Gauhati High Court
Page No.# 1/29 vs The Food Corporation Of India And 3 Ors on 23 January, 2025
Author: Devashis Baruah
Bench: Devashis Baruah
Page No.# 1/29
GAHC010002492024
2025:GAU-AS:891
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/66/2024
G.B. CHOWDHURY HOLDINGS PVT LTD
A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 HAVING ITS
REGISTERED OFFICE AT SARUMOTORIA, OPPOSITE DISPUR CAPITAL
COMPLEX, DISPUR, GUWAHATI-6, REPRESENTED BY ITS DIRECTOR, SMT.
SUJATA GURUNG CHOWDHURY
VERSUS
THE FOOD CORPORATION OF INDIA AND 3 ORS
REPRESENTED BY ITS CHAIRMAN CUM MANAGING DIRECTOR,
BARAKHAMBA ROAD, NEW DELHI-6
2:EXECUTIVE DIRECTOR
ZONAL OFFICE (NE)
FOOD CORPORATION OF INDIA
G.S. ROAD
ULUBARI
GUWAHATI
PIN-781007
3:GENERAL MANAGER (REGION)
FOOD CORPORATION OF INDIA
REGIONAL OFFICE
ASSAM REGION
GUWAHATI-781008
4:ASSISTANT GENERAL MANAGER
FOOD CORPORATION OF INDIA
REGIONAL OFFICE
ASSAM REGION
GUWAHATI-78100
Page No.# 2/29
For the Petitioner(s) : Mr. B. Chakraborty, Advocate
For the Respondent(s) : Mr. P. K. Roy, Sr. Advocate
: Mr. S. K. Chakraborty, Advocate
Date of Hearing : 21.01.2025, 23.01.2025
Date of Judgment : 23.01.2025
BEFORE
HONOURABLE MR. JUSTICE DEVASHIS BARUAH
JUDGMENT AND ORDER (ORAL)
Heard Mr. B. Chakraborty, the learned counsel appearing on behalf of the Petitioner and Mr. P. K. Roy, the learned Senior counsel assisted by Mr. S. K. Chakraborty, the learned counsel appearing on behalf of the Food Corporation of India.
2. The dispute involved in the instant writ petition pertains to the imposition of an amount of Rs.2.11 crores by the Respondent FCI upon the Petitioner and the manner in which the recovery was made from the dues the Petitioner was entitled to in respect to other contracts the Petitioner had with the FCI.
3. The materials on record reveals that a Notice Inviting e-Tender was issued on the 11.03.2015 for transportation of foodgrains/sugar/allied materials from EXRailway Siding FSD Changsari to FCI FSD Tangla via weighbridge (Distance 90 Kms) minimum daily requirement of trucks 20-30 which may increase or decrease as per the exigency of the requirement.
4. The Petitioner herein submitted its tender and was appointed as a Page No.# 3/29 Transport Contractor vide an order dated 20.06.2015. The said contract was for a period of two years i.e. from 20.06.2015 to 19.06.2017. The said contract was further extended upto 22.07.2017. The record further reveal that during the period of the contract and more particularly sometime just before its culmination, certain steps were taken to measure the shortest motorable distance between RTC Ex-FCI Siding CFCC Changsari to Tangla via weighbridge and the District Office Committee declared the distance to be 74 Km in its report dated 29.04.2017. The Area Manager thereafter confirmed it vide a letter dated 19.05.2017. It is further seen that subsequent thereto, there were confusion inasmuch as the shortest route assessed was without taking into consideration the road restrictions and as to whether it was the best suitable shortest route for heavy vehicles. Subsequent thereto, fresh assessments were made and vide a letter dated 25.05.2017, it was confirmed by the Area Manager that the distance of the shortest motorable route was 76 Km. On that basis, a communication dated 26.07.2017 (much after the extended period of the contract), the Assistant General Manager (Cont.), FCI wrote to the Area Manager, FCI that the Transport Bills w.e.f. 29.04.2017 be passed on the basis of 76 KM distance and not 90 KM. The rationale for implementing the said distance w.e.f. 29.04.2017 was on account of the District Office Committee for the first time rendered the report on 29.04.2017.
5. The records are not clear as to whether the Petitioner was taken into confidence about reducing the distance from 90 KM to 76 KM but it appears that the Petitioner protested against such action by submitting representations on 29.07.2017 and 25.09.2017.
Page No.# 4/29
6. It is relevant to mention that the Petitioner carried out the said contract during the period from 20.06.2015 to 22.07.2017 and in that regard had received the total consideration of Rs.13,75,04,372/-. The records reveal that the Respondent FCI w.e.f. 22.03.2017 till 22.07.2017, calculated the amount payable by taking into consideration 74 KM and not 90 KM. In that regard, an amount of Rs.25,00,000/- was recovered from the Petitioner. Subsequent thereto, on 05.12.2017, an order was passed by the Assistant General Manager, FCI acknowledging the issuance of the No Demand Certificate by the Area Manager, FCI and for refund of the security deposit.
