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TMI Blog2021 (2) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-2019 passed by the sole arbitrator. Under the impugned award, the Learned Arbitrator has held the petitioner liable to pay the respondent a sum of INR 1,40,60,784 along with future interest @ 9% per annum by way of compensation on account of inter alia the loss in revenue triggered by reduced toll collections once GST was implemented w.e.f. 1-7-2017. 6. The facts in brief are that on 23-5-2017, the petitioner invited bids from entities interested in undertaking toll collection from users of the Vaghasia Fee Plaza for the section from KM 183.50 to 254.00 (Bamanbore-Garanore section) of NH-8A in the State of Gujarat. In its Request for Participation (RFP), the petitioner had set out that the potential toll collection on this stretch of the highway would be INR 39.32 crores. The respondent's bid of INR 41,49,00,000 was accepted by the petitioner on 21-6-2017 by way of a Letter of Acceptance (hereinafter referred to as 'LoA') and, in accordance with the estimated Annual Potential Collection (APC), the respondent submitted the requisite security of INR 39,32,000 by way of a bank guarantee of INR 3,45,75,000 valid for 14 months and a bank draft of INR 3,45,75,000, both dated 28- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST was a force majeure event. Rather, the petitioner claimed that since the GST was originally proposed to be implemented w.e.f. 1-4-2017, instead of 1-7-2017, much before execution of the contract agreement on 30-6-2017, the fact of implementation of GST was always in the respondent's knowledge. In turn, vide its letter dated 19-7-2017, the petitioner claimed that since the shortfall in toll collection was a business risk associated with the work, the respondents was required to forthwith deposit the outstanding toll collections with penal interest. The petitioner also threatened to terminate the contract agreement with the respondent and recover its outstanding dues by invoking the performance security deposited on 28-6-2017. As a result, the respondent was compelled to deposit an amount of INR 1,59,13,974 with the petitioner by way of toll collection deposit. 10. On 27-10-2017, the respondent wrote to the petitioner, through its Project Director, PIU-Rajkot, requesting it to not take any hasty decision against the respondent on the ground of outstanding deposit of toll collection. When the petitioner failed to reply, the respondent invoked arbitration by raising the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner's circular dated 16-3-2018 whereunder it accepted GST w.e.f. 1-7-2017 as a 'change in law' falling under the ambit of force majeure as envisaged in the contract agreement. Aggrieved by these findings, the petitioner has filed the present petition. 13. Assailing the award, Mr. Balendu Shekhar, Learned Counsel for the petitioner has primarily reiterated the submissions made before the Learned Arbitrator. He submits that the Learned Arbitrator, by holding that the introduction of GST fell within the ambit of clause 25(b)(v) of the contract agreement and was a force majeure event, failed to appreciate that the contract was executed between the parties only on 30-6-2017, by which time the Government of India had already notified that GST would be implemented w.e.f. 1-7-2017. Thus, the respondent was well aware of the legal position which was to prevail on 1-7-2017 and the consequences thereof at the time of signing the contract. The respondent is now estopped from claiming ignorance of the possible consequences of GST being implemented, upon the public infrastructure of the country. He further submits that Learned Arbitrator has also erred in holding that the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age in a petition under Section 34 of the Act. For these reasons, he submits that there is no infirmity in the impugned award and prays for dismissal of the present petition. 15. Before I deal with the rival contentions of the parties, it may be useful to note the limited scope of interference by this Court while dealing with a petition under Section 34 of the Act. In this regard, reference may be made to a recent decision in Hindustan Construction Company Limited & Ors. v. Union of India & Ors. - 2019 (16) SCALE 823 wherein the Supreme Court reiterated the scope and grounds of judicial interference in an arbitral award under Section 34 of the Act; the relevant paragraphs read as under : "49. Further, this Court has repeatedly held that an application under Section 34 of the Arbitration Act, 1996 is a summary proceeding not in the nature of a regular suit - see Canara Nidhi Ltd. v. M. Shashikala. As a result, a Court reviewing an arbitral award under Section 34 does not sit in anneal over the award, and if the view taken by the arbitrator is possible, no