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TMI Blog2018 (5) TMI 2184X X X X Extracts X X X X X X X X Extracts X X X X ..... 07,50,000/- by 25.02.2017. Hence, at this stage it would be out of place for the petitioner to challenge the award on advance development cost. The arguments of the petitioner is totally misconceived since in the instant case the award both majority and minority were made on 27.06.2017 in the presence of all the parties after due notice to them. It was prior to the expiry of extended period of 06 months which rather came to end on 30.06.2017. Since the fee of learned tribunal was outstanding so vide order dated 27.06.2017 it exercised a lien on the award. Hence only the delivery of the award was withheld per Section 39(1) of the Act. In its order dated 08.09.2017, the learned tribunal did not adjudicate the interse rights of the parties in relation to the project agreements which were subject matter of the arbitration but merely vacated the lien on the award. Hence the petitioner cannot be allowed to take advantage of its own wrong since the fee of learned tribunal was merely paid by the respondent. A bare perusal of award would reveal the arbitral tribunal has examined all the documents placed on record, appreciated the evidence led by the parties and made a reasoned award. The ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for three years in payment of the license fee and has also failed to pay the advance development cost amount. 4. Mr. Sandeep Sethi, the learned senior counsel appearing on behalf of the petitioner has primarily raised four grounds to challenge the impugned majority award passed by the learned arbitral tribunal as follows:- a) The termination is not valid in view of the express finding of the learned arbitral tribunal that the respondent was holding excess amount as security deposit which they were not entitled to collect from the petitioner; b) the finding of the learned tribunal that the payment of annual license fee was an independent obligation despite there being a security deposit placed with the respondent for securing the payments of the annual license fee, is contrary to the terms of the Article 3.2 of the Development Agreement; c) learned tribunal erred in grant of the balance development cost in favour of the respondent despite holding the advance development cost is not payable post termination and without the respondent proving the expenses to the extent of the advance development cost if ever incurred by the respondent; and lastly d) the impugned award was beyond t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Rights 2.1.1 DIAL hereby grants to the Developer the exclusive right and authority during the Term to undertake and implement the Project upon Asset Area 3 and in furtherance of the same grants a license to the Developer in respect of the Asset Area 3, as per this Article 2, for the sole purpose of undertaking the Project and Developer hereby accepts such license and agrees to undertake the Project in accordance with the terms and conditions of this Agreement. In consideration of the Licence Fee, DIAL hereby grants a license to the Developer, for possession of the Asset Area 3 for the Term solely for the purpose of development of Assets. The Developer shall have the right to implement the Project, without interruption or interference, together with the full and free right and liberty of way and passage and other rights in relation thereto the rights granted herein above along with the license shall be referred to as the Grant . 1.1.58 Term shall mean the Initial Term and if this Agreement has been extended, shall include the Extended Term; 3.1 In consideration of the Grant, the Developer hereby agrees to make payment of an annual License Fee, with effect from the effective date, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purposes of as set forth in Annexure B and for the Extended Term the year on year escalation of the License fee shall be assumed to be 5.5%. The Security Deposit shall be paid by the Developer to DIAL in the manner set out hereunder. 6.1.10 The Developer shall be obliged to achieve commercial operations of all permissible Assets on Asset Area 3, within a period of 6(six) years from the Effective Date. Upon occurrence of a DIAL Event of Default which substantially prevents the developer from achieving commercial operations of all permissible Assets on Asset Area 3, within a period of 6 (six) years from the Effective Date, The Developer shall be entitled to a day for day extension beyond the aforesaid 6 (six) year period, equivalent to the time taken by the DIAL to complete its obligations hereunder. Further subject to the Developer having made timely applications for all applicable permits, in the event of a delay (as reasonably determined by DIAL) in the receipt of Applicable Permits, DIAL may permit a day for day extension beyond the aforesaid 6 (six) year period equivalent to the delay in receipt of such Applicable Permits. 