Kerala High Court
M/S. Nath Infrastructures vs State Of Kerala on 29 March, 2023
Author: Shaji P. Chaly
Bench: Shaji P.Chaly
W.P.(C) No. 16643/2022 & batch
:1:
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
WEDNESDAY, THE 29TH DAY OF MARCH 2023 / 8TH CHAITHRA, 1945
WP(C) NO. 16643 OF 2022
PETITIONER/S:
M/S. NATH INFRASTRUCTURES
28/309 A1, THONDAYAD, KOTTOOLY ROAD, CHERVARAMBALAM P.O
KOZHIKODE-673 017, REPRESENTED BY ITS MANAGING PARTNER,
V RAJEENDRANATH.
BY ADVS.
SANTHOSH MATHEW
ARUN THOMAS
KARTHIKA MARIA
ANIL SEBASTIAN PULICKEL
ABI BENNY AREECKAL
MATHEW NEVIN THOMAS
RESPONDENT/S:
1 STATE OF KERALA
REPRESENTED BY THE SECRETARY TO THE GOVERNMENT, PUBLIC
WORKS DEPARTMENT, GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM, KERALA - 695 001.
2 PROJECT DIRECTOR,
KERALA ROAD FUND BOARD-PROJECT MANAGEMENT UNIT,
GROUND FLOOR, BSNL OFFICE BUILDING, CGM(O) DOORSANCHAR
BHAVAN, PMG JUNCTION, THIRUVANANTHAPURAM,
KERALA - 695 033.
3 THE CHIEF EXECUTIVE OFFICER,
KERALA INFRASTRUCTURE INVESTMENT FUND BOARD 2ND FLOOR,
FELICITY SQUARE, MG ROAD, STATUE, THIRUVANANTHAPURAM,
KERALA - 695 001.
4 THE TEAM LEADER,
PMU-KRFB, GROUND FLOOR, BSNL OFFICE BUILDING, CGM(O)
DOORSANCHAR BHAVAN, PMG JUNCTION, THIRUVANANTHAPURAM,
KERALA - 695 033.
5 EXECUTIVE ENGINEER,
KERALA ROAD FUND BOARD-PROJECT MANAGEMENT UNIT,
KOZHIKODE / WAYANAD, A-16, VRINDAVAN COLONY, CHEVAYUR,
KERALA - 673 017.
6 ADDL. R6 IMPLEADED:
THE AUTHORIZED OFFICER.
W.P.(C) No. 16643/2022 & batch
:2:
THE FEDERAL BANK LTD., L.C.R.D KOZHIKODE DIVISION, IST
FLOOR, FEDERAL TOWERS, ARAIYIDATHUPALAM, KOZHIKODE,
KERALA - 673 016.
(ADDL. R6 IS IMPLEADED AS PER ORDER DATED 21.12.2022 IN IA-
4/2022 IN WP(C) NO. 16643/2022.)
BY ADVS.
Mohan Jacob George
P.V.PARVATHY (P-41)(K/000036/1991)
REENA THOMAS(R-364)
NIGI GEORGE(K/1169/2012)
R3 BY SRI. CHANDRASEKHARAN NAIR
R1 BY SRI. K.V. MANOJ KUMAR, SPL. GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16.03.2023,
ALONG WITH WP(C).16798/2022, THE COURT ON 29.03.2023 DELIVERED THE
FOLLOWING:
W.P.(C) No. 16643/2022 & batch
:3:
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
WEDNESDAY, THE 29TH DAY OF MARCH 2023 / 8TH CHAITHRA, 1945
WP(C) NO. 16798 OF 2022
PETITIONER/S:
M/S. NATH INFRASTRUCTURES,
28/309 A1, THONDAYAD, KOTTOOLY ROAD, CHERVARAMBALAM
(PO), KOZHIKODE - 673 017 REPRESENTED BY ITS MANAGING
PARTNER.
BY ADVS.
SANTHOSH MATHEW
ARUN THOMAS
KARTHIKA MARIA
ANIL SEBASTIAN PULICKEL
ABI BENNY AREECKAL
MATHEW NEVIN THOMAS
KARTHIK RAJAGOPAL
RESPONDENT/S:
1 STATE OF KERALA,
REPRESENTED BY THE SECRETARY TO THE GOVERNMENT, PUBLIC
WORKS DEPARTMENT, GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM, KERALA - 695 001.
2 PROJECT DIRECTOR,
KERALA ROAD FUND BOARD-PROJECT MANAGEMENT UNIT,
GROUND FLOOR, BSNL OFFICE BUILDING, CGM(O) DOORSANCHAR
BHAVAN, PMG JUNCTION, THIRUVANANTHAPURAM,
KERALA - 695 033.
3 THE CHIEF EXECUTIVE OFFICER,
KERALA INFRASTRUCTURE INVESTMENT FUND BOARD , 2ND
FLOOR, FELICITY SQUARE, MG ROAD, STATUE,
THIRUVANANTHAPURAM, KERALA - 695 001.
4 THE TEAM LEADER, PMU-KRFB,
GROUND FLOOR, BSNL OFFICE BUILDING, CGM(O) DOORSANCHAR
BHAVAN, PMG JUNCTION, THIRUVANANTHAPURAM,
KERALA - 695 033.
