At a time when the state government is going all out to attract investments in to the state, one investor is feeling the pinch after making a sizeable investment in the state.
At a time when the state government is going all out to attract investments in to the state, one investor is feeling the pinch after making a sizeable investment in the state, and that too when it is yet to bear fruit after six years.
Cycle manufacturing company, Hero cycles Ltd, which received a supply order of more then 74,000 cycles from the state government, is ruing the fact that fulfilling the order was like digging its own trap.
Now the company has approached the Gujarat high court to release its payment for the cycles after a period of six years. In their plea, the company has raised two issues before the high court — one, to clear their outstanding dues amounting more then Rs6 crore as well as deduction of heavy penalty for late supply of cycle, which according to the petitioner, had happened owing to the 2002 communal riots; and two, lack of inter-departmental co-ordination.
The company has made additional industries commissioner, and secretaries of departments like tribal development, social justice and empower, scheduled caste welfare and developing caste welfare as respondents to the state government.
A bench of the high court was annoyed with the government departments as it did not get satisfactory replies of the issues raised by the company and casked them to deliver order as appealed.
It also stated that it will treat a report of the chartered accountant (CA), which was appointed to settle the dispute with consent of both parties, as an award, which suggested a lower penalty than was as imposed by the government.
“The affidavit-in-reply does not throw any light on the merits of the controversy or does not even indicate as to why the report of the chartered accountant is not being accepted despite the fact that the chartered accountant was appointed according to the decision taken at the meeting convened by the secretary, tribal development department,” observed the bench of justices MS Shah and KM Thaker while delivering the interim order.
“The respondents (government depts) shall show-cause why the appeals made in the petition should not be granted by this court on the next date of hearing,” the bench further cautioned, adding that the respondents shall also place on record the CA’s report and show cause why it should not be treated as an arbitration award. Further hearing of the case has been posted on August 10.
Counsel of the petitioner, KG Sukhwani, submitted that Hero cycles had got contract to supply 74,569 cycles to be distributed among schedule caste, scheduled tribe and OBC students under various welfare schemes, at the rate of Rs1,224 for each gents cycle and Rs1,238 for each ladies cycle, in July 2001.
The company also supplied its first lot of cycle worth Rs5 crore; but when they demanded payment, the government departments raised queries including imposing of heavy penalty for late supply.
The petitioners say, slight delay in supply had happened due to communal riots in 2002 as their assembly team workers was completely made up of minority community members.
On the other hand, the government countered the petition on the grounds that it is not maintainable as it is a contractual dispute. The petitioner should approach way of arbitration to resolve the dispute.
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