State of Kerala v National Highway Authority of India and Guruvayoor Infrastructure Private Limited

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **THURSDAY, THE 13[TH] DAY OF APRIL 2023 / 23RD CHAITHRA, 1945 WP(C) NO. 13639 OF 2022** ## **PETITIONER/S:** STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT PUBLIC WORKS DEPARTMENT GOVERNMENT SECRETARIAT THIRUVANANTHAPURAM, PIN - 695001 BY ADV GOVERNMENT PLEADER ## **RESPONDENT/S:** 1 NATIONAL HIGHWAY AUTHORITY OF INDIA (MINISTRY OF SHIPPING, ROAD TRANSPORT & HIGHWAYS), GOVERNMENT OF INDIA , G-5&6 , SECTOR 10 DWARKA, NEW DELHI, PIN - 110075 2 GURUVAYOOR INFRASTRUCTURE PRIVATE LIMITED MCH NO.555 , ARORA COLONY ROAD NO.3 , BANJARA HILLS,HYDERABAD, PIN - 500034 BY ADVS. MANU SRINATH NAVEEN A.VARKEY ARJUN SYAL ## **OTHER PRESENT:** SPL.GP K.V.MANOJ KUMAR; DSGI S.MANU; ADV.ANKUR MITTAL AND ADV. YASH KAPUR FOR R1. **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON** **10.04.2023, THE COURT ON 13.04.2023 DELIVERED THE FOLLOWING:** W.P.(C) No.13639 of 2022 -2- ## **JUDGMENT** Dated this the 13[th] day of April, 2023 The first and second respondents entered into Ext.P1 concession agreement on 27.03.2006 for the design, construction, development, finance, operation and maintenance of Km 270.00 (Thrissur) to Km 316.70 (Angamaly) and Improvement, Operation and Maintenance of Km 316.70 of (Angamaly) to Km 342.00 (Edappally) on National Highway 47. The agreement requires the second respondent concessionaire to design construct, operate and maintain the National Highway in the stretches mentioned in the contract and authorised the second respondent to collect toll from the users. Ext.P1 agreement contains an arbitration clause, as per which any dispute arising out of the contract is to be referred to Arbitration by a Board of Arbitrators appointed by the parties. 2. With the objective of providing support ## W.P.(C) No.13639 of 2022 -3- on law and order issues and to ensure smooth operation of the highway, a separate agreement (State Support Agreement) is entered between the State of Kerala/petitioner and the second respondent. The State Support Agreement also contains an arbitration clause, which provides for resolution of disputes arising out of the agreement through arbitration. 3. As dispute arose between the first and second respondents with respect to the claims raised by the second respondent, the arbitration clause in Ext.P1 agreement was invoked and Honourable Justice R.K.Jain, former Judge of the Supreme Court of India, appointed as the Presiding Arbitrator. In that arbitration proceedings, the first respondent filed an application under Order I Rule 10 of CPC seeking impleadment of the Government of Kerala as additional respondent. Although petitioner objected to such impleadment, the Ld. Arbitrator W.P.(C) No.13639 of 2022 -4- allowed the application and impleaded the Government of Kerala as second respondent in the arbitration proceedings. Aggrieved, this writ petition is filed. 4. Heard Senior Government Pleader K.V.Manojkumar for the State of Kerala, Adv. Ankur Mittal for the National Highway Authority of India and Adv.Harsh Kapoor for the Concessionaire. 5. According to the learned Government Pleader, Ext.P8 order is _ex facie_ illegal since the petitioner is not a party to Ext.P1 agreement. Reference is made to Section 2(h) of the Arbitration and Conciliation Act, 1996 ('the Act' for short) to submit that 'party' means a party to an arbitration agreement. It is contended that as per Section 11, only a party to an arbitration agreement can resort to arbitration and seek appointment of arbitrator. As such, the order impleading a third party as ## W.P.