7. The Petitioner did not challenge the imposition and recovery of Rs.25,00,000/-. At the same time, the Petitioner also submitted a No Dues Certificate. The Respondent FCI had also issued the No Dues Certificate and further refunded the Security Deposit without reserving any rights. It is the case of the Petitioner that in view of the above, there was a valid discharge of the contract. It is the further case of the Petitioner that to its utter shock and surprise after a lapse of more than 5½ years, the Respondent FCI issued a Demand Notice dated 04.08.2023 stating inter alia that in the FCI Headquarters, Investigation Committee Report as printed out by the CAG Audit, the total amount that is required to be recovered from the Petitioner was Rs.2.36 crores and as only Rs.25,00,000/- was recovered. Under such circumstances, the Petitioner was directed to pay the remaining Rs.2.11 crores within 15 days from the date of issuance of notice else the amount would be recovered from the Security Deposits (SD and BG)/running bills from other contracts with FCI. It is relevant to mention that the said amount was arrived at by taking the distance at 74 KM for the entire period of the contract though earlier as per the communication dated 26.07.2017, the Page No.# 5/29 amount would be recovered for the period w.e.f. 29.04.2017 that too on the basis of 76 KM distance.
8. The Petitioner being aggrieved by the said Demand Notice dated 04.08.2023 challenged the same by filing a writ petition before this Court which was registered and numbered as WP(C) No.4733/2023. The said writ petition was disposed of vide an order dated 17.08.2023 whereby this Court taking into account that there is a Grievance Redressal Committee wherein the Petitioner can ventilate its grievances gave the liberty to the Petitioner to approach the said Committee of the FCI within 30.08.2023. This Court further observed that the Petitioner be given a reasonable opportunity of hearing and pass appropriate order(s) as deemed proper within a period of 60 days from the date of submission of the representation. This Court also directed that till the disposal of the representation submitted by the Petitioner, the Demand Notice dated 04.08.2023 shall remain suspended. The Petitioner thereupon submitted a representation on 29.08.2023. Subsequent thereto, vide an order dated 18.12.2023, the said representation was rejected holding inter alia that the demand of the FCI, RO, Assam on the basis of the distance of 74 Kms cannot be ruled as invalid.
9. It is very pertinent to take note of that immediately after the order dated 18.12.2023, which is impugned in the instant proceedings, the Respondent Authority recovered the amount of Rs.2.11 Crores from the Petitioner from the various other contracts which the Petitioner had with the Respondent FCI as would be apparent from a perusal of Annexure 16, 16A, 16B, 16C, 16D and 16E to the writ petition. It is under such circumstances, the instant writ petition has been filed.
Page No.# 6/29
10. The record reveals that this Court vide an order dated 08.01.2024 had issued notice. The Respondents thereupon filed an affidavit-in-opposition on 03.05.2024. In the said affidavit-in-opposition, various preliminary objections were taken as regards the maintainability of the writ petition on the ground that this Court should not enter into the instant dispute taking into account that the same falls within the realm of the contract. It was averred that the rights so affected as alleged in the writ petition are contractual rights and not statutory rights and as such, this Court ought not exercise the jurisdiction under Article 226 of the Constitution. On merits, it was stated in the affidavit-in-opposition that although in the E-Tender notice dated the 11.03.2015, bids were invited for appointment of transport contractors for various routes including EX-Railway siding FSD Changsari to FCI FSD Tangla via weighbridge and the distance shown therein was 90 Kms, however, as per the terms of the NIT, the rate was to be quoted as per MT per KM of transportation and therefore under the said terms of the tender, payment for transportation of the foodgrains are to be made against actual total distance transported by the transport contractor through their loaded trucks/lorries at their quoted and accepted rate per MT per KM. It was also mentioned that the distance of 90 Kms as provided in the NIT had not much of relevance for the purpose of making claim for payment against the transportation charges since payment for transportation of foodgrains are to be made for the actual distance transported. The distance of 90 Kms as shown was only tentative. It was further mentioned that the NIT itself provided that the intending bidders must get themselves fully acquainted with the size and location of the godowns vis-à-vis the loading/unloading points before submission of tender and rates quoted by them for loading into/unloading from the Page No.# 7/29 trucks/wagons shall be deemed to have been quoted after such acquaintance.
11. It was mentioned that the Petitioner was a regular and a known transport contractor in the field and therefore had quoted his rate with full acquaintance of the locations of the loading/unloading points and also knowing and understanding fully well that payment would be made to him for the actual distance transported by him with loaded foodgrains as per MT per KM basis at the quoted rate of Rs.9.13 per KM per MT notwithstanding the distance provided in the NIT was 90 Kms. It was also mentioned that a letter dated 26.07.2017 written by the FCI Regional Office to the FCI District Office was only an internal clarificatory inter office communication of the FCI which the Petitioner cannot seek to rely to interpret the terms of the contract different from its context which being in the form of the document of the agreement signed by and between the parties.
