PERSISTENCE PAYS

A Repeat order for manufacture and supply of 6.75 lakhs PSC sleepers was placed by Railway Board on M/s KEPL with fall clause during 1996. However, the firm did not accept the fall clause and made a request to Board in Aug'96 seeking exemption from fall clause for which Board did not agree and replied in the negative on 8.10.96. After this the firm was quietly manufacturing the sleepers without any agreement and was getting paid at the rate mentioned in the LOA for the materials supplied to Railways. Subsequently, Board finalised a fresh contract by calling open tenders, the rate of which was cheaper and application of fall clause became inevitable. The firm had approached the court and obtained a judgement for referring the matter to Arbitration. Southern Railway's request for foreclosing the contract was not accepted by Railway Board on the grounds that (-)30% option was only permitted. Board was requested to review their orders "to continue production". However, Railway Board replied that the production of sleepers should be allowed to continue without foreclosing and no reduction was made in payment on account of fall clause.

Now the Arbitration award has been received and the Sole Arbitrator has adjudged that the "fall clause is applicable in this Repeat Order." As a result of this Arbitration award, a sum of Rs.3.10 crores (approx) is recoverable which the firm has received in excess. As of now Rs.1.03 crores has been recovered from the bills submitted by the firm and action is being taken to recover the balance from the firm for which advice is being sent from Engg. Branch.

Besides, Board has given extension for manufacture of the balance quantity of 1.5 lakhs sleepers at the rates, terms and conditions as applicable to contract No. CS 145/2000 or the updated rate of Repeat Order whichever is lower. The contractor who was not even willing to accept the fall clause has come forward to accept the manufacture of balance 1.5 lakhs sleepers at a much reduced rate which is due to the uncompromising stand taken by finance. The savings achieved on this account is around Rs. 1.5 crores approximately. Thus the total savings that has accrued to Railways because of the uncompromising stand taken by the Accounts Department of Southern Railway is about Rs. 4.6 crores.

SUNANDA ARUL,
Dy.FA&CAO/Stores,
Southern Railway.

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