Excelsior Correspondent
JAMMU, June 28: In a development which will pave the way for Government to select new agency for construction of 850 Mega Watts Ratle Hydroelectric Project, High Court has dismissed the petition of Hyderabad-based company challenging the notice for termination of contract issued by the Government.
In the petition, it was submitted that pursuant to the competitive bidding process conducted by the Jammu and Kashmir State Power Development Corporation, the GVK Development Projects Private Limited (GVKDPL) was selected as the successful bidder to Build, Own, Operate and Transfer (BOOT) 850 MW Hydroelectric Power Project on the Chenab River near village Drabshalla in Kishtwar district.
As certain issues, which cropped up at latter stage between project executing agency and JKSPDC could not be resolved, the appellant vide Letter No. GVK/RHEP/D(PD)/215/31 dated 01.12.2015 finally expressed inability to execute the project enumerating therein the factors, which were responsible for their inability in this behalf.
As a result of this, a major hydroelectric project of enormous importance for economy of the State and welfare of the public at large could not virtually take off and this compelled the Government to issue notice for termination of contract. This notice was challenged by GVK in the High Court on various grounds.
After hearing counsels for both the sides, Justice Janak Raj Kotwal observed, “a substantial issue arises as to whether issuance of the Termination Notice dated 09.02.2017 by the respondent after receiving the lender’s letter dated 26.12.2016 whereby the lender had notified their intention to substitute the seller, was justified on the anvil of the various provisions of the PPA in particular Articles 14.3.4 and 14.3.5 and Schedule 15”.
“This issue will have to be determined by the arbitrators, if appointed. The plea of the respondents that Clause 4(a) of Schedule 15 would apply during operation of the project and not at the construction stage can also be raised for consideration of the Arbitrators. For the purpose of the application under Section 9 of the Act, it can, however, be said that the appellant (seller) has succeeded in making out a prima facie case in regard to the legality of the Termination Notice for the same having been issued without allowing the lender six months’ time to complete the substitution process even after exercise of option in this behalf by the lender”, High Court observed.
Justice Kotwal further observed, “the other important questions would be whether the same makes out a case for ordering any interim measure and/or whether the balance of convenience lies in favour of the appellant and irreparable loss would be caused to them in case some interim measures are not ordered”, adding “in this context, it is noticed that not much after taking over the project, the appellant had been giving indication of lack of will on their part to perform their contractual obligation. It is common ground of both the sides that the appellant stopped the work in July 2014”.
“As per the record available on the file, the appellant seems to have raised some issues coming in the way of implementation of the work vide their letter dated 12.11.2014 to the respondent followed by subsequent letters. All these letters were responded to by the respondent and every effort seems to have been made to resolve the issues”, High Court said, adding “having regard to the stage at which the appellant expressed their inability to execute the work and having regard to the nature of the factors said to be responsible for such inability, the appellants cannot claim balance of convenience in their favour to seek stay of the Termination Notice”, Justice Kotwal said.
“No irreparable loss would be caused to the appellant by not staying the Termination Notice because in any case the appellant-company is not interested in executing the work and had already expressed their inability in this regard”, High Court said, adding “balance of convenience does not tilt in favour of the appellant also for the reason that there is strong prima facie case of non-performance of contract by the appellant and they can well be compensated in money in case they establish a case of illegal termination of the contract at the appropriate stage in future”.
“The transfer of the assets of the company cannot be stayed also because such a course will create hurdle in taking necessary steps by the respondents towards execution of the work. The appellant can well be compensated for taking over of their assets by the respondents, if situation so warrants in future, and for that purpose a proper inventory of the assets shall be prepared and maintained by the appellants”, Justice Kotwal said.
With these observations, State High Court dismissed the petition and vacated interim order.
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