Shimla: The Himachal Pradesh High Court Monday ordered the attachment and potential auction of Himachal Bhawan, the state’s premier guesthouse in New Delhi, over unpaid dues in the Seli hydroelectric project case.
The court’s decision has highlighted lapses in the state administration’s handling of contractual obligations, leaving a major state asset hanging in the balance.
Located on Sikandra Road near Mandi House and built at the site of the former residence of Raja Sir Joginder Sen Bahadur, the last ruler of Mandi state, Himachal Bhawan has long served as a haven for Himachal Pradesh’s top dignitaries, including the governors and chief ministers during their visits to Delhi.
It now faces the possibility of being auctioned to recover Rs 64 crore owed to Moser Baer, the firm that had won the bid to build the Seli hydro project in 2009.
The case
The state government had awarded the Seli hydro project on the Chenab river in Lahaul-Spiti to Moser Baer via an international bidding process. However, delays in the approval of the Detailed Project Report (DPR) by the Central Electricity Authority (CEA), coupled with protests in the tribal region and infrastructural roadblocks, led the company to withdraw in 2017.
The state government not only quashed the project, but also ordered forfeiture of the upfront premium of Rs 64 crore paid by the company. The company challenged the decision in court, arguing that the forfeiture of the premium violated Article 226 of the Constitution.
In January 2023, the high court sided with Moser Baer, directing the state to refund the premium with 7 percent interest. Despite this, the state government failed to comply with the court’s orders to deposit the award amount, prompting the court to vacate its interim protection for the government earlier this year. This culminated in the attachment of Himachal Bhawan and the court permitting auction proceedings to recover the dues.
Mounting accountability
The high court has not only targeted state assets, but also demanded accountability from government officials. It has ordered a fact-finding inquiry to identify those responsible for the delay in depositing the award amount.
Principal secretary (multi-purpose projects & power) has been tasked with submitting a report by 6 December. A warning has been issued that errant officials may face personal liability for the interest accrued due to the delay.
Chief Secretary Prabodh Saxena has said, “We will study the judgment and proceed further.”
Advocate Puneet Bali, representing Moser Baer, had argued in court that the company had been forced to withdraw due to systemic delays and lack of approvals, making the forfeiture of the premium untenable. He pointed out that under the Electricity Act of 2003, projects require CEA concurrence before proceeding, which was not granted in this project.
A retired Indian Administrative Service officer, “This is an embarrassment for the state. The Rs 64 crore plus interest will ultimately be paid from public money. Accountability must be enforced.”
The matter has raised questions about the management of public projects and the implications of failure to honour judicial orders.
“It has exposed the administrative inefficiencies surrounding large-scale infrastructure projects, particularly in remote and ecologically sensitive areas like Lahaul and Spiti,” Narender Negi, a social activist said.
The timeline
28 February, 2009: Letter of Award (LoA) issued to Moser Baer for the Seli hydroelectric project.
20 July, 2009: Moser Baer paid the Rs 64 crore upfront premium via demand draft.
22 July, 2011: Pre-Implementation Agreement (PIA) signed between Moser Baer and Himachal Pradesh government, allowing the creation of a Special Purpose Vehicle (SPV) for project implementation.
12 December, 2011: Moser Baer submitted the first Detailed Project Report (DPR) to the Central Electricity Authority (CEA).
20 January, 2014: Respondent government directed Moser Baer to execute the Implementation Agreement (IA) within 30 days.
2014-2016: Multiple rounds of communication, with Moser Baer citing access difficulties, inadequate power supply and financial challenges.
14 April, 2016: Petitioner requested policy intervention to restore financial viability, citing changes in project economics.
5 September, 2016: Final notice issued by the government to execute the IA within two months.
4 November, 2016: The government conducted a hearing with the petitioner regarding project execution.
7 March, 2017: Updated DPR submitted by the petitioner after incorporating suggestions from CEA.
24 April, 2017: Border Roads Organisation (BRO) informed that the access road to the project site would be constructed by 2023.
14 August, 2017: Moser Baer sought withdrawal from the project and a refund of the upfront premium, citing techno-economic inviability.
23 September, 2017: Government rejected Moser Baer’s withdrawal request and quashed the award.
13 January, 2023: The high court ruled that the upfront premium should be refunded with interest.
15 July, 2024: Court vacated interim protection for the state due to non-compliance with its order to deposit the award amount.
18 November, 2024: High court ordered the attachment and auction of Himachal Bhawan to recover dues.
Political row
The matter has prompted sharp criticism from the Bharatiya Janata Party (BJP), which is in the Opposition in Himachal Pradesh.
Former chief minister and BJP leader Jairam Thakur told ThePrint, “I believe this is the first time in Himachal’s history that our very important and iconic properties are facing the risk of auction. Despite having an army of lawyers, the government has failed to protect the state’s interest. This judgment has vindicated our claim that this government is incompetent.”
BJP spokesperson Shehzad Poonawalla also took a jibe at the Congress-led government in the state. “This is the ‘khata-khat’ model of Congress. Wherever Congress party came to power, they brought loot, barbaadi (destruction) along with them,” he said.
“In Himachal Pradesh, the government cannot provide salaries of employees. The toilet tax has been imposed. They are busy investigating samosas and the situation is such that the Himachal Bhawan is now on the verge of getting sold to pay the dues of power companies.”
Chief Minister Sukhvinder Singh Sukhu, however, told media persons in Shimla, “I have not read the High Court’s order yet. However, the upfront premium is governed by a policy… In 2006, when the energy policy was formed, I was one of the architects of this policy during the tenure of the then-power minister Vidya Stokes. According to this policy, whether a power project is implemented or not, in the case of the upfront payment, the decisions are made through arbitration.”
He added that there have been concerning arbitration rulings lately, which show legal neglect. “The government has appealed against this in the high court. The government was supposed to deposit Rs 64 crore as part of the arbitration settlement. We will see what has to be done.”
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