Supreme Court allows NHPC to process bids for Teesta HE project

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January 5, 2021 1:30 AM

The Supreme Court on Monday allowed state-owned National Hydro power Corporation (NHPC) and its subsidiary Lanco Teesta Hydro Power to process the tender for completion of balance works for the Teesta-VI Hydro Electric Project on the Teesta river in Sikkim.

NHPC claimed that the Rs 5,748-crore project of “national importance” was being held up and it cannot process the fresh tender in the wake of a status quo order operating against it.

The Supreme Court on Monday allowed state-owned National Hydro power Corporation (NHPC) and its subsidiary Lanco Teesta Hydro Power to process the tender for completion of balance works for the Teesta-VI Hydro Electric Project on the Teesta river in Sikkim.

NHPC claimed that the Rs 5,748-crore project of “national importance” was being held up and it cannot process the fresh tender in the wake of a status quo order operating against it. The Sikkim High Court on December 11 in an interim order had asked it to maintain status quo with regard to construction of balance civil works package of the project. NHPC had acquired the debt-ridden Lanco Teesta HP, which was executing the 500 MW

Teesta VI HP project, in July 2019.

Lanco and NHPC had collectively challenged the HC’s Division Bench’s interim order on the grounds that it had the “effect of stalling and delaying the time-bound project of national importance”.

A Bench led by Chief Justice SA Bobde, while allowing the NHPC and Lanco to process the tender, also restrained them from finalising it without the HC’s permission. It also asked the single judge, which is hearing the main petition, to decide the case within a month on its own merits. “We understand this is the project of national importance but for them respondents) its of commercial importance. The solution is early decision,” the CJI told solicitor general Tushar Mehta.

Gammon Engineering and Contractors (GEPCL) had in March last year bagged the contract for execution of the balance civil works package. However, the contractor could not furnish the performance bank guarantee of over `62.42 crore even after getting a number of extentions till November 5, Lanco stated. While NHPC refused to give further extensions to GECPL, “who had been all along fooling the petitioners with lame excuses as it seemed they neither had the readiness nor the wiliness to furnish the Performance Bank Guarantee,” the PSU eventually annulled the Letter of Acceptance.

However, Gammon wrongly took advantage of the finance ministry’s November 12 decision that reduced performance security from existing 5-10% to 3% of the value of the contract for all existing contracts, according to the appeal.

“Although, the Letter of Acceptance stood annulled…., GECPL purposefully indulged into a unilateral communication with the petitioner and as such GECPL, taking advantage of the OM dated November 12, 2020,… thereby proposing and requesting for approval to submit performance bank guarantee of 3% of contract value being `37.45 crore for and on place of 5% of the contract value, which again cast a shadow on the readiness and wiliness of financial capability of GECPL to execute a contract of Rs 1,248.44 crore,” Lanco/NHPC told the SC.

While the LoA was annulled by NHPC, the latter also invited fresh tender on November 27 for completion of works, it said, adding that GECPL without challenging the fresh tendering process, moved the HC for declaring the letter of annulment and invocation of the bid security as arbitrary and unconstitutional, etc. The contractor also sought a direction to the Lanco/NHPC to accept the performance bank guarantee of Rs 37.45 crore.

While the single judge dismissed the GECPL’s stay application, the DB asked parties to maintain status quo with regard to Construction of Balance Civil Works Package.

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