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Chennai Metro Rail Ltd. (CMRL) has told Madras High Court that there are “serious defects” in the work executed by a Mumbai-based firm which constructed underground stations between Shenoy Nagar and Tirumangalam at a cost of ₹1,240.30 crore and between Egmore and Washermenpet at a cost of ₹1,847.24 crore.
Justice N. Sathish Kumar was told that CMRL had paid ₹209.31 crore more than the agreed contract price of ₹1,030.99 crore for the Shenoy Nagar-Tirumangalam stretch and ₹280.43 crore more than the contract price of ₹1,566.81 crore for the Egmore-Washermenpet stretch. Yet, the contractor did not complete all required works on time and there were defects.
Although CMRL claimed that many works remain incomplete and there were serious defects in the work executed, the contractor told the court that the defects were actually minor in nature. “The seepage pointed out by CMRL are common. Out of 4,500 alignments, seepage was found only in 300 alignments,” its counsel said.
The submissions were made during the hearing of two applications, both preferred jointly by Mumbai-based Afcons Infrastructure Ltd. and a joint venture between it and Russian firm Transtonnelstory. The applicants wanted to restrain CMRL from encashing two bank guarantees worth ₹25.77 crore and ₹117.51 crore respectively.
Justice Kumar dismissed both the applications on the ground that the bank guarantee was an independent contract which had to be honoured by the banks irrespective of disputes between CMRL and the contractors with respect to contractual obligations. He pointed out that in the present case, some disputes were subject to arbitral proceedings.
The judge recorded the submission of CMRL that it had encashed the bank guarantee of ₹25.77 crore even as the present applications were pending adjudication in the court. He directed it to maintain status quo with respect to the other bank guarantee of ₹117.51 crore and not encash it till August 21.
Accepting a request made by senior counsel G. Masilamani, representing the contractors, to suspend the judgment until it could be taken on appeal before a Division Bench, the judge granted time till Friday and said: “If the appeal is not filed within that time, it is open for the respondent (CMRL) to encash the amount.”
Earlier, senior counsel R. Yashod Vardhan and P.H. Arvindh Pandian, representing CMRL, brought it to the notice of the court that it had awarded contract for the Shenoy Nagar-Tirumangalam stretch to the applicants in December 2010 and entered into a formal contract on January 31, 2011 for completing the works by January 7, 2015.