NHAI directed to pay Rs750 cr to developer for delay in land clearances
03 Sep 2019
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An arbitration court has asked the National Highways Authority India (NHAI) to pay Rs750 crore to West Haryana Highways Projects Pvt Ltd (WHHPPL), a road developer that widened a national highway between the Delhi and Haryana border connecting Rohtak, as compensation for delays in land clearances and loss of toll revenue.
The compensation awarded by the tribunal is far higher than the total cost of the project of Rs586 crore, and could be the biggest awards against NHAI.
Nearly half of the compensation is interest due during the construction as requisite clearances were not made available in time.
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 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.
The project developer had demanded almost Rs2,145 crore from NHAI as compensation in September 2017. This was over three times the amount (Rs657.27 crore) demanded by the developer one and half year ago. The increase was due mainly to interest cost.
WHHPL sought damages from NHAI for not getting clearances from railways, irrigation department, among others in time.
The company was represented by Singh & Associates.
Also, the company pointed to the extent of toll revenue lost in certain days following demonetisation in 2016, when developers were not permitted to charge toll. The developer had sought almost Rs4 crore from NHAI as the extent of loss, but it was paid only Rs1.75 crore as compensation. The tribunal did not award any excess amount sought by the developer stating that the toll revenue compensation was based on expectations and not on facts.
NHAI, on its part, made counter-claims of over Rs600 crore stating that the highway developer should have been aware of resistance that the project would face. The counsel for NHAI demanded that the highway developer should pay Rs500 crore for causing inconvenience to the public.
NHAI said it was for the road developer 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 claimed that the company had not paid its share of dues to the independent engineer.
