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2011 DIGILAW 1611 (PNJ)

Gautam Builders v. Chandigarh Housing Board

2011-08-23

K.KANNAN

body2011
JUDGMENT K. KANNAN J. 1. There are at least two reasons why an intervention through a writ petition, which the petitioner seeks for, in my view, is not possible. The petitioner is a contractor, who has done some work for the respondents at a rate, which he had quoted and which was found to be the lowest for the work, estimated by the respondents themselves at Rs.6,92,32,076/-. The petitioner's quote at Rs.6,14,29,614/-was found to be the lowest and the petitioner had been awarded the contract. At the time when the final bills had been prepared, the respondents have made deductions relying on certain clauses in the agreement, which according to the petitioner, are objectionable. The contract runs to several pages and it is not denied by the petitioner that the deductions, which the respondents are making, are only by invoking the terms of the contract. The petitioner would, however, contend that the term of the contract is oppressive and it had been surreptitiously introduced without petitioner's knowledge. The particular clause, which according to the petitioner is oppressive in Clause 1.43 that is considered below:- 2. General Rules and directions set forth for the works are brought out in Schedule F. Clause 12.2 and 12.3 relate to deviation limits for building works as 30%. What this deviation work could mean, is seen elsewhere in the contract and the same is reproduced as under:- “Clause 12. General Rules and directions set forth for the works are brought out in Schedule F. Clause 12.2 and 12.3 relate to deviation limits for building works as 30%. What this deviation work could mean, is seen elsewhere in the contract and the same is reproduced as under:- “Clause 12. Deviations/Variations Extent and Pricing The Engineer-in-Charge shall have power (i) to make alteration, in, omissions from additions to, or substitutions for the original specifications, drawings, designs and instructions that may appear to him to be necessary or advisable during the progress of the work and (ii) to omit a part of the works in case of non-availability of a portion of a portion of the site or for any other reasons and the contractor shall be bound to carry out the works in accordance with any instructions given to him in writing signed by the Engineer-in-Chief and such alterations, omissions, additions or substitutions shall form part of the contract as if originally provided therein and any altered, additional or substituted work which the contractor may be directed to do in the manner specified above as part of the works, shall be carried out by the contractor on the same conditions in all respects including price on which he agreed to do the main work except as hereafter provided. 12.1 The time for completion of the works, shall in the event of any deviations resulting in additional cost over the tendered value sum being ordered, be extended, if requested by the contractor as follows:- (i) In the proportion which the additional cost of the altered, additional or substituted work bears to the original tendered value plus (ii) 25% of the time calculated in (i) above or such further additional time as may be considered reasonable by the Engineer-in-Charge. 12.2 Deviation, Extra Items and Pricing In the case of extra item (s), the contractor may within fifteen days of receipt of order or occurrence of the item (s) claim rates, supported by proper analysis, for the work and the engineer-in-charge shall within one month of the receipt of the claims supported by analysis after giving consideration to the analysis of the rates submitted by the contractor, determine the rates on the basis of the market rates and the contractor shall be paid in accordance with the rates so determined. In the case of substituted items, the rate for the agreement item(to be substituted) and substituted item shall also be determined in the manner as mentioned in the aforesaid para. 3. The above clause would make it clear that it is possible for the Engineer-in-Charge to make deviations of the quantum of work and the Contractor will be bound to carry out the same but at the rates which are mentioned clearly in 12.2 which allows for a particular procedure viz., raising a bill and after due analysis of the rates quoted by the Contractor, would determine the rates on the basis of market rate and the contractor would be paid in accordance with the rates so specified. When the bills were ultimately worked out, the respondents had worked out the details in a statement which is produced as Annexure P-13. In this statement, the calculations have been made in terms of Clause 1.43, which is reproduced as under:- “1.43 Justified amount (X) shall be worked out by the Board at the time of award of work while analyzing the bids received. The allotment amount (excluding escalation) (Y) shall be at %age O=(Y-X)/X above or below the said justified amount which will be called 'original %age above or below' as the case is. Revised justified amt (X), on the same parameters as worked out at the time of award of work, shall be worked out at the time of completion of work with the actual quantities. The actual amount of work (excluding escalation) (Y) at the time of completion of work shall be at a %age A=(Y-X)/X above or below the said revised justified amount which will be called “actual % age above or below' as the case is. The agency will give suitable rebate in case the “actual % age” (A) exceeds the “original % age” (O) so that the “actual % age remains at par or with in the “original % age”. 4. The counsel for the petitioner states that the justified amount, which is stipulated under the contract really constitutes a modification of the terms provided elsewhere under the same contract. 