Shimla, October 7
In a major setback to the state government, the Himachal Pradesh High Court today quashed the decision of the state Cabinet to allot the twin Jangi Thopan and Thopan Powari hydroelectric projects to Netherlands-based Brakel Corporation on the grounds that the company played a fraud upon the government by producing the erased documents.

The court also burdened the Brakel Corporation and its subsidiary, Kinnaur Power Corporation, with a Rs 1 lakh cost. It directed the state government to take a fresh decision regarding allotment of the projects as to whether it wanted to invite fresh bids or act on the earlier tenders.

Accepting the plea of the Reliance Infrastructure, which had challenged the decision on the grounds that the Brakel Corporation had misled the government regarding its financial and technical competence to bag the mega project, the court in a 65-page order observed that the company was formed only to hoodwink the state.

A division Bench comprising Justice Deepak Gupta and Justice Vinod Kumar Ahuja held that the government had wrongly relaxed the basic conditions of bidder’s strong financial and technical base with adequate free “investible” reserves and surplus and requisite technical capability necessary for development of the projects. The court observed that the company had set up false excuses for depositing upfront premium and none of its member of consortium had submitted its commitment for the projects.

The bid document was purchased in December 2005, whereas the Brakel INV was registered in February 2006. The court, after perusing the record, found that the registration certificate was forged and the dates of registration certificate were erased. The court found that discreet inquiry of the government even found that the Standard Bank had even not committed for financial arrangement with the Brakel INV company.

Further, none of the companies had authorised any person to sign the joint venture agreement on their behalf and as such the Brakel INV had no right to bid for a hydroelectric project. The court specifically held that Brakel had acted fraudulently and hence the contract was set aside.

In its petition, Reliance Infrastructure, one of the bidders, had challenged the decision of the Cabinet not to cancel the allotment of the two projects despite infirmities in the technical bid.

The issue had been hanging fire since January 2008, when the BJP government slapped a show-cause notice for cancellation of the Jhangi-Thopan and Thopan-Powari projects. Subsequently, the government decided to drop the notice and also accepted the upfront premium of Rs 173 crore along with interest of Rs 20 crore deposited by the company. However, the government served a second notice on the company when some new facts had come to the light.