Indian Railways relies on the counter while China firm claims damages after contract termination!

Source: India TV News

According to recent reports, just two years after the Railways terminated a Rs 471 crore contract of the Chinese Railways’ signaling and telecom arm for its work in Uttar Pradesh, the Chinese are known to have locked Indian Railways in an international dispute of sorts and is said to have claimed Rs. 279 crore compensation for the same.

Not just that, China Railways Signalling and communication (CRCS) Research and Design institute is said to have bagged the Rs. 471 crore contracts for signaling and telecommunication work on the Eastern Dedicated Freight Corridor back in 2016.

In 2020, Dedicated Freight Corridor Corporation of India Limited (DFCCIL) is said to have terminated the-called contract citing non-performance, an official said. Moreover, the Chinese firm is known to have instituted an arbitration under the International Chambers of Commerce rules in Singapore back in 2021.

As per the requests filed for arbitration, the claimant is known to have filed a claim of Rs 279 cores in January 2021 as previously mentioned. The Chinese firm has now submitted its statement of claim (SOC) with a revised claim of Rs 443.77 crores. “DFCCIL is submitting the statement of defence today. DFCCIL’s counter-claim is finalized at Rs 234.25 crore (excluding track access charges)”, the official said, adding that senior advocate Harish Salve has been nominated as an arbitrator member from DFCCIL.

In addition to this, the chines firm is said to have filed a petition earlier in the Delhi High Court in 2020, in which the court’s order was in favour of DFCCIL. Also, the chines firm had challenged the order before a division bench of the Delhi High Court but to no avail.

The concerned authorities mentioned, that though the contract was terminated in 2020, trouble had been brewing since 2019. They said the termination letter was issued after a 14-day notice to the company. Apart from this, some officials said that, “apart from performance issues, the Chinese company had also shown reluctance in furnishing technical documents, as per the contract agreement, such the as the logic design of electronic interlocking.”


They also said the company did not have engineers or authorized personnel at the project site which was a serious concern. The company also failed to have tie-ups with local agencies which harmed the physical progress of the work, they added.

As noted in a report by the week, The Chinese company has said DFCCIL owes it in lieu of the work already completed by it under the contract, payment for which has not been made. It also alleged a violation of contract provisions by DFCCIL. However, DFCCIL, in its counter-claim, has raised the issue of recovery of mobilization advance, retention money, and balance under the termination clauses apart from the regularisation of forfeiture of the bank guarantee, the officials said.

Lastly, it I being said that, the submissions from both the parties will now be presented in front of the international tribunal before a decision can be taken on the said matter, and currently, the railways is known to be working with Chinese firms and recently it awarded multiple contracts to TZ Hong Kong international limited, the international trading arm of Taiyuan Heavy Machinery Group Co. Ltd, a state-owned enterprise with direct links to the Chinese government.

Reading so far, I hope you must have gotten a fair insight into the contract which has been recently ended and the fact that, the China firm is claiming huge damages, while Indian railways reply with a counter, and by now I believe you will be able to decide on your own whether or not you think it was the right thing to do and whether or not you think will be their next move.

In conclusion, what are your thoughts on Indian Railway’s counter to China firm claiming damages Do let us know in the comments area below. To know more about such reports, check out other articles on our website. Thank you for your time & if you found our content informative, do share it with your investor friends!

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