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2017 DIGILAW 93 (CHH)

Banowarillal Agarwalla Pvt. Ltd. v. State of C. G.

2017-02-21

ASHOK KUMAR PANDA, T.P.SHARMA

body2017
ORDER : ASHOK KUMAR PANDA, J. 1. The petitioner/claimant has filed this petition under section 7 of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983 (in short the Adhiniyam, 1983) for an award of Rs. 101,95,525/- for work measured by the respondents but payment has not been made, claim for Rs. 44,24,687/- claiming as incentive bonus, claim for Rs. 23,70,052/- alleged to have retained by the respondents from the bills of the claimant for maintenance of the road, claim for Rs. 1,95,114/- retained by the respondents on account of royalty charges, claim for 3.24,553 retained from the bills in the name of extra deposits; claim for Rs. 23,69,877/- said to have been retained by the respondents from the bills of the claimant on the score of performance guarantee; claim for Rs. 30,65,045/- as loss of profit, claim for Rs. 20,00,000/- as over head expenditure, claim for Rs. 34,92,279/- as interest on the amount claimed at the rate of 14% per annum total amounting to Rs. 284,37,132/-. Facts not in dispute are that a work contract agreement was entered by and between the petitioner and respondents vide agreement No. 17/DL/2006-07 for construction of Bilaspur Mopka Road with construction of CDs. in 6.60 kilometre length. The tender amount was Rs. 908,56,000. Work order was given to the petitioner on 23.05.2006 vide work Order No. 6068 dated 23.05.2006. The stipulated period for completion of work was 12 months excluding rainy season. Thus, the work was to be completed by 15.02.2008. The work was not completed even within the extended period. The work contract was finally terminated by the respondents on 15.04.2009. 2. According to the petitioner, the petitioner had mobilised men power and machines power at the site just after receipt of the work order, and had commenced the work but, the work could not be completed as the respondents failed to discharge their contractual obligation. According to the petitioner, the respondents were required to provide the work site free from all encumbrances to the petitioner, whereas, there were number of impediments and hindrance such as electric poles, transformers, water supply pipe lines were not removed further, the work site was encroached by the villagers, which were not vacated despite repeated communication on the part of petitioner. Since, the cause of delay was purely attributable to the respondents, thereby, terms of contract were violated by the respondents. Since, the cause of delay was purely attributable to the respondents, thereby, terms of contract were violated by the respondents. However, the respondents arbitrarily and illegally terminated the contract and illegally retained the amount deposited by the petitioner and retained the amounts which were deducted from the bills. After termination of contract, the petitioner had invoked clause 28 of the contract agreement and had approached to the Superintendent Engineer, and, thereafter, to the Chief Engineer by filing an appeal but his request to settle dispute and appeal were not responded. Hence, this petition. 3. The respondents entered appearance and have contested the claim by filing written statement. The respondents have pleaded that the electric poles, transformer were removed from work site before 15th May, 2008 and time was extended so that petitioner could complete the work but, petitioner had never been serious and willing to complete the work. Therefore, the contract was terminated but, that order of termination was revived at the request and assurance of the petitioner to the effect that he would complete the work by June 2008. The petitioner had executed only 10 percent of the work by the end of May 2008 which clearly shows that he had not shown his willingness to execute the work and, therefore, ultimately the contract was lawfully terminated on 15.04.2009. Payment was made for the work the petitioner had executed. Since, the work executed by the petitioner was not up to the mark/standard an amount of Rs. 10,27,799/- which was already paid to the petitioner, it is therefore, the amount was adjusted from this security deposit and performance guarantee. The petitioner is not entitled for any relief which he has sought from this tribunal. 4. Both the parties led their documentary and evidence, so as to substantiate their respective claims. We have heard arguments of the counsel appearing for the parties and perused the record. 5. Learned counsel appearing for petitioner argued that as per clause 2 of the agreement (Article-A). The period of completion of work would start after one month of the work order. We have heard arguments of the counsel appearing for the parties and perused the record. 