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2009 DIGILAW 612 (ORI)

SAMAL BUILDERS PVT. LTD. v. BOARD OF TRUSTEES OF PARADIP PORT, PARADIP PORT TRUST

2009-08-06

I.M.QUDDUSI, SANJU PANDA

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JUDGMENT : Sanju Panda, J. - This writ application has been filed by the Petitioner for issuance of a direction to the Opp. Parties to allow the differential cost taking into account the prevailing market rates or in alternative to close the contract after settling & paying all the dues of the Petitioner & not to impose penalty for non-completion of work. 2. The Petitioner, a Private Limited Company registered under the provisions of the Companies Act, 1956 which is engaged in construction business entered into a contract with Opposite Party No. 1 on 14.6.2007 for execution of the execute the work "Modification to existing PPT Road from Gate No. 4 to Sandhakud Basti at Paradip Port". 3. The Opp. Parties directed the Petitioner to commence the work from 23.6.2007 & complete the same by 22.3.2008. The work order was allotted on 14.6.2007 vide Annexure-1 to the Writ Petition. Though the date of commencement of the work was 23.6.2007, the Opp. Parties could not hand over the site to the Petitioner-Company for execution of the work. After getting permission from the Forest Department for cutting the trees on the site, the work started after 2 months delay. The work was awarded for 2.85 kms. The entire area was covered by trees. Therefore, after getting clearance, the Opp. Parties handed over only 1.8 kms of area to start the work, Till the date of filing of the Writ Petition, the rest portion 1.05 Kms was not handed over to the Petitioner for completion of the work. 4. It is submitted by the Learned Counsel for the Petitioner that as per the contractual conditions, it was the obligation of the Opp. Parties to provide design & drawings & the Contractor was supposed to proceed as per the design & drawings. The Opp. Parties could not be able to provide the design & drawings within the stipulated time to start the work by 23.6.2007. On 29.10.2007, the Opp. Parties provided an incomplete provisional drawing of the work without any details of the existing road. Finally, on 31.3.2008 they provided the final & revised drawing according to which the Petitioner was supposed to proceed with the work. However, while starting the work as per the approved design & drawing, it was found that the electrical cables, telephone lines & water pipelines were there at the site, which were to be removed by the Opp. Finally, on 31.3.2008 they provided the final & revised drawing according to which the Petitioner was supposed to proceed with the work. However, while starting the work as per the approved design & drawing, it was found that the electrical cables, telephone lines & water pipelines were there at the site, which were to be removed by the Opp. Parties. But they did not take any action to remove those obstructions. He further submitted that due to inaction of the Opp. Parties, the work could not be started within the contractual time & the delay was caused by the Opp. Parties. 5. After considering the facts & circumstances, the Opp. Parties extended the time to 15 12.2.008 for completion of the work. In the meantime the cost of Bitumen, labour & other materials having been increased, the earlier rate at which the work was granted became unworkable. Therefore, the Petitioner vide its letters dated 9.7.2008, 26.9.2008, 11.10.2008, 18.10.2008 & 14.11.2008 asked the Opposite Parties to allow differential cost of Bitumen & the escalation cost. But, the Opp. Parties denied the said claim of the Petitioner. 6. Learned Counsel for the Petitioner further submitted that the escalation by way of statutory increase in labour wages cannot be denied as it is a statutory obligation. The Petitioner's men, machines & materials are lying idle due to inaction of the Opposite Parties to hand over the entire 2.85 kms. & after commencement of the work & mobilisation of men, machines & materials only 1.8 kms. area has been allotted to the Petitioner to execute the work. Therefore, the Petitioner was not able to complete the work without any further escalation. The Government of Orissa taking into consideration the increasing cost of Bitumen, cement & wages allowed the escalation cost vide its letter dated 8.4.2007. However, the Opposite Parties rejected the prayer of the Petitioner for escalation of price vide letter dated 2.12.2008. Hence, this Writ Petition. The Learned Counsel for the Petitioner in support of his contention for escalation price cited the decisions of the Apex Court in the cases of K.N. Sathyapalan (dead) by LRs v. State of Kerala and Anr. reported in (2007) 13 SCC 43 , Food Corporation of India Vs. A.M. Ahmed and Co. and Another, & the decision of this Court in the case of Niranjan Das v. Union of India and Ors. reported in (2007) 13 SCC 43 , Food Corporation of India Vs. A.M. Ahmed and Co. and Another, & the decision of this Court in the case of Niranjan Das v. Union of India and Ors. reported in 2007 I OLR 464, wherein the Apex Court as well as this Court have allowed the escalation claim of the contractor on the basis that the escalation is a normal phenomenon as the contractor has to pay minimum wages as per the statute. The Learned Counsel for the Petitioner alternatively submitted that since there is a dispute between the parties for completion of the work, the matter may be referred to the arbitration. 