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4. The further case of the appellant is that after the due examination of the documents, the respondent informed the appellant that it was pre-qualified for bidding in respect of this contract and on submission of technical and commercial bids, the respondent informed the appellant that its bid with respect to the aforesaid contract was the lowest and it was required to meet the Chief General manager of the respondent on 21-3-2001. After this meeting, by communication dated 24-4-2001, the appellant was asked to make a presentation on 27-4-20 01 regarding the methodology and mobilisation of resources for execution of the work with respect to this bid and another bid also (with which we are not concerned). However, since the finalisation of the grant of the award was delayed, the appellant, on causing enquiries, came to know that a letter was written by a Member of Parliament in April, 2001 to the Chairman of the respondent, the copy of which was made over to the Minister of Road Transport and Highways, Government of India, complaining about the slow progress of the work which was then going on under Contract Package No.NS-14. There was also a complaint that the appellant was sub-contracting the contracts without the approval of the respondent.
(3) that even up to 22-11-2000, NHAI or as the case may be its Engineer was not happy about the progress of the work.

25. It is pointed out by the learned counsel for the appellant that after the letters dated 14-6-2000 and 4-7-2000, wherein this question of prior approval of NHAI for subcontracting of the work was raised along with the dissatisfaction over the progress of the work, the appellant removed M/s.CECON from the scene by the letter dated 24 -10-2001. In this letter, it is pointed out that the joint measurement for the work done by M/s.CECON up to 15-10-2000 had been already taken by the Team Leader Consultant of Rail India Technical and Economic Services Limited (RITES) in the presence of the Project Director, NHAI and that the final settlement would be made to M/s.CECON as per the terms of the agreement. M/s. CECON was also directed to hand over all the documents relating to the work at the site. A further letter dated 29-11-2000 was also written, which makes a reference to the letter dated 22-11-2000 in which complaints were made about the slow progress of the work, in which an assurance is given by the appellant to the General Manager (Technical), i.e. the Engineer on the spot of NHAI that the remaining work would be completed within the time-frame. In this, they also accepted the responsibility of noncompletion of the work within the stipulated time. Therefore, in so far as the year 2000 is concerned, there was no further correspondence as regards the issue of subcontracting without the prior approval of NHAI. It seems that the first explanation came to be given by the appellant, perhaps in response to the letter dated 31-7-2001, i.e. almost about nine months after it was directed by the Chief General Manager, copy of which is not on record. However, it seems that by that letter the explanation was called for regarding the presence of M/s. CECON on the work site. In the explanation offered by the appellant in its reply dated 3-8-2001, the appellant pointed out that M/s.CECON had offered their services to carry out the job along with the appellant and they were engaged for the earth work activity only to find their ability to go along with the appellant. It w as also agreed that their quality and quantity of the work would be reviewed at the end of three months period before proceeding further and that if there was no satisfaction over their performance, their agreement would be cancelled. The appellant further explains that there was to be an overall supervision of work by one Mr. Raj Kumar, Project Manager of the appellant company. It is then mentioned that at the end of six months, after finding that the earth work done by M/s.CECON only amounted to 4% of the work, the agreement was cancelled and they were settled in full. It was reiterated that even before this was done, the appellant had mobilised its machinery, material, etc. and the work was on full steam. Thereafter, it was pointed out that M/s.CECON would have been continued had it been found capable of performing and only thereafter the appellant would have approached NHAI for the necessary permission but the appellant never got that opportunity since the arrangement with CECON was terminated, finding their dismal performance. It is then pointed out that there was no subcontractor on the site and that even before that all the necessary mobilisation of the machinery was done. In this very explanation, the extent of the work done was informed and an extension of time of three months was sought for regarding this work.

