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CAG raps Shivshahi for violation of norms

December, 25th 2009
The Comptroller and Auditor General of India (CAG) has said that the stategovernment owned, Shivshahi Punarvasan Prakalp has extended undue benefits worth above Rs 21 crore to its contractors. The company, which was floated to build free houses for Mumbai slum dwellers, has violated the terms of contract by extending the undue benefits on account of escalation claims and bonus, the CAG said in its report tabled recently. According to the report, the construction contracts, which were awarded to private contractors, had a general clause for payment of execution. Despite the contract saying that the price variation should be restricted to cement and steel only, the company paid an escalation of Rs 18.33 crore on labour, petrol, oil and lubricant to five contractors in five major projects, CAG said. These projects are Dindoshi, Matunga Labour Camp, Shed Complex, TurbheMandala and Wadala. The management in its reply said that though the price escalation of labour, petrol, oil and lubricant was endorsed by the government, it indicated the ambiguity that existed in the contract clause, the report said.