BEFORE THE HON’BLE ARBITRAL TRIBUNAL

COMPRISING OF:

(1) HON’BLE JUSTICE M.L.VARMA

Former Judge, Hon’ble High Court of Delhi ... Presiding Arbitrator

(2) Mr. VIJAY SHANKAR ... Member Arbitrator

CE, Cum CGM (Retd.)

(3) Mr. R.K. SRIVASTAVA ... Member Arbitrator

IAS (Retd.)

INTHE ARBITRATION BETWEEN

CLAIMANT RESPONDENT

North Bihar Highway Limited National Highways Authority of

India
Plot No.70, Sector-32, G-5 & 6, Sector-10, Dwarka,
New Delhi-110075

WRITTEN ARGUMENTS ON BEHALF OF THE RESPONDENT (NHAI)

Most Respectfully showeth:-

On the basis of pleadings and evidence on record, documents on record

and the precedents on the subject dispute between the parties to the present
lis in the present arbitration proceedings, it is submitted that the Claims
prayed through Statement of Claim filed by the Claimant are devoid of any
merits. The Respondent is relying upon its pleadings, Agreement between the
parties, documents on record, evidence by way of affidavit filed by the
Respondent, cross-examination of the parties and the precedents of Hon’ble
Supreme Court of India and the Hon’ble High Courts in support of its
pleadings/evidence and oral arguments as submitted during the proceedings.
Ld. AT in its order dated 07.02.2019 while disposing the I.A. No. 02 of 2019
filed by respondent herein had graciously allowed the Claimant to place
voluminous records at the stage of filing evidence of CW-2 (when respondent
was simultaneously asked to place entire evidence before the start of claimant’s
evidence and had no opportunity to revert all those additional facts and records
placed by the Claimant) bereft of any formal application moved under any
provision of law. Regarding determination of rules of procedure, Ld. AT Under
Section 19 of the Arbitration and Conciliation Act, 1996, has not followed the
Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872 while
adjudicating the instant arbitration case. Ld. AT in its order dated 07.02.2019
also observed:
 “… it will be open to the respondent to establish the inconsistency between
the affidavit evidence and the accompanying documents with the claimant’s case
as set out in their pleadings. It will be equally open to the respondent to cross-
examine the witness on those lines, and also at the time of disposal of the
proceedings. It equally goes without saying that it will be open to the respondent
to bring on record evidence, oral as well as documentary, in support of their
case….”

“…it will be open to the respondent to prove the rebut of the affidavit
evidence of the claimant, and the admissibility of the documents accompanying
thereto, by the cross-examination as well as the liberty to them in accordance
with law to bring on record their evidence including documentary evidence…”

I. BRIEF FACTS AND SUBMISSIONS: -

A. Name of the Project:

“Two-Laning of Muzaffarpur-Sonbarsa Section of NH-77 (From K.M. 2.8

to K.M. 89.00) in the State of Bihar under NHDP III on design, build, finance,
operate and transfer (DBFOT), ANNUITY BASIS PROJECT”
Disputes arisen from the Concession Agreement dated 03.09.2010
executed between the Claimant and the Respondent (The Concession
Agreement has been appended as part of the Statement of Claim filed by the
Claimant).
B. Other relevant dates/events under the Project:
 Inviting proposal through RFQ/RFP on 23rd November 2009.
 Submission of financial bid by M/S BSCPL Infrastructure Ltd. – C&C
Constructions Ltd. On 10th May, 2010.
 Letter of acceptance dated 5th July 2010.
 Date of signing of contract agreement on 3rdSeptember, 2010.
 The stretch of road on which two laning was to be conducted was already
having a pre-existing stretch of a single/intermediate lane road and not a
new road all together (@page 44 CD2 Clause C).
 The land acquisition by NHAI was made for 4 laning for which Section 3A
and Section 3D of NHAI ACT, 1956 notification was done from December
2009 to November 2010. (The said Notifications are part of the arbitral
record).
 The Concession Agreement along with the Supplementary agreements were
the master documents to determine the rights, liabilities of the parties.

It is to be noted that the Claimant (NBHL) is a Joint Venture of BSCPL

infrastructure Ltd. and C&C constructions Ltd. The promoters of NBHL and
the EPC Contractor are same (@page 295 CD 3, para 31) and therefore EPC
Contractor is not an independent or separate entity in the instant case. The
financial and other procedural disciplines are incorporated in the Concession
Agreement dated 03.09.2010 to check the misuse by the promoters of Special
Purpose Vehicle i.e., SPV/NBHL/Claimant herein. However, the promoters of
the Claimant have been wilfully not acted as per the provisions of the
Concession Agreement dated 03.09.2010 while executing the Project work
under the Concession Agreement and now at this stage they have raised highly
bogus and fictitious claims through the instant arbitral proceedings.

III. BRIEF LEGAL SUBMISSIONS: -

1. Claimant has purportedly not submitted various relevant documents
during the instant proceedings in order to conceal/suppress the true picture of
the entire circumstances in relation to the disputes as referred to the present
arbitral proceedings.

2. Claimant has failed to produce the Video recording of the Project as per
Article 13.6 of the Concession Agreement (CA) despite repeated reminders given
by Respondent during execution and also same has been specifically
asked/demanded during the Cross Examination of the Claimant’s witness.

3. Claimant has also not submitted the entire statements of Escrow

Accounts details from the date of commencement of the Project till date despite
repeated questions were asked during the cross-examination of Claimant’s
Witness.

4. Claimant has also not submitted the entire Audits and accounts as per
Article 33 of CA before the Hon’ble AT in order to suppress the real fact.
Claimant has purportedly not submitted the complete set of EPC Agreement,
and same has been admitted by the Claimant during the Cross-Examination of
the Claimant’s Witness. It is vehemently argued by the Claimant that the
Claimant is entitled to claim on behalf of its EPC contractor. It is to be noted
that in Mapex Infrastructure Pvt. Ltd v. NHAI; 2018 SCC OnLine Del 6664
relied upon by the Claimant, para 19 of the judgment itself states: “However,
for succeeding in the arbitration, it was for MAPEX to show whether under the
terms of the sub-contract/EPC contract, the EPC Contractor was entitled to raise
a claim of prolongation cost and if at all any such claim had been paid by
MAPEX to such EPC Contractor. The claim of prolongation cost was in the nature
of claim of damages for breach of contract under Section 73 of the Contract Act,
therefore, the quantum of loss had to be proved by MAPEX, being the claimant.
Principle of mitigation of loss would also apply to such situation.” It is needless
to mention that in the absence of any requisite proof thereof, the same cannot
be claimed by the Claimant.
5. That as the claimant had failed to furnish any corroborative documents
except to file few one pager statutory auditor certificate (devoid of any
supporting documents and making it per say objectionable/doubtful piece of
document), during the pendency of the arbitration proceedings. On the other
hand, the Respondent had appointed a special/additional auditor to conduct
the special/additional audit in accordance with provisions of the Concession
Agreement dated 03.09.2020. The said decision was also intimated to the
Claimant. The Special Auditor, conducted the audit and after giving ample
opportunity to the Claimant to assist during the audit, had submitted its
Report dated 27.02.2020. The said Special/Additional Audit Report dated
27.02.2020 was placed on record of this Hon’ble Arbitral Tribunal on the very
same day i.e., 27.02.2020 but the Hon’ble Arbitral Tribunal returned the said
Application and Special/Additional Audit Report containing 51 pages during
the arbitral proceedings dated 27.02.2020. Consideration of the above report
could have assisted a lot while doing fair adjudication of the sub-judice matter.
 In the said Report, it is clearly mentioned that the Claimant has not
adhered to the financial discipline and failed to act in accordance with terms
and conditions of the Concession Agreement and other relevant agreements in
relation to the subject Project. The Claimant suppressed true facts from this
Hon’ble Tribunal.

6. Witnesses of the Claimant purposefully avoided and ignored to answer

the relevant questions put up during the cross-examination by the
Respondent’s Counsel pertaining to the details and basis of the Audit
Reports/Certificates issued by the Auditors of the Claimant Company and the
EPC Contractor.

7. That after perusal of the records of the subject matter and deposition of
the said Witnesses of the Claimant, it is amply clear that the Claimant is
heavily relying upon the Statutory Auditor Report and certificate issued by him
to the Concessionaire and Auditor of the EPC contractor. The EPC contractor is
nothing but promoters of the Claimant/ Concessionaire Company, a Special
Purpose Vehicle created for execution of the instant Project. The Claimant has
failed to file any authentic contemporaneous record to substantiate its claims
before the Hon’ble Arbitral Tribunal.