12. It was further mentioned that the FCI after noticing that the shortest motorable distance between the loading point and the unloading point via weighbridge is 74 Kms which is the distance factually transported by the Petitioner through his loaded trucks, the bills of the writ petitioner were found payable only for the said distance at his quoted rate for the net weight of the foodgrains transported for the said distance as per the terms of the contract. It was further mentioned that the payment which was made to the Petitioner was made by mistake being public money and the Petitioner must repay and return it to the FCI. It was further stated that the No Demand Certificate dated 05.12.2017 or the work completion certificate dated 05.07.2018 had no relevance to determine the validity or otherwise of the Page No.# 8/29 demand made by the respondents for refund of the over-payment made to the Petitioner beyond the terms of the contract and the Petitioner cannot read into the contract, any term extinguishing the Petitioner's liability to refund the amount by taking aid of the law of limitation or otherwise. It was further stated that the claim for refund as made was not barred by limitations. Further to that, the Respondents in their affidavit have supported the order dated 18.12.2023 whereby the Grievance Redressal Committee had rejected the representation submitted by the Petitioner on the ground that the said adjudication was made by following the proper procedure.
13. Pursuant to the filing of the affidavit-in-position, the Petitioner filed a reply on 05.06.2024. In the said affidavit-in-reply, the Petitioner had reiterated the stand taken in the writ petition and denied to the averments made in the affidavit-in-position. It was mentioned that the instant writ petition was maintainable taking into account that the Respondents being a State within the meaning of Article 12 of the Constitution is bound to act reasonably, fairly and in a non-arbitrary manner. It was mentioned that in the instant case, the actions of the Respondent Authorities are on the face of it unfair, unreasonable as well as arbitrary. The rights of the Petitioner under Article 14 of the Constitution have been violated and as such this Court can duly entertain the instant writ petition.
14. When the instant writ petition was taken up by this Court on 16.12.2024, this Court enquired with Mr. P.K. Roy, the learned Senior counsel appearing on behalf of the Respondent Corporation as to under what powers the Respondent Corporation had recovered the amount of Rs.2.11 Crores from the amounts the Petitioner was entitled to in respect to other contracts.
Page No.# 9/29 The learned Senior counsel on that date submitted that the same was done on the basis of a Model Tender Form for Contract which contains various terms and conditions. As the said Model Tender Form for Contract had a vital significance to the dispute involved, this Court granted liberty to the Respondent Corporation to file an additional affidavit bringing on record the said contract. On the basis of the said liberty so granted, an additional affidavit was filed on 19.12.2024 wherein the Model Tender Form (Contract) was enclosed as Annexure-A to the additional affidavit.
15. It is further relevant to take note of that the Petitioner thereupon on 06.01.2025 had filed a reply to the said additional affidavit. In the said reply to the additional affidavit, it was mentioned that in the NIT, it was clearly mentioned that the distance of transportation was 90 Kms. However, subsequently after the expiry of the contract, the issue of distance was raised and on re-measurement it was purportedly found by the FCI that the distance was actually 76 kms. It was further mentioned that during the period of the contract, the Petitioner had informed the FCI about road diversion for trucks due to broken road condition and for repairing/maintenance works in the shortest route of transportation from FSD Changsari to FSD Tangla in consideration of which the distance was taken as 90 Kms and therefore the Petitioner was entitled for payment of bill for the entire 90 Kms. In that regard the Petitioner has also enclosed a communication dated 11.09.2017 issued by the Area Manager of the Food Corporation of India whereby Area Manager of the Respondent Corporation had sought information from the Executive Engineer, PWD Guwahati Roads Division as well as the PWD, Mangaldai Rural Road Division the shortest route fit for plying of heavy loaded vehicles. It was further mentioned in the Page No.# 10/29 said communication that the said information be furnished in respect to those roads which are fit for plying of heavy loaded trucks from FCI FSD Changsari to FSD Tangla indicating therein the distance in Kilometers. Additionally, the said Executive Engineers were also requested to furnish information about the period of diversion of the route in between FSD Changsari to FSD Tangla for repairing of the maintenance work, if any, or due to broken road condition caused by flood etc. w.e.f. May, 2015 to the date of the communication.
16. To the said communication, the Executive Engineer, PWD, Rural Road Division, Mangaldai replied vide a communication dated 14.09.2017 stating inter alia that due to plying of heavy loaded trailers carrying rail sections during the gauge conversion of the tracks and other materials as well as during the rainy season, road conditions were badly affected for which diversions took place on many occasions at various sections of the PWD road from Baihata to Tangla w.e.f. May, 2015. Moreover, during section wise repairing of the road between Baihata and Tangla, number of diversions were given for a considerable period. However, there is no proper record available with the Office about the road diversions in various sections of the PWD road becoming unfit for plying of heavy roads trucks during the period.
17. The Executive Engineer, PWD, Roads Division, Guwahati had also replied vide a communication dated 15.09.2017 to the Area Manager of the Respondent Corporation informing that the road distance from FSD Changsari to FSD Tangla does not fall within the jurisdiction of the said Division rather it falls within the Mangaldai Rural PWD Division. These documents were brought on record by way of the reply to the Additional Page No.# 11/29 Affidavit.
18. In the backdrop of the above pleadings, let this Court now take note of the submissions made by the learned counsels appearing on behalf of the parties.