33. It will be seen that the activity of CECON, the presence of its machinery, the work done by them was an open affair. It was not as if that work was being surreptitiously done and in deed the nature of the work was such that it could not have been done surreptitiously. CECON were engaged to do the earth work by removing the trees, electricity poles, telephone posts, etc. or other stumbling blocks for which a heavy machinery was necessary. There is evidence on record in shape of the measurement books which were endorsed by the representative of the engineer. In this case, the engineer was a man on the spot and it was obvious that he was the watchdog for the work which was supposed to be done in pursuance of the contract. The signatures of his representatives on the measurement books prior to 14-6-2000 cannot be disputed and were in deed not disputed. It is only on 14-6-2000 that the subcontracting was taken note of by the engineer. The letter dated 14-6-2000 stands testimony to that. Another letter dated 4-7 -2000 was written because of the slow progress of the work. After all, this was an ambitious project conceived by the Honble Prime Minister and, therefore, the importance of the work was enormous. Noting the slow progress, the second letter seems to have been written on behalf of General Manager. The tone of the letter is that NHAI was not happy at all with the progress. Even in that letter, a completely incorrect position has been taken up that a subcontract could be done to the extent of 50% of the work with the prior approval of NHAI. By these letters, the appellant was required to explain the circumstances under which the work was awarded. Till this time, there was no disapproval by the engineer concerned. It is liable to be seen that first letter is written by Team Leader of RITES while the second letter is written by the General Manager of NHAI. There is no letter or disapproval by the engineer on the spot. Perhaps, as a result of these letters dated 14-6-2000 and 4-7-2000, the appellant proceeded to remove CECON from the scene perhaps by terminating the agreement of subcontract. This seems to have been done on 24-10-2000. There is a letter fired by the Project Director who was the engineer on the spot dated 22-11-2000. This is also a letter in which a complaint was made of the slow progress of the work. Not only this but a specific caution was given in the couched language that for this fundamental breach of contract as per clause 59 of the conditions of the contract, the contract could be terminated. Very strangely, there is not even a whisper about the so-called breach of clause 7.1 in this. This was probably because the appellant had already removed CECON from the scene by terminating the agreement with CECON. This silence on the part of the Project Director/Engineer is rather telling. The appellant immediately responded this letter dated 22-11-2000 by accepting that they could not perform as per the schedule and also accepted the responsibility therefor. However, they undertook to complete the work to the full satisfaction of NHAI. Very significantly there is nothing on record before us to suggest that the engineer either conveyed the disapproval or the alleged breach of clause 7.1 right till July 2001, that is for full one year. There is a reference to the letter dated 31-7-2001 by the Chief General Manager which has not been produced before us but, it appears that in that letter the subject came to be broached regarding this subcontract. The letter dated 3-8-2001 by way of reply to this letter dated 31-7-2001, bearing No.NHAI/CGM(C)2001, suggests that though the services of CECON were utilised to begin with, they were to be on experimental basis and after dissatisfaction regarding their performance, they were removed from the scene and, therefore, there was no question of prior approval of NHAI. It is rather surprising that it is only after one full year that this subject came to be broached during which admittedly the work on the contract was in progress. Not only this but NHAI had also invited the appellant for two/three other works  one of them being the extension of this very work, which was going on. There is a letter on record dated 19-3

38. From all this, we are unable to see any disapproval on the part of the engineer even subsequent to the aforementioned enquiries. On the other hand, the totality of the reactions by the respondent and more particularly the engineer thereof do go to show that though the engineer was in the know of the work being done through CECON, that was objected to by the engineer seeing the slow progress and immediately after the removal of CECON from the scene on the objection having been raised, there was no question of taking the approval as the moment disapproval was shown, the contractor had complied with. The situation, therefore, comes to this that 4% earth work was done which the engineer on the spot was fully aware. He did not object to it till he found that the work was very slow and as soon as he complained against the slow progress of the work, the concerned subcontractor, if he can be so called, was immediately removed from the scene and the contractor started doing the work on his own. Under such circumstances, could it be said that there was a breach of clause 7.1. Through out the position was taken by the respondent that it should be a prior approval and we have already shown that the prior approval, that too of NHAI, was never necessary. All that was necessary was an approval of the engineer, who was obviously a man on the spot, and it was in his presence that the work was being done and when the subject of subcontracting was broached, CECON was removed from the scene.