13.1 (i) failure of the Developer to pay to DIAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second default, under Article 13.1(i), DIAL shall have the right to issue a Notice of Intent to Terminate. Upon the issuance of Notice of Intention to Terminate, the Developer shall have the right to rectify the breach within a restricted cure period of 15 (fifteen) days of issuance of such Notice of Intention to Terminate. In the event that the Developer fails to cure such event of default within the restricted Cure period of 15 (fifteen) days, DAIL shall have the right to terminate this Agreement, forthwith by issue of a Termination Notice. IDSA (Infrastructure Development Service Agreement) Article 2 Development of Infrastructure Facilities 2.1 DIAL hereby undertake to develop and maintain the Infrastructure Facilities .and provide the Infrastructure Services as common facilities and services, in accordance with this Article 2 and the Developer agrees to bear such costs for the Infrastructure Facilities and Infrastructure Services as are set out in Article J . Article 3 DEVELOPMENT COST 3.1 Advance Development Costs 3.1.1 The Developer shall pay lo DIAL, a sum of Rs. 1100/- (Rupees eleven hundred) per square foot of the Maximum GBA on Asset Area 3 in terms of the Development Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The annual license fee per Article 3.1 (supra) was payable on yearly basis in one tranche on 15th April every year. After the execution of the development agreement on 26.02.2010, the annual license fee for the first year was paid in time. However the annual license fee for the second year was payable on 15.04.2011, but was paid in bits and pieces between 2011 to 2012 amounting to 25.48 Crores after several reminders of the respondent. Thereafter defaults continued and no payment was made towards the annual license fee after April 2013 i.e. for the year 2012-13, 2013-14 and 2014-15 despite repeated assurances by the petitioner that it would be paid as per letters dated 18.05.2012, 13.08.2012, 21.08.2012, 31.01.2013, 29.03.2013, 05.04.2013, 30.07.2013, 24.01.2014, 09.06.2014, and 25.05.2015 as recorded in the impugned award while recording the respondent s submissions. There is no challenge to these facts. 11. On account of the admitted defaults of the petitioner, the project agreements comprises of Development Agreement and IDSA were terminated on 16.07.2015. Even there was a default in securing the security deposit of 196 Crores payable in the following manner viz 50% on 26.02.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 24.07.2016 wherein the learned arbitral tribunal recorded the petitioner did not pay the annual license fee since 2012. Hence, in petition under Section 9 of the Act the Court found the petitioner to be in breach of the terms and conditions of the agreements. 15. Qua the contention the excess security deposit per Article 3.2 of the Development Agreement was liable to be adjusted, I may note the petitioner never made any such request to adjust the Licence fee amount during the tenure of the said agreement. No letter is filed by the petitioner which reveal it ever made such request for adjustments. Moreso neither there is any article in both the agreements which could entitle the parties to adjust the arrears of annual license fee against excess security deposit. In fact the security deposit was taken by the respondent as per the settled terms between the parties though later held to be void by the learned tribunal. It was only at later stage the petitioner started alleging the amount outstanding of licence fee ought to have been adjusted against excess security deposit. Admittedly, the parties had entered into a construction agreement and not a money lending agreement which may h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in 2015. 158. In this case, non-payment of Annual License Fees and the Advance Development Cost is admitted. On construction of the Contract as well as in terms of the aforementioned finding; this Tribunal is of the opinion that the Claimant has committed fundamental breach of the terms of the Contract. 161. Non Payment of consideration for a grant, in the opinion of the Tribunal, constitutes a fundamental/ material breach. Such breach being repudiatory in nature, the termination of the Contract cannot be held to be bad in law. 172. The Claimant admittedly accepted and acknowledged its liability to pay the Annual License Fees and Advance Development Costs to the Respondent without any demur whatsoever. 173. In terms of Section 58 of the Indian Evidence Act, any fact admitted need not be proved. Such admission on the part of a party to the lis may either be by way of pleadings or by way of document or by such conduct, as are apparent from the materials brought on record by the parties. The Claimant is, thus estopped or precluded from raising any issue contra. 174. Moreover, admittedly the Claimant had issued several cheques to the Respondent, which bounced. 175. In terms of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters, but therein also accepted its liability to pay ALF. 188. In other words, the Claimant, save and except in aforementioned letter dated 29.03.20l3, never denied or disputed its liability to pay the Annual License Fees. On the other hand, it repeatedly requested for extension of time for payment of ALF. 195. This conduct on the part of the parties hereto, in the opinion of this Tribunal are sufficiently indicative of the fact that the parties were ad-idem that the Annual Licence Fees was payable by the Claimant to the Respondent. 614. Mr. Aggarwal would furthermore urge that Annual License Fees, even if payable, could have been adjusted by the Respondent from the security amount and on that ground too, the termination is illegal. 