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2013 DIGILAW 103 (GAU)

N. E. Trade & Transport v. Food Corporation of India

2013-02-12

S.R.SEN

body2013
JUDGMENT S.R. Sen, J. 1. The instant five writ petitions, namely (1) W.P.(C) (SH) No. 1 of 2013; (2) W.P.(C) (SH) No. 2 of 2013; (3) W.P.(C) (SH) No. 3 of 2013; (4) W.P.(C) (SH) No. 4 of 2013 and (5) W.P.(C) (SH) No. 5 of 2013, are directed against the impugned action on the part of the respondent authorities in deducting the amounts from the running bills of the petitioners towards alleged demurrage, costs, damages, registration fees, charges and expenses allegedly suffered or incurred by the Corporation due to contractors' negligence and un-workmen like performance without causing any enquiry in terms of Clause 10(a) as contained in Annexure-I to the tender document entitled "Terms and Conditions governing contracts for transportation of food grains from Depots/Mandis/Railheads, etc." Since the facts and circumstances of W.P.(C) (SH) No. 1 of 2013; W.P.(C) (SH) No. 2 of 2013; W.P.(C) (SH) No. 3 of 2013; W.P.(C) (SH) No. 4 of 2013 and W.P.(C) (SH) No. 5 of 2013 are same and in similar nature, all the cases are taken up for hearing and disposal by a common judgment and order. 2. Heard learned counsel for the petitioners, Mr. D. Senapati, who submits that the petitioners entered into a contract with the Food Corporation of India, i.e. the respondent No. 1, but the respondent No. 1 without causing any enquiry is deducting amounts from the running bills of the petitioners towards alleged demurrage, costs, damages, registration fees, charges and expenses etc., which is illegal. The learned counsel further submits that the petitioner in W.P.(C) (SH) No. 01 of 2013 had deposited security amount of Rs. 1,08,00,000.00 and performance bank guarantee of Rs. 3,23,00,000.00; petitioner in W.P.(C) (SH) No. 02 of 2013 had deposited security amount of Rs. 53,35,000.00 and performance bank guarantee of Rs. 3,20,10,000.00; petitioner in W.P.(C) (SH) No. 03 of 2013 had deposited security amount of Rs. 8,00,000.00 and performance bank guarantee of Rs. 48,00,000.00; petitioner in W.P.(C) (SH) No. 04 of 2013 had deposited security amount of Rs. 3,90,000.00 and performance bank guarantee of Rs. 78,00,000.00 and petitioner in W.P.(C) (SH) No. 05 of 2013 had deposited security amount of Rs. 28,28,275.00 and performance bank guarantee of Rs. 1,13,13,100.00 respectively with the No. 1. In spite of the fact respondent No. 1 is deducting demurrage, costs, damages, registration fees, charges and expenses etc. without causing any enquiry. 3,90,000.00 and performance bank guarantee of Rs. 78,00,000.00 and petitioner in W.P.(C) (SH) No. 05 of 2013 had deposited security amount of Rs. 28,28,275.00 and performance bank guarantee of Rs. 1,13,13,100.00 respectively with the No. 1. In spite of the fact respondent No. 1 is deducting demurrage, costs, damages, registration fees, charges and expenses etc. without causing any enquiry. The learned counsel submits that the instant cases are covered by the decision taken in the case of M/s. Bulbul Enterprise Vs. Food Corporation of India & Ors. reported in 2000 (2) GLT 344 : (2000) 1 GLR 537. 3. On the other hand, learned Sr. counsel Mr. K.S. Kynjing, Sr. Advocate assisted by Mr. K. Sunar, fairly submits that the deduction can be done only after causing enquiry as per clause X(a), i.e. Contract Agreement, which is at Annexure-II, page 36, in W.P.(C) (SH) No. 01 of 2013. The learned Sr. counsel, further, submits that necessary order or judgment may be passed in accordance with law. 4. After hearing the submissions advanced by the learned counsels for the parties at the Bar and after perusal of clause X(a), at page 36 (supra), it appears to me that the contractor shall be liable for all costs, damages, registration fees, charges and expenses suffered or incurred by the Corporation due to the Contractor's negligence and un-workman like performance of any services under this Contract or breach of any terms of the Contract, or failure to carry out the work under the Contract, and for all damages or losses occasioned to the Corporation, or in particular to any property or plant belonging to the Corporation, due to any act, whether negligence or otherwise, of the Contractor or his employees. The decision of the General Manager regarding such failure of the Contractor and their liability for the losses, etc. suffered by the Corporation, and the quantification of such losses, shall be final and binding on the Contractor. Para-5 of the judgment in the case of M/s. Babul Enterprise (supra) is reproduced below: 5. I have perused the terms of the contract. No where it is provided for any interim payment on deduction of demurrage charge before the liability of the contractor is ascertained by the senior Regional Manager as per terms of Clause XII. Therefore, such deduction on the face of it appears to be in violation of the terms embodied in Clause XII. No where it is provided for any interim payment on deduction of demurrage charge before the liability of the contractor is ascertained by the senior Regional Manager as per terms of Clause XII. Therefore, such deduction on the face of it appears to be in violation of the terms embodied in Clause XII. The argument that the deductions are proposed to be made from the interim payments to raise sufficient security to liquidate the demurrage charges that may be eventually raised by the railway authorities. But the pleadings on records show that the petitioner has already given sufficient security for carriage of the goods. Therefore, the corporation obviously cannot insist for additional security to be raised by way of deduction of demurrage charges in violation of the terms of the contract as embodied in Clause XII. It can safely be concluded that the proposed action of the corporation is not permissible under the terms of the contract. In my considered opinion, the proposed action of the corporation to deduct the demurrage charges before a decision in this regard given by the senior Regional Manager is not sustainable in law. 5. On combined reading of Clause X(a) and Clause XII, it appears and understood that demurrage or any other loss can be recovered only after causing a proper enquiry. From the contents of both clauses, it is understood that, causing enquiry is a precondition for recovery of demurrage loss etc., which cannot be done arbitrarily. Therefore, I find the submissions advanced by the learned counsel for the petitioners have force. Similar view was also taken by this Court in W.P.(C) No. 27 of 2000 in Agartala Bench. 6. After considering the submissions advanced by the learned counsels for the parties at the Bar and examining the contents of Clause X(a) and Clause XII of Annexure-2, i.e. 'Terms and Conditions Governing Contracts for Transportation of Foodgrains From Depots/Mandis/Railheads, etc." as well as taking into consideration of the judgment reported in(2000) 2 GLR 537 (supra), I have come to a conclusion that no deduction can be done by the respondent No. 1 as demurrage or loss without causing enquiry, which is a precondition of Clause X(a) and Clause XII of the terms and conditions of contract as referred to above. With this common judgment and order, the instant five write petitions, namely (1) W.P.(C) (SH) No. 1 of 2013; (2)W.P.(C) (SH) No. 2 of 2013; (3)W.P.(C) (SH) No. 3 of 2013; (4)W.P.(C) (SH) No. 4 of 2013 and (5) W.P.(C) (SH) No. 5 of 2013, are hereby allowed and stand disposed of. Disposed off