Himachal High Court Cancels Allotment Of Brakel Project

Shimla: Turning down a state cabinet decision and terming it as ‘arbitrary, illegal and irrational’, the Himachal High Court today canceled allotment of the contentious 960 MW Jangi-Thopan-Powari project to Dutch company Brakel corporation and asked the government “to decide whether to act on the basis of the old notice inviting bids or to invite fresh bid” for it.

Reacting to the court order, chief secretary Asha Swaroop said, “The government would examine the matter and take a final view.”

In response to civil writ petition 2748 of 2008 filed by Reliance Infrastructure, against the government allotment order, the court stated “we allow the writ petition and quash the decision of the Council of Ministers dated 25th November, 2008 as being arbitrary, illegal and irrational.”

In its order the two judge bench consisting of Justice Deepak Gupta and Justice V.K.Ahuja, held that in view of the misrepresentation made by Brakel the allotment of the two projects Jangi Thopan and Thopan Powari of 480 MW each, which were later combined into one project was illegal and is bound to be cancelled.

The court directed that the State, “to take fresh decision as to whether it wants to re-advertise the said projects or it wants to act on the basis of the old tender within four weeks from today.”

It is for the state to decide this matter keeping in view the larger public interest i.e. to get the best revenue for the state and also to ensure that the project is executed at the earliest.

Dismissing respondent Brakel’s contention that huge investments had already been made on the project before signing of a pre-implementation agreement (PIA) and depositing of upfront premium the court held, “the respondents also submit that they were not bound to deposit the upfront premium till the signing of the PIA. If that be so, then how on the basis of the letter of allotment only the respondents made huge investment as claimed by them.”

The order further states, “all these amounts have been spent after the legal proceedings were initiated in court. These amounts have been spent by the respondents knowingly well that the legal proceedings are pending. Investment, if any, made has to be at their own risk and therefore, the respondents cannot claim any equity in their favour on this ground.

The court observed that “we have dealt with the various allegations and found that Brakel was guilty of suppression and misrepresentation of material facts.”

The allegations were put on record in a draft order by Ajay Mittal, which were taken cognizance by the High Court but overlooked by a committee of secretaries appointed by the government while deciding allotment of the project in favor of Brakel.

The order states, “We are constrained to observe that the Committee of Secretaries dealt with the manner in a very slipshod manner. Surprisingly, there is no mention of the draft order in the report of the Committee of Secretaries.”

In the draft order the Special Secretary (Power) had given number of instances supported by reasons to establish the fact that there was suppression of material facts by Brakel.

In fact, in the draft order, the Special Secretary had noted that Brakel was guilty of submitting forged and doctored documents, the court order recorded.

The Committee not only permitted Brakel but also representatives of Adani Power Corporation to appear before it. We fail to understand how the representatives of Adani Group werepermitted to appear before the Committee.

On change of consortium members, the court stated, “How and in what manner it (Adani Power) was introduced as a member of the consortium (to execute the project) has not been satisfactorily explained.”

Rs 173,43,40,000/- amount paid as upfront premium money as part of bid allotment term for the mega project was traced to Adani group.

A Company with no financial basis, as in the present case can bid for huge projects claiming to have the support of reputed banks and technical consultants.

Admittedly, Brakel Corporation took huge loans from Adani Power Corporation before depositing the upfront premium. In one letter Brakel has stated that this loan will be converted into equity participation.

In the bid documents quoted here-in-above equity was to be distributed as follows:-

Energy Infrastructure Overseas Ltd 10%, Standard Bank or its affiliate 45%,  SNC Lavalin International or its affiliate 30%,  Eco Securities 5% and Halcrow Consulting India Ltd. 10%

Thus Brakel NV had no equity participation as per its own document. Now, none of the original equity holders are members of the so called consortium, the order says.

As Editor, Ravinder Makhaik leads a team of media professionals at Hill Post. Spanning a career of over two decades in mass communication, as a Documentary Filmmaker, TV journalist, Print Media journalist and with Online & Social Media, he brings with him a vast experience. He lives in Shimla.

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