Research › Search › Judgment

Chhattisgarh High Court · body

2018 DIGILAW 201 (CHH)

B. P. Agrawal v. Chhattisgarh Rural Road Development Agency

2018-04-05

ASHOK KUMAR PANDA, T.P.SHARMA

body2018
JUDGMENT : Ashok Kumar Panda, Member (J) 1. The petitioner a proprietorship organisation has filed this reference petition under Section 7 of the Chhattisgarh Madhyastham Adhikaran Adhiniyam, 1983 (in short the Adhiniyam, 1983) against the respondents for an award of Rs. 51.93 lakhs and Pendente-lite and Post-lite interest on the claim amount. 2. The facts not in dispute are that, the respondents invited tender for construction and maintenance of rural road under Pradhan Mantri Gram Sadak Yojna, Phase VI (year 2006-07) for package No. CG-10-26 for district Korba (C.G.) and this contractual work was awarded to the petitioner, an agreement bearing No. 5/DL/2007-08 (Article "A") was entered into and between the petitioner and respondents on 06/06/2007, work order (Ex. D-3) was issued on 07/06/2007, stipulated period for completion of work was 12 months including rainy season accordingly, the construction of work was to be completed on 18/05/2008, the contract amount for construction of road was Rs. 324.86 lakhs and the cost of maintenance of the road for 5 years from the date of completion of the work was at Rs. 8.49 lakhs, total amounting to Rs. 333.35 lakhs. The construction work could not be completed within the stipulated period, however, it was completed within the extended period and a completion certificate was issued in favour of the petitioner. 3. According to the petitioner the work contained in package No. CG-10-26 was comprised of construction of 4 No. of roads totalling in length of 14.15 Kms. as under:- (a) Balco-Rukbahari-Parsakhola road-7.00 Km. (b) Balco-Ajgarbahar-Rogbahari road-3.20 Kms. (c) Ajgarbahar-Kachhar-Donga Ghat-2.25 Kms. (d) Ajgarbahar-Kachhar-Kodia Ghat-1.70 Kms. There was hindrance put by the Forest Department in execution of work which affected the progress of work considerably and, therefore, the work could not be completed within the original stipulated period. Since, the cause of delay was not attributable to the petitioner, the respondents granted extension of time, vide Ex. P-4 till 15/06/2009. The petitioner completed the work within the extended date of completion and Ex. P-6 a completion certificate was issued by the Competent Authority. The petitioner was required to do maintenance of the roads for a period of 5 years from the date of completion of construction of roads. The petitioner also performed the maintenance work for 5 years. The petitioner completed the work within the extended date of completion and Ex. P-6 a completion certificate was issued by the Competent Authority. The petitioner was required to do maintenance of the roads for a period of 5 years from the date of completion of construction of roads. The petitioner also performed the maintenance work for 5 years. Maintenance period of 5 years expired on 15/06/2014 and after completion of maintenance period the department took over the roads and as such, there was no dispute at all in respect of construction and maintenance in contract of package No. CG 10-26. The respondents vide Ex. P-7 also released the security deposit in favour of petitioner on 13/12/2012. The petitioner had furnished a Bank Guarantee in favour of the respondents for an amount of Rs. 16,67,000/- came to be extended for a further period of 6 months as there was a delay in completion of work. But, the respondents encashed the Bank Guarantee submitted in this package for satisfaction of alleged failure of the petitioner in an another contract under package No. CG-10-31. The petitioner had opposed the encashment of the Bank Guarantee and had also moved an application for an order of stay against encashment of Bank Guarantee before the District Judge, Korba on 02/06/2014 which was not yet decided till the presentation of the instant petition. The petitioner being aggrieved by the illegal actions of respondents invoked their right to Arbitration under clause 24 of agreement and made a quantified claim of Rs. 45.16 lakhs with an interest at the rate of 15% before the competent authority on 02/07/2014 but, there was no response from the respondents to their representation. The petitioner is entitled for Rs. 16.67 lakhs for refund of encashed Bank Guarantee, Rs. 8.49/- for release of payment of bill for maintenance of roads, Rs. 20.00 lakhs as compensation under compensation events at the rate of 6% of the value of work done, Rs. 6.77 lakhs for ante-lite interest at the rate of 10% on claim amount, total amounting to Rs. 51.93 lakhs. 4. The respondents have contested the claims of the petitioner by filing their joint written statement controverting material particulars of the petition inter alia have pleaded that work order was issued on very next day after the execution of agreement. 6.77 lakhs for ante-lite interest at the rate of 10% on claim amount, total amounting to Rs. 51.93 lakhs. 