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2021 (2) TMI 479 - HC - GSTCompensation on account of inter alia the loss in revenue triggered by reduced toll collections once GST was implemented w.e.f. 1-7-2017 along with future interest - HELD THAT - It is a general truth that once the Government of India had proposed implementing the GST all over the country the respondent was aware of its advent but I find the petitioner s deduction that the respondent s awareness of the regime implied that it had knowledge of the date on which it would be implemented on the date of submission of the bid entirely unsupported and presumptuous. It is far-fetched to argue that the respondent s awareness of the existence of a policy would equip it with the ability to predict the date on which the said policy would be implemented. The Learned Arbitrator has rightly held that once the earlier date of 1-4-2017 was postponed by the Government of India the next date of implementation was not known or could not be speculated by anybody. The petitioner s assertion that the respondent ought to have refrained from executing the contract agreement if it was unwilling to bear the consequences of the GST regime also proceeds on the presumption that the respondent had the ability to predict the adverse impact of this decision on consumer behaviour with respect to utilization of national highways. This line of argument also fails to account for the fact that by 28-6-2017 the day when the Government of India announced its intention to implement this regime the parties were already bound contractually owing to the LoA issued by the petitioner on 21-6-2017 which aspect had been elucidated by the Learned Arbitrator - there are no merit in the petitioner s contention that the respondent s consent to execute the contract agreement on 30-6-2017 ought to be construed as an acquiescence on its part to bear the consequences of the implementation of GST. Whether the implementation of the GST regime qualified as any change in law which has a material adverse effect on the obligation of the parties hereto. as envisaged in the force majeure Clause i.e. Clause 25(b) of the contract agreement? - HELD THAT - The respondent observed the then prevailing traffic volume statistics and immediately sent notices to the petitioner on 5-7-2017 and 10-7-2017 which have also been duly noted by the Learned Arbitrator in its award. Thus the respondent gave the petitioner early notice and regular updates regarding the downward dip of highway traffic and toll collections at that point of time. The respondent even requested the petitioner to carry out its own traffic assessment to verify the respondent s claims but the petitioner refused. It is against this backdrop that the petitioner issued the circular dated 16-3-2018 specifically for the benefit of its toll collection contractors which stipulated that while the implementation of the GST Act constituted a change in law but whether this change invited application of the force majeure clause in a contract would be determined in the facts of each case by the respondent s representatives. There are no merit in the petitioner s contention that the implementation of GST could not be construed as a change in law to qualify as a force majeure event in the respondent s case. In the first place on 16-3-2018 once the petitioner released a public circular deeming the implementation of GST as a change in law qualifying as a force majeure event I see no reason to deprive the respondent of the benefit of this declaration. Secondly even if the petitioner wished to rebut the respondent s contentions on this ground it was the petitioner s duty to provide the Learned Arbitrator with a transparent and complete picture of the flow of traffic and toll collections arising therefrom instead of providing data containing inflated figures owing to exclusion of non-tollable vehicles. A perusal of the findings extracted hereinabove show that the petitioner s sole caveat in the circular that the toll contractors had been unable to prove their claims stood resolved when the Learned Arbitrator not only delved into the specifics of the respondent s claims but also meticulously combed through the specific project inputs provided by the respondent to conclude that it had suffered material losses in toll revenue owing to the implementation of GST. There is absolutely no ground made out to interfere with the impugned arbitral award passed by the Learned Arbitrator warranting the exercise of the limited jurisdiction of this Court under Section 34 of the Act - Petition dismissed.
Issues Involved:
1. Condonation of delay in refiling the petition. 2. Challenge to the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. 3. Determination of whether the implementation of GST constitutes a force majeure event under the contract. 4. Assessment of the impact of GST on toll collections and the respondent's obligations under the contract. Issue-wise Detailed Analysis: 1. Condonation of Delay in Refiling the Petition: The court allowed the application seeking condonation of a 2-day delay in refiling the petition, stating that the delay was minimal and thus permissible. 2. Challenge to the Arbitral Award under Section 34 of the Arbitration and Conciliation Act, 1996: The petitioner, National Highways Authority of India (NHAI), challenged the arbitral award dated 20-11-2019, which directed NHAI to compensate the respondent for losses due to reduced toll collections following the implementation of GST. The court reiterated the limited scope of interference under Section 34, emphasizing that it does not sit in appeal over the arbitral award and will not interfere if the arbitrator's view is a possible one. 3. Determination of Whether the Implementation of GST Constitutes a Force Majeure Event: The respondent argued that the implementation of GST led to a significant drop in toll collections, qualifying as a force majeure event under Clause 25(b)(v) of the contract. The arbitrator agreed, noting that the respondent could not have predicted the exact implementation date of GST when submitting its bid. The arbitrator also referenced NHAI's circular dated 16-3-2018, which acknowledged GST as a 'change in law' that could be considered a force majeure event on a case-by-case basis. 4. Assessment of the Impact of GST on Toll Collections: The arbitrator found that the implementation of GST had a material adverse effect on the respondent's toll collections, as evidenced by the significant drop in traffic volume. The respondent provided detailed traffic data, which the arbitrator found credible. The arbitrator rejected the petitioner's argument that the respondent was aware of GST's implementation and should have accounted for it, noting that the exact date was not known when the bid was submitted. The arbitrator concluded that the respondent was entitled to relief under the force majeure clause, given the unforeseen impact of GST on toll collections. Conclusion: The court found no merit in the petitioner's arguments and upheld the arbitrator's findings. The petition challenging the arbitral award was dismissed, affirming that the implementation of GST constituted a force majeure event under the contract and that the respondent was entitled to compensation for the resulting losses in toll collections. The court emphasized the limited scope of judicial interference under Section 34 and concluded that the arbitrator's decision was the only possible one in law based on the facts presented.
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