5 EXECUTIVE ENGINEER,
KERALA ROAD FUND BOARD-PROJECT MANAGEMENT UNIT,
KOZHIKODE / WAYANAD, A-16, VRINDAVAN COLONY, CHEVAYUR,
KERALA - 673 017.
6 ADDL.R6 IMPLEADED:
W.P.(C) No. 16643/2022 & batch
:4:
THE AUTHORIZED OFFICER
THE FEDERAL BANK LTD., LCRD KOZHIKODE DIVISION, 1ST
FLOOR, FEDERAL TOWERS, ARAIYIDATHUPALAM, KOZHIKODE,
KERALA 673 016
[ADDL. R6 IMPLEADED AS PER ORDER DATED 21.12.2022 IN
I.A.4/2022 IN WP(C)16798/2022.]
BY ADVS.
MOHAN JACOB GEORGE
P.V.PARVATHY (P-41)
REENA THOMAS
NIGI GEORGE
SRI. K.V. MANOJ KUMAR
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16.03.2023,
ALONG WITH WP(C).16643/2022, THE COURT ON 29.03.2023 DELIVERED THE
FOLLOWING:
W.P.(C) No. 16643/2022 & batch
:5:
SHAJI P. CHALY, J.
---------------------------------------------------------
W.P.(C). Nos.16643 & 16798 of 2022
---------------------------------------------------------
Dated this the 29th day of March, 2023.
JUDGMENT
The captioned writ petitions are filed by one and the same petitioner, who is a contractor engaged by the Kerala Road Fund Board, respondent No.2, to carry out the works "KIIFB- Improvements to Thamarassery-Varattiakkal road in Kozhikode District", and "KIIFB-2016-17 Improvement of Kaithapoyil- Kodenchery-Agastianmuzhi Road Km 0/000 to 21/200 in Kozhikode District" respectively. Accordingly, Exhibit P3 agreements were executed on 03.02.2018 and 13.09.2018 respectively, and the work was to be completed within 18 months from the date of execution of the agreement.
2. In W.P.(C) No. 16643 of 2022, the petitioner challenges Exhibit P18 order dated 08.04.2022 issued by the Project Director, Kerala Road Fund Board-- respondent No.2, terminating the work at the risk and cost of the petitioner. It is stated therein that the site was handed over to the contractor on 12.02.2018 with a period of completion of 18 months. It is also stated that the fourth extension of time of completion of the work was granted upto 31.12.2021. W.P.(C) No. 16643/2022 & batch :6: But, supplementary agreement was not executed as the validity of the bank guarantee was not extended. It is further stated that the extension of time of completion was requested upto 31.03.2022. However, the Team Leader, as per letter dated 01.02.2022, reported that there are many concrete works still pending and BC works in the first reach of 14.10 Km and second stretch of 2.75 km. are also not arranged by the petitioner contractor.
3. That apart, it is stated that as per a letter dated 05.03.2022, the Executive Engineer reported that repeated instructions were given to the contractor to carry out the BC works and balance side protection work; but the contractor did not start the balance work at the site to date. It is further stated that two notices were issued from the office of the second respondent dated 01.12.2021 and 10.01.2022 on the slow progress of the work and directed to complete the work at an early date benefiting the climatic condition; but the contractor did not show the proportionate progress during the extended period of time of completion and therefore, the undue delay in executing the work could not be accepted further.
4. Insofar as W.P.(C) No. 16798 of 2022 is concerned, the petitioner challenges Exhibit P19 order dated 08.04.2022 issued by the Project Director, Kerala Road Fund Board, respondent No.2 W.P.(C) No. 16643/2022 & batch :7: terminating the work at the risk and cost of the petitioner contractor. Therein also, it is stated that the site was handed over to the contractor on 22.09.2018 with a period of completion of 18 months. It is further stated that the third extension of time of completion for the work granted upto 31.03.2022; that the Executive Engineer, as per letter dated 10.03.2022 reported that even after the repeated meetings and instructions given to the contractor, the work was progressing slowly; that the contractor has not effectively utilized dry season from December, 2021 to March, 2022 by stating false promises and other reasons; and that the progress achieved during the said time is not satisfactory.
5. That apart, it is specified that notices dated 20.10.2021 and 30.11.2021 were issued from the office of the Project Director on the slow progress of the work, and final notices prior to the termination was issued on 14.03.2022; however, no measures are seen taken by the contractor to complete the work within the scheduled time benefiting climatic conditions.
6. When the writ petitions came up for admission, invocation of bank guarantee was restrained as per order dated 24.05.2022 which was being periodically extended and the same is in force now. The paramount contention advanced by the petitioner is that there were severe hindrances, such as electric posts, water pipeline, trees W.P.(C) No. 16643/2022 & batch :8: etc. along the sites, which were not shifted. That apart, it is contended that there was delay in obtaining consent for widening from the respective land owners.
7. The sum and substance of the contention advanced by the petitioner is that the work was delayed not due to the laches on the part of the petitioner, but, due to default on the part of the respondents in timely removing the hindrances along the site. It is further pointed out that even though several letters were issued by the petitioner to the second respondent wherein the issue was updated, no action was taken. Therefore it is the contention of the petitioner that the work was delayed due to the Covid-19 pandemic, and since the hindrances were removed by the respondents only during July, 2021.
