Tata Motors, one of the top automakers in India, has been given compensation totaling Rs 765.78 crore. On Monday, Tata Motors declared that they had obtained an arbitral award for the capital they invested in the now-closed Singur, West Bengal plant.
Tata Motors announced its intention to exit the Singur plant, which was established to produce the Tata Nano in 2008, in response to intense protests from Mamata Banerjee's Trinamool Congress, which argued that it had acquired farmland through force.
Tata Motors was forced to relocate its plant to Sanand, Gujarat, from Singur, West Bengal, in order to build the entry-level car Nano. At that point, the manufacturer of four-wheelers had invested more than Rs 1,000 crore in Singur. This change not only put Nano's initial marketing-related launch objectives five months behind schedule, but it also had an impact on Nano's availability.
Why is Tata Motors receiving compensation?
The payment relates to the auto major's claim for reimbursement from WBIDC (West Bengal Industrial Development Corporation) under a number of headings, including the loss of capital contributions related to the Singur auto manufacturing facility.
Tata Motors is now the recipient of a unanimous decision from the arbitral tribunal that resolved the case, holding it liable to retrieve the amount of Rs 765.78 crore, plus interest at the rate of 11% annually, from the respondent (West Bengal), starting on September 1, 2016, and continuing until the money is actually recovered.
Furthermore, Tata Motors is also eligible to receive reimbursement for up to Rs 1 crore to cover legal expenses.
In an official statement, Tata Motors stated, "The aforesaid pending arbitral proceedings before a three-member Arbitral Tribunal has now been finally disposed of by a unanimous award in favour of Tata Motors Limited (TML) whereby the claimant (TML) has been held to be entitled to recover from the respondent (WBIDC) a sum of Rs.765.78 crores with interest thereon @ 11% p.a. from September 1, 2016 till actual recovery thereof. The Claimant (TML) has also been held to be entitled to recover from the respondent (WBIDC) a sum of Rs.1 crore towards the cost of the proceedings."
Tata Motors opened a new facility in Sanand in June 2010 to manufacture the Nano, which it is no longer selling. It moved the plant out of West Bengal because of a land dispute, and the inauguration happened almost two years after that. Ratan Tata, the chairman of the Tata Group, and Narendra Modi, the Gujarat chief minister at the time, launched the Sanand plant.
(With inputs from ANI)
