National Highways Authority of India (NHAI) has barred Maharashtra-based Patel Engineering from applying for authority-sponsored project for a year. In a notice served on the company on May 27, the authority had said that Patel Engineering, its associates or any other company in which it holds stake will not be allowed to bid for any NHAI project for next one year.

“It is to be noted that your act of non-acceptance of LoA (letter of award) has resulted in huge financial loss, to the tune of Rs 3,077 crore, as assessed over the life of concession period, in terms of lower premium, apart from the cost of time and effort. Therefore, Patel Engineering is barred for a period of a year from the date of issue of this letter,” NHAI said in the notice.

Punishment comes after Patel Engineering failed to carry out NHAI’s six-lane project on Dhankuni-Kharagpur section of NH-6. The company had won the bid for the project worth Rs 1,400 crore on January 10, 2011. However, it later decided not to go ahead with the project citing financial constraints.

NHAI had slapped a showcause notice on the company threatening ‘not to deal with it in future for participation or award of further projects of NHAI’. The authority also forfeited Rs 13 crore security deposits.

A spokesperson from Patel Engineering said: “We were not in agreement with various issues raised by NHAI. We have been in dialogue with them for last two months. We are currently evaluating various options to appeal against any such punitive measure and we are hopeful of resolving the issue.”

Financial Chronicle in March had written about the ban and for forfeiture of security. The company then had denied any such move. It had informed the Bombay Stock Exchange that it had been submitting bids for other NHAI projects including — Krishnagiri Tindivaram and Barwadda – Pannaagarh – which was a clear indication that it had not been banned from participating in NHAI projects.

FC had spoken to NHAI officials again and was told that a formal notice in this regard was pending. On May 27, 2011, the same notice was issued to the construction firm.

Patel Engineering in response to the showcause notice had replied that some anomalies had crept in the bid submission and the company had miscalculated the total cost. Therefore, it had to withdraw it.

Patel Engineering closed at Rs 157.10 on the BSE, up 6.83 per cent on Wednesday.