8. That the even otherwise, the said Statutory Auditor had no right to give
report after completion of five years from the date of preparing the mutually
agreed Panel of Chartered Accountants, or such earlier period as may be
agreed between the Authority and the Concessionaire.

9. That the Claimant’s Statutory Auditor Report/Certificate is not

comprehensive and it appears that either no authentic or contemporaneous
records were made available to the Statutory Auditor/Auditor at the relevant
time or Statutory Auditor/Auditor ignored the relevant provisions of the
agreements between the parties, Escrow Agreement/ Escrow Account
Statements, Common Loan Agreements, EPC Contract and actual conditions at
site, while preparing the said Report. With regards to statutory auditor’s
certificate / CA certificate, it has been held in Parsa Kente Collieries Limited
Vs. Rajasthan Rajya Vidyut Utpadan Nigam Limited (2019)7SC C 236 that
where no other evidence other than the CA certificate has been placed on
records, the same cannot be considered as a proof of claim.

10. That in order to verify the veracity and credibility of report given by
Statutory Auditor, Respondent even filed an application to summon the
auditor, whose report is the sole basis upon which claimant has wrongfully
quantified his claims, however Ld. AT vide order dated 03.10.19 dismissed the
application. Order dated 3.10.19 also reads that claimant had raised objection
that the Respondent NHAI could have appointed auditor as per Clause 33 of
CA. Surprisingly, when report under clause 33.5 of CA by Additional Auditors
(dated 27.02.2020) was tried to be placed before Ld. AT by moving appropriate
application, the same was rejected upon the vehement opposition of the
claimant. Whereas in the said report, it has already been highlighted and
reported about gross financial wrong doing have been committed by the
claimant.

11. Purposefully, none of the Reports/Certificate of the said Statutory

Auditor/Auditor were filed by the claimant either along with Statement of
Claim or along with Rejoinder to the Statement of Defence barring one
pertaining to the change in law. No admission/denial process for these
documents have been done. These documents have been submitted along with
evidence by way of affidavit filed by the respective Witnesses of the Claimant.
Although such documents were very much available to the Claimant (as it
appears from the date mentioned on the said documents) at the time of filing
the Statement of Claim.
12. Before the Ld. AT, Claimant could have produced certain documents
which was asked by the Respondent through its Reply dated 02.12.2019 to the
objection filed by the Claimant especially regarding record of monthly
inspection report etc. As on date, Objection and Reply have not been decided
yet.

13. In order to carry inspection and production of certain documents from

the claimant by the Respondent, Application was also filed under Section 17 of
the Arbitration & Conciliation Act, 1996 on 08.12.2020.

14. It is submitted that at various stages, records were sought by the

Respondent from the claimant during the arbitral proceedings for inspection,
disclosure, discovery and production about those documents which were in the
custody and possession of the Claimant only. However, same were never
complied with by Claimant though these were very relevant and necessary to
arrive at a just and fair conclusion of the case.

15. The burden of proof is upon the Claimant to prove their alleged claims
during the arbitral proceedings but they have miserably failed to prove its
claims during the arbitral proceedings.

16. The alleged claims of the Claimant are barred by limitation as well on two
counts. (i) The Claimant neither raised its claims within stipulated period as
provided under the Concession Agreement dated 03.09.2010 (ii) nor followed
the manner in which such claims could have been raised within the stipulated
period of time.

17. No claims have been raised by the Claimant either during the
construction period or before the issuance of Provisional Commercial Operation
Date (PCOD) or before entering into the said Supplementary Agreements or
before taking benefits under the said Agreement. Further, the Claimant has not
followed the proper procedure of the Article 44 of the CA. Hence, no claims of
the Claimant are maintainable.

18. That the Claimant did not follow the procedure to the dispute resolution
as envisaged in Article 44 of the Concession/Contract Agreement (CA) dated
03.09.2010 and therefore, the present arbitration proceedings is not
maintainable.

19. The present claim of the Claimant is not maintainable as the Claimant
entered into settlement/supplementary agreement with the Respondent with
respect to certain issues crop up during execution of the project in accordance
with terms and conditions of the said CA. The parties to the present lis are
bound by the terms and conditions of the said settlement/supplementary
agreements. The alleged claims as raised by way of the present Statement of
Claim have no basis in view of the said settlement/supplementary agreements
signed/executed between the parties to the present lis as the Claimant has
admittedly benefited out of the said supplementary agreements. Therefore, no
cause of action arises to invoke the present arbitration. Further, In M/s.
Double Dot Finance Ltd. Vs. M/s. Goyal MG Gases Ltd. ILR (2005) I Delhi
161 the court has held that mere allegations of financial distress doesn’t
amount to duress and coercion. The court has further held that the contract
and agreement would only amount to duress or coercion if the party has no
other alternative or legal resource and had not taken any steps to avoid the
same.

20. That in Annuity Basis Project, every element of expenditure is involved in

construction, maintenance, management and operation of the infrastructure
project, return and interest on capital invested etc in consideration while
arriving at an Annuity figure. The Concessionaire/ Claimant would not be
entitled for anything further than the Annuity ascertained for the project and
other than the contractual provisions of the Concession/Contract Agreement
dated 03.09.2010 and other Agreements executed in accordance with the
provisions of said CA.

21. That as per Article 48 of the Concession Agreement, the ‘appointed date’
means the date on which financial close is achieved or an earlier date that the
parties may by mutual consent determine and shall be deemed to be the date
of commencement of the Concession Period. It is pertinent to mention that
every Condition Precedent shall have been satisfied or waived prior to the
‘Appointed Date’ and in the event all Conditions Precedent are not satisfied or
waived, as the case may be, the ‘Appointed Date’ shall be deemed to occur only
when each and every Condition Precedent is either satisfied or waived, as the
case may be.

22. As per the relevant terms and conditions of the contract agreement there
is no word signifying the substantial completion of the Conditions Precedent as
pleaded by the Claimant in SOC. Therefore, the Claimant has not achieved the
Conditions Precedent under the Concession Agreement within the time line as
mentioned in the said contract.

23. The delay occurred in the project due to several breaches, non-
compliance of the terms and conditions of the Concession Agreement by the
Claimant. The Respondent fulfilled its obligations under the Concession
Agreement within feasible timeline as provided therein subject to force majeure
and other prevailing conditions beyond the control of the Respondent. The
requisite land was provided to the Claimant as and when required for smooth
execution of the work assigned under the Concession Agreement. However, it is
the Claimant who had miserably failed to execute its own part of obligations
under the Concession Agreement, and therefore, in order to escape its liability,
started writing unwanted and meritless letters to the Respondent.

24. The Respondent had initiated the due process for selection of the
Independent Engineer within due time. In the meanwhile, the Respondent was
fulfilling its obligations under the Concession Agreement as envisaged for the
Independent Engineer. The Project Director, PIU-Muzaffarpur had been acting
as Independent Engineer with effect from 29.03.2011. With effect from
30.08.2011, M/s. Intercontinental Consultants and Technocrats Pvt. Ltd.
(hereinafter referred to as ‘ICT’) appointed to work as an Independent Engineer
during the Concession Period as per the provisions of Concession Agreement
dated 03.09.2010. Moreover, the Claimant never objected to the Project-
Director acting as an Independent Engineer for the interregnum period till
appointment of ICT as an Independent Engineer. It is pertinent to mention that
the commencement of the work by the Claimant had not been started till the
appointment of Project Director as an Independent Engineer. Therefore, the
alleged delay in appointment of the Independent Engineer has no material
impact on the progress of the Project. The Claimant failed to establish, that
how they suffered due to nominal delay in appointment of Independent
Engineer.

25. Without prejudice to the above, the Claimant had explicitly waived off all
its objections regarding timely execution of conditions precedent as per
Concession Agreement. Now, this objection is only an afterthought and barred
by principle of estoppels and limitation.

