Facts and Background:
A Concession Agreement existed between BEPL and NHAI. 80 percent of the product had been completed by BEPL. After the project had reached commercial operation, NHAI terminated the payment. The delays in the project were caused by the NHAI. Section 9 of the Arbitration Act was used by BEPL. Under Section 9 of the Arbitration Act, the Court ordered the Appellant National Highways Authority of India (NHAI) to pay BEPL Rs.337,73,19,434.10 paise as a termination payment under the NHAI-BEPL Concession Agreement. The Respondent was required to provide the Appellant with an unconditional and irrevocable bank guarantee. The application was approved by the Commercial Division, which claimed that even if the termination was due to BEPL's default, NHAI was obligated to make a Termination Payment equal to 90% of the debt due.
According to NHAI's senior counsel, the Concession Agreement prohibits the merger of the lenders' and equity participants' entities in the concessionaire. Only banks and financial institutions are expected to finance the project. The termination charge, according to the lawyer, is for the benefit of the lenders who have guaranteed to fund the project.
The debt assignment in this case is a private arrangement that does not fall under the SARFAESI Act. He also said that, while debt can be allocated to a private transaction, the assignee will not take the bank's place. As a result, the debt due does not include debt owed to the concessionaire's shareholders.
BEPL's senior counsel indicated that Concession Agreements must provide a provision for a termination payment. Since NHAI and its concessionaires often have disagreements, no bank or financial institution was willing to fund the projects. The concession period is 29 years, so banks and financial institutions need security.
They have a pari passu fee on the concessionaire's assets, rights, title, and interest, and the debt does not exclude BEPL from receiving termination payment. He went on to say that the compensation awarded to BEPL in the first round of arbitration was simply to bring the company back in the role it would have been in if NHAI had not delayed.
BEPL did not contact the Commercial Division in order to obtain the aforementioned termination payment. As a result, BEPL will be unable to recover the funds from NHAI. BEPL's application for a termination payment of 90% of the debt due could only be decided by the Arbitral Tribunal; it could not be decided in a Section 9 proceeding. BEPL is demanding the money in order to implement a clause in the Concession Agreement, not as a temporary fix.
The appeal was granted, and the November 25, 2019 judgement was set aside. As a result, BEPL's application under Section 9 of the Act was dismissed.