Film City project: In major blow, SC directs Chandigarh admin to pay Rs 118 crore to Parsvnath Developers by June 30
Parsvnath Developers had furnished the bid for a Multimedia-cum-Film City project in Chandigarh in 2007 and deposited an upfront payment of Rs 47.75 crore. However, the project got stalled over various issues.
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The apex court has now directed the Union territory to pay an amount of Rs 48.21 crore to Parsvnath along with a reduced interest rate of 8 per cent from March 1, 2007, which adds up to a total of around Rs 118 crore. (Express Photo/Amit Mehra)The Supreme Court has ordered the administration of the Union Territory of Chandigarh to pay Rs 118 crore to real-estate giant Parsvnath Developers by June 30 this year in connection with a Multimedia-cum-Film City project for which Parsvnath Film City Limited had furnished the bid in 2007.
As per the order issued by a bench of Justices B V Nagarathna and Satish Chandra Sharma on March 20 – the judgment was recently made available – the administration will have to pay a higher rate of interest than currently levied if the amount is not paid by the end of June.
The order stated, “…we direct the respondent(s) to deposit/pay the amount on or before 30.06.2025 without driving the appellant herein for execution of the said Award. If the amount is not paid to the appellant on or before 30.06.2025, the interest shall be at the rate of 12% per annum instead of the reduced rate of 8% per annum.”
The film city project was conceived during the tenure of the then Union territory administrator and Punjab Governor, General S F Rodrigues (retd).
In response to an advertisement issued by the administration inviting expressions of interest for the Multimedia-cum-Film City, Parsvnath Film City Limited participated in the bid and the work was awarded in their favour, following which a Development Agreement was executed on March 2, 2007.
Parsvnath deposited an upfront payment of Rs 47.75 crore, which was 25 per cent of the total bid amount of Rs 191 crore. Before the project could commence, certain issues cropped up with regard to the demarcation plan which was to be provided by the administration. There was also reportedly a delay on the part of the administration in shifting high-tension power lines and providing the zoning plan which held up the project.
Following disputes between the parties, an arbitral tribunal was constituted comprising former Supreme Court judges S C Aggarwal and D P Wadhwa, and former Punjab and Haryana High Court judge M R Agnihotri.
On March 10, 2012, the arbitral tribunal unanimously held that the Union territory was in breach of contract and allowed the refund of the initial deposit of Rs 47.75 crore in favour of Parsvnath. In addition, Rs 47.75 lakh was awarded towards compensation and Rs 46.20 lakh was awarded for reimbursement of the cost of work already executed. Interest at the rate of 12 per cent was also awarded. The counter claims filed by the administration were dismissed.
The Union territory, however, challenged the award before the Additional District Judge, Chandigarh but it was dismissed on April 8, 2015. Thereafter, it moved an appeal in the Punjab and Haryana High Court which set aside the award in entirety in a judgment dated March 17, 2016.
Parsvnath subsequently filed a Special Leave Petition in the Supreme Court which allowed the appeal and set aside the high court’s judgment on the grounds of “being untenable”. The apex court has now directed the Union territory to pay an amount of Rs 48.21 crore to Parsvnath along with a reduced interest rate of 8 per cent from March 1, 2007, which adds up to a total of around Rs 118 crore.
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