26. Without prejudice to the above, it is submitted that the Claimant could
raise its claims/disputes only in accordance with provisions of Concession/
Contract Agreement dated 03.09.2010 especially in accordance with Article 35,
Article 33 and Article 44 of the said CA. It is submitted that the present Claims
of the Claimant are not in accordance with the provisions of Article 35 read
with Article 33 and Article 44 of the Concession Agreement.
27. The requisite RoW had been provided to the Claimant to execute the
work assigned under the contract. The Respondent always tried its best to
comply with the obligations under the Concession Agreement in true letter and
spirit in accordance with the facts and circumstances of the relevant time
period keeping in view prevailing force majeure conditions. The letters had
been written by the Claimant to save its own skin from the liability arisen due
to its non-compliance with the Conditions Precedent in timeline manner. Since
the Claimant did not fulfil/perform its obligations under the contract and
therefore, unnecessarily started blaming the Respondent for their own default
during execution of the project. It is submitted that the Hon’ble Supreme Court
in CIVIL APPEAL NOS. 39763977 OF 2020 in Project Director, Project
Implementation Unit Vs. P.V Krishnamoorthy and ors. decided on
08.12.2020, has specifically observed that “the available ROW in existing lane
road varies between 12 mtrs. to 24 mtrs. maximum.” And the required ROW for
4/6/8 lanes is required to be 40-60 mtrs. minimum. It is submitted that the
Claimant has been misleading the Ld. Tribunal with time and again misguiding
the Ld. AT by saying that for making 2 lane roads in the instant project, the
requirement was of 40/60 Mtr. ROW under the contract.

28. The Respondent never been silent on any genuine request of the
Claimant for smooth execution of the project. The Claimant had been only
interested in writing repeated letters without any cause to write the same. The
Respondent had done its obligations of inspection under the contract. The
requisite land was handed over to the Claimant within time frame and the work
was never stopped due to non-handing over of the requisite stretch of land to
the Claimant. The project was primarily delayed due to inaction on the part of
the Claimant and force majeure conditions prevalent at the relevant time and
not otherwise. The dispute with the land owners had no direct bearings on the
smooth execution of the project as the length upon which the work had to be
executed was an operational highway and enough land was available to execute
the scope of work given under the Concession Agreement. The Claimant herein
is only trying to hide its own lapses in execution of the project in a timeline
manner. The project was delayed due to inaction on the part of the Claimant
and not otherwise. The dispute with the land owners had no direct bearings on
the smooth execution of the project as the length upon which the work had to
be executed was an operational highway and enough land was available to
execute the scope of work given under the Concession Agreement. The
Claimant herein is only trying to hide its own lapses in execution of the project
in a timeline manner.

29. The Claimant neither pleaded what steps they took to mitigate the
alleged losses while executing the work nor the same are supported by any
cogent evidence during the arbitral proceedings.

30. The alleged Claims of the Claimant are bogus as the basis of such claims
are not pleaded in the Statement of Claim, the details of quantification and
arriving of such claims are not mentioned in the pleadings of the Claimant and
also the same are not supported by any contemporaneous records as well as
any cogent evidence. The alleged statutory/audit reports were only filed at the
stage of evidence without following the due process of law that too when
respondent’s interest was badly affected and no opportunity was there to revert
the same. Most of the claims of the Claimant are overlapping/duplicate in
nature. Even during the cross-examination, the Claimants witness failed to
provide any answer to specific questions pertaining to the contemporaneous
and other relevant records pertaining to its alleged claims and why they opted
not to produce any contemporaneous and relevant documents during the
arbitral proceedings.

31. Without prejudice to the above, it is submitted that the Statement of

Claim and Evidence by way affidavit of the EPC Contractor are not supported
by the legally valid authority and therefore, the present Claims of the Claimant
 is not maintainable in the instant arbitral proceedings. (refer to cross-
examination of the EPC Contractor/representative witness produced by the
Claimant in support of EPC claims).

32. It is submitted that the Claimant had not placed any authentic
document as a proof of claim at the time of filing of statement of claim,
rejoinder or even till the date of admission and denial of documents.
Claimant’s failure can also be assessed by merely observing that following
documents pertaining various claims which are very vital to ascertain the
quantification are missing especially:

PART-I:

Claim A1.1 which reads Costs and losses arising out of the additional
interest during the construction:

To prove the calculation of the interest under this head, the Claimant
has filed merely a single page false and fabricated Statutory Auditor’s Report
dated 03.05.2017 along with the affidavit of evidence marked as annexure
CW 1/8. It is needless to mention that despite the same is of dated
03.05.2017, the Claimant has consciously opted to submit along with
evidence and not along with any documents running in more than several
thousand pages at the time of pleadings. The same was placed solely due to
the fact that Statutory Auditor’s Report dated 03.05.2017 is false, fabricated
and bereft of any reliable value and in accordance with CA. The document is
mischievously placed as an afterthought. In addition to the above, the
Claimant has miserable failed to produce the following documents as well in
support of the claim such as:
 Complete bank statement of Escrow Account Number SBI-
00000031640558160 and ICICI Bank Account No. 000805016433 of NBHL
which could easily reflect their alleged inflow, outflow and/or interest liability
by giving accompanying detailed report on that.
 Details of alleged loan such as how much amount of loan taken, statement of
loan account, Name of the bank, Outstanding loan amount on which the
interest is charged upon, Rate of interest charged on the said outstanding
loan amount (annex C-16) along with the sanction letter of the bank etc.
 Details of interest debited from the escrow accounts.
 Fabrication of fabricated of Statutory Auditor’s Report dated 03.05.2017 can
also be ascertained by perusing on its face value. For the sake of argument,
even if assume that there was delay than also, it is also important to note
that in Financial model provided at the time of concession agreement signed
on 03rd September 2010, Schedule III. Project cost and Financial Plan,
Interest During Construction had been shown Rs. 56 Crores for 910 days. If
we assume and calculate the interest for the delayed days of 582 days on the
basis of calculation provided by the concessionaire, it comes to merely 35.82
Crores instead of 105 Crores.

Claim A.1.2; Overhead Cost Incurred by the Claimant: -

To prove such huge claim, claimant documents don’t carry anything to
corroborate:
 Travelling expenses – Tour Program, Bills/Invoices, Invoices Payment
Confirmation.
 Professional Charges /Independent Consultant Fees/ Lender agent fees/ TRA
agent fees - Invoices, TDS Deduction Certificate, Payment Confirmation of the
said Transaction
 Insurance – Policy Documents Payment Confirmation.

Claim A.2.1, Cost towards overstay of plant and machinery during extended
period:
 Any details about date of Acquisition of equipment, plant and machinery are
not given, Date of Put to use of the equipment is not given; Salvage value of
equipment not provided; Life of equipment of equipment is not mentioned.
 tax invoice of the equipment has not been provided
 While going through the Annexure C-19 Page 2748 CD-15, it is observed that a
list of plant and machinery has been attached. In column number –D, Capital
cost of equipment is shown but tax invoice of the equipment has not been
provided. Only excel sheet is attached. Calculation of Per unit cost is based
on IS: 11590 which is Guidelines for working out unit rate cost of the
construction equipment used for river valley projects. Since the project
working site was at field/Road, then how this guideline will be applicable to
Road construction projects.
 Since EPC contractor is Limited Company, The companies Act, 2013 specify
the rate of depreciation and useful life as per Schedule-II read with Section
123 of The Companies Act, 2013. As per sheet it is observed that depreciation
is charged on original cost while these machines or equipment will be
deployed from the starting of this project and the depreciation must be
charged in earlier period also. As per Schedule II read with section 123 of
Companies Act, 2013, the WDV value of the machine used for the Road
Construction project should be replaced for the depreciation purpose. In view
of this case, the depreciation charged to the respondent is not appropriate
and it should not be charged.
 Since repair cost has been taken upto 200% of the Average cost employed of
the equipment which is very fictitious.
 When depreciation is charged on the basis of New equipment cost basis then in
the case of new assets, in the early years repairs cost is very minimum or it is
covered in guarantee or in warrantee period which cost nothing to company.
 If it is said that project is delayed and upto 2-08-2014, as per BOD reports,
project is completed 95% of its project length, then equipment shall be idle for
some time which cost nothing or very minimum cost of maintenance only.
 Repair cost is taken on the basis of running hours of equipment which is on
very higher side. Similarly, the cost of supplies used for the purpose of repairs
also not justified at the rate of 10% of repair & maintenance cost.

Claim A.2.2 Cost towards overhead incurred by the EPC contractor Rs. 23.32
Crores:

 The claimant has not provided anything including the Financial statements,
vouchers or ledger along with Balance Sheet of EPC contractor.

Claim A.2.3 Cost towards inflation of the cost of materials for the period of
overstay:
 The claimant has not provided anything including detailed data of purchase
of HSD and other material.

Claim A.2.4 Loss of Profit of the EPC Contractor.

 Claimant has claimed loss of profit to the EPC contractor but when claimant
is asking for the all expenses from the respondent then how it is loss to the
EPC contractor.

