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Delhi HC Directs Status Quo By NHAI As Regards Toll Contractors' Bank Guarantees, Other Securities Pending Force Majeure Claims Amid COVID-19 [Read Order]

Mehal Jain
23 Jun 2020 5:47 AM GMT
Delhi HC Directs Status Quo By NHAI As Regards Toll Contractors Bank Guarantees, Other Securities Pending Force Majeure Claims Amid COVID-19 [Read Order]
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In view of the the toll collection at various toll plazas across the country being drastically reduced on account of COVID-19 and the various restrictions imposed by the Central and State Governments, the Delhi High Court on Monday directed the NHAI to maintain status quo as regards the invocation of bank guarantees and forfeiture of cash performance security of its toll contractors.

The Single Judge, however, required that the contractors shall continue to deposit all the toll collected at the various toll plazas with NHAI, after deducting the retention amount as per the respective contracts.

The bench was hearing Petitioner, Skylark Infra Engineering Pvt. Ltd., which runs around 15 toll plazas across the country, against the NHAI and the Ministry of Road Transport & Highways. It is the Petitioner's case that the lockdown on account of COVID-19, which came into effect from March, 2020, has affected the toll collections as also the payments to NHAI. The gravamen of the dispute is that in respect of the contracts relating to the toll plaza in Assam and Meghalaya, the Petitioner has been threatened that performance bank guarantees will be encashed and cash performance security forfeited to the tune of approximately Rs.9.44 crores.

It is advanced that in fact, the NHAI had directed the toll contractors not to collect any toll during the period March 26, 2020 to April 19, 2020. On account of the aforesaid, the toll contractors have raised force majeure claims in terms of their contracts. The Ministry has issued an office memorandum dated 18.05.2020 specifying the manner in which relief for force majeure should be provided to the contractors. Pursuant to the said office memorandum NHAI had issued a policy circular dated 28.05.2020 further elaborating the manner in which force majeure relief is to be provided to toll contractors.

After various representations from the industry, MoRTH issued an office memorandum dated June 3, 2020 stating that relief to the toll contractors will be provided as per their respective contracts.

A bench comprising Justice Prathiba M Singh its order dated June 22 directed that status quo may be maintained in regard to the cash performance securities and performance bank guarantees until the next date of hearing i.e. July 2, 2020. The court has also recorded in its order that there are various questions that have arisen in respect of maintainability and joining of reliefs relating to various contracts together.

The aforesaid order brings a major relief to the toll contractor during the on-going COVID-19 pandemic with respect to all its toll plazas. Other toll contractors facing similar threats of invocation of their performance securities are expected to follow soon.

The petitioner was represented by Mr. Sandeep Sethi, Senior Advocate and Mr. Krishna Vijay Singh, Mr. Manish Dembla, Mr. Nachiketa Goyal and Mr. Pradyuman Sewar from Kochhar & Co.

NHAI was represented by Mr. Narendra Hooda, Senior Advocate along with Ms. Padma Priya and Ms. Neetica Sharma.

MoRTH was represented by the Solicitor General of India, Mr. Tushar Mehta along with Mr. Dev P. Bhardwaj.

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[Read Order]

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