Kerala High Court
Transcons Corporation vs State Of Kerala on 6 February, 2017
Author: Shaji P. Chaly
Bench: Shaji P.Chaly
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
WEDNESDAY, THE 8TH DAY OF MARCH 2017/17TH PHALGUNA, 1938
WP(C).No. 5377 of 2017 (V)
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PETITIONER:
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TRANSCONS CORPORATION, XIV/206,
NEDUMBASSERY, NAYATHODU.P.O.,
ANGAMALY - 683 572, REPRESENTED BY
ITS MANAGING PARTNER P.M.KUNJUMAKKAR.
BY ADVS.SRI.T.B.HOOD
SMT.M.ISHA
RESPONDENTS:
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1. STATE OF KERALA, REPRESENTED BY
SECRETARY TO GOVERNMENT,
PUBLIC WORKS (H) DEPARTMENT,
SECRETARIAT,
THIRUVANANTHAPURAM - 695 001.
2. THE SUPERINTENDENT ENGINEER,
PWD BUILDINGS, CENTRAL CIRCLE,
THRISSUR - 680 001.
3. THE EXECUTIVE ENGINEER,
PWD BUILDINGS DIVISION,
ERNAKULAM, EDAPPALLY - 682 024.
BY GOVERNMENT PLEADER SRI.S.KANNAN
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 08-03-2017, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
mbr/
WP(C).No. 5377 of 2017 (V)
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APPENDIX
PETITIONERS' EXHIBITS:
EXT.P1: TRUE COPY OF THE LETTER DATED 6.2.2017 ISSUED TO
THE PETITIONER BY THE 2ND RESPONDENT.
EXT.P2: TRUE COPY OF THE COMPLETION CERTIFICATE COUNTER SIGNED
BY THE 2ND AND 3RD RESPONDENTS.
EXT.P3: TRUE COPY OF THE LETTER DATED 9.2.2017 ISSUED BY THE
3RD RESPONDENT TO THE 2ND RESPONDENT.
EXT.P4: TRUE COPY OF THE CIRCULAR DATED 7.3.2003 ISSUED BY
THE PUBLIC WORKS (H) DEPARTMENT, GOVERNMENT OF KERALA.
EXT.P5: TRUE COPY OF THE JUDGMENT DATED 26.8.2016 IN
WPC.NO.28404/2016 OF THIS HON'BLE COURT.
EXT.P6: TRUE COPY OF THE REPRESENTATION DATED 12.2.2017
SUBMITTED TO THE 2ND RESPONDENT.
RESPONDENTS' EXHIBITS:
EXT.R2A: TRUE COPY OF THE GO DATED 28.9.2015.
EXT.R2B: TRUE COPY OF RELEVANT EXTRACT OF THE REVISED PWD
MANUAL.
EXT.R2C: TRUE COPY OF GO DATED 1.2.2012.
//TRUE COPY//
P.S. TO JUDGE
mbr/
SHAJI P. CHALY, J.
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W.P.(C) No.5377 of 2017
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Dated this the 8th day of March, 2017
JUDGMENT
Petitioner is a registered partnership firm and it is an A- class Public Works Department contractor. Petitioner has been awarded the tender for construction of new building for the Government Industrial Training Institute, Eriyad. The tender was accepted for the quoted rate of Rs.1,11,95,363.343/-. By Ext.P1 letter issued by the 2nd respondent, petitioner was directed to produce security deposit for an amount of Rs.5,59,800/- and performance guarantee of Rs.10,36,900/- from a nationalized or scheduled Bank. It is the contention of the petitioner that, for and on behalf of the firm, the Managing Partner executed the works related to construction of Fire and Rescue Station, Eloor, Ernakulam. Ext.P2 is the completion certificate of that work. Out of the four part bills submitted for the aforesaid completed work, only two bills have been paid. The 3rd and 4th part bills amount, which remains unpaid even now comes to Rs.27,21,612/- and Rs.65,53,115/- respectively, and the same is admitted in Ext.P3 letter sent by the 3rd W.P.(C) No.5377 of 2017 2 respondent to the 2nd respondent.
2. That apart, it is submitted by the petitioner that, as per Ext.P4 Circular issued by the Government and Ext.P5 judgment rendered by this Court, amounts due to the contractors under completed works can be adjusted towards security deposit for new contracts awarded. Even though petitioner submitted Ext.P6 representation to adjust the amount due from the Department, evident from Ext.P3, towards the security deposit for the work awarded as per Ext.P1, the same is not given a consideration by the respondents, and is insisting for production of the financial stipulations contained under Ext.P1.
3. Second respondent has filed a counter affidavit basically contending that by virtue of revised P.W.D Manual, all former circulars, including Ext.P4 has become inoperative. As per Clause 2009.6 and 7 of the revised PWD Manual, which was revised as per Government Order dated 01.02.2012, the procedure to be followed by the agreement authority has been prescribed, evident from Exts.R2(b) and R2(c) Government Order. Ext.R2(b) has been subsequently revised by Ext.R2(a) to the limited extent as stated therein.
W.P.(C) No.5377 of 2017 3
4. Exts.R2(a) and R2(b) do not contemplate for any sort of adjustment as claimed by the petitioner. Security deposit and performance guarantee has been insisted by the 2nd respondent on the basis of Exts.R2(a) and R2(b) and in that circumstances, petitioner cannot rely on Ext.P4. The said facts as stated above were not brought before this Court while passing Ext.P5 judgment and the facts and circumstances existed therein are different and distinct. Therefore, it is contended that petitioner is not entitled to get any reliefs as sought for in the writ petition.