interference is called for - see Associated Construction v. Pawanhans Helicopters Ltd., (2008) 16 SCC 128 at paragra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21-6-2017, which aspect had been elucidated by the Learned Arbitrator. This implied that on 30-6-2017, had the respondent decided to refrain from executing the agreement based on the notification dated 28-6-2017 issued by the Government of India, it would have had to forfeit the securities it had furnished in favour of the petitioner for a sum of INR 39,32,000 on 28-6-2017. Thus, I find 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. On this aspect, I find that the Learned Arbitrator has made extensive observations in paragraph 4.3.3 of the award, and completely agree with the view taken by him which reads as follows : "4.3.3 There is no doubt that claimant was aware about the likely implementation of GST all over the country. The earlier date of 1-4-2017 was postponed by Government of India (GOI) and next date of implementation was not known or could be speculated by anybody. GOI brought into force Central Goods and Services Tax Act, 2017 w.e.f. 1-7-2017 vide Notification No. 9/2017-Central Tax, dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed below 25(b) force majeure Event : Except as stated in Clause (a) above force majeure Event means an event or circumstances or a combination of events and circumstances referred to in this clause which are beyond the reasonable control of the Party or Parties to this Contract and which party could not have prevented or reasonably overcome with the exercise of its reasonable skill and care in relation to performance of its obligations pursuant to this Contract and which are of the nature, without limitation of those described below : (i) ............ (ii) to (iv) ............ (v) Any change in law which has a material adverse, effect on the obligation of the parties hereto (vi) .. ... (vii) Suspension of traffic on the said section of National Highway/said bridge or any part thereof, exceeding 15 (Fifteen) days at a stretch (viii) .... 25(c)(i)l .. If a party claims relief on account of a force majeure event, then the Party claiming to be affected by the force majeure event shall, as soon as reasonably practicable and in any event within 7 days of becoming aware of the force majeure event, give n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 16-3-2018 in extenso : "NHAI/13013/CO/17-18/CB/GST/114535 Date : 16-3-2018 To All ROs. Subject : Relief to User fee Collection Contractors on Public Funded Projects at the toll plazas on NHs on account of implementation of GST. Sir, Various representations have been received from various Toll Contractors at Public Funded plazas regarding loss in traffic and its impact on toll revenue collection, if any, due to implementation of Goods and Services Tax (GST) by Government of India w.e.f. 1-7-2017. AICUP and some other fee collection agencies have requested to consider their representation under force majeure Clause 25(b)(v) of the Contract Agreement : "Any change in law which has a material adverse effect on the obligation of the parties hereto." 2. In this regard, although promulgation of GST w.e.f. 1-7-2017 appears to be a change in law, however, its material effect could not be proved as the claims submitted by AICUP regarding reduction in traffic of commercial vehicles after implementation of GST are of generic nature without any project specific inputs. Further, their claims regarding reduction in tollable traffic due to implementation of GST had only l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST, has increased to 1,31,860 vehicles. (b) Claimant in para 4.1.22 supra has however stated that the respondent's above statement is incorrect since the Respondent has placed on record only tollable traffic and no exempted category of vehicles are mentioned. The volume of traffic for July, 2017 submitted by the Claimant includes the exempted category of vehicles with the tollable traffic. Respondent has therefore portrayed a completely misleading picture. In fact, during July, 2017, 42,895 exempted category (non-tollable) vehicles passed through.. Vaghasia User Fee Plaza, resultantly the tollable traffic remained at 88,965 only. Accordingly the traffic volume in July, 2017 clearly came down in July, 2017 to 88,965 (paragraph 6/CD-2 and Comparative Table in Annexure-C-29/CD-2). It is pertinent to note that the Monthly User Fee Statement dated 6 June, 2017 for May, 2017 (1-5-2017 to 31-5-2017) mentions the number of vehicles as 1,00,679 and the Monthly User Fee Statement dated 5 July, 2017 for June, 2017 (1-6-2017 to 30-6-2017) mentions the number of vehicles as 98,115 at Vaghasia Toll Fee Plaza, as claimed to be submitted by M/s. Anoj Kumar Agarwal. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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