Arbitral Tribunal Orders West Bengal Government to Pay Rs 765.78 Crore to Tata Motors
Kolkata: In a unanimous decision by a three-judge panel, an arbitral tribunal has ordered the West Bengal government to pay Rs 765.78 crore to Tata Motors, a subsidiary of Tata Group, to close the Nano factory in Singur, Kolkata. The order, announced on Wednesday, stated that the West Bengal State Industrial Development Corporation should pay this amount with an interest rate of 11 percent from September 2016. With this decision, the long-running conflict between the West Bengal government and the Tata Group has finally come to an end.
Tata Motors promptly announced the verdict to the National Stock Exchange, stating, “The issue of Tata manufacturing plant at Singur has been resolved by a unanimous decision by a three-judge panel. Accordingly, Tata Motors is entitled to recover Rs 765.78 crore as compensation.”
The background of this conflict dates back to 2006 when Tata Motors selected Singur in West Bengal’s Hooghly district as the site for their Nano car manufacturing plant. The then Chief Minister of West Bengal, Buddhadeb Bhattacharya, allocated 997 acres of land for the plant. However, this decision faced strong opposition from the Trinamool Congress, led by Mamata Banerjee, who argued against the use of agricultural land for industrial purposes. Banerjee went on a 26-day fast to protest the allocation of land for the plant.
Despite the construction of the plant being almost 70 percent complete, the protests continued. In October 2008, Ratan Tata, Chairman of the Tata Group, announced the abandonment of the Singur plant project and the relocation of the plant to Sanand, Gujarat.
Even after Tata Motors exited Singur, the land still remained in their possession. The state government then filed a lawsuit to reclaim the land, but Tata Motors argued that it was still necessary for their operations. After a lengthy legal battle, the Supreme Court ruled in 2016 that the land should be returned to the farmers within 10 weeks.
For Mamata Banerjee, this ruling was a significant victory in her political career. However, Tata Motors had invested Rs 1,400 crore in the Singur plant, and several other component manufacturing companies had also set up their operations there. The relocation to Gujarat caused them to incur significant losses, with component makers alone investing Rs 338 crore.
Seeking arbitration regarding the compensation for the land, Tata Motors has finally emerged as the winner after years of legal proceedings. This latest order requires the West Bengal government to pay Rs 765.78 crore to Tata Motors as compensation for the abandonment of the Singur plant project.
With this resolution, both parties can now put an end to the longstanding dispute, bringing closure to a chapter that has not only affected the Tata Group but also had implications for the industrial development and investment climate in West Bengal.