5. Learned counsel appearing for petitioner argued that as per clause 2 of the agreement (Article-A). The period of completion of work would start after one month of the work order. He has further submitted that the cause for delay in completing the work was purely attributable to the respondents only high tension electric lines, transformers were to be shifted by the respondents and lands which were encroached were to be removed by the respondents but, the respondents failed to do so, and thus, they did not discharge their contractual obligation by not providing clear work site to the petitioner. For these reasons time was extended without imposing any penalty. He has further submitted that since the time was extended, in this contract, the time was not the essence of contract and, therefore, the contract could not be terminated on account of not completing the work within the given period. The petitioner had applied for extension of time vide Ex.P-23 but the request was not responded. Learned counsel has further argued that the order of termination contract by the respondents is illegal, in view of the observations made by the Supreme Court in M/s. Hind Construction Contractors by its sole proprietor Bhikamchand Mulchand Jain (Dead) by L.Rs. vs. State of Maharashtra, AIR 1979 SC 720 , M/s. Aroson Enterprises Ltd. vs. Union of India and Another, AIR 1999 SC 3804 , Dwaraka Das vs. State of Madhya Pradesh and Another, AIR 1990 SC 1031 , Mc Dermott International Inc. vs. Burn Standard Co. Ltd. and Others, 2006 Arb. W.L.J. 625 (SC) and Bank of India vs. K. Mohandas and Others, (2009) 5 SCC 313 . 6. Learned counsel appearing for the respondents, on the other hand, argued that pipes, electric poles and transformer were removed by 15.05.2008. The contract was rescinded earlier which was revived, at the request and assurance by the petitioner that he would complete the work by 15.06.2008. He further submitted that the material used by the petitioner in the work executed was found sub-standard, hence, 102.775 lacs was adjusted. As per clause 5.2 of the agreement the petitioner is not entitled for incentive bonus as the work was not completed. The petitioner did not make payment of royalty charges to the State Government for the material used by him. As per clause 5.2 of the agreement the petitioner is not entitled for incentive bonus as the work was not completed. The petitioner did not make payment of royalty charges to the State Government for the material used by him. He had also not filed the testing report. He has further argued that judicial member and technical member had inspected the work and they found the work was not up to the mark. He further pointed it out that the petitioner had not invoked clause 28 of the agreement before invoking jurisdiction of this tribunal as the copies filed by the petitioner showing that appeal was filed before the Chief Engineer is suspicious as there is no endorsement of receipt of the appeal by the office of the Chief Engineer. 7. The point arises for determination is as to whether the petitioner/claimant was refrained from executing the work for adequate, sufficient or bona fide reasons, further whether the order of termination made by the respondent was not proper? 8. Initially, as per the work contract, the work was to be completed within a span of 12 months excluding rainy season, that is till 12.02.2008. The period of contract dragged on till the date of termination of contract, that is 15.04.2009, which goes to show that about 14 months more was in the hands of the petitioner to execute the work. According to the petitioner, the respondents did not remove the hindrance at the work site, that is why the petitioner was unable to execute the work. But, upon perusal of the pleadings of the respondents and documents, which are not controverted by the petitioner, show that electric poles, transformer and pipe lines were removed/shifted before 15.05.2008, even thereafter the petitioner had 11 months' time to execute the work. 9. The respondents have filed Ex.D-7, Ex.D-9, Ex.D-15, Ex.D-23, Ex.D-27, Ex.D-28 and Ex.D-29. Ex.D-7 is a letter by Executive Engineer to the petitioner wherein it is stated that the petitioner at the point K.M. 2100 where culvert is to be constructed has dug the earth out and has created huge pit and the pit has been left unattended since two months. The construction of culvert has been stopped. Ex.D-7 is a letter by Executive Engineer to the petitioner wherein it is stated that the petitioner at the point K.M. 2100 where culvert is to be constructed has dug the earth out and has created huge pit and the pit has been left unattended since two months. The construction of culvert has been stopped. Ex.D-9 is a letter dated 28.02.2007 from Executive Engineer to the petitioner, wherein the contents of Ex.D-8 has been reiterated and was stated that the petitioner has removed the bitumen level of the road and has stopped the work, questioning when the concrete work was not required to be done over the road then why the bitumen surface was removed. Ex.D-15 is letter dated 18.11.2008 written by the Executive Engineer to the petitioner wherein it was stated that the work has been stopped for about one month and on being inspected, it was found that number of pits have been formed and left unattended. Apart from this, the work executed is not of the standard prescribed. Ex.D-23 is written to the petitioner requesting therein to the petitioner to remove the earth and sand, heaped in pile by the sides of the road, which may cause casualty and if this is not removed by the petitioner then the same work would be done by the department at the cost of petitioner. 