Madhya Pradesh High Court
Om Electricals Firm Thr vs The State Of Madhya Pradesh Thr on 21 August, 2017
1 WP.2061.2016
M/s Om Electricals Firm through Prop. Rakesh Kumar Sharma
Vs. State of Madhya Pradesh and others
21.08.2017
Shri K.K. Shrivastava, learned counsel, for
the petitioner.
Shri N.S. Kirar, learned Government
Advocate, for the respondent/State.
With the consent of learned counsel for the parties, the matter is finally heard.
Question is whether the petitioner who was awarded a contract for providing electrification work to composite office building and 3 No's C and 3 No's E Type Quarters at Vidisha can be subjected to a recovery under the risk and cost when in an appeal preferred by the petitioner against the action of the Executive Engineer invoking Clause 3 of the Agreement the order of the Executive Engineer has been set aside.
Clause 3 of the Agreement (381/SAC/10-11) in reference to NIT No.202/SAC/2010-11 dated 03/01/2011 provides for:
"Clause 3:-In any case in which under any clause or clauses of this contract the contractor shall have rendered himself liable to pay compensation amounting to the whole of his security deposit (whether paid in one sum or deducted by instalments) or committed a breach of any of the rules contained in clause - 24 or in the case of abandonment of the work, except due to permanent disability or death of the contractor or any other cause the Divisional Officer on behalf of the Governor of M.P. shall give a notice before 15 days for work costing upto
2 WP.2061.2016 M/s Om Electricals Firm through Prop. Rakesh Kumar Sharma Vs. State of Madhya Pradesh and others 10.00 lacs and before 30 days for works costing above Rs.10.00 lacs and in the event of the contractor failing to comply with the directions contained in the said notice, shall have power to adopt any of the following courses, as he may deem best in the interests of the Government.
(a) To rescind the contract (of which rescission notice in writing to the contractor under the hand of the Divisional Officer shall be conclusive evidence) and in which case the security deposit of the contractor shall stand forfeited and by absolutely at the disposal of Government.
(b) To employ labour paid by the works Department and to supply materials to carry out the work or any part of the work, debiting the contractor with cost of the labour and the price of the material (of the amount of which cost and price certificate of the Divisional Officer shall be final and conclusive against the contractor) and crediting him with value of the work done in all respects in the same manner and the same rates as if it had been, carried out by the contractors under the terms of his contract or the cost of the labour and the price of materials as certified by the Divisional Officer, whichever is less.
The certificate of the Divisional Officer as to the value of the work done shall be final and conclusive against the contractor.
(c) To measure up to the work of 3 WP.2061.2016 M/s Om Electricals Firm through Prop. Rakesh Kumar Sharma Vs. State of Madhya Pradesh and others the contractor and to take such part thereof as shall be unexecuted out of his, hands and to give it to another contractor to complete in which case any expenses which may be incurred in excess of the sum which would have been paid to the original contractor, if the whole work had been executed by him (of the amount of which excess certificate in writing of the Divisional Officer shall be final and conclusive) shall be borne and paid by the original contractor and may be deducted from any money due to him by Government under the contract or otherwise or from his security deposit or the proceeds of sale thereof or a sufficient part thereof.
In the event of any of the above courses being adopted by the Divisional Officer, the contractor shall have no claim to compensation for any loss sustained by him by reason of his having purchased or procured any materials or entered into any agreements or made any advances on account of or, with a view to the execution of the work or the performance of the contract. And in case the contract shall be rescinded under the provision aforesaid the contractor shall not be entitled to recover or be paid any sum for any work thereto for actually performed under the contract unless and until the Divisional/Sub-Divisional Officer will have certified in writing the performance of such work and value payable in respect thereof, and he shall only be entitled to be paid the value so certified.
Whenever action is taken under 4 WP.2061.2016 M/s Om Electricals Firm through Prop. Rakesh Kumar Sharma Vs. State of Madhya Pradesh and others clause 3(a) the contractor's bill shall be finalised up within three months from the date of rescission both in the case of building works and road and bridge works."
