Madhya Pradesh High Court
M/S Sayyed Ali Construction Company ... vs Madhya Pradesh Rural Road Development ... on 18 December, 2017
1
(W. P. No.5478/2017)
HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE
Division Bench : Hon'ble Shri P.K. Jaiswal & Shri Virender Singh, JJ.
W. P. No.5478 of 2017
M/s Sayyed Ali Construction Company
vs.
M. P. Rural Road Development Authority & another
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Shri Piyush Mathur, learned Senior Counsel with Shri M. S.
Dwivedi, learned counsel for the petitioner.
Shri V. P. Khare, learned counsel for the respondents.
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ORDER
(Indore, dated : 18.12.2017) By this writ petition, under Article 226 of the Constitution of India, the petitioner is praying for the following reliefs :-
(a) That the Order of Termination of Contract Dt. 05.06.2017 issued by the General Manager, M.P.R.R.D.A. Dewas (Annexure P/13) may kindly be quashed.
(b) That the Order Dt. 04.08.2017 (Annexure P/16) may also kindly be quashed by further directing to the Respondent No.1 C.E.O. M.P.R.R.D.A to decide afresh the Dispute (Annexure P/14 & P/17), preferred in terms of Clause 24 of the Terms of the Agreement.
(c) That the Respondents may kindly be restrained from taking any coercive steps against the petitioner in relation to the Agreement executed for Package No.M.P. 1098 PIU-2, Dewas till its final decision.
(d) That any other relief, which this Hon'ble Court may deem 2 (W. P. No.5478/2017) fit may also be kindly given, along with cost.
2. Facts of the case are that the writ petitioner was awarded a work contract vide work order dated 15.07.2016 (Annexure-P/4) by the M. P. Rural Road Development Authority for the "Construction & Maintenance of Rural Roads under PMGSY Package No.1098 Kannod in Dewas District" and, thereafter, the petitioner had started road work as per the Drawing and Design contained in the tender documents but the site was not cleared due to not granting permission by the Forest Department as some portion of land was fallen into the reserve forest area and after obtaining permission, when the petitioner had started work in that area, then the officials of the Forest Department had seized the vehicles and other mechanical equipments and the people of locality of site was also obstructed and created hurdle for not constructing road upon the possession of their land.
3. All these facts were brought to the notice of the respondent No.1 but nothing was done within time and the petitioner resolved the dispute somehow and again started working and all of a sudden, notice for termination of contract was issued by the respondent No.2 on 11.05.2017 (Annexure-P/9) on the ground of slow progress of work and the petitioner had timely replied by mentioning all the facts as well as sought permission for extending the time till December, 2017 but the same had not been considered and had passed termination order dated 05.06.2017 (Annexure-P/13) by invoking Clause 52 of the Agreement and, thereafter, a statutory dispute was preferred in terms of Clause 24 of the contract for revival of the contract before the Chief Executive Officer and the same has been decided on 04.08.2017 (Annexure-P/16) without assigning any reason by a cryptic order based upon the inspection report prepared behind the back of the petitioner as by virtually prejudging the dispute, in an arbitrary manner for defeating 3 (W. P. No.5478/2017) the ends of justice.
4. A preliminary objection has been raised by the respondent Nos.1 and 2 on the ground that after receiving the termination of contract vide termination order dated 05.06.2017 (Annexure-P/13), the petitioner had approached under Clause 24 of the General Conditions of Contract before the Chief Executive Officer (CEO). The CEO after giving due opportunity of hearing passed the order dated 04.08.2017, whereby, rejected the application of the petitioner. Thereafter, the petitioner has the remedy to approach before the M. P. Arbitration Tribunal, Bhopal, as per Clause 25 of the General Conditions of Contract, which is part of the Agreement.
5. In view of the statutory remedy available to the petitioner by approaching M. P. Arbitration Tribunal constituted under the M. P. Madhyastham Adhikaran Adhiniyam, 1983, the present writ petition is not maintainable and prayed for dismissal of the writ petition.
6. Relevant provisions of Clause 24 and 25 of the General Conditions of Contract reads as under :-
24. Dispute Redressal System :
If any dispute or difference of any kind whatsoever shall arises in connection with or arising out of the Contract or the execution of works or maintenance of the works there under, whether before its commencement or during the progress of works or after the termination, abandonment or breach of the Contract, it shall, in the first instance, be referred for settlement to the competent authority, described along with their powers in the Contract Data, above the rank of the Engineer. The competent authority shall, within a period of forty-five days after being requested in writing by the contractor to do so, convey his decision to the contractor. Such decision in respect to every matter so referred shall, subject to review as hereinafter provided, be final and binding upon the contractor. In case the works is already in progress, the contractor shall proceed with the execution of the 4 (W. P. No.5478/2017) works, including maintenance thereof, pending receipt of the decision of the competent authority as aforesaid, with all due diligence.