4. The respondents have contested the claims of the petitioner by filing their joint written statement controverting material particulars of the petition inter alia have pleaded that work order was issued on very next day after the execution of agreement. Rainy season was inescapable as the rainy season included in the stipulated period for completion of work. So far as the portion of road passing through forest area was concerned, permission had been accorded by the Forest Department on 15/10/2007 for all the roads which is evident from Ex. D-10(I) to Ex. D-10(IV) and the same was known to the petitioner. In fact, the petitioner was asked by the Forest Department to stop work for two reasons. Firstly, the petitioner had exceeded the approved width of 10 Mtrs of road at many places in forest area and, secondly, while doing so, the petitioner had damaged valuable species of plants being nurtured by the Forest Department in their area. Therefore, the petitioner himself was responsible for the lapse causing stoppage of work and the consequent delay. Stipulated period for completion of work was extended up to 15/06/2009 under clause 27.1 of the agreement vide Ex. D-5, specifically mentioning therein that any kind of compensation will not be payable to the petitioner. Therefore, petitioner is not entitled for compensation under clause 11 (b) or any other clauses of the agreement. It is further stated that the maintenance period for 5 years started after the date of completion i.e. from 16/06/2009 up to 15/06/2014 but neither the routine maintenance was carried out nor bill for routine maintenance was submitted by the petitioner. The Executive Engineer asked the petitioner many a times to carry out the routine maintenance, which was not done during the last 3 years. Consequently, the period for maintenance was extended by 6 months i.e. up to 15/12/2014. Under these circumstances a show cause notice was issued against the petitioner as to why the maintenance should not be carried out departmentally and recovered the cost from the petitioner. But, there was no response from the petitioner. 5. Respondents have further pleaded that, the petitioner did not complete the contracted work of another package No. CG-10-31. Under these circumstances a show cause notice was issued against the petitioner as to why the maintenance should not be carried out departmentally and recovered the cost from the petitioner. But, there was no response from the petitioner. 5. Respondents have further pleaded that, the petitioner did not complete the contracted work of another package No. CG-10-31. Consequently, the contract pertaining to package No. CG-10-31 was terminated under clause 52 of the agreement and, the petitioner was directed to deposit the outstanding due amounting to Rs. 66,49,170/- vide Ex. D-12 as the amount was to be recovered from the petitioner. The Executive Engineer wrote the concerned Bank vide Ex. D-01 for encashment of Bank Guarantee in order to affect recovery for adjustment from the present package No. CG-10-26 under clause 53 of the agreement. It is further stated that an amount of Rs. 95,18,744/- was recoverable from the petitioner. Rs. 48,62,796/- had been recovered including Bank Guarantee on Rs. 16,67,000/-. Thus, balance amount Rs. 46,55,948/- was to be recovered from the petitioner. For the recovery of all these amount, a letter was written to the Collector, Korba vide Ex. D-6. In turn the Collector, Korba wrote to the Tahsildar, Korba to recover the amount of Rs. 46,55,948/- vide its letter dated 26/11/2014. It is further stated that the petitioner has not made a quantified claim. The petitioner has given only summary of claim for Rs. 51.93/-. The petitioner is not entitled for Rs. 16.67 lakhs as refund of amount of encashed Bank Guarantee and release of payment of bill for maintenance of road amounting to Rs. 8.49 lakhs. Petitioner is also not entitled for compensation amounting to Rs. 20.00 lakhs and interest amounting to Rs. 6.77 lakhs. It is further stated that the reference petition is barred by limitation. On these grounds basic rejection of the reference petition. 6. Both the parties led their documentary evidence in order to substantiate their respective claims. We have heard the counsel appearing for the parties and perused the record. We have also perused the written submission filed on behalf of the petitioner, and bullet point submission, submitted by the respondents. 7. The point arises for determination is as to whether the petitioner is entitled for an award of Rs. 51.93 lakhs as classified in different heads under summery of claims of the petition? 8. We have also perused the written submission filed on behalf of the petitioner, and bullet point submission, submitted by the respondents. 7. The point arises for determination is as to whether the petitioner is entitled for an award of Rs. 51.93 lakhs as classified in different heads under summery of claims of the petition? 