Shillong, Oct 20:The state government has filed a case against contractors of private companies and goverment officials under the Public Works Department (PWD) for alleged multi-crore scam in the construction of Shillong- Nongstoin-Rongjeng- Tura road at the cost of Rs 2366.77 crore.
The case was filed by the Chief Engineer (National Highway) PWD (Roads) on September 10 this year with Sadar Police station here as directed by the state government.
The period of probe sought is from September 20, 2010 to September 10, 2024.
The place of occurrence is the office of Chief Engineer (National Highway), PWD (Roads) Shillong.
Details of known suspects/unknown suspects, if any, with full particulars as per the FIR
(1) B. Seenaiah & Company Ltd., (Projects) Ltd. (BSCPL), having registered office at 6-2-913/914, Progressive Towers, 5th Floor, Khairatabad, Hyderabad-500004 through its Managing Director Bollineni Seenaiah,
(2) C&C Construction Ltd., having registered office at Plot No. 70, Sector-32, Gurgaon-122001 (Haryana) through its Managing Director, Charanbir Singh Sethi
(3) Bollineni Seenaiah, Managing Director of BSCPL
(4) Charanbir Singh Sethi, Managing Director of C&C Ltd.
(5) M/s. BSC C&C joint venture through its authorised signatory D. Srinivas Rao, Deputy General Manager (contracts) having office at Plot No. 30, Institutional Area-Sector-32, Gurugram, Haryana-122001
(6) MR Sangma, including all the previous Chief Engineers, from the date of contract of Public Works Department, National Highway
(7) The then Executive Engineer, (NH) Public Works Department,
(8) Dharamukkala Srinivasa Rao, son of Late. D.Suryanarayana, working with BSC C&C JV, situated at BSCPIL – Plot No. 30, Institutional Area-Sector 32, Gurugram, Haryana.
(9) And other unknown officials and employees/persons from government and private sectors.
The case was registered under section 120B, 409, 420, 465, 468, 471, 477(a) of IPC and under Section 7, 8, 9, 13 (1) (c), (d) and (e) read with section 13(2) of the Prevention & Corruption Act, 1988.
According to the complaint, the Chief Engineer, Public Works Department, National Highway said he has been authorised by the government to seek registration of the First Information Report (FIR) against the contractors/companies and their representatives and also the engineers/officials of PWD (NH wing).
The FIR said the facts which have come to his notice during ongoing arbitration proceedings conducted before the Arbitral Tribunal comprising Justice (Retd) VB Gupta, Former Judge, Delhi High Court, presiding Arbitrator KK Jalan, IAS (Retd.) co-arbitrator and Ravindra Kumar Srivasatava, IAS (Retd.) co-arbitrator revealed that by various acts and omissions, several persons and also persons unknown have committed criminal offenses. The arbitration proceedings had been initiated at the behest of M/s. BSC C&C JV having address at 6- 2-913/914, 5th Floor, Progressive Towers, Khairatabad, Hyderabad-500004.
It has been found during the course of arbitration that several criminal acts and omissions have been committed by the earlier named persons and also unknown persons and officials in conspiracy with each other to defraud the public exchequer of huge amount.
The details of the criminal offences committed by them are below.
In 2010, Ministry of Road Transport and Highways (MoRTH) invited notice inviting tender for 2- laning of the Shillong-Nongstoin section of NH 44 and Nongstoin -Rongjeng-Tura road in Meghalaya. The tender was issued under the Special Road Development Programme-NE (SARDP NE) of the Central Government.
The PWD (NH) Department of Meghalaya was implementing the project on behalf of MoRTH.
M/s. BSC C&C JV was awarded the letter of acceptance in respect of the project for a contract of Rs 1303,83,45,181 (around Rs 1303.83 crore).
Chief Engineer, PWD, Highway Meghalaya on behalf of the state goverment entered into agreement with the contractor M/s. BSC C&C as joint venture on October 21, 2011 for Rs 1303,83,45,181.
The cost of the contract price was revised from time to time and it was enhanced to Rs 2366.77 crore and the contract was ultimately concluded on December 15, 2017 as against the original date of completion which was on March 6, 2014.
