Delhi HC Notice To Centre, J&K Govt On Ratle Hydro Power Project [Read Order]

When the Indian delegation is in Islamabad to have a discussion with Pakistan over the Indus Water Treaty, the Delhi High Court has sought response from the Central and Jammu and Kashmir governments’ on a plea filed by GVK Developmental Projects Pvt Ltd over Ratle hydroelectric power project on Chenab river in Kishtwar district.

The Rs 6,275-crore 850 MW hydroelectric power project has halted since July 2014 due to agitation by Drabshala villagers demanding employment of the locals. The project was to be completed by January 2019.

GVK developer, the successful bidder of the tender invited by Jammu and Kashmir State Power Development Corporation Ltd (JKSRDCL) and Government of Jammu and Kashmir (GoJK) in 2008, has moved the Delhi High Court against Power Finance Corporation Ltd (PFCL) for raising interest over the loan given to it, despite the fact that the project has been stopped due to public agitation.

According to its plea, the financial institution agreed to lend Rs 4,706 crore to the developer for the power project.

The plaint raised issues under the Indus Water Treaty, relating to land acquisition and land lease deed, law and order situation at the site and also issue for exemption from water usage charges and levy of entry tax, sales tax and other local taxes, etc.

Issuing notice to the Centre and J&K government, Justice RK Gauba sought their replies by April 27 and also stayed the demand notices issued by PFCL on various occasions.

Appearing for the developer, senior advocate ML Lahoty cited several reasons including the Pakistan government’s objections to the hydro power project and ‘force majeure’ for which the project work has been stopped and the lender cannot raise interest for no fault of the developer.

He also referred to the report of PFCL’s engineer, which stated that the work was progressing as per expected schedule after financial closure in September 2013.  However in July 2014, some villagers ransacked the office of the sub-contractor demanding employment.

As the security to the staff and office equipment was in danger, the plaintiffs were forced to stop the work at site until protection was ensured by the local administration.

‘Force majeure’ means any event or circumstance or combination of events and circumstances that wholly or partly prevents or unavoidably delays an affected party in the performance of its obligations under an agreement, but only if and to the extent that such events or circumstances are not within the reasonable control, directly or indirectly, of the affected party and could not have been avoided if the affected party had taken reasonable care or complied with prudent utility practices, as per the petition.

On August 16, 2012, the treaty clearance was accorded by the Ministry of Water Resources, Government of India, but so far as Pakistan is concerned, objections were raised asking for design changes in the project.

The project developer, however, said if the design changes were to be carried out, the construction cost would be increased by Rs 269 crore in addition to revenue loss of Rs 771.6 crore, apart from time overrun, as a result of which the project would be financially unviable.

Read the order here.