Tribunal directs West Bengal govt to pay Tata Motors Rs 766 cr compensation for losses incurred at Singur plant

New Delhi/Kolkata: In a major victory for Tatas, an arbitral tribunal has awarded Tata Motors a compensation of over Rs 766 crore for the losses incurred because of protests by Trinamool Congress that stalled its small car project at Singur in West Bengal.

The tribunal asked the West Bengal government to pay Tata Motors the compensation, along with interest, according to a stock exchange filing by the Mumbai-based auto major on Monday.

Following the development, the TMC which is now in power in the state said it is not the "final verdict" and legal avenues are still open before the Mamata Banerjee government.

The CPI(M) which lost to TMC in 2011 to a large extent because of the Trinamool agitation against Singur, however, wondered whether the Mamata Banerjee-led government had the wherewithal to pay the award.

The auto major stated that the arbitral tribunal has asked the West Bengal Industrial Development Corp (WBIDC) to pay the company Rs 766 crore compensation, in connection with losses incurred on its manufacturing site in Singur.

Tata Motors had to shift its plant to produce small car Nano from Singur in West Bengal to Sanand in Gujarat in October 2008 due to a land row. Tatas, by then, had already put over Rs 1,000 crore in Singur.

In the regulatory filing, the auto major said a three-member Arbitral Tribunal has ruled that the company is entitled to recover from the respondent WBIDC a sum of Rs 765.78 crore with interest thereon 11 per cent per annum from September 1, 2016, till actual recovery thereof.

The compensation is in respect to the auto major's claim of compensation from WBIDC under various heads, including the loss of capital investments with regard to the automobile manufacturing facility at Singur.

"This is to inform that the aforesaid pending Arbitral proceedings before a three-member Arbitral Tribunal have now been finally disposed of by a unanimous award dated October 30, 2023, in favour of Tata Motors," the auto major said.

Tata Motors 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, it added.

"With the making of the final arbitral award as mentioned above, the Arbitral proceedings have come to an end," it noted.

In June 2010, Tata Motors inaugurated a new plant in Sanand to produce Nano, which it has ceased to sell now. The inauguration took place nearly two years after it was forced to shift the plant out of West Bengal due to the land row.

The Sanand plant was inaugurated by the then-Gujarat Chief Minister Narendra Modi and Tata Group Chairman Ratan Tata.

Ratan Tata's dream of making a car costing only Rs 1 lakh had to face many challenges -- both technical and political -- ever since it was conceived in 2003.

Amid opposition from the Trinamool Congress against the plant, Tatas shifted the manufacturing base of Nano from Singur to Sanand in October 2008.

While pulling the project out of West Bengal, Ratan Tata blamed the agitation for the group's decision.

The agitation, however, fuelled Mamta Banerjee's rise to power in the state as she routed the Left Front government of 34 years in 2011.

The then CPI(M)-led Left Front government had acquired around 1,000 acres of farmland for the project, which was taken back from the Tatas following a court order after Banerjee became the chief minister. Her government partly returned the land to its owners.

In 2022, Banerjee claimed that it was not her but the CPI(M) which drove away Tata Motors from Singur.

"This is not the final verdict or a verdict by the Supreme Court. This is a ruling by an arbitral tribunal. It doesn't mean this is the end of the road for the state government. Legal avenues are still open for the state government," senior TMC MP Sougata Roy said.

CPI(M) state secretary Md Salim claimed that the state is paying for the arrogance and destructive politics of the TMC.

Claiming that the state government is "already in a debt trap," CPI(M) Rajya Sabha MP and senior advocate Bikash Ranjan Bhattacharya said, "Now it has no resources to satisfy the award."

BJP spokesperson Samik Bhattacharya said the party was against forcible land acquisition.

But when the industry started, we wanted the factory to come up. For the wrong policies of the CPI(M) and the militant agitation of the TMC, the Tatas were forced out of the state, permanently driving industries away," he said.