The contractor vide letter dated 23.04.2015 sought appointment of Dispute Review Expert (Board)-I in terms of Clause 24 of General Conditions of Contract (GCC) and made initial claim amounting to Rs. 41,89,30,688 in respect of payment due on account of additional bitumen, labour cess, interest on delayed payment and also cost of litigation.
M.Phanbuh, Chief Engineer (NH), PWD (Roads) vide letter dated 16.05.2016 to Dispute Resolution Board (DRB) denied each and every claim including claim of interest and delayed payment. It was categorically stated that the contractor will be entitled to payment only in terms of contract.
The Dispute Resolution Board (DRB)-I made recommendations on 25.09.2016 for payment of Rs.5,69,00,928 for use on account of bitumen, Rs 17,75,39,464 for payment of labour cess and finally Rs 58,91,16,450 towards the interest on delayed payment on monthly compounding basis.
The state government through Chief Engineer had objected to the claims vide letter dated 16.05.2016 but the then Chief Engineer MR Sangma took the u-turn in the letter dated 12.09.2016 addressed to the members of DRB-I stating therein that the chief engineer has jointly verified statement with regard to disputes regarding non-payment of cost of extra bitumen used in DBM and BC (Item Nos. 4.04, 4.05 and 4.06 of the BOQ) and also regarding non-reimbursement of labour cess deducted from the contractors’ IPC besides claim of interest on delayed payment.
However, there was no occasion for the then Chief Engineer (NH) PWD Roads to jointly verify the claims which are being contested on merit or admit the claim of the contractor BSC C&CJV.
The DRB-I reviewed its recommendation dated 19.02.2017 and further awarded interest on claim of labour cess and use of extra bitumen.
The FIR said that it was also surprising and shocking to note that MR Sangma the then Chief Engineer, (NH) PWD (Roads) without any approval of MoRTH again addressed a letter dated 19.05.2017 to the DRB-I stating that the claim of the contractor has been incorporated in the revised cost estimate and the same is in the process and will be submitted in due course. The DRB-I after making the recommendation was also not in existence and the correspondence appears to have been made by the then Chief Engineer in order to provide illegal benefit to the contractor.
The Ministry of Road Transport & Highways which is main employer had not taken any decision on the recommendation of DRB-I and in absence of the decision the then Chief Engineer could not have written to the Chairman of DRB-I that payment will be made in respect of the claim. The admission of the Chief Engineer in the letters i.e. 12.09.2016 and 19.05.2017 have been treated as admission in the subsequent arbitration proceedings.
Executive Engineer, Pradeep Kumar Lal for Regional Office, Guwahati of Ministry of Road Transport & Highways in his letter dated 03.12.2017 had mentioned in paragraph 3.3 that the Chief Engineer, (NH) has furnished the compliance on 21.02.2017 and has agreed to the recommendation of DRB and has also further incorporated fourth revised cost estimate incorporating two recommendations of DRB-I. Rs 75.19 crore was proposed by the then Chief Engineer towards the payment of interest on delayed payment. The acceptance of recommendation by the then Chief Engineer was completely contrary to the stand of the Chief Engineer, PWD (NH) Roads, Meghalaya dated 16.05.2016. The contradictory stand of the Chief Engineer, PWD (NH) Roads has cost huge loss to the public exchequer.
Director General of Road Development of MoRTH held a meeting on 06.04.2018 and decided that the contractor is not entitled to interest on delayed payment and further directed the Chief Engineer, PWD (NH) Roads, Meghalaya to appeal against the DRB in appropriate court of law.
The contractor invoked the dispute resolution mechanism for other claims also and DRB-II was constituted for claims in respect of delay, disruption and prolongation in completion of the contract. The DRB-II recommended for payment of Rs. 96,52,57,513 on account of site overheads and head office overheads of Rs 59,20,31,209 towards additional expenses incurred on account of deployment of plant and equipment at site during the extended period, Rs. 65,10,06,545 towards loss of profit earning capacity. The DRB-II further awarded simple interest @12% p.a.
The contractor invoked arbitration proceedings in respect of claims arising out of DRB-I and DRB-II before the Arbitrator and claim of Rs. 117,97,18,006 was made in respect of recommendation of DRB-I i.e. interest on delayed payment.
