High Court asks MCA to deposit Rs 150 crore as bank guarantee

Arbitration proceedings arose after the two parties locked horns over delay on the part of MCA to pay off the dues to a Shapoorji firm

In a major setback to Maharashtra Cricket Association (MCA), Bombay High Court recently directed it to deposit Rs 150 crore in a nationalised bank till the conclusion of an arbitration proceeding initiated by construction major Shapoorji Pallonji Company private limited.

A single-judge Bench of Justice Amjad Sayed heard the application moved by MCA challenging the order passed by a Pune District Judge. The District Judge had directed the cricket body to deposit an amount of Rs 172.32 crore in the joint names of itself and the construction firm.

The arbitration proceedings arose after the two parties locked horns over delay on part of MCA to pay off the dues to Shapoorji firm. The firm had constructed a new international cricket stadium at Pune’s Gahunje, after the MCA floated tenders of the same.

MCA had in September 2009 awarded the contract of constructing the stadium to the Mumbai-based construction major.

The construction firm had completed the work of the stadium virtually on October 31, 2012 as against an extended deadline of August 31, 2011.

The virtual completion certificate was issued by the project manager, appointed as per the contract, who had excluded works that were to be completed during the defect liability period till April 30, 2014.

Accordingly, the firm had submitted a final bill of Rs 234.10 crore but the project manager had certified and approved only Rs 225 crore. The bill submitted by the firm was accepted by the MCA.

However, a dispute arose over the outstanding dues payable by the MCA and the latter too claimed Rs 81 crore from the firm towards cost of remedying defects, liquidated damages and damages for loss caused due to inordinate delay in construction.

MCA had paid some chunks of the entire amount on a few occasions but soon the cricket body started delaying. A series of discussions and meetings were deliberated between the parties but of no use.

Interestingly, MCA blamed the Supreme Court judgement, wherein the top court had directed Board of Cricket Association of India (BCCI) not to hold any general meetings. It said the BCCI could not release funds as it could not hold its annual general meeting as the same has been stopped by the Supreme Court.

After considering the submissions, Justice Sayed said, “I am inclined to grant an opportunity to MCA to furnish a bank guarantee in lieu of deposit, if the same is furnished within a stipulated period. In my opinion, ends of justice would be met by modifying the directions issued by the District Judge.”

Accordingly, Justice Sayed granted six weeks’ time to the MCA for furnishing the bank guarantee.