Delhi High Court curbs ministry on Larsen & Toubro road deal

The Delhi High Court has restrained the road transport ministry from withdrawing a highway project awarded to Larsen & Toubro in Coimbatore, Tamil Nadu.

The court has also restrained the government from disturbing the conditions and terms of the contract that was originally awarded to L&T in 1997 for constructing a bypass and two-lane bridges in the city.

Earlier, the ministry assured the court that it’s not opposed to setting up a steering group to resolve the dispute.

The court said its order would not be disturbed.

The ministry said “efforts will be made to convene the steering group meeting in a month. The court may kindly direct the petitioner (L&T) to cooperate in the steering group meeting.”

The government had invited tenders for the project way in 1995.

L&T won the bid and was awarded the contract with a concession period of 32 years till December 3, 2029, for the bypass.

For the bridge, the contract was till December 3, 2018.

L&T’s petition said the reason assigned for termination of the contract was based on the National Highways Authority of India plan for four-lane Highway 47 as part of the north south-east west corridor.

“The four-lane of the Coimbatore bypass was merely an additional work to be carried out and was well within the scope of the agreement,” the company said, adding the ministry’s decision was therefore wrong, arbitrary and illegal.

Analysts said the court’s order will send the right signals to ensuring smooth functioning of public-private initiatives.

A wire report quoting Manoj Kumar, managing partner for Hammurabi and Solomon, who represented L&T in the case, said the project was showcased as one of the first under the build-operate-transfer concept in India.

“We welcome the court’s intervention and also the ministry’s willingness to constitute a steering committee to hear issue.”

Kumar said the government’s decision was all the more questionable since L&T had completed the construction of the project and started the commercial operation of the bridge on December 12, 1998, and of the bypass on January 19, 2000.

The company had taken loans worth nearly Rs 150 crore for the project from UCO Bank and Union Bank of India. These loans were to be repaid from the future toll collections till the validity of the concession period.