Madras High Court
M/S. Chandragiri Construction Company vs State Of Tamil Nadu on 3 March, 2011
Author: B.Rajendran
Bench: B.Rajendran
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 03.03.2011
C O R A M
THE HONOURABLE MR. JUSTICE B.RAJENDRAN
WP No. 3379 and 3623 of 2009
and
M.P. No. 1, 1, 2 and 2 of 2009
M/s. Chandragiri Construction Company
No.3/402-A, Karat Road
West Nadakavu
Kozhikode 673 001
Kerala, rep.by its Partner .. Petitioner in both the
K.M. Moideen Kunhi Writ Petitions
Versus
1. State of Tamil Nadu
rep. by its Secretary to Government
Public Works Department
Fort St. George
Chennai 600 009
2. The Chief Engineer
Public Works Department
Chennai Region
Water Resources Organisation
Chepauk, Chennai 600 005
3. The Superintending Engineer
Public Works Department
Water Resources Organisation
Project Circle
Vellore 632 006
4. The Executive Engineer
Water Resources Organisation
Project Division, Sethuvandai
Gudiyatham R.S.
Vellore District 635 803
5. The Branch Manager
Federal Bank Limited
M.G. Road, Kasargode
Kerala State .. Respondents in WP 3379
1. State of Tamil Nadu
rep. by its Secretary to Government
Public Works Department
Fort St. George
Chennai 600 009
2. The Chief Engineer
Public Works Department
Chennai Region
Water Resources Organisation
Chepauk, Chennai 600 005
3. The Superintending Engineer
Public Works Department
Water Resources Organisation
Project Circle
Vellore 632 006
4. A.P. Jayaprakash
Superintending Engineer
Public Works Department
Water Resources Organisation
Project Circle
Vellore 632 006
5. The Executive Engineer
Water Resources Organisation
Project Circle, Sethuvandai
Gudiyatham R.S.
Vellore District 635 803
6. The Branch Manager
Federal Bank Limited
M.G. Road, Kasargode
Kerala State .. Respondents in WP 3623
WP No. 3379 of 2009:- Writ Petition filed under Article 226 of The Constitution of India praying for a Writ of Certiorarified Mandamus calling for the records relating to the impugned order issued by the first respondent vide Government Letter No. 46434/T.1/2008 dated 12.12.2009 and quash the same and consequently direct the respondents 1 to 4 herein to revise the contract rates as per the Codal Rules framed by the Public Works Department for the year 2007-2008 in respect of the contract work named as "Formation of Reservoir Across Malattar River near Bathalapalli Village in Gudiyatham Taluk of Vellore District (vide Agreement No. 2CR/2005-2006).
WP No. 3623 of 2009:- Writ Petition filed under Article 226 of The Constitution of India praying for a Writ of Certiorarified Mandamus calling for the records relating to the impugned order issued by the 5th respondent in No.10M/F.99/2009/D.O./dated 16.02.2009 and quash the same and consequently direct the respondents to extend the period of contract on a revised rates so as to enable the petitioner to complete the same in respect of the contract work named as "Formation of Reservoir Across Malattar River near Bathalapalli Village in Gudiyatham Taluk of Vellore District (vide Agreement No. 2CR/2005-2006).
For Petitioners : Mr. R. Krishnamoorthy, Senior Counsel
for Mr. S. Srinivasan
in both the writ petitions
For Respondents : Mr. S. Ramasamy, Addl. Advocate General
assisted by V. Arun
Additional Government Pleader
Mr. R. Murali
Government Advocate
for RR1 to 4 in WP No. 3379 of 2009
for RR1 to 5 in WP No. 3623 of 2009
Mr. M. Vaidyanathan for R5 in WP No. 3379
and for R6 in WP No. 3623 of 2009
COMMON ORDER
The dispute involved in both the writ petitions pertains to one and the same contract, therefore, by consent of counsel for both sides, the writ petitions are disposed of by this common order.
2. The first writ petition namely WP No. 3379 of 2009 is filed by the contractor to quash the Government Letter dated 12.12.2009 rejecting the petitioner's claim for payment at the revised rate. The second writ petition is filed to quash the order passed by the 5th respondent on 16.02.2009 by which the fifth respondent terminated the contract with the petitioner and ordered to forfeit the earnest money deposited, besides invoking clause 57.1 and 57.3 of the agreement for not showing progress in the contractual work.
