Three trade unions from Bharat Heavy Electricals Limited (BHEL) have jointly filed a public interest litigation petition in the Madras High Court insisting upon a Central Bureau of Investigation (CBI) probe into the Tamil Nadu Generation and Distribution Corporation (Tangedco) having awarded a contract for setting up a 660-MW thermal power plant at Ennore at an outlay of ₹4,442.75 crore to BGR Energy Systems Ltd., a private entity.
Acting Chief Justice (ACJ) T. Raja and Justice D. Bharatha Chakravarthy heard arguments advanced by the petitioners’ counsel as well as Advocate General R. Shunmugasundaram representing the State government and Senior Counsel P.S. Raman representing Tangedco chairman on Thursday and adjourned the matter to Tuesday for the litigants to produce judgments in support of their contention that a PIL could be filed in contractual matters too.
The judges primarily questioned the locus standi of the labour unions when it was settled law that only the aggrieved party could approach the court in contractual matters. They also questioned the need for a CBI probe when the board of directors of Tangedco had “in an open manner” decided to revive the cancelled contract. The Bench further pointed out that the petitioner unions had not made BGR Energy, a party to the case.
During arguments, the ACJ said if the court began to entertain such cases, then every other trade union would approach it and stall the operations of private and public sector undertakings. After the completion of arguments on all sides, when the judges began to dictate their orders on the PIL petition, the petitioners’ counsel intervened and obtained a short accommodation to produce some Supreme Court judgments in the trade unions’ favour.
BHEL Mazdoor Sangam, BAP Mazdoor Sangam and BHEL Piping Mazdoor Sangam had filed a common affidavit stating that a detailed project report (DPR) for the 660-MW thermal power plant was prepared and approved in May 2013, and the tender was initially awarded to Gurgaon-based Lanco Infra Tech in 2014. The project ought to have been completed by January 2018 but there were delays, and hence, the contract was terminated in April 2018.
Only 18% of the work had been completed at the time of termination, and hence, Tangedco called for tenders to carry out the remainder. The price bids were opened on February 2, 2019, and it was found that BGR Energy, had quoted ₹4,465.08 crore while BHEL had quoted ₹4,957.11 crore. Tangedco held negotiations with BGR Energy, and further reduced the quote by ₹22.33 crore and finalised it at ₹4,442.75 crore.
A Letter of Intent (LoI) was issued to BGR Energy Ltd., on December 12, 2019, and it was asked to furnish Security Deposit-cum-Performance Bank Guarantee (SDCPG), for 10% of the value of the entire contract, within 30 days. However, the private company did not furnish the SDCPG for ₹439.27 crore within the stipulated time, the litigants said and claimed that thereafter the contract should have been given either to BHEL or to a new bidder.
However, Tangedco continued to grant further time to BGR Energy for furnishing the bank guarantee and ultimately cancelled the LoI on April 23, 2021. Immediately, the company filed a writ petition in the High Court challenging the cancellation. Even as the case was pending, there was a change of regime in the State pursuant to the Assembly election held in April 2021 and Chief Minister M.K. Stalin chaired a review meeting of Energy Department in August 11, 2021.
In the meeting, it was decided to revive the project based on the recommendations of a high level committee constituted by Tangedco and accordingly the board meeting of the latter on October 29, 2021 decided to reinstate the LoI issued to BGR Energy without any escalation of cost. Accordingly, the LoI was reinstated on March 3, 2022. In the meantime, BGR Energy withdrew its writ petition from the High Court on February 7, 2022.
Emphasising upon the dates and events, the petitioner unions alleged collusion and foul play between Tangedco chairman and BGR Energy. However, the A-G denied the allegations in toto and said the delay in reinstating the LoI was due to the writ petition pending in the court for nearly a year. Mr. Raman said the fact that the LoI was reinstated without any escalation in cost by itself would go to show that there was no wrongdoing whatsoever.
He also argued that courts could order CBI probe only if there were prima facie materials to suspect foul play and not on the basis of affidavits filed by litigants whose locus standi itself was questionable.