(C) No.13639 of 2022 -5- respondent in the arbitration proceedings goes against the scheme of the Act. It is also contended that, Order I Rule 10 of CPC has no application to the proceedings under the Act. The group of companies doctrine or the decisions relied on by the Arbitrator for finding the petitioner to be a necessary party have no application. The decision in _**Chloro Controls India Private Limited v Severn Trent Water Purification Inc.and others [(2013) 1 SCC 641]**_ has been doubted by the Apex Court in _**Cox and Kings Limited v. SAP India Private Limited and another [(2022) 8 SCC 1]**_ . Attention is drawn to various clauses in the concession agreement and the State Support Agreement to contend that the agreements are distinct and entered into for entirely different purposes. 6. Learned Counsel for the respondents raised a preliminary objection as to the ## W.P.(C) No.13639 of 2022 -6- maintainability of the writ petition on the ground that the venue of arbitration that as per Clause 39.2.4 of the Concession Agreement, the venue of arbitration is New Delhi and hence, this Court cannot entertain the challenge against the order passed by the Arbitral Tribunal. The maintainability is also assailed on the ground that the petitioner's remedy is to challenge the impugned order under Section 34 and not to rush to this Court by invoking the jurisdiction under Article 226. In support of the contentions, reliance is placed on the decision in _**SBP and Co.**_ _**v. Patel Engineering Ltd and another [2005] 8 SCC 618], Brahmani River Pellets Ltd v. Kamachi Industries Ltd [ 2020] 5 SCC 462]** and_ _**Bhaven Construction v. Executive Engineer, Narmada Nigam**_ _**Limited and another [2022] 1 SCC 75]**_ . 7. In reply to the contention that Order I Rule 10 of CPC is not applicable to W.P.(C) No.13639 of 2022 -7- arbitration proceedings, reference is made to the decision in _**Srei Infrastructure Finance Limited**_ _**v. Tuff Drilling Private Limited [(2018) 11 SCC**_ _**470]**_ , wherein it is held that even though the Arbitral Tribunal is not bound by the rules of procedure contained in CPC and Evidence Act, the Tribunal is not incapacitated in drawing sustenance from those rules. 8. On merits, it is contended that it will not be possible for the parties to adhere to the conditions in the concession agreement unless the State abides by its obligation under the State Support Agreement. As such, the Concession Agreement and the State Support Agreement are intrinsically linked. 9. At the outset, it is to be noticed that there is no dispute to the fact that the venue of arbitration is New Delhi. Further, the parties to the concession agreement have invoked the arbitration clause and the Arbitral has W.P.(C) No.13639 of 2022 -8- passed the order impugned in this writ petition. The first question arises for consideration is whether this Court is having jurisdiction to consider the legality of that order. The answer to that question is available from the decision in _**SBP and Co.