Meghalaya High Court
M/S Sarin'S Green House, vs . Union Of India & Ors on 8 August, 2018
Equivalent citations: AIR 2018 MEGHALAYA 26, AIRONLINE 2018 MEG 113
Author: Mohammad Yaqoob Mir
Bench: Mohammad Yaqoob Mir
Serial No.07
Regular List
HIGH COURT OF MEGHALAYA
AT SHILLONG
WP (C) No.143/2017
Date of Order: 08.08.2018
M/s Sarin's Green House, Vs. Union of India & ors
Nongrim Hills, Shillong
Coram:
Hon'ble Mr. Justice Mohammad Yaqoob Mir, Chief Justice
Appearance:
For the Petitioner/Appellant(s) : Mrs. PDB Baruah, Adv
For the Respondent(s) Mr. N Mozika, Adv for R1-3
Mr. K Ch. Gautam, Adv R4
i) Whether approved for reporting in Yes Law journals etc.:
ii) Whether approved for publication in press: No ORAL
1. Respondent No.4-Engineering Projects (India) Limited an agency for respondents No.2 and 3 has issued two work orders in favour of the petitioner:
(a) Construction of 08 No's of Single Men Barrack in 02 Blocks of (G+III), 12 No's. of Single JCO's Accommodation and 04 No's. Single Officer's Accommodation including infrastructural development works for Assam Rifles at Khonsa, Arunachal Pradesh dated 02.07.2009. A Letter of Intent No.ASR/KHN/628/006 dated 17.06.2009 was issued.
(b) Construction of 01 No. Officer's Mess, 01 No. Administrative Block and 01 No. JCO' Mess including infrastructural development works for Assam Rifles at Khonsa, Arunachal Pradesh dated 30.11.2009. A Letter of Intent No.ASR/KHN/628/006 dated 15.11.2009 was also issued.
2. The stipulated date for completion of the said two work orders was 16.02.2011 and 14.07.2011 respectively. Within the stipulated period, it was not completed as a result whereof, extension of time was granted up to 30.11.2013 but without any financial effect/escalations as is clear from the communication dated 20.05.2013 addressed to the respondent No.4. The respondent No.4 in turn has conveyed the same to 1 the petitioner vide communication dated 31.05.2013. Then, again time was extended till 15.01.2014. Finally, the work was completed.
3. The petitioner submitted the escalation bill which in turn was submitted by the respondent No.4 to the Chief Engineer, Assam Rifles on 21.09.2016 for an amount of Rs.1,54,87,613/- (Rupees one crore fifty four lakhs eighty seven thousand and six hundred thirteen only). The Directorate General Assam Rifles, Shillong vide order dated 25.10.2016 accorded sanction for an amount of Rs.1,00,43,884/- (Rupees one crore forty three thousand eight hundred and eighty four only) for payment of escalation bill to the respondent No.4 wherein, it is also mentioned that the bill from EPIL (respondent No.4) is technically checked and passed for an amount of Rs.1,00,43,884/- (Rupees one crore forty three thousand eight hundred and eighty four only). After deduction, balance amount of Rs.94,36,371/- (Rupees ninety four lakhs thirty six thousand and three hundred seventy one only) was released in favour of the respondent No.4. When the amount was not paid to the petitioner, through her counsel notice was served upon the respondents No.3 and 4, which has been responded vide communication dated 06.04.2017 where- under, it was conveyed that extension of time to complete all works as mentioned in the notice was granted by DGAR (Competent Financial Authority) on the condition that "no escalation will be paid". It has also been mentioned that the contention of the contractor that MOU/contract agreement stating escalation will be paid for justified extended period shall have no bearing as the extension letter itself would have served as a corrigendum to the contractual agreement/MOU and as such post extension on specific terms of the original contract agreement would stand merged with the letter granting extension of time with specific conditions.
4. Vide communication dated 15.03.2017 addressed to the respondent No.4 by the respondent No.3, it has been conveyed that the escalation bill for an amount of Rs.1,00,43,884/- (Rupees one crore forty three thousand eight hundred and eighty four only) was paid to the respondent No.4 but because of certain technical reasons approval has been cancelled. The bill was directed to be reverted, by means of 2 Government Challan, to the Government account before 25.03.2017 to regularize the said payment.
