NHAI issued a circular dated January 11, 2024, clarifying the extent of deductions which can be made from the settlement amount to be paid to contractors under the GOI's flagship contractual dispute settlement scheme- Vivaad se Vishwas.
The circular clarifies that NHAI noted that while deciding upon the settlement amount to be paid to the contractors under Vivaad se Vishwas, the Technical Department of NHAI is making deductions under several heads. To avoid arbitrary deductions, the circular clarifies that for BOT and Hybrid Annuity Model ("HAM") projects, deductions can be made from the escrow account as per the waterfall mechanism set out in the concession agreement. Further it is clarified that the following dues (which have priority over debt service) is recovered from the escrow account: 1. dues against premium including interest; and 2. expenses made by NHAI at its risk and cost including damages chargeable over such expenses.
In the case of EPC projects, deductions which are in the nature of dues, as per the concession agreement, is deducted from the settlement amount.
Finally, the circular clarifies that the settlement amount must be offered to the contractor without any deductions and that the deductions are specified in a separate calculation sheet. It must be clarified by NHAI to the contractor that the deductions calculated are debited from the escrow account without prejudice to the rights of NHAI to recover other dues on account of damages arising from performance of the concession agreement.
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