The work taken up at Pushpa Bhawan at Pushp Vihar was, however, abandoned in November, as the CPWD did not permit installation of antenna on the roof of the building. Until then the BECIL had already spent Rs 9.77 lakh on interior work. It stated in April 2007 that it had selected an alternate site, where the work of setting up the EMMC had started in March 2007.
''The premature release of funds by the Ministry to BECIL, without ensuring the readiness of the consultants to undertake the work and more importantly, the suitable site for the project led to premature cash outgo from the Comsolidated fund of India with an interest cost of Rs 21.08 lakh on the unspent amount up to February 2007,'' the CAG report said.
There was no obligation on the Ministry to release advance payment before signing of the agreement.
''The advance of Rs 2.40 crore was paid on March 31, 2006, merely to avoid surrender of avoid surrender of funds. This was indicative of weak financial and budgetary controls in the Ministry,'' the CAG report said.
The CAG also rejected the contention of the Ministry that BECIL was not laible to pay interest as the delay in work was not of its own making. The report said the terms of agreement stipulated release of advance to BECIL subject to the conditions prescribed in Government rules on advance payments.
''The Ministry ought to insist on payment of interest by BECIL as per provisions of Government rules and also in view of the fact that the amount of advance payment renailed with BECIL for a sufficiently long period and the interest on outstanding balance earned by it if not recovered would amount to grant of unintended benefit,'' it said.