** (supra)_ , wherein the Apex Court answered the question of jurisdiction based on the venue of arbitration as under; _“18.Where the contract specifies the jurisdiction of the court at a particular place, only such court will have the jurisdiction to deal with the matter and parties intended to exclude all other courts. In the present case, the parties have agreed that the “venue” of arbitration shall be at Bhubaneswar. Considering the agreement of the parties having Bhubaneswar as the venue of arbitration, the intention of the parties is to exclude all other courts. As held in Swastik[Swastik Gases (P) Ltd.v.Indian Oil Corpn. Ltd., (2013) 9 SCC 32 : (2013) 4 SCC (Civ) 157], non-use of words like “exclusive jurisdiction”, “only”, “exclusive”, “alone” is not decisive and does not make any material difference.”_ ## W.P.(C) No.13639 of 2022 -9- Although learned Government Pleader contended that the venue of arbitration fixed under the Concession Agreement will not bind the petitioner, the order under challenge being one passed by the Arbitrator appointed in terms of the Concession Agreement, the petitioner's remedy is to challenge the order before the High Court of Delhi. **==> picture [381 x 12] intentionally omitted <==** question, I am not delving into the other contentious issues, like applicability of Group of Companies Doctrine and the jurisdiction of the High Court to entertain the challenge against Ext.P8 order, in view of Sections 5 and 34 of the Act. For the reasons aforementioned, the writ petition is dismissed as not maintainable. **==> picture [35 x 12] intentionally omitted <==** ## **V.G.ARUN JUDGE** Scl/ W.P.(C) No.13639 of 2022 -10- ## **APPENDIX OF WP(C) 13639/2022** |PETITIONER EXHIBITS|PETITIONER EXHIBITS| |---|---| |ExhibitP1|TRUE COPY OF THE RELEVANT PAGE OF| ||CONCESSION AGREEMENT DTD 27.03.2006| ||EXECUTED BETWEEN THE RESPONDENTS| |ExhibitP2|TRUE COPY OF THE RELEVANT PAGES OF| ||CLAUSE 9 & 10 OF EXHIBIT P1 CONTRACT| |ExhibitP3|TRUE COPY OF THE RELEVANT PAGES OF| ||CLAUSE 25.1 OF EXHIBIT P1 CONTRACT| |ExhibitP4|TRUE COPY OF THE RELEVANT PAGES OF| ||CLAUSES OF EXHIBIT P1 CONTRACT| ||GOVERNING DISPUTE RESOLUTION MECHANISM| |ExhibitP5|TRUE COPY OF THE APPLICATION FILED BY| ||1ST RESPONDENT BEFORE THE ARBITARAL| ||TRIBUNAL DTD 10.09.2021| |ExhibitP6|TRUE COPY OF THE OBJECTION FILED BY| ||THE PETITIONER| |ExhibitP7|TRUE COPY OF THE RELEVANT PAGES OF| ||STATE SUPPORT AGREEMENT| |ExhibitP8|TRUE COPY OF THE ORDER DTD. 15.03.2022| ||ISSUED BY THE ARBITRAL TRIBUNAL| |RESPONDENT EXHIBITS|| |Exhibit R1(a)|Copy of Concession Agreement dated| ||27.03.2006 along with Schedule R| |Exhibit R1(k)|Copy of Contempt Case bearing No.| ||CC(C) 1081/2014 without its exhibits| |Exhibit R1(o)|Copy of Judgment/Order dated| ||04.06.2014 passed in WP(C) 28657/2013| |Exhibit R1(m)|Copy of Judgment/Order dated| ||10.07.2015 passed in SLP No.| ||17453/2015| |Exhibit R1(j)|Copy of Judgment/Order dated| ||12.06.2014 passed in W.P. (C) No.| ||2352/2013| |Exhibit R1(h)|Copy of Judgment/Order dated| ||12.10.2017 passed in W.P. (C)| ||29171/2017| |Exhibit R1(f)|Copy of Judgment/Order dated| ||16.07.2012 passed in WP(C) 14492/2012| |Exhibit R1(n)|Copy of letter dated 28.08.2021| ## W.P.(C) No.13639 of 2022 -11- Exhibit R1(d) Copy of Statement of Claim filed by the Respondent No. 2. Exhibit R1(b) Copy of State Support Agreement dated 14.12.2007 Exhibit R1(e) Copy of Writ Petition bearing No. W.P (C) 14492/2012 Exhibit R1(i) Copy of Writ Petition bearing No. W.P. (C) 2352/2013 without exhibits Exhibit R1(g) Copy of Writ Petition bearing No. W.P. (C) 29171/2017 Exhibit R1(c) Copies of letters dated 18.03.2019 Exhibit R1(l) Copy of Judgment/Order dated 25.02.2015 passed in Writ Appeal bearing No. W.A. 263/2015 PETITIONER EXHIBITS EXHIBIT P9 THE COUNTER AFFIDAVIT FILED BY THE FIRST RESPONDENT IN WP(C) 27586/2022.