Claim A.2.5 Cost and losses incurred during the period 30.06.2015 to
31.07.2018:

 The claimant has not provided any documents pertaining to Cost and losses
incurred during the period 30.06.2015 to 31.07.2018.

PART-II:
 It is further submitted that the Claimant has further mischievously
magnified its baseless frivolous claim with heavy rates of interest contrary to
the stipulations of the concession agreement which are mentioned hereinbelow:

Claim A1.1 which reads Costs and losses arising out of the additional interest
during the construction:

 Schedule Four of the Common loan Agreement, titled ‘Particulars of

Applicable Interest’ which states the rate of interest that can be charged is
Base Rate +2.75% and after taking the historical Base rate available with
the State bank of India which is also a senior lender the said interest rate of
the period 2011 to 2015 ranges from the said loan period from 10.35% to
12.75%. However the claimant has failed to show as to on what basis the
interest is being charged.

 Further, a supplementary concession agreement is carried out on

19th August 2011 and amendment in clause 47.5 is inserted regarding
interest on delay payment, Rate of Interest will be decided on the basis of G-
Sec traded in previous 15 trading days and ceiling of @9% is imposed.
Hence, the rate of Interest on borrowings shall be charged maximum of 9%
per annum for delayed period.

 Claimant cannot give material advance to the EPC contractor, but claimant
had given 51.81 Crores which carries interest to the claimant.

Claim A.1.3 Loss of interest due to the delay in release of Annuities caused
due to prolongation:

 In light of supplementary concession agreement is carried out on 19 th August

2011 and amendment in clause 47.5 inserted regarding interest on delay
payment, Rate of Interest will be decided on the basis of G-Sec traded in
previous 15 trading days and ceiling of @9% is imposed. Hence, the rate of
Interest on borrowings shall be charged maximum of 9% per annum for
delayed period. However, Claimant has charged delayed interest on 14%
which is more than 56% of the applicable rate as per supplementary
agreement signed by the claimant.

Claim A.2.1, Cost towards overstay of plant and machinery during extended
period:
 In the case of daily interest on capital cost, interest had been charged on the
assumption basis @ 15%. However, the base rate of SBI in 2013 was around
9.00% to 10.00%.

Claim A.2.2 Cost towards overhead incurred by the EPC contractor Rs. 23.32
Crores:
 Massive financial irregularities have been committed in arriving the fictitious
claims such as, entry shown in C-20 on serial No. 38 in CD-15 filed by the
claimant for this claim for example: Sales Tax Expenses is shown amounting
to Rs. 6,87,06,110.00. Whereas, as per accounting purposes Sales Tax is
not an expense. Sales tax is duty which is adjusted against sale and
purchase.

Claim B.4.1 Loss of interest due to delayed annuity payments.

 Claimant already has claimed interest on missed annuity vide claim number
A.1.3, then on which ground again interest has been claimed.

33. It is undisputed that the claim has been brought by the Claimant and
the Respondent has not made any counter claim. It is a settled position of law
that it is the duty of the Claimant to prove its claim with support of evidence
and necessary documents. In State of Rajasthan v. Ferro Concrete
Construction (P) Ltd. 2009 12 SCC 1, the Hon’ble Supreme Court has
observed that merely giving figures of claim amount for plant/machinery etc.
doesn’t suffice as a proof of claim. The court has held that if the claim made by
the contractor is equated with proof of claim then the same is to be considered
as legal misconduct and error apparent on the face of award.
In case titled “Geo Pictures Ltd. v. Neelakandru Gopalakrishnan; 1970
SCC ONLINE KER 52, the Hon’ble Kerala High Court has also observed that
the burden is always on the plaintiff to prove the extent of damages.
In case titled “Pradyuman Kumar Sharma Vs. Shri Jaysagar M. Sancheti ;
Bombay High Court in Arb Petition No. 300-303 Of 2012” Hon’ble Bombay
high court has held that if a document produced before the arbitral tribunal is
not proved, the same cannot be considered as a piece of evidence.

IV. BRIEF SUBMISSIONS ON ARGUMENTS ADVANCED: -

A. Claimant affected the financial viability of the Project due to its
own defaults:

1. The Claimant was bound to provide correct financing agreements in

order to achieve the financial close within time schedule as mentioned under
the Agreement, which is not done by the Claimant herein, and therefore, the
Claimant themselves is responsible/liable for such delay in achieving the
scheduled target under the Concession Agreement. It is the Claimant who is
squarely liable / responsible for the inordinate delay in achieving the financial
close within the scheduled time line as per terms and conditions of the
Concession Agreement, and therefore, liable to pay damages to the
Respondent. The Claimant abysmally failed to comply with the Conditions
Precedent as given Article 4.1.3 (d), Schedule E, Article 48, Schedule G of the
Concession Agreement.

2. The initial project cost was calculated to be Rs. 512 cr however as per
the financial plan the estimated cost of the project was raised to Rs. 656 cr.
(@pg 802 CD-5)

3. The financing plan was divided into two sources of funds, the first project
equity capital amounting to Rs. 181 cr. Wherein sponsor equity contributions
amounted to Rs. 131 crores along with a short-term loan of rupees 50 crore.
The second source was categorised as loan of Rs. 475 crores from consortium
of banks where SBI was the senior lender. (@pg 814 of CD 5)

4. It is clear from the definition of financial package and financial model

According to Art. 48 (@pg 28 CD 2) and facts of the instant case that the
financial viability of the project was dependent upon the financial package and
the financial model submitted by the claimant to the respondent. It is to be
noted that the inflow of cash in the project had to be in accordance with the
financial package of the claimant. (@pg 814 of CD-5, Pg 1998 of CD-11). It is
to be noted from the above pages that Equity was to be infused by the
Company for Rs. 131 Crore from the period of 2011 to 2014 in various stages
which was not maintained by NBHL and till date NBHL had infused not more
than 69 Crores in the Equity till the grant of PCOD which had resulted in
alleged loss to the company and affected the financial viability of the project.
The Claimant was required to maintain a debt equity ratio of (2.61: 1) during
the project period. It is further pertinent to note that even the short term loan
of Rs. 50 Cr which was raised by Claimant NBHL at initial stages as a
drawdown on 24.05.2011 (@pg 705,706 CD-5) even before the appointed date
however it was to be taken in the Year 2014 (@page 814). It is submitted that
as per the financial plan submitted by the Claimant to the Respondent the
same was to be arranged in 2014, i.e., post to infusion of equity of 131 crores
by the Claimant itself. It is submitted that the above facts are clear in order to
understand that the Claimant itself was not financially equipped to work
throughout the contract period and had not fulfilled the financial obligations
due on the Claimant resulting into alleged losses of the Claimant and the same
cannot be attributable on the Respondent. It is relevant to mention that since
the NBHL (JV) and EPC Contractors are same companies which has resulted
into financial bungling has taken place.

5. It is submitted that, if there had to be any deviation from the financial

package by the Claimant/NBHL, whether it was related to incurring of
additional cost or cost escalation etc., approval had to be sought from
NHAI/Respondent. It is pertinent to note that the same was not obtained by
the Respondent till date. (@pg 57 CD2, Art 5.2.3). it is needless to mention
that an ESCROW Agreement was exclusively entered into by the Claimant/
NBHL with the senior lenders and NHAI as a party to the same (@pg 657 of
CD5). It is imperative to mention that all the transactions/ withdrawals/
deposits related with the project was only to be done from the Escrow Account
only as per Article 31.2 and Article 31.3 (@page 119-120 CD2)(Refer to Article
31.2 (a) (b) (c) and Article 31.3 (a) (b) (f) read with Schedule S (@page 234 CD
3, Clause 2.5, 3.1.1 (c), 5.4 and 6.1.1). It is pertinent to note that as per
Article 31.3.2 the Claimant was not allowed to modify the order of payment
provided in Article 31.3.1 without the prior approval of the Authority. It is also
submitted that no such approval was sought from NHAI under 31.3.2 and
therefore for any such costs incurred or alleged losses suffered by the Claimant
the Respondent is not liable for the same.

6. It is reiterated that the relevance of Escrow Account and the relation of

the same to the process of deposits, withdrawal and expenditure has also been
brought out in the cross examination of CW1 (Question 5-14, 46, 89, 127,
134) wherein it was time and again asked from the Claimant’s witness as to
whether the expenditure and deposits were made from the escrow accounts
and if yes then whether such details have been placed before the Ld. Arbitral
tribunal, however admittedly the Claimant had failed to answer the questions
as well as place the escrow account statements before the Ld. Arbitral tribunal
till the conclusion of final arguments before the arbitral tribunal.

