South Delhi Municipal Corporation vs Sms Aamw Tollways Private Limited

3. The National Highways Authority of India (hereinafter referred to as ‘NHAI’) entered into a State Support Agreement (hereinafter referred to as ‘the SSA’) dated 27.5.2004/22.2.2005 with M/s Jaypee-DSC Ventures Limited (hereinafter referred to as ‘Concessionaire’) for the design, engineering, financing, procurement, construction, completion, operation, maintenance and the toll collection of certain sections of the NH-8 highway.

4. The arrangement under the SSA was that the Concessionaire of the NHAI shall not only collect the toll under the concession agreement executed between NHAI and its Concessionaire, but also the entry toll (toll tax) levied by the Appellant-SDMC on entry of specified commercial vehicles into the territory of NCT of Delhi. The Appellant-SDMC is a ‘designated agency’ of the Government of NCT of Delhi under the SSA.

5. The Appellant-SDMC, for the purpose of collection of toll tax from all border entry points within the NCT of Delhi, decided to engage a contractor and accordingly floated a tender, inviting bids from interested parties. The Respondent-SMS AAMW being the successful bidder was awarded the work for collection of toll tax for a period of 3 years and a Bilateral Agreement dated 14.05.2011 2 (hereinafter referred to as ‘the Agreement’) was entered into between the Appellant-SDMC and the Respondent-SMS AAMW.

7. Thereafter, on 19th February 2014, the Rajokri integrated toll plaza was dismantled, apparently, as a result of an understanding between the parties to the SSA. It is the case of Respondent-SMS AAMW that due to this situation, it was forced to incur the expenses to arrange for the collection of the Appellant-SDMC’s toll tax from the Rajokri Integrated toll plaza. As a result, the Respondent-SMS AAMW suffered a huge loss amounting to approximately Rs.80 crore.

21. This was relied on by the Respondent-SMS AAMW to support the submission that Clause 16.3 does not provide for an appeal to the Commissioner but provides for arbitration by the Commissioner. The passage above clearly contemplates that an arbitration should be an enquiry in the nature of a judicial enquiry i.e. an enquiry which involves hearing both the parties. The appeal involved in the present case clearly does not involve hearing both the parties. On the contrary, the authority which decides the appeal is in a sense the other party. The Commissioner is a higher officer than the Competent Officer in the same organization. It is, therefore, clear 10 that the appeal to the Commissioner is not intended to provide a forum for a decision by an impartial adjudicator but is only intended to ascertain some matter for the purpose of preventing differences from arising and not for settling them after they have arisen. It is thus clear that the Commissioner is not intended to be an arbitrator, as his jurisdiction cannot be invoked by both parties.

24. We find that the present Clause 16 and in particular Clause 16.3 does not provide for the reference of any dispute that may arise between the parties to an Arbitrator. The purpose of this Clause is to vest the Competent Officer and the Commissioner with supervisory control over the execution of work and administrative control over it from time to time and thus to prevent disputes. The intention is not to provide for a forum for resolving disputes. Thus, in the present circumstances no Arbitrator could have been appointed by the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, therefore, the impugned order dated 17.06.2016 is set aside.

25. The appeal is accordingly allowed.