The company is claiming Rs 5.30 crore `loss of profit', following the cancellation of a project by the SMC. The civic body had awarded a Rs 26.32 crore-contract to the company for the construction of Ved Road Davoli bridge in the early 1990s. But later the contract was scrapped. The company claimed that it had purchased machinery and construction materials worth Rs 2.75 crore for the construction of the bridge and demanded compensation.

The commissioner has given in writing to the standing committee, which met on Wednesday, that the company's claim was ``unreasonable'' and amounted to blackmailing the corporation.

The civic chief has also suggested that retired judge justice Dheerubhai Desai's help could be sought to decide the quantum of compensation to be paid to the company.

While describing the company's claim that it had spent Rs 2.75 crore as unfair, Jagadeesan said he would constitute a team of three engineers who would study, verify the work done by the company and ascertain the expenditure incurred.

When contacted, Standing Committee Chairman Natu Soma Patel said the committee had discussed the issue, but was yet to take a final decision. ``We have invited Vijay Mistry to elicit his views'', the chairman said, adding a decision would be taken only afterwards.

According to an official report, the company has spent only Rs 70 lakh, Patel said, adding that the company's claim was unfair. The SMC, he said, could consider paying the company 15 per cent of the cost of the project.

The company had come in for sharp criticism after the Athwalines flyover allegedly developed cracks. Some members of the standing committee have asked Technical Advisor P C Shah to conduct an enquiry and submit a report.