Larsen & Toubro gets court backing in highway project

The Delhi High Court has restrained the road transport ministry from interfering in one of the first highway projects awarded on a build-operate-transfer basis to Larsen and Toubro (L&T) at Coimbatore in Tamil Nadu.
“I am satisfied that in the absence of grant of interim relief, the prayer made by the petitioner would become infructuous,” said Justice Valmiki J. Mehta’s order on the case involving a bypass and two-lane bridges awarded in 1997, a copy of which is with IANS.

“Accordingly, therefore, until further orders, unless so verified by the court, the respondent is restrained from in any manner interfering with the operations and maintenance of the build-operate-transfer project as constructed by the petitioner.”

The tenders for the project were invited way back in 1995, following which L&T was selected and awarded the contract, with a concession period of 32 years till Dec 3, 2029, for the bypass. For the bridge, the contract was till Dec 3, 2018.

But the government decided to terminate the contract in May last year based on the decision of the National Highways Authority of India to four-lane the said Highway 47, as part of the North South-East West Corridor.

“I am satisfied that the petitioner has a prima facie case and the balance of convenience is in favour of the petitioner who will be caused grave and irreparable injury if the interim orders as prayed for are not granted,” the judge said.

Larsen and Toubro’s petition said that loans worth nearly Rs.150 crore taken for the project were outstanding with the UCO Bank and the Union Bank of India and that these were to be paid from the future toll collections till the validity of the concession period.

“The termination of the agreement at this stage will make the petitioner (L&T) liable for default and there shall be huge claims for such events of default even by the banks and financial institutions,” the original petition said.

Welcoming the court’s intervention, Shweta Bharti, a partner with the legal firm Hammurabi and Solomon that anchored the case, said this will send right signals to ensure the mooth functioning of public-private initiatives.

“This project was showcased as one of the first under the build-operate-transfer concept in India. A termination at this stage would have made L&T liable for default and the settling of huge claims with the banks,” Bharti told IANS.

“We particularly thank the honourable court for understanding our stated intent that in case additional lanes have to be constructed, we will meet the bid of the best tenderer with respect to the project,” she said.

“The government’s decision was all the more questionable since our client had completed the construction of the project and had also started commercial operation of the bridge on Dec 12, 1998, and of the bypass on Jan 19, 2000.”