10. Ex.D-27 is a communication from Artifact Project Limited, a consulting agency engaged in the instant work contract, to the Executive Engineer in respect of sub standard quality of work executed by the petitioner, requesting thereby, not to take any panel against the agency for willful negligence of their instruction by the contractor. Upon perusal of these documents show that the petitioner was not executing the work in proper way. The progress of the work was extremely slow. That apart, the work, which was executed by the petitioner; was found of sub-standard. It also appears that the road rigid pavement was to be constructed with M-40 grade of cement, the grade containing 43 grade OP cement but the contractor had executed construction of rigid pavement by using M-25 grade as against M-40 grade (Ex.D-29). 11. From above it also is clear that the petitioner had been repeatedly requested to expedite the work and remove the defects and to use material of standard quality as per the terms of contract. 11. From above it also is clear that the petitioner had been repeatedly requested to expedite the work and remove the defects and to use material of standard quality as per the terms of contract. But the petitioner has not filed any documentary evidence or oral evidence to contradict these documents, mentioned above. The petitioner has also not led any evidence to show that he had been executing the work strictly adhering to the standard provided in the contracts nor had responded the communications of the respondents. On the contrary, it appears from the documents filed by the respondents that the petitioner had created largish pits by digging the road and had left the pits unattended and, the very fact was brought to the notice of the petitioner. The petitioner had also removed or extirpated the bitumen level of roads, for no reason and had left the road unattended thereby, causing inconvenience to people at large. This fact was also communicated to the petitioner. But there is nothing on the record to show that the petitioner had either responded the communications or made any effort to cure the defects. 12. The petitioner has not led any evidence to substantiate that he was unable to execute the work on account of any impediments or hindrances. On the contrary, it is found that the petitioner despite having sufficient time after shifting of electric poles, transformer and pipe lines, did not carry out the work. 13. So far as, termination of contract is concerned, learned counsel for the petitioner submits that since the time was not essence of the contract, the contract could not have been terminated on the ground of non-completion of work within the stipulated period. Here, in this case the contract was not terminated on the sole ground of non execution of the work within the stipulated period, initially, scheduled at the time of entering into contract agreement. Had it been so, the time for completion of work would not have been extended by the respondents. Materials available on the record, on the other hand, show that the petitioner was negligent in carrying out the work. They had left the work in such a condition which would have been dangerous/harmful to the public at large and further, the material, which were being used by the petitioner in executing the work was of sub-standard. Materials available on the record, on the other hand, show that the petitioner was negligent in carrying out the work. They had left the work in such a condition which would have been dangerous/harmful to the public at large and further, the material, which were being used by the petitioner in executing the work was of sub-standard. It is pertinent to mention here that the site was inspected by Mr. C.B.S. Patel, the then judicial member and Mr. P.S. Kshatri, the then technical member of this Tribunal and have filed their inspection report. The members have reported that number of cracks were found developed on the road and number of pits were found on the road. The petitioner has not challenged this report, which indicates that whatever the work, the petitioner had executed was not up to the mark of standard. 