The arbitral tribunal noticed in Para 78 and 79 of the award dated 27.07.2021 that the then Chief Engineer in his letter dated 19.05.2017 admitted the claim of the contractor and therefore the state government is liable to pay at least Rs 75 crore and awarded the amount in favour of the contractor.
The award of the Arbitrator in respect of claim 1 was challenged before the Commercial Court and the decision of the Commercial Court dismissing the challenge of the government was also further challenged under section 37 of the Arbitration and Conciliation Act, 1996 before the High Court
The Division Bench in the orfe order dated 19.06.2023 held that the decision of the DRB-I was not challenged and also made the observation that there is a collusion between the contractor and the goverment officials. The Special Leave Petition against the judgment and order was also dismissed. The observations of the High Court require to be taken seriously and necessary action should be taken against the contractor and erring officials, the FIR said.
Furthermore, there were other instances which had come to light showing that there has been collusion between the contractor and the erring officials of PWD (NH) Roads in causing loss to the public exchequer.
Liquor bottles and gift items
It was also come by way of evidence that wine bottles/costly gift items have been given by way of bribe by the contractor in respect of the project to the officials/engineers and those expenses have been included in claim before arbitration for payment of the same by the state government.
There are more such glaring examples in the documents provided by the contractor in his claim before arbitral proceedings especially under the head of “Business Promotion Account”. Some of the instances noticed in the account are enumerated below:
1. Cash paid for purchase of gift items for goverment officials
2. Cash paid for tour from Shillong to Guwahati to- fro charges (for IOCL officials) and sweets- for seeking extension of time in clearing dues
3. Cash paid for gift articles purchased and given to local administration (watch from HELOIS-Titan Company);
4. Cash paid at Hotel Polo Towers for celebration of Engineers Day of PWD Department Staff as per instruction of Higher Management;
5. Cash paid towards purchase of whisky bottles (Black Dog) 3 nos@1600 for officials;
6. Cash paid towards amount at Bamboo Hut Restaurant for farewell party with PWD Staff
7. Cash paid towards expenses at City Hut Family Dhaba for goverment officials.
8. Cash paid for purchase of whisky bottles for officials.
9. Expenditure in favour of Highland Studio against purchase of gift (Samsung Tab) items for officials during the Christmas festival.
10. Expenditure incurred in favour of M.L Tech against purchase of gift items (Samsung Galaxy Core 2 Prime) for officials for the Christmas festival.
11. Cash paid towards purchase of Titan watch 3 Nos from Meghatraders for officials;
12. Cash paid towards purchase of whisky bottles for goverment officials.
13. Expenditure incurred for purchase of gift items for event of New Year 2015.
14. Cash paid for purchase of sweets for IOCL officials.
15. Cheque of Rs. 5,00,000 paid to NONGKHNUM WE CARE SOCIETY as per instruction of Higher Management;
16. Cash paid towards purchase of gift items for officials for local administration purpose.
17. Cash paid for purchase of Samsung Mobile Phone 1 for official purpose.
These examples clearly show that officials/engineers in collusion with the contractors have not only cheated, defrauded, indulged in fabrication of record and adopted corrupt means to cause huge loss to the public exchequer, the FIR said.
Punjab expenditure in Meghalaya
On record of the arbitration in cross- examination on 14.07.2022 (Q.83), the erring engineers of PWD had verified the claims of the contractor in respect of expenditure incurred in other projects as part of the project. For example, the expenditure for the Road Project in Punjab was included as expenditure for the instant project and the same has been verified by the Engineer of PWD.
There could be many more glaring examples indicating corruption and cheating by the contractor and erring engineers of the PWD, NH Roads in execution of the project. It is because of the act and omission on the part of erring engineers and the contractor, the loss has been caused to the public exchequer to the tune of Rs 91 crore and it is likely to be more if timely action is not initiated. The entire conspiracy is required to be unearthed by systemic, detailed and thorough police investigation, the complaint said.
When contacted, an official source said investigation was on into the matter.
Looking at the gravity of the issue, the police may transfer the case to the CID or any other high level team.
