Indian Railways: Contracts For Sixteen RLDA Projects Terminated For Payment Default

A Parliamentary panel has flagged the termination of 16 contracts in commercial projects undertaken by the Rail Land Development Authority (RLDA).

Bidders defaulting in payment of installments of lease premium, developers facing issues in getting the projects financed and the National Green Tribunal not granting approval on certain grounds, were the reasons as reported by the parliamentary committee.

As per the report on “Performance of RLDA” submitted by the standing committee on Railways, the Union Railway Ministry informed the panel that the 'letter of acceptance' of 16 commercial sites have been cancelled.

“Main reasons adduced by the Ministry for cancellation of award of most of these commercial sites are default in payment of installments of lease premium by the developers,” it said.

Taking note of the Ministry's submission that modifications in RLDA regulations are under process, which will enable the developers in obtaining loans from financial institutions, the panel has urged the Indian Railways to issue necessary modifications at the earliest, to avoid further cancellations and ensure fulfilment of development of commercial sites.

The committee also observed that the Ministry should establish a clear and fair dispute resolution mechanism within the contracts, including provisions for mediation, arbitration and other alternative dispute resolution methods.