The Executive Engineer, PWD (E/M) Division II Bhopal invoking Clause 3C of the Agreement took over the incomplete work and terminated the contract vide his order dated 25.07.2015. Petitioner questioned the said decision under Clause 29 of the agreement, which provides dispute resolution mechanism, before Superintending Engineer, PWD (E/M) Bhopal, who by his order dated 06.10.2015 set aside the order passed by the Executive Engineer under Clause 3C and directed for fresh tender. The Order reads thus:
**¼1½ Bsdsnkj ds fo:) izLrqr /kkjk 3 *lh* ds varxZr vuqca/k fujLr djus dh dk;Zokgh dks vekU; fd;k tkrk gSA ¼2½ pwafd Hkou ,oa vkokl vkt fnukad esa Hkh fo|qrhdj.k dk;Z lqjf{kr :i ls fd;s tkus gsrq miyC/k ugh gSa] tks laYkXu QksVks ls LIk"V gks jgk gSaA vr% ;g mfpr gksxk fd uohu ,l- vks- vkj- ds vk/kkj ij iqu% izkDdyu cuk dj Hkou dh vko';drkuqlkj ftlesa buTkhZ lsoj ykbV ,oa ia[ks dk lekos'k djrs gq, iqu% LohÑfr izkIr dj u;k Bsdk fu/kkZfjr dj dk;Z dks iw.kZ djkus dh dk;Zokgh dh tk,A ¼3½ izdj.k esa ,slh dksbZ ifjfLFkfr ugha ikbZ xbZ gS] ftlds fy;s Bsdsnkj dks mRrjnk;h ik;k tk lds vr% ;g mfpr gksxk dh eq[; vfHk;ark egksn; /kkjk&14 esa izdj.k esa iqufoZpkj dj fof/kekU; fu.kZ; nsaA** With the passing of the order by the Appellate
5 WP.2061.2016 M/s Om Electricals Firm through Prop. Rakesh Kumar Sharma Vs. State of Madhya Pradesh and others Authority the petitioner stood exonerated from completion of remaining work by another agency at his risk and costs. This order was not challenged by the State or its functionaries and was allowed to attain finality.
That NIT was issued on 27/01/2016 at risk and cost whereagainst the petitioner filed a Writ Petition No.822/2016. The said writ petition was disposed of with the liberty to the petitioner to avail departmental remedy. The order was affirmed in Writ Appeal 51/2016 decided on 01/03/2016. The Chief Engineer to whom the matter stood relegated by order dated 10.03.2016 negatived the claim of the petitioner from being exonerated from risk and cost. It held:
**l{ke vf/kdkjh }kjk flfoy dk;kZsa dh fLFkfr] dk;Zikyu ;a=h] flfoYk ,oa v/kh{k.k ;a=h flfoy ls izkIr dh xbZ ftlds vuqlkj voxr djk;k x;k fd flfoy dk;Z ds vuqikr esa fo|qrhdj.k dk dk;Z lafonkdkj }kjk ugha fd;k x;kA rnuqlkj /kkjk&14 ds varxZr izkIr izLrko dks vekU; fd;k x;k gS ,oa vuqca/k dh /kkjk& 3¼lh½ dh dk;Zokgh dks oS/k ekuk x;k gSA vr% lafonkdkj dk dFku vLohdkj fd;s tkus ;ksX; gSA v/kh{k.k ;a=h] yksd fuekZ.k foHkkx fo@;ka e.My] Hkksiky }kjk vuqca/k iquthZfor djus ds i'pkr~ vuqca/k dh /kkjk& 3¼lh½ dh dk;Zokgh dks vekU; fd;s tkus ls vuqca/k iquthZfor gks pqdk Fkk fdarq ;kfpdkdrkZ lafonkdkj }kjk vuqca/kkuqlkj 'ks"k dk;Z iw.kZ ugha djus ds fy, dk;Zikyu ;a=h }kjk iqu% vuqca/k fo[kaMu fd;k x;k ,oa vuqca/k fo[kaMu djus ds i'pkr~ lafonkdkj dks gTkZs&[kpZs ij 'ks"k dk;Z dks iw.kZ djus ds fy, fufonk vkeaf=r dh xbZA bl izdkj foHkkx }kjk dh xbZ dk;Zokgh iwjh rjg fof/klEer ,oa vuqca/kkuqlkj gSA** Apparently, the Chief Engineer glossed over the
6 WP.2061.2016 M/s Om Electricals Firm through Prop. Rakesh Kumar Sharma Vs. State of Madhya Pradesh and others order dated 06/10/2015 passed by the Superintending Engineer on an appeal under Clause 29 whereby the decision by the Executive Engineer under Clause 3C was overruled and the Executive Engineer was called upon to review under Clause 14 of the agreement which provides for 'no claim to any payment or compensation for alteration in restriction in works'. It stipulates:
Clause 14 - If at any time after the execution of the contract documents the Engineer-in-Charge shall for any reason whatsoever require the whole or any part of the work as specified in the tender to be stopped for any period or shall not require the whole or part of the work to be carried out at all or to be carried out by the contractor, he shall give notice in writing of the fact to the contractor who shall thereupon suspend to stop the work totally or partially, as the case may be.
