Research › Search › Judgment

Madhya Pradesh High Court · body

2017 DIGILAW 915 (MP)

Anil Kumar and Company v. State of M. P.

2017-08-18

S.K.AWASTHI, SANJAY YADAV

body2017
JUDGMENT : SANJAY YADAV, J. Being aggrieved by demand notice dated 31-12-2016 for recovery of Rs. 225.82 lakhs, petitioner has filed this writ petition for its quashment. 2. Having bid the lowest in response to NIT dated 25-2-2005 petitioner was awarded the works contract for construction of Road New Flexible pavement including cross drainages on Karariya Shamshabad bifurcated from K.M. 16/2 to Nathanpur-Karrakhedi-Sherpur-Mundra-Nateran road length 16.5 K.M. with estimated cost of Rs. 4,46,82.00. The work was to be completed within 11 months from the issuance of work order. The work order was given on 16-5-2005. An agreement No. 8/DL/2005-06 was executed. As the work was not completed within time, 6th and 7th running bills were withheld and the measurement of work done by the petitioner was taken. Petitioner, however, in Paragraph 5.3 of the petition alleges that the measurement of quantity of work has wrongly been recorded. However, petitioner apparently has not raised any dispute in respect thereof. Be that as it may. That subject to right to recover the lose occasioned to the Revenue, extension was granted to complete the work till 3-12-2007 vide communication dated 18-7-2007. As the work could not be completed by 3-12-2007, further extension up to 30-6-2008 was sought by the petitioner vide its communication dated 20-12-2007. The extension sought was not acceded to; and the contract was terminated on 25-3-2008 with an intimation to the petitioner that the fresh NIT shall be issued at the Risk and Costs of the petitioner. That NIT for remaining work was issued on 9-6-2008. 3. Pertinent it is to note that the petitioner did not challenge the termination of contract, but challenged the issuance of fresh NIT vide Writ Petition No. 2805/2008. In said writ petition, an interim order was passed on 27-6-2008, whereby respondents were directed to appoint an officer equivalent to the post of Executive Engineer to record the measurement of the work done by the petitioner prior to the issuance of work order. That, the NIT dated 9-6-2008 was not acted upon; another NIT was issued on 11-1-2011. In said writ petition, an interim order was passed on 27-6-2008, whereby respondents were directed to appoint an officer equivalent to the post of Executive Engineer to record the measurement of the work done by the petitioner prior to the issuance of work order. That, the NIT dated 9-6-2008 was not acted upon; another NIT was issued on 11-1-2011. It is noticed at this stage that, the petitioner though came to have the knowledge of order dated 25-3-2008, which fact is gathered from the record of W.P. No. 2805/2008, which were summoned; and though petitioner sought leave to challenge the same in said writ petition by filing an application I.A. No. 2833/2011, but it appears from the record of said writ petition that he did not pursue the same. Thus, allowed the said order dated 25-3-2008 to attain finality. The text of said order is worth taking note of in present context:— “Office of the Executive Engineer P.W.D. Division (B and R) Vidisha (Notice of Final Action under Clause-3 of the Agreement from ‘A’ and ‘B’) No. 2079/A……/Date 25-3-2008 To, M/s Anil Kumar and Co. E-17, Brij-Nagar-Shujalpur Distt. Shajapur (M.P.) Sub.: 1. Agreement No. 8/DL/2005-06 2. Name of work construction of road and humepipe on Karariya, Shamshabad KM 16/2 to Nathanpur-Karrakhedi, Sherpur-Mundra-Nateran road L-16.65 K.M. Dear Sir, Where as under clause 3 of the aforesaid agreement the Engineer in charge shall have the powers to take action under sub-clause 3(c) in the event of Delay in the execution of the aforesaid work by the contractor so that in the opinion of the Engineer in Charge (which shall be final and binding) on the contractor. You were served with a show cause notice in this regard under this office No. 6886 date 4-8-2007 which has not been replied to the satisfaction of the Engineer in charge by the specified in the show cause notice. Therefore, under powers delegated to me under sub-clause 3(c) I Sanjay Khande Engineer in charge for the aforesaid work under the aforesaid agreement for and on behalf of the Government of Madhya Pradesh hereby. Therefore, under powers delegated to me under sub-clause 3(c) I Sanjay Khande Engineer in charge for the aforesaid work under the aforesaid agreement for and on behalf of the Government of Madhya Pradesh hereby. Take our such part of the work out of your hand, as remains unexecuted for giving it to another agency to complete the same in which case expenses which may be incurred in excess of the sum which would have been paid to you if the whole work had been executed by you in terms of the agreement (the amount of excess certified in writing by the Engineer In charge shall be final and conclusive) shall be borne and paid by you on demand or may be deducted from any money due to you whatsoever or from security deposit or the proceeds of sales thereof or sufficient part thereof the as the case may be without prejudice to the right of the Government to realize the said excess amount by suit or otherwise you are also hereby served with notice to the effect that the work executed by you will be measured on 10.00 A.M. 24-4-2008 and for which you are asked to attend for joint measurement, failing which the work will be measured by the department unilaterally in your absence and result of measurement will be final and will be binding on you. 2. This is without prejudice to Governments right to take action under any other clauses or sub-clauses of the agreement and to realize Government dues and losses and damage whatsoever under such clauses or sub-clause. Yours Faithfully -Sd/- (Sanjay Khande) Executive Engineer P.W.D. (B and R) Division, Vidisha For and on behalf of the Governor M.P. Endt. No.