'Chennai Metro rail free to scout for new contractor'

Two months after Chennai Metro Rail Limited terminated contracts for tunnelling and other works allotted to Gammon India and Russia-based Mosmetrostroy, the Madras High Court today said CMRL is free to scout for a new contractor while Gammon's bank guarantee should be kept alive but not realized by CMRL.
"It is open to CMRL to go ahead with the project and complete it by employing a new contractor, for which they have already taken steps by issuing paper publication inviting tenders. Since it is an important project which cannot brook any more delay, this court cannot prevent CMRL from going ahead with the project and complete it with the third party," Justice K Ravichandra Baabu said.

He delivered the judgement on applications by Gammon seeking to stop CMRL from invoking the bank guarantees.
The Judge noted that Gammon India completed 60 per cent of work even after Mosmetrostroy abandoned it and CMRL has extended time to complete work. This (time) had not admittedly expired on the date the termination order was issued.
Gammon sought to bring in an Italian company to complete the remaining work, which was also not considered by CMRL. "Such an attempt of Gammon certainly shows the bona fide on their part in completing the project," the judge said.
Gammon was mandated to complete the project in 1,521 days from April 2, 2011. It could not meet the deadline and cited factors like delay in handing over work site, delay in approval of traffic management plan and utility diversion works. It initially sought 208 days extension but CMRL rejected it.

It then sought a second interim extension by 419 days to complete the project by July 23, 2016, which CMRL agreed. Gammon said it again faced similar hindrances. When it sought another extension, CMRL rejected their plea on October 15, 2014.

Then Mosmetrostros abandoned the project and this was followed by termination of contract. Gammon filed applications seeking reliefs, including stay on operation of a July 13 2015 CMRL order, terminating the March 18,2011 agreement and contract.
It also sought to restrain CMRL from invoking the bank guarantee submitted by Gammon as part of contract conditions.
Justice Baabu concurred with Gammon's submissions, saying if injunction is refused, it would cause not only irretrievable injury to Gammon but also irretrievable injustice.

Noting that Gammon's bank guarantees are alive and CMRL can invoke them anytime, he said "therefore, the interest of CMRL is well protected by bank guarantees furnished by Gammon.
If the bank guarantees are invoked in the meantime, Gammon would be put to great financial strain as banks would pounce on them to pay the money, he said.
"In my considered view, this would certainly make Gammon suffer even before the arbitral tribunal decides the main dispute," he said.