Lok Sabha Question No. 462 (UNSTARRED), answered on 2021-12-01
Subject: New CCEA Policy
Ministry: PLANNING
Asked by: Sushil Kumar Singh

## GOVERNMENT OF INDIA MINISTRY OF PLANNING

## LOK SABHA UNSTARRED QUESTION NO. 462

TO BE ANSWERED ON 01.12.2021

## NEW CCEA POLICY

## 462. SHRI SUSHIL  KUMAR SINGH:

Will  the  Minister  of  PLANNING be pleased to state:

- (a) whether  it  is  a  fact  that  as  per  the  new  CCEA  policy,  in  order  to  challenge  the  arbitration  awards given  by  the  courts,  the  Government  Entities  like  GOI  Deptts/  PSUs/SPVs  will  only  take  the decision to  initiate  proceedings  for  setting  aside  of  the  arbitral  award  with  the  opinion  of  the Law Officer  in consultation  with  Department  of Legal  Affairs;
- (b) if  so, the  details  thereof;
- (c) whether  it  is  also  a  fact  that,  where  a  Government  Entity  has  challenged  an  arbitral  award,  shall immediately pay as per the court order, an interim payment of 75%  to the contractor /concessionaire  against  a bank guarantee;  and
- (d) if  so,  the  details  thereof  and  the  number  of  cases  wherein  interim  payment  of  75%  were  made during  the last  two years?

## ANSWER

MINISTER  OF STATE (INDEPENDENT  CHARGE)  OF THE MINISTRY OF STATISTICS  & PROGRAMME IMPLEMENTATION;  MINISTER OF STATE  (INDEPENDENT  CHARGE)  OF THE MINISTRY OF PLANNING AND MINISTER  OF STATE IN THE MINISTRY  OF CORPORATE AFFAIRS

## ( RAO INDERJIT SINGH )

- (a) &  (b): The Cabinet Committee  on Economic  Affairs (CCEA)  in  its  meeting  held  on  20 November  2019 approved the following:

'With  respect  to  arbitral awards  decided  in  favour  of  the  contractors  / concessionaires,  the concerned  Government  Entity  will  take  the  decision  to  initiate  proceedings  for  setting  aside  of the  arbitral  award,  and  any  appeal(s)  thereto,  with  the  opinion  of  a  Law  Officer    -    AttorneyGeneral  for  India  /  the  Solicitor-General  for  India  /  the  Additional  Solicitor-General  for  India  in consultation with the Department of Legal  Affairs  ('DOLA')  at  the  Ministry  of  Law  & Justice as per the procedure laid down in this respect. DOLA  is to ensure that the aforementioned process of soliciting and communicating the opinion of Law  Officer to the concerned  Government  Entity  is completed  within  30 (thirty)  days of the receipt  of  request . '

## (c):  The  CCEA in its  meeting  held  on 31 August  2016 approved the  following:

'In case of claims where  the  PSU/  Department  has  challenged  the  Arbitral  Award  already announced, 75%  of  the award  may  be paid by the PSU/  Department  to the contractor/ concessionaire  against  Bank  Guarantee  without  prejudice  to  the  final  order  of  the  Court  in  the matter  under  challenge.  The  payment  may  be  made  into  a  designated  Escrow  Account  with  the stipulation  that  the  amount  so  released  will  be  used,  first,  for  payment  of  lenders'  dues,  second, for  completion  of  the  project  and  then  for  completion  of  other  projects  of  the  same  PSU/ Department, as mutually agreed/ decided. Any balance remaining in the escrow account subsequent  to  settlement  of  lenders'  dues  and  completion  of  projects  of  the  PSU/  Department may  be  allowed  to  be  used  by  the  contractor/  concessionaire  with  the  prior  approval  of  the  lead banker and the Department/PSU.'

The  CCEA in  its  meeting  held  on 20 November  2019 approved the following:

'In  cases  where  the  Government  Entity  has  challenged  the  arbitral  award,  and,  as  a  result,  the amount  of  the  arbitral  award  has  not  been  paid,  75%  of  such  award  will  be  paid  by  the Government  Entity  to  the  contractor  /  concessionaire  against  a  bank  guarantee  only  for  the  said 75%  and  not  for  its  interest  component.    With  respect  to  the  interest  payable  to  the  Government Entity,  should  the  subsequent  court  order  require  refund  of  the  said  75%,  payment  of  the  same will  be  as  per  the  court  order,  non-compliance  of  which  by  the  contractor  /  concessionaire  would be  a  contempt  of  court.  And,  the  concerned  Government  Entity  will  have  the  right  to  recover  the said  interest  by  way  of  legal/judicial  remedies.  In  cases  where  bank  guarantee  for  the  interest component  has  already  been  submitted  by  the  contractor  /  concessionaire,  the  same  will  be returned  by  the  concerned  Government  Entity.  Should  the  court  order  prescribe  a  rate  of  interest, the  same will  prevail.'

(d):

|   Sl. No. | Ministry                              | Number of cases wherein interim payment of 75% were given during the last two years   |
|-----------|---------------------------------------|---------------------------------------------------------------------------------------|
|         1 | Ministry of Railways                  | 5                                                                                     |
|         2 | Ministry of Road Transport &Highways  | 1                                                                                     |
|         3 | Ministry of Petroleum & Natural Gas   | 5                                                                                     |
|         4 | Ministry of Housing &Urban Affairs    | 3                                                                                     |
|         5 | Ministry of Steel                     | NIL                                                                                   |
|         6 | Ministry of Civil Aviation            | NIL                                                                                   |
|         7 | Ministry of Port, Shipping &Waterways | NIL                                                                                   |
|         8 | Ministry of Mines                     | NIL                                                                                   |
|         9 | Department of Commerce                | NIL                                                                                   |
|        10 | Department of Telecommunications      | NIL                                                                                   |