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2017 DIGILAW 13 (MAN)

Raghava Constructions v. Union of India

2017-03-20

KH.NOBIN SINGH

body2017
JUDGMENT : Kh. Nobin Singh, J. Heard Shri Kh. Tarunkumar, the learned counsel appearing for the petitioners; Shri S. Rupachandra, the learned ASG appearing for the respondent Nos. 1 and 3 and Shri N. Ibotombi, the learned Additional Advocate General appearing for the respondent Nos. 2, 4 and 5. W.P. (C) No. 880 of 2016 2. The legality and correctness of the notice dated 19-09-2016 and the letter dated 24-10-2016, issued by the Addl. Chief Engineer-II, PWD, Manipur, are being questioned and challenged in this writ petition by the petitioner. 3.1. According to the petitioner, it is a registered firm duly incorporated under the Indian Partnership Act, 1937 and is a Special Class Contractor. Shri Khomdram John Singh, a resident of Haobam Marak Irom Leikai, Imphal is authorised and empowered by the petitioner to do all necessary acts including the filing of the petition, to protect the interest of the petitioner by way of executing a Power of Attorney dated 30-09-2016 in his favour. 3.2. The Chief Engineer(NER), Ministry of Road Transport and Highways, Government of India invited bids through online only for execution of the work "Strengthening existing two lane pavement from 287- 304 km including widening of formation from 294-304 km on NH-39 (Mao-Maram Imphal Section)" in the State of Manipur vide a notification dated 28-05-2014 and in response thereto, the petitioner who submitted its bids, was found to be the lowest responsive bidder and accordingly, a Letter of Acceptance dated 24-04- 2015 was issued in its favour with the request that it should furnish a Bank Guarantee of Rs. 2,23,28,314/- (Rupees two crore twenty three lakh twenty eight thousand three hundred fourteen) only as additional Security for unbalanced bid in addition to the performance security Bank Guarantee for an amount equivalent to 5% of contract price i.e., for Rs. 1,36,45,126/- (Rupees one crore thirty six lakh forty five thousand one hundred twenty six) only within 21 days therefrom. When the petitioner submitted the said two Bank Guarantees to the Ministry of Road Transport & Highways in time, it was informed by the Assistant Executive Engineer (NER) vide its letter dated 14-05- 2015 that the same be submitted to the Addl. Chief Engineer-I, PWD, Manipur and accordingly, the petitioner re-submitted the said two Bank Guarantees to the Addl. Chief Engineer-I, PWD, Manipur vide its letter dated 16-05-2015. 3.3. Chief Engineer-I, PWD, Manipur and accordingly, the petitioner re-submitted the said two Bank Guarantees to the Addl. Chief Engineer-I, PWD, Manipur vide its letter dated 16-05-2015. 3.3. The Assistant Executive Engineer (NER), Ministry of Road Transport & Highways issued a letter dated 03-09-2015 thereby requesting the Additional Chief Engineer-I, PWD, Manipur to sign an agreement with the petitioner as per the invited bid and bid conditions and in furtherance of the said letter, an Agreement was entered into between the Addl. Chief Engineer-I, PWD, Manipur and Shri Khomdram John Singh as the Attorney holder of the petitioner and pursuant to the signing of the said agreement, the Addl. Chief Engineer-I, PWD, Manipur vide its letter dated 07- 09-2015 instructed the petitioner to proceed with the execution of the work in accordance with the contract documents. Thereafter, the petitioner started the execution of the work and while the execution of the work was in progress, on 01-09-2016 a team of Imphal Police Station arrested Shri Khomdram John Singh, the Attorney Holder of the petitioner and Shri Beishamayum Bimol Singh, a Manager of the Manipur Rural Bank, Imphal Branch in connection with a case under F.I.R. No. 216(8)2016 Imphal P.S. u/s 468/47/420 IPC. However, both of them were released on bail vide order dated 05-09-2016 passed by the Learned Chief Judicial Magistrate, Imphal West. 3.4. The respondent No.5, the Addl. Chief Engineer-II, PWD, Manipur issued a Notice dated 19- 09-2016 under Clause 59 of the Agreement requiring the petitioner to show cause within seven days as to why the contract should not be terminated on the ground that it had indulged in corrupt and fraudulent practise in the procurement of the contract by using forged Bank Guarantees and in response thereto, the petitioner submitted a representation dated 26-09-2016 