NHAI Termination Notice Upheld for West Gujarat Expressway Limited: Impact on IL&FS Resolution Process

The Tribunal dismissed the challenge to the Termination Notice by NHAI in the case involving West Gujarat Expressway Limited. The termination was upheld due to alleged defaults under the Concession Agreement, including safety concerns. Despite concerns about the impact on the IL&FS Group's Resolution Process, the Tribunal directed implementation of the Termination Notice from 1st April 2021 to allow the Resolution Process to conclude by 31st March 2021. Lenders' rights were not separately considered as the application was not entertained on merits.

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Issues Involved:
1. Validity of the Termination Notice issued by NHAI.
2. Compliance with previous Tribunal orders.
3. Impact of termination on the Resolution Process of IL&FS Group.
4. Rights of the lenders in the event of termination.

Issue-Wise Detailed Analysis:

1. Validity of the Termination Notice issued by NHAI:
The primary issue revolves around the Termination Notice dated 21st December 2021 issued by NHAI to the Applicant, West Gujarat Expressway Limited, for alleged defaults under the Concession Agreement. The Applicant contended that the termination was unjustified as they had complied with the Cure Notice and Preliminary Termination Notice issued earlier. The NHAI, however, argued that due to Concessionaire defaults, including a significant incident where a portion of the retaining wall collapsed causing fatalities, they had no choice but to terminate the agreement for public safety and maintenance reasons.

2. Compliance with previous Tribunal orders:
The Applicant argued that the Termination Notice violated the Tribunal's order dated 8th April 2019, which directed NHAI not to cancel any agreements with companies in question. However, the Tribunal found that the order dated 8th April 2019 was not continued in subsequent orders, including the final order on 12th March 2020. The Tribunal clarified that the 8th April 2019 order was not intended to indefinitely restrain NHAI from terminating agreements.

3. Impact of termination on the Resolution Process of IL&FS Group:
The Applicant emphasized that the termination would severely prejudice the ongoing Resolution Process of IL&FS Group, which was at a crucial final stage. The Tribunal acknowledged that the Resolution Process was critical and likely to be completed by 31st March 2021. However, it concluded that the Applicant's remedy lies elsewhere, specifically through the dispute resolution process in the Concession Agreement, and not within the current proceedings.

4. Rights of the lenders in the event of termination:
The lenders, represented by their counsel, supported the Applicant’s stance, arguing that termination would impede their ability to recover debts. The Tribunal noted the lenders' concerns but stated that since the application was not entertained on merits at the instance of the Applicant, the lenders' claims did not require separate consideration in this context.

Conclusion:
The Tribunal dismissed I.A. No. 2908 of 2021, refusing to entertain the challenge to the Termination Notice on merits within the current proceedings. The interim order dated 23rd December 2021 was discharged. However, recognizing the critical stage of the IL&FS Group's Resolution Process, the Tribunal directed that the Termination Notice be implemented from 1st April 2021, allowing the Resolution Process to reach its anticipated conclusion by 31st March 2021.

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