B. Whether The Claim Brought Forward By The Claimant Is In

Accordance With The Provisions Of The Contract Agreement?

1. It is submitted that there is an express provision with regards to

calculations and claim of compensation is provided in Article 35 of the
Concession Agreement (@page 132 of CD 2).
2. It is to be noted that on bare reading of Article 35.2 of the Concession
Agreement it is evident that post to the occurrence of Appointed date, if the
Authority is in any material breach of the provisions of the Contract, it was the
obligation of the Claimant/ NBHL to raise the receipt of demand of the same
within 30 days, along with all the particulars thereof under various heads as
provided in Article. It is needless to mention that the Claimant has not only
miserably failed to demand the same within the time limitation provided in the
Article but also had failed to provide any particulars of the demand in a
prescribed format as set out in the Article 33.3(@page 125 CD2) of the
Concession Agreement.

3. It is submitted that under Article 35.6 (@page 133 of CD 2) expressly

provides for mitigation of costs and damages. It is imperative to note that it is
the express duty of the Claimant/NBHL (as alleged affected party) under this
concession agreement to mitigate costs and damages arising out of any alleged
breach of the Concession Agreement. It is submitted that the Claimant, not
only failed to submit any demand of such costs and damages as per the
provisions of the Agreement, but also failed to provide any proof of such
mitigation throughout the construction period of the contract. It is to be noted
that Article 35.6 does not only lay the obligation on the Claimant to mitigate
but also to limit the costs and damages by taking appropriate steps, however
despite of doing the same the Claimant chose to extract benefit out of it.
In PepsiCo India Holding Pvt. Ltd. Vs. Nishiland Park Limited, in
ARBITRATION PETITION NO. 768 OF 2010, the Hon’ble Bombay High Court
has held that loss of profit claims always has a foundation f net loss and not
only the estimated gross profit, without supporting accounts and material. The
awards so granted is not nominal or reasonable amount, as there was no
material to show actual loss.

4. It is submitted that since the inception of the project itself, the Claimant
was very much aware about the conditions at the ground level and the
Claimant had every opportunity to step out/ opt out from the contract at the
initial stage itself as there had been no financial implications upon the
Claimant since there was no drawdown from the lenders till the appointed date
i.e., commencement of construction work. It is also submitted that with effect
to such termination, the Claimant had every opportunity to recover damages/
compensation in consonance with Article 35 and Article 37 of the Concession
Agreement for incurrence of any initial costs if any. It is submitted that the
only responsibility of the Respondent, apart from damages if any, claimed by
the Claimant with due procedure, was to give the annuity as per the schedule
G of the Concession Agreement. it is further submitted that on bare perusal of
Letter Comprising Bid (which is part of concession agreement) (@page 295
CD3, para 26) it is abundantly clear that the Claimant was fully aware about
all the ground realities of the project and the annuity amount was quoted by
the Claimant itself after taking into consideration all the terms and
conditions stated in the RFP (request for proposal), draft concession
agreement, Claimant’s own estimates of costs and traffic and “Careful
Assessment Of The Site And All The Conditions That May Affect The
Project Cost And Implementation Of The Project”. It is submitted that all
the activities were carefully examined by the Claimant before entering into the
contract.

5. It is submitted that express provisions have also been provided in the

Concession Agreement itself with regards to damages which was not covered
under Article 35 of the Concession Agreement. it is needless to mention that for
non fulfilment of conditions precedents an express provision for damages is
provided under Article 4.2 (@page 54 of CD2) and Article 10.3.4 (@page 72 of
CD2 ). It is to be noted that it was the conscious decision of Claimant/ NBHL
to proceed with the contract which lead to grant of express waiver by the
Claimant not to claim any damages under Article 4.2 of the Concession
Agreement (@pg 2 and 3 of R-1 Document Compilation)
6. It is stated that, throughout the final arguments the Claimant has
reiterated the availability of land to be provided by the Respondent as per the
Agreement. It is submitted that the Respondent under its conscious business
call took conscious business decision providing an express waiver with regards
to claiming any damages for the land acquisition. It is pertinent to mention
that not only under the above circumstances, the Claimant provided the said
waiver, the Claimant also requested the authority to grant financial close and
further requested to set the appointed date for the project from 30 th May, 2015.
(@pg 702, 703 of CD 5) and the same has been granted by the Respondent
with retrospective effect. (@pg 1 and 4 of R-1 Document Compilation).

C. Whether the Claimant fulfilled its obligations under the contract

1. It is reiterated that the Claimant in its letter to bid as mentioned above

had claimed the amount of annuity after the perusal of the Draft Concession
Agreement, RFP and with its own estimation costs and calculations along with
careful inspection of the site. In addition to the above, there were certain
obligations upon the Claimant to oblige in order to operate under the
Concession Agreement. As per bare perusal of Article 5.1.4 (g) and (c) (@page
56 CD 2) the Claimant was required not do or omit or to do any act in violation
to any provision of the Contract agreement. Also, under Article 5.2.3 (@page 57
of CD2) the Claimant had to seek approval of Respondent whilst making any
addition, replacement or amendment which may have the effect of imposing or
increasing any financial liability or obligation on the authority. It is pertinent to
note that no such approval/ consent was sought by the Claimant before
altering the financial arrangement.

2. It is submitted that under Article 7.1 (C) and (f) (@page 63 of CD 2) the
Claimant had warranted that it has the financial standing and capacity to
undertake the project in accordance to the terms of the Agreement and the
information furnished in the bid is updated till the date of this agreement and
are true and accurate in all respects. However, it is already represented
hereinabove that the Claimant has violated the terms and conditions of the
Agreement by not providing true and correct information with regards to
following the financial package, maintaining debt equity ratio before
commencement of the construction work under the project.

3. It is submitted that the Claimant had also provided a disclaimer under

Article 8.1.1 (@page 66 CD 2 r/w Page 295 CD 2) and has acknowledged that
prior to the execution of the Concession Agreement, the Claimant had already
done a complete and careful examination and made an independent evaluation
of the RFQ, RFP, Scope of Project, Specifications, Standards, Site, existing
structures, local conditions, physical qualities on the ground, sub soil and
geology, traffic volume etc. The Claimant has also determined to its own
satisfaction the accuracy or otherwise thereof and nature and extent of
difficulties, risks and hazards as are likely to arise or may be face by it in due
course of performance of the Claimants obligations under the agreement. it is
further submitted that the Claimant has further acknowledged the disclaimer
under Article 8.2. (@page 66 CD 2) that the Respondent was not liable for any
risk of inadequacy, mistake or error in or relating to any of the matter as set
forth in Clause 8.1.1. it therefore evident that the Claimant had calculated all
the associated risk beforehand and took a business decision to proceed with
the contract and had failed to maintain the financial viability, failed to fulfil its
obligations and had later on attributed the Respondent for non completion of
work. It is pertinent to note that as per own records of the Claimant the
Claimant was able to do sufficient amount of work on one hand at the start of
the project and on the other hand the Claimant had raised the issue of land
availability attributable towards the Respondent for non completion of work on
time. It is also pertinent to note that the Claimant had also represented that
the Claimant had achieved all the requisite milestones of the project well within
the timeline despite of lack of land on the project. It is to be kept in mind that
the achievement of milestones was co-dependent upon the work on the land
and financial expenditure.

4. It is submitted that the Claimant was required to conduct inspection

along with the Respondent on site under Article 13 of the Concession
agreement. it is further submitted that the Claimant was asked time and again
to conduct joint inspection of the site vide letter dated 25.05.2011 (@pg 18 R-1
Document Compilation) which the Claimant had failed to do so. (@pg 17 R-1
Document Compilation).

5. It is pertinent to note that under article 13.6 (@page 82 CD2) the

Respondent was also required to submit video recordings of the same in order
to show the status and projects of the construction work in the quarter. The
same was not fulfilled by Claimant (@pg 19 R-1 Document Compilation). it is
therefore stated that the Claimant had failed to perform its obligations of the
contract and thereafter didn’t raise any demand till the limitation of any
damage whatsoever and had came with a false claim before this Hon’ble
Tribunal at a belated stage in order to claim damages despite of the
Respondent providing all the accommodation to the Claimant and the Claimant
utilizing all the advantages from the same.

