Madhya Pradesh High Court
Narmada Enterprises vs Managing Director Food Corporation ... on 2 April, 2014
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Narmada Enterprises Vs. Food Corporation of India and others.
W. P No. 8424/09
2/04/14
Shri D. K. Dixit, learned counsel for the petitioner.
Shri M. K. Agrawal, learned counsel for the
respondents.
Petitioner has filed this writ petition calling in question the orders passed by the respondents Food Corporation of India whereby a contract awarded to the petitioner for Rail Head Transport has been terminated and certain recovery is being ordered against the petitioner on the ground that the work has been got done through a third contractor and, therefore, petitioner has to pay the expenses incurred for getting the work done through such a contractor.
A short term tender notice was issued by the respondents vide Annexure P-1 on 26.06.08 in the year 2008 and the petitioner was awarded the contract. The period of work was from 13.10.06 to 12.10.08. The rate at which the work was to be done was 33 % ASOR. It seems that in the execution of the work, as certain dispute arose between the petitioner and the respondents Food Corporation of India, various correspondence took place and, finally, the work was awarded to a third party at the risk and cost of the petitioner and after the work has been executed, recovery of the amount in excess of the original contract has been made against the petitioner. Challenging the said recovery, this writ petition has been filed.
It is the case of the petitioner that even though, initially the contract was for the period from 13.10.06 to 12.10.08 but the work given to the petitioner was extended 2 Narmada Enterprises Vs. Food Corporation of India and others.
from 13.10.08 to 12.01.09 on the same terms and conditions vide Annexure P-5 on 24.09.08 but even before this period could be over and without terminating the contract, the work was given to a third person at the rate which was more than 99 % ASOR and now the amount of difference is being recovered from the petitioner. It is said that the petitioner's contract was never terminated and during the extended period of contract, the action taken is unsustainable.
Placing reliance on a judgment rendered by a Full Bench of this Court in the case of B. B. Verma and another VS. State of M. P. and another, 2008 (1) M.P.H.T. 17, Shri D. K. Dixit argues that without adjudication of the dispute between the parties in the matter of work done through another contractor, recovery of more than Rs. 4,00,000/- is unsustainable and as the recovery is contrary to the law laid down by a Full Bench of this Court in the case of B. B. Verma (supra), it is said that the action taken is unsustainable.
Shri Mukesh Agrawal, learned counsel for the respondents invited our attention to the Clause 9 (2) of the agreement Annexure P-2 and argued that the contract could be extended by a further period of three months and in Clause 10 (B), it is clearly stipulated that even during the extended period, if the contractor is unable to do the work unsatisfactorily, it can be given to the third party at the risk and cost of the petitioner. Accordingly, he further submitted that respondents have acted in accordance with the terms and conditions of the contract. As far as the judgment rendered in the case of B. B. Verma (supra) is concerned, Shri 3 Narmada Enterprises Vs. Food Corporation of India and others.
Mukesh Agrawal argues that the aforesaid judgment is not applicable in the present case.
It is further argued by Shri Mukesh Agrawal that there is no dispute between the parties and as the work is executed by the third person in accordance with the Clause 10 ( B), the judgment rendered in the case of B. B. Verma (supra) will not be applicable in the facts and circumstances of the case.
Shri D. K. Dixit invites our attention to the principles laid down by a Full Bench of this Court in the case of B. B. Verma (supra) in para 16 and argues that submission of Shri Mukesh Agrawal cannot be accepted.
We have heard learned counsel for the parties at length and perused the records. It is a case where the contract was awarded to the petitioner and initially, the period of the contract was extended vide Annexure P-5 on 24.09.08. However, even though extension was granted from 13.10.08 to 12.01.09 but during the extended period, the work was got executed through certain other contractor and now the amount of this work is recovered from the petitioner. Even though Clause 10 (B) permits the respondents to get the work executed from a third person but without termination of the contract and without adjudicating the dispute between the parties, the action taken is unsustainable. The law laid down in the case of B. B. Verma (supra) squarely applies in this case and without resolution of the dispute in accordance with law by an appropriate forum, the entire action taken for recovery is unsustainable.
As far as the objection taken by Shri Mukesh Agrawal 4 Narmada Enterprises Vs. Food Corporation of India and others.
is concerned, in para 13 and 16 in the case of B. B. Verma (supra), the matter has been dealt with in the following manner :-
13. In the two decisions of the Division Bench in Ch. Chandra Shekhar v. State of M.P. and Ors. and Seth Mohanlal Hiralal v. State of M.P. and Anr. (supra), there is also no reference to the decision of the Supreme Court in State of Karnataka v. Rameshwar Rice Mills Thirthahalli (supra), in which Clause 12 of the agreement with the State of Mysore and a private person for purchase of paddy under the Paddy Procurement Scheme, 1959 inter alia provided that any amount that may become due or payable by the first party to the second party under any part of the agreement shall be deemed to be and will be recovered from the first party as if they are arrears of land revenue and the Supreme Court held that the terms of Clause 12 of the agreement do not have scope for liberal construction being made so as to confer power on the Deputy Commissioner to adjudicate upon disputed questions of breach as well as to assess the damages arising from the breach. The Supreme Court further held that the officers of the State Government which is a party to the agreement, cannot be an arbiter in his own cause and interest of justice and equity require that where a party to a contract disputes the committing of any breach of conditions, the adjudication should be by an 5 Narmada Enterprises Vs. Food Corporation of India and others.
independent person or body and not by the other party to the contract.
16. We may now deal with the contention of Mr. Shukla that under Clause 4.3.3.3 of the conditions of contract, the Executive Engineer or the Divisional Officer does not assess and recover any damages but expenses which may be incurred in excess of the sum which would have been paid to the original contractor in case the unexecuted part of the work is completed by another contractor. This contention of Mr. Shukla over-looks the fact that the additional expenses incurred by the State Government for getting the unexecuted part of the work completed by another contractor which are sought to be recovered under Clause 4.3.3.3 are really in the nature of damages. Section 73 of the Indian Contract Act, 1872 provides that when a contract is broken, the party who suffers by such breach is entitled to receive from the party who has broken the contract compensation for any loss or damage caused to him thereby which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it but such compensation will not be given for any remote and indirect loss or damage sustained by reason of the breach. Where therefore a contractor does not complete the work 6 Narmada Enterprises Vs. Food Corporation of India and others.
entrusted to him under the contract and the unexecuted part of the work is entrusted to another contractor for completion and the Government incurs additional expenses for having the work completed by another contractor over and above the expenses which have been paid to the original contractor, the additional expenses sought to be recovered by the Government are nothing but damages within the meaning of Section 73 of the Indian Contract Act, 1872. The contention of Mr. Shukla that the additional expenses sought to be recovered under Clause 4.3.3.3 of the conditions of contract are not really damages is therefore misconceived.
In view of the above, we hold that the action of the respondents in making the recovery from the petitioner without proper adjudication of the dispute in accordance with law is not proper and, therefore, the entire recovery is quashed.
Respondents are directed to effect the recovery from the petitioner after following the due process as contemplated.
With the aforesaid, the petition stands allowed and disposed of.
(Rajendra Menon) (Anil Sharma) JUDGE JUDGE Vy*