BSF fails to levy over Rs 2 cr liquidated damages on HAL: CAG

Border Security Force (BSF) has failed to levy over Rs two crore of liquidated damages on Hindustan Aeronautics Limited (HAL) for delay in supply of a Dhruv helicopter by 19 months, the CAG has said.
The Home Ministry had in March 2009 conveyed sanction to the BSF for procurement of eight Dhruv helicopters from HAL at a total cost of Rs 413.30 crore. The procurement was governed by an agreement between the Ministry and HAL which mandated delivery of helicopters to be made in two lots.
The first lot of four helicopters was to be delivered by March 2010 and the second by March 2011. The agreement said in the event of delay in delivery, the buyer reserved the right to impose liquidated damages.

However, no such damages was leviable in case of delay caused due to any action or inaction of the buyer as also due to Force Majeure (unforceable circumstances).
HAL delivered three helicopters of first lot by October 2009 and the fourth helicopter in May 2010, after a delay of 37 days. BSF, at the instance of the Ministry, imposed liquidated damages of Rs 25.95 lakh for the delay, said a CAG report tabled in Parliament today.
Audit observed that HAL delivered three helicopters of the second lot in October 2010, i.E. Within the stipulated time frame, while it delivered the fourth in October 2012, after a delay of 19 months, it said.

"However, it did not levy liquidated damages for the delays. We further observed that HAL did not approach BSF for extension of the delivery period indicating that the delay was on the part of the seller. Failure of BSF to invoke provisions of the agreement led to non-levy of liquidated damages of Rs 2.18 crore.
"After the issue was raised in audit, MHA issued instructions to BSF, Air Wing, in November 2015 to initiate action for liquidated damages as per the provision contained in Memorandum of Understanding. Subsequently BSF, Air Wing took up the matter with HAL for imposition of liquidated damages of Rs 2.18 crore as pointed out by audit," the report said, adding that the Ministry's formal reply was awaited as of January 2016.