The Delhi High Court has issued a notice to the Ministry of Health and Family Welfare (MoHFW) over an appeal to proportionately release bank guarantees worth over ₹30 crore to JMC Projects (India) after completion of construction of All India Institute of Medical Sciences (AIIMS), Bhopal. The company is a subsidiary of Kalpataru Power Transmission and a major engineering, procurement and construction (EPC) company.

Last week, the court asked MoHFW to reply within four weeks to the company’s petition. JMC Projects moved court against MoHFW after Covid-19 broke out and Prime Minister Narendra Modi announced on May 13 that under Atmanirbhar Bharat, government agencies should partially release bank guarantees provided by the contractors, to the extent the contracts are partially completed, to ease cash flows.

While JMC started work on AIIMS Bhopal in 2010, it has argued in its petition that the Centre had started taking over completed portions of the hospital since 2013, and the Outpatient Department (OPD) has been operational since January 2013.

“In 2012-13, the departments of Anatomy, Biochemistry, Community and Family Medicine, Forensic Medicine, Physiology, Trauma and Emergency Medicine, in addition to the College of Nursing, were started. In 2014, patients began to be admitted, and radio-diagnosis and lab services were started. By March 2015, AIIMS Bhopal had dealt with 1,87,496 outpatients, 1,18,233 investigations, with 27 functional departments, 249 medical and 120 nursing students. Between 2017-18, the OPD saw 1,330 patients every day, 7,058 admissions and 5,572 major and minor surgeries,” the petition argued.

“Due to the onset of the ongoing pandemic, the control unit of the Nurse Call system, worth roughly ₹7 lakh, is the only pendency, as after damage during testing, the same needs to be replaced. MoHFW is whimsically treating the entire work as incomplete, valued at ₹2.5 crore,” the company has further stated in the petition.

Financial burden

The company has argued that due to Covid-19, the economic conditions are already bleak and banks are insisting for a larger percentage (in some cases even 100 per cent) margin money to renew the bank guarantees. The same is causing unnecessary financial burden on the firm.

“In 2019, MoHFW granted the virtual completion certificate for the works to the company. MoHFW is liable to now release the proportionate share of bank guarantees. Any further retention of bank guarantees would be arbitrary and mala fide on part of the MoHFW,” said Manoj K Singh, legal counsel for JMC Projects.

Singh said that repeated requests to the Superintendent Engineer of AIIMS, Bhopal to release the bank guarantees since mid-May have gone unheeded, after which the company had to take the legal route.

Meanwhile, Sunil Sharma, Joint Secretary, MoHFW, who is in charge of Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), which funds the building of various AIIMSes stated: “We have empowered the institute (AIIMS, Bhopal) to handle all contractual matters locally. This has been done under decentralisation of powers to increase efficiency. They will file a reply to the petition.”

More dues

While the company and MoHFW battle it out in the court for release of the bank guarantees, Singh said JMC has already raised its claim of more than ₹140 crore worth of pending dues for works, which is under a separate dispute resolution process.

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