NEW DELHI: In a classic case that substantiates how red tape can result in government entities paying a big price at a later stage, the NHAI ended up releasing nearly Rs 4.5 crore to a private firm for holding back the clearing of bills of barely Rs 20 lakh, eight to nine years back.
The National Highways Authority of India made the final payment in December 2019, according to documents accessed by TOI, after the private firm won the arbitration award and also two cases in the Delhi high court.
The NHAI had to pay this large amount due to the high interest rate. The firm was entitled to get 27% interest since it was registered under the MSME Development Act of 2006. Responding to a query from TOI, Union road transport and highways minister Nitin Gadkari said, "We will investigate the matter."
Court documents show that the private firm had signed an agreement with the NHAI in February 2010 to oversee the toll collection at 11 toll plazas. The NHAI had submitted that the firm had failed to carry out continuous observations of the assignments given to it and there was a delay on their part in furnishing the reports. It had also said the payment was delayed as the reports were submitted late.
However, finally the NHAI cleared invoices of Rs 20 lakh. The private firm then took the matter to the MSME Facilitation Council citing delay in clearing of bills. The private firm had registered itself under the MSME Development Act in February 2011. After the conciliation proceedings failed, the MSME Council referred the case to the Delhi International Arbitration Centre. In June 2018, the institutional arbitrator passed an award of Rs 2.24 crore along with interest at the rate of 27% per annum at monthly rest in favour of the private firm, commencing from July 2016.
The matter then reached the Delhi HC as the private firm sought execution of the arbitration award. The HC upheld the arbitration award and in May 2019, it directed the NHAI to pay Rs 4.18 crore to the private firm as on November 20, 2018. The NHAI made the payment of Rs 3.79 crore in July 2019.
Later, the private player again raised the demand for Rs 83.78 lakh as additional interest on the original award amount of Rs 2.24 crore for the period between November 2018 (the day it filed the petition in the HC) and July 2019 (the day NHAI made the payment). As the HC issued directions to the NHAI to make the additional payment, the authority sought legal opinion. According to an official document of November 2019, the legal adviser "advised the NHAI to pay the amount" within time "to avoid further interest".