19. Mr. B. Chakraborty, the learned counsel appearing on behalf of the Petitioner submitted that a perusal of the Notice Inviting Tender would clearly show that the distance mentioned therein was 90 Kms. The learned counsel further submitted that the Petitioner thereupon participated in the said tender and was awarded the contract on 20.06.2015. The learned counsel for the Petitioner while drawing the attention of this Court to the additional affidavit containing the Model terms and conditions of the Contract as brought on record by the Respondent Corporation drew the attention of this Court to Clause-B(II) of the General Information to the Tenderers. The learned counsel submitted that a perusal of the said Clause would show that the tenderer must also get acquainted with the conditions of the route to be taken by him for transportation of foodgrains/sugar, etc. and once the tender is submitted, the tenderer would be deemed to have been fully acquainted himself with the route and he will not be entitled for any compensation on account of road blockade, diversions etc. on the same route. The learned counsel therefore submitted that a conjoint reading of the Notice Inviting Tender with Clause-B(II) of the General Information to Tenderers would clearly show that the tenderer would be entitled to the amount on the basis of 90 Kms. He submitted that if there was a diversion or a blockage, then also the tenderer cannot be permitted to get any additional compensation. The learned counsel for the Petitioner further submitted that in the similar Page No.# 12/29 manner, the Respondents are also bound by the terms of the NIT as well as the General Information to the Tenderers to pay to the contractor i.e. the Petitioner the transportation charges on the basis of 90 Kms.
20. The learned counsel for the Petitioner further drew the attention of this Court to Clause-IX(c) of the Terms and Conditions Governing Contracts and submitted that the security deposit so submitted by a contractor would be refunded only upon due satisfactory performance of the services and on completion of all obligations by the contractor under the terms of the contract as well as on submission of the No Demand Certificate subject to such deductions from the security as may be necessary for recovering the Corporation's claims against the contractor. The learned counsel therefore submitted that in the instant case, the No Demand Certificate was duly issued by the Respondent Corporation on 05.12.2017 from which it is evident that there was no further dues payable by the Petitioner to the Respondent Corporation as well as vice versa. The learned counsel while pointing out to the order dated 05.12.2017 enclosed as Annexure-8 to the writ petition submitted that the said order so passed by the Assistant General Manager of the Respondent Corporation do not reserve any right to make further demands in respect to the said contract and as such the contract stood duly discharged.
21. The learned counsel appearing on behalf the Petitioner also referred to the Storage and Contract Manual, Contract Part-II of the Food Corporation of India and more particularly to Chapter 29 which stipulates as to when the security deposit is required to be refunded and when a No Demand Certificate is to be issued. He further referred to Clause 29.2.1.(d) and Page No.# 13/29 submitted that if there is any further demand after adjusting with the security deposit, the said clause mandates that the Respondent corporation should initiate legal action. The learned counsel therefore submitted that even the manual does not prescribe a mode as have been taken by the Respondent Authorities in order to appropriate the amount of Rs.2.11 Crores.
22. The learned counsel for the Petitioner further referred to a judgment passed by the learned Coordinate Bench in the case of the Petitioner in respect to some other contract with the Respondent Corporation dated 06.12.2019 in WP(C) No.3261/2016 wherein it was categorically held that upon issuance of a No Demand Certificate, the contract between the parties stood concluded and the parties have waived all remaining rights and liabilities they might subsequently have against each other. The learned counsel further submitted that this judgment passed by the learned Coordinate Bench of this Court was taken in an appeal by the Respondent Corporation being Writ Appeal No.297/2022 and the observation so made by the learned Single Judge was not interfered with in that context. However, the judgment was modified only to the extent as regards payment of interest.
23. The learned counsel for the Petitioner further submitted that in such circumstances, the question of imposing a further amount of Rs.2.11 crores that too after six years from the issuance of the order dated 05.12.2017 is nothing but an arbitrary, illegal, unreasonable, irrational action on the part of the Respondent Corporation. The learned counsel further submitted that this is a case of high handedness on the part of the Respondent Corporation Page No.# 14/29 taking into account that it had a higher bargaining power and as such this is a fit case wherein this Court ought exercise its jurisdiction.
24. The learned counsel for the Petitioner further submitted that even assuming for argument sake, although not admitting that the amount of Rs.2.11 crores could have been claimed by the Respondent Corporation but the manner in which it has been done is totally illegal and arbitrary taking into account that the contractual provisions do not permit appropriation of the said amount in such an illegal manner. The learned counsel submitted that the reference to Clause-XIV of the Terms and Conditions Governing Contracts for Transportation of Foodgrains for Depots/Mandis/Railheads etc. which is Annexure-I to the Model Tender Form is totally misconceived inasmuch as the said Clause would only permit appropriation when any amount is due to the contractor as a set off against any claim of the Corporation for the payment of any sum of money arising out of or under this contract or any other contract made by the contractor with the Corporation. He therefore submitted that as there was no money due in respect to the instant contract payable to the Petitioner rather it has been alleged that the Respondent Corporation was entitled to the money, the provisions of Clause-XIV could not have been invoked.
