Kerala High Court
M/S. We Build (P) Ltd vs Government Of Kerala on 12 March, 2019
Author: Anu Sivaraman
Bench: Anu Sivaraman
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN
TUESDAY ,THE 12TH DAY OF MARCH 2019 / 21ST PHALGUNA, 1940
WP(C).No. 4465 of 2018
PETITIONER/S:
M/S. WE BUILD (P) LTD.,
T.K. RAJAN (JV) HAVING ITS REGISTERED OFFICE AT T.C
16/1713, JAGATHY, THIRUVANANTHAPURAM,
REPRESENTED BY SRI.C.KAMALASANAN, MANAGING DIRECTOR,
WEBUILD (P) LTD, AGED 77
S/O. LATE CHELLAPPAN, RESIDING AT SRUTHI,
T.C 16/712, JAGATHY, THIRUVANANTHAPURAM - 695014.
BY ADVS.
SRI.BASANT BALAJI
SMT.N.P.SILPA
RESPONDENT/S:
1 GOVERNMENT OF KERALA,
REPRESENTED BY THE PRINCIPAL SECRETARY TO GOVT.,
LSGD(URBAN AFFAIRS)DEPARTMENT,
GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM -
695 001
2 EMPOWERED COMMITTEE OF KERALA STATE URBAN DEVELOPMENT
PROJECT
REPRESENTED BY ITS MEMBER SECRETARY,PROJECT DIRECTOR,
KSUDP/ MISSION DIRECTOR, "AMRUT" T.C.15/166,
VIPANCHIKA ANNEX,ALTHARA NAGAR,
BEHIND VELLAYAMBALAM TELEPHONE UNIT,
THIRUVANANTHAPURAM- 695 010
3 KERALA STATE URBAN DEVELOPMENT PROJECT
REPRESENTED BY THE PROJECT DIRECTOR,
KSUDP/MISSION DIRECTOR
STATE MISSION MANAGEMENT UNIT
"AMRUT" T.C.15/166, VIPANCHIKA ANNEX,ALTHARA
NAGAR,BEHIND VELLAYAMBALAM TELEPHONE
UNIT,THIRUVANANTHAPURAM- 695 010
4 PROJECT MANAGER
KSUDP/MISSION DIRECTOR,STATE MISSION MANAGEMENT
UNIT"AMRUT" T.C.15/166, VIPANCHIKA ANNEX,ALTHARA
NAGAR,BEHIND VELLAYAMBALAM TELEPHONE
UNIT,THIRUVANANTHAPURAM- 695 010
WP(C).No. 4465 of 2018 2
5 CORPORATION OF THIRUVANANTHAPURAM
REPRESENTED BY ITS SECRETARY,CORPORATION BUILDING,
THIRUVANANTHAPURAM- 695 001.
BY ADVS.
SMT.ANEETHA A.G.,SPL.G.P.(CO-OPERATION)
ADV. BASANT BALAJI, SC
SRI.N.NANDAKUMARA MENON (SR.)
OTHER PRESENT:
SR GP K.V. MANOJKUMAR
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
12.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No. 4465 of 2018 3
JUDGMENT
This writ petition is filed seeking directions to the respondents to pay the amounts due to the petitioner, after amicably settling the disputes between the parties, as prescribed in clause 24.1 of the general conditions of contract. Further prayers are raised challenging Exts.P24 and P27 orders. A declaration is also sought for that the petitioner is entitled to price adjustment as provided in the contract, under Annexure 2 for the period from 15.10.2010 to 31.08.2015.
