WBIDC has taken legal action to contest an arbitral award granted to Tata Motors in the Singur case, where Tata Motors received compensation of nearly Rs 1,400 crore for expenses related to the defunct Singur small car factory. The appeals, filed under Sections 34 and 36 of the Arbitration & Conciliation Act 1996 before the Calcutta High Court, mark a new phase in the protracted legal dispute over land acquisition and industrialization in West Bengal.
The West Bengal Industrial Development Corporation (WBIDC) has taken its case to the Calcutta High Court, seeking to annul an arbitral award that awarded Tata Motors Ltd nearly Rs 1,400 crore. This compensation pertains to expenditures incurred by Tata Motors for the ill-fated Singur small car factory.
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The Bengal government entity, which had leased out approximately 997.11 acres of land to Tata Motors and its approved vendors in 2006, has initiated appeals under Sections 34 and 36 of the Arbitration & Conciliation Act 1996 before the HC.
Section 34 of the Act provides the aggrieved party with the opportunity to appeal against an arbitral award. However, the mere filing of an application under Section 34 does not render the award unenforceable. A separate application under Section 36 is required to seek a stay on the enforcement of the award.
Both matters are slated to be heard by Justice Moushumi Bhattacharya. While WBIDC’s appeals are set for their first hearing, Tata Motors has already filed an application to enforce the arbitral award, which was brought before Justice Bhattacharya on February 13 and is scheduled for further deliberation.
Given the politically sensitive nature of the case, the legal challenge to the arbitral award, delivered by a three-member panel on October 30, 2023, was widely anticipated. The Trinamool Congress government is under pressure to vigorously defend its stance against Tata Motors in the Singur case, particularly in light of the forthcoming general elections, where industrialization in Bengal is expected to be a hot-button issue.
The arbitral panel, led by retired Justice V.S. Sirpurkar, ruled in favor of Tata Motors, determining that the company is entitled to recover Rs 765.78 crore from WBIDC, along with interest at 11 per cent per annum from September 1, 2016, amounting to nearly Rs 1,400 crore presently.
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Tata Motors based its case on a clause in the lease deed signed with WBIDC, which stipulated that if any court or authority declared the land acquisition proceedings illegal, WBIDC would indemnify and compensate Tata Motors for any losses suffered. The Supreme Court’s judgment on August 31, 2016, declaring the land acquisition in Singur illegal, triggered this clause, according to Tata Motors.
The arbitral panel also noted that Tata Motors’ relocation from Singur to Sanand in Gujarat did not invalidate the lease agreement. The company withdrew from Bengal in October 2008 due to alleged breakdowns in law and order around the Singur factory, which was nearing completion at the time.
WBIDC’s move to challenge the arbitral award and Tata Motors’ bid to enforce it signal a new phase in the protracted legal battle over the Singur case. The case has seen multiple legal challenges since its inception in 2007, including petitions before the Calcutta High Court and the Supreme Court, culminating in the apex court’s 2016 decision declaring the land acquisition illegal and void, thus ordering the return of land to the original owners.
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