5. Petitioner aggrieved of the action of the respondents in not paying the escalated bill amount has filed the instant petition with a prayer that the letters dated 06.04.2017 and dated 02.05.2017 may be set aside. The respondents No.2 to 4 may be directed to immediately release the escalation claim of the petitioner along with interest @ 12%.
6. Learned counsel for the petitioner submits that admittedly the petitioner due to unavoidable circumstances could not complete the work as was allotted to him within the stipulated period. For the work which was not completed, time was extended and finally executed. The petitioner had submitted the escalation bill which was technically verified by the respondent No.4 same was processed and sanctioned by the respondents No.1 to 3 for an amount of Rs.1,00,43,884/- (Rupees one crore forty three thousand eight hundred and eighty four only) but not paid. Subsequently, approval for payment has been cancelled on the ground that while granting extension for completion of work, it was specifically mentioned in the extension letter that the extension of time shall be without any financial effect/escalation, which according to the petitioner would mean that further escalation beyond stipulated period for completion of work shall not be allowable. But the escalation during the actual period stipulated for completion of work had been worked out, which was technically verified by the respondent No.4, as such was payable.
7. Learned counsel for the respondents No.1 and 2 submits that as per Clause 16 of the General Conditions of Contract (hereinafter referred to as GCC), escalation is not permissible at all but such a contention is repelled by the learned counsel for the petitioner because as per the condition No.7 of the Additional Conditions of Contract (hereinafter referred to as ACC), escalation clause has been included whereas, as per the condition No.1 of ACC, the provisions of the ACC shall take precedence. The submission of the learned counsel for the petitioner is well founded. It shall be quite advantageous to quote condition No.16 of GCC and also conditions No.1 and 7 of ACC as hereunder:-
3"(G.C.C.) 16.0 ESCALATION / PRICE VARIATION No claim on account of any Price Variation / Escalation on whatsoever ground shall be entertained at any stage of works. All rates as per Bill of Quantities (BOQ)/Price-Bid quoted by Contractor shall be firm and fixed for entire contract period as well as extended period for completion of the works. No escalation/price variation clause shall be applicable on this contract."
"(A.C.C.) "1.0 The following Additional Conditions of Contract shall be read in conjunction with General Conditions of Contract. If there are any provisions in these Additional Conditions of Contract, which are at variance with the provisions of General Conditions of Contract, the provisions in these Additional Conditions of Contract shall take precedence."
"7.0 PRICE ADJUSTMENT Payment due to increase/decrease in prices/wages after Receipt of Tender for works:
If the prices of materials and / or wages of labour required for execution of the work increase, the Contractor shall be compensated for such increase as per provisions detailed below and the amount of the contract shall accordingly be varied subject to the condition that such compensation for escalation in prices and wages shall be available only for the work done during the stipulated period of the contract including the justified period extended under the provision of clause 72.4.3 of G.C.C. of the contract without any action under clause 72.4.1 of G.C.C. (as modified in A.C.C.). However, for the work done during the justified period extended as above, the compensation as detailed below will be limited to prices/wages prevailing at the time of stipulated date of completion or as prevailing for the period under consideration whichever is less. No such compensation shall be payable for a work for which the stipulated period of completion is equal to or less than 12 months. Such compensation for escalation in the prices of materials and labour, when due, shall be worked out based on the following provisions. ........
...... ..... .... .... ....."
8. The conditions No.1 and 7 of ACC clearly reveal that compensation for escalation of prices and wages shall be available only for the work done during the stipulated period of the contract including the justified period extended under the provision of Clause 72.4.3 of GCC of the contract. However, for the work done during the justified period extended, compensation will be limited to prices/wages prevailing at the time of stipulated dates of completion or as prevailing for the period under consideration whichever is less.4
9. The centre of controversy is as to whether the petitioner shall be entitled to compensation for escalation in prices/wages for the balance work which he has completed during the extended period. The answer has to be in the affirmative. It has to be clarified that in terms of condition No.7 of ACC, the compensation for escalation during justified extended period will be limited to prices/wages prevailing at the time of stipulated dates of completion or as prevailing for the period under consideration whichever is less.