14. In M/s. Hind Construction Contractors vs. State of Maharashtra, AIR 1979 SC 720 (supra) and McDermott International Inc. vs. Burn Standard Co. Ltd. 2006 Arb. W.L.J. 625 (SC) (supra). The Hon'ble Supreme Court has emphasised upon as to when the time can be treated as essence of contract and has held that when the time is not essence of the contract, the contract cannot be rescinded for non completion of work within stipulated period. Admittedly, here in the instant case, time is not the essence of the contract as the time has been extended by the respondents twice. Since the contract has not been terminated only on the ground of non execution of work within time, it is therefore benefits of the observations made in the above referred cases cannot be extended to the petitioner. 15. The petitioner has claimed for over head expenses and in support of his claim learned counsel for the petitioner has placed reliance on McDermott International Inc. vs. Burn Standard Co. Ltd. 2006 Arb. W.L.J. 625 (SC) (supra). In this case Hon'ble the Supreme Court has observed that what should be method of computation of damages and has discussed the Hudson Formula, Emden Formula and Eichleay Formula. Learned counsel for petitioner submitted that Hudson Formula would apply in the instant case. He further relying upon Dwarka Das vs. State of Madhya Pradesh and Another AIR 1990 SC 1031 (supra) argued that the respondents have illegally rescinded the contract, therefore, the petitioner is entitled for damages as expected profit out of the contract. 16. Learned counsel for petitioner submitted that Hudson Formula would apply in the instant case. He further relying upon Dwarka Das vs. State of Madhya Pradesh and Another AIR 1990 SC 1031 (supra) argued that the respondents have illegally rescinded the contract, therefore, the petitioner is entitled for damages as expected profit out of the contract. 16. The documents filed by the respondents reveal that the respondent had deposited the requisite amounts to the Electricity Board and to the Corporation for shifting of the electric poles, transformer and water pipe lines. And all these were shifted by 15.05.2008. But even thereafter the petitioner did not execute the work, and, therefore, the contract was terminated under clause 3 of the contract agreement whereby the respondents were entitled to forfeit the earnest money, security deposit and to recover/deduct/adjust compensation at the rate of 10% of the balance value of work left in complete. Under these circumstances the petitioner is not entitled for over head expenses and loss of profit. Therefore, the benefit of the referred cases cannot be given to the petitioner. 17. So far as, other claims of the petitioner are concerned, from the documentary evidence and affidavit of the respondents it is clear that Rs. 1,02,77,99/- has been deducted from the bills for the reason that the work of the petitioner was not up to the mark. Since the petitioner has not completed the work even within the extended period. Therefore, grant of incentive bonus does not arise. As per clause 5.2 of agreement, incentive bonus could have been granted if the petitioner had executed the work within the stipulated period. 18. The petitioner did not complete the work, despite time was extended twice. In view of the reasons aforementioned the termination of contract cannot be held to be unjust, therefore, the petitioner is not entitled for any claim. 19. According to the petitioner, the petitioner had referred the dispute for settlement to the Superintendent Engineer by invoking clause 28 of the agreement on 27.04.2009 vide (Ex.P-13). Since the SE did not decide the request, an appeal was preferred to the Chief Engineer on 20.07.2009 vide (Ex.P-24). Respondents have denied receipt of Ex.P-24. On being examined Ex.P-13 and Ex.P-24 we found that Ex.P-13 bears seal of the office, receipt number, date of receipt and signature of the recipient. Since the SE did not decide the request, an appeal was preferred to the Chief Engineer on 20.07.2009 vide (Ex.P-24). Respondents have denied receipt of Ex.P-24. On being examined Ex.P-13 and Ex.P-24 we found that Ex.P-13 bears seal of the office, receipt number, date of receipt and signature of the recipient. But Ex.P-24, on the other hand, though bears seal of the office but receipt number, date of receipt is not mentioned. It is also not clear as to who had received the appeal. Since, respondents have denied this document, therefore, it was incumbent upon the petitioner to prove that he had preferred an appeal before Chief Engineer and the office of Chief Engineer had received the appeal but took no action on his appeal. But the petitioner has not led any evidence in this respect. Under these circumstances, we are unable to hold that the petitioner had preferred an appeal before the Chief Engineer. Which lead us to arrived at a conclusion that the petitioner has not complied with the provision of clause 28 of the agreement which was imperative upon the petitioner to comply with, before filing reference petition under Section 7 of the Act. In view of the above, the petition has no substance and being devoid of merits, it deserves to be dismissed. 20. The petition is dismissed with cost accordingly. 21. The petitioner shall bear its own cost and shall also bear the cost of respondents. 22. Memo of cost be drawn up accordingly.