3. According to the petitioner in both the writ petition, the contract was awarded to the petitioner to construct a reservoir across Malattar river in Gudiyatham Taluk and an agreement dated 26.10.2005 was entered into between the petitioner and the department. The contract value awarded in favour of the petitioner was Rs.22,24,84,340/-. The period for completion of the contract was 18 months, the earnest money deposit paid was Rs.10,75,000/- and a sum of Rs.45,00,000/- was offered by means of bank guarantee by the petitioner. According to the petitioner, originally, the site was handed over to them on 30.12.2005 and immediately thereafter, within a short period of four months time, dispute arose between the parties. Under those circumstances, the petitioner filed three writ petitions namely WP No. 3977 of 2006 to quash the resolution of the Tender Award Committee and the consequential order of the Chief Engineer dated 13.01.2006 in respect of the construction of check dam across Palar river; WP No. 45060 of 2007 to quash the termination of contract work dated 04.05.2006 and consequential re-tender notice dated 01.11.2006 regarding the very same work and WP No. 45057 of 2007 to quash the order of the Superintending Engineer, Pollachi dated 10.10.2006 regarding cancellation of registration of the petitioner's name as Class I contractor with the public works department. All these writ petitions were jointly heard by this Court and a common order dated 26.04.2007 was passed in which the petitioner herein was permitted to rectify the defects or sub-standard work in relation to the Malatar river work and liberty was given to the petitioner to participate in the re-tender along with other tenders. Accordingly, the three writ petitions were closed by this Court. Thereafter, on 18.05.2007, the petitioner sought permission to commence the rectification work, as per the common order passed by this Court, followed by a reminder on 07.06.2007. Ultimately, on 25.10.2007, the petitioner was permitted to resume the work as per the order passed by this Court. According to the petitioner, by 18.12.2007, he completed the sub-standard work and also rectified all the mistakes. Thereafter, the petitioner was permitted to carry out the balance work, thereby, the petitioner had completed atleast 35% of the work. In view of the resumed work performed by the petitioner, the petitioner sought to revise the rate of the current year PWD price index by means of letters dated 07.01.2008, 10.01.2008, 16.02.2008 and 16.12.2008. Further, the Superintending Engineer, by his proceedings dated 18.02.2008 extended the time for completion of work upto 18.02.2009, In that letter, it was stated that in so far as approval for the revision of rate is concerned, it will be done at a later point of time only after approval of the work. Since the petitioner's request for consideration of higher price was not approved by the department, the petitioner filed another writ petition in WP No. 27633 of 2008 for a Mandamus directing the respondents to revise the agreement rate as per Public Works Department scheduled rates prevailing for the financial year, corresponding to the work executed by the petitioner, including payment of idling charges as claimed by the petitioner and handover the canal site after completing the land acquisition process so as to enable the petitioner to complete his contractual obligations in respect of the contract work. Pending writ petition, by letter dated 27.11.2008 of the third respondent, the petitioner was called upon to expedite the work but rejected the request of the petitioner for revision of the rate. In the meanwhile, WP No. 27633 of 2008 was disposed of by this Court on 17.12.2008 directing the respondents to consider the petitioner's letter dated 16.12.2008 and pass orders within a period of six weeks. Thereafter, by notice dated 22.01.2009, the Superintending Engineer alleged that there is no progress in the work and that the contract would be terminated due to the lethargic attitude of the petitioner. Immediately, the petitioner filed WP No. 3378 of 2009 to quash that letter dated 22.01.2009 of the third respondent and obtained an interim stay on 17.03.2009. The petitioner also made a further representation dated 31.01.2009 to the Secretary to the Government of Tamil Nadu. In the meanwhile, pursuant to the earlier directions issued by this Court, the Secretary to the Government rejected the request of the petitioner by an order dated 12.02.2009. Subsequently, by an order dated 16.02.2009, the Executive Engineer terminated the contract, forfeited the earnest money deposit and also invoked the Bank Guarantee on the ground that there was slow progress in the work and that the contractor had not adhered to the instructions given by the department. Challenging the same, the above writ petitions are filed. In view of filing of WP No. 3379 of 2009, the relief sought for by the petitioner in the earlier writ petition in WP No. 3378 of 2009 has become infructuous.
4. As far as the first writ petition is concerned, the learned senior counsel appearing for the petitioners would contend that the impugned orders are arbitrary in view of the fact that the Chief Engineer himself inspected the site and made a note on 23.09.2008 that pillway and canal work could not be carried out due to certain bonafide reasons, whereas the Executive Engineer states that there is no bar for the petitioner to carry out the work. The Superintending Engineer further stated that 35% of the work was completed as early as on 18.02.2008 itself, whereas the Executive Engineer, in the impugned order had stated that only 14.35% work was completed. Further, the Executive Engineer never sent any proposal for revised rate even after the directions given by the Superintending Engineer and no reason was given to reject the valid explanation offered by the petitioner. Further, no pre-decision hearing was given to the petitioner and therefore, both the impugned order is liable to be set aside.
