Decided on March 20,2012

Suresh Prasad Tiwari And Others Appellant


Barin Ghosh, J. - (1.) IN this public interest litigation it is being contended that respondent No. 2, herein after referred to as THDC, entered into a contract with PCL -Intertech Lenhydro, a Consortium of M/s Lenhydro and PCL -Intertech, for execution of civil work of dam, spillway and power house of Koteshwar HEP, for a total sum of Rs. 334.55 crores. It has been contended that in addition to spending Rs. 334.51 crores, THDC has already spent a sum of Rs. 130 crores, and still continues to spend money for that work. It has been stated that in addition thereto, the contractor has obtained an Award which runs into Rs. 500 crores. It has been stated that a contract worth Rs. 334.51 crores has now become almost 9000 / 10000 crores and thereby public money has been wasted. On the direction of the court, the petitioners have deposited a sum of Rs. 50,000/ - with the Registrar General of this court, as security for cost of the present litigation. Parties have exchanged their affidavits as they intended to file. We have perused the copy of the Award. The contract was awarded on 31st August, 2002 and the same was to be completed by 31st May 2006. By 31st May 2006, the contract was not completed. Only about 25 per cent of the work was done. In respect thereof a sum of Rs. 78.99 crores was paid to the contractor. On 20th May 2007, a decision was taken by THDC, whereby and under, a Committee, comprising of a few officers of THDC, was entrusted the job of completing the remaining work. It was decided that materials required will be procured directly from the vendors and labour charges will be paid through the construction gang. It was decided that such payment would be on account of the contractor. It was also decided that the construction work would be done at the risk and cost of the contractor. On the basis thereof the work beyond 25 per cent of the work done by the contractor commenced. The work is now complete. For carrying out the work, THDC has spent the contract amount of Rs. 334.51 crores and, in addition thereto, has spent roughly about Rs. 135 crores. The contractor, in the meantime, invoked the arbitration agreement. It made certain claims before the arbitrators. Certain counter claims were also put forward by THDC. Two of the arbitrators have made an Award by allowing certain claims of the contractor, some of which are on account of purported enlargement of the scope of the contract, and, also by allowing certain counter claims of THDC. In terms thereof, it appears that after adjustment of the quantified amounts of claim with the quantified amounts of the counter claim allowed, THDC would be required to pay a sum of Rs. 15 crores to the contractor. In addition thereto, Claim No. 12 of the claimant has also been allowed by the arbitrators. By that, the said two arbitrators have allowed revision of rates of materials, labour etc., subsequent to 31st May, 2006 less 9.77 per cent of the claim. The liability of THDC on this count has not been quantified in the Award, nor the same has been placed in quantified figures before us in any of the pleadings. It is contended by the petitioners that claim on that account would be in excess of Rs. 400 crores. The learned counsel for THDC has submitted that the said claim of the contractor was not accepted by the third arbitrator at all. The learned counsel further submitted that there was and is no rational behind allowing the said claim. THDC accordingly, as advised, has already approached the appropriate court, seeking setting aside of the Award of the said two arbitrators. The learned counsel further submitted that at the time when the counter claim was put forward inasmuch as a sum of Rs. 33 crore and odd was spent by THDC over and above the contract amount, a counter claim to that extent was put forward and, subsequent thereto, further expenses were incurred on that account amounting to roughly Rs. 100 crores and, for that no claim has yet been put forward before the arbitrators.
(2.) FROM what has emerged from the facts narrated above, it appears to us, that after it was noticed by THDC that the contractor has failed to complete the work within the stipulated time, it decided to complete the work at the cost and expenses of the contractor. It accordingly, incurred such costs, which it could incur within the value of the work envisaged in the contract. In addition to that, it had incurred a cost of Rs. 133 crores, of which a claim for Rs. 33 crores has already been lodged in arbitration, the remaining has not yet been lodged. In addition to the claim for Rs. 33 crores, THDC claimed interest thereon. While two arbitrators have refused to accord such interest, they agreed to allow the claim of THDC to the tune of Rs. 28.06 crore out of Rs. 33.19 crores. The third arbitrator, according to THDC, has allowed the full claim put forward on that account. In addition to that THDC was successful in obtaining certain other of its claims established even before those two arbitrators and, obtained a total Award of Rs. 56 crores by way of counter claim. In the circumstances, the one and the only question that this court is required to go in, is whether the petitioners have been able to make out a prima facie case, that through machination, THDC has permitted public money to be spent in excess of what was required to be spent. As aforesaid, a contract awarded in 2002, which ought to have had been completed in 2006, could only be completed sometimes in 2011. As it appears in respect of the said contract, THDC incurred an additional expense of Rs. 133 crores. It put forward a claim of Rs. 33 crores before the arbitrators and, while two arbitrators accepted that THDC is entitled to Rs. 28.6 crores out of Rs. 33 crores, the third arbitrator agreed that THDC is entitled to the whole claim of Rs. 33 crores. As yet, THDC has not placed its claim for Rs. 100 crores before the arbitrators. On the other hand, two of the arbitrators have allowed the price escalation in favour of the contractor, which has not been acceded by the third arbitrator. This matter is before the court, inasmuch as, THDC has challenged the Award. In the circumstances, as of today it cannot be said that by any action of THDC or on the part of any of the employees of the THDC, any money has been spent in excess of what THDC was otherwise lawfully obliged to spend. We, accordingly, close the matter and at the same time, refund the sum of Rs. 50,000/ - to the petitioners.;

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