Case Law Details
MSK Projects (I) (JV) Ltd. Vs State of Rajasthan & Anr (Supreme Court)- Facts and circumstances giving rise to these appeals are: A. The Public Works Department of the State of Rajasthan (hereinafter called “PWD”) decided in September 1997 to construct the Bharatpur bye-pass for the road from Bharatpur to Mathura, which passed through a busy market of the city of Bharatpur. For the aforesaid work, tenders were invited with a stipulation that the work would be executed on the basis of Build Operate and Transfer (BOT). The total extent of the road had been 10.850 k.ms. out of which 9.6 k.ms. was new construction and 1.25 k.ms. was improvement, i.e. widening and strengthening of the existing portion of Bharatpur-Deeg Road. B.
After having pre-bid conference/meeting and completing the required formalities it was agreed between the tenderers and PWD that compensation would be worked out on the basis of investment made by the concerned entrepreneur. The tender submitted by MSK-appellant for Rs. 1,325 lacs was accepted vide letter dated 5.2.1998 and the MSK-appellant was called upon to furnish security deposit which was done on 25.7.1998. Concession agreement dated 19.8.1998 was entered into between the parties authorising collection of toll fee by MSK-appellant. According to this agreement, period of concession had been 111 months including the period of construction. The said period would end on 6.4.2008. It also contained the provisions for making repayment/ collection of toll fee and in case of any difference/ dispute to refer the matter to the Arbitrator. C. MSK-appellant completed the Bharatpur bye-pass Project on 10.4.2000 and also started collection of toll fee as provided under the agreement with effect from 28.4.2000. There had been some problem in collecting the toll fee because of agitation by local people. The State issued Notification dated 1.9.2000 under the provisions of the Indian Tolls Act, 1851 and Rajasthan Motor Vehicles Taxation (Amendment) Act, 1994 (hereinafter called the `Notification dated 1.9.2000’) preventing the entry of vehicles into Bharatpur city stipulating its operation with effect from 1.10.2000. MSK-appellant invoked arbitration clause raising the dispute with respect to: (a) Delay in issuance of Notification prohibiting entry of commercial vehicles into Bharatpur town and diverting traffic through the bye-pass; and (b) Collection of toll from vehicles using Bharatpur-Deeg patch of the road. D. The State/PWD failed to make appointment of the Arbitrator. MSK-appellant preferred SB Civil Arbitration Application No.31 of 2002 before the High Court and the High Court vide order 12.4.2002 appointed the Arbitrator. The Arbitrators so appointed in their meeting on 8.5.2002 appointed the third Arbitrator. Claim Petition was filed before the Tribunal by MSK-appellant on 23.9.2002. The State submitted its reply to the claim petition on 7.12.2002. E. The Arbitral Award was made in favour of MSK-appellant on 1.12.2003 according to which there had been delay on the part of the State of Rajasthan in issuing the Notification and the State failed to implement the same and the contractor was entitled to collect toll fee even from the vehicles using Bharatpur-Deeg part of the road . The State of Rajasthan was directed to pay a sum of Rs.990.52 lacs to MSK-appellant as loss due up to 31.12.2003 with 18% interest from 31.12.2003 on wards. The Tribunal further gave various other directions to the State in this regard. F. Being aggrieved, the State of Rajasthan filed objections under Section 34 of the Act 1996 and while deciding the same, the District Judge vide order dated 17.1.2006 set aside the Arbitral Award on the grounds that there was no clause in the agreement to issue notification barring the entry of vehicles in the city of Bharatpur; and the Tribunal erred in taking 1997 survey as basis for calculating the loss suffered by MSK-appellant. It held that MSK-appellant was not entitled to any monetary compensation under clause 10 of the concession agreement, but only entitled to extension of concession period, and the rate of interest was reduced from 18% to 10%. G. Being aggrieved, MSK-appellant preferred an appeal before the High Court wherein the High Court vide impugned judgement and order dated 24.4.2007 held that Bharatpur-Deeg section was part of the project and the contractor could collect the toll fee from the users of this part of the road also. Clause 10 of the concession agreement was not attracted in the facts of the case. There was no agreement for issuance of Notification by the State barring the use of old route and directing the vehicles to use the new route alone. Therefore, the question of grant of compensation on that account for the traffic loss could not arise. The District Judge was justified in reducing the rate of interest from 18% to 10% in view of the provisions of Section 31(7)(b) of the Act,1996 and economic realities, whereby the rate of interest had been reduced by the Banks in India.
Citation
M/s. MSK Projects (I) (JV) Ltd. … Appellant Vs
State of Rajasthan & Anr. …Respondents
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Happy to see judgement related to my client MSK Projects