5. As far as the second writ petition in WP No. 3623 of 2009 is concerned, which relates to termination of the contract, the learned senior counsel for the petitioner would contend that there is malafide on the part of the third respondent/Superintending Engineer and therefore, he was impleaded in his individual capacity as well as official capacity. It was further contended that the fourth respondent had terminated the contract without any basis and that the contract was terminated only due to malafide and he prayed for allowing of the writ petitions.
6. The respondents filed a detailed counter. The learned Additional Advocate General appearing for the respondents would mainly contend that the writ petitions are not maintainable as the disputes involved in both the writ petitions relate to contractual dispute inasmuch as the parties are governed by the terms and conditions of the contract. As per the terms and conditions of the contract between the parties, there is a clause for arbitration and if any party is aggrieved by any act of the other, they can invoke the arbitration clause and approach the Arbitrator. Without invoking the arbitration clause, the writ petitions filed by the petitioner are not maintainable. Hence, on the preliminary point of maintainability, the learned Additional Advocate General prayed for dismissal of both the writ petitions.
7. The learned Additional Advocate General would further contend that as per the earlier consent order passed by this Court in WP Nos. 3977, 45056 and 45057 of 2006 dated 26.04.2007, it was very clearly stated that the petitioner shall be permitted to participate in the re-tender. Therefore, it is clear that the tender itself was originally cancelled and when the cancellation was challenged this Court only permitted the petitioner to participate in the re-tender along with others. The fact remains that the contract awarded to the petitioner, which was terminated by the respondents, was never set aside by this Court. Though it is superfluous, by virtue of the order passed by this Court, even after termination, the petitioner was permitted to resume the work, which are to be rectified. Therefore, the petitioner has no legal right to challenge the orders impugned in these writ petition.
8. In so far as the direction to consider the representation of the petitioner is concerned, seeking for revised rate, as per the approved price, even though the property was handed over to the petitioner way back in the year 2007, he has not chosen to complete the work and the delay is only on the part of the petitioner. Taking into consideration the nature of work done by the petitioner and the slow progress of the work, the request made by the petitioner was rejected by the respondents. The impugned orders were passed validly and the petitioner's interpretation of the grant of time by the Superintending Engineer by one year would mean that the time for completion of the rectification work was extended, whereas, the actual letter states that for extension of one year only, in so far as it relates to the extension, as granted to rectify the mistakes pursuant to the order passed by this Court. Therefore, the petitioner cannot be permitted to make his own interpretation at this point of time to say that the extension was for completion of the whole contract work. The intention of the parties in extending the work was only to complete the rectification work, which remained incomplete, after the order of termination was originally passed by the respondents. The learned Additional Advocate General denied the averments relating to malafide on the part of the Superintending Engineer, Public Works Department, Vellore Circle and the petitioner alone has to be blamed for the slow progress in the contract work.
9. Heard the counsel for both sides. Mr. R. Krishnamoorthy, learned senior counsel appearing for the petitioner would mainly contend that even though the contract was awarded in favour of the petitioner, the department did not handover the site and only a portion of the site was handed over to the petitioner. The reason being, certain portion of the site were not acquired by the competent authority properly or there were disputes in respect of acquisition was still pending without being resolved. Therefore, the petitioner could not complete the work within the stipulated time as mentioned in the contract. Under those circumstances, the delay could not be attributed to the petitioner. Further, the Chief Engineer himself had inspected the site on 23.09.2008 and made a note to the effect that "If the land acquired for canal portion is not continuous, there is no use of casting the precast slabs for the part of the reaches only. Similarly, the excavation of canal should not be taken up here and there. Therefore, the Executive Engineer is instructed to report the stage of Land Acquisition and the same may be expedited. The excavation, precast casting of slab land lining etc., for canal portion should be taken up only after completion of the land acquisition process." Therefore, the learned senior counsel for the petitioner would contend that even as per the inspection note of the Chief Engineer there is still portion of the land unacquired by the department and hence, it can be inferred that the site, as a whole, was not handed over to the petitioner. Consequently, the respondents cannot allege any delay or slow progress on the part of the petitioner for non-performance of the contract. At the same time, by letter No. 10M/F.99/2009/D.O/dated 16.02.2009 of the Executive Engineer, fifth respondent herein, which is challenged in WP No. 3623 of 2009, it was stated that there is no bar for the petitioner to carry out the work in spite of the delay in the acquisition proceedings. Therefore, there is total contradiction in the summations made by the Chief Engineer and that of the Executive Engineer, fifth respondent herein. In fact, in the proceedings dated 27.11.2008 of the Superintending Engineer, Vellore, it was categorically stated that 35% of the work was completed by the petitioner as on that date. Whereas, the Superintending Engineer, in his subsequent communication dated 22.01.2009 would state that the petitioner had completed only 14.35% of the work. The Executive Engineer never sent any proposal for the revised rate even after the Superintending Engineer, by his proceedings dated 18.02.2008 had extended the time for completion of the work by 14 months upto 18.02.2009. Under those circumstances, the impugned orders passed by the respondents are arbitrary and illegal. The respondents have not applied their mind before passing the impugned orders. No reason was given for rejecting the explanation offered by the petitioner. The learned senior counsel for the petitioner would contend that as per the letter dated 18.02.2008, in compliance of the orders passed by this Court, what was extended is the time for completion of the contractual work and not the rectification work. Even as per the proceedings of the Executive Engineer, he directed to submit a report for revised rate, which would indicate that the time extended was for completion of the contract as a whole. If that be so, the present order of termination passed by the fifth respondent is without any basis and consequently the impugned orders are liable to be set aside.
