Court directs TN to deposit ₹510.50 crore to credit of an execution petition filed by GMR Chennai Outer Ring Road Pvt Ltd

A judge of the Madras High Court ordered that the money be deposited in a nationalised bank within six weeks, in the name of the High Court’s Registrar General

The Madras High Court has directed the State government to deposit ₹510.50 crore to the credit of an execution petition filed by GMR Chennai Outer Ring Road Private Limited. The money is intended towards compensating the losses suffered by the company while laying the 29.5 km Chennai Outer Ring Road between 2010 and 2014.

Justice Senthilkumar Ramamoorthy ordered that the government create an interest-bearing fixed deposit for ₹510.50 crore in any nationalised bank in the name of the Registrar General (R-G) of the High Court within six weeks. The deposit should be to the credit of the execution petition and the original receipt should be handed over to the R-G.

The court also directed that a copy of the receipt should be given to advocate Rahul Balaji, representing GMR, and that the fixed deposit should be for an initial term of one year and on an auto-renewable basis. The orders were passed on an application taken out by the private company, seeking a direction to the government to deposit the amount forthwith.

Senior Counsel Mukul Rohatgi told the court that GMR had won the bids for laying the outer ring road in 2009 and entered into a concession agreement with the government on a ‘design, build, finance, operate and transfer’ basis at a total cost of ₹1,166.75 crore. As per the contract, the construction period was 30 months and the concession period was 20 years.

The government also offered a bonus payment of one annuity if the construction could be completed within 24 months from June 3, 2010 when the construction began. In order to earn the bonus, GMR took earnest steps to complete the construction by June 2, 2012. However, it failed because of the government’s failure to assist the company in obtaining statutory clearances.

Therefore, in 2015, the company initiated arbitration proceedings demanding a compensation of ₹675.06 crore towards the losses suffered by it due to the increase in construction material costs, prolonged payment of interests for loans taken and so on. After a through hearing, the arbitral tribunal awarded ₹340.97 crore along with 18% interest from January 30, 2020.

The award was challenged both by the government as well as GMR before a single judge of the High Court because the former was aggrieved against the award per se whereas the latter wanted an award of interest pendente lite (pending litigation) , interest even for the period when the arbitral proceedings were pending between 2015 and 2020.