising

of Justice N.K. Sodhi (Former Chief Justice) presiding Arbitrator,

Justice  (Retd.)  T.S.  Doabia,  arbitrator  and  Shri  K.B.  Lal  Singal

(Engineer-in-Chief) (Retd.), arbitrator in Arbitration Case No.103 of

2013 against HSIIDC.   

14. As  discussed  earlier,  development  of  4/6  lane

Kundli–Manesar-Palwal Expressway from km 0.00 to km 83.320 in

the  State  of  Haryana  on  ‘BOT’  basis  was  awarded  to  erstwhile

concessionaire M/s. KMP Expressways Limited.  Because  of the

incompletion  of  the  work  as  aforesaid  and  intervention  of  this

Court by order dated 30.01.2015, the work was divided into two

parts  and awarded to M/s. KCC Buildcon Pvt. Ltd.-Dilip Buildcon

Ltd. (JV) and ESSEL as under:-

        Stretch    Amount To whom awarded

Manesar-Palwal  Expressway Section (Manesar RD.83.320 km to  Palwal  RD  135.650km) (Balance  Work)  on  Item  Rate Mode.

INR 401.49 crores M/s.  KCC  Buildcon  Pvt. Ltd.-Dilip  Buildcon  Ltd. (JV)

Development  of  access controlled  4/6  Lane Kundli-Manesar  (0.00km  to 83.320  km)  in  the  State  of Haryana  on Build-Operate-Transfer  (Annuity

INR 1774 crores M/s  ESSEL

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basis) (Balance Work)

15. Since the work of development of access controlled six

lane  Kundli-Manesar  Section  (from  km  0.00  to  km  83.320)  is

awarded to M/s. ESSEL, the applicants now seek a direction to

amend the concession agreement between HSIIDC and ESSEL, so

as to include a suitable  condition to take over lenders’  dues and

other amounts due to the senior lenders.  In our view, such a relief

cannot be granted by an order of this Court, as the same would

amount to variation of the contractual terms between the parties

i.e. HSIIDC and ESSEL. Even so the lender banks are complaining

about the violation of the terms of the tripartite agreement between

them and concessionaire. Any such dispute regarding the alleged

violation of the terms and conditions of a contract shall have to be

resolved in an appropriate civil action before the competent civil

court.  That is because the same are not amenable to adjudication

in these proceedings. Fortunately,  however,  the parties may not

have to resort to any civil action because of the presence of clause

7.11 in the tripartite agreement between the lender banks, HSIIDC

and  erstwhile  concessionaire  which  provide  for  adjudication

inter-se disputes between the parties by way of arbitration. Clause

7.11 reads as under:-

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“7.11 Any dispute, difference or claim arising out of or in connection with or in relation to this Agreement which is  not  resolved  amicably  shall  be  decided  finally  by reference  to  arbitration  to  a  board  of  arbitrators comprising of one nominee of each party to the dispute. Such  arbitration  shall  be  held  in  accordance  with  the Rules of Arbitration of the Indian Council of Arbitration and shall be subject to the provisions of the Arbitration and Conciliation Act, 1996.  The arbitrators shall issue a reasoned award.  The venue of such arbitration shall be at Chandigarh, India.   The award shall be final and binding on the parties.  The parties agree and undertake to carry out  the  award  of  the  arbitrators  (the  “Award”)  without delay.”  

16. That  certain  disputes  between  HSIIDC  and  the

concessionaire  have  already  been  referred  by  arbitration  to  an

Arbitral Tribunal comprising of Justice N.K. Sodhi, Former Chief

Justice of Karnataka High Court and Justice (Retd.) T.S. Doabia,

former Judge of the Jammu and Kashmir High Court is admitted.

Given the fact that two of the parties to the disputes sought to be

raised in the present applications, are already before the Arbitral

Tribunal, we see no reason why the disputes raised in the present

applications should also not be referred to the Arbitral Tribunal in

terms of clause 7.11 (supra).  To the credit of learned counsel for

the parties, we must mention that they were also agreeable to the

making of such a reference leaving it open to the arbitral tribunal

to entertain claims and counter claims based on the contractual

obligations flowing from the agreements and to adjudicate upon the

same.

