The amount to be paid with interest at the rate of 18% p.a. with effect from January 30, 2020, in addition to 9% pendant light interest
The amount has to be paid in addition to 9% with interest at the rate of 18% p.a. with effect from January 30, 2020 pendant light interest
The state government has lost a case involving huge financial implications of Rs 340.97 crore, apart from the annual interest of 18% on the amount since January 2020, with the Madras High Court dismissing its appeal against the orders passed by the single judge. Arbitral Tribunal in favor of GMR Chennai Outer Ring Road Pvt Ltd.
A Second Division Bench of Justices M. Duraiswami and Justice Sundar Mohan dismissed the appeals filed in the name of the Governor of Tamil Nadu and Justice N. Satish Kumar, who, in turn, found the essence in the decision taken by the three- member arbitral tribunal awarding ₹340.97 crore for damages caused to the private firm.
The Bench noted that the firm was a successful bidder for the Chennai Outer Ring Road, which runs for a length of 29.5 km. The total project cost was ₹1,166.75 crore. A Concession Agreement was signed between it and the Government on 5 December 2009 on Design, Build, Finance, Operate and Transfer (DBFOT) basis. The construction period was 913 days (30 months) plus the concession as per the agreement. The duration was 20 years. After construction, the private firm will be eligible for 30 installments of half yearly payment of ₹62.12 crore. It was also offered bonus payments of an annuity period if construction was completed within 24 months.
The due date to start the construction was June 3, 2010 and hence, the private firm planned to complete the work by June 2, 2012. It entered into an Engineering, Procurement and Construction (EPC) agreement and mobilized requisite manpower and machinery for the same. Timely completion of the project.
However, due to failure of the Government to discharge its contractual obligation of providing full support in obtaining requisite clearances from Railways and National Highways Authority of India, the firm could not keep up with the deadline, failure to hand over the land free of encumbrances, Alignment and change in ground conditions etc.
As a result of the delay the firm suffered heavy losses on account of increase in material costs, other overheads and payment of interest on loans taken by it. Therefore, it resorted to arbitration in 2015, seeking Rs.675.06 crore and the Tribunal, after detailed consideration, awarded Rs.340.97 crore with 18% interest from the date of award on January 30, 2020.
While the government approached a single judge in 2021 challenging the award, the private firm also approached a single judge challenging the denial of payment to the tribunal. pendant light (pending litigation) interest. Justice Kumar, while rejecting the government’s petition, allowed the private firm’s petition. pendant light Interest at the rate of 9% per annum.
Aggrieved by these two orders, the government had now come on appeal, but a bench headed by Justice Duraiswami found no reason to interfere with the single judge’s order.