2. The petitioner, who is a Company engaged in taking up Government contracts, was awarded the work of 'Thiruvananthapuram Road Improvement Works Part-I, Package No.TVM-RT-01-A1-Road from Attakulagara Jn. to NH Bye-pass near Thirvallom (via) Manacaud'. The validity of the agreement was for 15 months from the date of the agreement. The initial period of validity was due to expire on 14.10.2010. However, WP(C).No. 4465 of 2018 4 the work was not completed in time and the period was extended on several occasions. Relying on Ext.P9 delay analysis report of the 4th respondent, the learned counsel for the petitioner contends that the lion's share of the delay was attributable to the employer. The petitioner contends that there is a price adjustment clause for work completion, which is applicable after the intended date of completion. When the respondents refused to honour the price adjustments clause, the petitioner approached this Court and by Ext.P25 judgment dated 12.4.2017, the 4th respondent was directed to consider the representation preferred by the petitioner by resorting to the dispute resolution mechanism contained in the contract and to attain finality within two months. Though Ext.P26 hearing notes and claim statement were furnished by the petitioner, Ext.P27 proceedings have been issued by the 4th respondent rejecting the claim of the petitioner. The said proceedings are under challenge.
3. The learned counsel for the petitioner WP(C).No. 4465 of 2018 5 submits that the price escalation clause was in- operation till the ultimate completion of the contracted work as on 31.8.2015 and the benefit of the same has been arbitrarily denied to the petitioner. It is further stated that the extension of time was without any financial implications, since the delay was on the part of the employer in the completion of the work. It is therefore contended that the refusal on the part of the respondents to grant the benefit of the price escalation clause to the petitioner, till the date of completion of the work is completely illegal and unsustainable. It is further contended that in view of Ext.P9 delay analysis report prepared by the 4th respondent, the petitioner was not liable to be mulcted with any liability for the delay in the completion of the work. Ext.P13 particular conditions of contract is relied on by the learned counsel for the petitioner to contend that price escalation for labour component and the material component of the contract is liable to be granted, till the completion of the work. WP(C).No. 4465 of 2018 6
4. A detailed counter affidavit has been placed on record by the 3rd respondent. It is contended therein that the intended period of completion of the project was 14.10.2010. The period of contract was extended repeatedly on request of the contractor and the extensions were approved by the respective empowered committees and the petitioner executed supplementary agreements on willingness. It is stated that all the extensions of time were on specific conditions of liquidated damages being imposed on the petitioner. It is stated that 9 out of the 10 extensions granted were approved, subject to liquidated damages due to the contractors' unsatisfactory performance. It is stated that Ext.P9 report of the Project Manager was one prepared without considering the actual facts of the matter and that the same cannot be acted upon. It is stated that in view of the fact that all extensions were subject to liquidated damages, the petitioner could not escape the liability, on account of the extension of the work on liquidated damages. It is further WP(C).No. 4465 of 2018 7 stated that the condition with regard to price escalation, as provided in the special conditions of contract is applicable only for the original period of the contract and is not intended to operate beyond the period of the contract. It is stated that no delay damages were deducted from the petitioner and the petitioner was not entitled to price escalation since he had entered into specific agreements for extension without claiming any such escalation in the price. It is therefore contended that in view of the agreement between the parties and the specific terms of the supplementary agreements entered into, the petitioner is not entitled to price escalation since he had agreed to extension of the time, without demanding any such escalation.
5. A reply affidavit has been filed by the petitioner. It is contended that the Liquidated Damages clauses in the supplementary agreements have no significance at all and that the supplementary agreements are evidence of the extension of the validity of the contract between parties and nothing WP(C).No. 4465 of 2018 8 more. It is contended that the extension of the validity of the contract under deferred application of liquidated damages was adopted by the respondents to get over the lacuna of non availability of provision to extend the contract for delay attributable to the employer. It is stated that the delay in execution of the contract was attributable, to a major extent, to the employer and that contentions to the contrary are completely misconceived. It is stated that a verification of the records by an independent Arbitrator will reveal the facts of the case. It is further contended that the petitioner is in dire financial straits due to the rejection of the valid claims of the petitioner.
6. An additional counter affidavit has also been placed on record by the 3rd respondent repudiating Ext.P9 delay analysis report submitted by the Project Manager. Ext.R3(e) which is purported to be an audit objection and recommendation by the Comptroller and Auditor General as against the Officer, who prepared Ext.P9 is also produced. It is WP(C).No. 4465 of 2018 9 stated that in Ext.P27, the Project Director had independently considered the contention of the petitioner and had found that the claims of the petitioner are completely unsustainable. It is stated that the claim raised by the petitioner is not liable to be considered by this Court in exercise of its writ jurisdiction and that the dispute can be properly decided only in a civil suit between the parties after taking evidence.
