The dispute, which had escalated to nearly ₹4 crore due to accumulated interest, has now been settled at ₹1.83 crore through mutual agreement between the parties involved.

The case dates back to 2012-13 and involved payment claims by a contractor who had been awarded construction work related to the hospital building project funded through corporate social responsibility (CSR) contributions.

According to officials involved in the process, the payment amount payable by Nirmithi Kendra to the contractor had increased to nearly ₹4 crore due to interest accumulation over several years.

However, after negotiations and mutual consent between the parties, the amount was settled at ₹1,83,23,040. The compromise was reached during a Lok Adalat session, significantly reducing the financial burden on the government.

Fourth Additional District Judge Sridhar Gopalakrishna Bhat, who facilitated the settlement in the Lok Adalat, said that both parties agreed to resolve the matter through their respective legal representatives.

The dispute had earlier been examined in the district court under the provisions of the Arbitration and Conciliation Act, 1996 before being referred to the Lok Adalat for amicable settlement.

Authorities noted that the settlement has resulted in substantial savings of public money.

Dakshina Kannada Deputy Commissioner participated in the conciliation process, helping both parties reach an agreement. Officials stated that the contractor's claim had grown significantly over the years due to the addition of 12 per cent annual interest on the pending payment.

Principal District Judge Basavaraj described the settlement as a special case where both parties consented to resolve the dispute in the interest of saving public funds and bringing a long-standing issue to closure.

According to officials, the compromise reduced the payable amount by nearly half compared to the total claim, which would otherwise have placed a considerable financial burden on government resources.

The dispute originated during the construction of a new building at Lady Goschen Hospital, one of the key maternity hospitals in the region.

In 2012-13, Mangalore Refinery and Petrochemicals Limited sanctioned ₹21 crore under its CSR initiative for the construction of the new hospital building.

However, the project encountered administrative complications at the early stage. As advance payment was not provided by MRPL, the work could not be assigned directly to the Public Works Department or other government agencies.

To address this issue, a district-level committee decided to execute the construction work through Nirmithi Kendra.

Following the decision, a tender was floated for approximately ₹18 crore, and the project was eventually awarded to a contractor for about ₹9 crore.

The contractor was expected to complete the construction within two years. However, officials said that even after three years, less than half of the work had been completed.

Due to the delay and slow progress, the then Deputy Commissioner reassigned the project to another contractor. The second contractor successfully completed the construction work and was paid accordingly.

Because the first contractor had failed to complete the project within the stipulated time, authorities withheld the pending payment and imposed penalties.

Following the withholding of payment, the contractor approached the court seeking the release of the pending amount.

The court later directed that the outstanding amount, estimated at about ₹1.5 crore, be paid. However, with the addition of 12 per cent interest over the years, the total liability increased to nearly ₹4 crore.

This development prompted both parties to seek resolution through arbitration. The matter was subsequently reviewed under the Arbitration and Conciliation Act, 1996 and later referred to Lok Adalat proceedings for settlement.

Through negotiations during the Lok Adalat, both sides agreed to settle the case by paying ₹1.83 crore to the contractor.

Officials stated that the resolution of the dispute marks the end of a legal matter that had remained unresolved for more than a decade. The settlement not only concludes a prolonged arbitration process but also ensures significant savings of public funds.

Authorities hope that similar disputes in public projects can be addressed through alternative dispute resolution mechanisms such as Lok Adalat, enabling faster settlements while protecting government resources.