Tata Motors Awarded Compensation of Over Rs 766 Crore for Singur Plant Losses
Tata Motors Ltd has emerged victorious in an arbitration case against the West Bengal Industrial Development Corp. Ltd (WBIDC), the state’s industrial development agency, and is set to receive a compensation of ₹766 crore. This marks the resolution of a long-standing dispute related to the Singur plant, which was shuttered in 2008 due to protests against land acquisition.
Tata Motors had originally intended to produce its Nano model, known as the world’s most affordable car, at this facility.
The arbitral tribunal has also ordered WBIDC to pay interest on this amount at a rate of 11%, commencing from September 2016 and continuing until the complete recovery of the funds. In a statement, Tata Motors announced, “The pending arbitral proceedings before a three-member arbitral tribunal have now been finally disposed of by a unanimous award in favor of Tata Motors Ltd, whereby the claimant has been held to be entitled to recover from the respondent (WBIDC) a sum of ₹765.78 crore with interest thereon at 11% per annum from September 1, 2016, till actual recovery thereof. The claimant has also been held to be entitled to recover from the respondent a sum of ₹1 crore towards the cost of the proceedings.”
The Singur issue has been widely regarded as a crucial case for land acquisition and industrial development in India. The roots of this conflict trace back to the early 2000s when the West Bengal government, led by the Left Front, announced its intention to acquire 1,000 acres of fertile farmland in Singur for the construction of a Tata Motors car factory. The government justified this move by claiming that the factory would generate employment and stimulate the local economy.
However, this decision faced opposition from many local farmers and political leaders, including Mamata Banerjee of the Trinamool Congress, who contended that the nearly 6,000 displaced families had not received fair compensation. In 2011, taking advantage of the protests against land acquisition in Singur and Nandigram, Mamata Banerjee unseated the Left alliance, bringing an end to the world’s longest-ruling democratically elected Communist party.
Ratan Tata, who had initiated the ambitious project to create India’s “people’s car” with a price tag of ₹1 lakh, announced Tata Motors’ decision to vacate Singur in Kolkata. Nonetheless, the company had already made substantial investments and initiated the construction of the Singur factory in 2007 before having to halt the project in 2008. Following this, Tata Motors relocated its manufacturing unit to Sanand in Gujarat, which continues to serve as the site for Tata Motors’ other passenger vehicles after the discontinuation of the Nano project in 2018.
Tata Motors released an exchange filing stating, “In respect of the arbitration proceedings between Tata Motors Limited (TML) and West Bengal Industrial Development Corporation Limited (WBIDC), about TML’s claim of compensation from WBIDC under various heads, on account of the loss of capital investments, about the automobile manufacturing facility at Singur (West Bengal), 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 favor of TML.”
According to the filing, the tribunal has ruled that Tata Motors can recover ₹765.78 crore with interest at a rate of 11 percent per annum, commencing from September 1, 2016, until the complete recovery from WBIDC. The filing did not specify whether the interest was calculated as simple or compound interest.
Tata Motors also stated that it has been authorized to recover ₹1 crore towards the cost of the proceedings. This award signifies the conclusion of a prolonged legal battle, bringing clarity and resolution to the Singur plant dispute.