Concessionary Agreements, often formed in the engagement between a government authority and a private entity, are on the rise in India, especially as the Government has favourably explored the idea of a public partnership model in the past years. As of 6th December 2019, the Government reports a total of 1825 projects amounting to a little more than Rs. 20 lakh crores in developing public utilities and infrastructure. Considering the widespread implications of such an arrangement, the agreement between the government and the private party - the concessionaire - holds profound significance as it details the rights and obligations between the parties, essentially forming the constitution on which this contractual relationship exists.
The concessionaire is tasked with a multitude of compliances for developing and implementing the operation and the concession agreement forms the policy and regulatory framework for implementation for the project.
Here, the allocation of obligations between the parties, calculation of risks and returns, estimation of transactional costs and finally, the termination of the agreement is detailed with specific precision, so as to avoid any ambiguity. Failure to abide by the agreement can result in penalties, delay in payments and legal disputes that end up in laborious and time-consuming arbitration.
In introducing the new labour codes, the Government has attempted to cover major labour aspects such as wages, social security, provident fund, safety and welfare and working conditions within 480 sections; a stark difference from the 1228 sections that were earlier distributed amongst 29 odd laws.
It is of utmost importance that this agreement be adequately registered, interpreted and followed; all under the guidance of seasoned subject matter experts.