explaining the true facts as regards the procurement of the Bank Guarantees followed by a representation dated 01-10-2016 addressed to the Hon'ble Minister (Works), Government of Manipur with the request that it be permitted to complete the execution of the work by furnishing new Bank Guarantees if the Government was not satisfied with the Bank Guarantees submitted earlier by it. Having not satisfied with the explanation furnished by the petitioner, the Addl. Having not satisfied with the explanation furnished by the petitioner, the Addl. Chief Engineer-II, PWD, Manipur by invoking the power vested under Clause 59 of the Agreement, terminated the agreement on the ground that the petitioner had indulged in fraudulent practise in the procurement of the contract and the petitioner was directed to stop the work immediately and to leave the site as soon as possible and in consequence thereof, on 26-10-2016 the Superintending Engineer, National Highways Circle, PWD, Manipur addressed a letter to the petitioner informing that a joint measurement be held on 31-10-2016 at 01:00 p.m with the request to it to come to work site or send any of his authorised representatives for conducting a joint measurement. Being aggrieved by the Notice dated 19-09-2016 as well as the letter dated 24-10-2016 of the Addl. Chief Engineer-II, PWD, Manipur, the instant writ petition has been filed by the petitioner on the ground that the acts of the respondents and in particular, the respondent No.5, the Addl. Chief Engineer-II are arbitrary and malafide and the respondent No.5 has acted without any authority. 4. Contesting the said writ petition, an affidavit-in-opposition on behalf of the respondent Nos. 2, 4 and 5 has been filed wherein the fact that the agreement was entered into between the Addl. Chief Engineer-I and the attorney holder of the petitioner, because of which it was executing the work, was not denied and their stand indicated therein is that the Addl. Chief Engineer-II is the employer as the power having been delegated to him in the manner mentioned therein and in exercise of power vested under clause 59 of the Agreement, he terminated the contract on the ground that the petitioner had indulged in fraudulent practise in the procurement of the contract. Their further case is that based on the bona fide belief that the Bank Guarantees furnished by the petitioner being valid in terms of the confirmation letter dated 18-5-2015 of the Manager, Manipur Rural Bank, the Addl. Chief Engineer-I went ahead with the signing of the agreement and the petitioner was instructed to proceed with the execution. Their further case is that based on the bona fide belief that the Bank Guarantees furnished by the petitioner being valid in terms of the confirmation letter dated 18-5-2015 of the Manager, Manipur Rural Bank, the Addl. Chief Engineer-I went ahead with the signing of the agreement and the petitioner was instructed to proceed with the execution. Having found no progress as regards the pavement construction during the past 60 days, a show cause notice dated 21-6-2016 was issued to the petitioner and in the meantime, a case of termination of contract of a work in Manipur under NHIDCL on the ground of submission of fraudulent Bank Guarantee did surface and accordingly, the Chairman, Manipur Rural Bank was requested to confirm the genuineness of the Bank Guarantees submitted by the petitioner and in response thereto, the Senior Manager (Advance & Recovery), Manipur Rural Bank, Head Office vide its letter dated 05-07-2016 intimated that no such Bank Guarantees were issued by the Manipur Rural Bank and no such record were available in the bank's system. Having felt that the said Bank Guarantees were not genuine, the Addl. Chief Engineer-II, PWD, Manipur was directed by the State Government to lodge an F.I.R. against the Bank and the Contractor. In fact, a case under FIR No.218(8)2016-17 under Section 468/471/420 IPC was registered in respect thereof. But on receipt of a letter dated 29-08-2016 confirming the genuineness of the Bank Guarantees, the State Government vide its letter dated 02-09-2016 directed the Addl. Chief Engineer-II, PWD, Manipur to withdraw the F.I.R. who in turn submitted a letter dated 02-09-2016 to the O.C., Imphal Police Station for withdrawal of the F.I.R. In the meantime, the Chairman, Manipur Rural Bank vide its letter dated 03- 09-2016 intimated the Chief Secretary, Government