D. Whether the claim brought before the Arbitral tribunal is certified by

the statutory Aurditor and whether Statutory Auditor was legally
equipped to issue such certificate:
1. It is submitted that there was a provision of accounts and audit in the
Agreement wherein certain obligations were laid down upon the Claimant to
fulfil in order to maintain proper accounts of the project. It is to be noted that
any books of accounts, statement of profit loss or any such records which was
for the verification of basis of payment was to be certified by the statutory
auditor and provided to the authority within the stipulated time frame.

2. On perusal of Article 33.1.1 (@page 124 of CD2) it is construed that it

was the obligation of the Claimant to maintain books of account recording all
the receipts of payments (including annuities, revenue derived and collected by
the Claimant) in relation to the project. It must also include all income,
expenditure, payments (including the payments from Escrow Account)
assets and liabilities etc as a good industry practice etc.

3. It can be further construed from Article 33.1.1 of CA itself that the

Claimant was supposed to provide 2 copies of the balance sheet, cash flow
statement, profit and loss account, along with a report thereon by its
statutory auditor, within 90 days of close of the accounting year with
which they pertain, save and except where expressly provided to the
contrary, shall form the basis of payments by either party under this
agreement. it is evident from the above clause that the Claimant has
conveniently failed to adhere to the above clause resulting into non fulfilment
of any such obligation on behalf of it within the stipulated time frame. It is also
pertinent to note that the Claimant never raised any demands or produced any
of the above documents or made any mention with regards to incurring
damages, costs or losses. It is further pertinent to note that had the Claimant
raised any such demand within the stipulated time frame, the above clause
also entrusts a right upon the Respondent to inspect the records of the
concessionaire, and require relevant extract of accounts duly certified by
statutory auditors, to be provided to the Respondent for verification of basis of
payments which would have been done by Respondent. It is to be noted that
specific question with regards to requesting of documents under Article 33 of
the Concession agreement were asked by the Claimant Counsel from
Respondent Witness (Question 83, 89-90, 148) wherein it was specifically
answered with reference to page (1237 - CD 8). Further vide answer of
Question 91-95, 134 the Respondent has also pointed out financial
irregularity with the Claimant and the same was raised in writing by the
Respondent and in furtherance to that when a question was put before the
Respondent witness whether any steps were taken with regards to deal with
the financial irregularity under Article 33.2.3, it was specifically pointed out
that the Respondent is in the process of appointing the additional auditor. It is
pertinent to mention that since the project is still going on and the Concession
Agreement is in force the Respondent has the right to appoint the additional
auditor.

4. It is submitted that despite the obligation upon the Claimant to conduct

the above exercise on yearly basis, the Claimant miserably failed to do the
same and for the first time in 2017 raised a notice for certain claims payable by
the Respondent. It is submitted that not only the claim raised by the Claimant
was beyond limitation period as the Respondent did not fulfil its obligation
under Article 33.1.1 but also not in accordance with the procedure enshrined
in Article 33.3 of the Concession Agreement. (@page 125 CD2). It is to be
noted that any claim or document provided by the Claimant to the
authority in connection with or relating to recipients, income, payments,
costs, expenses, accounts or audits and any matter incidental thereto,
SHALL BE VALID AND EFFECTIVE ONLY IF CERTIFIED BY ITS
STATUTORY AUDITORS. It is needless to mention that the frivolous claim
raised by the Claimant vide its notice dated 17.05.2017 (@page 2692 CD14)
before the Respondent didn’t accompany any such certification from the
statutory auditor.
5. With regards to appointment of auditor by the Claimant is concerned, it
is submitted that Article 33.2.1 and Schedule D (@page 247 CD3) had to be
adhered along with the provisions of Companies Act 1956. It is submitted that
as per the provisions of mentioned herein above read with clause 5.2 of
Schedule D it is clear that after completion of every five years from the date of
preparing the mutually agreed panel of chartered accountants or such earlier
period as may be agreed between the authority and the concession hire a new
panel shall be prepared in accordance with the provisions of schedule T. It is
submitted that on bare perusal of the records it is clear that the same auditor
has been operating on behalf of the company since the inception of the project
till the present stage and the same auditor has provided auditors certificate in
support of the claim of the Claimant which is in clear contravention of Article
33.2.1 of the contract as well as the provisions of Companies Act 1956, Rule 7
of Companies (Auditor and Auditors Rules 2017) and therefore the auditor
certificates provided by the statutory auditor has no legal validity or
authenticity. It is the duty of the Claimant had placed no document on record
in order to prove whether the Auditor was reappointed in accordance with the
provisions mentioned hereinabove. The same has been brought out in the cross
examination of CW1 R.M Agarwal dated 27 th March 2019 (Question No. 163-
178).

6. It is also pertinent to note that only with respect to change in law,

certificates have been placed in the documents by the Claimant. However the
same is beyond limitation as per the stipulations of the concession agreement.
(@page 2647, 2681 to 2688 of CD14).

7. It is only at the stage of evidence (post to admission and denial of

documents) the one certificate dated 03.05.2017 was produced before the
Hon’ble Arbitral Tribunal in the affidavit of CW1 Mr. RM Agarwal (@page 47). It
is to be noted that the document was placed on 15.01.2019 before the Arbitral
Tribunal. It is to be noted that the certificate allegedly dated 03.05.2017 did
not find any mention in the Demand Notice of the Claimant dated 17.05.2017
Statement of Claim of the Claimant which is dated 03.08.2018 and the same
was not even placed at the stage of further pleadings. Therefore, it is clear that
the document is fabricated or deliberately suppressed till the date of admission
and denial of documents. It is also pertinent to mention that a strong objection
was raised by the Respondent vide Application bearing I.A no. 1 of 2019 and
I.A no. 2 of 2019 (Order of tribunal dated 14.01.2019 & 07.02.2019) with
regards to admissibility of the same however the tribunal has dismissed the
same and placed the certificate on record. It is stated that it has been the
settled law of land in this regard by the Hon’ble Supreme court that any
document which is marked for the purpose of identification shall not be
deemed to be admitted by the affected party when the party has raised an
objection with regards to the same.

8. The Claimant has relied upon two case laws i.e., SREI Infrastructure
Finance Ltd. V. Tuff Drilling Private Limited 2018 11 SCC 470 and ITI v.
Siemens Public Communication Network 2020 5 SCC 510 that the Ld.
Tribunal is bound by the basic fundamental principles of CPC and Evidence
law. However it is need less to mention that in para 17,26 and 27 of SREI
Infrastructure Finance Ltd. V. Tuff Drilling Private Limited itself observed by
the Hon’ble Court that the arbitral tribunal need not to apply CPC and
Evidence in its complete rigour and has the power to travel beyond the above
laws in the interest of equity and justice and/or in the event of agreement
between the parties. It is pertinent to mention that the tribunal had itself
modified the procedure vide its order dated 07.02.2019 under which the
Respondent had conducted its pleadings, evidence and cross examination etc.

9. It is submitted that the certificates produced by the Claimant does not

accompany the audit report as well as the audit evidence based on which the
certificate was issued. It is submitted that a standalone audit certificate cannot
be the proof of claim. The filing of Auditors certificate at the belated stage of
evidence is only a meagre effort to fill the lacunas to support their false and
fabricated claim. It is to be noted that the demand notices dated 17.05.2017
did not carry any enclosures or proof of claim or any certificate to support the
claim. It is also to be noted that in the claim notice the Claimant has claimed
an amount of Rs. 271 Crore and whereas the same has been raised to Rs. 408
Crore without any basis of the same. (@Page100 of Statement of Claim). It is
further to be noted that in the demand notices there is no mention of audit
certificates. It is submitted that the auditors certificates placed by the Claimant
in order to fill their lacuna does not have any mention at all in the statement of
claim and thus to be treated beyond the pleadings.

D. Financial Close:

1. The financial Close as mentioned in Article 24 (@page109 CD 2), there is

a specific methodology of levying damages in accordance of delay in achieving
financial close. It is to be noted that the financial close allegedly was achieved
by the Claimant on 1.03.2011, however it is clearly evident from the letters of
the Claimant itself that there were certain amendments made in the financial
documents submitted by the Claimant pursuant to financial close was
requested by the Claimant on 30.05.2011 (@page 703 CD 5). It is to be noted
that due to the delay in achieving financial close the Respondent the
Respondent had intimated levy of penalties under Article 24.1.1. of the
Concession agreement. (@page 1 R-1 Respondent Documents) pursuant to
which the Claimant vide its letter dated 15.06.2011 (@page 2 R-1 Respondent
Documents) requested the Respondent to grant financial closure from
30.05.2011 and waiver of penalties/ damages under Article 4.3 and 24.1.1 and
in return the Claimant shall waive of damages under Article 4.2 for delay in
handing over of land. It is submitted that in light of the waiver granted by the
Claimant for handing over of land, the Respondent too granted the financial
close w.e.f 30.05.2011 and vide its letter dated 17.08.2011 (@page 3 R-1
Respondent Documents) granted waiver of damages on financial close. It is
pertinent to note that vide above letter the appointed date was also agreed to be
occurred on 30.05.2011.