10. The position as such is clear i.e. incomplete work which has been completed during extended period has to be paid but same has to be limited to prices/wages as were prevailing at the time of stipulated dates of completion i.e. in the case of work order No.1 as on 16.02.2011 and in the case of work order No.2 as on 14.07.2011, whatever escalation was prevailing in prices/wages for the incomplete work shall be payable.
Any further escalation beyond 16.02.2011 and 14.07.2011 respectively, shall not be allowable.
11. Learned counsel for the respondents next contended that the petition is not maintainable. Supporting his submission relied on the judgment reported in (2004) 12 SCC 327. In the reported judgment, it has been held that "it is well settled that writ of or in the nature of mandamus would not ordinarily issue for enforcing the terms and conditions of a contract qua contract. A writ of mandamus would issue when a question involving public law character arises for consideration. It is also well settled that the High Court would not entertain a writ petition involving disputed questions of fact". Applying the same law to the present case, there is no disputed question of fact neither prayer is for enforcing any disputed terms and conditions of the contract.
12. Learned counsel for the petitioner in support of maintainability of the petition has placed reliance on the judgment rendered in the case of "ABL International Ltd. and anr v. Export Credit Guarantee Corporation of India Ltd. and ors": (2004) 3 SCC 553. Paras 10 and 53 of the reported judgment are relevant to be quoted:
"10. It is clear from the above observations of this Court in the said case, though a writ was not issued on the facts of that case, this Court has held that on a given set of facts if a State acts in an 5 arbitrary manner even in a matter of contract, an aggrieved party can approach the court by way of writ under Article 226 of the Constitution and the court depending on facts of the case is empowered to grant the relief. The judgment in K.N. Guruswamy v. State of Mysore was followed subsequently by this Court in the case of D.F.O. v. Ram Sanehi Singh wherein this Court held:
(SCC p.865, para 4) "By that order he has deprived the respondent of a valuable right. We are unable to hold that merely because the source of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of a writ. In view of the judgment of this Court in K.N. Guruswamy case there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power."
(emphasis supplied) "53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of the State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering the risk of the appellants was issued by the first respondent after seeking all required information and after receiving huge sums of money as premium exceeding Rs 16 lakhs. On facts we have found that the terms of the policy do not give room to any ambiguity as to risk covered by the first respondent. We are also of the considered opinion that the liability of the first respondent under the policy arose when the default of the exporter occurred and thereafter when the Kazakhstan Government failed to fulfil its guarantee. There is no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such factual situation, we are of the opinion, the facts of this case do not and should not inhibit the High Court or this Court from granting the relief sought for by the petitioner."
13. Applying the law as has been laid down by the Hon'ble Apex Court, to the facts of the present case, it is quite clear that neither there is misrepresentation nor fraud pleaded and alleged instead a justified claim of the petitioner regarding compensation for escalation which in 6 principle initially has been sanctioned by the respondents but later on arbitrarily revoked.
14. The claim of the petitioner is not only fair and just but reasonable as well. There is no disputed question of fact involved, position is clear and admitted still right is denied in an arbitrary manner. Therefore, for enforcement of such right, a remedy under Article 226 of the Constitution of India cannot be denied. That being so petition is held to be maintainable.
15. The amount as compensation for escalation of prices/wages has been technically checked by the respondent No.4 for an amount of Rs.1,00,43,884/- (Rupees one crore forty three thousand eight hundred and eighty four only) and sanctioned by the respondents-Assam Rifles vide order bearing No.VIII.11014/611/Khonsa/Engr-2008 dated 28.10.2016 and after deduction, fully vouched contingent bill for Rs.94,36,371/- (Rupees ninety four lakhs thirty six thousand and three hundred seventy one only) has been prepared but not drawn therefore, not paid to the petitioner, shall be payable to the petitioner. As such, be paid to the petitioner within a period of three months from today. In default of payment within three months, same shall be payable with interest @6% per annum. The letters impugned including letter dated 06.04.2017 providing for revoking the approval for payment of compensation for escalation shall stand quashed.
16. Petition succeeds and is disposed of as above.
(Mohammad Yaqoob Mir) Chief Justice Meghalaya 08.08.2018 "Lam AR-PS"
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