of Manipur that the said Bank Guarantees were not issued by the Manipur Rural Bank enclosing therewith a letter from the Manager, Manipur Rural Bank, Imphal Branch who is alleged to have issued the Bank Guarantees stating that he had not issued the Bank Guarantees and based on the letter of the Chairman, Manipur Rural Bank, a letter dated 02-09-2016 addressed to the O.C., Imphal Police Station for withdrawal of the F.I.R., was withdrawn. On 07-09- 2016, the Addl. On 07-09- 2016, the Addl. Chief Engineer-II, PWD, Manipur appraised the matter to the Chief Secretary (Works), Government of Manipur requesting him to convey the approval for initiation with respect to termination of the contract and after the approval being conveyed, the Addl. Chief Engineer-II, PWD, Manipur issued a letter dated 19-09-2016 to the petitioner to show cause as to why the contract should not be terminated for the default of the Contractor and the reply furnished by the petitioner on26-09-2016 was found to be without any merit and therefore, the Addl. Chief Engineer-II, PWD, Manipur by invoking the power vested under Clause 59 of the Contract, terminated the contract on the ground that the petitioner had indulged in fraudulent practise in the procurement of the contract and the execution thereof to the detriment of the employer. In support of the stand taken by the State Government, the affidavit filed on behalf of the respondent Nos.1 & 3 states that as per Notification dated 11-09-1956, the Ministry of Road Transport & Highways is primarily responsible for the development and maintenance of National Highways and the State Governments being the executing agencies, are delegated power of execution of works pertaining to National Highways and are responsible for operation and management of the contracts relating to National Highways and accordingly, the Addl. Chief Engineer-I, PWD, Manipur has been declared as employer of the works in respect of the said contracts. That is the reason why the Addl. Chief Engineer-I, PWD, Manipur who was in charge of the National Highways in Manipur, has been requested to sign the said contracts and thereafter, the Ministry vide its letter dated 17-10- 2016 has reconfirmed the Addl. Chief Engineer-II, PWD, Manipur as employer of the works pertaining to the said contracts retrospectively from the date of issue of letter of acceptance. 5. In its rejoinder affidavit, it is stated by the petitioner that as per contract data, the Chief Engineer (NER) is the employer and mere signing the agreement does not confer upon the Addl. Chief Engineer-II the status of the employer. As is evident from the letter dated 17-10-2016, at the time of issuing the notice dated 19-09-2016, the Addl. Chief Engineer-II was not the employer and the defect/ illegality occurred at the time of issuing the notice, cannot be cured by virtue of the letter dated 17-10-2016. Chief Engineer-II the status of the employer. As is evident from the letter dated 17-10-2016, at the time of issuing the notice dated 19-09-2016, the Addl. Chief Engineer-II was not the employer and the defect/ illegality occurred at the time of issuing the notice, cannot be cured by virtue of the letter dated 17-10-2016. The Chief Engineer (NER) cannot further sub-delegate the power of the Government of India to the Addl. Chief Engineer-II, PWD, Manipur. The petitioner was not given an opportunity to prove the genuineness of the Bank Guarantees during the course of enquiry and only after taking a decision behind its back, the said sow cause notice was issued with a closed mind in order to punish it. WP (C ) NO.881 of 2016: 6. The instant writ petition has been filed by the same petitioner which has filed the writ petition being WP(C) No.880 of 2016 and the facts and circumstances of both the cases are almost identical except in respect of the works to be executed by it. Both the cases have arisen out of the similar contracts with the result that the notices and letters impugned in both the cases are similar and verbatim. The only difference between the two is the places where the works are to be executed by the petitioner. Prayers in the both the writ petitions are almost the same and therefore, the detailed facts and circumstances of the present case are not narrated herein for the sake of brevity. Both the writ petitions are, accordingly, being disposed of by this common judgment and order. 