Urban Railways

BMRCL faces 29 Arbitrations from Contractors

The Bengaluru Metro Rail Corporation Ltd (BMRCL) is facing at least 29 arbitration cases, mostly filed by its construction contract companies. These arbitrations pertaining to Metro’s Phase I and Phase II projects has been invoked against BMRCL on the grounds that the public utility didn’t hand over the required land for the project on time, changed the scope of work, loss incurred on account of extended stay in the project etc.

As per the details obtained under Right to Information (RTI), the 29 construction companies include ITD Cementation India, Larsen Toubro Ltd, Simplex Infrastructure Ltd, URC Construction Pvt Ltd, RITES Ltd, IDEB Projects Ltd, etc. While the BMRCL has already paid two companies, as many as 13 cases are currently being heard in the court. Punj Lloyd Sembawang – Sembawang (Joint Venture) and ITD Cementation India Ltd are the two companies that have received payments.

On its part, the Namma Metro has apparently filed arbitration suits, challenging the construction companies. The RTI also says the arbitral tribunal has partly allowed the pleas of only 16 companies. Of the 16 companies, BMRCL has engaged ITD Cementation India, URC Construction and L&T Ltd for the construction of the Phase II corridor. While Mott Macdonald was hired to provide consultancy services in Phase I, Punj Lloyd Sembawang had built a small portion of the 42-km Phase I elevated corridor.

Arbitration cases are not new to government utilities pertaining to the construction sector such as BMRCL or National Highway Authority of India (NHAI).

A government official, who worked in both Metro and Railway projects, say it’s a tactic adopted by the construction agencies to find a loophole in the tender and approach the tribunal seeking compensation. “Some construction companies quote very low prices just to bag the contract even though they know that it’s not possible to complete the project at that price. They do it because they’re confident about finding a loophole in the tender. An example of such a loophole is land. If the right of way is not provided on time, the contractor has every right to go to court. In a massive project like the Metro, there are several such examples where the executing agencies tend to go wrong,” the official explained.

Cases partly allowed by Arbitral tribunal

  • ITD Cementation India (three cases)
  • URC Construction (two cases)
  • CEC – Soma – CICI (JV) L&T Ltd (three cases)
  • Punj Lloyd Sembawang (three cases)
  • Mott MacDonald (two cases)
  • Navayuga Engineering Company