Infrastructure

The different types of PPP contracts are listed below-

Build Operate and Operate (BOO) – The private entity designs, invests, constructs, manages, maintains and owns the project. The salient feature of this model is that the ownership and the service facility responsibility rest with the private entity. Later on the government entity partner purchases the goods and services produced by the project.

Build-Own-Operate-Transfer (BOOT) - The private entity partner undertakes to complete a complex infrastructure development project, for which the private entity is granted concession. The government entity provides limited funding or other benefits such as tax benefits.

Build Own and Transfer (BOT) – It is the most common form of concession agreement in India. The private entity is responsible for the financing, construction, operation and maintenance of the project for the fixed period of contractual agreement. During the operation period the private entity recovers its construction expenses/operation and maintenance charges by charging fees, collecting toll or rentals. Thereafter, a fully operational facility is transferred to the government at no cost.

Build Transfer Operate (BTO) – Under this model the private entity builds the project and subsequently, the title is transferred to the government entity. However, the private entity is given the right under an agreement to operate the project for a certain period of time after transferring the built infrastructure project to the government entity.

Design-Construct-Manage-Finance (DCMF) – Under this model the private entity partner creates, designs, finances, constructs and manages the project in accordance with the government entity specifications and leases it back to the government entity. The private entity recovers its expenses by receiving rent from the government entity in the form of periodical payment or direct payment.

Design-Build-Finance-Operate-Transfer (DBFOT) - In this model, the private entity designs, constructs, finances, manages and operates the project for a specific time period and transfers the ownership of the project to the government entity after the specific time frame.

Engineering, Procurement and Construction (EPC) – This model is used for the development of infrastructure projects especially highways. The procurement of raw material, construction costs and other finances are wholly met by the government entity. The private entity participation is limited to providing engineering expertise only.

Hybrid Annuity Model (HAM) – This is another model which is commonly used for implementing Highway projects. The government and private entity share the cost of the project in the ratio of 40:60, respectively. It is a mix of BOT and EPC model. The government entity collects the toll and pays the fixed amount of annuity to the private partner entity for a fixed period as per the contract agreement.

The most common models of PPP are DBOFT and BOT. Under the said models the private entity invests, designs, constructs, finances, owns and operates the constructed project for the fixed concession period which is stipulated in the contract. However, when the concession period ends the ownership of the project is transferred to the authority.

The SPV’s have an independent corporate and separate legal existence and helps in mitigating the risks of liquidation and bankruptcy. Thus, under a PPP arrangement, the government and private entity preferably creates SPV which helps to isolate risk with a transaction or an asset.

No. The legal position to raise a claim by Sub Contractor is to primarily have privity of contract between the parties or the performance of work is based on the bid documents or concession agreement.

Infrastructure and Construction are the emerging sectors in India. Owing to the engineering technicalities and complex issues involved, many times intricate questions are raised before the Arbitral Tribunal pertaining to cause of action and assessment of damages. Hence, the opinion of the expert becomes indispensable in deciding the disputes. 

Section 45 to 51 of Evidence Act, 1872 provides for relevancy of the opinion of the expert. The law on the admissibility of expert evidence is no longer res integra. The Supreme Court in the case of Ramesh Chandra Agarwal vs. Regency Hospital Ltd. and Ors (2009) 9 SCC 709, clarified that "Mere assertion without mentioning the data or basis is not evidence, even if it comes from an expert, where the experts give no real data in support of their opinion, the evidence even though admissible may be excluded from consideration as affording no assistance in arriving at the correct value.”

PPP is an arrangement between a government owned entity and a private sector for development of infrastructure or delivery of services. The said arrangement works towards financing, designing, implementing, and operating infrastructure by use of substantial financial resources from the private sector. The essential feature of this unique arrangement is risk sharing by the government and private entity and investments being undertaken by the private entity.

The Department of Economic Affairs, Government of India defines PPP as under-

“Public Private Partnership (PPP) means an arrangement between a Government / statutory entity / Government owned entity on one side and a private sector entity on the other, for the provision of public assets and/or public services, through investments being made and/or management being undertaken by the private sector entity, for a specified period of time, where there is well defined allocation of risk between the private sector and the public entity and the private entity who is chosen on the basis of open competitive bidding, receives performance linked payments that conform (or are benchmarked) to specified and pre-determined performance standards, measurable by the public entity or its representative.”[1]

The World Bank defines PPP as under-

“A long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance"[2]

A new Section 20A and Section 20B has been inserted by the Amendment Act of 2018 in the Specific Relief Act, 1963 for infrastructure projects. Section 20A is a special provision for contracts relating to infrastructure projects and stipulates that “No injunction shall be granted by a court in a suit under this Act involving a contract relating to an infrastructure project specified in the Schedule, where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project.”

