Research › Search › Judgment

Gauhati High Court · body

2019 DIGILAW 496 (GAU)

Hare Krishna Talukdar v. State of Assam

2019-04-22

KALYAN RAI SURANA

body2019
JUDGMENT : Kalyan Rai Surana, J. 1. Heard Mr. Y.S. Mannan, the learned advocate for the petitioner and also heard Mr. A. Kalita, Advocate, the learned Standing Counsel for the Industries Department, representing all the respondents. 2. By this writ petition filed under Article 226 of the Constitution of India, the petitioner, who is a contractor, is seeking, amongst others, a direction to the respondents to increase the rates in respect of contract works awarded to the petitioner for construction of R.C.C. Office building for ADO Office at Bajali and ADCI Office at Sonari as compensation due to price escalation and in terms of compensation event as envisaged in the Contract Agreement. 3. The case projected in the writ petition is that pursuant to an Invitation for Bid (IFB) by the Executive Engineer, Industries & Commerce Department (respondent No. 3), published in the newspapers on 18.02.2012, for construction of ADCI Office building at Bajali in Barpeta district and Sonari in Sivasagar district, the petitioner had participated in the tender process. In the tender selection committee meeting held on 09.04.2012, the bid of the petitioner was held to be technically qualified and when price bid was opened on 2.5.2012, the petitioner was the lowest (L-1) tenderer for both works. However, when the work order was not issued, the petitioner issued an Advocate's notice dated 24.8.2012 to the respondent No. 3. The respondent No. 3 by his reply letter dated 21.09.2012 informed the petitioner that the work order would be issued after completion of official formalities. Thereafter, the petitioner approached this Court by filing a writ petition, which was disposed of by order dated 5.10.2013 passed in W.P.(C) 5073/12, thereby directing the authorities to issue work order in respect of the said work to the petitioner. Subsequently, work order was issued on 07.11.2013 in respect of both the work, stipulating that the work be completed within 18 months from the date of issue of work order. The respondent No. 3 handed over the work site at Sonari to the petitioner on 8.12.2013 and the work site of Bajali was handed over on 21.12.2013. After commencement of work, on 21.02.2014, the petitioner made a request for enhancement, of rates by at-least 35% because of inordinate delay in issuing work order and handing over the work site, by which time price of all commodities and labour charges had increased. After commencement of work, on 21.02.2014, the petitioner made a request for enhancement, of rates by at-least 35% because of inordinate delay in issuing work order and handing over the work site, by which time price of all commodities and labour charges had increased. As no steps were taken, the petitioner had approached this Court by filing another writ petition claiming compensation and/or cost escalation in terms of the Schedule of Rates ('SoR' for short) of Assam Public Works Department (APWD for short) or 35% increase in the quoted rates of the bid. This Court by order dated 06.09.2016, in WP(C) 2023/14 directed the respondent No. 3 to look into the representation dated 21.02.2014 submitted by the petitioner and pass appropriate orders thereon within a period of 6 (six) weeks considering the terms and conditions stipulated in the contract. The said order of this Court was communicated to the respondent No. 3 on 15.09.2016. However, the said representation by the petitioner was rejected. The said rejection order dated 14.10.2016 is under challenge in the present writ petition. 4. The learned advocate for the petitioner has referred to the delay caused in issuing work order and to hand over the work site to the petitioner. It is stated that from 09.04.2012, the date of opening of technical bid till the 08.12.2013 and 21.12.2013, the two dates when the work site was handed over, about 20 months' time had lapsed. Hence, when bid was submitted, he had kept the prevailing rates of SOR for 2012 in mind and by the time work had commenced, the SoR of 2014 had come into force. Hence, the demand for enhancement of rate for work was fully justified. Hence, the rejection of his representation was not sustainable. It is submitted that though the quoted rate of Rs. 1,73,89,645/-. for the Bajali work site and the rate of Rs. 1,73,72,572/- for the Sonari work site had become unworkable, yet the petitioner had completed the allotted work to the best satisfaction of all concerned. The learned advocate for the petitioner has referred to various provisions of the IFB, APWD F-2 Form of Agreement, Conditions of Contract, etc. 1,73,89,645/-. for the Bajali work site and the rate of Rs. 1,73,72,572/- for the Sonari work site had become unworkable, yet the petitioner had completed the allotted work to the best satisfaction of all concerned. The learned advocate for the petitioner has referred to various provisions of the IFB, APWD F-2 Form of Agreement, Conditions of Contract, etc. it is submitted that as the delay on part respondent No. 3 to provide the work site within reasonable time of submission of his bid constituted compensation event as provided for under Clause 21.1 read with Clause 28 and 44 of the Conditions of Contract. 5. It is submitted that escalation is a normal and routine event arising out of time gap in this inflationary age. Therefore, in this case, as the petitioner has been able to establish that the respondent No. 3 had caused delay in handing over the work site, it would be open for the petitioner to claim escalation. It is submitted that in this case, the terms and conditions formed a part of the contract agreement, which contained compensation event, but assuming that there is no escalation clause in the contract agreement, yet, it is open for the petitioner to seek compensation owing to delay in awarding contract to the petitioner, who was the L-1 bidder in the tendering process. In support of his submissions, the learned advocate for the petitioner has relied on the following cases, viz., (i) Assam State Electricity Board & Ors. Vs. Buildworth (P) Ltd., (2017) 8 SCC 146 (para-13-18 and 24), (ii) K.N. Sathyapalan (Dead) by LRs. Vs. State of Kerala & Anr., (2007) 13 SCC 43 (para-23-34), and (iii) Food Corporation of India Vs. A.M. Ahmed & Co. & Anr., (2006) 13 SCC 779 (para-32). 6. Per contra, the learned Standing Counsel for the Industries Department has submitted that the petitioner was awarded with the work order for the contract work on 7.11.2013, consequent upon the order passed by this Court in order dated 05.10.2013 passed in W.P.