8. It is also the contention of the petitioner that he was compelled to execute supplementary agreements to extend the time of completion of the work on various occasions. It is further submitted that subsequently also, the petitioner applied for extensions after the expiry of the time of completion, and the work was being carried on. It is also the case of the petitioner that the request of the petitioner was endorsed and recommended by all concerned engineers. However, none of them were approved by the second respondent. It is the further case of the petitioner that W.P.(C) No. 16643/2022 & batch :9: he has completed 93% and 76% respectively of the works awarded to him.
9. It is further contended that it is a well settled position in law that when there is a contractual dispute, the party alleging breach cannot also be the arbiter as to whether or not the breach has been committed. It is further contended that when there is a dispute as to whether or not there has been a breach in the conditions of a contract, the party alleging breach cannot determine whether or not a breach has actually occurred and cannot take any penal action against the other party. However, in the instant case, the second respondent, being a party to the agreement, cannot unilaterally determine whether the petitioner has committed any default or take any penal action including assigning the risk and cost of re-tendering to the petitioner and invoking the performance securities provided by the petitioner. It is also contended that as per clause 24 of the agreement, all disputes arising during the implementation have to be settled through civil courts of applicable jurisdiction.
10. In sum and substance, the contention advanced by the petitioner is that it must be proved before a civil court of applicable jurisdiction that there are sufficient grounds to assign the risk and cost to the petitioner before the same can be done. It is also W.P.(C) No. 16643/2022 & batch : 10 : contended that the second respondent has failed to meet its obligations under the agreements and the site was not handed over free of hindrances which contributed heavily to the delay in the work. Other contentions are also raised.
11. KIIFB, respondent No.3, has contended that it is only a funding agency and it is the prerogative of the special purpose vehicle, respondent No.2, to regulate the work in terms of the agreement. Additional documents are also produced along with I.A. No. 3 of 2022.
12. I have heard Sri. Santhosh Mathew for the petitioners, Sri. K. V. Manoj Kumar, learned Special Government Pleader, and Sri. S. Chandrasekharan Nair for KIIFB, and perused the pleadings and material on record.
13. The sum and substance of the contention advanced by the petitioner is that the Project Director, being a party to the contract, is not vested with any powers to terminate the contract at the risk and cost of the contractor. The Project Director is shown as the employer in the agreement and the engineer is the team leader; Executive Engineer, PWD Roads Division, Kozhikode is the authorised representative. The General Conditions of Contract shows that the employer is the party who will employ the contractor to carry out the works. The Engineer is the person named in the W.P.(C) No. 16643/2022 & batch : 11 : Contract Data (Or any other competent person appointed and notified to the contractor to act in replacement of the Engineer) who is responsible for supervising the contractor, administering the contract, certifying payments due to the contractor, issuing and valuing variations to the contract, awarding extensions of time and valuing the compensation events.
14. Clause 17 of the General Conditions of Contract deals with 'the works to be completed by the Intended Completion date' and sub-clause 17.1 makes it clear that the contractor may commence execution of the works on the start date and shall carry out the works in accordance with the programmes submitted by the contractor, as updated with the approval of the Engineer, and complete them by the Intended Completion Date.
15. As per clause 36, the contractor is bound to carry out the items in the Bill of Quantities item wise variation upto 25 percent excess provided that the change does not exceed 1% of initial contract price.
16. Clause 41 deals with payments and sub-clause 41.2 enumerates that payments shall be adjusted for deductions for advance payments retention, other recoveries in terms of the contract and taxes at source, as applicable under the law; and that W.P.(C) No. 16643/2022 & batch : 12 : the employer shall pay the contractor the amounts certified by the engineer within 28 days of the date of each certificate.
17. Clause 42 deals with 'compensation events' and sub- clause 42.1 enumerates 'the compensation events unless they are caused by the contractor', which reads as follows:
42. Compensation Bvents 42.1. The following are compensation events unless they are caused by the Contractor.
(a) The Employer does not give access to a part of the sìte by the site possession date stated in the Contract Data.
(b) The Employer modified the schedule of other contractor in a way which affects the work of the contractor under the contract.
(c) The engineer orders a delay or does not issue drawings specifications or instructions required for execution of works on time.
(d) The Engineer instructs the Contractor to uncover or to carry out additional tests upon work which is then found to have no defects.
(e) The Engineer does not approve of a subcontract to be let, within 15 days.
(f) Ground conditions are substantially more adverse than could reasonably have been assumed before issuance of Letter of Acceptance from the information issued to Bidders (including the Site Investigation Reports), from information available publicly and from a visual îinspection of the site.
(g) The Engineer gives an instruction for dealing with an unforeseen condition caused by the Employer, or additional work required for safety or other reasons.
(h) Other contractors, public authorities, utilities or the Employer does not work within the dates and other constraints stated in the Contract, and they cause delay or extra cost to the Contractor.
(i) The advance payment is delayed, beyond 28 days after receipt of application and bank guarantee.
(j) The effect on the Contractor or any of the Employer's Risks.
(k) The Engineer unreasonably delays issuing a Certificate of completion.
(l) Other compensation events listed in the Contract Data or mentioned in the Contract.
