Justice M. Sundar ordered notice to the consortium after Advocate-General Vijay Narayan, representing CMRL, claimed the award passed by the tribunal, comprising three technical members, was per se illegal and unintelligible because adequate reasons had not been assigned for passing such an award by a 2-1 majority.
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CMRL moves High Court against tribunal’s award of ₹39.97 crore
St.Thomas Mount Metro station
St.Thomas Mount Metro station | Photo Credit: G_KRISHNASWAMY ;G_KRISHNASWAMY
Legal Correspondent
CHENNAI 03 FEBRUARY 2021 00:06 IST
UPDATED: 03 FEBRUARY 2021 00:06 IST
St. Thomas Mount station construction contract was terminated in 2014
Chennai Metro Rail Ltd. (CMRL) has approached the Madras High Court against an award passed by a tribunal last year directing it to pay ₹39.97 crore to Consolidated Constructions Consortium Ltd. whose contract for the construction of the St. Thomas Mount elevated station and the associated viaducts was terminated in 2014.
Justice M. Sundar ordered notice to the consortium after Advocate-General Vijay Narayan, representing CMRL, claimed the award passed by the tribunal, comprising three technical members, was per se illegal and unintelligible because adequate reasons had not been assigned for passing such an award by a 2-1 majority.
The A-G told the court that CMRL was a special purpose vehicle (SPV) floated for establishing metro rail in Chennai. The Centre as well as the State government had equal stakes in the SPV. On February 17, 2011, it awarded the contract to the consortium for an estimate of ₹78.61 crore.
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Financial stress
As per the terms of the contract, the work should have been started on February 21, 2011, and completed by September 6, 2013. However, the consortium was able to complete only 40% of the work, despite being granted two extensions. The reason for the delay was a deep financial stress faced by the consortium, which owed about ₹900 crore to several banks.
“They [the consortium] realised that they were in a hopeless situation and therefore issued a notice of termination on January 2, 2014, and we terminated the contract on January 11, 2014. Thereafter, they raised an arbitration claim amount of ₹91.17 crore, and what was awarded was ₹39.97 crore,” the A-G said and urged the court to stay the operation of the award.
Advocate S.S. Rajesh blamed CMRL for the financial stress and said multiple arbitral proceedings were pending between it and the consortium. He said he would demonstrate, on the next date of hearing, how CMRL was liable to compensate the losses suffered by the consortium.
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