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Jharkhand High Court · body

2018 DIGILAW 1112 (JHR)

Bharat Drilling and Foundation Treatment Pvt. Ltd. v. Union of India, through secretary, Ministry of Human Resource Development

2018-05-15

RAJESH SHANKAR

body2018
JUDGMENT : The present writ petition has been filed for quashing letter no.CUJ/P122 dated 21.12.2016 (Annexure-8 to the writ petition) issued under the signature of the Registrar (I/C), Central University of Jharkhand (in short ‘CUJ’), whereby it has been informed that pending payment of the petitioner has been withheld as per the direction of the Central Bureau of Investigation, Anti-Corruption Bureau, Ranchi and the payment will be considered once “No objection for release of payment” is received from it. It is also prayed for issuance of direction upon the respondents, particularly, respondent no. 2 to release the outstanding amount of Rs.11.24 crores to the petitioner against the work done by it along with penal and compensatory interest @ 18% per annum with effect from the date on which the said amount fell due. 2. The factual background of the case, as stated in the writ petition, is that pursuant to the Notice Inviting Tender (NIT) No.CUJ/OSD(Project)/2011-12/1012 dated 22.10.2011 issued by the CUJ, the petitioner got empanelled in Group-C category. The empanelled contractors were advised to submit their rates for undertaking construction works (Civil and Electrical) based on Delhi Schedule of Rates of the year 2007 (DSR-2007). The petitioner quoted the rate 58% above the DSR-2007. However, it was asked by the respondent-University to reduce the rate 54% above the DSR-2007, which was accepted by the petitioner. Thus, two separate agreements were executed between the CUJ and the petitioner for execution of construction work of (288+288) i.e. 576 number of 3 seated rooms of U.G Boys’ Hostel along with dining hall and other allied structures of the CUJ at its permanent campus in Mauja Cheri/Manatu, at a total agreement value of Rs.20.00 Crores (Rs. 10.00 Crores for each agreement). The entire work was completed with strict adherence to all the quality norms within the scheduled time and the engineers inspected the building so constructed and recorded their satisfaction in the site order book. The building was also maintained up to Defect Liability Period, and the petitioner continuously requested the respondent-CUJ to take over the possession of the building but it failed to take over the possession of the same. The building was also maintained up to Defect Liability Period, and the petitioner continuously requested the respondent-CUJ to take over the possession of the building but it failed to take over the possession of the same. Subsequently, an FIR was lodged by the S.P/HOB, CBI, ACB Ranchi on 30.10.2014 alleging, inter alia, that the then Vice-Chancellor and other employees of CUJ had connived with contractors/firms/companies in respect of allotment of work for construction of building and infrastructure at the permanent campus of CUJ at Cheri-Manatu Ranchi. It was further alleged that works of similar nature were allotted to different categories of contractors at different rates which caused wrongful loss to CUJ and correspondingly wrongful gain to the accused persons. In the said case, charge-sheet has also been submitted alleging that the contractor in Group-D was awarded the work at 49% above DSR-2007, whereas similar works were awarded to the contractors in Group-C at 54% above DSR-2007 and to the contractors in Group-B at 56% above DSR-2007 which caused a total loss of Rs.3,56,66,439/- to the CUJ. It has been alleged against the petitioner that an amount of Rs.43,52,503/- has been paid in excess to it. The petitioner received a letter dated 21.12.2016 from the respondent-CUJ through its Registrar (I/C) whereby it has been informed that, on the direction of the CBI, ACB, Ranchi, the pending payment of the petitioner has been withheld and the same will be processed once ‘No Objection’ is received from the CBI. 3. The learned senior counsel for the petitioner submits that non-release of the payment has broken the financial backbone of the petitioner inasmuch as the petitioner has been facing tremendous pressure from the market creditors and the bankers as the petitioner had purchased materials from the suppliers on credit and had taken loan from the bankers for working capital. It is also submitted that the release of payment against the work done has to be made as per contractual stipulations or on the principle of “Quantum Meruit”. The payment due to the petitioner against the work done cannot be withheld merely because the CBI has lodged a prosecution against the petitioner and others on the allegation of causing wrongful loss to CUJ by quoting a higher rate than those quoted by other contractors empanelled in different groups. The payment due to the petitioner against the work done cannot be withheld merely because the CBI has lodged a prosecution against the petitioner and others on the allegation of causing wrongful loss to CUJ by quoting a higher rate than those quoted by other contractors empanelled in different groups. It is also submitted that withholding of payment due to the petitioner on the allegation levelled against it is not under due process of law, as neither the stipulation of the contract under which the work was executed, prohibits payment on such ground nor this issue has been adjudicated by any competent court of law. The CBI has no privity of contract entered between the petitioner and the CUJ. Therefore, CUJ cannot avoid payment under the agreements citing excuse of purported direction of the CBI to withhold payment of the petitioner. The respondent-CUJ or even the CBI does not dispute that the works under the agreements have been completed by the petitioner within the stipulated time frame under the supervision and to the satisfaction of the engineers of CUJ and a certificate of completion has also been issued by the CUJ in favour of the petitioner to that effect. The payment due to the petitioner cannot be postponed indefinitely as the criminal prosecution lodged by the CBI may take a long time in the court of law to be adjudicated and it may have to travel to the higher forums to attain its finality. The petitioner has also served a legal notice dated 26.09.2017 on the respondent- CUJ, but till date its due payment has not been released by the respondent no. 2. 