18. Sub-clause 42.2 specifies that if a compensation event would cause additional cost or would prevent the work being completed W.P.(C) No. 16643/2022 & batch : 13 : before the Intended Completion Date, the contract price shall be increased and/or the Intended completion Date is extended, and the engineer shall decide whether and by how much the Contract price shall be increased and whether and by how much the Intended completion Date shall be extended.
19. Clause 46 deals with 'liquidated damages' and clause 46.1 stipulates that the contractor shall pay liquidated damages to the employer at the rate per day stated in the Contract Data for each day that the Completion Date is later than the Intended Completion Data (for the whole of the works or the milestone as stated in the contract data); that the total amount of liquidated damages shall not exceed the amount defined in the Contract Data; that the employer may deduct liquidated damages from payments due to the contractor; and that payment of liquidated damages does not affect the contractor's other liabilities.
20. Clause 46.2 specifies that if the Intended Completion Date is extended after liquidated damages have been paid, the Engineer shall correct any overpayment of liquidated damages by the Contractor by adjusting the next payment certificate, and the contractor shall be paid interest on the over payment calculated from the date of payment to the date of repayment at the rates W.P.(C) No. 16643/2022 & batch : 14 : specified in sub-clause 43.1
21. Sub-clause 43.3 states that if the contractor fails to comply with the time for completion as stipulated in the tender, then the contractor shall pay to the employer the relevant sum stated in the Contract Data as Liquidated damages for such default and not as penalty for every day or part of day which shall elapse between relevant time for completion and the date stated in the taking over certificate of the whole of the works on the relevant section, subject to the limit stated in the Contract Data.
22. Clause 54 deals with 'termination' and sub-clause 54.1 specifically states that the employer or the contractor may terminate the contract, if the other party causes a fundamental breach of the contract. Clauses 54.2 deals with the fundamental breaches of contract which shall include, but shall not be limited to, and it reads as follows:
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 Engineer instructs the contractor to delay the progress of the works and the instruction is not withdrawn within 28 days;
c) the employer or the contractor is made bankrupt or goes into W.P.(C) No. 16643/2022 & batch : 15 : liquidation other than for a reconstruction or amalgamation;
d) a payment certified by the engineer is not paid by the employer to the contractor within 56 days of the date of the engineer's certificate;
e) the engineer gives 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.
f) The contractor does not maintain a security which is required.
g) The contractor has dealyed the completion of works by the number of days for which the maximum amount of liquidated damages can be paid as defined in the contract data; and
h) if the contractor in the judgment of the employer has engaged in corrupt or fraudulent practices in completing for or in executing the contract.
23. Sub-clause 54.4 is a covenant empowering the employer to terminate the contract for convenience notwithstanding the specific instances pointed out in sub-clause 54.2. Sub-clause 54.5 makes it clear that 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.
24. Clause 55 deals with 'payment upon termination', and sub-clause 55.1 specifies that if the contract is terminated because W.P.(C) No. 16643/2022 & batch : 16 : of a fundamental breach of contract by the contractor, the engineer shall issue a certificate for the value of the work done less advance payments received upto the date of issue of the certificate, less other recoveries due in terms of the contract, less taxes due deducted at source as per applicable law, and less the percentage to apply to the work not completed as indicated in the Contract Data; that additional liquidated damages shall not apply; and that if the total amount due to the employer exceeds any payment due to the contractor, the difference shall be a debt payable to the employer.
25. Sub-clause 55.2 makes it clear that if the contract is terminated at the employer's convenience or because of a fundamental breach of contract by the employer, the engineer shall issue a certificate for the value of the work done, the cost of balance material brought by the contractor and available at site, the reasonable cost of removal of equipment, repatriation of the contractor's personnel employed solely on the works, and the contractor's costs of protecting and securing the works and less advance payments received up to the date of the certificate, less other recoveries due in terms of the contract and less taxes due to be deducted at source as per applicable law.
26. Clause 57 deals with 'release from Performance' and sub- W.P.(C) No. 16643/2022 & batch : 17 : clause 57.1 states that if the contract is frustrated by the outbreak of war or by any other event entirely outside the control of either the employer or the contractor, the engineer shall certify that the contract has been frustrated; that the contractor shall make the site safe and stop work as quickly as possible after receiving the certificate and shall be paid for all work carried out before receiving it and for any work carried out afterwards to which the commitment was made.
27. From the above , it is clear that the terms and conditions of the agreement executed by and between the employer and the contractor are definite. The petitioner did not have any complaint with respect to the terms and conditions of the agreement executed by and between the parties till the work was terminated by the employer. Moreover, it is an admitted case that the period of contract was extended by executing supplementary agreements on various dates and even at that point of time, the petitioner did not have a case that the terms and conditions of the contract are unconscionable, illegal or void.
28. It is also clear that the agreement speaks about the compensation events, if the employer commits default and also the compensation events in the event the contractor makes default in W.P.(C) No. 16643/2022 & batch : 18 : execution of the work. The termination could be made by the employer for his own fault and also due to the fault on the part of the contractor. Therefore, the terms and conditions of the contract are entered by and between the parties taking into account the nature of the contract that had to be executed by the contractor.
