Policy

Highway builders may have to wait longer to settle disputes

Mamuni Das Vishwanath Kulkarni New Delhi | Updated on March 15, 2011

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The resolution of ongoing disputes between highway builders such as L&T and Gammon, and NHAI estimated at Rs 11,000 crore may take longer.

The matter has once again been referred to a Ministerial Panel, following detailed deliberations on the report of committee headed by Mr B.K. Chaturvedi, Member, Planning Commission, on the proposed dispute resolution mechanism.

There are 536 disputes pending in Courts and 1,099 disputes pending in arbitration tribunals relating to highways development projects. The amount involved in each dispute ranges from less than Rs 1 crore to Rs 69 crore before the Courts; and from less than Rs 1 crore to Rs 1,514.32 crore in various arbitration tribunals.

The B.K. Chaturvedi Committee (BKC) had, through its suggestions on dispute resolution, aimed to unlock the disputed Rs 11,000 crore. In fact, the BKC suggestions had been approved by an Empowered Group of Ministers (EGoM) last year for implementation.

However, now with varied views coming in on the implementation of the committee's recommendations, the Highways Ministry has again referred the matter to an EGoM.

“There were recommendations from the Solicitor General of India which suggested a different path than that of the B.K. Chaturvedi Committee. Additionally, there were some clauses where a quid pro quo between NHAI and concessionaires was not being maintained, ” an official told Business Line.

“So, it was decided to refer the matter to the empowered Group of Ministers (GoM) again,” he added.

The BKC had recommended that the matters should be settled on the case-to-case basis by an independent expert group.

Further, for disputes where the amount claimed by contract is less than Rs 10 crore or 5 per cent of contract price (whichever is lower), the committee has suggested that NHAI may offer a “one-time settlement of pending disputes”.

For cases, where the amount involved is between Rs 10 crore and Rs 100 crore, the committee stated, “In general, award of Arbitral Tribunal may be accepted, particularly in cases where the unanimous decision at dispute resolution board (DRB) level is upheld by the Tribunal.”

And for cases where the amount involved is beyond Rs 100 crore, the committee has recommended, “Considering substantial amount involved, NHAI may carefully consider the award of Tribunal before challenging in the Court. NHAI may take up with the Arbitral Tribunal/Court for early hearing and disposal of all pending cases. These measures would enable significant savings in interest payment.”

Also, after the recommendations, the NHAI witnessed a trend of firms working out mechanism to fit into a lower category of claims in order to get early settlements.

Published on March 15, 2011

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