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Court stays revocation of highway project to Larsen and Toubro (L&T)

The Delhi High Court has restrained the road transport ministry from revoking one of the first highway projects awarded on the build-operate-transfer basis to Larsen and Toubro (L&T) at Coimbatore in Tamil Nadu.

The court said no further decision be taken and status quo be maintained on the project — originally awarded over a decade ago in 1997 for a bypass and two-lane bridges in the city — till further orders.        

The high court order came even as the road transport ministry Thursday said it had no objection to a steering group hearing the dispute as per the provisions of the agreement and maintaining status quo till a decision on the matter.        

“Efforts will be made to convene the steering group meeting in a month. The honourable court may kindly direct the petitioner to cooperate in the steering group meeting,” said a letter from the ministry to the government’s standing counsel.        

The tenders for the project were invited way back in 1995, following which L&T was selected and awarded the contract, with a concession period of 32 years till Dec 3, 2029, for the bypass. For the bridge, the contract was till Dec 3, 2018.        

The company’s petition said the reason assigned for termination was the decision of the National Highways Authority of India for four-laning Highway 47 as part of the North South-East West Corridor.        

“The four-laning of the Coimbatore bypass was merely an additional work to be carried out and was well within the scope of the agreement,” said the company’s petition, adding the decision was therefore wrong, arbitrary and illegal.        

Welcoming the court’s intervention, Manoj Kumar, managing partner for Hammurabi and Solomon, which is representing L&T in the case, said this will send the right signals to ensuring smooth functioning of public-private initiatives.        

“This project was showcased as one of the first under the build-operate-transfer concept in India. We welcome the court’s intervention and also the ministry’s willingness to constitute a steering committee to hear issue,” Kumar added.        

“The decision was all the more questionable since our client had completed the construction of the said project and started the commercial operation of the bridge on Dec 12, 1998, and of the bypass on Jan 19, 2000.”        

The petition said loans worth nearly Rs.150 crore taken for the project were outstanding with UCO Bank and Union Bank of India and that these were to be paid from the future toll collections till the validity of the concession period.        

“The termination of the agreement at this stage will make the petitioner (L&T) liable for default and there shall be huge claims for such events of default even by the banks and financial institutions.”        

–Indo-Asian News Service        

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