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The Maharashtra government has been directed by an arbitrator appointed by the Bombay High Court to pay INR 691 crore to India Debt Resolution Company Ltd (IDRCL) in a dispute linked to the Sion Panvel toll road project. The award relates to compensation claimed after the state terminated the concession and took over toll collections without sharing revenue with lenders. The ruling marks a significant recovery for IDRCL, which had acquired the stressed debt at a much lower value, and highlights unresolved issues in terminated road concession projects.
An arbitrator appointed by the Bombay High Court has instructed the Maharashtra government to pay INR 691 crore to India Debt Resolution Company Ltd, the resolution manager of National Asset Reconstruction Company Ltd. The amount is to be deposited into IDRCL's account with a nationalised bank, as stated in the arbitration order. Advertisement
The dispute stems from the Sion Panvel Tollways Ltd project, where the concession was granted to widen and strengthen the Sion Panvel road from three lanes to five lanes under a build-operate-transfer model. The concession period was originally scheduled to run from May 2011 to October 2028. Differences between the concessionaire and the state began surfacing several years into the project over the extent of work completed and revenue sharing.
Sion Panvel Tollways Ltd was classified as a non-performing asset during the 2015-16 period. In the latter part of 2017, the Maharashtra government terminated the concession agreement and took over toll collection through its public works department. However, toll revenues collected after the takeover were not shared with lenders or used to service the outstanding debt linked to the project.
IDRCL, which acquired the stressed debt of Sion Panvel Tollways Ltd for about INR 117 crore last year, initiated arbitration proceedings seeking compensation for the premature termination of the concession. The claim was based on provisions in the concession agreement that allow compensation to lenders in the event of termination by the authority.
The arbitration proceedings commenced earlier in the past year and concluded later in the year. In a detailed order running into over 20 pages, the arbitrator accepted IDRCL's calculation of dues and ruled that the state was liable to pay INR 691 crore. The order also noted that despite continuing toll collections after termination, no mechanism was put in place to protect lender interests.
IDRCL did not issue any public comment following the ruling. The award is seen as one of the larger recoveries achieved by an asset resolution entity in a road sector dispute involving a state government.
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