E. Issue of Land and achievement of milestones:

1. The Concession Agreement provides for project completion schedule in

schedule G of the Concession Agreement (@page 198 CD3) wherein the 1st
milestone was to be achieved within 180 days of the appointed date. The
appointed date shall only occur if as per Article 10.3.2 (@page 71 CD2) at least
80 % of the land was handed over to the Claimant. It is to be noted that the
appointed date was mutually agreed upon by the parties post to grant of
waivers. Further, representations were made by the Claimant to the Lenders
with regards to availability of land of 77.35% (@page 1560 CD 10). It is to be
understood that based on the above representations of land provided by
Respondent to work, coupled with letters to bid with regards to evaluating the
local conditions, hazards, risks, estimates etc. and conscious business decision
and business risk, the Claimant had proceeded with the contract and had been
able to complete the milestone -1. It is clear that the other milestones were
under the threshold of expenditure of finances (i.e 35% in second and 70% in
third milestone). It is an admitted fact that the project could only have
commenced on occurrence of Appointed date and availability of land at that
time. The milestones were achieved only due to the availability of land however
the project was not completed even to achieve PCOD was due to slow progress
of work as apparent from their own Monthly Progress Report, resulting in
delays in completion of work, poor financial viability of the Claimant on
account of their financial jugglery and diversion of funds.
2. It is repeated and reiterated that the commencement of work upon the
project could have only begun upon the occurrence of appointed date. Before
the appointed date it is understood that no money was to be spent on the
project itself. It has already been established above that the financial profile of
the Claimant along with the financial statements were needed to be looked into
by this arbitral tribunal in order to determine the actual losses. It had also
been established above that the EPC Contractor, Bidder and SPV were same
and hence there was every opportunity available to the Claimant to divert the
money from the project. It is an understood fact that the work done is directly
proportional to the amounts spent, however, in the instant case the Claimant
had managed to show the expenditure of money without the actual work being
done on the ground thereby achieving 2nd and 3rd milestones as the same were
upon the threshold to achieve the financial expenditure and only limited to
commencement of construction works with respect to actual work done.
It is submitted the following milestones were only achieved by showing
expenditure of money without actually working on the project in order to
enable themselves to withdraw more money. It is understood that since the
milestones were achieved however the work was not done on the ground as per
the own MPR of the Claimant is clearly indicative of massive financial
irregularities and embezzlement of funds. It is pertinent to mention that even
in achieving the milestone III the Claimant was in slow progress of work as
clearly made out vide letter of Independent engineer (@page 2101 CD 11)
wherein the Claimant was asked to submit the documents pertaining to
Milestone III. It is clear that the land was available with the Claimant to work
on the same however it was due to delay in execution of work the Claimant was
able to provide the documents for the Project Milestone III in April 2013 (@page
2102 CD 11) wherein it is clear that the Claimant was working on all the
project facilities however the same was only completed till October 2013.

3. It is also to be noted that in the instant case, despite of the fact that not
even single penny was to be spent on the project before the appointed date, the
Claimant had already advanced Rs. 42.8 Crores to the EPC Contractor (@page
707 CD 5) above that before the appointed date the Claimant has The same
has been brought out in the cross examination of CW1 RM Agarwal(Question
no. 335- 340) (@page 1148 CD8 dated 29th April 2011). It is further
pertinent to note that even the short-term loan of Rs. 50 Cr which was
raised by Claimant NBHL at initial stages as a drawdown on 24.05.2011
(@pg 705,706 CD-5) even before the appointed date however it was to be taken
in the Year 2014 (@page 814) i.e., projection of cash flow. Further, the same
has been brought out in the cross examination of CW1 RM Agarwal (@question
336, 338). It is to be remembered as mention earlier that any deviation from
the financial package and financial model should only be done with the
approval of Respondent, however no such approval was taken.

4. It is submitted that the land to commence construction on the project

site was very much available to the Claimant on the Appointed date. It is to be
noted that the Claimant itself in its June 2011 MPR has pointed out that the
Claimant has got 67.014 Km out of 82.751 on which it has commenced the
project work on 55 km and had already completed C&G work (cleaning and
grubbing) on 52 km and is in progress on 3 Km. it is to be noted that 67.014
km of 82.751 km comes out to be 80.38% which was there with the Claimant
to conduct work at the appointed date itself. Thereafter, it is reflected from the
MPR of the Claimant itself (@ CD 19, CD 20-B, CD 22-A) that though the C&G
work was done on almost 90% of the stretch, the BC was not completed even
till June 2015 due to which the same had to be accommodated by the
Respondent in the Second Supplementary Agreement.

5. It is also submitted that Right of Way as defined in the Concession

Agreement (@pg 32 CD2) which talks about Constructive Possession of the
land which is to be read with Section 3D of the National Highways Act, 1956
and to Article 10.3.4 of the Concession Agreement (@page 72 CD2) wherein it
is mentioned that the authority shall make best efforts to procure and grant
the Right of Way within 90 days of the appointed date. It is pertinent to
mention that the 3D notification of the complete stretch of land for 4 laning
had already been done by November 2011. It is further pertinent to mention
that the Claimant’s Monthly Progress Report itself high lights in the abstract of
project that even 3G has been completed. It is further pertinent to mention that
as per Article 10.4 (@page 73 CD2) it is specifically mentioned that that site
was to be handed over to the Claimant free from encumbrances which was
done by Respondent in the instant matter and it was the duty of the Claimant
to remove any hindrances or encroachment from the site.

6. It is submitted that vide letter of the Senior Lender (@page 627 CD5) the
approval of financial close deemed to be given subject to the obligations of the
condition precedents fulfilled by the Respondent. Though the financial close
was not achieved by this letter as already explained earlier, it is imperative to
note that if the ROW with respect to two laning of the project would have been
an issue to such an extent that a huge claim is brought out by the Claimant on
the same, the Claimant would not have represented the availability of land
@page 1560, the appointed date would not have been achieved, the Claimant
would not have been able to proceed with work, achieve milestones etc. Further
as per letter of Claimant dated 11.07.2011 (@page 1211 CD8) it is to be noted
that express waiver has been granted to the Respondent with respect to
conditions precedent and based on the same letter, the Respondent vide letter
dated 17.08.2011 the appointed date was agreed upon along with the mutual
waiver of NHAI. Therefore, it can also be said that even the financial closure
was subjected to condition precedent and that is why mututal waiver was
agreed upon by the partied in order to achieve financial close and appointed
date.

F. TREE CUTTING-

It is submitted that on bare perusal of Article 11.4 (@Page 76 CD2) it is to be

noted that the responsibility of Respondent was to only assist the Claimant in
obtaining applicable permits. It is pertinent to mention that the obligation
Respondent was only to obtain the environmental clearance and it was the
duty of the Claimant to obtain permission with regards to tree cutting. It is
further submitted that on 1st March 2011 the Claimant itself had applied for
permissions for tree cutting to the MOEF and Government of India for the
forest land (@page 614 CD5). It is further pertinent to mention that even under
Schedule E of the Concession Agreement Clause 1.1 (i) (@page 194 CD 3) it
was the responsibility of the Claimant to obtain permission for cutting of trees.

H. Slow progress of work

1. The entitlement of the Claimant to obtain annuity from the Respondent

was solely dependent upon the provisions of Article 14 of the Concession
Agreement which talks about completion certificate/ provisional completion
certificate including tests and completion of punch list items. It is to be noted
that in the instant case only the Provisional Certificate has been issued in
favour of the Claimant. It is to be noted that as per Article 14.3.1 read with
Article 14.1.1 (@page 83 CD 2) it was the obligation of the Claimant to request
for tests at least 30 days prior to the likely completion or provisional
completion of the project highway.

