Jammu Kashmir HC Dismisses Alpine Agro’s Plea Against Recovery for Delayed Godown Works | Kashmir Life

SRINAGAR: The High Court of Jammu Kashmir and Ladakh has dismissed a petition filed by M/s Alpine Agro Services challenging penalties imposed by the Food Corporation of India (FCI) for the delayed completion of black-topping of internal roads at a grain storage facility constructed under the Private Entrepreneur Guarantee (PEG) Scheme.

Justice MA Chowdhary upheld the recovery orders issued by FCI, ruling that the petitioner-firm had failed to fulfil essential contractual obligations despite repeated extensions and could not evade liabilities arising from the agreement after enjoying its benefits.

The petition had challenged communications dated September 3, 2021, and November 15, 2021, through which FCI ordered recoveries from monthly rentals payable to the firm for delays in completing black-topping work at a 17,500-metric-tonne godown established at Shilvat, Srinagar.

According to court records, Alpine Agro Services was awarded the project in May 2013 under the PEG Scheme on a “Build, Own and Operate” basis for a guaranteed period of ten years. A Lease and Service Agreement executed between the parties provided for operation of the facility on a Guaranteed Hiring Basis from February 27, 2015, to May 20, 2024, with monthly rentals linked to the approved storage rate and annual escalation.

The petitioner argued that the godown had been constructed according to prescribed specifications and was accepted by FCI as operationally fit for storage purposes. It contended that only black-topping of internal roads remained incomplete and that the delay occurred due to circumstances beyond its control, including the death of a partner and the law-and-order situation that prevailed in Kashmir during 2016.

The firm also relied on a communication from the District Development Commissioner, Bandipora, stating that no macadamization works were undertaken in the district during 2016 because of prevailing disturbances.

Alpine Agro further contended that the godown had remained operational throughout the period and that FCI suffered no actual loss. It argued that the recoveries were arbitrary, violated principles of natural justice and were not authorised under the contract.

FCI, however, maintained that black-topping of internal roads was an essential infrastructure requirement under the PEG Scheme and the Model Tender Form. The corporation submitted that the petitioner had furnished an undertaking in February 2015 to complete drainage work by March 2015 and black-topping by September 2015. Despite this assurance and a subsequent extension until February 26, 2016, the work remained incomplete.

The corporation stated that instead of terminating the agreement, as permitted under Clause 5 of the Lease and Service Agreement, it adopted a lenient approach based on decisions taken by a High-Level Committee (HLC), which examined similar cases across the country.

According to FCI, the HLC decided that where black-topping was completed beyond the permissible period, rentals would be regulated on an Actual Utilization Basis and deductions equivalent to twice the Cost Saving Amount would be recovered.

The corporation calculated that the petitioner had effectively saved Rs 9.48 lakh annually by delaying the work. Based on the area of the premises and the estimated cost of black-topping, the monthly cost saving was assessed at Rs 79,001. The initial recovery of Rs 1.58 lakh represented twice the monthly cost-saving amount.

After examining the record, the High Court noted that the petitioner had admittedly failed to complete drainage and black-topping works within the stipulated period and had not fulfilled the commitments made in its undertaking even after receiving additional time.

Justice Chowdhary observed that black-topping of internal roads constituted an essential component of the infrastructure required under the PEG Scheme and that failure to complete it amounted to breach of contractual obligations.

The court rejected the petitioner’s reliance on the 2016 unrest in Kashmir, noting that the extended deadline for completion of the work had expired in February 2016, several months before the disturbances began in July that year.

“The petitioner was under an obligation to complete the work within the extended period of time before 26.02.2016, whereas the disturbances in the Valley started in July, 2016,” the court observed.

The judgment also held that the petitioner could not simultaneously enjoy the benefits of the agreement while contesting liabilities arising from it.

“The petitioner-firm, having accepted the terms and conditions of a contract and deriving benefits therefrom, cannot subsequently approbate and reprobate by disputing liabilities flowing from the same contractual arrangement,” the court said, invoking the doctrine of election and estoppel.

The court further noted that the petitioner had challenged only the consequential recovery orders and not the underlying decisions of the High-Level Committee that formed the basis of the recoveries.

Finding no illegality in the action taken by FCI, the High Court concluded that the recoveries were in accordance with policy decisions applicable to PEG investors nationwide and that the corporation had, in fact, adopted a lenient approach by imposing recoveries instead of terminating the contract.

Holding that the petition lacked merit, the court dismissed the writ petition and vacated all interim directions.