Supreme Court Holds Chandigarh Authorities Liable for Delay in Film City Project, Directs Refund Of 47.75 Crores to Successful Bidder

The Supreme Court of India recently ruled in favor of a company engaged by the Chandigarh Administration to establish a Multimedia-cum-Film City in Sarangpur, Chandigarh. The Court upheld an arbitral award, directing the authorities to refund ₹47.75 crores to the successful bidder, along with interest and compensation.

The case revolved around a significant delay of over 16 months in providing encumbrance-free land to the company, which led to frustration of the development agreement. The Court emphasized that time was of the essence for the project, and each day’s delay had commercial consequences, striking at the heart of the agreement.

Each Day’s Delay in Executing Project Had Commercial Consequences & Struck at Heart of Development Agreement: Supreme Court Allows Appeal in Arbitration Case

The Supreme Court of India recently allowed an appeal in an arbitration case involving M/s. Parsvnath Film City Ltd. and the Chandigarh Administration. The case revolved around a Multimedia-cum-Film City project in Chandigarh, where the authorities delayed providing encumbrance-free land for over 16 months. This delay was deemed to have commercial consequences, striking at the core of the development agreement.

The Court emphasized that time was of the essence in such projects, and each day’s delay had significant financial and operational impacts. The two-judge bench criticized the earlier judgment that partially set aside the arbitral award, stating it was based on a flawed understanding of the issues. The Supreme Court upheld the arbitral award, directing the Chandigarh Administration to refund ₹47.75 crores to the company, along with interest and compensation.

This ruling reinforces the importance of adhering to contractual timelines and highlights the judiciary’s role in ensuring accountability in public-private partnerships.