25. The learned counsel for the Petitioner further submitted that such illegal exercise have been resorted to by the Respondent Corporation though they were fully aware that in respect to a discharged contract, the Respondent Corporation could not have claimed the amount of Rs.2.11 crores in any legal proceedings. He therefore submitted that the impugned actions of the Respondents are in violation to Article 14 of the Constitution Page No.# 15/29 for which appropriate writ, direction and order is required to be passed.
26. Per contra, Mr. P.K. Roy, the learned Senior counsel appearing on behalf of the Respondent Corporation submitted that the contract in question was for transportation of foodgrains from Ex-Railway siding FSD Changsari to FCI FSD Tangla via weighbridge. The Petitioner submitted his bid at Rs.9.13 per KM per MT. The Petitioner accordingly is entitled to be paid on the basis of the transportation carried out on actual distance. In the instant case, as the distance was 74 Kms and not 90 Kms, the Respondent Corporation had mistakenly paid an amount on the basis of 90 Kms. It is a case of unjust enrichment inasmuch as the Petitioner has not carried out the contract to the extent of 90 Kms rather the Petitioner had only transported for 74 Kms. Under such circumstances, the Respondent Corporation is entitled to recover the said amount from the Petitioner in respect to the excess payment made for the additional 16 Kms which the Petitioner actually did not transport.
27. The learned Senior counsel further submitted that issuance of a No Demand Certificate under no circumstances can be said that there is any bar on the part of the Respondent Corporation to make further claims inasmuch as the issuance of a No Demand Certificate is in respect to the refund of the security deposit and had nothing to do with the amount to which the Respondent Corporation is otherwise entitled to as per the contract. The learned Senior counsel has referred to the judgment of the Supreme Court in the case of R.L. Kalathia & Company Vs. the State of Gujarat reported in (2011) 2 SCC 400 wherein it was held that merely because of acceptance of the final bill, it cannot be said that the contractor in that case deprived of his rights to claim damages, if it had incurred additional amount and is able to Page No.# 16/29 prove the same by accepted materials. On the basis of the said judgment, the learned Senior counsel therefore submitted that merely because of issuance of a No Demand Certificate by the Respondent Corporation it does not disentitle the Respondent Corporation to further make claims if it is being found at a later stage that the Petitioner had taken additional amounts which the Petitioner was not entitled to as per the contractual terms.
28. The learned Senior counsel for the Respondents further submitted that the judgment which have been referred to by the learned counsel for the Petitioner of the learned Division Bench of this Court in Writ Appeal No.297/2022 was taken in appeal before the Supreme Court which was registered and numbered as Special Leave to Appeal (C) No. 2032/2023. The learned Senior counsel submitted that though the said judgment and order passed by the learned Coordinate Bench of this Court as well as by the learned Division Bench was not interfered with, more particularly, in view of the modifications made by the learned Division Bench, but there was a clarification in the order passed by the Supreme Court in its order dated 14.02.2023, wherein it was mentioned that the indication of adjudication in the order of the learned Division Bench is in terms of the dispute/redressal mechanism provided under the agreement entered into between the parties and such course could be adopted and thereafter appropriate action could be taken subject to the rights of both the parties. It was also observed that the observations contained in the order passed by the learned Coordinate Bench of this Court as well as by the learned Division Bench on merits shall not prejudice either of the parties to the future dispute resolution mechanism proceedings or thereafter. The learned Senior counsel therefore submitted that the ratio so laid down by the learned Coordinate Bench of Page No.# 17/29 this Court as well as by the learned Division Bench of this Court cannot be said to be a binding precedent inasmuch as the Supreme Court had observed that any further adjudication so made would not be influenced by the observations so made by the learned Coordinate Bench as well as by the learned Division Bench in the judgments referred to by the learned counsel for the Petitioner.
29. The learned Senior counsel for the Respondents further submitted that Clause-XIV of the General Conditions of the Contract is a Clause which is there in each and every contract entered into by and between the Respondent Corporation with the contractors. He therefore submitted that by virtue of Clause-XIV, any amount, if payable in respect to any other contract can be very well appropriated in respect to amounts due to the Respondent Corporation in the present contract, and as such the appropriation so made in the instant case from the amounts payable to the Petitioner in respect to other contracts to the amounts due to the Respondent Corporation in the present contract is in terms with the contractual terms. He therefore submitted that this is a fit case which ought to be dismissed inasmuch as the dispute involved in the contract has nothing to do with any violation of any statutory or constitutional provisions rather it is a purely within the realm of contractual dispute.
30. The learned Senior counsel further submitted that this Court is exercising the writ jurisdiction against an order passed by the Redressal Committee. The learned Senior counsel therefore submitted that the jurisdiction so conferred upon this Court is only to see as to whether the decision making process was in order, not the decision. He further submitted Page No.# 18/29 that there is no illegality so committed in the order dated 18.12.2023 by the Redressal Committee and as such the exercise of jurisdiction under Article 226 of the Constitution of India is not called for in the instant proceedings.
31. I have heard the learned counsels appearing on behalf of the parties and have given my anxious consideration to the submissions as well as the materials on record.
