Infrastructure developers have got some cheer by way of the government’s move to remove impediments to project execution.
Infrastructure developers have got some cheer by way of the government’s move to remove impediments to project execution. They believe the proposed amendments to the Specific Relief Act, 1963, (SRA) introduced in Parliament on Friday, which look to prevent infrastructure projects getting tangled up in legal disputes, are developer-friendly and will enable timely completion of projects, while giving confidence to investors in infrastructure projects. Satish Parakh, managing director, Ashoka Buildcon, said, “The government is definitely trying to remove hurdles and push stuck projects out of the rut. If the government is taking steps to restrict people from unnecessarily approaching courts, it is extremely positive for the sector. Projects will get completed within prescribed time limits, because the contracting fraternity in India today is well equipped to complete projects on time. The obstacles we faced resulted in delays, and many a time these were beyond the control of even the government. With this, construction of projects will get expedited.” His sentiments were echoed by Jayant Mhaiskar, vice-chairman and MD, MEP Infrastructure: “It is a welcome move in terms of speeding up the process on account of the government’s ambitious Bharatmala project. This much awaited move will help the government keep costs of the project at predetermined numbers. It will speed up projects and the risk of projects being halted will be low.”
Some of the key proposals in this are a provision to ensure injunctions are not granted for infrastructure projects that could delay their execution, special courts are set up for such cases, suits are expeditiously disposed of within a specific time frame and substitution is allowed in performance of contracts. The amendment reads: “No injunction shall be granted by a court in a suit under this Act involving a contract relating to an infrastructure project specified in the Schedule, where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project.” It goes on to add that state governments, in consultation with the chief justice of the high court, shall designate one or more civil courts as special courts to try a suit under this Act relating to infrastructure projects. It limits the time for disposal of a suit to 12 months “from the date of service of summons to the defendant” and says that any extension to this can be only for a maximum period of six months “after recording reasons in writing for such extension”.
Another very significant amendment relates to the “substituted performance of a contract” under which if a contract is broken, the party who suffers would be entitled to get the contract performed by a third party, or by his own agency, and to recover expenses and costs, including compensation from the party who failed to perform his part of the contract. This would be an alternative remedy at the option of the party who suffers the broken contract. It is also proposed to enable the courts to engage experts on specific issues and to secure their attendance. A new Section 20A has been introduced in the amendment to the act relating specifically to infrastructure projects. Rajesh Narain Gupta, managing partner, SNG & Partners, said, “In 2016 a committee was constituted to consider amendments in the SRA to curtail powers of the court to grant injunctions against the government or large public/private infrastructure projects, as well as for the cause of ease of doing business in India. Today infrastructure-related development is at a critical stage and its a do or die situation. So any bona fide step where people with malicious intentions do not stop the developmental work by abusing process of law and justice is welcome.”
Manish Agarwal, lead (infrastructure), PwC India, seconded the view. “It is a big positive as it will provide some guidelines to the government agencies also as to when to take the matter to courts. We have seen that the disputes carry on for three to five years because the officials hesitate to take a call before all legal remedies available are exhausted, so matters which could have been settled at the arbitration level itself are prolonged till the last court verdict is received. This move will provide some certainty and clarity to the investors also in terms of the time frame within which the issues/disputes can be resolved,” he said. The amendments would be applicable to infrastructure segments included in the schedule of the amendment Bill. These are communication (telecom, etc), social infrastructure (sports projects, educational institutions, hospitals, affordable housing, cold chains), water and sanitation, energy and transport (roads, ports, airports, inland waterways and urban public transport).
In a note highlighting the objectives of the amendment Bill, Union minister for law and justice Ravi Shankar Prasad said, “The tremendous economic development since the enactment of the Act have brought in enormous commercial activities in India including foreign direct investments, public-private partnerships, public utilities, infrastructure developments, etc, which have prompted extensive reforms in the related laws to facilitate enforcement of contracts, settlement of disputes in speedy manner. It has been felt that the Act is not in tune with the rapid economic growth happening in our country and the expansion of infrastructure activities that are needed for the overall development of the country. In view of the above, it is proposed to do away with the wider discretion of courts to grant specific performance and to make specific performance of contract a general rule than exception subject to certain limited grounds.”