New twist in Singur tale, panel to soon decide on arbitration in dispute

A new chapter is set to unfold in the ten-year-old Tata Motors-Singur saga. 

A three-member arbitral panel will deliver its decision on whether or not to start arbitration proceedings in the dispute surrounding the acquisition of land in Singur shortly.

At the heart of the dispute is Tata Motors' claim for compensation of the losses incurred in Singur - the location of the Nano project - from which it pulled out in 2008, following a Mamata Banerjee-led agitation by locals against the acquisition of land. 

The statement of claims filed by the company has put the figure at nearly Rs 934 crore with interest.

A Tata Motors spokesperson said, "We cannot comment on this as the matter is sub judice."

Tata Motors started seeking compensation for its losses after a Supreme Court verdict that set aside the acquisition of 997 acres by the Left Front-led West Bengal government in 2006 to help it set up the Nano plant in Singur. That was August 31, 2016.

The apex court directed the state government to take possession of the land and re-distribute it to the owners.

Thereafter, Tata Motors wrote to WBIDC for reimbursement of its losses.  WBIDC rejected the claim on grounds that the arbitration clause had perished with the lease deed, as the Supreme Court had struck down the land acquisition for the project. 

Tata Motors had invested nearly Rs 1,800 crore in establishing the plant which was almost ready to roll out cars. However, the project relocated to Sanand in Gujarat and what the company is looking for now, is to recover is the sunk cost and interest.

After WBIDC rejected its claim, Tata Motors invoked the arbitration clause under the Arbitration and Conciliation Act, 1996. Later an application was moved in Calcutta High Court.

Between 2017 and March 2019, issues of maintainability of the arbitration clause and selection of nominees dominated the high court proceedings.

Finally, on March 28, 2019, the Calcutta High Court accepted nominations for respective arbitrators and said that the arbitrators would nominate the third arbitrator in line with the terms of the agreement.

Subsequently, Tata Motors filed a statement of claims amounting to nearly Rs 934 and interest; WBIDC filed counter claims of Rs 267 crore along with pendente lite interest on account of investment made in the land.  

WBIDC has also challenged the arbitration clause before the panel under Section 16 of the Arbitration Act, which confers powers on the Arbitral Tribunal to rule on its own jurisdiction.

It is praying for declaration that the Arbitral Tribunal doesn't have the power to adjudicate claims of Tata Motors under the lease deed of 2007. The next date of hearing is on December 2, when an order on Section 16 is expected.

Clauses relating to compensation and arbitration do exist, however, in the termination clauses of the lease deed. 

The lease agreement between Tata Motors and West Bengal Industrial Development Corporation (WBIDC) for the Singur land had an arbitration clause that could be invoked if a court or any other authority declared the land acquisition proceedings had not been in accordance with the provisions of the law.

The lessee would then be entitled to compensation for losses incurred, equal to the actual capital expenditure made, mentioned the agreement. 

On October 3, 2008, when Tata Motors pulled the plug on manufacturing the Nano out of Bengal, the equipment had already been installed and trial production had begun; 15-20 cars were ready for roll-out.

Adjacent to the main site, 13 vendors had constructed plant buildings, 17 others were at various stages of construction and balance 24 vendors were at various stages of obtaining approvals before commencing construction.

Much water has flown since. From a pullout to a change of government to redistributing the land to land losers following the Supreme Court order, Singur has come a full circle.

The Tata group, however, has continued to expand in West Bengal and is one of the largest private sector investors in the state.  

SINGUR TIMELINE

August 2016: Supreme Court sets aside land acquisition for Tata Motors project in Singur

Feb-March 2017: Tata Motors claims compensation from WBIDC; WBIDC rejects claim 

April 2017: Tata Motors invokes arbitration clause and nominates A K Ganguly; WBIDC does not appoint nominee; Tata Motors files application under Section 11 of Arbitration and Conciliation Act, 1996 before Calcutta High Court

March 2019: High Court disposes of the matter after Tata Motors agrees to change its nominee from A K Ganguly to Aloke Chakraborti; WBIDC also agrees to nominate Jayanta Kumar Biswas as its nominee

May 2019: Arbitral Tribunal set up; V S Sirpurkar named presiding arbitrator

June 2019: Tata Motors files statement of claims of around Rs 934 crore + interim interest

August 2019 - WBIDC files application under section 16 before Arbitral Tribunal

September 2019: WBIDC files counter claim seeking compensation of Rs 267 crore along with pendente lite interest