Logistics

Arbitrator asks NHAI to pay ₹750 cr to developer for delays in making land, clearances available

Mamuni Das New Delhi | Updated on September 02, 2019 Published on September 02, 2019

The total cost of the project was ₹586 crore, which is less than the compensation awarded by the arbitration tribunal

One of the biggest awards against NHAI; developer also claims loss of toll revenues

The National Highways Authority India (NHAI) has been slapped a fine of ₹750 crore in an arbitration case, which requires the authority to pay the amount to West Haryana Highways Projects Pvt Ltd (WHHPPL), a road developer that widened a national highway between the Delhi and Haryana border connecting Rohtak.

Almost half of the compensation is due to the interest during the construction as requisite clearances were not made available in time.

The total cost of the project was ₹586 crore, an amount less than the compensation awarded by the arbitration tribunal. Financiers who had lent money to WHHPPL include Punjab National Bank, India Infrastructure Finance Corporation Ltd, Central Bank of India, State Bank of India and Dena Bank.

The project developer — a consortium of Karam Chand Thapar and Bros and Era Infra Engineering — had won the project in 2007 to widen the national highway in Delhi-Haryana border.

The highway project developer was supposed to fund and complete the construction in two years. It could then collect toll from users for the next 20 years, and hand over the project to NHAI. But, delays in getting utility clearances and making land available to widen the highway delayed the project subsequently adding to the overall cost.

Following this, the project developer demanded almost ₹2,145 crore from NHAI as compensation in September 2017. This was over three times the amount (₹657.27 crore) demanded by the developer one and half year ago. The increase was largely attributed to interest cost.

This could turn out to be one of the largest arbitration awards against NHAI, say industry sources. WHHPPL was represented by Singh & Associates, led by Founding Partner Manoj K Singh. The claims also included not getting clearances from railways, irrigation department, among others in time.

Another point of dispute was the extent of toll revenue lost by the road developer in certain days following demonetisation in 2016, when developers were not permitted to charge toll. The developer had sought almost ₹4 crore from NHAI as the extent of loss, but it was paid only ₹1.75 crore as compensation. The Tribunal did not award any excess amount sought by the developer stating that the toll revenue compensation was based on the history of toll collected.

NHAI also made counter-claims of over ₹600 crore on the highway developer stating that while bidding for the project the highway developer should have been aware of the kind of resistance that the project would face. The highway developer should pay ₹500 crore for causing inconvenience to the public, a counsel for NHAI said.

NHAI stance

The highway authorities body pointed out that the road developer was to protect the land from being “encroached” by policing it. It also noted that the developer did not do enough to put “good quality” railway facilities back in place even after completing the project and that the developer had shifted the railway equipment while constructing the project.

NHAI also pointed out that the company had not paid its share of dues to the independent engineer, an amount that was expected to be shared by both the developer and the NHAI.

Published on September 02, 2019
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