10. Contra, the learned Additional Advocate General would mainly contend that the delay is totally on the part of the petitioner. Even the original contract was cancelled or repudiated on the ground of inordinate delay in completing the contract work inspite of the fact that the site was handed over to the petitioner as early as on 30.12.2005. Inspite of the handing over of the site, the petitioner did not complete the work as per the contract. At the time of argument, the learned Additional Advocate General has also produced a map along with the details of the lands handed over to the petitioner and the lands to be acquired. By relying on the map produced to this Court, the learned Additional Advocate General would contend that the patta lands forms a very meager portion from Om to 380M in the main canal and in the left main canal also, the patta land is more. The map also indicates the work which can be executed between the two levels as follows:-
Work may be executed
1. LS 360 - 520 160M
2. LS 520-700 180M
3. LS 4000-4750 750M
4. LS 6050-8500 2510 M
----------
3800 M
----------
11. The learned Additional Advocate General also relied on the chart indicating the details of the works to be executed which are as follows:-
I. Work may be executed in Canals S.No. Description Total length Length of Canal of canal may be executed
1. Right main canal 8560 3600
2. Sathampakkam Distributory 560 --
3. Left Main Canal 32610 9430
4. Chendathur Distributory 9030 00
5. Valathur Distributory 3660 3660
----------- ------------
Total 54220 M 16690 M ----------- ------------ II. CD work may be executed S.No. Description Total No. of No. of CD works CD work may be executed 1. Right main canal 37 12 2. Sathampakkam Distributory 3 -- 3. Left Main Canal 100 35 4. Chendathur Distributory 47 11 5. Valathur Distributory 5 4 ----------- -------- Total 192 62 ----------- --------
12. The map also consists of a Flow chart for patta and poromboke land regarding the left main canal Bathalapalli Malattar Reservoir Project indicating the following Works may be executed
1. LS 0-440 M 440 M
2. LS 1760-2040 280 M
3. LS 2540-2840 300 M
4. LS 3970-4050 80 M
5. LS 4910-5890 980 M
6. LS 7730-7900 170 M
7. LS 8780-9350 570 M
8. OS 17670-20010 2340 M
9. LS 22800-25130 2330 M
10. LS 26270-28510 1940 M
-----------
9430 m
-----------
Total No. of CD works : 100 No. of CD works may be executed : 3513. Referring to the map and the details contained thereon, the learned Additional Advocate General would contend that the contractor could have undertaken the work unhindered in many of the places and therefore, it is clear that the delay is on the part of the petitioner and consequently, the petitioner is not entitled to the relief prayed for in these writ petitions.
14. Earlier, the contract awarded in favour of the petitioner came to be terminated by the respondents. Challenging the same, the petitioner had filed three writ petitions namely WP No. 3977, 45056 and 45057 of 2006. Those three writ petitions were taken up together by this Court and a common consent order was passed on 26.04.2007 which is as follows:-
"1. These writ petitions are posted today for reporting settlement
2. The learned Advocate General for the respondents has submitted that in so far as the show cause notice issued for blacklisting the petitioner is concerned, all further proceedings will be dropped and the petitioner will be permitted to rectify the mistakes and that in so far as the re-tender to be invited by the respondents for construction of check dam across Palar River, the petitioner has stated no objection for the same and the petitioner is at liberty to participate in the re-tender along with other tenderers.
3. The learned counsel for the petitioner has submitted that the petitioner agreed for the said proposal.
4. In view of the same, recording the submissions of the learned Advocate General and also the counsel for the petitioner, these writ petitions are disposed of, accordingly. No costs."