25. Arbitration :
Either party will have right of appeal against the decision of the competent authority, nominated under Clause 24, to the Madhya Pradesh Arbitration Tribunal constituted under Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 provided the amount of claim is more than Rs.50,000/-.
7. On merit, the stand of the respondents is that the contract of work for Package No.MP-1098, PIU-2, Dewas, District Dewas was awarded to the petitioner after entering into agreement No.13/2016-17 dated 13.07.2016 (Annexure-P/4). The contract amount of the package was Rs.936.57 lacs. Period of the work was 12 months including rainy season upto 14.07.2017 including routine maintenance for 5 years after construction.
8. Clause 21(a) of the General Conditions of Contract reads as under :-
(a) Milestones to be achieved during the contract period (1) 1/8th of the value of entire contract work upto 1/4th of the period allowed for completion of construction.
(2) 3/8th of the value of entire contract work upto ½ of the period allowed for completion of construction.
(3) 3/4th of the value of entire contract work upto 3/4th of the period allowed for completion of construction.
9. As per terms and conditions of the contract, time was essence of the contract. As per Clause 21(a) of the General Conditions of Contract, the petitioner has to complete 1/8th of the value of entire contract work upto 1/4th of the period allowed for completion of construction, 3/8th of the value of entire contract work upto ½ of the 5 (W. P. No.5478/2017) period allowed for completion of construction and 3/4th of the value of entire contract work upto 3/4th of the period allowed for completion of construction.
10. The petitioner/company had completed the work only for Rs.81.51 lacs against agreement amount of Rs.797.40 lacs after passing more than 9 months period. The progress was very slow and only 10.22% of the work upto April 2017 was completed. A show cause notice under Clause 52 of the Agreement dated 11.05.2017 (Annexure- P/9) was issued but the petitioner failed to achieve the prescribed milestones. On 20.12.2014, a decision was taken by the respondents about the width of the road ought to have been 7.50 mtrs. in place of 6 mtrs., which was communicated vide order dated 28.07.2016 i.e. within a period of 10 days from the date of issuance of work order dated 15.07.2016 (Annexure-P/5). The permission was duly granted by the Forest Department vide letter dated 12.07.2016 permitting to construct the road from Katkut to Gadway (6.30 kms.) and the same was forwarded to the petitioner on 15.07.2016 to carry out the work accordingly. Relevant part of the letter dated 12.07.2016 (Annexure-R/
2) reads as under :-
mijksDr fo"k;karxZr lanfHkZr i= ls vkids }kjk dkVdqV ls x<ok; ekxZ ls izHkkfor ou{ks= esa ekxZ mUu;u dh vuqefr pkgh xbZ gSA bl laca/k esa vkids v/khuLFk vf/kdkjh }kjk mioueaMykf/kdkjh dUukSn ds ek/;e ls ekxZ mUu;u gsrq izLrkfor dkVdqV ls x<ok; ekxZ dh fo| eku ,oa izpfyr yackbZ o pkSM+kbZ laca/kh la;qDr :i ls ekSdk fujh{k.k fd;k x;k] ftlds vk/kkj ij mioueaMy vf/kdkjh dUukSn }kjk muds i= dzekad 1727 fnukad 04-07-2016 ls izLrqr tkWp izfrosnu vuqlkj %& 1- mUu;u gsrq izLrkfor ekxZ 1980 ds iwoZ ls vkokxeu gsrq mi;ksx esa fy;k tkuk n'kkZ;k x;k gSA vFkkZr ekxZ fnukad 25-10-1980 ds iwoZ ls izpyu