Shimla, Oct 7 : The Himachal Pradesh High Court Wednesday cancelled the allotment of a multi-million dollar hydropower project to Dutch firm Brakel Corp on a petition filed by Reliance Infrastructure Ltd (RIL).

RIL, which was one of the bidders for the 960 MW Thopan-Powari-Jangi hydropower project in Kinnaur district, had challenged the state government's decision to allot the project to Brakel.

"We allow the writ petition and quash the decision of the council of ministers dated November 25, 2008, as being arbitrary, illegal and irrational," a division bench of Justice Deepak Gupta and Justice V. K. Ahuja said.

"We also hold that in view of the misrepresentation made by Brakel, the allotment of the two projects Jangi Thopan and Thopan Powari of 480 MW each, which were later combined into one project, was illegal and is bound to be cancelled," the bench ruled.

"We further hold that for the reasons stated above the allotment of the above said projects in favour of Brakel is liable to be cancelled and accordingly cancel the same. The state is directed to take fresh decision as to whether it wants to re-advertise the said projects or it wants to act on the basis of the old tender within four weeks from today (Oct 7)," said the judges.

The state cabinet had taken a decision in its July 7, 2008, meeting that a final show-cause notice should be served to Brakel asking it why the project contract awarded to it should not be cancelled and in case the project had been cancelled, it would be re-advertised.

On the reply of Brakel, the state government April 9, 2009, signed a pre-implementation agreement (PIA) with Brakel to set up the hydropower project. It was signed between Chief Secretary Asha Swaroop and company's director Dean Gesterkamp in Shimla.

The decision to sign the agreement was taken by the government Nov 25, 2008, two years after the project was awarded to the Dutch company.

The signing of the PIA is mandatory before beginning the work of the project in Kinnaur district, 300 km from here.

The project requires an investment of more than Rs. 60 billion.

Brakel has already deposited 75 percent of the upfront premium of Rs. 280 crore, including Rs. 21 crore as delayed interest at the rate of 11 percent, with the state government.

Brakel has also completed most of the field surveys and investigations of the project at the site.

RIL had moved the high court three times since the allotment of the project in 2006. Its two earlier petitions against the government were dismissed by the court.(IANS)