4. The counsel for the petitioner states that the justified amount, which is stipulated under the contract really constitutes a modification of the terms provided elsewhere under the same contract. According to the learned counsel appearing for the petitioner, the calculation of the justified amount is arbitrary and the petitioner had no means of knowing that this clause would be operative to reduce the rates further than how the rates had to be worked out as provided under Clause 12.2. The petitioner would say that the action of the respondents is spirited by mala fides and it was only because he had earlier filed a case with reference to the same contract, the respondents were applying the rates as specified in para 1.43 and they are trying to enforce it. 5. Learned counsel for the petitioner cites judgments of the Hon'ble Supreme Court; one, in Harbanslal Sahnia and another Vs. Indian Oil Corporation and others 2003(2) SCC 107 that lays down that an alternative remedy provided under a arbitration clause, will not completely bar a Court from exercising its jurisdiction under Article 226 of the Constitution. In that case it was contested in the defence by Indian Oil Corporation that there was an arbitral agreement under the contract and therefore, a writ remedy was not available. The other judgment that the counsel relies upon is Reliance Energy Ltd. and another Vs. Maharashtra State Road Development Corpn. Ltd and others (2007) 8 SCC1 that lays down that where there exists an uncertainty or vagueness in contract, the reliance on such term could itself give a sufficient ground for interference by the judicial intervention, for it would mean violation of Article 14, 21 and 19(1)(g). 6. In this case, I am unable to see any vague or uncertain terms. The terms, which are in para 1.43 are a part of the contract. It will be no argument for a person to contend as canvassed by the counsel, that the contract was contained a large document and the petitioner did not have the benefit of going through the particular clause that refers to a manner of working out 'justified amount'. A contractual term which a person would be normally bound could be challenged when there has been a fraud exercised by the respondents. A contractual term which a person would be normally bound could be challenged when there has been a fraud exercised by the respondents. It cannot be a matter, which can be dealt with in a writ petition and such contractual matter will be appropriately adjudicated only in a properly instituted civil suit and not through a writ petition. 7. The issue of an alternative remedy on the basis of an arbitral clause shall be adjudged from the context of whether the nature of dispute as raised is such that it cannot be decided by the Arbitrator. If the contention is that the Clause 1.43 was concealed in some way and the respondents have committed a fraud, justifiably an adjudication through an Arbitrator may not be appropriate. A civil suit then will be the appropriate answer. On the other hand, if it were to be contended that such clause existed and that clause would not be operative, it could still be a matter which falls within the concept of dispute between the parties, which shall require an adjudication only before the Arbitrator. 8. The question whether a writ petition could be entertained even when there is an arbitral clause has been dealt with by the Hon'ble Supreme Court to lay down a proposition that it would be essentially a question of fact whether the matter should be referred to arbitration or could be dealt with by the Court in the writ jurisdiction itself. In cases where there existed a fraud or there is a patent illegality, it would be appropriate that the Writ Court itself gives directions without remitting the matter to the Arbitrator. However, in case where there are factual considerations that have to be dealt with and evidence have to be given, it would be best left to the Arbitrator to deal with the case. 9. In Empire Jute Company Ltd. Vs. Jute Corporation of India (2007) 14 SCC 680, the Hon'ble Supreme Court was dealing with the case where an arbitral agreement existed and the dispute between the parties was covered thereby. The dispute arose between the parties on the question of liability of the appellant/purchaser to pay "carrying costs" under the terms of the contract. Jute Corporation of India (2007) 14 SCC 680, the Hon'ble Supreme Court was dealing with the case where an arbitral agreement existed and the dispute between the parties was covered thereby. The dispute arose between the parties on the question of liability of the appellant/purchaser to pay "carrying costs" under the terms of the contract. In the event of default on the part of the appellant in taking delivery of goods, the Hon'ble Supreme Court observed that the High Court should have left the parties to avail of the remedy under the arbitration clause that existed in the contract and ought not to have undertaken an adjudication under Article 226 of the Constitution. Again in Noble Resources Ltd. Vs State of Orissa (2006) 10 SCC 236, the Hon'ble Supreme Court outlined the extent of judicial review available in writ jurisdiction in contractual matters. It held that even if there was non-supply of goods that amounted to breach of contract, it could not be said to be so arbitrary as to be hit by Article 14 of the Constitution. The dismissal of the writ petition by the High Court in such a situation was upheld by the Hon'ble Supreme Court but liberty was granted to the parties to take recourse of other legal remedy available in law on the strength of the proposition outlined, the remedy through writ petition in this case is not appropriate. 10. Learned counsel also contended that the decision was taken without involving the petitioner in any form of enquiry. Where a term of the contract is applied against the petitioner, it requires no notice to be given as though it involves a judicial adjudication. Between the petitioner and the respondents, the case is no more than enforcement of contractual terms, where the latter applies an express clause in the document to determine its liability. The correctness of its action will alone be required to be adjudicated and if it is put to challenge before a third party that is when the issue of prior notice could arise. It will be absurd to urge that every term in a contract shall be put through after calling upon the other party to enquiry if he agreed to its application. This objection is also rejected. 11. The writ petition is not sustainable for all the above reasons and it is dismissed accordingly. Petition dismissed.