esa gSA 2- mUu;u gsrq izLrkfor ekxZ dh pkSM+kbZ izkjafHkd fcanq ls 3000 ehVj yackbZ o 3200 ehVj ls 4100 ehVj yackbZ rd 08 ehVj pkSM+kbZ ,oa 3001 ls 3100 ehVj yackbZ rd 04 ehVj pkSM+kbZ o 3100 ls 3200 ehVj ¼?kkV lsD'ku½ esa 06 ehVj pkSM+kbZ n'kkZ;h x;h gSA 3- mUu;u gsrq izLrkfor ekxZ ouifj{ks= [kkrsxkWo ds 6 (W. P. No.5478/2017) varxZr chV x<ok; ds d{k dzekad 286 ,oa chV yhy ds d{k dzekad 288 ls gksdj xqtjrk gS bl izdkj ekxZ ds dqy 4100 eh- yackbZ dk ou{ks= izHkkfor gksuk n'kkZ;k x;k gSA 4- mUu;u gsrq izLrkfor ekxZ es amijksDr mYysf[kr pkSM+kbZ esa dksbZ Hkh o`{k izHkkfor ugha gksuk n'kkZ;k x;k gSA 5- mDr ekxZ ds izHkkfor ou{ks= ds izkjafHkd fcanq dk v{kka'k N 22o 42' 9" ,oa ns'kkal 76o 49' 02.1" rFkk vafre fcanq dk v{kka'k N 22o 44' 13.8" ,oa ns'kkal E 76o 49' 58.7"
gSA vr% izdj.k esa izpfyr ekxZ dh fo|eku pkSM+kbZ izkjafHkd fcanq ls 3000 ehVj yackbZ o 3200 ehVj ls 4100 ehVj yackbZ rd 08 ehVj pkSM+kbZ ,oa 3001 ls 3100 ehVj yackbZ rd 04 ehVj pkSM+kbZ o 3100 ls 3200 ehVj ¼?kkV lsD'ku½ esa 06 ehVj pkSM+kbZ esa egkizca/kd e-iz- xzkeh.k lM+d fodkl izkf/kdj.k ifj;kstuk fdz;kUo;u bdkbZ nsokl dks e-iz- 'kklu ou foHkkx ds i= dz @5@6@2005@10&3 Hkksiky fnukad 17 ebZ 2005 ,oa 21-11-2006 ls iznRr 'kfDr;ksa dk mi;ksx djrs gq, ekxZ mUu;u dh vuqefr fuEu 'krksZa ds vrxZr iznku dh tkrh gS %& 'krsZ %& 1- ouifj{ks= vf/kdkjh ds funsZ'ku esa o`{kksa ls lqjf{kr nwjh ij dksyrkj dks fi?kykus ,oa feykus ds fy, vkx yxkbZ tkuh gksxhA dk;kZfUor djus okyh ,tsalh dks bl dk;Z gsrq tykm ydM+h iwoZ esa jkT; 'kklu ds fMiks ls dz; fd;k tkuk gksxkA 2- ou{ks= ds vanj fdlh Hkh izdkj ds iRFkjksa dks ugh rksM+k tkosxkA 3- mUuf;r lM+d ds nksuksa fdukjs bZV@iRFkj vkfn ls lqn`M+ fd, tk;saxs rFkk Hkw&{kj.k dks jksdus ds fy, bl dk;kZy; ds ijke'kZ ls osthVsVho dk;Z ifj;kstuk ykxr ij fd;k tkosxkA 4- fdlh Hkh o`{k dks dkVk ugha tkosxkA 5- lM+d dk pkSM+hdj.k ugh fd;k tkosxk] bl ckcr~ e-iz- 'kklu ou foHkkx ds i= dz- @5@6@2005@10&3 Hkksiky fnukad 21-11-2006 ds funsZ'kkuqlkj (Right of Way) ds v/khu jgsxhA 6- ou{ks= dks dgha ls Hkh rksM+k ugha tkosxkA ou{ks= esa fdlh Hkh izdkj mR[kuu ugha fd;k tkosxkA 7- tgka vko';d gks] ou foHkkx pkgs rks ouifj{ks=kf/kdkjh ds funsZ'ku es aekxZ ds nksuksa vkSj ifj;kstuk ykxr ij o`{kkjksi.k djok ldrk gS] ftldk j[kj[kko Hkh ifj;kstuk ykxr ij fd;k tkosaXkkA 8- ou Hkwfe ij Jfed dsEi ugh yxk;s tk;sxsaA 9- lq;kZLr ds i'pkr~ dksbZ dk;Z ugha fd;k tkosxkA 10- le;≤ ij LFkkuh; ikS/ks ,oa tarqvksa ds laj{k.k o fodkl ds fy, 'kklu dh iwoZ vuqefr izkIr dj dksbZ ubZ 'krZ yxkus ds fy, l{ke jgsxsaA 11- lM+ ds ds mUu;u dk;Z ds dkj.k ;fn ou{ks= esa dksbZ uqd'kku gksrk gS] rks dk;kZfUor djus okyh ,tsalh ifj;kstuk ykxr ij ,sls uqdlku dh HkjikbZ djsxhA uqdlku dk fu/kkZj.k] bl dk;kZy; }kjk fd;k tkosxkA 7 (W. P. No.5478/2017) 12- bl mUuf;r dh xbZ lM+d ij vFkok mUu;u ds v/khu lM+d ij LFkk;h psdiksLV mi;qDr LFkkuksa ij 'kklu dh iwoZ vuqefr izkIr dj yxk;s tk;saxsA 13- mDr Lohd`r fu/kkZfjr pkSM+kbZ vuqlkj vius DPR esa Hkh vko';d la'kks/ku fd;k tkos ftldh izfr bl dk;kZy; dks izLrqr dh tkosA 14- 'krksZa dk ikyu u fd, tkus dh fLFkfr esa nh xbZ Lohd`fr fujLr ekuh tkosxhA
11. Likewise, vide letter dated 01.07.2016 (Annexure-R/3), permission was duly granted by the Forest Department permitting to construct the road from MDR to Dabri (3.80 kms.) and the same was forwarded to the petitioner on 15.07.2016.