In any such case, except as provided hereunder, the contractor shall have no claim to any payment of compensation whatsoever on account of any profit or advantage which he might have derived from the execution of the work in full, but which he did not so derive in consequence of the full amount of the work on having been carried out or on account of any loss that he may be put to on account of materials purchased or agreed to be purchased or for unemployment of labour recruited by him. He shall not also have any claim for compensation by reason of any alteration having been made in the original specifications, drawing, designs and
7 WP.2061.2016 M/s Om Electricals Firm through Prop. Rakesh Kumar Sharma Vs. State of Madhya Pradesh and others instructions, which may involve any curtailment of the work as originally contemplated. When however materials have already been purchased or agreed to be purchased by the contractor, he shall be paid for such materials at the rates determined by the Engineer in Charge, provided they are not in excess of requirement and are of approved quality and / or shall be compensated for the loss of any, that he may be put to in respect of materials agreed to be purchased by him, the amount of such compensation to be determined by the Engineer-in-Charge whose decision shall be final. If the contractor suffers any loss on account of his having to pay labour charges during the period during which the stoppage of work has been ordered under this clause, the contractor shall on application be entitled to such compensation on account of labour charges as the Engineer-in- Charge whose decision shall be final, may consider reasonable provided that the contractor shall not be entitled to such compensation on account of labour charges. In the opinion of the Engineer- in-charge, the labour could have been employed by the contractor elsewhere for the whole or part of the period, during which the stoppage of the work has been ordered as aforesaid.
If the total duration of suspension of the work is more than six months, then this suspension of the work will be considered as permanent stoppage of the work, and the contractor can determine the contract if he so desires."
Respondents though have filed their return, however have not commended to any material to 8 WP.2061.2016 M/s Om Electricals Firm through Prop. Rakesh Kumar Sharma Vs. State of Madhya Pradesh and others establish whether the Executive Engineer passed any order under Clause 14. Neither there is any pleading to that effect in the return. The Chief Engineer in his order dated 10.03.2016 in reference to Issue no.1 has observed that with the setting aside of the order under Clause 3C and with the revival of the contract it was incumbent upon the contractor to have completed the work. The Chief Engineer has glossed over the vital fact that the electrification work could not be completed as observed by the Appellate Authority in its order dated 06.10.2015 because the buildings were not complete. Thus the conclusion arrived at by the Chief Engineer on the basis of perverse findings cannot be given the stamp of approval. Furthermore, as evident from the adverted to that as work order dated 12.02.2011 (Annexure P/2) the time period for completion of work was 20 months from the date of issue of work order. That the work was taken over by the Engineer in Charge invoking Clause 3C by his order dated 25.07.2015. The work remained suspended for over a period of six months and as per Clause 14 if the total duration of suspension of the work is more than six months, then the suspension of the work is considered as permanent stoppage of the work, and the contractor can determine the contract if he so 9 WP.2061.2016 M/s Om Electricals Firm through Prop. Rakesh Kumar Sharma Vs. State of Madhya Pradesh and others desires. The petitioner in the case at hand having determined the contract cannot be subjected to the risk and cost. Though it is open to the State and its functionaries to raise a dispute in respect of any loss or damages and for compensation.
In view whereof the petitioner is held entitled for being exonerated from risk and cost with a liberty to respondents to raise dispute as per Clause 29 of the agreement which is an arbitration clause for loss, damages or compensation.
Petition is finally disposed of in above terms. No costs.
(Sanjay Yadav) (S.K. Awasthi)
Judge Judge
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