Big win! Tata Motors can recover Rs 765.78 crore from Bengal govt over Singur Nano factory closure
Tata Motors awarded Rs 765.78 crore in Arbitral Tribunal decision over Singur Nano factory closure, highlighting legal dispute and compensation with the Bengal government.
The Bengal government was on Monday ordered to pay Tata Motors a substantial amount of Rs 765.78 crore, along with 11 percent interest from September 2016, related to the closure of its Nano factory in Singur. This decision was reached by a three-member Arbitral Tribunal and was in favor of Tata Motors.
Tata Motors confirmed the unanimous award in its favor and the financial details in a note to the National Stock Exchange. The note stated that Tata Motors is entitled to recover Rs 765.78 crore, along with 11 percent annual interest from September 1, 2016, from the West Bengal Industrial Development Corporation (WBIDC), the respondent in the case. Additionally, Tata Motors can recover Rs 1 crore as the cost of the proceedings.
"With regard to the automobile manufacturing facility at Singur (West Bengal), this is to inform that the aforesaid pending Arbitral proceedings before a three-member Arbitral Tribunal has now been finally disposed of by a unanimous Award dated October 30, 2023 in favour of TML whereby Tata Motors has been held to be entitled to recover from the respondent (WBIDC) a sum of ₹ 765.78 crore with interest thereon @ 11% p.a. from September 1, 2016 till actual recovery thereof," Tata Motors said in a note to the National Stock Exchange.
"Tata Motors has also been held to be entitled to recover from the respondent (WBIDC) a sum of ₹ 1 crore towards cost of the proceedings," the note added.
In 2008, Tata Motors had to abandon its plans for the Nano factory in Bengal due to persistent protests led by Mamata Banerjee and her Trinamool Congress, who were in the opposition at the time. Subsequently, the company relocated the factory to Gujarat.
Upon coming into power, the Trinamool government had offered Tata an alternative piece of land for a factory, but Tata Motors declined the offer, expressing a preference for a compensation amount of ₹154 crore, which it had paid to the Left Front government to acquire the land.
In 2016, the Supreme Court declared the Left Front government's land acquisition decision in Singur as "grossly perverse and illegal" due to non-compliance with the Land Acquisition Act provisions.
Tata Motors had defended the land acquisition, arguing that a government couldn't change its stance in the middle of a lawsuit just because a different political party came to power. The court held that such a change could be made if there was evidence of illegal acquisition. Tata Motors subsequently initiated arbitration proceedings under its lease agreement with the state government, which included dispute resolution mechanisms.
The Left Front government had acquired agricultural land in Singur for the Nano factory, positioning the Nano project as the start of a policy shift to industrialize the state and revive its declining economy.