29. Now, the fundamental and basic question remains to be considered is whether as pointed out by the petitioner, the employer has to resort to a civil remedy for the purpose of terminating a contract. In that regard, the learned counsel for the petitioner has advanced arguments that conditions in the PWD Manual relied upon by the employer to terminate the contract are merely administrative instructions and therefore, the said provisions cannot overlook the law in respect of the termination of contract.
30. In support of the said contention, the learned counsel has placed reliance on a Division Bench judgment of this Court in State of Kerala v. Aboobacker Kutty [1992 (2) KLT 939], wherein following the judgment of the Apex Court in Fernandez v. State of Mysore (AIR 1967 SC 1753), it is held that the instructions contained in the PWD Manual are merely administrative instructions and not statutory rules.
31. In my considered opinion, the issue to be decided in this W.P.(C) No. 16643/2022 & batch : 19 : writ petition is entirely different. This is a case where the parties have entered into an agreement which are having specific terms and conditions with respect to each and every aspect, including the termination of contract. Therefore, the provisions of the PWD Manual would have to be read along with the terms and conditions agreed by and between the parties.
32. Clause 2116.1 deals with 'termination due to default by contractor', which states that as per General Conditions of Contract, the agreement authority has the power to cancel the contract and arrange the work otherwise in the event of default by the contractor; that the agreement authority, in exercising the power vested with him, shall follow the procedure outlined in the General Conditions of the Contract; and that the damages and penalties provided therein and applicable to the particular contract shall also be realised in accordance with the General Conditions of Contract.
33. Clause 2116.2 dealing with 'termination of contract', enumerates the circumstances under which the Department can terminate the contract at the risk and cost of the contractor that: --
(i) if the contractor does not turn up for starting the work within the specified period to take charge of the site after executing the agreement; (ii) if the contractor does not show the proportionate W.P.(C) No. 16643/2022 & batch : 20 : progress during the extended period of time of completion; (iii) if the contractor abandons the work after executing a portion without genuine reason and does not resume or complete it even after specific direction from the Department; (iv) fails to make application for extension of time of completion in time; (v) the licence of the contractor whose work has been terminated shall be cancelled with immediate effect and shall be barred from quoting for another work for a minimum period of five years. Contract licence shall not be renewed in his name or different name of a binamy;
and (vi) a company or person or firm once terminated shall be disqualified from participating in any tender in his name or by using a different name or binamy. There shall also be a fine and forfeiture of deposits.
34. Clause 2116.2.1 of the PWD Manual Revised Edition, 2012 deal with 'realisation of loss on account of termination', which clearly specifies that an amount equal to 30% of the cost of the remaining works at agreed rates of the terminated contract shall be recovered from the defaulted contractor towards the risk and cost; that the contractor shall be directed to remit the risk and cost amount within three months; that there is no need to wait till the work is arranged alternatively through another contractor and the total loss sustainable due to the default of the original contractor is W.P.(C) No. 16643/2022 & batch : 21 : assessed; that such loss, if any, shall be realised after completion of the work; and that if he fails to remit the amount within the period, the steps enumerated thereunder can be adopted for realisation of loss. It also specified that the amount can be realised from the EMD/security; Bill amount/ retention if any due to the contract; any dues from department to the contract; and Bank Guarantee/ Performance Guarantee or by filling civil suit against the contractor.
35. That apart, clause 2116.2.2 deals with 'revoking of termination', which specifies that the contract for a work on terminated by the agreement authority can be revoked by the immediate superior officer, if the contractor expresses his willingness at later date to complete the balance work; but performance guarantee of 30% of the balance work to be completed shall be deposited; and the said performance guarantee shall be released only on completion of the work. In such a case, the contractor is bound to do the work at the originally agreed rates for which agreement authority shall execute a supplemental agreement with balance schedule and fresh time of completion.
36. Therefore, on a conjoint reading of the agreement and the provisions of the PWD Manual specified above, it is clear that power is vested with the employer to terminate the contract. It is not by W.P.(C) No. 16643/2022 & batch : 22 : invocation of the provisions of the PWD Manual alone, the termination was effected by the employer. But, it was also taking into account the terms and conditions of the agreement mutually agreed upon by and between the parties.
37. Therefore, it is not a case where the petitioner is not without a remedy, if an action of termination is employed by the employer. It is also clear from clause 2118 of the PWD Manual dealing with the 'settlement of disputes and differences' that the agreement authority as well as the contractor shall follow the procedure contained in the relevant clauses in the General Conditions of Contract for settling the disputes arising out of the execution of the contract.
38. The issue of the legal effect of the Public Works Department Code was considered by the Apex Court in Fernandez (supra), wherein the question considered was whether the instructions in the Code have any statutory force, and if they have no statutory force, whether they confer any right on anybody; and if so, whether a tenderer can claim any rights on the basis of the administrative instructions; and finally it was held that the State Government can take executive action in all matters in which the Legislature of the State can pass laws; but Article 162 by itself does W.P.(C) No. 16643/2022 & batch : 23 : not confer any rule making power on the State Government in that behalf; and therefore, it was held that the instructions contained in the Code are mere administrative instructions and are not statutory rules.
