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LAHORE, Feb 28: The KAP Associates on Friday filed a contempt notice against the Lahore Electric Supply Company (Lesco) for not following a court order to restore a contract that it had unilaterally scrapped.
The KAP associates had secured a stay order against the Lesco for cancelling an agreement on automated bill collection only eight days after its signing.
The Lesco had cancelled the agreement, citing a ‘disapproval’ by its board of directors as the ground.
Rejecting the Lesco stand, the KAP said the excuse did not form part of the agreement between the two companies nor was it mentioned during the three-month correspondence prior to the signing. The cancellation would cost the KAP financial loss because its had invested a huge sum in preparatory arrangements after inking the deal.
TENDER: The Lesco had floated a tender in November 2002 for automated bill collection (collection and remittance of Lesco’s revenue). The Lesco wanted to privatize transfer of money from banks to its offices for quick and efficient service.
The KAP offered a bid of Rs1.65 per bill. Prior to that, the Lesco had been paying Rs1.91 per bill to a company presently handling the assignment. The Lesco further negotiated with the KAP to bring it down to Rs1.30 per bill.
The agreement was signed Jan 31, 2002 and the KAP set up paraphernalia to start collecting bills and transferring of money in the area allotted to it.
The Lesco duly informed over 300 banks and post offices about the authorization of the KAP employees for collecting bills. But only a week after the signing, cancellation order was issued and earlier instructions to financial institutions were withdrawn. The KAP moved the court.
DEAL: Under the agreement, the Lesco can scrap the agreement after reviewing KAP’s performance every three months and after serving a one-month notice. The Lesco is however also bound to communicate lapses, if any, on the part of the KAP and grant a personal hearing before cancellation.
