Gaseb Construction wins compensation case against MoWHS

The Supreme Court in a judgment on July 25 gave a construction company, Gaseb Construction, more than double the compensation decided by the arbitration tribunal in the case between the company the works and human settlement ministry.

One of the contractors of Dalbari-Dagapela secondary national highway in Dagana, Gaseb Construction, filed a case against the human settlement ministry after it terminated its works in 2015.

The company was paid Nu 33.3 million (M) as mobilisation advance and another Nu 150M as interim measure after the ministry terminated the works. The court found that the contractor was entitled to Nu 102.39M as compensation .

The court ordered the proprietor of the company, Thinley Tenzin, to return the remaining Nu 80.9M to the works and human settlement ministry.

The Supreme Court judgment stated that had the ministry stopped giving the works when the Anti-Corruption Commission gave its recommendations, the problems of loss of resources would have been avoided.

The judgment stated that hereafter the government should be mindful to avoid such situations and comply with the procurement procedures and norms.

The Supreme Court judgment also stated that the value of the work was Nu 158M and there was no way to compensate Gaseb Construction beyond that.

The construction company claimed Nu 360.81M in compensation whereas the ministry offered Nu 39.76M and the arbitral tribunal decided on Nu 40.823M.

Of the Gaseb Construction’s claims under 14 expenses, the court dropped six claims, found that he was entitled to 10 percent of expenses on hiring labour for the project, entitled to 60 percent each of the cost of returning equipment to Phuentsholing, loss from keeping the equipment idle, and the land lease charges. The court also partially awarded his claims for wear and tear of the machines, compensation for loss of opportunity, and cost escalations.

The court ruled that the ministry does not have to pay for the machines he bought as the contractor was supposed to have a certain number of machines as per the contract conditions.

 

Background 

In 2014, one of the bidders, complained to the ACC that it was the lowest bidder at Nu 336.6M but the award of package C to Gaseb-SPML, which quoted Nu 358M was unfair.

Following an investigation and having found no evidence of corruption involved, the ACC recommended the government to re-evaluate the tender or revoke the contract and re-tender in the interest of better value for money. The third package was not cancelled and work was in progress.

The Cabinet, after consulting the Office of the Attorney General, terminated two of the three contract packages of the Dagapela-Dalbari highway construction in January 20, 2015, four months after works had started. By the time the Cabinet took the decision, construction work had begun and progress was ahead of schedule.

The Dagapela – Dalbari, Lhamoizingkha national secondary highway was approved by the former government. The government of the Netherlands provided Euro 21.34M to sponsor half the construction of the 80.58km highway.

The project was divided into three packages and tendered out internationally and awarded in September 2014. The Dagapela-Dalbari secondary national Highway passes through five gewogs of Tshendagang, Goshi, Dorona, Gesarling and Deorali.

DoR officials said that the cutting was incomplete compared with the road design, thus, making assessments for compensation difficult.  Two groups of engineers assessed the construction progress. The government offered compensations to the two contractors as per the tender conditions and norms.

Tundi Construction private company from Nepal had reached 5km of the 20km package B between Odalthang and Gesarling. The company, accepted the government’s compensation of Nu 35M.

The joint venture company Gaseb and an Indian construction company, SPML, had already finished 9km rough widening of the existing 21.22km.  It was awarded 31.58km long section C worth more than Nu 358M of the road, including the 21.22km existing road from Dagapela to Geserling.

Gaseb Construction Company and SPML was offered Nu 39.76M as compensation, but they asked for Nu 360M and sued the human settlement ministry.

Thimphu dzongkhag court asked the issue to be resolved by an arbitration tribunal of the Construction Development Board (CDB) as per the Alternative Dispute Resolution Act (ADRA) 2013. The dzongkhag court asked the ministry to pay Nu 150M to the contractor as an interim measure. The matter of interim measure reached before the Supreme Court, which upheld the decision of the Thimphu dzongkhag court ordering the government to pay Gaseb-SPML Nu 150 million by July 10 while waiting for the arbitration committee decision.

The arbitration tribunal, including representatives from both parties, came out with a little more than Nu 40.823M compensation that the ministry has to pay the contractor.

An arbitration committee as required by the contract agreement decided the case, the decision was upheld by the High Court and dismissed Gaseb Construction Company’s claim of Nu 360M.

Thinley Tenzin then appealed to the Supreme Court, still seeking more compensation than what the arbitration tribunal had given.

Tshering Palden

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