39. But, this is a case where the action was initiated on the basis of the terms and conditions of contract entered into by and between the parties. Therefore, that can only be treated as a contract executed by and between the parties in terms of the provisions of the Indian Contract Act, 1872. Viewed so, once an offer was made by the employer and accepted by the contractor and an agreement was executed by and between the parties, one of the parties cannot turn around and attack some of the terms and conditions of the agreement, but for the agreement vitiated by undue influence, fraud, misrepresentation, without free consent, mistake of fact or it is void consequent to any terms and conditions forbidden by law.
40. Further, the petitioner does not have a case that any of the agreement conditions executed by and between the parties is void in nature. The issue with respect to the binding nature of the terms and conditions of an agreement executed by and between the State or other authority with private persons was considered by the W.P.(C) No. 16643/2022 & batch : 24 : Apex Court in Bareilly Development Authority and Ors. v. Ajay Pal Singh and Ors. [(1989) 2 SCC 116], Radhakrishna Agarwal and Ors. Vs. State of Bihar and Ors. [(1977) 3 SCC 457], Premji Bhai Parmar and Ors. Vs. Delhi Development Authority and Ors. [1980(2) SCC 129] and Divisional Forest Officer v. Biswanath Tea Co. Ltd. [(1981) 3 SCC 238] and it is held that the contract entered into by and between the State and the persons aggrieved is non statutory and purely contractual and the rights are governed only by the terms of the contract and no writ or order can be issued under Article 226 of the Constitution of India, so as to compel the authorities to permit a breach of contract, pure and simple.
41. However, conducting an elaborate survey of the earlier Supreme Court judgments on the issue relating to a non statutory contract, the Apex Court had rendered a judgment in M.P. Power Management Company Limited, Jabalpur v. Sky Power Southeast Solar India Private Limited and others [2023) 2 SCC 703] holding that the principle laid down in Bareilly Development Authority (supra) that in the case of a non- statutory contract, the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, may not continue to hold good, in the light of what has been laid down in W.P.(C) No. 16643/2022 & batch : 25 : ABL International Limited and another v. Export Credit Guarantee Corporation of India [(2004) 3 SCC 553] (supra), and as followed in the recent judgment in State of U.P. v. Sudhir Kumar Singh and Ors.[2020 SCC Online SC 847]. After finding so, it was held thus:
82.1. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court.
...
82.12. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to act fairly and to eschew arbitrariness in all its actions, resort to the constitutional remedy on the cause of action, that the action is arbitrary, is permissible (see in this regard Shrilekha Vidyarthi v. State of U.P. [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212 : 1991 SCC (L&S) 742] ). However, it must be made clear that every case involving breach of contract by the State, cannot be dressed up and disguised as a case of arbitrary State action. While the concept of an arbitrary action or inaction cannot be cribbed or confined to any immutable mantra, and must be laid bare, with reference to the facts of each case, it cannot be a mere allegation of breach of contract that would suffice. What must be involved in the case W.P.(C) No. 16643/2022 & batch : 26 : must be action/inaction, which must be palpably unreasonable or absolutely irrational and bereft of any principle. An action, which is completely mala fide, can hardly be described as a fair action and may, depending on the facts, amount to arbitrary action. The question must be posed and answered by the Court and all we intend to lay down is that there is a discretion available to the Court to grant relief in appropriate cases. 82.13. A lodestar, which may illumine the path of the Court, would be the dimension of public interest subserved by the Court interfering in the matter, rather than relegating the matter to the alternate forum."
42. Taking into account the above principles of law and bearing in mind the terms and conditions of the agreement executed by and between the parties, it cannot be said that the termination of the contracts by the agreement authority is bad or illegal. This I say because, the authority has granted sufficient time to the petitioner, even by extending the agreement period by executing supplementary agreements. The rest of the aspects put forth by the petitioner in this writ petition is premature in nature. Moreover, admittedly, consequent to the execution of the agreement, the parties have entered into specific terms and conditions by which the employer as well as the contractor are given the liberty to terminate the contract in the circumstances specified in the agreement executed by and between the parties. W.P.(C) No. 16643/2022 & batch : 27 :
43. Considering the facts and figures so, I do not think, the petitioner is entitled to get any reliefs as are sought for in the writ petitions against Exhibits P18 and P19 termination orders made by the Project Director--the agreement authority.
Needless to say, writ petitions fail and accordingly, they are dismissed. However, I make it clear that all the issues with respect to the payment due to the petitioner; the contentions raised by the petitioner apprehending further action, and the contentions with respect to the power of quantification of the damages by the employer, are all left open.
sd/- SHAJI P. CHALY, JUDGE.
Rv W.P.(C) No. 16643/2022 & batch : 28 : APPENDIX OF WP(C) 16643/2022 PETITIONER'S EXHIBITS:
Exhibit P1 TRUE COPY OF NOTICE INVITING TENDER NO. PMU-
KRFB/T-07/2017-18 DATED 04.10.2017 ISSUED BY THE 2ND RESPONDENT FOR THE WORK "KIIFB IMPROVEMENTS TO THAMARASSERY-VARATTIAKKAL ROAD IN KOZHIKODE DISTRICT".
Exhibit P2 TRUE COPY OF THE LETTER OF ACCEPTANCE DATED 13.12.2017 ISSUED BY THE 2ND RESPONDENT IN FAVOUR OF THE PETITIONER.
