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2016 DIGILAW 852 (MP)

Nandish Construction Co. Thru. Mr. Onkarlal Jain v. M. P. Rural Road Development Authority

2016-09-22

VIVEK RUSIA

body2016
ORDER : Vivek Rusia, J. With the consent of the parties, present writ petition is heard and decided finally. The facts of the case are that the petitioner is the partnership firm represented through his partner Shri Omkarlal Jain. The petitioner entered into a work contract on 07.08.2006 with respondent no. 2 for the construction/up-gradation and maintenance of rural roads under the package no. M.P.-2406. The tender of the petitioner was accepted @ 27 % above SOR. 2. According to the petitioner, the work order was issued on 02.09.2006, but there was delay in completion of the work due to the reasons beyond control of the petitioner. Vide order dated 02.01.2008, the work contract was terminated by the respondent by invoking Clause- 24 of the agreement. Being aggrieved of the said termination of the contract, vide letter dated 25.09.2010, the petitioner invoked Clause-24 of the agreement requesting final authority to allow the claims for latches and damages. According to the petitioner, due to personal family problems, he could not pursue the matter further and respondent no. 2 has raised demand for recovery of Rs. 54.03 lakhs vide letter dated 15.09.2010. The petitioner has replied the said letter and now the respondent has initiated recovery proceedings for recovery of Rs. 27.21 lakhs as arrears of land revenue. The Tehsildar at Udaypur has issued notice dated 15.07.2016, hence, the present petition before this Court. 3. The petitioner has challenged the recovery notice on the ground that there is no provision in the contract for recovery of the amount by way of RRC. He further challenged the impugned action of the respondent on the ground that without resorting to the process of adjudication, no recovery can be issued against the petitioner. He has also alleged that the termination of the contract is also illegal as the petitioner was entitled for extension of time. The petitioner has alleged that the respondent has breached the terms and conditions of the contract by failing to provide clear work site, payment within time etc. 4. The respondent filed reply and submitted that the petitioner has commenced the work, but has committed numerous latches and breaches of the contract and the work was delayed considerably because of the fault of the petitioner. It is further submitted that the petitioner was required to complete the work upto 01/06/2007. 4. The respondent filed reply and submitted that the petitioner has commenced the work, but has committed numerous latches and breaches of the contract and the work was delayed considerably because of the fault of the petitioner. It is further submitted that the petitioner was required to complete the work upto 01/06/2007. Thereafter, the petitioner submitted a representation for extension of time upto December, 2007 which was extended, but failed to complete the work within extended time. As a result of which, the contract was terminated on 02.01.2008. The petitioner approached the Chief Executive Officer, Bhopal under Clause-24, who has rejected the application of the petitioner vide letter dated 25.03.2008 after affording opportunity of hearing. Thereafter, recovery notice was issued for the recovery of Rs. 54.03 lakhs to the petitioner on 16/06/2010. Since the petitioner failed to deposit the same, the respondent has adjusted bank guarantee of Rs. 17.61 lakhs and S.D. of Rs. 7.34 lakhs and Extra deposit of Rs. 1.87 lakhs, total Rs. 26.82 lakhs and initiated the recovery proceedings for recovery of Rs.27.21 lskhd. Thereafter, the Collector, Mumbai and Udaipur were sent recovery notice for recovery of Rs. 27.21 lakhs from the petitioner in the year 2010. Now, the petitioner has filed the present writ petition after six years to challenge the recovery which hopelessly time barred. 5. It is further submitted that the petitioner had remedy to approach M.P,. Arbitration Tribunal, Bhopal under Clause-25 of the agreement, which he failed to avail, therefore, the present petition is not maintainable and liable to be dismissed. 6. Shri Sidharth Jain, learned counsel appearing on behalf of the petitioner has submitted that the amount of Rs. 54.03 lakhs cannot be recovered from the petitioner without adjudication under Clause "24 of the agreement. In support of his contention, he has placed reliance over the judgments delivered by Hon'ble Supreme Court in the case of M/s Gangotri Enterprises Ltd v. Union of India and others reported in AIR 2016 SC 2199 as well as B.B. Verma and another v. State of M.P. And another reported in 2007 Arb. W.L.J. 733 and submitted that unless the sum claimed by the respondent is in the nature of damages in assertion of is yet to be adjudicated in arbitration proceedings, there cannot be any recovery. 7. W.L.J. 733 and submitted that unless the sum claimed by the respondent is in the nature of damages in assertion of is yet to be adjudicated in arbitration proceedings, there cannot be any recovery. 7. Shri V.P. Khare, learned counsel appearing on behalf of the respondent submitted that the petitioner has failed to complete the work even within the extended period and therefore, the respondent had no option, but to terminate his contract and recover the losses from the petitioner. The petitioner did not avail the remedy of arbitration, therefore, the amount is liable to be recovered from the petitioner. 8. I have heard the learned counsel for the parties. 9. That, it is not disputed that the petitioner did not complete the work during the agreed period and thereafter, during extended period and vide order dated 02/01/2008, his work contract was terminated. According to the petitioner, by letter dated 25/09/2010, he raised claim before the Competent Authority under Clause- 24. The Clause " 24 reads below : 24. Dispute Redressal System If any dispute or difference of any kind whatsoever shall arises in connection with or arising out of this Contract or the execution of Works or maintenance of the Works there under, whether before its commencement or during the process of Works or after the termination, abandonment or breach of the Contract, it shall in the first instance, be referred for settlement to the competent authority, described along with their powers in the Contract Data, above the rank of the Engineer. The competent authority shall, within a period of forty-five days after being requested in writing by the Contractor to so, convey its decision to the Contractor. Such decision in respect of every matter so referred shall, subject to review as hereinafter provided, be final and binding upon the Contractor. In case the works is already in progress, the Contractor shall proceed with the execution of the Works, including maintenance thereof, pending receipt of the decision of the competent authority as aforesaid, with all due diligence. 