IRB biggest beneficiary of Ministry’s arbitration reform

Twesh Mishra New Delhi | Updated on January 12, 2018 Published on January 05, 2017


NHAI liable to pay 75% of total ‘payout amount’ against bank guarantee

Within a month since the Road Ministry launched a scheme to revive the construction business, two projects of Maharashtra-based IRB Infrastructure Developers Ltd have got relief.

As per the National Highways Authority of India (NHAI) website out of the total 53 claims made by various players till December 27, 2016, the contested amount has been released only for IRB Ahmedabad Vadodara Super Express Tollway Private Ltd and IRB Goa Tollway Private Ltd.

The third project that has made relatively favourable progress is of Gujarat-based Backborne Projects Ltd.

As per the policy, the NHAI is liable to pay 75 per cent of the total ‘payout amount’ against a bank guarantee payable by the contractor of the equivalent amount.

Both IRB Goa Tollway and IRB Ahmedabad Vadodara Super Express Tollway approached the NHAI on December 8 to avail the scheme.

An amount of ₹248.50 crore was released on December 16 for the Goa Tollway, while ₹21.17 crore was released on December 19 for the Ahmedabad Vadodara Super Express Tollway. Experts are quick to point out that a parallel cannot be drawn between all claims as they vary from case-to-case basis. Besides, the decisions are taken by an arbitration panel.

The Cabinet Committee on Economic Affairs (CCEA) had approved the scheme on August 31, 2016, and the NHAI started accepting claims under the scheme on December 7.

HCC claims

While IRB’s claims came on December 8, all other applications came on December 13 and afterwards. Three claims made by Hindustan Construction Company (HCC) have been turned down by the NHAI. In two of HCC’s claims, the NHAI has turned down the arbitral award claim citing Delhi High Court rulings. In one case, the website notes that the claim amount stands deposited with the Supreme Court, and hence, is not eligible for the scheme.

In response to a claim by Gujarat-based Backborne Projects, made on December 14, the NHAI replied on December 20, seeking a bank guarantee of ₹68.86 crore against a payment release of ₹58.35 crore. The bank guarantee is awaited in this case.

Published on January 05, 2017
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