UNION OF INDIA Vs. KRISHNAPATNAM RAILWAY COMPANY LIMITED

JUDGEMENT

(1.) Writ petition has been filed by the Ministry of Railways to set aside the orders dtd. 18/6/2020 and 29/4/2021 passed by the learned Arbitral Tribunal on the grounds of patent lack of inherent jurisdiction; violation of public policy, as also to declare the dispute raised by the respondent-Krishnapatnam Railway Company Limited as inarbitrable and not capable of settlement by Arbitration and further order to remove the privileged documents from the record, which includes sensitive Governmental file notings concerning the subject matter.

(2.) Brief facts of the case, in nutshell, as emerged from the pleadings are:- In December 2002, the Ministry of Railways launched National Rail Vikas Yojna to improve rail transport facility capacity and port connectivity by upgrading railway infrastructure. In the backdrop of this initiative, the Railways sanctioned Project Railway on 22/3/2006 for construction and implementation of broad-gauge rail link connectivity between Obulavaripalle at Km 0.000 and Krishnapatnam at Km 111.129.

(3.) The petitioner and the respondent entered into Concession Agreement in year 2007 in respect thereof wherein the respondent was required to complete the project within a period of 5 years among other things. The Concession Agreement inter-alia included performance and execution of all activities related to the development, financing, design, construction, operation and maintenance of the Project Railway by the respondent. During the course of execution of the Project Railway work, in year 2012 the respondent made a representation seeking for apportionment of various charges including "Terminal Costs" and "Apportioned Earnings for the length of the PKPK Siding" and it is entitled to get an amount of Rs.500.00 crores from November, 2008 to March, 2017, which the Ministry of Railways refused initially by issuing Circular dtd. 2/8/2016 wherein it said that there was no such provision in the Concession Agreement to give a cause to the respondent to make such extra contractual demands. However, it has come on record that after receiving similar representations from SPVs of other Zonal Railways, the matter was considered afresh and the petitioner conceded to such claims and accordingly issued two Circulars dtd. 10/8/2017 and 15/11/2017 wherein the claims, as the one made by the respondent and all other SPVs was allowed for payment from the date of issuance of the two Circulars prospectively, not retrospectively thereby the claim of the respondent for payment of Terminal Costs and Apportioned Earnings for the length of the PKPK Siding was considered prospectively. This gave rise to invocation of the Arbitration Clause enshrined in the Concession Agreement and Arbitral Tribunal was formed.