2020 (11) TMI 1092 - HC - Indian Laws

Doctrine of Frustation - Extension of effective date of termination of the contract and for hearing - seeking declaration that the Toll Tax ECC Agreement is ultra vires Section 113 (2) (g) of the Delhi Municipal Corporation Act, 1957 - re-determination of annual/ weekly amount payable by the petitioner to the SDMC towards toll tax - suitable downward revision in the weekly/ annual remittance commensurate with the reduction in toll tax paying commercial vehicles and taking into account the tax leakages on account of free lanes - HELD THAT - There is a serious dispute regarding the actual number of vehicles passing through the toll gates during the Force Majeure period as MCD is claiming that a large number of vehicles are passing through the said toll gates whereas claim of MEP is that lesser number of vehicles are passing through the said gates. MEP was expected under the clauses of the contract to give average weekly traffic count and to calibrate the toll collection system with the servers of MCD. To put this controversy at rest, the learned Single Judge may explore all the possibilities to arrive at a reasoned conclusion as to whether the number of vehicles passing through these toll plazas are correct or not as different figures are being claimed by the contesting parties. The said exercise is also necessary to decide two contempt petitions filed by both the parties against each other, which are pending adjudication before this Court. In case the system of actual collection of toll tax to be deposited by MEP with SDMC after adjustment of administrative and toll collection expenses continues for some time, the SMCD will be at liberty to get the said toll plazas inspected by its inspectors/staff on regular basis and/or by continuously monitoring the said toll plazas by installing the CCTV system or any other appropriate gadgets to enable it to count the actual number of vehicles passing through toll gates and paying the toll, so as to avoid continuous bickering between the two parties on this issue and the court being unable to continuously monitor implementation of directions to deposit the amount so collected by MEP in the bank accounts of SDMC after deducting the administrative and toll collection expenses @ 7.5%. It is made clear that the excess 7.5% administrative and toll expenses for the period from 26.03.2020 till today deducted by MEP from collection of toll tax made by it is to be deposited in the bank account of SDMC within 15 days of passing of this order by MEP as the actual rate of administrative and toll collection expenses allowed to be deducted by the contractor is 50% of the agreed expenses, which comes to 7.5% and not 15% as claimed earlier by the MEP. The Force Majeure clause stands invoked w.e.f. 26.03.2020 in terms of OM dated 18.05.2020 issued by MORTH, Govt. of India and it shall stand revoked when 90% traffic, in comparison to the traffic before lockdown period of weekly basis, stands resumed - The SDMC shall be entitled to weekly payments of Rs.20.00 crores till 25.03.2020 and after resumption of 90% traffic in comparison to the pre-lockdown period on weekly basis during pendency of the writ petition. Arrears of Rs.115.04 crores are held to be cleared without being affected by Force Majeure clause. Application disposed off.

Issues Involved:
1. Invocation of Force Majeure clause.
2. Compliance with court orders by MEP.
3. Validity of termination notice issued by SDMC.
4. Calculation and payment of dues by MEP.
5. Appointment of a retired judge for dispute resolution.
6. Implementation of OM dated 18.05.2020 by MORTH, Govt. of India.
7. Assessment of traffic flow at toll gates.
8. Reconciliation of accounts between MEP and SDMC.

Detailed Analysis:

1. Invocation of Force Majeure Clause:
The court addressed the invocation of the Force Majeure (FM) clause by MEP, which was acknowledged by the Government of India's notification dated 19.02.2020. The court observed that the FM clause was rightly invoked by MEP, but the national lockdown was declared on 24.03.2020. The court concluded that the FM clause came into effect from 26.03.2020, as per the OM dated 18.05.2020 issued by MORTH, Govt. of India.

2. Compliance with Court Orders by MEP:
The court noted that MEP had defaulted on the payment of Rs.20.00 crores per week as per the interim order dated 02.03.2020. The court observed that the SDMC had bank guarantees worth Rs.64.00 crores, which could have been invoked to meet the shortfall in payments. The court held that there was no breach of the order dated 02.03.2020 by MEP up to 16.03.2020, but MEP defaulted on 17.03.2020 and 23.03.2020.

3. Validity of Termination Notice Issued by SDMC:
The court upheld the finding of the learned Single Judge that the termination notice dated 16.03.2020 issued by SDMC was premature by one day, as the 15-day period for payment of Rs.38.00 crores was to end on 17.03.2020.

4. Calculation and Payment of Dues by MEP:
The court clarified that the Force Majeure clause applied from 26.03.2020 onwards. MEP was required to deposit the actual toll collection after deducting 7.5% as administrative and toll collection expenses. The court directed that the excess administrative and toll collection expenses deducted by MEP should be deposited with SDMC within 15 days.

5. Appointment of a Retired Judge for Dispute Resolution:
The court rejected the request for appointing a retired judge to adjudicate the dispute, stating that it was not inclined to order the same without the consent of the other party.

6. Implementation of OM Dated 18.05.2020 by MORTH, Govt. of India:
The court held that the Force Majeure clause stood invoked w.e.f. 26.03.2020 as per the OM dated 18.05.2020 issued by MORTH, Govt. of India. The court directed that the Force Majeure clause would stand revoked when 90% of the traffic, in comparison to the pre-lockdown period, resumed.

7. Assessment of Traffic Flow at Toll Gates:
The court directed the learned Single Judge to order an exercise to be conducted by a reputed agency to estimate the flow of traffic passing through toll gates managed by MEP from 26.03.2020 onwards. SDMC was also allowed to install CCTV or any other mechanism to count the vehicles passing through toll gates until 90% traffic resumed.

8. Reconciliation of Accounts Between MEP and SDMC:
The court directed both parties to reconcile their accounts from 03.03.2020 onwards to ensure strict compliance with the order dated 02.03.2020. MEP was instructed to ensure that all bank guarantees and post-dated cheques were deposited with SDMC and kept valid during the pendency of the writ petition.

Conclusion:
The court disposed of both the Letters Patent Appeals with specific directions regarding the invocation of the Force Majeure clause, payment of dues, assessment of traffic flow, and reconciliation of accounts. The court also preponed the date of hearing before the learned Single Judge to 24th November 2020 and requested the expeditious disposal of the writ petition.

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