Madras HC nod for CMRL to encash Rs 142 crore worth guarantees of Russian Company

The move of the High Court comes as a big relief for the CMRL as the suspension of services has turned into huge revenue loss.

Chennai Metro
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Chennai (Metro Rail News): The Madras High Court has permitted the CMRL to encash more than Rs 142 crore worth bank guarantees issued by Transtonnelstory-Afcons JV, a Russia based company which was awarded contracts worth more than Rs 2,500 crore for construction of underground Metro stations in Chennai. It is being seen a matter of great relief for the CMRL.

The CMRL initiated encashment due to delay and quality issues in the completion of the projects by the company. Justice N Sathish Kumar granted the relief to Chennai Metro Rail Limited (CMRL) in order while dismissing the plea moved by the Russian company. However, since the counsel for the company sought a week’s time to prefer an appeal against the order before a division bench, Justice Kumar instructed the CMRL to maintain status quo till August 21. CMRL was also granted liberty to encash the guarantees if the appeal is not filed within that time. The issue pertains to a resolution passed by CMRL to encash two bank guarantees issued by the company for Rs 25.77 crore dated October 16, 2018, and Rs 117.51 crore dated December 29, 2010, for the alleged delay caused by the company in completing the underground station construction and quality issues in the project.
Aggrieved, Transtonnelstory-Afcons JV, a joint venture of Transtonnelstroy Limited, Moscow and Afcons Infrastructure Limited, Mumbai, moved the high court seeking to restrain CMRL from encashing the guarantees.
The company bagged a contract to design and construct underground metro stations at Shenoy Nagar, Anna Nagar East, Anna Nagar Tower, Thirumangalam and associated tunnels for a price of Rs 1,030.99 crore. It inked a second contract worth Rs 1,566.81 crore to design and construct underground stations at Washermenpet, Mannadi, High Court, Chennai Central, Egmore and associated tunnels.

According to the company, despite mobilisation of necessary resources, there was a delay in commencement of work and attributed the delay to CMRL.The petitoner said they requested CMRL to revise the key dates, but it declined the same and this issue became a dispute between the parties. Hence, the matter was referred to an arbitral tribunal for extension of time as well as for costs of the claim, the petitioner said.

The CMRL while opposing the pleas, contended that despite numerous requests and reminders, the company failed to complete the outstanding works and fix snags to the satisfaction of CRML compelling it to encash the guarantee. Recording the submission, the judge held that the company has not made out any case for granting injunction against CMRL and dismissed the pleas.
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