To reduce build-up of arbitration cases, the National Highways Authority of India (NHAI) has asked its project managers to cancel portions of the proposed contracts in case of hurdles in the land acquisition process.
NHAI Chairman Sukhbir Singh Sandhu, in a letter to the authority’s regional offices and project director, has said the matter of land acquisition should not be left pending as it leads to litigation cases in the future.
“In future, the stipulated land would be acquired and handed over encumbrance free to the contractor in time or that part of the project will be cancelled if the land is not handed over,” Sandhu wrote in the letter, a copy of which is with Business Standard.
Such disputes mostly land in arbitration, for which contracts have provision. It is not just the projects that get delayed but also the invested money — either of the government or the private party — gets stuck in the dispute. It is learnt that not just for future projects, the NHAI has done the same for some project stretches in the past. “The idea is to stay away from any future litigation and arbitration, because then questions are raised as to why NHAI did not address the issue if the land was not fully,” said an official.
Sandhu has asked his regional offices for a stricter maintenance of land acquisition progression data. NHAI’s concern for the arbitration matters and its related claims can be gauged from the fact that at the start of 2020, the authority had set a target of settling arbitration claims worth Rs 70,000 crore through the reconciliation method in January 2020.
The process began with NHAI settling an arbitration claim worth about Rs 650 crore with Infrastructure Leasing & Financial Services (IL&FS) for nearly Rs 200 crore through a conciliation process.
The NHAI decided to settle the claim for less than 70 per cent of Rs 800 crore demanded by the company through an arbitration process. The NHAI had, in turn, asked for Rs 150 crore from the company, which worked out to a net outgo of Rs 650 crore.
The conciliation exercise is being conducted by the NHAI to deleverage its balance sheet.
There are three committees on reconciliation set up by the NHAI to look into these claims. These comprise retired judges.