8. First we take the claims No. 01 which relates to refund of amount of encashed Bank Guarantee amounting to Rs. 16.67 lakhs. It is submitted on behalf of the petitioner that the Bank Guarantee provided in this contract has not been encashed for the default of the claimant in performance of the work of contract. It is submitted on behalf of the petitioner that vide Ex. P-9 the respondents tried to encash the Bank Guarantee which was furnished in connection with the instant contract package. On being opposed by the petitioner the respondents vide Ex. P-11 removed the name of contract package No. CG-10-31 and simply wrote that the Bank Guarantee is being encashed for not doing the work of contract up to standard by the contractor, which goes to show that Bank Guarantee was not encashed for the default of claimant in performance of work contract package No. CG-10-31 but, for the sub-standard work in the package No. CG-10-26. It is further submitted that since the final payment was released by the respondents and deviation amount was also sanctioned in this contract which indicates that there is no question of substandard work in the contract. Further relying on observation made by the Hon'ble Supreme Court in Union of India Vs. Raman Iron Foundry AIR 1974 SC 1265 submitted that since the basic principle of contract is that, each and every contract is an independent contract, therefore, alleged liability of one contract cannot be realised from the another contract. 9. Learned counsel, appearing for the respondents, on the other hand submitted that by virtue of clause 53.1 of the General Condition of the Contract and clause 4.1 of section 4 of the Special Condition of the Contract part-11 the Executive Engineer approached the Bank of Baroda for encashment of Bank Guarantee of Rs. 16.67 lakhs as the amount was due against the petitioner. The petitioner protested and approached the District Judge Korba for grant of stay which proved futile. Ultimately, the Bank Guarantee was encashed in favour of respondents on 02/03.06.2014. 16.67 lakhs as the amount was due against the petitioner. The petitioner protested and approached the District Judge Korba for grant of stay which proved futile. Ultimately, the Bank Guarantee was encashed in favour of respondents on 02/03.06.2014. Therefore, the recovery of amount which was due was legally recovered. 10. It is not in dispute that work package CG-10-31 was awarded to the petitioner and the contract agreement was terminated by the respondents. Respondents moved an application for encashment of the Bank Guarantee furnished in connection with the instant contract vide Ex. P-9 wherein respondents has categorically stated that a Bank Guarantee bearing No. 24119/IGPER001907 dated 04/06/2007 for Rs. 16.67 lakhs in connection with package No. CG-10-26 has been issued by the bank and the concerned contractor did not complete the work of package No. CG-10-31. Consequently, the contract was terminated and the balance work has been awarded to an another agency. Therefore, the amount of Bank Guarantee is to be forfeited. It is true that Ex. P-10 written on the same month i.e. on 27/05/2014. There is no mention of package No. CG-10-31, this makes no difference as the first letter Ex. P-9 written on 06/05/2014 to the bank is quite elaborate and detailed. Thus, it is clear that there was no concealment on the part of respondents while making a request to bank for encashment. 11. The petitioner Mr. Sourabh Agrawal at para 31 of his cross examination admitting the suggestions put by the respondents has deposed that, it is true to say that there was an order of recovery in connection with package No. CG-10-31 for which a reference petition No. 10/2014 is there and for recovery of this a letter was written to the Bank for encashment of Bank Guarantee. On basis of the admission made by the petitioner himself it is established that there was a debt due against the petitioner on the debt. The respondents made an application for encashment of Bank Guarantee which was furnished in connection with instant contract package No. CG-10-26. 12. Now, question arises as to whether the respondents could have recovered the dues from an another contract, in order to consider this issue, it would be appropriate to quote here the relevant clauses of the agreement. Clause 53.1 of the general condition of the contract reads as under:- .......... 12. Now, question arises as to whether the respondents could have recovered the dues from an another contract, in order to consider this issue, it would be appropriate to quote here the relevant clauses of the agreement. Clause 53.1 of the general condition of the contract reads as under:- .......... If the total amount due to the Employer exceeds any payment due to the Contractor, the difference shall be recovered from the security deposit, and performance security. If any amount is still left un-recovered it will be a debt payable to the Employer............ Sub-section-1 of Section-4 part-Il of the Special Conditions of Contract reads under:- ......... or any work claimed by him to have been done under contract and found not to have been executed, the contractor shall be liable to refund the amount of over payment and it shall be lawful for the Government of Chhattisgarh/CGRRDA/Engineer-in-Charge to recover the same from the security deposit of the contractor or from any dues payable to the contractor from the Engineer-in-Charge account........... By invoking these clauses of the agreement, respondents have recovered the debt due of contract package No. CG-10-31 from the contract package No. CG-10-26. 