12. The remaining two roads namely, Surani to Amoda (2.40 kms.) and MDR to Hatlay (2.20 kms.) were not related to forest department. The work order was issued for Package No.M.P. 1098 PIU-2, Dewas for construction of four roads, which are as under :-
S. Block Road Name Length Cost of Area
No. (in construction
kms.) (in lacs)
(PAC)
1 Kannod MDR to Dabri 3.80 253.23 Forest
2 Kannod MDR to Hatlay 2.20 93.92 Revenue
3 Kannod Surani to Amoda 2.40 160.47 Revenue
4 Kannod Katkut to Gadway 6.30 396.12 Forest
14.70 903.74
13. The petitioner while constructing the road from MDR to Dabri, apart from excavation of the road in question excavated the forest area No.273, contrary to the terms and conditions of permission granted by the Forest Department on 12.07.2016 and 01.07.2016 and as such the Forest Department had taken action against the contractor vide letter dated 26.09.2016 (Annexure-R/4).
14. The stand of the petitioner is that when he started widening of 8 (W. P. No.5478/2017) road upto 7.50 mtrs., then the Forest Department had seized the vehicle of the petitioner. This fact is not correct because the Forest Department had made a complaint to the respondents about the MDR to Dabri because the petitioner excavated in the forest compartment area No.273 beyond the permitted area.
15. The respondents/department immediately vide letter dated 21.09.2016 directed the petitioner to comply with the terms and conditions of the permission granted by the Forest Department and ensure to construct the road as per the terms and conditions else if the Forest Department has done any action about violation of the terms and conditions of the permission granted by the Forest Department, then the company will be responsible for the same.
16. On 11.05.2017, a show cause notice was issued for taking action under Clause 52 of the Agreement on the ground of slow work progress is just and proper because he has not completed the work within the time frame given in the terms and conditions of the Agreement. The extension of time can be granted only if the progress of work is satisfactory and delay was due to beyond the control of the contractor. As the progress was very slow, the petitioner within a period of 9 months upto April, 2017 has completed only 10.22% of the work out of total work awarded to him and till 30.05.2017, he has completed 13.25% of the total work of the roads in question.
17. The respondents/department's action of termination of contract by termination order dated 05.06.2017 is just and proper. All the four bank guarantees/FDRs of the petitioner has been encashed by the department. The respondent No.2 has directed for inspection of the work by constituting an Inspection Committee which was conducted in the presence of the supervisor of the contractor on 15.07.201.2017. A joint inspection report of the Committee was submitted to the CEO on 9 (W. P. No.5478/2017) 25.07.2017. A copy of the joint inspection report was also supplied to the petitioner and, thereafter, CEO has passed a final order on 04.08.2017 after giving due opportunity of hearing to the petitioner.
18. The contention of the learned Senior Counsel for the petitioner that no opportunity of hearing was granted to the petitioner is incorrect. He has placed on the decision of the Apex Court in the case of Nagarjuna Construction Company Limited vs. Government of Andhra Pradesh & others reported in 2008 (16) SCC 276 and submits that the termination order was passed without granting any opportunity of hearing as joint inspection was not made in presence of the petitioner or his representative and, therefore, in view of the law laid down by the Apex Court, the impugned orders be set aside and the matter be remitted to the CEO to reconsider the matter for supervision of the copy of the report on which the department's case rests.
