BMC directed to pay INR 30 Crore to contractor of Middle Vaitarna dam project

An arbitrator has ruled that the Brihanmumbai Municipal Corporation (BMC) must pay approximately INR 30 crores to Soma Consortium, the contractor who built the Middle Vaitarna dam in Thane.

The project, which completed in 2014, was approved by the BMC’s standing committee at a cost of INR 505.91 crores.

Soma Consortium had raised commercial claims related to labour cess deductions, fly ash lead costs, and royalty fees, which the BMC failed to honour.

The arbitral tribunal denied the claim about labour cess but upheld the other two claims, resulting in the award of approximately INR 15.30 crore, along with interest computed at 12 per cent per year from 2015 to the date of the award within 90 days. The total amount awarded to the contractor is around INR 30 crore.

The dispute was referred under the Arbitration and Conciliation Act, 1996. The proceedings were held from 2017 to 2023, and the decision was made in favour of the contractor.

Justice V. C. Daga, a retired Bombay High Court Judge, was appointed as the arbitrator to take a decision regarding the five-year dispute.

The Middle Vaitarna dam is one of Mumbai’s primary water sources, and the project was completed in record time by the contractor for a contract value of INR 812 crore. The project got under way on October 27, 2008, and it was finished on March 28, 2014. The dam was ranked as the ninth-fastest dam ever constructed.

According to attorney Prerak Choudhary, who is defending Soma Consortium, “disputes arose between the contractor and BMC during the course of the contract.” Meanwhile, Senior attorney Dipal Merchant was the representator for the BMC.

Under the arbitration Act, every contract must have an arbitration clause in accordance with the Act. The parties can choose the judge they wish, and if they are unable to do so, they may apply to the high court, which will then choose the arbitrator. The arbitrator’s decision has been amended under Section 33 of the Arbitration Act to include interest, and a copy of the decision is available.

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