Hyderabad: The Andhra Pradesh high court told the state government that they cannot compel a company to extend its contract against the agreement and that it is against the rules to convert bank guarantees of the firm into cash if the latter fails to comply with the rules.
A petition was filed by Reach Dredging Limited which secured a contract to mine sand in the Krishna river near Prakasam barrage.
Though it got seven reaches, the agreement was made with respect to three only. As per the agreement, the government has to allot 40 acres of land to stock the sand mined, but only 20 acres were allotted. When the stock points were filled, the Reach Dredging Limited informed the water resources department and submitted bills for Rs 3.11 crore.
The officials however refused the pay the bills after which the company filed the petition in court.
The company’s counsel VRN Prasanth informed the court that the officials were threatening to convert the bank guarantees into cash. The government on its end argued that there were discrepancies in the quantum of sand mined as claimed by the firm and verification done by officials.
The court ruled that the government should return the bank guarantees to the firm.