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Aiming to boost road sector, NHAI drive looks to settle disputes with contractors

Contractors have on various occasions taken disputes to the available fora over the years, seeking claims from the country’s premier highways maker through clauses of the contract.

Written by Avishek G Dastidar | New Delhi | November 27, 2020 3:16:43 am
The NHAI has formed a three-member Dispute Resolution Board for projects wherein contractors can go within 90 days of the arising of a potential dispute and get a verdict immediately.

The National Highways Authority of India (NHAI) will soon begin a drive to settle with its contractors all existing disputes — worth Rs 70,000 crore and stuck at various levels of arbitration for years — within weeks and save around Rs 50,000 crore in potential payout, giving a fillip to the road construction industry.

Contractors have on various occasions taken disputes to the available fora over the years, seeking claims from the country’s premier highways maker through clauses of the contract. Arbitration and litigation in such cases typically take years, and also keep that much liquidity notionally tied up. The NHAI has decided to reach out to all such contractors—big and small players—to settle the disputes “amicably”, and hopefully within a few weeks.

“Around Rs 70,000 crore is stuck in arbitration claims. Although much of that is exaggerated claim, we believe something in the range of Rs 20,000 crore will happen. Through courts and arbitration they will take five to 10 years to get that money. So, we are asking all contractors to come to our conciliation committees instead, through which they get the money within three-four weeks. So companies get that much liquidity, early,” Sukhbir Singh Sandhu, Chairman, NHAI, told The Indian Express. “We are going to start a drive.”

The move is aimed at giving thrust to the pace of highways construction in the country, which the NDA government has highlighted as one of the major infrastructure sectors to bring traction back into the post-Covid recovery of the economy. The NHAI has this year awarded contracts for 60 projects with capital cost of around Rs 70,000 crore so far for a length of 1,790 km — highest in the past three years.

The Authority has formed three Conciliation Committees of Independent Experts (CCIE) of three members each. The CCIE is headed by retired officials from judiciary, besides experts from public administration and finance and private sectors.

Till now, 131 disputes have been referred to these CCIEs and 59 cases, originally worth Rs 15,678 crore, have been successfully settled for Rs 5,480 crore, giving the NHAI the idea for the drive.

“I am inviting every contractor whether they have gone to the High Courts or the Supreme Court, come to the conciliation and take the money. It will happen on mutual consent, amicably,” Sandhu said.

As per Arbitration Act, 2015, all the arbitration are to be settled within 12-18 months. However, that seldom happens and such arbitration goes on for years. In the conciliation route, the NHAI and the contractor take the view of independent experts and through consent agree on a settlement, within weeks.

The NHAI has formed a three-member Dispute Resolution Board for projects wherein contractors can go within 90 days of the arising of a potential dispute and get a verdict immediately.

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