………………/A/Date…………………………… Copy forwarded to:— (1) Chief Engineer, Capital Zone, Satpura Bhawan Bhopal. (2) Superintending Engineer P.W.D. Circle No. 2, Bhopal (3) Sub-Divisional Officer Vidisha Sub-Division Vidisha. -Sd/- (Sanjay Khande) Executive Engineer P.W.D. (B and R) Division, Vidisha” 4. Yours Faithfully -Sd/- (Sanjay Khande) Executive Engineer P.W.D. (B and R) Division, Vidisha For and on behalf of the Governor M.P. Endt. No.………………/A/Date…………………………… Copy forwarded to:— (1) Chief Engineer, Capital Zone, Satpura Bhawan Bhopal. (2) Superintending Engineer P.W.D. Circle No. 2, Bhopal (3) Sub-Divisional Officer Vidisha Sub-Division Vidisha. -Sd/- (Sanjay Khande) Executive Engineer P.W.D. (B and R) Division, Vidisha” 4. That, Writ Petition No. 2805/2008 was disposed of on 8-12-2011 after taking note of the fact that the respondent vide communication dated 21-7-2010 had informed that petitioner, Executive Engineer, Raisen and Sub-Divisional Officer inspected the spot and substantially verified the work done by the petitioner, with the direction that:— “That the Executive Engineer of the Concerned division and Sub-Divisional Officer and two officers from M.P. Rural Road Development Authority on the expenses which shall be paid by the petitioner shall inspect the work of the petitioner and also record the measurement in the measurement book and for the aforesaid purpose the petitioner shall also be informed about the date on which he or his representative shall present at the time of inspection. This exercise be completed within a period of four weeks from the date of receipt of the copy of the order.” 5. It is contended on behalf of petitioner that the respondent did not comply the order passed in W.P. No. 2805/2008; whereon a request was made to Chief Engineer, Madhya Pradesh Rural Road Authority, which led him to write a letter to the Executive Engineer on 5-1-2013 to comply the order in writ petition. It is however, borne out from the material on record that the Executive Engineer, Public Works Department, Division Vidisha vide letter dated 3-5-2012 had informed the Managing Director and the Assistant Manager, MPRRDA that the measurement as directed vide order passed in writ petition has already been taken. 6. In these factual background, the petitioner calls in question the demand notice on the ground that the demand is raised without adjudication. Petitioner relies on the decision by Full Bench of this High Court in B.B. Verma v. State of M.P., 2007 (4) M.P.L.J. (F.B.) 610, wherein it is held that:— “16. We may now deal with the contention of Mr. Petitioner relies on the decision by Full Bench of this High Court in B.B. Verma v. State of M.P., 2007 (4) M.P.L.J. (F.B.) 610, wherein it is held that:— “16. We may now deal with the contention of Mr. Shukla that under Clause 4.3.3.3 of the conditions of contract, the Executive Engineer or the Divisional Officer does not assess and recover any damages but expenses which may be incurred in excess of the sum which would have been paid to the original contractor in case the unexecuted part of the work is completed by another contractor. This contention of Mr. Shukla overlooks the fact that the additional expenses incurred by the State Government for getting the unexecuted part of the work completed by another contractor which are sought to be recovered under Clause 4.3.3.3 are really in the nature of damages. Section 73 of the Indian Contract Act, 1872 provides that when a contract is broken, the party who suffers by such breach is entitled to receive from the party who has broken the contract compensation for any loss or damage caused to him thereby which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it but such compensation will not be given for any remote and indirect loss or damage sustained by reason of the breach. Where therefore a contractor does not complete the work entrusted to him under the contract and the unexecuted part of the work is entrusted to another contractor for completion and the Government incurs additional expenses for having the work completed by another contractor over and above the expenses which have been paid to the original contractor, the additional expenses sought to be recovered by the Government are nothing but damages within the meaning of section 73 of the Indian Contract Act, 1872. The contention of Mr. Shukla that the additional expenses sought to be recovered under Clause 4.3.3.3 of the conditions of contract are not really damages is therefore misconceived.” 7. Respondents on their turn have refuted the contention that the demand is raised without adjudication. The contention of Mr. Shukla that the additional expenses sought to be recovered under Clause 4.3.3.3 of the conditions of contract are not really damages is therefore misconceived.” 