10. According to the petitioner, he could not pursue the matter further. The respondent submitted that vide order dated 25.03.2009, the representation of the petitioner was rejected by the Competent Authority, which was filed under Clause-24 of the agreement. The order is filed as Annexure-R/4. 10. According to the petitioner, he could not pursue the matter further. The respondent submitted that vide order dated 25.03.2009, the representation of the petitioner was rejected by the Competent Authority, which was filed under Clause-24 of the agreement. The order is filed as Annexure-R/4. Under Clause- 24 of the agreement, the petitioner was required to file an appeal against the decision of the Competent Authority nominated under Clause-24 of the agreement to M.P. Arbitration Tribunal constituted under M.P. Madhyastham Adhikaran Adhiniyam, 1983. According to the petitioner, he himself failed to pursue the matter after submission of claim under Clause-24. Since the petitioner did not challenge the order passed by the Competent Authority under Clause-24, he has lost his right to file appeal to M.P. Arbitration Tribunal, because under section 7-B of the M.P. Madhyastham Adhikaran Adhiniyam, 1983, there is limitation prescribed. Section 7-B of the Adhiniyam is reproduced below : 7-B (1) The Tribunal shall not admit a reference petition unless- (a) the dispute is first referred for the decision of the final authority under the terms of the works contract; and (b) the petition to the Tribunal is made within one year from the date of communication of the decision of the final authority: Provided that if the final authority fails to decide the dispute within a period of six months from the date of reference to it, the petition to the tribunal shall be made within one year of the expiry of the said period of six months." "(2-A) Notwithstanding anything contained in sub-section (1), the Tribunal shall not admit a reference petition unless it is made within three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end in any other manner or when a dispute arises during the pendency of the works contract. Provided that if a reference petition is filed by the State Government such period shall be thirty years." That, Special Bench of this High Court in the case of Sanjay Dubey v. State of M.P. Reported in 2012 (4) MPLJ, 212 has decided the issued of limitation to approach M.P. Madhyastham Adhikaran Adhiniyam, 1983 in case of works' contract. Para 13 is reproduced below : 13. Para 13 is reproduced below : 13. In view of the preceding analysis, we proceed to state our conclusions as under: - (i) Where the works contract contains a clause like Clause 29, the jurisdiction of the Tribunal can be invoked only after approaching the Authority as provided under the terms of the works contract. (ii) However, subject to final adjudication of the issue by the Supreme Court as to whether Tribunal under the Act is a Court or not, in case where the dispute has arisen under an agreement prior to coming into force of Section 7-B(2-A) of the Act which does not contain a clause like Clause 29, an aggrieved person has to approach the Tribunal within a period of three years from the date of accrual of cause of action. (iii) Where the works contract does not contain any provision like Clause 29 and the dispute has arisen after coming into force of Section 7-B(2-A) of the Act, in such a case, sub-section (2-A) of Section 7- B of the Act will apply and an aggrieved person can approach the Tribunal within a period of three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end in any other manner or when a dispute arises during the pendency of the works contract. (iv) In a case where the agreement is rescinded, two questions may arise for consideration. Firstly, which party to the agreement is at fault and consequently, claim for damages for breach of contract. Secondly, the claim with regard to payment of amount of the final bill before recission of the contract in accordance with the rates prescribed in the agreement. In the first case, the limitation would commence from the date when the agreement is rescinded whereas in the second case, the limitation would commence from the date when the final bill is prepared. (v) The dispute under Clause 29 has to be submitted within the time limit which has been prescribed in the clause. The dispute cannot be submitted to the Authorities mentioned in Clause 29 of the Agreement within a period of three years as the provisions of Limitation Act do not apply to the Authorities under the Agreement as they are not the Courts. (vi) Clause 29 of the Agreement is not violative of Section 28(b) of the Indian Contract Act, 1872. 11. (vi) Clause 29 of the Agreement is not violative of Section 28(b) of the Indian Contract Act, 1872. 11. Since the petitioner did not approach the Tribunal, the order of termination of the contract has attained the finality, therefore, the respondent has rightly issued the notice for recovery of Rs. 24.21 lakhs after adjusting the amount of bank guarantee etc. 12. So far as the judgment cited by the petitioner delivered in the case of M/s Gangotri Enterprises Ltd (supra) as well as B.B. Verma and another (supra) are concerned, in these cases, during the pendency of the arbitration proceedings, the respondent/department made an attempt to recover the amount and in that circumstances, the Hon'ble Apex Court as well as this Court has held that when the arbitration proceedings are pending and that the claim in the nature of damages relating to the contract is yet to be adjudicated in arbitration proceedings, the recovery cannot be made. But in the present case, the petitioner himself did not avail the remedy of arbitration under the provisions of M.P. Madhyastham Adhikaran Adhiniyam, 1983, therefore, as on today, there is no arbitration proceedings, which are pending and the termination order passed in the year 2008 has attained the finality, therefore, the respondent has rightly initiated recovery proceedings to recover the damages from the petitioner. Even otherwise, there is delay in filing this present petition and the recovery of the amount pertaining to the year 2010 are being challenged in the year 2016. The present petition is suffered from delay and latches also, hence the present writ petition being devoid of merits, is liable to be dismissed and is accordingly dismissed. No order as to costs. C. C. as per rules.