Thiruvananthapuram: The Kerala government has initiated contractual legal proceedings against TECOM Group after talks for an amicable takeover of the Kochi Smart City project collapsed. A notice has been issued to the company, citing breach of contract due to lapses in project implementation.

If TECOM’s response is found unsatisfactory, the government may cancel the lease agreement and acquire the company’s entire shareholding in the project. The valuation of the shares will be based on the value of the allotted land, assessed at ₹91.58 crore. Once the takeover is completed, TECOM will have no claim over any Smart City assets, while the government can continue the project independently.

Indications suggest the government intends to press TECOM toward a settlement by exploring all available options. The decision to take over the project was taken in December 2024, citing prolonged delays.

Clause 7 of the contract specifies the procedures to be followed in the event of a breach, empowering either party to act depending on who is at fault. The current notice has been issued under Clause 7.2.2(b), citing TECOM’s failure to meet key obligations, including the construction of 88 lakh sq ft of built-up space and the creation of 90,000 jobs.

The government had initially planned a mutually agreed exit strategy: appointing a common valuer, reimbursing TECOM’s investment, and then completing the takeover. According to the action plan, the process was to be finished by August 31 last year. However, the arrangement collapsed after TECOM objected to certain proposals and approached the Union government.

TECOM has sought the Centre’s intervention, arguing that its investment should be governed by provisions of the India–UAE bilateral trade agreement. Kerala, however, maintains that the terms of the Smart City agreement — not the trade pact — apply. These conflicting positions have triggered the current dispute. The state government has clarified that the delay will not affect ongoing operations or future investments and says all legal options are being explored to ensure a smooth takeover while protecting the state’s interests.

Talks today
Under the contract, any dispute must be heard by an arbitration tribunal based in Kochi. TECOM, however, contends that under the India–UAE agreement, the tribunal should be mutually acceptable to both countries. In an effort to resolve the issue, a meeting will be held today in the presence of a Union Secretary, with the Chief Secretary, IT Secretary, and TECOM representatives participating.