7. Respondents on their turn have refuted the contention that the demand is raised without adjudication. It is contended that even before the direction in W.P. No. 2805/2008, at the time after termination of contract on 25-3-2008 and before issuing the NIT for remaining work at the Risk and Costs of the petitioner, the measurement of the work was done before remaining work could be tendered out. It is urged that the petitioner has admitted this fact in paragraph 5.3 that 6th and 7th bill were upheld and measurement of quantity has wrongly been recorded. It is urged that even after the order passed in W.P. No. 2805/2008 measurement of work was further carried out on 8-2-2013 and verification report was furnished, which is brought on record as Annexure R/1. This report, however, records that it could not be ascertained as to how much of the work is done by the petitioner. It is contended that since measurement was carried out in the year 2013 when the work was completed by the Agency who was given the second contract it could not be determined as to how much of the work was done by the petitioner. It is, however, urged that the liability having been determined on the basis of measurement done in the year 2011 and it does not lie with the petitioner to contend that the recovery is effected without adjudication. Certain office notes are relied upon by the respondent. It is also contended that since the dispute arises out of a works contract, the petitioner has remedy to raise the dispute before the Arbitration Tribunal constituted under the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1984. 8. Considered the rival contentions. 9. At the outset, we must express that except extract of clause 3 and 29 of the Agreement 8/DL/2005-06, the said agreement is not brought on record by either of the party. It is, however, borne out from Clause 3 that it provides for action when the work is left incomplete, abandoned or delayed beyond the permitted limit allowed by the Divisional Officer. It is, however, borne out from Clause 3 that it provides for action when the work is left incomplete, abandoned or delayed beyond the permitted limit allowed by the Divisional Officer. It stipulates:— “Clause 3:— In any case in which under any clause or clauses of this contract the contractor shall have rendered himself liable to pay compensation amounting to the whole of his security deposit (whether paid in one sum or deducted by instalments) or committed a breach of any of the rules contained in clause 24 or in the case of abandonment of the work, except due to permanent disability or death of the contractor or any other cause the Divisional Officer on behalf of the Governor of M.P. shall give a notice before 15 days for work costing upto 10.00 lakhs and before 30 days for works costing above Rs. 10.00 lakhs and in the event of the contractor failing to comply with the directions contained in the said notice, shall have power to adopt any of the following courses, as he may deem best in the interests of the Government. (a) To rescind the contract (of which rescission notice in writing to the contractor under the hand of the Divisional Officer shall be conclusive evidence) and in which case the security deposit of the contractor shall stand forfeited and by absolutely at the disposal of Government. (b) To employ labour paid by the works Department and to supply materials to carry out the work or any part of the work, debiting the contractor with cost of the labour and the price of the material (of the amount of which cost and price certificate of the Divisional Officer shall be final and conclusive against the contractor) and crediting him with value of the work done in all respects in the same manner and the same rates as if it had been, carried out by the contractors under the terms of his contract or the cost of the labour and the price of materials as certified by the Divisional Officer, whichever is less. The certificate of the Divisional Officer as to the value of the work done shall be final and conclusive against the contractor. The certificate of the Divisional Officer as to the value of the work done shall be final and conclusive against the contractor. (c) To measure up to the work of the contractor and to take such part thereof as shall be unexecuted out of his, hands and to give it to another contractor to complete in which case any expenses which may be incurred in excess of the sum which would have been paid to the original contractor, if the whole work had been executed by him (of the amount of which excess certificate in writing of the Divisional Officer shall be final and conclusive) shall be borne and paid by the original contractor and may be deducted from any money due to him by Government under the contract or otherwise or from his security deposit or the proceeds of sale thereof or a sufficient part thereof. In the event of any of the above courses being adopted by the Divisional Officer, the contractor shall have no claim to compensation for any loss sustained by him by reason of his having purchased or procured any materials or entered into any agreements or made any advances on account of or, with a view to the execution of the work or the performance of the contract. And in the case the contract shall be rescinded under the provision aforesaid the contractor shall not be entitled to recover or be paid any sum for any work thereto for actually performed under the contractor's bill shall be finalised within three officer will have certified in writing the performance of such work and value payable in respect thereof, and he shall only be entitled to be paid the value so certified. Whenever action is taken under clause 3(a) the contractor's bill shall be finalised up within three months from the date of rescission both in the case of building works and road and bridge works.” 