Continuing Favours to Raju-Maytas Company

Maytas Metro Limited (MML), the company floated by Maytas Infra (which in turn was established by the Raju family, formerly of Satyam Computers) to construct and run the Hyderabad metro rail has not achieved financial closure (FC) and provided a bank guarantee as per the concession agreement (CA) signed on 19 September 2008 with the government of A ndhra Pradesh (GoAP). The deadline ended on 17 March 2009. The MML could not fulfil Clause 9.1 for depositing a bank guarantee of Rs 240 crore as performance security (PS) and Clause 24.1.1 for FC. There is no provision for extension of the deadline for depositing the PS whereas the date for FC can be extended on a payment of Rs 24 lakh per day in advance every week as damages. The extension can be granted provided this amount is paid in advance. Seen together, there is no way the deadlines can be extended as per the CA.

The MML has sought extension of the deadline by six months by giving several reasons but seems to be silent on the PS and the penalty. While citing reasons for seeking an extension, MML is also reported to have blamed the public interest litigation (PIL) filed by civil society organisations in the AP High Court for their inability to mobilise loans. The MML is also t rying to invoke Clause 34 (force majeure) for seeking an extension. This clause r efers to three types of events, which b asically relate to natural calamities (lightning, earthquakes, cyclones, floods, etc), wars and armed attacks, political u nrest, and changes in public policy, etc. Further, the occurrence of such an event should be brought to the notice of the GoAP and any extension can be granted only to the extent of the duration of such an event. None of the events under this clause have occurred in the last six months and thus Maytas cannot get the benefit of force majeure.