RAPID METRORAIL GURGAON LIMITED ETC. versus HARYANA MASS RAPID TRANSPORT CORPORATION LIMITED & ORS.

Citation: [2021] 3 S.C.R. 639 · Decided: 26-03-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Disposed off

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Judgment (excerpt)

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   [2021] 3 S.C.R. 639
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RAPID METRORAIL GURGAON LIMITED ETC.
v.
HARYANA MASS RAPID TRANSPORT CORPORATION
LIMITED & ORS.
(Civil Appeals Nos. 925-926 of 2021)
MARCH 26, 2021
[DR. DHANANJAYA Y CHANDRACHUD, M R SHAH AND
SANJIV KHANNA, JJ.]
Constitution of India: Art. 226 – Power of High Courts to
issue writ – Award of Concession Agreement to two companies-
RMGL and RMSGL respectively by Haryana Shehri Vikas
Pradhikaran-HSVP for developing metro rail – Meanwhile direction
by State of Haryana that all metro projects would be handled by the
first respondent – Thereafter, issuance of termination notice by
RMGL and RMSGL to HSVP to bring an end to the Concession
Agreement upon expiry of 90 days from delivery of the termination
– Thereafter, HSVP issued their termination notices to RMGL and
RMGSL, directing them to hand over the projects to HMRTC –
However, since RMGL and RMGSL were entities of a group
categorised in the Red category, they were to seek approval before
transferring or encumbering any assets – Subsequently, RMGL and
RMGSL permitted to handover possession and control of metro
project to HSVP pursuant to termination of the Agreement – On the
same day, writ petition u/Art. 226 by HSVP and HMRTC challenging
the notice of termination on the ground that it was against public
interest – High Court granted interim direction for continuance of
the operation of metro project for 30 days, which was further
extended and during which the debt due under the financing
documents in terms of concession agreements was to be determined
by the auditor and then HSVP was to deposit 80 % of the debt due
as determined in an Escrow Account in terms of Concession
Agreement, which would be subject to order of NCLAT or any other
court – On appeal, held: Exercise of writ jurisdiction by the High
Court u/Art. 226 was justified since non-interference, which would
have inevitably led to the disruption of rapid metro lines for
Gurgaon, would have had disastrous consequences for the general
public – However, ordinarily the High Court in its jurisdiction u/
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SUPREME COURT REPORTS
[2021] 3 S.C.R.
Art. 226 would decline to entertain a dispute which is arbitrable –
Directions contained in the High Court’s consent order makes it
clear that the audit team appointed by CAG was to conduct a
financial audit of the debt due and to examine the scope of the
audit, the audit being completed within 30 days and 80 % of the
debt due being deposited within 30 days after the receipt of the
audit report; and that the rest of the disputes between the parties
arising out of the audit report were to be agitated in arbitration –
HSPV and HMRTC could not avoid compliance with the High Court’s
Consent Order since they willingly agreed to pay 80% of the debt
due as per the auditor’s findings – HSPV to deposit 80% of the
amount within 3 months – Amount to be maintained in the Escrow
Account subject to the orders of NCLAT or any other competent
authority – RMGL and RMGSL on the one hand and HSVP on the
other hand, at liberty to pursue their rights and remedies in
pursuance of the arbitration clause.
Disposing of the appeals, the Court
HELD: 1.1 The expression ‘debt due’ is defined in Article
1.1 of the Concession Agreement dated 9 December 2009. The
expression indicates that the term debt due comprises of three
components: the principal amount of the debt provided by the
senior lenders under the financing agreement; all accrued
interest, financing fees and charges payable under the financing
agreement; and any subordinated debt which is included in the
financial package. [Para 36][682-D-H; 683-A]
1.2 Article 18 provides for an Escrow Account into which
all funds, which constitute the financing package for meeting the
capital cost of the concessionaire, are to be deposited. During
the operational period, all fare and non-fare revenues were also
to be deposited exclusively in the Escrow Account by the
concessionaire. Article 18.2.1 provided for the disbursement from
the Escrow Account, which included debt service payments due
to the senior lenders. [Para 37][683-F-G]
1.3 Where the Concession Agreement has been terminated
by HUDA on account of a default by the concessionaire, HUDA
was required to take over the complete project and assets, and
to pay to the lenders of the Project, as per the financing documents,
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an amount equal to 80 per cent of the debt due as termination
payment. Where on the other hand, the termi

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