32. From the materials on record and more particularly the Notice Inviting Tender dated 11.03.2015, it is seen that the distance so mentioned in the Notice Inviting Tender from EX-Railway Siding FSD Changsari to FCI FSD Tangla was 90 Kms. The Respondent Corporation had not been able to show any Clause in the contract which permits that the distance so mentioned in the Notice Inviting Tender could be altered subsequently during the period of the contract or even post the contract. On the other hand, a perusal of Clause-B.(II) of the General Information to Tenderers which is a part of the Model Tender Form is relevant to be taken note of. The said Clause being apposite to the instant dispute is reproduced herein under:
"B.(II) The tenderer must get themselves fully acquainted with the size and location of godowns vis-à-vis loading/unloading points before submission of the tender. The rates quoted by Tenderer shall be deemed to have been done after such acquaintance. No Tenderer will be entitled to any compensation arising out of any misapprehension in this regard. Before tendering, the Tenderer must also get acquainted with the conditions of route to be taken by him for transportation of food grains/suger etc. Once the tender is submitted, the Tenderer will be deemed to have fully acquainted himself with the route and he will not be entitled for any compensation on account of road blockade, diversions etc. on the route."
Page No.# 19/29
33. From a perusal of the above quoted Clause, it is seen that the tenderer is required to quote on the basis after being fully acquainted with the size and location of the godowns vis-à-vis the loading/unloading points between the submission of the tenders. It is further seen that no tenderer would be entitled to any compensation arising out of any misapprehension in that regard, meaning thereby that a tenderer later on cannot say that the rate quoted by him/her was not a proper recompense for transportation of the goods. This aspect is further made clear on a further reading of the above quoted Clause to the effect that the tenderer must also get acquainted with the conditions of the route to be taken by him for transportation of the food grains/sugar etc. and the tenderer after submission of the tender would not be entitled for any compensation on account of road blockade, diversion, etc. on the route. The above Clause further mandates in the opinion of this Court that if in the circumstance, the route concerned as already mentioned in the NIT which was 90 Kms gets extended or enhanced on account of blockade or diversion, the tenderer/the contractor cannot claim any further compensation. This aspect assumes importance taking into account another clause being Clause No.XVIII of the General Information to the Tenderers which deals with the Rates. Clause XVIII(a) being relevant is quoted herein under:
"XVIII.(a) (i) All rates will be treated as firm for the period of the contract. No escalation whatsoever shall either be claimed or considered except as provided under sub-clause (b) below.
(ii) The rates for transportation of foodgrains etc. are on the basis of net weight of foodgrains.
(iii) No separate remuneration will be payable for the Page No.# 20/29 distance covered by the loaded lorries for the return journey, or from garage to place of loading, or back to garage.
(iv) For the purpose of calculation of transportation charges, the distance shall in all cases be rounded off to the nearest Kilo Meter.
(v) The distance will be reckoned as fixed by the Chief Engineer, PWD, or an officer nominated by him, or by the General Manager, or verified by an officer acting on his behalf and rounded off to the nearest Kilo Meter, which will be final and binding on the contractor.
(vi) No compensation shall be admissible to the contractor in respect of detention of trucks at the godown or any other loading/unloading points or any other place unless such detention is of an extraordinary kind. The decision of the General Manager in all such matters shall be final."
34. A perusal of the above quoted Clause would show how the rates are to be finalized. Sub-Clause (v) of Clause XVIII(a) categorically stipulates that how the distance would be reckoned. It would be fixed either by the Chief Engineer, PWD or an officer nominated by him or by the General Manager or verified by an officer acting on his behalf. The NIT was clear and unambiguous that the distance was 90 KM. The tenderers including the Petitioner had submitted their tender and quoted their rate on the basis thereof. No materials were produced by the Respondent Authorities that they exercised their power under Clause XVIII(a)(v) of the tender conditions to fix any other distance immediately prior to finalization of the tenders or even immediately after. What is seen from the records that near the completion Page No.# 21/29 period of the contract, an internal assessment was made by some District Committee which was verified by the Assistant General Manager and a communication was issued on 29.07.2017 i.e. even after the completion of the extended period of the contract. There is also no materials on record as to how the distance of 74 KM was arrived at. The question thus arises as to whether such an action is permissible taking into account that the Respondent Authorities are a "State" within the meaning of Article 12 of the Constitution. This Court would deal with the said aspect on a further analysis of the tender conditions.
35. Clause-X of the Terms and Conditions Governing the Contract for Transportation of the Foodgrains which is Annexure-I to the General Information to the Tenderers is in relation to the liability of the contractors for losses suffered by the Corporation. The circumstances under which there is a liability upon the contractor as stipulated in Sub-Clauses "a" to "d" of Clause-X do not envisage a Clause on account of a distance subsequently reduced by the Respondent Corporation or for that matter the Respondent Corporation later on realizing that the distance was much less than what was stated in the Notice Inviting Tender.
36. This Court further finds it relevant to take note of Clause XII of the said Terms and Conditions Governing the Contracts which stipulate how the recovery of losses suffered by the Corporation can be made. Sub-Clause (a) of Clause XII assumes importance inasmuch as if there is any loss to the Corporation on account of the infractions mentioned in Sub-Clauses "a" to "d" of Clause-X, the same shall be first adjusted against the security deposit furnished by the contractor and should the security deposit be not sufficient Page No.# 22/29 to cover the full amount claimed by the Corporation, the contractor shall pay to the Corporation on demand the remaining balance of the aforesaid sum claimed. The said Clause however does not specify what steps can be taken if the contractor does not pay upon demand being made.
