Almost 15 years after the intense events that led to the shutdown of its small car plant near Singur in West Bengal, Tata Motors announced that it has received a significant win. The company stated that the arbitral tribunal has ruled in favor of the company, ordering the West Bengal Industrial Development Corporation Limited (WBIDC) to pay Tata Motors Rs. 766 crore in compensation for the abandoned Singur Nano factory. The massive decision now closes the long-going legal battle between Tata Motors and the state government of West Bengal.
What happened with the Singur Tata Nano factory in West Bengal?
For those unaware, in 2006, Tata Motors announced plans to set up a car manufacturing facility in Singur, West Bengal for its tiny hatchback, the Nano. The company estimated a substantial investment of Rs. 1800 crore in the project, which also aimed to generate employment for over 2,000 individuals directly and an additional 10,000 indirectly through vendors and service providers. For this project, the government of West Bengal acquired 1,000 acres of land. However, protests over land acquisition and political agitation by the President of All India Trinamool Congress, Mamta Banerjee, disrupted the project’s operations. The unrest escalated to violence, resulting in property damage and threats to personnel.
Relocation and legal battles
Following this, the escalating challenges led Tata Motors to shut down its operations in Singur in October 2008. Subsequently, the company relocated its Nano manufacturing to Gujarat, where the state government, led by then Chief Minister of the state of Gujarat, Narendra Modi, offered additional incentives and support.
After this move, a bill was passed in the West Bengal state assembly that alleged that Tata Motors had abandoned the project, citing different reasons. However, in response to these allegations, Tata Motors contended that it was compelled to move due to adverse conditions and the state’s failure to provide a conducive environment for industrial operations. Following this, legal disputes ensued, with Tata Motors engaged in a prolonged battle with the West Bengal government.
Final verdict and compensation
After years of legal proceedings, a three-member Arbitral Tribunal delivered a unanimous decision in favor of Tata Motors on October 30, 2023. The tribunal concluded that the West Bengal Industrial Development Corporation Limited owes Tata Motors a compensation of Rs. 766 crore, with an additional 11% interest per annum from September 1, 2016, until the amount is fully recovered.
The tribunal directive stated, “The aforesaid pending arbitral proceedings before a three-member Arbitral Tribunal has now been finally disposed of by a unanimous award in favor 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.”. The tribunal added, “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 announcement
Tata Motors, in a regulatory filing, announced this information about the tribunal’s decision. The company highlighted that the compensation is towards the loss of capital investments due to the closure of the Singur Nano factory. It stated that the ruling not only acknowledges the hardships faced by Tata Motors but also signifies a significant legal victory for the company, bringing closure to the prolonged legal battle.