Himachal Pradesh High Court Orders Attachment of Himachal Bhawan in Rs 150 Crore Dispute with Power Firm

Keywords ; Himachal Bhawan, Himachal Pradesh High Court, power dispute, Seli Hydropower, attachment order, Chenab project, Rs 150 crore, arbitration ruling, government lapse, Mandi House.

High Court Orders Attachment of Himachal Bhawan for Rs 150 Crore Recovery

The Himachal Pradesh High Court has ordered the attachment of Himachal Bhawan in Delhi’s Mandi House area for the recovery of Rs 150 crore owed by the state government to Seli Hydropower Electric Company. The decision, delivered on November 18, 2024, by Justice Ajay Mohan Goel, allows the company to take steps toward auctioning the property if the government fails to clear the dues.

Background of the Case:

The dispute concerns the 340 MW Seli Hydropower Electric Project on the Chenab river in Lahaul & Spiti district, awarded in 2009 to Seli Hydropower Electric Company/Moser Baer. After the company paid an upfront premium of Rs 64 crore, the project failed to materialize due to technical and financial challenges.

The Himachal Pradesh government later cancelled the Letter of Allotment (LOA) and forfeited the premium, prompting the company to seek arbitration. The arbitrator ruled in favor of the company, directing the government to return the upfront premium with 7% annual interest.

Legal Developments:

The government’s non-compliance with the arbitration award led the company to file a petition under Article 226 of the Constitution in the High Court.

The Court upheld the arbitrator’s ruling on January 13, 2023, observing that the project had become technically and financially unviable and that the company’s withdrawal was justified. The government was instructed to deposit the premium and interest with the court registry.

Due to delays, the amount accrued to Rs 150 crore, including interest from the date of filing the petition.

Court’s Ruling and Directions:

The Court’s attachment order of Himachal Bhawan marks a significant embarrassment for the state government. Located in a prime area of Delhi, Himachal Bhawan may now face auction proceedings unless the dues are paid promptly.

Additionally, the Court directed the Principal Secretary (Power) to initiate a fact-finding inquiry to identify the officials responsible for the lapse. A report on this inquiry is to be submitted within 15 days, with the next hearing scheduled for December 6, 2024.

Implications of the Order:

This ruling highlights the importance of government compliance with arbitration decisions and timely resolution of disputes. The attachment of a prominent government property underscores the serious repercussions of administrative lapses in managing critical infrastructure projects.

The case also raises questions about governance in public-private partnerships, particularly in high-stakes energy projects, and calls for accountability among officials involved in such decisions.

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