37. In the above context, this Court finds it relevant to take note of another Clause which forms the bone of contention i.e. Clause XIV, which being relevant is reproduced herein under:
"XIV. Set-off:
Any sum of money due and payable to the contractor (including Security Deposit refundable to the contractor) under this Contract may be appropriated by the Corporation and set off against any claim of the Corporation for the payment of any sum of money arising out of, or under this contract or any other Contract made by the contractor with the Corporation."
38. A perusal of the above Clause shows that if any sum of money is due and payable to the contractor (including the security deposit refundable to the contractor) under the contract, the Respondent Corporation has been authorized to appropriate and set off against any claim of the Respondent Corporation for the payment of any sum of money arising out of or under the present contract or any other contract made by the contractor with the Corporation. There is nothing on record to show that similar terms are there in contracts entered into by and between the Petitioner and Respondent Corporation in respect to other contracts. In fact, there is also no averment in the pleadings of the Respondents. Be that as it may, Mr. P. K. Roy, the learned Senior counsel submitted that similar terms are there in all contracts entered into by and between the contractors and the Respondent FCI. But Page No.# 23/29 the question arises whether such powers conferred by the Clause XIV can be invoked in the present facts. Now let this Court again revert back to the question so formulated hereinabove.
39. Upon the submission of the tenders by the tenderers, the Deputy General Manager (Region) had issued a communication to the Petitioner on 19.05.2015 categorically stating the distance from EX-Railway Siding FSD Changsari to FCI FSD Tangla via weighbridge to be 90 Kms. The Petitioner thereupon continued to receive its contractual dues on the basis of the agreement and taking into account the distance at 90 Kms. The contract as stated above was for a period of 2 years w.e.f. 20.06.2015 to 19.06.2017. Subsequently, the said contract was extended till 22.07.2017. The Petitioner completed the contract and received the contractual dues taking into account the distance at 90 Kms. After the period of the contract was over, there had been an internal communication between the Assistant General Manager and the Area General Manager of the Respondent Corporation wherein it was mentioned that the District Office Committee had measured the distance and declared that the shortest motorable route is 74 Kms vide a communication dated the 29.04.2017. Thereupon, the Area Manager confirmed vide the communication dated 19.05.2017 enclosing the detailed report of the said Committee of the District Office certifying the shortest motorable distance to be 74 Kms. It was also mentioned that while measuring the said 74 Kms as the shortest motorable route, there was no consideration taken as regards the road restriction imposed by the Mangaldai, PWD, Rural Road Division for heavy vehicles. It was further mentioned that on the basis of the District Committee Report, a decision was taken that the distance should be reckoned at 76 Kms and accordingly the Page No.# 24/29 Competent Authority was directed that the bills of transport contractor be passed on the basis of 76 Kms w.e.f. 29.04.2017. This very decision was taken after the contract had come to an end and the Petitioner was never consulted in this regard. However, the Petitioner could come to learn later in view of the various deductions made for which the Petitioner submitted representations on 29.07.2017 and 25.09.2017.
40. The record further reveals that an amount of Rs.25,00,000/- was recovered from the Petitioner. A closure to the dispute took place when the Petitioner and the officials of the Respondents had respectively issued No Demand Certificates and an order dated 05.12.2017 was passed for refunding the security deposit which was refunded subsequent thereto on the basis thereof. It is also seen from the records that neither the Petitioner nor the Respondent Corporation reserved any right to claim any further amounts or the Respondents claimed that the discharge vide the order dated 05.12.2017 was subject to realization of the further amounts on objection being raised in respect to the amounts paid for the earlier period. Under such circumstances, in the opinion of this Court, the contract between the Petitioner and the Respondent Corporation stood validly discharged.
41. This Court further finds it relevant at this stage to take note of Chapter 29 of the Storage and Contract Manual, Contract Part-II of the Respondent Corporation as well as Clause IX(c) of the Terms and Conditions Governing the Contract. Chapter 29 of the Storage and Contract Manual, Contract Part- II deals with refund of the Security Deposit. Clause 29.2.1 being relevant is reproduced herein below:
"29.2.1. The following points are relevant relating to submission of "No Page No.# 25/29 Demand Certificate" by the contractors for releasing the security deposit.
(a) If the corporation has no claims against the contract, a No Demand Certificate from the contractor should be obtained before releasing the security deposit.
(b) If the Corporation has claims against the contractor which are required to be adjusted against the security deposit of the Contractor by following the usual procedure if issuing show cause notice etc. there is no question of asking the Contractor for No Demand Certificate.
(c) If, after adjusting Corporation's claims against the contractor from his security deposit still some amount of security deposit is payable by FCI to the contractor, then the contractor should be asked to submit No Demand Certificate.
(d) If adjusting Corporation's claims against the security deposit still some more amount is due from the Contractor then the question of obtaining No Demand Certificate from him does not arise. A demand for balance from the Contractor should be made and on his failure to pay, the Corporation should initiate legal action.