15. From a reading of the above order, it will be clear that what was agreed between the parties before this Court was that the petitioner shall be permitted to complete or rectify the defective works within a stipulated time, at the same time the petitioner shall participate in the auction or re-tender that may be flouted by the respondents. Therefore, the order only indicate that the termination order passed by the respondents was not set aside and it remained intact.
15. With this background, we have to analyse the submissions of the learned counsel for both sides. By proceedings dated 18.02.2008, the Executive Engineer had categorically stated that the work carried on by the petitioner is slow and the petitioner had failed to achieve the target fixed. Therefore, the petitioner was directed to bring more men, materials and machineries to the site of work and tempo the progress of work to achieve the target within the stipulated time namely 18.02.2009, failing which, or other wise, penal action will be initiated as per the terms and conditions of the agreement. This proceedings emanated pursuant to the representation dated 09.01.2008 of the petitioner.
16. When we read the representation dated 10.01.2008 of the petitioner, it was stated that after the order of this Court, in October 2007, the mistakes were rectified during November and December 2007. According to the petitioner, as per the instruction of the Superintending Engineer, they were directed to proceed further with the balance work from 19.12.2007 and on that date on wards, the petitioner also resumed the balance work and the same is in progress. It was further stated in that letter that the current rates for items of work taken up after 19.12.2007 were to be effected for payment. As the original time frame fixed for the completion of work was 18 months and the site was handed over on 30.12.2005, they have resumed the work from 19.12.2007. Therefore, the petitioner sought for time from 19.12.2007 to 18.02.2009 for 14 months. They have also claimed revised rate for having kept the men and machineries idle for over 19 = months. Therefore, what was sought for by the petitioner was extension of time from19.12.2007 for 14 months to complete the contract work, which was given in the order dated 18.02.2008.
17. In the proceedings dated 18.02.2008 of the Superintending Engineer, Vellore it was clearly stated that extension of time is granted from 19.12.2007 to 18.02.2007 i.e., 14 months subject to the following conditions namely (a) the work should be completed within the extension of time now granted (ii) there should be no loss to the Government by way of granting this extension of time (iii) The Revision of agreement rates requested by the contractor may be considered on receipt of approval from the competent authority for which the Executive Engineer should submit necessary proposal as per codal rules. In the footnote, it was stated that the Executive Engineer is directed to prepare and submit a proposal for revising the agreement rate as requested by the contractor and as instructed by the Superintending Engineer for getting approval from the competent authority and as per codal rules and as per the agreement clause laid down.
18. From a reading of the representation dated 10.01.2008 of the petitioner and the proceedings of the Superintending Engineer, Vellore dated 18.02.2008, it is clear that the time was extended for completion of the work and this would only mean the completion of the work and not the rectification work. At the same time, when we analyse the inspection note of the Chief Engineer dated 23.09.2008, the Chief Engineer had categorically stated that the proposal which require financial involvement should be got approved from the competent authority and thereafter the work should be taken for execution and the Executive Engineer will be held responsible for any lapses in this aspect. So far as canal operation is concerned, it was stated that (i) In order to avoid further escalation at least now itself all the necessary additional items to works other than the agreement may be prepared and submitted for getting approval of the Government (ii) the additional cost involved for the items of work not covered in the agreement like formation of ring bund etc., may be prepared and submitted within a month. The copy of the notes of inspection note of the Chief Engineer was also forwarded to the Superintending Engineer and the Executive Engineer.
19. In the records produced before this Court, it is seen that by letter dated 17.07.2008 of the Executive Engineer to the petitioner, it was clearly noted that progress of achievement of work is not appreciable and the site for the canal work in poromboke land and patta land are readily available to commence the work. Therefore, the petitioner was requested to bring additional men and machineries to commence the work immediately.
20. Subsequently, by a letter dated 31.10.2008, the petitioner would contend that the work order was issued on 19.12.2007 as per the order of this Court and they have also resumed their work, therefore, they sought for revision in the rates as they have done the work only after the period of original term expired.
21. In the letter dated 26.11.2008, the Superintending Engineer had stated that during the inspection on 26.11.2009 it was noted that no work was going on in the dam site. It was further pointed out that the extension of time was granted only upto 18.02.2009 and if the petitioner fails to show appreciable progress in the work, necessary penal action will be taken as per the agreement.
