Bombay HC strikes down payment of ₹303 cr to firm for Balganga dam works

In a major reprieve for City and Industrial Development Corporation (CIDCO) and the Konkan Irrigation Development Corporation (KIDC), the Bombay high court on Tuesday

In a major reprieve for City and Industrial Development Corporation (CIDCO) and the Konkan Irrigation Development Corporation (KIDC), the Bombay high court on Tuesday struck down a decision directing them to pay a sum of Rs 303 crore to FA Enterprises towards unpaid bills for construction of Balganga dam in Raigad district.

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Justice RD Dhanuka struck down the arbitral award dated April 3, 2019, on the ground that it was patently illegal and legally unsustainable. The judge noted FA Enterprises could not prove most of its claims independently, but the majority members (three out of five) of the tribunal accepted the claims on the basis of communications issued by some KIDC officers, who are under the cloud of suspicion.

In January 2009, the government decided to construct Balganga dam at Niphad in Pen tehsil of Raigad district for catering drinking water requirements of some CIDCO areas and therefore CIDCO was to fund the project, initially estimated to cost Rs 353.89 crore.

However, five months later the work was allotted to FA Enterprises for Rs 495.45 crore and on June 10, 2011, the cost of the project was revised to Rs 1,220 crore. The dispute started the same year after CIDCO officers started disputing the project cost and appointed the body’s own experts to ascertain the cost.

FA Enterprises had then moved high court invoking the arbitration clause in its agreement with the authorities. Accordingly, the arbitral panel was formed, comprising one representative each of the state government, KIDC, the CIDCO and FA Enterprises. The presiding member was appointed by the high court.

The contractor had claimed an amount of Rs 536.56 crore, including Rs 186.89 crore towards a particular bill. Both KIDC and CIDCO had strenuously opposed the claim.

On April 3, 2019, three members of the tribunal passed a majority award directing the KIDC to pay to the claimant a sum of Rs 303 crore to the contractor firm.