The Karnataka High Court on Tuesday ordered issue of notices to the State government and the Bangalore Development Authority (BDA) on a petition seeking winding up of the authority for not making full payment to a private company as per an award passed by an arbitration tribunal.
Justice Ravi Malimath, while ordering issue of notices, also asked the BDA counsel to inform by Friday whether the authority would make the remaining payment to the petitioner — IL&FS Engineering and Construction Company Ltd — as per the award passed by the arbitrator.
In its petition, IL&FS has said that it had been given the contract to construct a six-lane ring road, with two-lane service road on either side, between kilometre 51.880 and 56.70 connecting Mysuru Road and Magadi Road in 2005. The project was completed in 2007. As a dispute arose over the work during execution and the claims made by the company were disputed by the BDA, the same were referred to an arbitration tribunal by the High Court in 2012.
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While BDA had paid ₹31.49 crore in two instalments of the total award of ₹36.05 crore, the authority is yet to pay the remaining money despite several reminders and in violation of the tribunal’s award, which is binding on the authority, claims IL&FS.
As the BDA is a ‘body corporate’ as per Section 3(2) of the BDA Act, the authority is a ‘corporate entity’ in the eyes of the law akin to any corporation of State or Central entity as per the law laid down by the Supreme Court, the petitioner-company contended. As the BDA is unable to discharge its liabilities and in the larger interest of the public, it is liable to be wound up by applying the same principle of winding up a corporation under the Companies Act, 1956, IL&FS stated.