Karnataka High Court imposes Rs 2-lakh cost on KSTDC

Highlights

• The High Court of Karnataka has noted ‘callousness’ and ‘come what may attitude’ on the part of some public functionaries in matters like payment of contractors bills.

• Justice Krishna S Dixit observed this while granting relief to a class-1 contractor and directed the department of tourism and Karnataka State Tourism Development Corporation (KSTDC) to pay a balance bill amount of Rs 34.85 lakh along with interest at 12%.

• “This is a fit case for levy of exemplary costs for the ill-treatment meted out to the scrupulous citizen who had done the work for the state entities. A message should loudly go to the quarters that be, that the courts would not tolerate indolence on the part of public bodies when interest of the citizen is put to peril,” the court said and imposed a cost of Rs 2 lakh on the corporation to be payable to the petitioner.

• The petitioner had taken up the contract to renovate a building belonging to KSTDC at Nandi Hills. The building was handed over after the work on April 4, 2017 and an inaugural function took place on April 10, that was attended by district incharge minister and MPs/MLAs.

• The contractor submitted a representation on February 8, 2018, reminding that his amount is not settled. He received a reply by the MD in April 2018 stating that work was not satisfactory and there were four defects.

• When the petitioner sent a legal notice, KSTDC’s response dated May 10, 2018, pointed out seven defects in the work and also warned the petitioner of deducting 10% of the amount if the said defects were not addressed in 10 days.

Resisting the petition, the KSTDC contended that there is an arbitration clause and therefore, the petitioner should be relegated to arbitration.

• The court said that there is a settled position of law that only a genuine dispute merits reference for arbitration and not ‘fictional disputes’.

• “It is not that the so called dispute squarely falls within the realm of private law, either; there is Karnataka Transparency in Public Procurements Act, 1999 and Rules promulgated thereunder. There are sufficient elements of public law. A contract to which the State is a party, does not create an island completely immune from judicial review under Article 226 & 227,” Justice Dixit said.

• The court has directed the authorities to file a compliance report to the registrar general of the High Court within six weeks and if delay is brooked, it would attract an additional interest of 1% per month.