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17. The only question then is whether we ought to make

any interim arrangement pending adjudication of the disputes by

the arbitral tribunal.  Having heard learned counsel for the parties

at some length, on that aspect, we are inclined to make a suitabe

arrangement to protect the interest of all concerned.  We say so,

because  Manesar  RD  83.320  km  to  Palwal  RD  135.650  km  =

52.330 km has been completed at least in part by the outgoing

concessionaire while  the remaining was completed by M/s.  KCC

Buildcon Pvt. Ltd.  The amount advanced by the lender banks to

the outgoing concessionaire has been, it is reasonable to presume,

utilized for construction of the said portion of the road.  HSIIDC

has now appointed an agent to collect the toll for the use of the said

road.  Ends of justice, in our opinion,  demand that the amount so

collected is secured to the extent of 80 percent by deposit of the

same in an escrow account to be opened in the IDBI (Lead bank)

while,  the balance 20 percent can be utilized by the HSIIDC for

maintenance etc.   The amount so collected shall be available to the

arbitral  tribunal  for  disbursement  in  such  ratio  as  the  arbitral

tribunal  may  after  hearing  the  parties  deem just  and proper  to

direct.   

18. In the result, we dispose of these applications with the

following directions:-

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(i) All  disputes between the lender banks, the HSIIDC

and  the  outgoing  concessionaire-KMP  Expressways  Ltd.

arising  out  of  or  in  relation  to  the  tripartite  agreement

dated 08.01.2007 executed between the parties shall stand

referred  to  the  arbitral  tribunal  headed  by  Justice  N.K.

Sodhi.

(ii) The parties namely,  the lender banks, HSIIDC and

the  outgoing  concessionaire  shall  file  their  claims,  and

counter claims before the arbitral tribunal who shall then

adjudicate upon and decide the same in accordance with

the law giving to each one of them an opportunity of being

heard in the matter.

(iii) Pending adjudication of the claims as aforesaid, we

direct  deposit  of  eighty  percent  of  the  amount  collected

towards toll  for use of  Manesar-Palwal  Section (Manesar

RD 83.320 km to Palwal RD 135.650 km= 52.330 km) in

an escrow account to be opened in IDBI-the lead bank. The

said amount shall then be available to the arbitral tribunal

for disbursement to the lender banks by way of an interim

arrangement or otherwise as it may consider appropriate

after hearing the parties.

(iv) This order of reference to arbitration or the pendency

of the proceedings before the arbitral tribunal shall not be

considered as an impediment for the new concessionaire to

commence its work of widening 4/6 lane work pertaining

to Kundli-Manesar (0.00 km–83.320 km.), subject however,

to the condition that before ESSEL, the new concessionaire

commences the work in Kundli-Manesar (0.00 km–83.320

km) in terms of  the contract allotted to it,  HSIIDC shall

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appoint a committee of engineers/experts for measurement

of the work done on (i) Kundli-Manesar-0.00km-83.320km

and  (ii)  Manesar-Palwal–83.320km-135.650km  by  the

outgoing concessionaire.  The  report  shall  be  filed before

the  arbitrators  within  four  weeks  from the  date  of  this

order. The outgoing concessionaire, the lender banks and

the new concessionaire shall associate with the process of

measurement of the work.

(v) Needful  shall  be  done  expeditiously  to  avoid  any

delay in commencement of the work by ESSEL.  

Reference of the disputes to arbitration shall not be an impediment

for  the Debts  Recovery Tribunal  to  proceed with the application

filed by the banks pending before it.  We make it clear that we have

not  expressed  any  opinion  as  to  the  merits  of  the  claims  or

contentions opened to the parties before the arbitral tribunal.  No

costs.

…………………….CJI.      (T.S. THAKUR)

……………………….J.          (R. BANUMATHI)

New Delhi; May 13, 2016     

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