Section 20B provides for designation of one or more Civil Courts as Special Courts to try a suit under the Specific Relief Act in respect of contracts relating to infrastructure projects.

The applicable laws governing infrastructure sector are Indian Contract Act, Code of Civil Procedure, Specific Relief Act, Evidence Act, Companies Act etc. However, some infrastructure sectors also have their own governing statutes as listed hereunder-

1. Power Sector - Electricity Act, 2003
2. Major Ports Trusts Act, 1963
3. National Highways Act 1956 and the National Highways Authority of India Act, 1988
4. Ports - Major Ports Trusts Act, 1963

The 2013 Act has brought about several changes to the process of Land Acquisition in the country as under-

• A new provision was introduced for rehabilitation and resettlement to the displaced families (Section 31)
• Schedule-1 provides for an increase in the compensation to the land owners.
• The Act further mandates a social impact assessment to be conducted for all the projects including attaining consent of 80% of the land owners for private projects; and 70% of land owners for public private partnership project.
• The Schedule also incorporates certain change in the process of acquiring land, for example, there is prohibition on the acquisition of an irrigated multi cropped land.
• As far as determination of compensation is concerned, the 13 Acts mentioned in the Fourth Schedule which were earlier exempted from the purview of Land Acquisition Act, 1894, are now brought within the purview of the RFCTLARR Act.

In determining the compensation, a Collector has to take into consideration the following factors as given under Section 28 of the RFCTLARR Act, 2013 namely-

1. the market value of the land as determined under Section 26;
2. the damage sustained by the person interested, by reason of the taking of any standing crops and trees which may be on the land at the time of the Collector's taking possession;
3. the damage sustained by the person interested, at the time of the Collector's taking possession of the land, by reason of severing such land from his other land;
4. the damage sustained by the person interested, at the time of the Collector's taking possession of the land, by reason of the acquisition injuriously affecting his other property, movable or immovable, in any other manner, or his earnings;
5. in consequence of the acquisition of the land by the Collector, the person interested is compelled to change his residence or place of business, the reasonable expenses incidental to such change;
6. the damage bona fide resulting from diminution of the profits of the land between the time of the publication of the declaration under section 19 and the time of the Collector's taking possession of the land;
7. any other ground which may be in the interest of equity, justice and beneficial to the affected families.

Additionally, the landowners are entitled to solatium amount equivalent to 100% of the compensation amount.

Before taking possession of the land, the Competent Authority has to first pronounce an award under Section 3G (1) of the National Highway Act, 1956 determining the compensation of the acquired land. After pronouncement of the award, the amount so determined shall be deposited in the joint account of the Competent Authority (i.e., CALA) and NHAI under Section 3H (1) as per the National Highway Rules, 2019.

After deposition of the compensation amount, the Competent Authority has to issue a public notice in writing, directing the owner as well as any other person who may be in possession of the land to collect the compensation and simultaneously, surrender or deliver possession of the land to CALA or any duly authorized person within 60 days. In case, any person refuses to handover peaceful possession of land, then the act empowers Competent Authority to take possession of the land by approaching the Commissioner of Police, in case of metropolitan area and/or the District Collector in case of any other area after expiry of 60 days period. 

Recently a substantial question of law with respect to possession was decided in a batch of petitions by the Delhi High Court in the case of Purshotam Behl & Ors. V. Union of India & Ors. (2020) 275 DLT 16. The High Court held that possession of the land can be taken only after a comprehensive award has been passed i.e. the award must be passed in respect of land, structures/improvements, trees etc., if any. 

No, Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 has no applicability on the acquisition proceedings under the NH Act of 1956.

In this respect, the High Court of Rajasthan, Jodhpur Bench, in case titled Gopa Ram V. Union of India & Ors. 2018 SCC OnLine Raj 77, held that as per Sub-section (3) of Section 105 of the Acquisition Act of 2013 (as amended), the provision relating to the First Schedule, Second Schedule and Third Schedule have only been applied to the NH Act of 1956. Therefore, Section 24 of the Acquisition Act of 2013 is not made applicable to the acquisitions made under the NH Act of 1956.

Recently, a Constitutional Bench of Supreme Court has passed a landmark judgment upholding the Indore Development Authority decision. It was held that proceedings under the Land Acquisition Act 1894 will not lapse if the compensation has been tendered by deposit in treasury. The Court further held that the landowners cannot insist that the amount should be deposited in Court so as to sustain the land acquisition proceedings under the old Act on the commencement of the RFCTLARR Act.

The Bench further clarified that if a person was tendered compensation but refuse to accept such compensation, then it is not open to him to claim lapse of acquisition due to non-payment or non-deposit of compensation.

Merely because the state could not deposit compensation in land owner’s account, the land acquisition proceedings will not be deemed to have lapsed.