19. As per Annexure-R/8, joint inspection was done on 15.07.2017 in the presence of supervisor of the petitioner. Thereafter, opportunity of hearing was granted to the petitioner and after granting opportunity of hearing, termination order dated 05.06.2017 by invoking Clause 52 of the Agreement and the application for revival of the contract has been decided on 04.08.2017 by the CEO vide Annexure-P/17.
20. Clause 52 of the Agreement (Annexure-P/2) reads as under :-
52. Termination 52.1 The Employer may terminate the Contract if the Contractor causes a fundamental breach of the Contract.
52.2 Fundamental breaches of Contract shall include, but shall not be limited to, the following :
a) the Contractor stops work for 28 days when no stoppage of work is shown on the current Programme and the stoppage has not been authorized by the Engineer;
b) the Contractor is declared as bankrupt 10 (W. P. No.5478/2017) or goes into liquidation other than for approval reconstruction or amalgamation;
c) the Engineer given Notice that failure to correct a particular Defect is a fundamental breach of Contract and the Contractor fails to correct it within a reasonable period of time determined by the Engineer;
d) the Contractor does not maintain a Security, which is required.
e) the Contractor has delayed the completion of the works by the number of days for which the maximum amount of liquidated damages can be paid, as defined in clause 44.1;
f) the Contractor fails to provide insurance cover as required under clause 13;
g) if the Contractor, in the judgement of the Employer, has engaged in the corrupt or fraudulent practice in competing for or in executing the Contract. For the purpose of this clause, "corrupt practise" means the offering, giving, receiving, or soliciting-of-any-thing of value to influence the action of a public official in the procurement process or in Contract execution.
"Fraudulent Practice" means a misrepresentation of facts in order to influence a procurement process or the execution of a Contract to the detriment of the Employer and includes collusive practice among Bidders (prior to or after bid submission) designed to establish bid process at artificial non- competition levels and to deprive the Employer of the benefits of free and open competition.
h) if the Contractor has not completed at least thirty percent of the value of construction work required to be completed after half of the completion period has elapsed.
i) if the Contractor fails to set up a field laboratory with the prescribed equipment, within the period specified in the Contract Data; and
j) any other fundamental breaches as specified in the Contract Data.
k) if the Contractor fails to deploy machinery and equipment or personnel as specified in the Contract Data at the appropriate time.11
(W. P. No.5478/2017) 52.3 Notwithstanding the above, the Employer may terminate the Contract for convenience.
52.4 If the Contract is terminated, the Contractor shall stop work immediately, make the site safe and secure, and leave the site as soon as reasonably possible.
21. From the aforesaid, we are of the view that the petitioner has started illegal mining over the forest area No.273 for which no permission was granted by the Forest Department on 01.07.2016 and 12.07.2016 and as per terms and conditions of permission over the area of Surani to Amoda and MDR to Hatlay, no extraction of quarry mineral was permitted over the forest area and, thus, the contention of the learned Senior Counsel for the petitioner that due to aforesaid illegal action of the Forest Department, he could not achieve the time schedule as specified under Clause 52 of the Agreement is not correct.
22. The law on the subject is well settled. The decision of the Apex Court cited by the learned Senior Counsel is distinguishable on facts.
23. In the present case, the petitioner has to make reference under the provisions of the M. P. Madhyastham Adhikaran Adhiniyam before the M. P. Arbitration Tribunal, Bhopal.
24. We have gone through the terms and conditions of the contract and arbitration clause. The contract between the parties is not a statutory contract, it is private contract and in view of the law laid down by the Apex Court in the case of State of U.P. & Ors. vs. Bridge & Roof Co. (India) Ltd., decided on 20.08.1996 [Equivalent Citation JT 1996 (7) 395], the writ petition is not maintainable.
25. In the case of State of U.P. & Ors. vs. Bridge & Roof Co. (India) Ltd. (supra), the Apex Court has held that firstly, the contract between the parties is a contract in the realm of private law. It is governed by the provisions of the Contract Act. Any dispute relating to 12 (W. P. No.5478/2017) interpretation of the terms and conditions of such a contract cannot be agitated and could not have been agitated, in a writ petition. That is a matter for Arbitration Tribunal as provided by the contract.
26. For the above mentioned reasons and in view of the law laid down by the Apex Court in the case of State of U.P. & Ors. vs. Bridge & Roof Co. (India) Ltd., the writ petition has no merit and is accordingly, dismissed. No costs.
(P. K. Jaiswal) (Virender Singh)
Judge Judge
gp
Digitally signed by Geeta Pramod
Date: 2017.12.20 18:14:43 +05'30'