13. The Hon'ble Supreme Court in Union of India Vs. Raman Iron Foundry AIR 1974 SC 1265 (Supra) has held that when there is an obligation to pay a sum of money at a future debt, it is a debt owing to when the obligation is to pay a sum of money in presenti, it is debt due. A sum due would, therefore, mean a sum for which there is an existing obligation to pay in presenti or in other words which is presently payable. Recovery of such sums is a subject-matter of clause 18 according to the heading i.e. the dominant idea running fully entire clause 18 the Hon'ble Supreme Court has held that clause 18 does not lay down the substantive rights and obligation of the parties under the contract. It is merely intended to provide a mode of recovery of a claim for payment of a sum of money arising out of or under the contract. It therefore postulates a claim for a sum which is due and payable, i.e., presently recoverable and may be recovered by the mode therein provided. 14. It is merely intended to provide a mode of recovery of a claim for payment of a sum of money arising out of or under the contract. It therefore postulates a claim for a sum which is due and payable, i.e., presently recoverable and may be recovered by the mode therein provided. 14. Since, from the admission made by the petitioner in his cross examination, it is established that the amount was due and payable the invocation of the clause 53 of the General Condition of the Contract and section 4 of the Special Condition of the Contract appears to be just and proper. Had there been no existing due against the petitioner and the amount would have been recovered to secure the due which may arise in future, then the encashment of Bank Guarantee would not be legal but, in the in the case in hand since there was an existing liability and the petitioner had debt due, the recovery cannot be treated as illegal. 15. With regard to claim No. 02, the petitioner has claimed Rs. 20 lakhs as compensation under compensation events at the rate of 6% of the value of work done. Petitioner has submitted that in this case the petitioner has completed the work in all respects to the satisfaction of the respondents and a completion certificate was granted by the competent authority. The work was completed within the extended date of completion and the extension of time was granted under clause 27.1 of the agreement without any imposition of liquidated damages upon contractor. It is further submitted that clause 27.1 is inter-connected with clause 11 and clause 40.1 (b) of the agreement and by plain reading of these clauses which places the responsibility on the respondent to compensate the payment for delaying the work caused by reasons attributable to the claimant. The extension of time under clause 27 also confers the admission of the respondents of the impediments and hindrances at the site of work and that the respondents failed in providing encumbrance free site to the claimant. 16. Per contra, counsel appearing for the respondents submitted that total length of roads which was to be constructed was 14.15 Kms out of this about 10.31 Km road was under forest zone and the rest of 3.8 Km was Government land. 16. Per contra, counsel appearing for the respondents submitted that total length of roads which was to be constructed was 14.15 Kms out of this about 10.31 Km road was under forest zone and the rest of 3.8 Km was Government land. Forest clearance had been accorded by the Forest Department in time for 5 meters wide road. Later this was revised/increased to width of 10 meters on 15/10/2007. Therefore, this did not hamper execution of work. It is further submitted that there is no evidence of any hindrances/impediments in the petition or in the affidavit filed in lieu of evidence by the petitioner. So far as stoppage of work by the Forest Department is concerned, it is submitted that the petitioner had exceeded the approved width of 10 meters at many places and while doing so the petitioner damaged valuable species of plants. Later, the petitioner was allowed to restart work w.e.f 30/01/2009 with a specific warning that no damage will be caused to the valuable plants. Thus, the petitioner himself was responsible for the laps causing stoppage of work and the consequent delay. 17. Documents filed by the respondents marked and exhibited as Ex. D-10(1) to Ex. D-10(IV) are admitted documents. Ex. D-10(I) dated 15/10/2007 is an order granting permission for execution of work over lands falling under forest zone wherein the Divisional Forest Officer had imposed certain conditions while granting permission. One of the condition is that no trees will be unearth/cut while constructing the road. Ex. D-10(II) is a permission granted by the Divisional Forest Officer whereby in connection with road falling on forest zone crossing Balco Lemaru road to Rokbahari. This permission contains same condition. Similarly, permission order Ex. D-10(III) which relates to road crossing from Kachhar road to Dongaghat bears the same condition. Ex. D-10(IV) relates to forest land from Kachhar road to Kodyaghat, this order has also same condition. Ex. This permission contains same condition. Similarly, permission order Ex. D-10(III) which relates to road crossing from Kachhar road to Dongaghat bears the same condition. Ex. D-10(IV) relates to forest land from Kachhar road to Kodyaghat, this order has also same condition. Ex. P-3(II) and its enclosures filed by the petitioner goes to show that the Secretary Forest Management Committee wrote a letter to the petitioner to the effect that on being inspected the worksite it was found that the petitioner had exceeded the width of the road against the width for which permission was granted by the Forest