7. During the course of hearing, Shri Kh. Tarunkumar, the learned counsel appearing for the petitioner has confined his argument only as regards the authority and competence of the respondent No.5, the Addl. Chief Engineer-II, PWD, Manipur in issuing the notice dated 19-09-2016 and therefore, this court will not go into the merits of the case except consideration of the issue as to whether the respondent No.5, the Addl. Chief Engineer-II, PWD, Manipur while issuing the notice dated 19-09-2016, is competent to do so or not. According to him, the respondent No.5 is neither the employer nor has he been given authority to issue the notice dated 19-09-2016 and since the action taken by the respondent No.5 is illegal and void ab initio, the same cannot be validated by the letter dated 17-10-2016. According to him, the respondent No.5 is neither the employer nor has he been given authority to issue the notice dated 19-09-2016 and since the action taken by the respondent No.5 is illegal and void ab initio, the same cannot be validated by the letter dated 17-10-2016. In support of his contention, he has relied upon the decision of the Hon'ble Supreme Court in V.C Banaras Hindu University & ors v. Shrikant, reported in (2006) 11 SCC 42 wherein the wife of the respondent applied for and was awarded a Commonwealth Fellowship in the United Kingdom for a year and the respondent desired to assist his wife as also to attend the Retina Meeting at Frankfurt, Germany, for which he applied for leave. The respondent left with his wife for the United Kingdom without express sanction of leave and without the permission of the Vice-Chancellor. The respondent was asked to join his duties with the direction to show cause as to why action be not taken against him for his alleged acts of misconduct. Being not satisfied with the respondent's reply, his service was terminated vide order dated 3-5-2000 issued by the Vice-Chancellor and this order came to be challenged by way of a writ petition which was disposed of by the High Court with the direction to the Vice-Chancellor to consider the representation sympathetically. After having considered the representation, the Vice-Chancellor refused to recall his order and opined that the respondent had gone abroad in a pre-planned manner. A second writ petition was filed assailing the orders dated 7-8-2000 and 20/22-5-2000 which was dismissed by the High Court vide order dated 15-2-2001 on the premise that the respondent can avail an alternative remedy by making a representation to the Executive Council of the University. The respondent submitted a representation dated 15-03-2001 which was not placed before the Executive Council for a long time. When the matter was placed before the Executive Council on 8-9-2003, it appears to have approved the order of the Vice-Chancellor that the respondent would be deemed to have abandoned his service with effect from 1-3-2000. The Hon'ble High Court allowed a writ petition in part directing that the order of termination of the respondent was bad in law but denied him back wages. The Hon'ble High Court allowed a writ petition in part directing that the order of termination of the respondent was bad in law but denied him back wages. Two appeals came to be preferred by both the parties before the Hon'ble Supreme Court which dismissed the appeal preferred by the University holding inter-alia that as the initial order passed by the Vice-Chancellor was wholly without jurisdiction, the same was a nullity and thus, the purported approval thereof by the Executive Council would not cure the defect. However, the Hon'ble Supreme Court partly allowed the appeal preferred by the respondent. He has placed reliance in State of Orissa & anr v. Mamata Mohanty, reported in (2011) 3 SCC 436 , the Hon'ble Supreme Court held: "37. It is a settled legal proposition that if an order is bad in its inception, it does not get sanctified at a later stage. A subsequent action/ development cannot validate an action which was not lawful at its inception, for the reason that the illegality strikes at the root of the order. It would be beyond the competence of any authority to validate such an order. It would be ironic to permit a person to rely upon a law, in violation of which he has obtained the benefits. If an order at the initial stage is bad in law, then all further proceedings consequent thereto will be non est and have to be necessarily set aside. A right in law