5. Heard learned counsel for the petitioner and the learned Government Pleader and perused the documents on record and the pleadings put forth by the respective parties.
6. Learned counsel for the petitioner has invited my attention to a Division Bench judgment of this Court in 'State of Kerala v. Edward John' [2015 (2) KLT 967], wherein in paragraphs 10, 16 and 17, it is held as follows:
"10. The Kerala Financial Code (hereinafter referred to as 'the Financial Code') contains rules relating to all financial transactions of Government which fall into two broad classes, viz., receipts and disbursements; which should be followed by every Government servant in the matter of receipt, custody and disbursement of Government money. These rules are supplementary to the rules contained in the Kerala W.P.(C) No.5377 of 2017 4 Treasury Code and should be applied in conjunction with them. Chapter VII of the Financial Code deals with 'works'. Article 163 of the Financial Code provides that, the rules in Chapter VII are applicable to departments in General and are supplemented for particular departments by the detailed rules and orders contained in the respective department manuals and codes and any other special orders applicable to them. Article 165 provides further that, the Public Works Department (PWD) is responsible for the execution of all works which the Government have not specifically allotted to other departments. Article 178 deals with 'method of executing works' and Article 180 deals with 'provision of funds'. As per Article 180, except in accordance with the provisions of Articles 184 and 185 of that Code, no Government servant may enter into a contract for the execution of a work unless funds have been duly provided for it or an assurance has been received from the authority competent to provide the necessary funds that they will be allotted before the liability matures.
16. The provisions in the Kerala Financial Code, PWD Manual and the contract for execution of the work mandate payment of part bill during the progress of work and final bill immediately after the completion of the work. The fact that, after the completion of work final measurements were recorded and a final bill in terms of such measurements was drawn up and passed for payment on 29.9.2003 is not in dispute. But, according to the appellants/defendants, they could not make payment due to paucity of funds and the same was released to the respondent/plaintiff in terms of priority in the department concerned and as per availability of funds and letter of credit. They would also contend that, the respondent/plaintiff is not entitled for any interest for delayed payment, since going by Exts.B4 and B5 judgment/order of this Court any payment to the contractors can be made only in accordance with priority based on the date of registration of the bill and subject to availability of funds.
17. When the provisions in the Kerala Financial Code, PWD Manual and the contract for execution of the work mandate payment of part bill during the progress of work and final bill immediately after the W.P.(C) No.5377 of 2017 5 completion of the work, the contractors are legally entitled for such payments without any delay, as they are undertaking the contract work on the legitimate expectation and promise that payment will be made at any rate immediately after the completion of work. Going by the terms of the agreement a contractor has to deposit a sum amounting to 5% of the cost of the work undertaken by him as security for the due performance of the contract and all damages payable by the contractor under the terms of the contract shall be deducted by the Executive Engineer concerned by adjustment of a sufficient part of the security deposit or from any other sum due, or which may become due to the contractor by the Government. In addition to this, a deduction of 10% from all the payments made to the contractor shall be made by the Executive Engineer concerned as guarantee fund, which shall be released to the contractor only after the work is completed to the satisfaction of the department and it is finally taken over by the department. When payment of part bills is delayed indefinitely, the contractors are constrained to complete the entire work within the time stipulated in the contract by investing the entire funds raised by them, which in most of the cases would be borrowed funds from banks or financial institutions at higher rate of interest."
7. In my considered opinion, it is clear from Exts.P2 and P3 that substantial amounts are due to the petitioner from the respondents. If the said amounts are adjusted, the financial stipulations contained under Ext.P1 can be met with. When there are sufficient amounts due to the petitioner from the respondents, there is no point in insisting that petitioner should provide the financial stipulations contained under Ext.P1 separately. Petitioner has also a contention that the works are carried out by the petitioner by securing financial assistance W.P.(C) No.5377 of 2017 6 from Banks and other institutions by paying huge rate of interest. If the amounts due to the petitioner after completion of works are not paid, petitioner is put to innumerable difficulties and losses. Over and above, insisting the petitioner for production of separate financial stipulations rather than providing adjustment of the amount, is totally illegal and arbitrary.
8. Learned Government Pleader, on the other hand, submitted that petitioner is relying upon Ext.P4 Circular in order to seek the adjustment, which is modified as per the revised manual of guidelines for the purpose, which is discussed above.
9. Anyhow, after taking note of the submissions made by the respective counsel, I am of the considered opinion, when substantial amounts are due from the respondents to the petitioner, it is most unfair to insist the petitioner to comply with the financial stipulations contained in Ext.P1. In very many cases, this Court has issued direction to adjust the financial stipulations from the amounts due from the respective respondents. Petitioner is entitled to get the similar relief. Moreover, the Manual of guidelines is only an enabling W.P.(C) No.5377 of 2017 7 circumstance for the Government for proper guidance. That by itself is not a binding feature on this Court while considering the question of invoking the powers conferred under Article 226 of the Constitution of India.
10. Therefore, there will be a direction to the competent among the respondents to adjust the amount due to the petitioner, evident from Exts.P2 and P3, to the financial stipulations contained under Ext.P1, and execute an agreement within two weeks from the date of receipt of a copy of this judgment.
The writ petition is disposed of accordingly.
Sd/-
SHAJI P. CHALY JUDGE //true copy// P.S. to Judge St/-
09.03.2017