7. I have considered the contentions advanced on either side. The relief claimed by the petitioner is with regard to the operation of a price escalation clause in the contract. Referring to the provisions of the contract itself, the learned Government Pleader would contend that the price escalation would be available only during the original term of the contract. It is alternatively contended that even in case, the petitioner is entitled to price escalation during the extended periods of the contract, the petitioner has given up such rights by entering into supplemental agreements, which did not provide any WP(C).No. 4465 of 2018 10 such price escalation. It is further contended that 9 out of the 10 time extensions had been granted to the petitioner, considering the delay on the part of the petitioner in meeting the required time lines and on imposition of liquidated damages, the calculation of which was deferred. Clause 24 of the general conditions of contract provides for amicable settlement of any disputes between the Project Manager of the employer and the contractor. If the dispute is not so settled, it shall be tried to be resolved by the Chief of the Contractor's firm and the Project Director. Clause 24.3 provides that any difference arising out of the contract which cannot be settled as above, shall be settled through the local court of law. Though the learned counsel for the petitioner would contend that the delay, almost in its entirety, was attributable to the employer, I am of the opinion that in view of the repudiation of Ext.P9 by the respondents, the question of the responsibility for the delay is a matter is to be considered in a properly constituted civil suit in WP(C).No. 4465 of 2018 11 view of the provisions of clause 24 of the general conditions of contract. This Court, exercising jurisdiction under Article 226 of the Constitution of India, cannot go into the disputed questions of fact involved in a commercial contractual transaction between the parties to a contract. Since what is raised before me is essentially a question of fact, I am of the opinion that it is not open for this Court to consider such aspects of the matter in detail.
In the above view of the matter, leaving open the contentions of the parties to be agitated in appropriate proceedings, the reliefs sought for in this writ petition are declined. It is made clear that nothing stated in the judgment shall prejudice the parties in a properly constituted proceedings before the appropriate court.
Sd/-
ANU SIVARAMAN
sab JUDGE
WP(C).No. 4465 of 2018 12
APPENDIX
PETITIONER'S/S EXHIBITS:
EXHIBIT P1 A TRUE COPY OF THE LETTER OF ACCEPTANCE
DATED 15.6.2009 ISSUED BY THE 4TH
RESPONDENT
EXHIBIT P2 TRUE COPY OF THE 1ST TWO PAGES OF THE
AGREEMENT NO 14/PIU/KSUDP/TVM/URT DATED 15.7.2009 EXHIBIT P3 TRUE COPY OF THE RELEVANT PAGES CONTAINING LIQUIDATED DAMAGES CLAUSE 46 OF GENERAL CONDITIONS OF CONTRACT (G.C.C) EXHIBIT P4 TRUE COPY OF THE RELEVANT PAGES OF THE PCC CONTAINING CLAUSE 46.
EXHIBIT P5 A TRUE COPY OF THE PROJECT MANAGEMENT STRUCTURE AND ORGANIZATION CHART EXHIBIT P6 TRUE COPY OF THE LETTER OF PETITIONER DATED 24.5.2010 EXHIBIT P7 TRUE COPY OF THE SECTION 13(2) NOTICE DATED 25.5.2017 ISSUED BY SBI TO THE PETITIONER UNDER SARFAESI ACT.