exists only and only when it has a lawful origin. (Vide Upen Chandra Gogoi v. State of Assam, Mangal Prasad Tamoli v. Narvadeshwar Mishra and Ritesh Tiwari v. State of U.P)" He has also relied upon the decision in Union of India & ors v. Paul George reported in (2004) 1 SCC 351 wherein issue involved was as to whether the charge-sheet issued against the respondent is without jurisdiction, in view of the fact that the disciplinary authority, ie., the Finance Minister, had not given approval for issuing the charge memo, even though he had given approval for initiation of disciplinary proceedings against the respondent. The respondent was served with a charge-sheet, contemplating a major punishment under Rule 14(3) of the Central Civil Services (CCA) Rules, 1965, which was challenged by him before the Central Administrative Tribunal on the ground that the same was served on him without jurisdiction and, therefore, was liable to be quashed, as the charge memo had not been approved by the disciplinary authority. The Central Administrative Tribunal allowed the application and the writ petition filed against the order of the Central Administrative Tribunal was dismissed by the High Court. The Hon'ble Supreme Court, while dismissing the appeals, was of the view that the Central Administrative Tribunal as well as the High Court had correctly interpreted the provisions of Office Order No. 205 of 2005. 8. There can be no any dispute about the law being laid down by the Hon'ble Supreme Court in the cases referred to herein above. But the facts of these cases are not similar to that of the present cases for the reason that in these cases, the provisions of the relevant statutes are involved and non-compliances thereof have rendered the actions taken by the authorities non est. In the present cases, no such provisions of a statute are involved at all and the issues involved herein have arisen out of the agreements entered into between the petitioner and the respondent No.5, the Addl. Chief Engineer-I, PWD, Manipur. Admittedly certain works are being undertaken by the Government of India in the National Highways fallen in the State of Manipur and as per the Contract Data contained in the National Competitive Bidding, the employer is the Chief Engineer (NER), Ministry of Road Transport & Highways, Government of India and the Executive Engineer, National Highways Division No. II, PWD, Manipur is said to be the Engineer. However, it is not in dispute that the agreements are entered into between the petitioner and the respondent No.5, the Addl. Chief Engineer-I, PWD, Manipur who has singed them on the requests of the Chief Engineer (NER) vide its letter dated 24-04-2015 addressed to the petitioner with a copy endorsed to the respondent No.5 followed by another letter dated 03-09-2015 addressed to the respondent No.5. The contents of both the letters dated 24-04-2015 and 03-09-2015 are known to the petitioner because they bear its signature thereon. The contents of both the letters dated 24-04-2015 and 03-09-2015 are known to the petitioner because they bear its signature thereon. As is evident from the affidavit of the Union of India, the reason as to why the Addl. Chief Engineer-I, PWD, Manipur is requested to sign the said agreements, is that it is given the charge of the Section in PWD, Manipur dealing with the National Highways. There is no any material on record to show that the Chief Engineer (NER) has issued any order/notification authorising the Addl. Chief Engineer-I, PWD, Manipur to sign the agreements or it has executed any power of attorney in favour of the Addl. Chief Engineer-I, PWD, Manipur to sign them. As aforesaid, the Addl. Chief Engineer-I, PWD, Manipur has signed the said agreements only on the basis of the requests made by it and it is not that the petitioner is oblivious of it. Although copies of the said agreements are not placed on record by any of the parties, the learned counsel appearing for the petitioner, during the course of hearing, did produce a copy of the agreement in respect of the work "widening of existing 2 lane to 4 lane pavement from km 326.660 to 330.150 on NH-39 (Imphal-Moreh Section)" for perusal by this court. On perusal of it, it is evident that the said agreement is signed between the Addl. Chief Engineer-I, PWD, Manipur and the petitioner and it appears that the other agreement in respect of the work "Strengthening existing two lane