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SREI for faster arbitration payout, dispute resolution

IANS  |  New Delhi 

Upset over the enforcing of contractual obligations and delays in awards, Kolkata-headquartered has decided to be extra cautious where the government or its agencies are a contracting party.

Having burnt its fingers over financing public-private partnership (PPP) projects, the private financial institution believes that banks are reluctant to fund projects because sanctity and validity of a contract is under severe challenge.

"The confidence in the infrastructure sector is at its lowest ebb today because there is significant delay in awards and long-drawn litigations," told IANS.

is a leading infrastructure financing company with consolidated assets under management of Rs 49,913 crore as on December 31, 2018.

He said that the situation will not improve until there is a very clear cut demonstration by the government on enforcing contractual obligations and that there is no reneging on contracts on flimsy grounds.

"I think what is very important is that the sanctity of the contract needs to be kept. Second issue is that if there is an award given against the government, it must be honoured immediately," Kanoria said.

He stressed the need for establishing discipline in contracts, arbitration awards and certain processes for reviving private sector interest in infrastructure.

The issue clearly reflects in the company's books. In the quarter ending December, 2018, Srei disbursed a total of Rs 3,800 crore, as compared to Rs 5,731 crore in the corresponding quarter of last year.

Even as pace of dispute resolution has improved and arbitration awards have been expedited, much remains desired to make the infrastructure sector investor-friendly.

A Niti Aayog study earlier noted that takes as much as 1,420 days and 39.6 per cent of the claim value for dispute resolution. The situation is only slightly better than Bangladesh, the report found.

"After the report, reforms were initiated in the way arbitration awards have to be done. There has been definitely an increase in the pace of the arbitration awards. But there is enough scope to make things better for the contracting community," said Sandeep Upadhyay, MD and CEO, Advisory.

The three key infrastructure segments of highways, power and ports account for most of the arbitration proceedings between the private and the public sector. As a result, thousands of crores of rupees remain locked in litigations which, if freed-up, could be used to build new projects.

"Dispute resolution and contract enforcement should be quicker. It is in the interest of lenders, developers and all other stakeholders. Delay in payment of arbitration awards through endless litigation badly affects all the parties involved and eventually slows down infrastructure development." said

(Nirbhay Kumar can be contacted at nirbhay.k@ians.in)

--IANS

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 16 2019. 18:28 IST
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