Contract ended, China firm claims damages, Rlys replies with counter

The company, China Railway Signalling and Communication (CRSC) Research and Design Institute, recently instituted arbitration under International Chamber of Commerce (ICC) rules in Singapore.

Playing hardball, the Indian side — the Dedicated Freight Corridor Corporation of India Limited (DFCCIL), under the Railways — has issued a counter-claim of Rs 71 crore on the Chinese major. The matter is headed for a showdown in the international tribunal, sources in the Railways said.

In 2020, DFCCIL terminated CRSC’s contract for installation signalling and telecom systems on the 417-km stretch between Kanpur and Mughalsarai (now Deen Dayal Upadhyay) stations in UP for the Eastern Dedicated Freight Corridor.

The contract was terminated at the peak of the border dispute between the neighbours in Ladakh. The DFCCIL had cited non-performance by the contractor as the reason behind the move.

The Indian Express had first reported on the termination of the contract in 2020.

The Chinese company had dragged the matter to Delhi High Court at the time, but to no avail.

It has now raised claims regarding works it affirms to have executed under the contract but was not paid for; return of its forfeited bank guarantee; interest on various forfeited amounts; and claims for various overheads and contractual deployment. The Chinese company contends that termination of the contract was illegal, as the Indian side did not comply with the procedure set out for termination in the contract.

In response, DFCCIL has raised a counter-claim on the basis of recovery of mobilisation advance; retention money and balance under the termination clauses, apart from regularisation of forfeiture of the bank guarantee, officials told The Indian Express.

Faced with claims and counter-claims, the international tribunal has called for various submissions, which are “in the process of being complied with by the parties as per procedural orders”, a senior official said.

One of the reasons why the contract was terminated was that the Chinese side was “reluctant to furnish technical documents such as logic design of electronic interlocking,” this official said.

The Railways has said that the Chinese company did not do any work, and even after four years made only around 20 per cent progress.

Asked about the progress of the contract now, a DFCCIL official said that the balance work was re-tendered and is progressing under a different contractor.

The DFCCIL had approached the World Bank, which is funding the project, in April this year informing them of their decision to terminate the contract.