Loss Of Toll For Wrong Categorization Of Vehicles: Nagpur Court Dismisses Centre’s Plea Against Arbitration Award Extending Concessionaire’s Period Of Operating Toll Road [Read Judgment]

A court in Nagpur has dismissed the Centre’s petition challenging the arbitration award in favour of a Nagpur-based firm which was given an extension of concession period by three years, six months and two days as compensation for loss of toll collection due to difference in toll rates and on account of structural changes in a major highway project across Vainganga river.

Principal district judge VD Dongre refused to interfere with the award of the arbitration tribunal which had granted an extension of concession period to the company M/s Jayaswal Ashoka Infrastructure Pvt Ltd in the year 2011 on a claim petition filed by the latter.

The Ministry of Shipping, Road and Highways had, in its petition filed under Section 34 of Arbitration & Conciliation Act, challenged the 2011 award in favour of the company saying the claims made by the company were not maintainable and that the tribunal had no jurisdiction to decide them.

In the instant case, the Government of Maharashtra on behalf of Government of India invited offers for work of construction of a major project across Vainganga river and its project in km. 491/00 of Nagpur ­Raipur Section of National Highway No.6 underbuilt, operate and transfer (BOT) basis.

M/s Jayaswal Ashoka made the lowest offer, which was accepted by the government in 1998, and a four­party agreement was entered into.

As per the agreement, the construction period was 2 years and 6 months from the date of agreement expiring on May 15, 2001. The concession period, including construction period was 18 years and 9 months i.e., August 15, 2017. The company was authorised to collect toll tax from the date of actual completion of work upto August 15, 2017.

The company completed the construction of the project on March 2, 2001 after which a notification was issued to collect the toll on March 3, 2001, under the National Highways Act 1997, and Rules. During the construction period of the contract and subsequently during the concession period, certain disputes arose between the parties. The claimant raised a dispute which lay before an arbitrator on 2007.

It sought an award of Rs.1,522.96 lakh, and interest to the tune of Rs.1,383.31 lakh at 20 percent per annum compounded annually from due date till the date of final payment of the amount.

It claimed compensation under expected risks, excess interest paid on investment due to delay in granting permission for assigning toll rights, compensation due to change in the type of foundation piers, compensation due to delay of nine months in opening the facility to traffic, the difference in toll rates for mini-buses etc.

As per the award, claim for compensation towards excess interest paid on investment due to delay in granting permission for assigning toll rights to the lending institution was rejected and the cost of arbitration was ordered to be borne by both the parties. Claim for expected risks and compensation for delay in opening the facility to traffic was partly allowed.

As for the claim of compensation due to change in the type of piers and difference in toll rates, the works company was granted the same in terms of extension of concession period of 3 years, 6 months and 2 days in lieu of quantified amount.

This was challenged before the Nagpur court by the government which also argued that the award was against the Motor Vehicles Act.

Counsel for Jayaswal Ashoka Infrastructure Pvt Ltd, CS Dhore along with advocates Sandeep Bajaj, managing partner at PSL and associate partner Soayib Qureshi vehemently opposed the Centre’s petition and said it had lost revenue on account of an order issued by the government’s engineer as it was forced to collect Rs 10 per trip for Tata 407 and 709 models even when they fall in the category of heavy motor vehicles and should have been charged at the rate of Rs 40 per trip.

The counsel said the government is liable to compensate them in this regard and the tribunal has passed the order after perusing all relevant documents.

The principal judge, after hearing all parties, dismissed the Centre’s petition and upheld the extension of concession period for running the toll road.