HC orders TN to deposit Rs 510 cr intended as relief for pvt company

Justice Senthilkumar Ramamoorthy passed the direction on hearing the petition moved by the company for a direction to grant the compensation.
Madras High Court
Madras High Court File

CHENNAI: The Madras High Court directed the state government to deposit Rs 510.50 crore in favor of the Registrar-General within six weeks in an execution petition filed by GMR Chennai Outer Ring Road Private Limited. The said amount was marked as compensation for the company for the alleged loss faced by the company while laying the Chennai outer ring road from 2010 to 2014.

Justice Senthilkumar Ramamoorthy passed the direction on hearing the petition moved by the company for a direction to grant the compensation.

The judge directed the state to create an interest-bearing fixed deposit for Rs 510.50 crore and asked the receipt to be surrendered before the R-G.

The judge also noted that the copy of the receipt was to be surrendered to the advocate Rahul Balaji, who represented GMR.

The company was a successful bidder in 2009 to lay a road for 29 kilometers stretch at a cost of Rs 1,665 crore. Even though the project was said to be completed within 30 months, the company was not in a position to complete the work within the said time. It was alleged that the lack of government assistance and clearances was the reason for the delay.

Therefore, the company moved arbitration proceedings against the government demanding Rs 675.06 crore alleging that it faced the loss due to the increased cost of materials, interest payments for the loans, and others.

Though the arbitral tribunal directed the state to give Rs 340.97 crore as compensation with 18 percent interest from January 2020, the same was challenged before the HC by the state and the company.

A single judge dismissed the state’s plea but allowed the company’s plea granting the interest pendente lite (pending litigation) at the rate of nine percent per annum from 2015 to 2020.

As the judgment was confirmed by a single judge, the state approached the Apex Court. However, the SC held that it has confined to the interest pendente lite which was worked out to Rs 165 and the remaining Rs 510.50 crore in connection with the petition have attained the finality. Therefore, the High Court confirmed that the state should deposit Rs 510.50 crore.

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