Concession Agreement terms incorporated into Escrow and Substitution Agreements are binding and enforceable by lenders.

NHAI (Appellant) entered into Concession Agreements (CAs) with Respondent No. 2 for road projects

Consequently, Escrow Agreements (EAs) and Substitution Agreements (SAs) were executed as tripartite contracts involving Respondent No. 1 (Lenders)

Following project delays, the Independent Engineer (IE) issued a Provisional Completion Certificate (PCC) on Dec 8, 2016, but purportedly kept it in "abeyance" via a letter dated Dec 17, 2016, citing incomplete works

NHAI terminated the CAs in 2019 due to financial defaults

The Lenders invoked arbitration under the EAs and SAs, seeking a direction for NHAI to deposit the "Termination Payment" into the Escrow Account

The Arbitral Tribunal ruled in favor of the Lenders, and a Single Judge dismissed NHAI’s Section 34 challenge

NHAI appealed under Section 37 of the Arbitration Act

The court applied Section 37 of the Arbitration and Conciliation Act, 1996, which limits appellate interference to cases of patent illegality or conflict with public policy

It relied on the doctrine of "Incorporation by Reference," distinguishing M.R. Engineers & Contractors (P) Ltd. v. Som Datt Builders Ltd., noting that express language ("to form part of this agreement") integrates an annexed document into the main contract

The court further applied the principle that an Arbitral Tribunal’s interpretation of a contract is final if it is a "plausible view," as held in Jan De Nul Dredging India Pvt. Ltd. v. Tuticorin Port Trust

Finally, it applied Clause 2.1 of the SA regarding the "Assignment of Rights" to establish the Lenders' standing

The Court found that Recital A of the EA and SA explicitly stated that the CA was annexed "to form part of this Agreement," making the CA's Termination Payment provisions enforceable under the tripartite agreements

Regarding the PCC, the Court reasoned that Article 14.5 of the CA only allows for the withholding of a certificate before issuance; it provides no power to suspend or withdraw a PCC once granted

Because NHAI had expressly concurred with the IE’s recommendation to issue the PCC after finding the stretch safe for commercial operation, the COD was legally achieved

Consequently, the Termination Payment became "due and payable" upon termination. The Court also held that under Clause 2.1 of the SA, the Concessionaire had assigned its rights and interests to the Lenders, granting them the standing to compel NHAI to perform its obligation of depositing funds into the Escrow Account

The court noted that NHAI failed to dispute the mechanical calculation of the payment before the Tribunal, rendering the quantum a settled finding of fact

The Court upheld the Arbitral Awards and the Single Judge's judgment, confirming that NHAI is contractually mandated to deposit the Termination Payment (₹ 229.50 crore and ₹ 181.81 crore respectively) plus interest into the Escrow Account

The appeals were dismissed