"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Friday, May 6, 2011

National Highways Authority of India and Arbitration: A few Startling Numbers

There is something inherently wrong in the working of the National Highways Authority of India (NHAI). Business Standard reports a startling figure. If the said news report is true, more than Rs. 11,000 crore of claims have been made in various arbitrations against the NHAI. This is a serious issue and there is something inherently wrong in the working of the said body. Following are the total number of claims against NHAI and their value*.
Arbitration & Post-Arbitration Proceedings against NHAI
It would be interesting to see the nature of issues that have been taken up against the NHAI. The news report also suggests that change of design is a major culprit in disputes arising between the parties. Disputes also arise because of restrictive conditions in the Invitation to Bid and a take-it-or-get-out approach as regards acceptance of the government imposed tender conditions. See, for example, NHAI v. Unitech-NCC Joint Venture, where the Delhi High Court admonished NHAI for not having escalation clauses in their contracts despite the work under the contracts are for a few/ several years. The court held:
It is for this reason that I put it to the learned senior counsel for the petitioner to point out to me even a single contract or a single case in which National Highways Authority of India has entered into a contract without any price escalation and variation clause although the contract covers a huge period of many years and cost of which runs into crores and crores of rupees. Obviously there was no answer to the query put by the Court to the Learned ASG.”
In 2009, a Committee was constituted under the Chairmanship of BK Chaturvedi to look into the National Highways Development Plan and to find out means to suggest reforms to the industry. The first report of the committee did not deal with dispute resolution. However, the second report dealt with the same. Following are the highlights of the second report. A summary of the recommendations of the said Committee can be accessed from here. More on this in a future post.

* The table has been modified after posting to make it more clear.

No comments: