Legal Compliance in Tunnel Construction PDF

NICMAR University, Pune LEGAL COMPLIANCE IN CONSTRUCTION OF TUNNEL: ISSUES & CHALLENGES By PAVITHRAN A S (P2370004) ZAKI MOHAMMED TERNIKAR (P2370240) HABINASH S (P2370424)...

NICMAR University, Pune LEGAL COMPLIANCE IN CONSTRUCTION OF TUNNEL: ISSUES & CHALLENGES By PAVITHRAN A S (P2370004) ZAKI MOHAMMED TERNIKAR (P2370240) HABINASH S (P2370424) STEFFI MARY THOMAS (P2370452) MBA Batch II (2023- 2025) A project seminar report submitted in partial fulfilment of the Academic requirements for the Master of Business Administration in 2023-2025 (MBA II) 1.1 Introduction The construction of tunnels is essential to advancing infrastructure, providing efficient and faster routes below ground, through hills or mountains for transportation, water supply, sewage, etc. With the Union Budget 2023-2024 allocating ₹7.5 lakh crore for capital expenditure, investments in infrastructure are expected to enhance economic productivity. As the demand for tunnel projects are increasing in India, it is essential to understand and be aware of the legal challenges faced during tunnel construction, since delays in these projects can have cascading impact on Indian economy. The process of obtaining Land acquisition & compensation, Environmental Clearances necessary for the project are the key challenges hindering the development of infrastructure in India. The Atal Tunnel in Himachal Pradesh, Chenani-Nashri Tunnel, Twin Tunnel construction as a part of the Mumbai Coastal Road Project and several underground metro projects have all been delayed and faced legal challenges related to Land Acquisition and Environmental Clearances during its construction. This study aims to identify deficiencies and offer recommendations by comparing Land Acquisition, Compensation, and Clearance processes with global practices. 1.2 Objectives: 1. To study and analyse the legal issues arising with respect to tunnel construction projects in India. 2. To identify deficiencies and offer recommendations by comparing Land Acquisition, Compensation, and Environmental Clearance processes with global practices. 1.3 Scope & Limitations: Scope: Study of the legal compliances involved like the environmental regulations and clearances from MoEF, Land Acquisition, Rehabilitation & Resettlement Act,2013 Comparative study of Singapore’s Land Acquisition Act and Environmental Clearance Processes. Limitations: The study will primarily focus on the legal aspects related to construction of tunnel only. The study will not discuss issues arising due to ambiguities in contractual obligations between main parties. 1.4 Issues & Challenges A. Land Acquisition: Land acquisition is one of the most significant hurdles in tunnel construction. Securing the necessary land for entry and exit points, along with intermediate shafts, often leads to project delays and increased costs. The legal complexities and ambiguity in valuation methods involved in land acquisition can stall projects for years. Establishing fair and transparent Compensation based on fair market value with relocation assistance to displaced individuals ensures fair treatment to affected communities. B. Regulatory Clearance Delays due to obtaining approvals from various Government agencies can take months or even years due to inefficient and Lengthy Environmental Clearance Process. C. Ambiguity in Contractual Obligations Ensuring uniformity in contractual procedures, procurement systems, and project delivery methods is critical. A standardized contract that clearly defines roles, responsibilities, and expectations. This reduces misunderstandings and disputes, facilitating smoother project execution. C. Coordination Among Stakeholders: Effective coordination among various stakeholders, including government agencies, contractors, and local communities, is essential. Early involvement of stakeholders to address concerns proactively, reduces the likelihood of disputes ensuring efficient and timely execution of project. 2. Case Laws 2.1 M/S The Exchange Agencies vs Delhi Metro Rail Corporation Ltd, 2010 This legal case between M/S The Exchange Agencies (plaintiff) and Delhi Metro Rail Corporation Ltd (DMRC, defendant) provides insights about the impact of tunnel construction on adjacent buildings. The plaintiff claims their building developed cracks due to the excavation work carried out by DMRC for Delhi Metro construction in 2002-2003. DMRC argued the cracks pre-existed the construction and their work caused no new damage. The Court awards a decree in favour of the plaintiff and against the defendant for an amount of Rs.3,37,900/, along with the interest @ 12 % per annum The case highlights the importance of conducting thorough pre-construction surveys to document the existing condition of buildings in vicinity, to avoid legal disputes 2.2 Jamshed Noshir Sukhadwalla And 4 Ors vs Union of India and 11 Ors, 2018 The core dispute centers on the construction of a metro tunnel beneath two Zoroastrian fire temples, with the petitioners arguing that it would desecrate their holy sites. The project suffered a loss of around more than Rs. 4 crores per day due to delay in execution of the project. The court rejected the stay order as it did not find it appropriate to withhold the infrastructure project of this magnitude any further. 2.3 Union Of India & Ors. vs A.K.Verma , 2010 High-level officials and experts within the railway bodies had differing opinions on the optimal approach, leading to internal conflicts and delays. There were two primary viewpoints on the optimal alignment for the Katra-Qazigund section: Steeper Gradient (1:50): Advocated by individuals like B. Rajaram and E. Sreedharan, this approach promised shorter tunnels, fewer bridges, and reduced travel time. Gentler Gradient (1:100): Supported by the project's leadership, this option was seen as more conservative and potentially safer due to the challenging terrain. 2.4 Residents of Shenoy Nagar vs Chennai Metro Rail Limited, 2019 The residents of Shenoy Nagar opposed the construction of a metro station and mall on Thiru.vi.Ka. Park, a vital green space and recreational area. They argued that the park is crucial for rainwater absorption, groundwater recharge, and biodiversity. While the Chennai Metro Rail Limited proposed to replace the lost greenery with a Miyawaki plantation, residents fear the park's irreplaceable functions and character will be permanently altered and a dense, young plantation cannot fully replicate the ecological services provided by decades-old trees and the park's established ecosystem. The case highlights the ongoing tension between urban development and environmental preservation. The Court stated that the public space is essential for residents to enjoy fresh air, greenery, and a decent quality of life. The proposed modifications will not change the fundamental nature of the park, as the commercial activities will be underground, and the park will remain open to the public. 2.5 M/s Simplex Infrastructure Ltd. v. Union of India, 2017 In this case, workers employed by Simplex Infrastructure Ltd. were injured during the construction of a tunnel for a road project in the Himalayan region. The workers filed claims for compensation, alleging unsafe working conditions and lack of proper safety protocols during tunnel excavation. The case revolved around the safety obligations of contractors and the rights of workers under the Factories Act, 1948, and the Employee Compensation Act, 1923, specifically regarding safety standards for tunneling operations. The court ruled that the contractor was liable for the injuries sustained by workers due to negligence in maintaining safety standards. The case reinforced the need for contractors to adhere to strict safety protocols in hazardous construction activities such as tunnel excavation 2.6 Delhi Metro Rail Corporation (DMRC) v. J.K. B. Engineering Co., 2008 The Delhi Metro Rail Corporation (DMRC) awarded a contract to J.K.B. Engineering Co. for tunnel construction as part of the Delhi Metro Phase I. The project faced significant delays and allegations of construction defects in the tunnels, including issues with tunnel stability and water seepage. The case involved allegations of contractor negligence, construction defects, and failure to meet safety and quality standards in tunnel construction. The issue of whether the construction company had adhered to the proper safety protocols and met the technical standards was central to the dispute. The Delhi High Court ruled that DMRC, and its contractors needed to adhere to higher standards of safety and quality. The case underscored the importance of quality control in urban tunnel construction, especially in high-risk areas like metro tunnels, which affect public safety 2.7 NHAI vs. Lanco Infratech Ltd., 2014 The National Highways Authority of India (NHAI) had awarded a contract to Lanco Infratech Ltd. for the construction of tunnels and roads as part of a highway project in Jammu and Kashmir. The construction was delayed due to unforeseen geological conditions, and the contractor sought additional compensation for the delay. The case centered around the breach of contract, delay in project completion, and the applicability of force majeure clauses in the context of tunnel construction. The court ruled that the contractor was entitled to compensation for additional time and expenses incurred due to geological challenges that were not foreseen at the time of the contract. The case emphasizes the importance of clearly defining risks and responsibilities in contracts involving complex tunneling work, particularly when there are unforeseen environmental or geological challenges 3. Legal Compliances in Tunnel Projects 3.1 Applicable Laws 3.1.1 LAND ACQUISITION AND COMPENSATION Land Acquisition, Rehabilitation and Resettlement Act, 2013 (LARR Act, 2013) Section 2 – Definitions and Applicability: Defines “public purpose” and specifies that projects (including major infrastructure such as tunnels) must satisfy certain criteria before land may be acquired. Provides that if acquisition is for public-private partnerships or involves private companies, a pre-acquisition consent requirement is imposed (e.g., 70–80% of affected families must agree). Section 26 – Determination of Market Value: The Collector is required to assess the market value using multiple parameters: – The Market Value based on sale deeds – The average sale price of similar plots in the area, and – For PPP or private projects, any prior agreed compensation. Section 28 – Compensation Parameters: Compensation must cover the determined market value as well as additional elements such as: – Damages to standing crops or plantations on the land, – Costs incurred in relocation or changes in residence, and – Other incidental losses or expenses. The Act explicitly includes solatium (an amount equivalent to the market value) for affected families. Sections 31–37 – Rehabilitation and Resettlement Provisions: Detailed measures to rehabilitate displaced families are prescribed. These include: – The formulation of rehabilitation awards, – Infrastructure support (housing, community facilities, etc.), and – Timelines and procedures for finalizing compensation awards. These sections ensure that the social and economic losses incurred by the affected population are comprehensively addressed. 3.1.2 ENVIRONMENTAL CLEARANCES The Environmental Protection Act, 1986 These provide the statutory framework for pollution control (both air and water) and require obtaining consent from the Central Pollution Control Board (CPCB) and the State Pollution Control Board (SPCB) before commencing construction. Provisions under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control of Pollution) Act, 1981 may also apply, specifying permissible emission limits and operational requirements during construction. Environmental Impact Assessment (EIA) Notification, 2006 (as amended) Schedule I & II – Classification of Projects: Tunnel construction projects typically fall under the category of “infrastructure projects” that require a comprehensive EIA. The schedule lists the types of projects and the nature of baseline studies required. Chapter IV – Public Consultation and Public Hearing Requirements: Prior to project approval, the developer must organize public hearings in the affected area. The objective is to record the concerns and recommendations of local communities. Specific guidelines detail the notice period, language of publication, and venues for such hearings. Detailed Requirements for Baseline Studies: Air and water quality data, noise levels, and ecological assessments must be conducted. The EIA report must demonstrate that any adverse environmental impacts (e.g., ground vibrations, dust emissions, water table changes) will be mitigated. Approval Process: The State or Central Ministry responsible (usually the Ministry of Environment, Forest and Climate Change) reviews the EIA report along with public comments. Only after satisfactory mitigation measures and compliance with stipulated criteria will clearance be granted. 3.1.3 STATUTORY REQUIREMENTS & APPROVALS Land Use and Acquisition NOC: Issued by the State Government or the relevant District Collector after completing the land acquisition process under the Land Acquisition, Rehabilitation and Resettlement (LARR) Act, 2013. Confirms that the land earmarked for the project has been acquired legally and that appropriate compensation and rehabilitation measures are in place. Local Planning and Zoning NOC: Granted by the local municipal authority or the Town Planning Authority (as per the applicable Town and Country Planning Act of the state). Ensures that the project complies with local zoning regulations, land use policies, and building codes. Involves submission of detailed project layouts and alignment plans for approval. Road and Traffic Management NOC: Issued by the local Public Works Department (PWD) or the Road Transport Authority if the tunnel construction affects existing road networks or requires temporary diversion of traffic. Addresses issues such as road access, detour routes, and traffic management during construction. Electricity and Power NOC: Obtained from the State Electricity Board or Distribution Companies. Ensures that the project does not disrupt power supply and that any new infrastructure (such as dedicated power lines or backup generators) meets regulatory standards. Telecommunications NOC: Secured from the Department of Telecommunications (DoT) or relevant state telecom authorities, especially if the project affects existing communication lines or requires the installation of new communication infrastructure within or near the tunnel. Geotechnical and Mining Clearance (if applicable): If the tunnel construction involves excavation in areas with complex geology or near mining zones, clearance must be obtained under the Mines Act, 1952, and related regulations from the Directorate General of Mines Safety (DGMS). Water Resource and Drainage NOC: Required from the local water authority or the State’s Department of Water Resources if the project may affect local drainage patterns, groundwater levels, or water bodies. Ensures that water management plans are in place to prevent adverse hydrological impacts. Environmental, Social, and Corporate Governance (ESG) Standards Heritage and Archaeological NOC (if applicable): If the tunnel’s alignment or construction area affects heritage sites or archaeological zones, an NOC must be obtained from the Archaeological Survey of India (ASI) or the relevant State Heritage Council. Corporate Social Responsibility (CSR) Requirements: For projects involving public-private partnerships, CSR obligations may apply, requiring the contractor to invest in community development, environmental mitigation measures, and long- term monitoring of project impacts 3.1.4 LABOUR, HEALTH, AND SAFETY REGULATIONS Large-scale construction projects, including tunnel construction, engage hundreds of workers and fall under several labour laws that dictate the obligations of contractors: Factories Act, 1948: Governs the working conditions on construction sites. Specifies mandatory safety measures, including: Installation of protective equipment, Work hours and breaks, and Provision of first aid and emergency services. Workmen’s Compensation Act, 1923: Provides for compensation in the event of injuries sustained during construction activities. Section 4: Compensation for death (min. ₹50,000) and permanent disability (min. ₹60,000). Section 10B: Mandates reporting fatal accidents within 7 days. The Contract Labour (Regulation and Abolition) Act, 1970: This Act applies when contractors employ contract workers. It mandates registration of contractors, timely payment of wages, and maintenance of records detailing employment conditions. Specific clauses within the Act require: Payment of wages without unauthorized deductions. Provision of safe working conditions, proper sanitation, and adequate drinking water. Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996: This law provides for the welfare of construction workers. Key clauses include: Registration of workers and maintenance of a welfare fund. Provisions for health and safety measures, including protective equipment and on-site medical facilities. Rules for working hours, rest periods, and overtime compensation. Contractor-Specific Obligations IS 4756-1978: outlines- Tunnel Safety Guidelines: Standards for lighting, electrical installations, and communication systems within the tunnel. Ventilation requirements, Fire-fighting systems, Emergency communication, and Regular maintenance schedules. Prior to construction, comprehensive geological surveys must be conducted to assess soil and rock stability. Health and Safety Management: Contractors are required to develop and implement a comprehensive Health and Safety Plan that addresses all aspects of tunnel construction, from blasting operations to material handling. This plan must be submitted to the local labor commissioner and safety inspector, with periodic reviews as per the Act. Welfare Provisions: Contractors must establish on-site welfare facilities, including restrooms, canteens, and medical first-aid stations. They are also obliged to provide training in first-aid, emergency response, and safe handling of hazardous materials. 3.1.5 Explosives and Tunnel Excavation A. Handling of Explosives Tunnel excavation projects, especially those that involve blasting in rock or soil, are subject to stringent regulations regarding explosives. The primary statute here is the Explosives Act, 1884, along with its associated rules and modern amendments. Licensing Requirements: Contractors must secure a license for purchasing, storing, and using explosives. This license stipulates the type and quantity of explosives that may be handled on site. The rules under the Explosives Act detail: Storage and Handling: Specific guidelines (often detailed in Schedule X of the rules) dictate how explosives must be stored, including requirements for fireproof safes, separation from other flammable materials, and distance from inhabited areas. Usage During Blasting Operations: Detailed blasting plans must be submitted to the Chief Inspector of Explosives. These plans specify the timing, sequence, and methods of blasting to minimize vibration and potential damage to nearby structures. Training and Safety Protocols: The Act mandates that personnel involved in blasting operations must receive certified training. Additionally, a safety officer must be present on site during any blasting operation. B. Tunnel Excavation and Dumping of Excavated Material The excavation process in tunnel construction involves the removal of vast quantities of rock and soil. Specific legal requirements address the disposal and management of this material: Environmental Clearance for Dumping Sites: Disposal of excavated material must be carried out in designated dumping sites approved by local environmental agencies. Permits under the Hazardous Waste Management Rules or specific municipal by-laws may be required if the material is considered contaminated. Rehabilitation of Excavation Areas: Contractors may be obligated to rehabilitate or restore the areas where material is dumped, ensuring that dust, runoff, and other environmental impacts are minimized. Specific clauses in local municipal regulations might require a detailed rehabilitation plan prior to commencement of dumping. Regulations on Transport and Storage: The transport of excavated material must follow guidelines laid out by the Central Pollution Control Board (CPCB), including measures to prevent spillage and contamination en route to the dumping site. 3.2 Land Acquisition Framework in India Requiring body Requisition to the government represented by the collector Notification Study of the proposal Notification: legitimizing Gazette and two government to daily newspapers conduct feasibility study on the said land Identification of affected persons Calculation of compensation Objections to be registered at the Collectors’ satisfaction collectors office Compensation awarded Land transferred 3.3 Critical Analysis of LARR Act, 2013 The Land Acquisition Act of 1894 does not prescribe a definitive formula for calculating compensation, instead relying on guideline values derived from comparable land sales over the preceding three years. This method frequently underestimates true market value, as landowners tend to report lower sale prices to minimize stamp duty liabilities. In the case of V. Madhusudanan vs. The Special Tehsildar (2007), it was noted that among 1,152 examined sale deeds, the compensation was based on the lowest, distress sale—which was 40 times less than those of comparable properties. Although the Land Acquisition, Rehabilitation and Resettlement Act (LARR) of 2013 attempted to address some of these issues, it remains controversial due to its reliance on average sale prices, restrictions on multi-cropped land that reduce available area, and delays caused by the mandatory Social Impact Assessment. A more effective land acquisition policy should aim to deliver real value to the owner through a negotiated settlement process and a fair valuation method that accounts for both the direct and indirect costs associated with the land acquired (Mahalingam and Vyas, 2011). Clause 2 - Definitions Defines terms such as "affected family," "land," and "public purpose." Deficiency/Issues: The term "public purpose" under Section 2(1) is loosely defined, leading to misuse for projects that prioritize commercial interests over community welfare. States like Gujarat amended the Act to exempt projects like industrial corridors from Social Impact Assessments (SIAs), diluting accountability. Land acquisition for the Ahmedabad Metro faced protests when commercial hubs were prioritized over residential areas. Clause 26 – Determination of Market Value The Collector is required to determine the market value by considering the valuation under the Indian Stamp Act, the average sale price for “similar land” in the vicinity, and the agreed compensation in cases of private companies or public–private partnerships. Deficiencies/Issues: Ambiguity in “Similar Land”: The criteria for what qualifies as “similar” are not precisely defined. This can lead to disputes and inconsistencies as different valuers or Collectors might use varying benchmarks. Multiple Criteria: Relying on several parameters (outdated sale-deeds, local market averages, and negotiated figures) increases complexity and creates room for litigation when there is a dispute over which standard to apply. Compensation Parameters Clause 28 – Parameters for Compensation The compensation must include the market value (from Clause 26), damages for loss of standing crops or trees, and expenses incurred due to relocation or a change in residence. Deficiencies/Issues: Complexity in Calculation: Including various parameters such as relocation expenses, damages to standing crops, and solatium (often 100% extra) creates a multi-dimensional valuation. This complexity often leads to disputes in courts over what should be included and how. Subjective Interpretations: Different Collectors may interpret what constitutes “relocation expenses” or “loss of standing crops” differently. 3. Consideration of Other Factors (Social and Economic Impact) Social Impact Assessment (SIA) – Clauses 4 to 8 The act mandates that before any acquisition, an SIA study must be prepared, including public hearings, appraisal by an expert group, and publication of the SIA report. Deficiencies/Issues: Implementation Delays: Although the process is designed to be participatory and transparent, the extensive procedures can delay acquisitions and complicate the decision-making process. Inconsistency: Variation in how SIAs are conducted from one region to another leads to unpredictable outcomes. Legal Disputes: Disputes over the adequacy and accuracy of the SIA have frequently led to litigation, particularly when the findings are later challenged by affected parties. 4. Rehabilitation and Resettlement (R&R) Chapter V – Rehabilitation and Resettlement Award (Sections 31-47) Provides detailed measures for rehabilitation and resettlement, including the development of new housing, infrastructure in resettlement areas, and additional compensation for multiple displacements. Deficiencies/Issues: Resource Intensity: The comprehensive nature of R&R measures demands significant financial and administrative resources. Implementation Delays: There is often a long delay between the award and actual rehabilitation, leading to prolonged hardship for affected families. Legal Complexity: The broad scope sometimes leads to disputes about whether specific entitlements have been met. In several high-profile projects, Entitlements like jobs and housing (Section 31) are rarely enforced. Only 20% of displaced families in the Delhi Metro received promised jobs. 3.3 Environmental Clearance Framework Environmental Impact Assessment (EIA) Notification, 2006 Process: Screening: Determines if EIA is required. Scoping: Identifies key environmental concerns (e.g., deforestation, groundwater depletion). Public Consultation: Affected communities must be heard. Appraisal: Expert committee reviews the EIA report. Challenges 2.1 Multi-Layered Approvals Issue: Metro projects require separate clearances from state and central bodies (Category A/B), causing delays. The Mumbai Metro Line 3 took 5+ years due to conflicts between state EPA and MoEFCC. The Kolkata East-West Metro Corridor faced delays after environmentalists challenged its impact on wetlands. 2.2 States often bypass EIA for smaller land parcels worsening deforestation. Example: Hyderabad Metro acquired fragmented plots to avoid full environmental reviews. 4. Inferences from Global Practices Establish Uniform Valuation Standards: Create detailed, nationally accepted guidelines for determining “similar land” values. Establish uniform valuation guidelines and involve independent valuation committees to reduce subjectivity. The USA and EU favor independent appraisals and clearly defined benchmarks. Simplify Compensation Formulas: Develop standard compensation formulas that cover market value and severance damages. Streamline compensation parameters by specifying standard formulas for common losses, while still allowing adjustments for unique local conditions. Streamlining Environmental Clearances 2.1 Create a Centralized Authority to unify approvals (like Singapore’s National Environment Agency). Single-Window System: The Thomson-East Coast MRT Tunnel secured approvals in 8 months via the National Environment Agency (NEA). In the USA (NEPA) and EU (EIA directives), environmental, social, and economic assessments are integrated into a unified planning process. Integrate environmental impact assessments with the SIA process under LARR Act guidelines to ensure a comprehensive, coordinated review, reducing duplication and delays. Standardize and Expedite the SIA Process: Implement a national SIA framework with fixed timelines and independent expert panels. Use digital platforms to publish and track SIA reports and public hearings for transparency. Train independent agencies (not project consultants) to conduct SIAs, as done in Kerala Metro’s community-led assessments. Strengthen that genuinely reflect community concerns. Public hearings should be conducted in local languages and at accessible locations. Germany’s Negotiation-First Model Stuttgart 21 Rail Tunnel: Offered 30% above market value as a "hardship allowance" to families near tunnels, reducing litigation. Empower specialized agencies to oversee resettlement, ensuring that rehabilitation measures are implemented without undue delay. Set up an independent tribunal or appellate authority with the power to review valuation and compensation disputes, modeled on practices in the USA and the EU. Encourage mediation and arbitration as preliminary steps to reduce litigation. CASE STUDY DMRC acquired land for the Chattarpur Metro Station and Electrical Relay Sub-Station under the Land Acquisition Act, 1894, depositing ₹3.28 crores as 80% of the compensation on June 16, 2009. After legal challenges, the final acquisition declaration was issued on October 9, 2009, and DMRC took possession, later paying the remaining ₹60.81 crores in 2011. However, landowners filed writ petitions in the Delhi High Court, seeking enhanced compensation under the LARR Act, 2013, which provides higher payouts and rehabilitation benefits. The High Court ruled in favor of the landowners, directing that compensation be recalculated under the LARR Act, 2013, despite the acquisition occurring under the 1894 Act. DMRC appealed this decision, arguing that compensation should be based on the law in force at the time of acquisition, not a later-enacted statute. This case highlights gaps in India’s land acquisition framework, where delays and legal transitions create financial disparities— landowners who challenged the acquisition received higher compensation, while those who settled earlier got lower payouts. Unlike global models (USA, UK, Australia, Singapore), where land value is fixed at the time of acquisition, India’s delays and legal uncertainties cause inconsistent compensation awards. To resolve such disparities, the LARR Act should introduce fixed valuation timelines, independent review panels, and pre-determined compensation frameworks to ensure fair and uniform payouts for all affected landowners.