In an attempt to fast-track highway construction, the National Highways Authority of India (NHAI) is pursuing out-of-court settlement of disputes. Developers have made claims of R10,000 crore in several build-operate-transfer projects.
Many of these cases have gone to arbitration, locking up funds for developers already squeezed by a drought of bank finance, delayed clearances and overall economic gloom. The move is likely to benefit construction majors like L&T, IVRCL, GMR, Punj Lloyd, Nagarjuna and HCC.
The NHAI feels that settling these cases could lead to the release of at least some of the disputed amount to the concessionaires, helping them bid for new projects and make investments. Usually, it takes years to get disputes and claims to get settled through arbitration. Both NHAI and the concessionaires have come around to the view that early settlements would benefit both, an NHAI official told FE.
A committee headed by NHAI?s chief general manager (technical) is studying the possibility of amicable settlements and has made efforts in this direction in the last one month, the official added. Once the committee settles a case, it will be referred to an independent settlement advisory committee, comprising former roads secretary AK Upadhyay, retired chief justice of Delhi High Court Rekha Sharma and ex-director general (road development) AV Sinha. This committee will approve claims after assessing all aspects, before disbursing the claim amounts to concessionaires.
The authority is understood have received over 50 claims from developers for cost escalation, which have cited factors beyond their control. Several concessionaires have expressed interest in going for out-of-court settlements. ?Many more such cases are expected shortly and the builders are happy to refer their cases to this committee,? the official quoted above added.
?This process is helping developers and the authority save legal costs. It is also saving time and the huge interest which gets accrued if cases go through the arbitration channel. One needs to understand that since many developers have huge debt positions, such settlement will give them extra cushion to bid for new projects,? M Murali, director-general, National Highways Builders Federation (NHBF) said.
Sources said six such cases have already got settled and in one case, claims worth Rs 270 crore were settled by reworking the figure to Rs 18 crore.