Reliance Infra Wins INR 200 Cr Arbitration Award Against NHAI
Reliance Infrastructure Limited has won Rs. 200 crore arbitration award against National Highway Authority of India (NHAI). A three-member Arbitration Tribunal in its unanimous award on August 31, 2018 has asked NHAI to pay Rs. 150 crore by November 29, 2018 to Reliance Infrastructure. NHAI will have to pay interest @12% p.a. on the amount if they do not pay Rs. 150 crore by the deadline.
The Tribunal has also awarded Reliance Infrastructure compensation @13.5% of actual revenue for the loss of revenue suffered due to change in location of toll plaza. This is payable from March 2017 till the end of concession on January 14, 2038. Net present value of this future cash-flow is estimated at over Rs. 50 crore.
The need for arbitration arose due to prolonged delay in providing land by the NHAI to TD Toll Road Private Limited (TD Toll Road), a wholly owned subsidiary of Reliance Infrastructure, resulting in cost over-run during construction and change in location of toll plaza from km 360+450 to km 382+850 on NH 45.
The contention of TD Toll Road that the project was delayed resulting in cost over-run during construction and location of toll plaza resulting in loss of revenue was upheld by the Tribunal.
TD Toll Road has designed, built and are operating 87 km long 4-lane National Highway (NH45) road connecting Trichy and Dindigul in Tamil Nadu. The project construction works have been completed and the commercial operation for the project commenced in January 2012.
The proceedings of the Tribunal were held for about two years starting August 2016, and all pleadings and arguments by both the parties were completed in 42 sittings. The Arbitration Tribunal consisted of illustrious personalities like former Director General, Ministry of Road Transport and Highways, ADG CPWD and Engineer in Charge of CPWD.