Chinese firm moves Delhi HC after Railways terminates its contract due to poor progress

A day after Indian Railways terminated the contract of a Chinese firm on the Eastern Dedicated Freight Corridor citing 'poor progress, Chinese engineering firm has moved the Delhi High Court, as per reports. The plea seeks prevention from encashing its bank guarantee, as the World Bank - which is funding the Eastern Dedicated Freight Corridor, has not given a no-objection certificate for it. The matter will be heard on Thursday. 

Railways' decision to terminate the contract comes in the backdrop of strained ties between India and China after 20 Indian soldiers were martyred in a fierce clash with Chinese troops in the Galwan Valley in eastern Ladakh last month.  

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Railways terminated contract of a Chinese firm

The Railways on Friday terminated the contract of a Chinese firm for signaling and telecommunication work on the Eastern Dedicated Freight Corridor due to "poor progress", an official said. The work was to be executed on a 417-km section of the corridor between Kanpur and Mughalsarai.

“The termination letter was issued today,” Dedicated Freight Corridor Corporation of India Ltd (DFCCIL)’s Managing Director Anurag Sachan told PTI. The DFCCIL is the implementing agency for the project.

He said the termination letter was issued after a 14-day notice to the Beijing National Railway Research and Design Institute of Signal and Communication Group, which had bagged the Rs 471-crore contract in 2016. The process to oust the Chinese firm from the project had started as early as in January 2019 as it had failed to complete its work within the given timeframe, officials had earlier said. The firm had by only managed to finish 20 percent of the work by then, they said.

The DFCCIL approached the World Bank, which is funding the project, in April this year informing them of their decision to terminate the contract. ¨We have terminated the contract of the Chinese firm due to poor progress which led to immense delay in our work. We are yet to receive the NOC from them (world bank), but we have conveyed to them (world bank) that we are terminating the contract and will fund this works on our own,” Sachan said on Friday.

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