10. Evidently, as the petitioner had failed to complete the work within the extended time till 31-12-2007 led the Executive Engineer exercise the option under Clause 3 who withdrew the work from the petitioner for giving it to another agency to complete the same at the cost of the petitioner vide communication dated 25-3-2008 and called upon the petitioner for joint measurement on 24-4-2008. Admittedly, the petitioner who sought leave to challenge this order by filing I.A. No. 2833/2011 did not pursue the challenge and thus allowed the order dated 25-3-2008 to attain finality. It is also not in dispute that the work left incomplete by the petitioner was got executed from another contractor by inviting fresh NIT at the Risk and Costs of the petitioner. Evidently, said NIT was not interfered with in the W.P. No. 2805/2008. 11. In view whereof, it now does not lie with the petitioner to question the recovery of the amount incurred by the respondent in getting the incomplete work completed through another agency. 12. It is not a case that any damages are being recovered as would warrant further adjudication. As regard to the dispute raised by the petitioner as to measurement. It could not be established by the petitioner with certitude that there was no measurement done by the department prior to termination on 25-3-2008 and after the termination before issuing NIT for completion of remaining work. On the contrary, a communication dated 7-9-2008 which is a part of record of W.P. No. 2805/2008 reveals that the measurements were taken on 6-9-2008, the petitioner, however, was not satisfied with the same. It is further revealed from the record of W.P. No. 2805/2008 that physical verification of work was carried and on 20-7-2010 by a team comprising of Executive Engineer, Public Works Department Division Raisen, Sub-Divisional Officer, PWD Sub-Division Obaidullahganj, Sub-Engineer, PWD, Raisen and Vidisha and the timekeeper. That, the petitioner was aware of these facts is also evident from I.A. No. 7341/2011 filed in said writ petition No, 2805/2008 whereby he sought direction for compliance of order passed on 27-6-2008 and 16-5-2011 in said writ petition. As the petitioner was not satisfied with the said physical verification, thus, it cannot be said that no physical verification of the work done by the petitioner was carried out before issuing NIT for remaining work. That the remaining work having been carried out by different agency at petitioner's Risk and Costs, the petitioner cannot escape the liability to pay the amount incurred. 13. In the case of B.B. Verma (supra) whereon reliance is placed, the facts were different than the facts of the present case. That the remaining work having been carried out by different agency at petitioner's Risk and Costs, the petitioner cannot escape the liability to pay the amount incurred. 13. In the case of B.B. Verma (supra) whereon reliance is placed, the facts were different than the facts of the present case. In said case, the facts were that the agreements of the appellants with the State Government in respect of some public works were terminated by the respondents and orders were issued for recovery and money as per clauses 4.3.3.3 and 4.3.38.1 from the appellants as arrear of land revenue under Madhya Pradesh Land Revenue Code, 1959. Appellants raised dispute before Superintending Engineer contending that the action of Executive Engineer in terminating the agreements and issuing orders of recovery was illegal since when the Engineer had not decided the dispute, the appellants filed an application under section 7 of Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1993 and the applications were pending adjudication by the Arbitration Tribunal when the recovery of the money under Clauses 4.3.3.3 and 4.3.38.1 was issued. In this factual background, learned Full Bench held that under clause 4.3.38.1 or any other similar clause in the condition of contract, the claim against the contractors of payment of sum or money in the contract cannot be recovered unless the dispute is adjudicated. 14. In the case at hand, the action under clause 3 having been initiated and the work having been taken over from the petitioner vide order dated 25-3-2008 and was entrusted to another agency at the Risks and Costs of the petitioner and the petitioner having not challenged the same and the fact that there has been physical verification of the work done by the petitioner, the principle of law laid down in B.B. Verma (supra) is not attracted in present facts situation. 15. Having thus considered we do not perceive any illegality in the action initiated by the respondents to recover the amount incurred by the respondents State of M.P. and its functionaries for completion of work left incomplete by the petitioner. Consequently, the petition fails and is dismissed. Interim order stands vacated.