615. In the opinion of this Tribunal the question as to whether the Respondent could take recourse thereto was dependent on the option of the Respondent. Only because Security Deposit has been made for securing the Annual Licence Fees, the same by itself does not entitle the Claimant not to pay the Annual License Fees despite clear mandate contained in clause 3.1 of the DA and the IDSA, the effect whereof has been discussed hereto before. 18. Thus, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the Respondent in respect of return of the purported excess developmental cost payable by the Respondent to the Developers in term of the Contract. xxx xxx 214. The Claimant at all material times and even before the Tribunal was ready and willing to pay not only the Annual Licence Fees and Advance Development cost but also interest accruing thereon. 24. The learned senior counsel for the petitioner raised yet another contention viz. no interest was awarded on refund of security deposit. The respondent was bound to return the security deposit in July 2015 viz. upon termination of the contract, but it was returned only after the award was passed, hence the learned arbitral tribunal ought to have granted interest upon such deposit. It was argued such amount was retained illegally by the respondent and clause No. 3.2 of the Contract was held to be void, hence on principles of restitution and unjustified enrichment, the learned arbitral tribunal ought to have ordered refund of such amount with interest thereon. 25. The learned senior counsel for the plaintiff relied upon paras No. 593, 606 and 607 of the impugned award which note :- 593. The question which now arises for consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of pre-suit interest to the plaintiff appears to be inequitable. It cannot be lost sight of that the defendant, inspite of showing the sum of Rs. 50 lakhs as payable to the plaintiff in the balance sheet, took a false stand before the Court. I have explored, whether Interest Act could be said to be not exhaustive of the law relating to pre-suit interest. 17. xxx xxx 18. Earlier also, it was held by a Single Judge of this Court in Bank of India Vs. T.R. Arora 1999 SCC OnLine Del 668 that Section 3 or Section 4(2) of the Interest Act do not take away the power of the Court where interest is otherwise payable by virtue of any enactment or other rule of law or usage having force of law; other rule of law would include the power of the court to award interest on equitable grounds. 19. Yet earlier, in Union of India Vs. National Overseas and Grindlays Bank Ltd. 1976 SCC Online Del 6 also this Court held interest is recoverable both at law and in equity on money obtained by fraud or conversion and retained by a defendant and that the Interest Act is not exhaustive of all claims as to interest and it is open to the courts to award interest in cases not coming strictly within the purview of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 56.68 Crores from 15.09.2015 to 24.07.2016; and the advance development cost is also awarded from 26.02.2011 till 16.07.2015 to the extent of Rs. 20.07 Crores with interest on it from 20.02.2011 till 16.05.2017 and from 15.09.2015 till 24.07.2016. 35. The reasoning given by the learned arbitral tribunal is in paras No. 708, 715, 716, 732, 733 and 735 which note: 708. The Respondent itself having terminated the contract in terms of its letter date 16.07.15, the performance of the terms thereof came to an end and in that view of the matter the Respondent could not have enforced the Contract in so far as the same related to payment of Annual Licence Fees and Advance Development cost on and from the date when the contract comes to an end. 715. The matter relating to Annual Licence Fees and ADC pursuant to lease/license does not thus arise. In other words if there is no lease/licence there can be no question of payment of licence Fees in terms of the DA. 716. The Respondent, therefore, in terms of the Contract not entitled to the ALF post termination. 732. It may be difficult for the Tribunal to accept the submissions of Mr. Rajshekhar Rao that the Respondent is entitled to the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the opinion that the Claimant is estopped and precluded from raising any plea that no ALF or ADC was payable to the Respondent. Such a stand taken by the Claimant at this stage must be held to be by way of an afterthought only. 182. In its application filed before the Hon'ble Delhi High Court, also not only the Claimant raised no such plea, it even agreed to deposit the entire arrears of ALF and other dues with interest. 183. No such plea was also raised ever before this Tribunal in its application u/s 17 of the 1996 Act. 184. The Tribunal in its order passed under the aforementioned provision proceeded on the basis that ALF was payable and the Claimant infact has failed and/or neglected to do so. 185. The Tribunal noticed that Annual License Fees was payable. Clause 11.2.1 of the OMDA provides that the Respondent was under a corresponding obligation to make timely payment of Annual License Fees to AAI from its revenues and thus the Respondent was obligated to comply with the terms of OMDA irrespective of the fact as to whether the Claimant and/or other Developers have been paying the Annual License Fees or not. 186. It is beyond any doubt or dispute that the Claimant did n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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