Reliance Sea Link One Pvt Ltd (RSOPL), an arm of Reliance Infrastructure (RInfra) which has bagged the Worli-Haji Ali sea link project in Mumbai, will have to pay a daily penalty of Rs 10 lakh for not complying with the provisions of a concession agreement with Maharashtra State Road Development Corporation (MSRDC).

According to the agreement, RSOPL was supposed to pay Rs 1,634 crore (Rs 16.34 billion) to MSRDC to take over the existing Worli-Bandra stretch by July 3, before the construction on the Worli-Haji Ali link started.

MSRDC has invoked provisions of the concession agreement in this regard.

The Worli-Haji Ali link is an extension of the Bandra-Worli stretch, which was thrown open to the public in June 2009.

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"According to the concession agreement executed since June 2010, it was binding on the company to pay Rs 1,634 crore (Rs 16.34 billion) to take over the Worli-Bandra sea link by July 3. This was to be done as the company has achieved a financial closure. However, the company has not made any payment and thus is liable for the payment of a daily penalty of Rs 10 lakh," MSRDC Vice-Chairman and Managing Director Bipin Shrimali said.

He said the MSRDC can recover the penalty for up to a maximum 120 days or till the date on which RSOPL pays Rs 1,634 crore (Rs 16.34 billion). "MSRDC will take the future course of action after 120 days are over," he added.

MSRDC forwarded financing documents to RSOPL on July 2, a day before the deadline. The documents relate to the financing of the Worli-Haji Ali  project. Based on these documents as approved by MSRDC the company's lenders would release the funds. RSOPL had submitted these documents on March 15, 2010.

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RSOPL declined to comment on the penalty, which comes with immediate effect.

It has so far completed all design-related activities, financial closure, appointment of an operator from Portugal and geo-technical analysis.

The company is insisting MSRDC give in writing the fulfilment of its commitment towards the availability of viability gap funding of Rs 1,392 crore (Rs 13.92 billion), making available space for casting yard at the sit and execution of a state support agreement and issuance of toll notification.

However, MSRDC has rejected the demands, saying it had sufficient funds to pay the viability gap funding in phases.

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RSOPL has also expressed displeasure over the state government's move to appoint a technical group chaired by the Mumbai Municipal Commission to explore the possibilities of building a coastal road in Mumbai.

The committee has been formed in the wake of a relaxation in the Coastal Regulation Zone notification issued in January to make coastal roads on stilts permissible.

A Mumbai-based analyst said the formation of a technical group was crucial at a time when MSRDC had come up with a concept of a garland road consisting primarily of the coastal road and linking east and west corridors.