(e) If there is some litigation pending between the Corporation and the Contractor, nothing prevents the corporation from adjusting its dues against the security deposit by following usual procedure of issuing show cause notice etc. unless the contractor obtains a stay/injunction against the corporation."
42. A perusal of the above clause and more particularly Sub-Clause (d) would show that if after adjusting the Corporation claim against the security deposit still some more amount is due, then the question of issuance of the No Demand Certificate does not arise. In such circumstances, the Respondent Corporation would make a demand for the balance amount for the contractor and on his failure, the Corporation should initiate legal action.
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43. Clause IX(c) of the General Information to Tenderers also stipulates when the No Demand Certificate would be issued. The said Clause being relevant is reproduced herein below:
"IX.(c) The Security Deposit will be refunded to the contractors on due satisfactory performance of the services, and on completion of all obligations by the Contractor under the terms of the Contract, and on submission of a 'No demand certificate', subject to such deduction from the Security as may be necessary for recovering the Corporation's claims against the Contractor. The Corporation will not be liable for payment of any interest on the Security Deposit."
44. From the above quoted Clauses read with the factual matrix delineated above, it would be seen that both the Respondent as well as the Petitioner had submitted the No Demand Certificate without reserving any right or objection. It is also not the case of the Respondent Corporation that the officials of the Respondents in collusion with the Petitioner had played fraud inasmuch as the Petitioner had claimed on the basis of the NIT which stipulated the distance as 90 KM. Under such circumstances, the contract between the Petitioner and the Respondent stood validly discharged upon issuance of the No Demand Certificate as well as the refund of the Security Deposit.
45. This Court further finds it relevant at this stage to take note of the submission made by Mr. P.K. Roy, the learned Senior Counsel for the Respondent Corporation and the reference made to the judgment of the Supreme Court in the case of R. L Kalathia and Company (supra). It is relevant to take note of that the said judgment passed by the Supreme Court do not apply to the facts of the instant case inasmuch as the amount which was received as full and final settlement was under protest. However, Page No.# 27/29 in the instant case, the No Demand Certificate as well as the returning of the security deposit shows that the Respondent Corporation had permitted a valid discharge to the contract with the Petitioners without any objection or protest as well as also without reserving its right to claim further compensation. Under such circumstances, the judgment so submitted by the learned Senior counsel for the Respondents being R. L Kalathia and Company (supra) is misplaced in the present facts and circumstances.
46. This Court further takes note of that almost after 5½ years from the date of the discharge of the contract, the Assistant General Manager of the Respondent Corporation issues the impugned demand notice dated 04.08.2023, now claiming an additional amount of Rs.2.11 crores on the basis of certain audit objection made by the CAG Audit wherein, it was observed that the amounts which should be claimed from the Petitioner should be claimed for the entire contract by taking into account the distance as 74 Kms.
47. This Court further finds it relevant to take note of that when the contract in question stood discharged way back on 05.12.2017, the question of issuance of a demand notice on 04.08.2023 and that too making a further claim of Rs.2.11 Crores and subsequently appropriating the same from other contracts of the Petitioner is on the face of it illegal, arbitrary as well as unreasonable. This Court further takes note of that as the Respondent Corporation is a State within the meaning of Article 12 of the Constitution, it is bound to act fairly, reasonably and in a non-arbitrary manner. As in the instant case, the actions on the part of the Respondent Authorities to realize the said amount was an act of highhandedness take advantage of its Page No.# 28/29 superior bargaining power, it is a fit case where this Court is required to exercise its jurisdiction under Article 226 of the Constitution.
48. Accordingly, the instant petition stands disposed of with the following observations and directions:
(i) The contract between the Petitioner and the Respondent Corporation stood validly discharged upon the issuance of the respective No Demand Certificates and the refund of the Security Deposit. The imposition so made vide the Demand Notice dated 04.08.2023 was nonest, void and accordingly interfered with.
(ii) The appropriation so made by the Respondent Corporation on the basis of the Demand Notice dated 04.08.2023 from the other contracts of the Petitioner is bad in law for which the orders dated 02.01.2024 enclosed as Annexure 16, 16A, 16B, 16C, 16D and 16E are all set aside and quashed.
(iii) The Respondent Corporation is directed to refund the said amount of Rs.2.11 crores so deducted from the various other contracts to the Petitioner within a period of 45 days from the date of the instant judgment failing which the Respondent Corporation would be liable to pay interest @9% on the said amount from the date of such failure.
(iv) This Court further finds it relevant to clarify that the instant decision shall only operate in respect to the amount of Rs.2.11 crores which have been appropriated from the various other contractual amount payable to the Petitioner. The instant judgment under no circumstances would entitle the Petitioner to claim the amount of Rs.25,00,000/- which have already been deducted prior to the valid discharge of the contract.
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(v) For the reasons above mentioned, the order dated 18.12.2023 passed by the Redressal Committee is found to be based on extraneous considerations for which the same is set aside and quashed.
(vi) There shall be no order of costs.
JUDGE Comparing Assistant