Exhibit P3 TRUE COPY OF THE RELEVANT EXTRACTS OF THE AGREEMENT DATED 03.02.2018 ENTERED INTO BETWEEN THE PETITIONER AND RESPONDENT.
Exhibit P4 TRUE EXTRACT COPY OF THE PETITIONER FIRM'S DETAILS FROM THE REGISTRAR OF PARTNERSHIPS. Exhibit P5 TRUE COPY OF THE ORDER NO. A2/824/2018 OF THE SUPERINTENDING ENGINEER, PWD DATED 30.04.2018.
Exhibit P6 TRUE COPY OF THE PETITIONER'S LETTER TO THE 2ND RESPONDENT DATED 20.02.2018.
Exhibit P7 TRUE COPY OF THE PETITIONER'S LETTER TO THE 2ND RESPONDENT DATED 19.06.2019.
Exhibit P8 TRUE COPY OF THE PETITIONER'S LETTER TO THE 2ND RESPONDENT DATED 12.03.2021.
Exhibit P9 TRUE COPY OF SUPPLEMENTAL AGREEMENT NO. 1 DATED 24.09.2019 EXECUTED BETWEEN THE PETITIONER AND 2ND RESPONDENT.
Exhibit P10 TRUE COPY OF SUPPLEMENTAL AGREEMENT NO. 2 DATED 01.01.2020 EXECUTED BETWEEN THE PETITIONER AND 2ND RESPONDENT.
Exhibit P11 TRUE COPY OF SUPPLEMENTAL AGREEMENT NO. 4 DATED 16.09.2020 EXECUTED BETWEEN THE PETITIONER AND 2ND RESPONDENT.
Exhibit P12 TRUE COPY OF THE MOST RECENT EXTENSION REQUEST DATED 20.12.2021 SENT BY THE PETITIONER TO THE RESPONDENTS.
Exhibit P13 TRUE COPY OF THE FIRST NOTICE PRIOR TO TERMINATION ISSUED BY THE 2ND RESPONDENT DATED 01.12.2021.
Exhibit P14 TRUE COPY OF THE PETITIONER'S REPLY DATED 28.12.2021.
Exhibit P15 TRUE COPY OF THE SUPPLEMENTAL AGREEMENT NO. 3 DATED 13.03.2020 EXECUTED BETWEEN THE PETITIONER AND 2ND RESPONDENT.
Exhibit P16 TRUE COPY OF THE RELEVANT EXTRACTS OF THE W.P.(C) No. 16643/2022 & batch : 29 : ESTIMATE REPORT SUBMITTED ON REVISED 20.12.2021 BY THE 5TH RESPONDENT.
Exhibit P17 TRUE COPY OF THE FINAL NOTICE PRIOR TO TERMINATION DATED 10.01.2022 ISSUED BY THE 2ND RESPONDENT.
Exhibit P18 TRUE COPY OF THE ORDER NO.06/PWD004-18/PD/PMU-KRFB/137R/KKD/2017 DATED 08.04.2022 ISSUED BY THE 2ND RESPONDENT.
Exhibit P19 TRUE COPY OF THE REPRESENTATION DATED 21.04.2022 SUBMITTED BY THE PETITIONER BEFORE THE 1 RESPONDENT'S MINISTER FOR PUBLIC WORKS. Exhibit P20 TRUE COPY OF THE LETTER SENT BY THE 5TH RESPONDENT TO THE 4TH RESPONDENT.
Exhibit P21 TRUE COPY OF THE PETITIONER'S LETTER SUBMITTING THE 8TH AND PART BILL TO THE 5TH RESPONDENT DATED 12.05.2022.
Exhibit P22 TRUE COPY OF THE LETTER OF THE 4TH RESPONDENT ALONG WITH RELEVANT EXTRACTS OF THE CERTIFIED BILL ACCOMPANYING.
Exhibit P23 TRUE COPY OF THE NOTICE DATED 24.11.2022 ISSUED TO THE PETITIONER BY THE AUTHORIZED OFFICER, THE FEDERAL BANK LTD, LCRD, KOZHIKODE.
Exhibit P24 TRUE COPY OF THE REPLY DATED 5.12.2022 TO EXT.
P23 ISSUED BY THE PETITIONER.
Exhibit P25 TRUE COPY OF THE EMAIL REPLY OF THE BANK TO EXT.P24 DATED 06.12.2022.
RESPONDENTS' EXHIBITS: NIL True Copy PS To Judge.
rv W.P.(C) No. 16643/2022 & batch : 30 : APPENDIX OF WP(C) 16798/2022 PETITIONER'S EXHIBITS:
Exhibit P1 TRUE COPY OF NOTICE INVITING TENDER NO. PMU-
KRFB/T07/2017-18 FOR THE WORK "KIIFB-2016-17 IMPROVEMENT OF KAITHAPOYILKODANCHERY- AGUSTHIAMUZHI ROAD KM 0/000 TO 21/200 IN KOZHIKODE DISTRICT DATED 07.05.2018 ISSUED BY THE. 2ND RESPONDENT.
Exhibit P2 TRUE COPY OF THE LETTER OF ACCEPTANCE DATED 23.08.2018 ISSUED BY THE 2ND RESPONDENT IN FAVOUR OF THE PETITIONER.
