CMRL Contests Court's Authority in Solving Dispute

Published: 21st July 2015 05:31 AM  |   Last Updated: 21st July 2015 05:31 AM   |  A+A-

CHENNAI: Refusing to try ‘settlement’ as suggested by Madras High Court, the Chennai Metro Rail Limited (CMRL) on Monday submitted that it was beyond the power of the court to suggest settlement in connection with the suspension of contract of the Russia-based company for the ongoing metro work in the city.

However, Justice S Vimala adjourned the matter to July 24, observing that CMRL had made the submission without understanding the role and responsibility of the court and the scope of Alternate Dispute Resolution (ADR).

The issue is of temporary suspension of contract by CMRL entered with Gammon India for building seven underground stations along with twin bored tunnels 6.40 km long.

Through a notice dated May 22, CMRL suspended the contract worth around Rs 1,947 crore, claiming that the company failed to complete the project on time.

Fearing that the bank guarantee of Rs 15 crore would be forfeited by CMRL, Gammon India moved the High Court seeking to restrain CMRL from encashing the bank guarantee.

In its petition, the company submitted that through an agreement on March 8, 2001 the company and its joint venture partner, Mosmetrostroy, were given 1,430 days to complete the entire tunnelling work.

“But due to several infirmities and delay in handing over the project site, work was delayed for which extension of time was sought at several instances,” the company claimed.   

In the mean time, Mosmetrostroy quit the project. Left alone, Gammon India sent several communications to CMRL informing its willingness to continue the project, the petitioner added.

The petitioner alleged that without giving it a chance and not referring the dispute to arbitration as mandated by the contract, CMRL issued work suspension notice.

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