Odisha to pay ₹100 cr to L&T for ₹20 cr payment default after 20 years

More than 20 years after an arbitration tribunal asked the Odisha government to pay up for defaulting on payment of 20 crore to construction major Larsen &Toubro in construction of a 166 km long road, the Odisha government has finally decided to pay 100 crore to the company after exhausting all the legal remedies.

“The state government has decided for payment of decretal dues amounting to Rs100.06 crore to Larsen & Toubro Ltd. for compliance of the arbitral award dated in January 2002 by Arbitration Tribunal in case of strengthening and widening of Sambalpur-Rourkela road out of Asian Development Bank (ADB) assistance,” said a state government official.

The decision to pay 100 crore to the construction major came three months after L&T got several furniture and computers of the public works department seized following an order of the civil judge (commercial) in Bhubaneswar. As the government did not make the payment even after several orders of the courts including the high court and the Supreme Court, the civil judge (commercial) then ordered the seizure of the property of the government, which led to major embarrassment of the state government in July this year with the opposition seeking a reply in the state Assembly.

According to people familiar with the matter, the state government had roped in the agency on a contractual basis for different projects 19 years ago. However, the government failed to clear the dues of the company.

Going by the the people cited above, 20 crore previously due to the L&T was not paid, which has now gone up to 100 crore after including interest. Meanwhile, the state Cabinet approved the proposal of paying the amount from the State Treasury which has become a matter of discussion in political circles.

L&T was given the contract for the construction of 166 km of road from Sambalpur to Rourkela in the late 90s. However, the Works Public department reportedly failed to pay 20 crore to the company after the completion of the work following which the company moved tribunal.

In 2004, the Odisha Arbitration Centre asked the government to pay the money to the company. But the government challenged the order in the high court. The state government subsequently moved the Supreme Court after it lost the case in the high court. The government filed a review petition in the apex court after the Supreme Court ordered in favour of the company. In the meantime, the 20 crore due had ballooned up to 120 crore due to interest.

Meanwhile, Opposition leaders slammed the government for squandering the public money. “The government should know that it has no right to use public money for its own mistake. The government has to take action against people who are responsible for ballooning of the dues from 20 crore to 100 crore,” said Bharatiya Janata Party (BJP) leader, Jaynarayan Mishra.

Congress state president Sarat Patnaik said, “The government is paying the penalty after collecting tax from the common people. The government should collect the fine amount from the official responsible for the goof-up.”