4. The learned counsel appearing on behalf of the respondent-CUJ submits that the University is presently running in a temporary campus, and as such, it also requires its permanent campus to be shifted to the constructed buildings. Thus, the University sought a clarification from CBI for release of fund and taking over the buildings, however, the CBI vide letter dated 16.01.2015 advised the University not to make payment to any contractor. It is further submitted that in the charge-sheet, the CBI has alleged conspiracy between the University officials and 8 contractors for putting the University to wrongful loss and corresponding gain to the private parties/contractors. It is further submitted that in the charge-sheet, the CBI has alleged conspiracy between the University officials and 8 contractors for putting the University to wrongful loss and corresponding gain to the private parties/contractors. It is further submitted that the CBI vide letter dated 17.08.2017 has advised the CUJ to take its own decision in the light of its findings in the investigation. It is also submitted that the entire documents relating to the construction work at permanent campus were seized by the CBI for investigation. The petitioner’s documents were also amongst the documents seized by the CBI which include measurement book also, which are vital for ascertaining the amount of work certified by the engineers of CUJ. Since the buildings were constructed during the period 2011-12 and nearly 6 years have elapsed since then, the respondents are exploring the possibility of getting the quality of the buildings checked by an independent agency. It is also submitted that during the course of investigation by the CBI, the UGC/MHRD stopped the release of the fund to the CUJ under capital head for the reason that unless the hurdle is cleared, no payment can be made. 5. Heard the learned counsel for the parties and perused the materials available on record. The petitioner was allotted the work of construction of Boys’ Hostel and the said work is said to have been completed. However, as per the petitioner, an amount of Rs.11.24 Crores is due to be paid to it against the work done. The respondent-CUJ, in its counter affidavit, has stated that the payment could not be made due to objection raised by the CBI. It has also been stated that subsequently the CBI vide, letter dated 17.08.2017 has advised the CUJ to take its own decision in the light of its findings in the investigation. It has been submitted on behalf of the CUJ that since more than 6 years have elapsed from the construction of the building, its quality is required to be checked by an independent agency. On perusal of the record it appears that in view of the letter of the CBI, no decision has yet been taken by the respondent-CUJ in respect of release of the dues to the petitioner. Moreover, UGC/MHRD has stopped the release of fund to the CUJ under the capital head. On perusal of the record it appears that in view of the letter of the CBI, no decision has yet been taken by the respondent-CUJ in respect of release of the dues to the petitioner. Moreover, UGC/MHRD has stopped the release of fund to the CUJ under the capital head. The charge-sheet has been submitted by the CBI against the petitioner-firm for a wrongful gain of Rs.43,42,503/- and corresponding loss of the same to the CUJ. 6. In the case of Joshi Technologies International Inc. v. Union of India, reported in (2015) 7 SCC 728 , it is held as under:- “69. The position thus summarised in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, it can refuse to exercise. It also follows that under the following circumstances, “normally”, the Court would not exercise such a discretion: 69.1. The Court may not examine the issue unless the action has some public law character attached to it. 69.2. Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said mode of settlement, particularly when settlement of disputes is to be resorted to through the means of arbitration. 69.3. If there are very serious disputed questions of fact which are of complex nature and require oral evidence for their determination. 69.4. Money claims per se particularly arising out of contractual obligations are normally not to be entertained except in exceptional circumstances. 70. Further, the legal position which emerges from various judgments of this Court dealing with different situations/aspects relating to contracts entered into by the State/public authority with private parties, can be summarised as under: 70.1. At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness. 70.2. State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practise some discrimination. 70.3. At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness. 70.2. State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practise some discrimination. 70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. In such cases the Court can direct the aggrieved party to resort to alternate remedy of civil suit, etc. 70.4. Writ jurisdiction of the High Court under Article 226 of the Constitution was not intended to facilitate avoidance of obligation voluntarily incurred. 70.5. Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business. 70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages. 70.7. Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if it can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice. 70.8. 70.8. If the contract between private party and the State/instrumentality and/or agency of the State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitution of India and invoking its extraordinary jurisdiction. 70.9. The distinction between public law and private law element in the contract with the State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract, this Court has maintained the position that writ petition is not maintainable. The dichotomy between public law and private law rights and remedies would depend on the factual matrix of each case and the distinction between the public law remedies and private law field, cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions under Article 226 of the Constitution of India to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision-making process or that the decision is not arbitrary. 70.10. Mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirements of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness. 70.11. The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. 71. 70.11. The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. 71. Keeping in mind the aforesaid principles and after considering the arguments of the respective parties, we are of the view that on the facts of the present case, it is not a fit case where the High Court should have exercised discretionary jurisdiction under Article 226 of the Constitution. First, the matter is in the realm of pure contract. It is not a case where any statutory contract is awarded.” 7. In the aforesaid case, the Hon’ble Supreme Court in para 69.4 has specifically held that money claim under the extra ordinary writ jurisdiction can be entertained only in exceptional circumstances. Otherwise also from the facts of the case, it appears that all the documents relating to the concerned work have been seized by the CBI and in the meantime, the UGC/Ministry of Human Resources Development Department, Government of India has stopped the release of fund to the respondent-CUJ under capital head. The respondent-CUJ has also taken a stand that the building is about six years old and before releasing the payment, the quality of the construction is required to be checked by an independent agency. Under the aforesaid circumstance, the amount claimed by the petitioner cannot be said to be an admitted dues and as such no writ of mandamus can be issued at this stage for releasing the outstanding amount in favour of the petitioner. 8. However, the respondent-CUJ is at liberty to take its own decision in this regard in terms with the letter dated 17.8.2017 issued by the CBI. 9. The writ petition is, accordingly, disposed of. 10. I.A. No.2349 of 2018 also stands disposed of.