DLF Riviera doesn't need to pay monthly concession fee: Arbitral tribunal to NDMC

An arbitral tribunal consisting of Justice (Retd) Ajit Prakash, Justice Rekha Sharma and Justice SN Aggrawal on February 16 ruled in favour of real estate company DLF Commercial Developers Ltd in their dispute with the New Delhi Municipal Council (NDMC) over non-payment of monthly concession fee of Rs. 1 crore for the construction of a multiplex-cum-commercial facility at Yashwant Place in Chanakyapuri.

DLF had got a tender in 2008 to demolish the cinema hall spread over two acres and construct the commercial facility. It had given an upfront premium of Rs. 85 crore to NDMC and was supposed to construct the facility in 23 months before the Commonwealth Games in 2010 which never happened.

DLF Managing Director Rajeev Talwar said that the shopping complex will be ready by June this year. "When there is no earning, how can we be expected to pay? There has been a delay over clearances - architectural clearances, height clearances, clearances from Airports Authority of India. Currently, we are working on the interiors, the building is ready," Talwar said, over the delay of eight years since the contract had been signed.

The arbitral tribunal observed in its order that, "the liability of the claimant to pay monthly concession fee would start only after completion of construction of the project facility in the manner stipulated in the concession agreement and not from any date prior there to."

The NDMC and DLF had entered into a public-private partnership "to develop a modern and state-of-the-art multiplex- cum-commercial facility on a design-build-operate-transfer (DBOT) basis." The concession agreement was for 30 years. DLF was responsible for demolishing existing cinema building, developing, financing, planning and designing the new commercial complex.

The NDMC had contended that despite "expiry of more than four years of execution of concession agreement" DLF hadn't finished the construction of the building. DLF was required to pay "monthly concession fee of Rs. 100 per month per sq foot of total permissible floor area which shall be enhanced at the rate of 15 per cent every three years."

The NDMC sent a bill of Rs. 15 crore to DLF which was based on the concession fee after the expiry of 23 months from 2008. Talwar questioned, "Who stands to gain from this delay? Certainly not us."

DLF Ltd