Petitioners Have Imposed A Toll On The Already Burdened Docket; Bombay HC Directs Toll Operators To Deposit Rs.10 Lakh As Cost To Tata Memorial Hospital

The Bombay High Court on Friday while dismissing writ petitions filed by toll operator infrastructure companies seeking directions to provide for a dispute resolution mechanism through Arbitration regarding contracts they entered into with Maharashtra State Road Development Corporation Limited (MSRDC), imposed a cost of Rs.10 lakh (5 lakh each) and directed the petitioners to deposit the same with the Tata Memorial Hospital.Division bench of Chief Justice Dipankar Datta and Justice GS Kulkarni observed-"Petitioners are thoroughly ill-advised to file the present proceedings to seek application of the State Government Policy to provide for an institutional arbitration qua the agreements executed by them with the MSRDC. It is also equally surprising as to how the petitioner in the first petition can take a contradictory stand that clause 36(a) is an arbitration clause."Further, admonishing the petitioners, Court said-"Before parting we would be failing in our duty if we do not record what our judicial conscience would say. We have noted that the reliefs as prayed for were totally not maintainable. It appears to us that the purpose for which these proceedings are instituted is not innocuous. There seems to be some oblique purpose. The petitioners are experts in their commercial field, they are certainly not those who would be deprived of legal advice so as to be not oblivious of their contractual limitations. Nonetheless the petitioners with all resources at their disposal have taken recourse to the present proceedings and in doing so have imposed a toll on the already burdened docket and precious public time of the Court, which could have been utilised for many deserving cases."Case BackgroundThe two writ petitions were filed by M/s.MEP RGSL Toll Bridge Pvt. Ltd. (MEPRGSL) and Raima Toll & Infrastructure Pvt. Ltd. Both the petitioners are stated to be 'Special Purpose Vehicles' of one MEP Infrastructure Developers Limited (MEPIDPL). The petitioners were beneficiaries of 'toll contracts' awarded by MSRDC, which were at different locations and for different periods. The contract period in regard to both these contracts, has long expired. Although, there is no relation between these two contracts, as the cause of action is common, the petitions were tagged together. In 2013, MSRDC invited bids for appointment of a contractor for operation and maintenance of 'Rajiv Gandhi Sea Link Project & Toll Plaza & Collection of Toll' on upfront basis. The contract work inter alia consisted of collection of toll, from the notified vehicles crossing the toll plaza, at the prescribed rate and making payment of upfront amount in installments to the MSRDC. The contract period was to be of 3 years commencing from February 6, 2014 and to end on February 1, 2017. MEPIDPL's bid was the highest bid, of an amount of Rs.227.70 crores.On December 5, 2013 MEPIDPL agreed to pay Rs.50 lakh as upfront payment over and above the financial offer as quoted. The MSRDC accepted this revised offer and issued a letter of acceptance dated January 10, 2014 to MEPIDPL for a contract period of 3 years. Then, MEPIDPL sought approval for a contract to be entered with the petitioner (MEPRGSL), being a Special Purpose Vehicle created for the said contract. On January 17, 2014 the MSRDC granted its approval to the SPV proposal. Accordingly, on January 29, 2014 an agreement came to be entered between the MSRDC and the petitioner, under which the petitioner was appointed as a contractor for operation and maintenance of this toll project. It was a tripartite agreement between MSRDC, parent company of the petitioner and the petitioner.Although the first petitioner's contract with MSRDC had come to an end on February 1, 2017, the petitioner's case is, that the MSRDC by its letter dated February 26, 2018 had called upon the petitioner to pay Rs.16.86 crores as the petitioner's revenue share as per Article 22, Clause no.22.12 (Volume II) of the contract. This is based on the difference in the traffic count reported by the contractor/petitioner and the traffic count undertaken by MSRDC independently. It is stated that correspondence ensued between the parties on this issue and as there was disagreement on the accuracy of the traffic data, as per the dispute resolution clause, as contained in the agreement, a committee comprising of the Legal, Accounts and Engineering Division was formed on September 18, 2018. This committee did not accept the objections of the petitioner. The petitioner was then called upon to pay the revenue share as demanded by the MSRDC. The petitioner contends that the order passed by the said committee is cryptic and a non-speaking order. Petitioners have impleaded the State Government as a respondent in the petition, as it is their case that the State by its notification dated October 13, 2016 has provided for an "Institutional Arbitration Policy", as a preferred mode of dispute resolution in respect of Government contracts. According to the...

Petitioners Have Imposed A Toll On The Already Burdened Docket; Bombay HC Directs Toll Operators To Deposit Rs.10 Lakh As Cost To Tata Memorial Hospital

Nitish Kashyap

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