Madras High Court orders arbitration proceedings in Rs 140 crore deal

Chennai: The Madras high court has ordered arbitration proceedings to resolve the dispute between a software company and the Tamil Nadu Electricity Board relating to non-payment of Rs 140 crore for the work completed by the company pursuant to the contract of Restructured Accelerated Power Development Programme (RAPDP).

Justice M.M. Sundresh ordered arbitration proceedings as agreed upon by both sides while disposing of a petition from Navayuga Infotech Private Limited.

The judge said three retired high court judges, Justice K. Chandru,  the arbitrator for TNEB and Justice K. Venkataraman, the arbitrator for the petitioner and  Justice N. Paul Vasanthakumar, who will be an umpire. Till then, the status quo against the cancellation of the agreement until either side files an application before the arbitration, judge added.

According to the company, pursuant to a tender floated by TNEB, it entered into a contract with TNEB in October 2010 to develop IT infrastructure under the Restructured Accelerated Power Development and Reforms Programme for the TNEB in order to automate the existing business process of billing collection for consumer across 110 towns all over the state. The time limit prescribed for completing the project was by 18 months from the date of the contract. However, at the instance of the TNEB right from the inception of the project, it has been delayed and the company has to face many problems. Therefore, it sent several representations with regard to the difficulties faced by it on account of non-cooperation of the TNEB, company added.

The company said despite all these difficulties, it had completed 90 per cent of the contract and implemented software in 102 towns. The value of the hardware supplied to TNEB was Rs 250 crore. But, the TNEB has paid only Rs110 crore so far.

Though the TNEB has received the entire amount from the central government, it has not paid the remaining Rs 140 crore to the company. Despite several representations, the TNEB has refused to make any official commitment to pay the remaining amount. Instead, the TNEB has raised frivolous and false issues as a pretext for non-payment. Meanwhile, the TNEB was making efforts to engage some other third parties to operate the servers. Therefore, the company has filed the present petition, it added.