7. The Opp. Parties in pursuance of the notice, filed their counter-affidavit. While admitting the fact that the area could not be handed over to the Petitioner due to non-availability of clearance from the Forest Department, they have specifically stated that the cost of the tender was Rs. 7,24,90,319 with a stipulation to complete the work by 22.3.2008. From the counter-affidavit it transpires that the Opposite Parties allowed the Petitioner to execute the work for 1.85 kms. & considering the delay in starting the work, extended the time up to 15.12.2008 for a road length of 1.8 kms. & shifted the electrical cables, telephone lines by the time the Petitioner started the work & in spite of enough opportunity, the Petitioner miserably failed to achieve the target within the allotted time. The cost of the work for 1.8 kms was at Rs. 4,82,47,695 out of the entire contractual value of work of Rs. 7,24,90,319 & the Petitioner could only execute the work amounting to Rs. 1,27,56,918 & the rate of progress during the contractual period is Rs. 14,17,314 per month as against the target of Rs. 80,54,481 per month which shows that the Petitioner did not proceed with the work as per the Schedule. He is also responsible for the delay & the Opposite Parties assessed the work completed by the Petitioner up to 15.12.2008 at Rs. 1,26,17,855. The Opposite Parties had given a chart to complete different portions of the work by different dates but the Petitioner could not achieve the said target as per that bar chart due to poor planning & inadequate labour, machinery & key personnel available with the Petitioner. 1,26,17,855. The Opposite Parties had given a chart to complete different portions of the work by different dates but the Petitioner could not achieve the said target as per that bar chart due to poor planning & inadequate labour, machinery & key personnel available with the Petitioner. According to the Opposite Parties, the question of allowing the differential cost of Bitumen towards escalation cost does not arise as the Petitioner has not executed the Bitumen surface for the stretch of 1.8 kms. & the escalation of wages, materials & POL which may occur from time to time is deemed to have been covered in the rate of contract & no extra payment on those scores shall be paid to the Contractor on any account & the price quoted shall be kept firm till completion of the work as per the Clauses 28 & 61.7 of the agreement which are extracted hereunder: (28) ESCALATION: The escalation on labour, materials & POL that would occur from time to time is deemed to have been covered in the rate of contract & no extra payment on those scores shall be paid to the contractor on any account. 61.7 Price Escalation: The prices quoted shall be kept firm till the completion of the work. No price escalation will be paid to the contractor." 8. Admittedly, in the present case, the dispute has not been referred to arbitration. In all the decisions cited by the Learned Counsel for the Petitioner the Court has considered the escalation price after the award has been passed in the arbitration proceeding. It is well settled that a little difference in facts or additional facts may make a lot of differences in the precedential value of a decision. Judicial utterances are made in the setting up of the facts of a particular case. Therefore, the above cited decisions are not applicable to the case at hand. 9. In the case of Smt. Kalpana Kothari Vs. Smt. Sudha Yadav and Others the Apex Court held as under: As long as the Arbitration clause exists, having recourse to Civil Court for adjudication of disputes envisaged to be received through arbitral process or getting any orders of the nature from Civil Court for appointment of Receiver or prohibitory orders without evincing any intention to have recourse to arbitration in terms of the agreement may not arise. From the aforesaid decisions it is clear that as long as the arbitration clause exists, the parties have to take recourse to arbitration proceeding for adjudication of the dispute. Therefore, this Court is not inclined to give any opinion on the merit of the present case & it is left open for the parties to take appropriate action as per the agreement to settle the dispute. With the aforesaid observation, the Writ-Petition is accordingly disposed of. I.M. Quddusi, A.C.J. I agree.