22. Subsequently, by proceedings of the Superintending Engineer dated 27.11.2008, in response to the letter dated 31.10.2008 of the petitioner, it was categorically stated that even though the work commenced on 30.12.2005, the petitioner had completed only 2.28% of work and therefore the contract was terminated due to bad quality of work on 04.05.2006. This was challenged by the petitioner before this Court and as per the order dated 26.04.2007, the petitioner was permitted to rectify the mistakes. It was stated that the petitioner rectified the mistakes on 18.12.2007 and for such rectification work alone, the petitioner took two months time. Further, inspite of extension granted for completion of work on 19.12.2007 till 18.02.2007 for 14 months, by the end of 27.11.2008, only 35% of the work alone was completed by the petitioner. It was also categorically stated that by this time, the petitioner should have completed atleast 77% of the work, but it was not done and this shows the slackness on the part of the petitioner. The Superintending Engineer further stated that right from the initial stage, the progress of the work was not upto the mark. It was further stated that the agreement period includes the rainy season and that cannot be a reason attributable for the delay. Therefore, the Superintending Engineer would contend that the request for enhancement or revised rate is not plausible as the idle period of 19 = months for the men and machinery is caused because of executing bad quality of work by the petitioner which resulted in the termination of the contract earlier. It was also stated that only because of the venture of the petitioner in approaching the Court by filing one writ petition after the other, the delay had caused. Therefore it was stated that as per the agreement condition and Codal Rule, the petitioner is not entitled for any revision in the rate.
23. In all these letters, the petitioner was asked to increase the tempo of work by engaging more men and materials to show progress in the work. It was also cautioned that if there is no progress in the work within 15 days, necessary penal action will be taken against the petitioner as per the conditions of the contract.
24. By another letter dated 08.12.2008 of the Executive Engineer, it was stated that inspite of several instructions given to the petitioner, there was slow progress of work and the petitioner failed to achieve the target given to him. Therefore, the petitioner was instructed to bring more men, machineries and to show progress in the work before 18.02.2009 failing which necessary action will be taken for initiating penal proceedings as per the contract. Once again, another notice dated 22.01.2009 was issued by the Superintending Engineer in which it was clearly stated that the rectification work was completed before 18.12.2007 and the work commenced for completing the balance work from 19.12.2007, even though the contract period lapsed on 30.06.2007. It was stated that in consequence of lapse of agreement period, the EOT for the contract was approved based on the representation of the petitioner to complete the work within the extended time in full shape. But even as on 29.12.2008, though the petitioner was expected to complete 90% of the work for the total value of Rs.278 lakhs only, he has not done so, whereas, he has completed only 14.35% of the work. Therefore, it was pointed out that the shortfall of work is 75.65% to the value of Rs.1503.00 lakhs as on 29.12.2008. Under those circumstances, it was stated that the petitioner would be liable for panelty i.e., recovery of the amount as per the agreement clause 57 (1), 57 (2) and 57 (3) of general special condition. It was further pointed out that the work was held up from 15.11.2008 onwards without any reason and without any prior intimation. Finally, it was stated that if there is no progress in the above work before 30.01.2009, the Engineer, who was in charge of the work was informed to terminate the contract of the petitioner with forfeiture of EMD and security deposit.
25. Though this letter was dated 22.01.2009, the petitioner sends a reply to the Government on 31.01.2009 in which the petitioner categorically admitted that the work done by him so far up to October 2008 was 514.61 lakhs or 23.13%. It was also pointed out that the Executive Engineer in his letter had stated that the petitioner had only completed 14.35% of work, which is incorrect. The fact remains that within this period, though extension was granted for 14 months and it expired on 18.02.2009, the work completed by the petitioner even as on 30.01.2009 is only 23.13% as per the admission of the petitioner himself. Admittedly, the percentage of work completed by the petitioner is very meager. Taking into consideration the earlier order of termination, the subsequent order passed by this Court in WP Nos. 3977 of 2006 etc., on 26.04.2007, the extent of rectification work done by the petitioner and the extension of time granted to the petitioner, the net result or the quantum of work completed by the petitioner is meager. Even as per the admission of the petitioner in his letter dated 31.01.2009, which is enclosed in page No.145 of the typed set of paper, though the petitioner assigned various reasons for the delay in completing the work, in the very same letter, it was stated that his request may be considered as per G.O. Ms. No.60, Public Works Department dated 14.03.2008 for enhancement of the rate as per the work done by him in the particular year. Finally, the petitioner would also state that favourable orders may be passed so as to enable them to continue the work and complete it within the monsoon starts, meaning thereby, even as on 31.01.2009, the petitioner has not completed the work. The petitioner has already stopped the work on 15.11.2008 and even according to the petitioner, they have stopped the work on 31.10.2008 inspite of extension granted by the respondents.
26. When the petitioner has failed to perform the contract as per the agreement inspite of the fact it was informed that there is slow progress of work, the delay is only on the part of the petitioner in completing the work and such delay is inordinate, even though possession of the site was handed over to the petitioner on 30.12.2005. On the other hand, the reasons enumerated by the petitioner for the inordinate delay in completing the work does not deserve any consideration.