2, The Respondent vide its letter dated 16.02.2012 (@page 14 R-1

Respondent Documents) has raised an objection upon the Claimant for
improper conduct in carrying out the work, road of insufficient thickness and
failure to provide proof of expenditure in the monthly progress report and for
not conducting the tests. It is to be noted that till the stage of Second
Supplementary Agreement (@page 102 R-1 Respondent Documents
Para/point 7) the entire over lay / BC work was not done on the ground.
Moreover the Independent Engineer has written several letters to the Claimant
for slow progress of work from 2013 to 2014, non completion of work and slow
mobilization of material, equipment and manpower, establishment of toll plaza
@page 30-37 R-1 Respondent Documents). It is to be noted that the proper
execution of work was very much necessary for the Respondent itself as
completion of tests and facilities would have readied the road for commercial
operation in order to enable the Respondent to collect toll revenue from the
highway. It is to be noted that on 27 th September 2013 (@page 36 R-1
Documents) it has specifically been pointed out that the remaining work of the
Claimant which were balanced and problem free were not done till September,
2013 itself. Even till 06th March 2014 and 22nd March 2014(@page 37,38) which
is post to scheduled completion date the work was not completed by the
Claimant due to its slow progress and on the other hand the Claimant has
come before the Arbitral tribunal with the claim from Schedule completion date
to Provisional Commencement and Operation Date. (COD to PCOD). It is to be
mentioned that the Claimant’s conduct is reflected from the letters of the
Independent engineer even after giving the PCOD certificate where the
Claimant is called upon by the Independent Engineer for its slow progress of
work. (@page 39-65 R-1 Respondent Documents)

3. It is submitted that on mere reference of the Second supplementary

agreement dated 23rd December, 2015 (@page 101 R-1 Respondent
Documents) it is evident from clause 4. (b) of the agreement itself that only
around 4 km of encumbrance free land was not provided to the Claimant. It is
to be noted that the same can be cross referred with the MPR of the Claimant
in order to compare that it was the stretch of only 4 km where the Claimant
was unable to do the C&G work. It is therefore easy to determine that the land
for completion of work was very much available to the Claimant to complete
work well within time in order to get the PCOD issued and start getting annuity
payments.

I. Accommodation Of Claimant By The Respondent

1. It is submitted that despite of delays and default of the Claimant and

practical problems faced in land acquisition faced by Respondents, the
Respondent in order to get the project executed on ground in public interest,
accommodated the Claimant in order to restore the Claimant to its original
financial position. It is to be noted that in order to restore the financial position
of the Claimant, the Respondent can only felicitate the Claimant in obtaining
provisional completion certificate so that the Claimant may be able to get the
annuity payments as per the Schedule of the concession agreement. However,
as per the Concession Agreement itself, the completion certificate or provisional
completion certificate.

2. It is submitted that Article 14.3 deals with provisional certificate (@page

83 CD2) wherein it is specifically mentioned in 14.3.1. that the provisional
certificate shall be issued by the Independent engineer if the Tests are
successful (to be read with Article 14.1.1) and the other works which are not
completed by the Claimant were to be placed in punch list to be completed
within the stipulated period of time. It is further provided in 14.3.2 that the
provisional certificate shall be issued on the request made by the
Concessionaire, to this affect, for the operating part of the Project
Highway, if ATLEAST 75% of the total length of the project highway HAS
BEEN COMPLETED. It is submitted that the completion mentioned herein is
with respect to carrying out all the activities mentioned in 14.3.1 and inturn
14.1.1 with respect to conducting tests and completion of complete work of
75% of the project highway. (The same can be explained with an illustration
that if a contractor had worked 80% of the project work, it does not make the
contractor liable for provisional certificate. The Contractor shall be eligible for
provisional certificate only if out of the 80% work done 75% of the work has
been completed in all respects in consonance with 14.3.1 i.e successful tests so
that the 75% of the highway can be safely and reliably placed into commercial
operation.) It is needless to mention that Article 14.3.2 is a subsequent
provision to Article 14.3.1 and not a stand alone provision to be read in
isolation for the purposes of obtaining provisional certificate.

3. It is submitted that the Second Supplementary Agreement was entered

into by the Claimant and Respondent on recommendation of Independent
Engineer in order to include the list of incomplete work in the punch list along
with the pending works which remained incomplete due to lack of land
availability. It is also submitted that the works related to metal beam crash
barrier, construction of drain and footpath were also incomplete due to the
hindrances and resistance posed by the local public was also included in the
supplementary agreement. (@para 4 (b) (c) (d). It is pertinent to note that the
PCOD granted by the Independent engineer was also ratified in para 4 (e) for
72.347 km out of 82.751 km length of the project.

4. It is needless to mention that the PCOD was granted to the Claimant

only pursuant to the completion of work which to the accord and satisfaction of
the Independent Engineer only post to full completion of work in 75% of the
project length except for the works provided in the supplementary agreement in
the punch list which were not completed due to public protest and hindrance.
It is imperative to mention that the removal of hindrance was the responsibility
of Claimant however in order to enable the Claimant to achieve PCOD the
Respondent accommodated the Claimant. It is important to note that since the
above exercise was a deviation from the terms of Concession agreement and
the Respondent had to ensure the balance works to be done as per the
Concession agreement, hence, it was important to enter into a supplementary
agreement and only then the Respondent would have been able to release the
annuity. It is to be noted that the same was done to accommodate the
Claimant in order to get the work executed.

5. It is submitted that the punch list items which were put into the
supplementary agreement wherein the Claimant was not able to complete the
work, the same were to be governed by Article 14.4 of the Concession
Agreement (@page 84 CD2). It is submitted that the Claimant further failed to
complete the punch list items due to which damages were deducted by the
Respondent from the annuities paid to the Claimant under Article 14.4.1 of the
Concession Agreement.

6. It is submitted that the case of the Claimant’s Counsel is self contrary as

is argued that due to default of the authority for not handing over the land, the
Claimant was not able to work and has suffered losses, on the other hand the
Claimant has spent massive funds thereby achieving milestones and
completing substantial C&G work on the complete road stretch except for 4-5
km. Also, on one hand the Claimant had shown that the Claimant had suffered
huge losses and additional costs etc. from the COD to PCOD, however the
Claimant has not been able to complete the work on the lands which were
available to him and he had done C&G work upon it as per their own MPR.

7. It is submitted that the request of PCOD was made desperately by the

Claimant in July 2014 on the pretext of treating 14.3.2 as a stand-alone
provision to obtain the PCOD certificate. However, the same was not accepted
by the Independent Engineer as well as the Respondent in order to complete
the deficient work on at least 75% of the project highway under Article 14.3.1
thereby making it safe and reliable for commercial operation. The Request for
grant of PCOD was made by the Claimant which was duly rejected by the
Independent Engineer for want of completion of deficient work in order to get
the highway complete up to 75% in consonance with Article 14.3.1. it is to be
noted that the Independent Engineer recommended the Respondent
(@page2392 CD 13) to enter into supplementary agreement for (i) granting
extention of time (ii) for putting balance work in punch list (iii) Granting PCOD
to NBHL. The same was replied to by the Respondent vide letter on (@page
2394 CD 13) requiring comments on vigilance observations, comments on
pre safety audit observations and safety stretch for PCOD stretch. Also, on
(@2397) the PIU wrote to RO recommending grant of PCOD along with
supplementary agreement, also intended to appraise NBHL to achieve its
financial deadlines so that the balance work could be segregated from the
completed work (if this could have been done then the claim would have been
only for the balance work).

8. The Claimant didn’t make any punch list so the Independent Engineer
vide letter dated 11.05.2015 sent the list of punch list work. It is submitted
that the IE deviated from the requirement of 14.3.1 and granted of PCOD
merely showing the physical progress on authority of some letter of NHAI which
is not there on record (@page 2418).

In view of the above, it is amply clear that the Claimant have placed
highly concocted, non-substantiated and fictitious claims which are bereft from
any supportive documents. No claims have been proved during the instant
arbitral proceedings and therefore, liable to be rejected with exemplary cost.

Respondent expenses:

1. The respondent has suffered huge legal expenses in pursuing the above
titled arbitration proceeding. Expenses of the respondents are as follow:
a) Arbitrators fee:
b) Lawyer’s fee: -
c) Venue booking for Ld. AT’s hearing and steno charges:
d) Other miscellaneous expenses: -

PRAYER
It is therefore most respectfully prayed that this Hon’ble Tribunal may be
pleased to reject all claims of the Claimant and refund the legal expenses of
NHAI amounting Rs. ……….; and imposed cost upon the Claimant for raising of
unsubstantiated/bogus claims

RESPONDENT
THROUGH
(BALENDU SHEKHAR)
Counsel for Respondent (NHAI)
Office: - LB-17, Gauri Sadan, Plot No.5,
Hailey Road, New Delhi-110001
Place: New Delhi
Date: 08.01.2021