M.C. MEHTA versus UNION OF INDIA & ORS.

Citation: [2016] 7 S.C.R. 962 · Decided: 13-05-2016 · Supreme Court of India · Bench: T.S. THAKUR, R. BANUMATHI · Disposal: Disposed off

Judgment (excerpt)

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[2016] 7 S.C.R. 962 
M.C. MEHTA 
v. 
UNION OF INDIA & ORS. 
[IDBI Bank Limited and State Bank of India .... Applicants] 
(I.A. Nos.363-364, I.A. No. 425 in I.A. No. 364 in 
I.A. Nos. 344, 355, 362) 
In 
(Writ Petition (Civil) No.13029of1985) 
MAY 13,2016 
[T. S. THAKUR, CJI AND R. BANUMATHI, J.) 
Contract: Bid invited by HS/JDC for developing 135.65 kms 
1011g Ku11dli-Ma11esar-Palwal Expressway - Three co111pa11ies set 
up a concessionaire - Loan raised by concessionaire - Delay in 
execution of work by concessionaire resulting in /er111inatio11 - On 
IA filed by Government, Supreme Court directed State of Haryana 
to replace the existing concessionaire - HSI/DC informed IDB/-
lender bank about the said order - IDBI intimated HS//DC that 
senior lenders have agreed that the entity selected by HSI/DC shall 
be selectee of the lenders for the purpose of the substitutio11 
agreement - Lender banks asked HS/JDC lO ensure that the new 
co11cessio11aire takes over the debt due to the lenders - New 
concessio11aire appointed - However, in the tender as well as the 
concession agree111ent there was neither mention of debts due to the 
le11der ba11ks nor any clause incorporated to secure the loans of 
the lender banks - Thus, instant /As by Consortium of banks seeking 
directions to HS/JDC to e11sure that new concessionaire assumes all 
the existing liabilities and obligations of the existi11g concessionaire 
towards se11ior lenders - Held: Such a relief cannot be granted by 
an order of this Court, as the same would amount to variation of 
the contractual terms between the parties - Any such dispute 
regarding the alleged violation of the terms and conditions of a 
contract shall have to be resolved in an appropriate civil action 
before the competent civil court - The tripartite agreement between 
the lender banks, HSIIDC and erstwhile concessionaire provide 
for adjudication inter-se disputes between the parties by way of 
arbitration - Therefore, parties are directed lo refer matter to 
arbitration - Howeve1; in the ends of justice, toll amount collected 
is secured to the extent of 80% by deposit of the sa111e in escrow 
account while balance 20% for use by HSI/DC for 111aintenance. 
962 
M.C. MEHTA v. UNION OF INDIA & ORS. 
Disposing of the IAs, the Court 
HELD: 1. Such a relief cannot be granted by an order of 
this Court, as the same would amount to variation of the 
contractual terms between the parties i.e. HSIIDC and ESSEL. 
Even so the lender banks are complaining about the violation of 
the terms of the tripartite agreement between them and 
concessionaire. Any such dispute regarding the alleged violation 
of the terms ancl conditions of a contract shall have to be resolved 
in an appropriate civil action before the competent civil court. 
That is because the same are not amenable to adjudication in 
these proceedings. However, the parties may not have to resort 
to any civil action because of the presence of clause 7.11 in the 
tripartite agreement between the lender banks, HSIIDC and 
erstwhile concessionaire which provide for adjudication i11ter-se 
disputes between the parties by way of arbitration. [Para 15) [973-
B-D) 
2. Certain disputes between HSIIDC and the 
concessionaire have already been referred by arbitration to an 
Arbitral Tribunal. Given the fact that two of the parties to the 
disputes sought to be raised in the present applications, are 
already before the Arbitral Tribunal, there is no reason why the 
disputes raised in the present applications should also not be 
referred to the Arbitral Tribunal in terms of clause 7.11. However, 
some arrangements are made to protect the interest of all 
concerned. That is so, because Manesar RD 83.320 km to Palwal 
RD 135.650 km = 52.330 km has been completed at least in part 
by the outgoing concessionaire while the remaining was 
completed by new concessionaire The amount advanced by the 
lender banks to the outgoing concessionaire has been, it is 
reasonable to presume, utilized for construction of the said portion 
of the road. HSIIDC has now appointed an agent to collect the 
toll for the use of the said road. In the ends of justice, the amount 
so collected is secured to the extent of 80 percent by deposit of 
the same in an escrow account to be opened in the IDBI (Lead 
bank) while, the balance 20 percent can be utilized by the HSIIDC 
for maintenance etc. The amount so collected shall be available 
to the arbitral tribunal f

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