Madras HC allows Chennai Metro to go for re-tender

Project was originally awarded to Gammon India, whose contract was terminated by Chennai Metro authorities

The Madras High Court today allowed Chennai Metro Rail Ltd (CMRL) to go ahead with a new tender for underground work on the line.

The project was originally awarded to Gammon India. But CMRL terminated the tender due to delays in completion of the tunnel work after Gammon's Russian joint venture partner Mosmetrostroy allegedly abandoned the project.

Gammon had bagged the Rs 1,947-crore contract along with Mosmetrostroy in 2011 to design and construct seven underground stations for CMRL. A Russian contractor, Mosmetrostroy, carrying out tunneling operations over an 18-km length underground, had disappeared without a word to Chennai Metro Rail Limited (CMRL). Over 90% of the work was completed on the Saidapet-Gemini stretch while 70% of work was done in the LIC-Thousand Lights phase when the Russians abandoned work.

Gammon moved to the Court against CMRL's decision to go for a fresh tender and got it stayed also. This stay order was quashed by Justice K Ravichandrabaabu today.

While allowing CMRL to go for new tender, the Judge asked both the parties to go for arbitration in four weeks. The Court did not mention whether Gammon will be allowed to participate again in the new tender.

Earlier, the company argued that it was ready to bring in an Italian company to replace Mosmetrostroy. It said it was even ready to give an undertaking that it will finish the remaining project in a particular time frame, but CMRL was against it.

The counsel for CMRL earlier stated that once the termination notice is issued it cannot be revoked. He also argued that as per the agreement, Gammon cannot outsource the project .

CMRL wanted to involve the bank guarantee against Gammon post the termination of the contract. However, Gammon wanted this to be stayed. The court has asked CMRL to keep the bank guarantee live till the arbitration process gets over.