Chandigarh: Supreme Court has directed Chandigarh Administration to pay approximately Rs 118 crore to Parsvnath Film City Ltd by 30 June, resolving a long-standing dispute over a failed multimedia-cum-film city project in the shared capital of Haryana and Punjab.
The verdict, pronounced on 20 March by Justices B.V. Nagarathna and Satish Chandra Sharma, reverses a Punjab and Haryana High Court decision and modifies an earlier arbitral award, ordering the refund of Rs 47.75 crore and Rs 46.20 lakh in expenses with 8 percent annual interest instead of the earlier 12 percent ordered by an Arbitral Tribunal.
The copy of the order was made available on the SC website Wednesday.
The case stems from a 2007 development agreement where Parsvnath, after securing a Rs 191 crore bid, paid Rs 47.75 crore upfront for a 30-acre multimedia-cum-film city project in Sarangpur, Chandigarh.
Delays by Chandigarh Administration in providing a demarcation plan—issued only after 16.5 months on 17 July, 2008—and failure to deliver encumbrance-free land, including removal of two high-tension lines, stalled the project.
Parsvnath declared the contract unfulfilled in December 2008, leading to its termination by the Chandigarh Administration in December 2009, which also forfeited the Rs 47.75 crore deposit.
In 2012, an Arbitral Tribunal ruled in Parsvnath’s favour, ordering the refund of Rs 47.75 crore with 12 percent interest from 1 March, 2007, Rs 46.20 lakh for expenses, and Rs 47.75 lakh as compensation for losses suffered by the developer.
While the Additional District Judge, Chandigarh, upheld this in 2015, the Punjab and Haryana High Court overturned it in 2016, citing Parsvnath’s alleged unwillingness to proceed with the agreement.
The Supreme Court, however, found the Chandigarh Administration at fault, noting that the 36-month project timeline was derailed by its delays, not Parsvnath’s actions.
The apex court found that the high court wrongly overturned both the arbitral award and a 2015 order of the Additional District Judge, Chandigarh, which had upheld the award. Terming the high court’s reasoning “unreasonable,” SC said the delay in issuing the final demarcation plan and failure to hand over encumbrance-free land struck at the heart of the agreement.
“Clearly, about 22 months had passed since the development agreement was signed… in such a scenario, the appellant (Parsvnath) cannot be held to have shown unwillingness to carry on with the work,” the court observed.
The Supreme Court reduced the interest rate to 8 percent from 12 percent and scrapped the Rs 47.75 lakh compensation, calculating the total payable amount at approximately Rs 118 crore.
This includes Rs 47.75 crore with interest from March 2007 and Rs 46.20 lakh with interest from December 2009. Failure to pay by the deadline will increase the interest rate to 12 percent thereafter, said the order.
(Edited by Amrtansh Arora)
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