Chinese Company Demands Rs 443 Crore In Damages From India. Here Are The Reasons

India-China Railway Contract Canceled: On one side, India and China are taking steps forward to ease the political tensions in the wake of the border standoff in Ladakh, while on the other end the countries are also in a tiff over Rs-471 crore Railways contract in India.

The contract had to be canceled after the summer 2020 crisis.

Earlier, a contract was given to CRSC Research & Design Institute Group to install signaling and telecom systems between Kanpur and Deen Dayal Upadhyay junction on the Eastern Dedicated Freight Corridor. The CRSC Research & Design Institute Group is a company controlled by the Chinese government. However, India had to cancel the contract in June 2020.

In response, China has taken the case to international arbitration. China claims that the Dedicated Freight Corridor Corporation of India (DFCCIL) did not pay China for the extent of work already done.

The Claims By Both Sides

The CRSC Research & Design Institute Group initially filed a claim of Rs 279 crore in damages. However, it revised it to Rs 443 crore. Moreover, the company wants its bank guarantee to be returned.

The Indian side, in response, filed a counterclaim which was initially Rs 71 crore but was subsequently revised to Rs 234 crore. The DFCCIL raised the claim on the grounds of retention money, balance under the termination, and mobilization advance.

China claims that the cancellation of the contract was illegal. Also, as per China, the DFCCIL did not adhere to the procedure set out for such a termination.

Currently, a Tribunal under the ICC rules has been established. Both parties are preparing for various submissions called for by the Tribunal.

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The Big Question: Why Did India Cancel The Contract?

Many think that the political tensions between India and China are the reason to be blamed, however, as per Indian officials, this is not the case. 

As per Indian officials, one of the reasons to terminate the project was the ill progress of the work. The project commenced in 2016, but the company could only show 20% progress by the year 2020. Moreover, there were many missed targets too.

Additionally, visits to the projection sites made by DFCCIL officials caught the company’s personnel absent on a myriad of occasions.

Not to miss, Indian officials also claimed that the Chinese company was hesitant to display technical documents to them, which included interlocking and logic design. An Indian senior official said that the sharing of such documents was a part of the contract conditions and that such documents were crucial for the officials.