27. Even in the extension order, it was clearly stated that the work should be completed within the extended time now granted. It was further made clear that there should not be any loss to the Government by way of granting such extension of time. Inspite of the conditions stipulated, when the petitioner has not chosen to abide by the conditions, it is not open to the petitioner to seek the discretionary remedy from this Court, especially, seek to quash the order of termination. In fact, the termination order was passed by the fifth respondent after affording sufficient opportunity to the petitioner to complete the work in time and after exchange of various correspondences between the parties. Therefore it is clear that the petitioner had intentionally caused delay in completing the work on a day to day basis without taking note of the fact that time is the essence of the contract as per clause 57.1 to 57.3. Therefore, the respondents are fully justified in passing the impugned order of termination of the contract for violation of the terms and conditions of the contract by the petitioner.
28. In this background, we have to analyse the legal position in disputes of this nature. The learned Senior Counsel appearing for the petitioner relied on the decision of a Division Bench of the Orissa High Court reported in (Zerina Marines Pvt Ltd., vs. State of Orissa and others) AIR 2006 SC 66. In that case, there was a categorical recommendation by the Chief Engineer to extend the time to enable the petitioner to complete the execution of work and inspite of the same, the tender committee concluded that there is no progress on the part of the petitioner to complete the work and the work carried on by the petitioner was slow. Therefore, the committee closed the contract with the petitioner. Under those circumstances, the Division Bench of the Orissa High Court held that the administrative decision of the tender committee is arbitrary and illegal. This decision cannot be made applicable to the facts and circumstances of this case. In this case, from the various letters exchanged between the parties, it is clear that right from the beginning the petitioner delayed in carrying out the work and in fact, for such delay, the contract awarded in favour of the petitioner was validly cancelled by the respondents.
29. The learned Additional Advocate General appearing for the respondents relied on the decision of the Honourable Supreme Court reported in (State of U.P. And others vs. Bridge and Roof Company (India) Ltd) (1996) 6 SCC 22, it was held that in case of dispute relating to terms of contract, the appropriate course would be to refer the dispute to arbitration or institution of civil suit and not a writ petition. In Para No.21, it was held thus:-
21. There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration (clause 67 of the contract). The arbitrators can decide both questions of fact as well as questions of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extraordinary jurisdiction of the High Court under Article 226. The existence of an effective alternative remedy in this case, provided in the contract itself is a good ground for the Court to decline to exercise its extraordinary jurisdiction under Article 226. The said article was not meant to supplant the existing remedies at law but only to supplement them in certain well-recognised situations. As pointed out, the prayer for issuance of a writ of mandamus was wholly misconceived in this case since the respondent was not seeking to enforce any statutory right of theirs nor was it seeking to enforce any statutory obligation cast upon the appellants. Indeed, the very resort to Article 226 whether for issuance of mandamus or any other writ, order or direction was misconceived for the reasons mentioned supra."
30. The learned Additional Advocate General appearing for the respondents also relied on the decision of the Honourable Supreme Court reported in (Kerala State Electricity Board and another vs. Kurien E.Kalathil and others) (2000) 6 SCC 293, wherein, it was held in para-11 as follows:-
"11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies."
31. The learned Additional Advocate General appearing for the respondents relied on the decision reported in (Pimpri Chinchwad Municipa Corporation and others vs. Gayatri Construction Company and another) (2008) 8 SCC 172, in which, the Honourable Supreme Court held, by following the earlier decision in (Kerala State Electricity Board and another vs. Kurien E.Kalathil and others) (2000) 6 SCC 293 held that when the agreement provides for in-house remedy for resolution of the dispute, High Court should not interfere in those matters.
32. In the decision reported in (Kisan Sahkari Chini Mills Limited vs. Vardan Linkers) (2008) 2 SCC 500, relied on by the learned Additional Advocate General for the respondents, the Honourable Supreme Court wherein it was held that ordinarily, the remedy for breach of contract is a suit for damages or for specific performance and not a writ petition under Article 226 of the Constitution of India. However, where the contractual dispute has a public law element, the power of judicial review under Article 226 of the Constitution of India may be invoked. In Civil suit, the emphasis is on the contractual right, whereas the emphasis in writ petition is on the validity of the exercise of power by the authority. In that case, there was a dispute in respect of very fact itself and therefore, the High Court should not normally interfere into the dispute or applicability of the question of fact. In Para No.24, it was held as follows:-
"24. In this case, the question arose for consideration in the writ petition was whether the order dated 24-04-2004 passed by the Secretary (Sugar) cancelling the allotment letter dated 26.03.2004 was arbitrary and irrational or violative of any administrative law principles. The question whether there was a concluded contract or not, was only incidental to the question as to whether cancellation order dated 24.04.2004 by the Secretary (Sugar) was justified. As the case involved several disputed questions in regard to the existence of the contract itself, the High Court ought not to have referred the first respondent to a civil Court. But the High Court in exercise of its writ jurisdiction proceeded as if it was dealing with a pure and simple civil suit relating to breach of contract."