EXHIBIT P8 TRUE COPY OF THE COMPLETION CERTIFICATE DATED 16.9.2015 WITH THE COVERING LETTER EXHIBIT P9 TRUE COPY OF THE LETTER WITH THE DETAILED DELAY ANALYSIS REPORT OBTAINED UNDER RTI ACT EXHIBIT P10 A TRUE COPY OF THE REPORT DATED 24.9.2009 OF THE CHIEF SUPERVISION ENGINEER (CSE) EXHIBIT P11 TRUE COPY OF THE RELEVANT PAGES OF GCC CONTAINING CLAUSE 44 TO THE CONTRACT AGREEMENT EXHIBIT P12 TRUE COPY OF THE RELEVANT PAGES OF PCC CONTAINING CLAUSE 44 EXHIBIT P13 TRUE COPY OF THE RELEVANT PAGES OF THE AGREEMENT CONTAINING THE ANNEXURE 2- PRICE ESCALATION WP(C).No. 4465 of 2018 13 EXHIBIT P14 TRUE COPY OF THE LETTER DATED 18.10.2013 OF THE PETITIONER TO THE 3RD RESPONDENT EXHIBIT P15 A TRUE COPY OF THE LETTER NO.10/URT-
TVMP/2012-13/ KSUDP DATED 01 NOVEMBER 2013 TO THE PETITIONER EXHIBIT P16 TRUE COPY OF THE LETTER DATED 06.08.2014 OF THE 4TH RESPONDENT TO 3RD RESPONDENT EXHIBIT P17 TRUE COPY OF THE NOTE 948 DATED 2.12.2014.
EXHIBIT P18 STATEMENT IN TABULAR FROM SHOWING THE DETAILS OF THE AMOUNTS DEFERRED BY THE 4TH RESPONDENT FROM CONTRACT PRICE EXHIBIT P19 COPY OF THE LETTER DATED 18.11.2016 OF THE PETITIONER ADDRESSED TO THE 3RD RESPONDENT EXHIBIT P20 COPY OF THE TECHNICAL CIRCULAR DATED 15.6.2011 ISSUED BY KSUDP EXHIBIT P21 TRUE COPY OF THE RELEVANT PAGES CONTAINING THE CLAUSE 24 OF G.C.C EXHIBIT P22 TRUE COPY OF THE RELEVANT PAGES CONTAINING THE CLAUSE 57 OF G.C.C. EXHIBIT P23 TRUE COPY OF THE GO(RE) NO 2765/2013 LSGD DATED 11.11.2013 EXHIBIT P24 TRUE COPY OF THE RELEVANT PAGES OF THE MINUTES OF THE 57TH MEETING OF THE EC.
EXHIBIT P25 TRUE COPY OF THE JUDGMENT DATED 12.4.2017 IN WPC NO 13668/2017 EXHIBIT P26 TRUE COPY OF THE HEARING NOTE AND CLAIM STATEMENT WITHOUT ANNEXURES EXHIBIT P27 TRUE COPY OF THE ORDER NO LO-
261/2017/KSUDP DATED 18.12.2017 OF THE 3RD RESPONDENT.
EXHIBIT P28 TRUE COPY OF THE SUPPLEMENTARY AGREEMENTS ENTERED BETWEEN THE PETITIONER AND THE 4TH RESPONDENT.
WP(C).No. 4465 of 2018 14RESPONDENT'S/S EXHIBITS:
EXHIBIT R3 A TRUE COPY OF THE GOVERNMENT ORDER DATED 02/03/2007.
EXHIBIT R3 B TRUE COPY OF THE RECOMMENDATIONS INCLUDING THAT OF DATED 11/07/2011, 20/10/2011.
EXHIBIT R3 C TRUE COPY OF THE MINUTES OF THE MEETINGS OF THE 24TH, 27TH, 28TH, 29TH, 36TH, 40TH, 43RD, 47TH, 55TH AND 57TH.
EXHIBIT R3 D TRUE COPY OF SUPPLEMENTARY AGREEMENTS DATD 15/11/2010, 30/03/2011, 15/06/2011, 30/11/2011, 04/05/2012, 24/01/2013, 09/09/2013 AND 15/01/2014.
EXHIBIT R3 E A TRUE COPY OF THE AUDIT OBJECTIONS AND RECOMMENDATIONS MADE BY THE CONTROLLER AND AUDIT GENERAL.
EXHIBIT R3 F TRUE COPY OF THE RECOMMENDATIONS OF THE PROJECT MANAGER DATED 13/08/2012.