Department and it also shows that while widening the road the contractor damaged valuable species of plants of the forest land and for this reason the Forest Department had issued an order to stop the work. 18. From these admitted documents it is proved that the work was not stopped by the respondents but owing to breach of condition on the part of contractor the Forest Department had stopped the work for which the petitioner was solely responsible and it is also proved that the petitioner not only had increased the width of the road beyond the permitted width but also damaged the valuable species of plants. So far as extension of time is concerned, the department considering all these facts extended the period of completion of work vide Ex. P-4. After hearing both the parties time was extended with specific condition that no compensation of any kind will be allowed to the petitioner, the petitioner by admitting the condition imposed for granting extension of time carried out the execution of work. Therefore, now the petitioner is estopped from assailing or disputing the condition imposed in granting extension of time. 19. The petitioner, in his cross examination, at para 30 has admitted that the extension of time was granted with condition that no compensation will be allowed. The petitioner has utterly failed to prove that the delay caused in executing the work was caused by the respondents and the cause was purely or anyway attributable to the respondents. On the contrary, it is found that cause of delay was purely attributable to the petitioner and, therefore, the petitioner is not entitled for any kind of compensation for delay in execution of work. 20. In regard to release of payment of Rs. On the contrary, it is found that cause of delay was purely attributable to the petitioner and, therefore, the petitioner is not entitled for any kind of compensation for delay in execution of work. 20. In regard to release of payment of Rs. 8.49 lakhs for maintenance of road, the petitioner has submitted that the maintenance of road for a period of 5 years from the completion of work was done by the claimant without any demur. It is further submitted that after maintaining the road for 5 years the road was handed over to the respondents. 21. Counsel for the respondents submitted that as per agreement maintenance of roads for 5 years was required to be carried out by the petitioner but, the petitioner failed to do so. Therefore, a period of 6 months was extended to facilitate the petitioner, but, the petitioner did not respond. Finally, a show cause notice was issued to the petitioner that as to why the maintenance should not be done departmentally at the petitioner's cost and the respondents maintained the road. Vide Ex. P-6 it is proved, This fact is not in dispute that the petitioner completed the work by the extended date of extension of time i.e. 15/06/2009 and the petitioner was required to maintain the work for a period of 5 years from the date of completion of work. Ex. D-5 filed by the respondents which is an admitted document, shows that the petitioner was not performing work of maintenance of 4 roads under package No. CG-10-26 despite expiry of 3 years and asking the petitioner number a times orally as well as in writing. Therefore, a period of 6 month was extended for the maintenance work and it was directed that the petitioner shall ensure completion of maintenance work prior to commencement of rainy season. The petitioner has not filed any document to show that he had responded to this notice which was served upon him. Ex. D-11 is also admitted by the petitioner which proves that the petitioner did not maintain the road even within the extended period of 6 months. Therefore, this notice was issued to show cause as to why the maintenance work should not be done departmentally at the petitioner's cost and the cost be recovered from the petitioner. The petitioner has not filed any evidence to deny or contradict this fact. Therefore, this notice was issued to show cause as to why the maintenance work should not be done departmentally at the petitioner's cost and the cost be recovered from the petitioner. The petitioner has not filed any evidence to deny or contradict this fact. Under these circumstances all these documents clearly indicates that the petitioner did not maintain the road under terms and conditions of the contract. Therefore, the petitioner is not entitled for claim of Rs. 8.49 lakhs. 22. Now, we are coming to the last claim which relates to ante-lite interest at the rate of 15% on claim No. 01 to 03 from 02/06/2014 to 02/01/2015 amounting to Rs. 6.77 lakhs. At the outset, it would be worthwhile to mention here that there is no clause in the agreement for grant of interest. Besides this since it is found that cause for delay in execution of work was not attributable to the respondents and the encashment of Bank Guarantee was not unjustified, further the petitioner is not entitled for the compensation, it is therefore, the petitioner is also not entitled for the claim as sought for. 23. In view of the aforementioned reasons and findings, we do not find any substance in the petition and the petition being devoid of merits deserves to be dismissed and hereby accordingly dismissed. Parties shall bear their own cost. Memo of cost be drawn accordingly.