33. In our case on hand, the petitioner claimed to have completed 35% or 23% of the work and the respondents contended that only 14% of the work was completed by the petitioner. Such a disputed question cannot be adjudicated by this Court under Article 226 of The Constitution of India.
34. In any event, when there is an alternative remedy is available but without exhausting the same, the petitioner has come forward with this writ petition. Further, the findings rendered by the respondents for terminating the contract was cogent, clear and I do not find any reason to interfere with the same.
35. In the order dated 12.12.2009 of the first respondent, which is impugned in WP No. 3379 of 2009, the first respondent rejected the request of the petitioner seeking payment at an enhanced rate on the ground that in spite of handing over the site as early as on 30.12.2005, the petitioner has not completed the contract work in time. Even for completing the rectification work, the petitioner took much time and completed it only during December 2007. Therefore, according to the first respondent, the delay was only on the part of the petitioner in completing the work inspite of the fact that sufficient land was made available for the purpose of completing the work and this was one of the reasons for the first respondent to reject the claim of the petitioner for payment at enhanced rate. It was also pointed out in the impugned order that G.O. Ms. No.60, Public Works Department will be applicable only to those contracts which were allotted on and after 14.03.2008 and it will not apply to the contract awarded in favour of the petitioner on 26.10.2005. It was also mentioned therein that the amount is being paid only from the state fund norms and not from the financial assistance provided by World Bank fund norms and therefore also, the claim of the petitioner for payment at enhanced rate cannot be accepted. Such a reasoning assigned by the first respondent cannot be said to be invalid. Moreover, apart from the reasonings given by the first respondent, in the agreement dated 26.10.2005 entered into between the petitioner and the respondents, there is an arbitration clause namely Clause 69 is available which provides that in respect of any dispute or claim to be made by one party against the other, the aggrieved person can move the arbitrator. Clause 69 reads as follows:-
"Clause 69. In case of any dispute or difference between the parties to the contract, either during the progress or within the three months of the completion of the works or after the determination, abandonment or breach of the contract, or as to any matter or thing arising thereunder except as to the matters left to the sole discretion of the Executive Engineer under clauses 18, 20, 25.3, 27, 32, 34, 36 and 37of "General conditions of contract" or TNBP Vol.II or as to the withholding by the Executive Engineer of payment of any bill to which the contractor may claim to be entitled, the either party shall forthwith give to the other notice of such dispute difference and such dispute or difference, shall be and is hereby referred to the arbitration of the Superintending Engineer of the nominated circle mentioned in "Articles of Agreement" (hereinafter called the "Arbitrator") in cases where the value of claim is less than and upto Rs.50000/-, the parties will seek remedy through competent civil Court in cases when the value of claim is more than Rs.50,000/-."
36. Therefore, the agreement between the parties provide for resolution of disputes by an arbitrator and as far as the request of the petitioner for payment of the amount at enhanced rate is concerned, it can only be decided by the respondents or by an arbitrator in the event of the parties approaching the arbitrator and this Court cannot decide the same in this writ petition. Therefore, I hold that the order of rejection, which is impugned in WP No. 3379 of 2009 is valid and interference of this Court is not warranted.
37. Though the petitioner alleged malafide against the Superintending Engineer, Vellore and impleaded him in his personal capacity in WP No. 3623 of 2009, no argument was separately advanced before this Court besides the plea of malafide was not proved or established by any documentary evidence.
38. In the result, the writ petitions are dismissed. No costs. Consequently, connected miscellaneous petitions are closed. It is open to the writ petitioner to seek such remedy as is available to him under law.
rsh To
1. State of Tamil Nadu rep. by its Secretary to Government Public Works Department Fort St. George Chennai 600 009
2. The Chief Engineer Public Works Department Chennai Region Water Resources Organisation Chepauk, Chennai 600 005
3. The Superintending Engineer Public Works Department Water Resources Organisation Project Circle Vellore 632 006
4. The Executive Engineer Water Resources Organisation Project Division, Sethuvandai Gudiyatham R.S. Vellore District 635 803
5. The Branch Manager Federal Bank Limited M.G. Road, Kasargode Kerala State