Official circles in Azad Jammu and Kashmir (AJK) are shocked at the “palpable leanings” of the Earthquake Reconstruction and Rehabilitation Authority (Erra) towards a contractor, who has been made an additional payment of Rs 62.8 million without completion of the due process of law.
Lately, AJK’s State Earthquake Reconstruction and Rehabilitation Agency (Serra) has also asked Erra to recover the “unlawfully released” public money from the contractor till the final judgment by the relevant court.
According to the documentary evidence and background interviews, a Rs 344.225 million contract envisaging construction of 10 basic health units, including 28 residential units, in district Poonch was awarded to M/S Shoukat Khan & Co under the ‘Earthquake Emergency Assistance Project’ (Eeap) in July 2008.
It may be recalled that the Asian Development Bank (ADB), European Union, DFID, AusAid and Finland had sanctioned a loan-cum-grant of around Rs 18 billion for rehabilitation of health, power, education and communications sectors in AJK’s earthquake-affected areas in 2006. The execution of Eeap began in 2008 and was financially closed in June 2011. However, physical closing is under process.
On completion of contract, contractor Shoukat Khan submitted 18 claims of (additional payment of) Rs 303.034 million, which were rejected by the concerned consultant - M/S EA Consulting (Pvt) Ltd.
After objection and on request by the contractor, Eeap chief engineer got an adjudicator appointed from the Pakistan Engineering Council (PEC) for the settlement of dispute.
The adjudicator gave his decision in July 2013, accepting one claim worth Rs 27 million. Regarding another claim worth Rs 43 million, he said it could be paid if the consultant verified it. All other claims, amounting Rs 233 million, were rejected by the adjudicator.
However, Eeap chief engineer again approached the PEC against the adjudicator’s decision for appointment of an arbitrator.
In the meanwhile, in September 2013, Erra set up a committee at its headquarters to “amicably” resolve the issue “on the request of the contractor.” Interestingly, there is no clause for amicable settlement in the original contract agreement. However, on being asked by this scribe, a spokesman for Erra maintained that the committee was formed under clause 67.2 of “International Federation of Consulting Engineers (fidic) in line with the decision of Erra’s Project Steering Committee.
What raised eyebrows in Muzaffarabad was the fact that Eeap was not given representation in the said committee, notwithstanding the fact that the contract agreement was signed by Eeap chief engineer on behalf of the AJK health department, and Erra did not figure anywhere in it.
The Erra spokesman asserted that chief engineer Eeap was included in the committee later, “on his request.”
The committee came up with a decision that the contractor should be given Rs 70.169 million. However, when Eeap chief engineer was asked in January 2014 to make the said payment, the then Secretary Serra, Sardar Rahim Khan, refused to implement the “arbitrary direction” in favour of the contractor in a strong-worded note on the relevant file.
In October 2014, the PEC appointed an arbitrator who asked both the parties to give their claims and replies, so that he could initiate proper hearing from January 15.
Around same time, Erra established an ‘Eeap Closure Cell’ at its headquarters, deciding, among other things, that the Cell (and not the Muzaffarabad based chief engineer Eeap) would take up all disputes pending with the courts regarding Eeap with assistance from Erra’s legal wing.
On February 22, the arbitrator announced an award of Rs 62.8 million in favour of the contractor, in a decision which Serra alleges was a “clear-cut legal misconduct” for having been given on the basis of photocopies (of documents), without giving opportunity to Eeap for arguments and testimonies.
Under the Arbitrator Act, 1940, an award by an arbitrator attains finality only after a ruling of the court. The court enjoys the authority to either nullify or allow the award, after hearing the parties concerned.
However, while the contractor applied for the rule of the court before the additional district and session judge Muzaffarabad on March 4, Erra made him payment of Rs 62.8 million on March 13, without completion of court proceedings.
Interestingly, the contractor arrayed Eeap Closure Cell in his application. However, on May 22, the court itself served a notice on Muzaffarabad based chief engineer Eeap to file his comments for being "real defendants."
Official sources say that Erra’s haste and its visible tilt towards the contractor had literally baffled them.
“I wonder why Erra has acted in a rushed manner to make payment to the contractor, without exhausting all available channels to reject the claims of contractor,” remarked one senior official at the AJK Law Department.
Rejecting the allegation that Erra acted in a rushed manner, spokesman Bilal Thaheem said in his written reply that Erra had found the award in the best interest of department and there was no legal misconduct observed in it from any angle.
However, to the question that why payment was made in less than three weeks after the announcement of award and without obtaining the rule of the court, he replied that Erra owed Rs 81.22 million to the contractor in connection with two other projects.
“Even if the decision received from the court is contrarily to the award, the payment of 62.8 million can be adjusted with Rs. 81.22 million due to the contractor,” he said.
Tariq Naqash
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