Exhibit P3 TRUE COPY OF THE RELEVANT EXTRACTS OF THE AGREEMENT DATED 13.09.2018 ENTERED INTO BETWEEN THE PETITIONER AND RESPONDENT.
Exhibit P4 TRUE COPY OF THE PETITIONER'S LETTER TO THE 2ND RESPONDENT DATED 29.08.2019.
Exhibit P5 TRUE COPY OF THE PETITIONER'S LETTER TO THE 2ND RESPONDENT DATED 18.09.2019.
Exhibit P6 TRUE COPY OF THE PETITIONER'S LETTER TO THE 2ND RESPONDENT DATED 18.09.2019.
Exhibit P7 TRUE COPY OF THE PETITIONER'S LETTER TO THE 2ND RESPONDENT DATED 11.02.2021.
Exhibit P8 TRUE COPY OF THE SUPPLEMENTAL AGREEMENT NO. 1 DATED 08.06.2020 EXECUTED BETWEEN THE PETITIONER AND THE 2ND RESPONDENT.
Exhibit P9 TRUE COPY OF THE SUPPLEMENTAL AGREEMENT NO. 2 DATED 11.08.2021 EXECUTED BETWEEN THE PETITIONER AND THE 2ND RESPONDENT.
Exhibit P10 TRUE COPY OF THE SUPPLEMENTAL AGREEMENT NO. 3 DATED 11.10.2021 EXECUTED BETWEEN THE PETITIONER AND THE 2ND RESPONDENT.
Exhibit P11 TRUE COPY OF THE FIRST NOTICE PRIOR TO TERMINATION ISSUED BY THE 2ND RESPONDENT DATED 20.10.2021.
Exhibit P12 TRUE COPY OF THE REPLY DATED 26.10.2021 SENT BY THE PETITIONER TO THE 2ND RESPONDENT.
Exhibit P13 TRUE COPY OF THE NOTICE DATED 30.11.2021 ISSUED BY THE 2ND RESPONDENT.
Exhibit P14 TRUE COPY OF THE REPLY DATED 21.12.2021 SENT BY THE PETITIONER TO THE 2ND RESPONDENT.
Exhibit P15 TRUE COPY OF THE EMAIL OF THE 2ND RESPONDENT TO THE PETITIONER.
Exhibit P16 TRUE COPY OF THE 2ND RESPONDENT'S NOTICE DATED 14.03.2022.
EXHIBIT P17 TRUE COPY OF THE REPRESENTATION DATED W.P.(C) No. 16643/2022 & batch : 31 : 15.03.2022 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.
EXHIBIT P18 TRUE COPY OF THE LETTER DATED 23.03.2022 SENT BY THE PETITIONER TO THE 2ND RESPONDENT.
EXHIBIT P19 TRUE COPY OF THE 2ND RESPONDENT'S ORDER NO.
38/PWD004-100/PD/PMU-KRFB/137R/KKD/2018 DATED 08.04.2022.
EXHIBIT P20 TRUE COPY OF THE REPRESENTATION DATED 21.04.2022 SUBMITTED BY THE PETITIONER BEFORE THE FIRST RESPONDENT'S MINISTER FOR PUBLIC WORKS.
EXHIBIT P21 TRUE COPY OF THE RELEVANT EXTRACTS LETTER OF THE 5TH RESPONDENT TO THE 4TH RESPONDENT DATED 17.03.2022.
EXHIBIT P22 TRUE COPY OF THE PETITIONER'S LETTER SUBMITTING THE 8TH PART BILL DATED 28.04.2022. EXHIBIT P23 TRUE COPY OF THE LETTER OF THE CONSULTANT ON THE PROJECT FORWARDING THE BILL TO THE 5TH RESPONDENT.
EXHIBIT P24 TRUE COPY OF THE PETITIONER'S LETTER DATED 19.05.2022 REQUESTING MEASUREMENT AND CERTIFICATION OF THE UNBILLED WORK.
Exhibit P25 TRUE COPY OF THE RELEVANT EXTRACTS OF THE CERTIFIED BILL FORWARDED ON 17.03.2022 ALONG WITH EXT. P21.
Exhibit P26 TRUE COPY OF THE LETTER OF THE 5TH RESPONDENT DATED 29.06.2022 ALONG WITH RELEVANT EXTRACTS OF THE CERTIFIED BILL INCLUDED THEREWITH.
Exhibit P27 TRUE COPY OF THE COMMUNICATION DATED 21.11.2022 OF THE 5TH RESPONDENT TO THE 4TH RESPONDENT ALONG WITH RELEVANT EXTRACTS OF THE CERTIFIED BILL INCLUDED THEREWITH.
Exhibit P28 TRUE COPY OF THE NOTICE DATED 24.11.2022 ISSUED TO THE PETITIONER BY THE AUTHORIZED OFFICER, THE FEDERAL BANK LTD, LCRD, KOZHIKODE.
Exhibit P29 TRUE COPY OF THE REPLY DATED 05.12.2022 TO EXT.
P 28 ISSUED BY THE PETITIONER.
Exhibit P30 TRUE COPY OF THE EMAIL REPLY OF THE BANK TO EXT.P29.
RESPONDENTS' EXHIBITS: NIL True Copy PS To Judge.
rv