The Karnataka high court has rejected the petition by a construction company seeking the return of the bank guarantee which was encashed by the Karnataka State Police Housing and Infrastructure Development Corporation for alleged shoddy construction of police quarters by the firm.
The high court also directed that engineers involved in shoddy constructions using public money be brought to book.
Citing earlier Supreme Court judgements, the high court said that bank guarantees were not for show and the corporation had done the right thing.
"What would unmistakably emerge is that the Bank Guarantee is not furnished for it to be photo-framed and hung on the wall, it has a purpose. The purpose is redeemed by the Corporation and cannot be found fault with."
PG Setty Construction Technology Pvt Ltd had approached the High Court after KSPHIDC encashed the bank guarantee of Rs 1,15,13,500 for allegedly shoddy construction of 144 police quarters in Mandya and Chamarajanagar districts which was executed by the company.
The counsel for the company argued before the bench of Justice M Nagaprasanna that the construction was over and bills paid after the quality of construction was checked.
The bank guarantee during the defect liability period was with regards to the infrastructure facilities and could not have been encashed.
The advocate for the KSPHIDC argued that "the construction was of so poor quality that the building began to develop cracks the moment construction was completed.
What the petitioner has claimed to have completed the construction is a shoddy construction coming within the defect liability period itself.”
The high court, in its judgement, said public money cannot be misused.
"It is rather surprising how the engineers of the Corporation or the engineers concerned have cleared the bills without inspecting the construction and the quality of construction, as complaints have arisen immediately after the completion certificate is issued," the court noted.
"The Police Gruha 2020 scheme is not a private project or private scheme. It is a scheme funded by the government. If it is a scheme funded by the government, it is public money. Therefore, contractors undertaking construction utilising public money cannot be seen to make constructions that are very poor and the life of such inhabitants there becomes unlivable."
Directing action against erring engineers, the HC said: "This court, has in a plethora of cases come across, contractors undertaking shoddy constructions particularly of low income group (LIG) and middle income group (MIG) houses, in certain cases, even in high income group houses."
"Therefore, it is for the respondent/State to take care that proper constructions are made under any scheme which involves public money, so that public money is not misused by such contractors who undertake such constructions and bring those Engineers to book who would approve such shoddy constructions, as and when it is found," the high court further stated.