pavement from 287-304 km including widening of formation from 294-304 km on NH-39 (NH- 2: Mao-Maram Imphal Section) is also signed in the same manner. It may be noted that it is nowhere mentioned in the said agreement that it is signed by the Addl. Chief Engineer-I, PWD, Manipur either for and on behalf of the Chief Engineer (NER) or on the authority given by the Chief Engineer (NER). But the petitioner has signed the agreement with open eyes without any objection being raised by it. One aspect to be noted is that from the day the said agreements having been signed, it is the Addl. Chief Engineer-I who has taken all appropriate actions towards the execution of the said works. Even prior to signing the agreement, the Asst. But the petitioner has signed the agreement with open eyes without any objection being raised by it. One aspect to be noted is that from the day the said agreements having been signed, it is the Addl. Chief Engineer-I who has taken all appropriate actions towards the execution of the said works. Even prior to signing the agreement, the Asst. Executive Engineer(NER) vide its letter dated 14-05- 2015 informed the petitioner that the Bank Guarantees be submitted to the Addl. Chief Engineer-I, PWD, Manipur and accordingly, the petitioner did it with the Bank Guarantees being addressed to it. On the day of signing the agreement, it is the Addl. Chief Engineer-I, PWD, Manipur who vide its letter dated 07-09-2015, instructed the petitioner to proceed with the execution of the said work in accordance with the contract documents. At this stage also, it may further be noted that the petitioner has not raised any objection to the notice vide letter dated 07-09-2015 being issued by the Addl. Chief Engineer-I, PWD, Manipur. Moreover, it is the Addl. Chief Engineer-I, PWD, Manipur who got the Bank Guarantees verified from the Manipur Rural Bank and on receipt of the information from the Manipur Rural Bank and in particular, the letter dated 3-9-2016 of the Chairman, Manipur Rural Bank intimating that the said Bank Guarantees were not issued by its Bank, it is the Addl. Chief Engineer-II who invoking the provisions of clause 37 of the ITB, has issued the notice dated 19-09-2016 to show cause as to why the contract be not terminated for the default of the petitioner. The petitioner is aggrieved only by this notice on the ground that the Addl. Chief Engineer-II, PWD, Manipur is not the employer. It may also be noted that the Addl. Chief Engineer-II, PWD, Manipur is a signatory to the said agreements and in view thereof, it is hard to believe that the Addl. Chief Engineer-II, despite having signed the said agreements, cannot enforce the terms of the same by issuing the notice dated 19-09-2016. The petitioner has played hot & cold which is impermissible-on the one hand, the petitioner has happily accepted the notice issued by the Addl. Chief Engineer-I instructing the petitioner to proceed with the execution of works and on the other hand, the petitioner has questioned the authority of the Addl. Chief Engineer-I when it issued the show cause notice. The Addl. Chief Engineer-I instructing the petitioner to proceed with the execution of works and on the other hand, the petitioner has questioned the authority of the Addl. Chief Engineer-I when it issued the show cause notice. The Addl. Chief Engineer-I or II as the case may be, while issuing the said notices, has exercised the power in its capacity as the signatory or the employer. The conduct of the petitioner also can be said to have admitted the fact that the Addl. Chief Engineer-II is the employer. In the facts and circumstances, this court is the view that there is nothing wrong in issuing the notice dated 19-09-2016 by the Addl. Chief Engineer-II, PWD, Manipur and at the most, it can be said to be irregular which has been cured and not illegal. There is no clause in the agreement to the effect that even though the Addl. Chief Engineer-II, PWD, Manipur has signed the agreements, it has no authority to issue such notice. Moreover, the Ministry of Road Transport & Highways vide its letter dated 17-10-2016 has reconfirmed the Addl. Chief Engineer-II, PWD, Manipur to be the employer of the work contracts retrospectively from the date of issuing the letter of acceptance. 9. In view of the above and for the reasons stated herein above, the instant writ petitions fail and are accordingly dismissed with no order as to costs.