(C) 5073/12. However, the contract agreement including the Condition of Contract does not contain any clause envisaging cost escalation. It is submitted that in the case of Assam State Electricity Board (supra), there was an arbitration award which was made rule of the Court, where there was a finding regarding price escalation. However, the contract agreement including the Condition of Contract does not contain any clause envisaging cost escalation. It is submitted that in the case of Assam State Electricity Board (supra), there was an arbitration award which was made rule of the Court, where there was a finding regarding price escalation. It is also submitted that in the case of K.N. Sathyapalan (supra), there was an arbitration proceeding wherein there was a finding of fact that the appellant of the said case was prevented from starting the work as some local miscreant had created law and order problem at work-site. It is further submitted that in the case of Food Corporation of India (supra), there was an arbitration award, which was made rule of the Court and decree was drawn in terms of the award and that there was a finding of fact, inter-alia, to the effect that the minimum wages had increased. Therefore, it is submitted that for seeking compensation, it is well settled that some evidence must be gone into and the Court must record its finding to hold the petitioner to be entitled to compensation. It is submitted that in this case the respondents are strongly contesting the claim of the petitioner that any escalation event had occurred. Accordingly, it is submitted that the petitioner should have made his claim in the civil Court and established his claim. In order to sustain his submissions, the learned Standing Counsel has placed reliance on the case of Union of India Vs. Varindera Constructions Ltd. & Ors., (2018) 7 SCC 794 (para-9 and 11-14), and it is submitted that it had been held therein that if the contract agreement did not contain escalation clause, it was not grantable by the arbitrator, as such escalation clause was not vitiated by arbitrariness. 7. Considered the submissions made by the learned counsel for both sides and perused the materials available on record. It is seen that Clause 20 of the Terms and Conditions (General) of the EFB reads as follows- "20. 7. Considered the submissions made by the learned counsel for both sides and perused the materials available on record. It is seen that Clause 20 of the Terms and Conditions (General) of the EFB reads as follows- "20. No escalation of price will be allowed for the work under any circumstances." Therefore, the only issue required to be decided whether the existence of compensation event as envisaged as per Clause 21.1 read with Clause 28 and 44 of the Conditions of Contract would entitle the petitioner to increase in the rates quoted by him in terms of the prevailing SoR of APWD. The said clauses are extracted below:- 21. Possession of the Site 21.1- The Executive Engineer, Industries & Commerce Deptt. Bamunimaidam, Guwahati-21 shall give possession of all parts of the Site to the Contractor. If possession of a part is not given by the date stated in the Contract Date and Executive Engineer, Industries & Commerce Deptt. Bamunimaidam, Guwahati-21 is deemed to have delayed the start of the relevant activities and this will be Compensation Event. 28. Extension of the Intended Completion Date Clause-28.1. The Engineer shall extend the Intended Completion Date if a Compensation Event occurs or a Variation is issued which makes it impossible for Completion to be achieved by the Intended Completion Date without the contractor taking steps to accelerate the remaining work and which would cause the Contractor to incur additional cost. 21.2 The Engineer shall decide whether and by how much to extend the Intended Completion Date within 35 days of the Contractor asking the Engineer for decision upon the effect of a Compensation Event or Variation and submitting full supporting information. If the Contractor has failed to give early warning of a delay or has failed to cooperate in dealing with a delay, the delay by this failure shall not be considered in assessing the new Intended Completion Date. 28.3 The Engineer shall within 14 days of receiving full justification from the contractor for extension of Intended Completion Date refer to the Employer his decision. The Employer shall in not more than 21 days communicate to the Engineer the acceptance or otherwise of the Engineer's decision. 44. 28.3 The Engineer shall within 14 days of receiving full justification from the contractor for extension of Intended Completion Date refer to the Employer his decision. The Employer shall in not more than 21 days communicate to the Engineer the acceptance or otherwise of the Engineer's decision. 44. Compensation Events 44.1 The following compensation Events unless they are caused by the Contractor: (a) The Employer does not give access to a part of the Site by the Site Possession Date stated in the Contract Date. (b) The Employer modifies the schedule of other contractors in a way, which affects the work of the contractor under the contract. (c) The Engineer orders a delay or does not issue drawings, specifications or instructions required for execution of works on time. (d) Deleted. (e) Deleted. (f) Deleted." 8. It is seen that the work order was issued on 07.11.2013 to the petitioner in respect of both the work, stipulating therein that the work be completed within 18 months from the date of issue of work order. Therefore, when the petitioner had accepted the said work order, he did so with eyes wide open. This Court is unable to imagine that a contractor had not understood the consequences of accepting a work order which specifically mentioned that the work order was being issued at his own quoted rates, further stipulating that the work was to be completed within the time of completion as provided therein. 9. This Court is also conscious of the fact that by virtue of the order dated 05.10.2013 passed in W.P.(C) 5073/12, which was filed by the petitioner, this Court had directed the authorities to issue work order in respect of the said work to the petitioner. Accordingly, work order was issued to the petitioner on 07.11.2013 in respect of both the contract works. Therefore, this Court is compelled to draw inference that as on 05.10.2013, when this Court was allowing the writ petition filed by the petitioner, the petitioner did not express his reservation to do the contract work at his own quoted rates. Accordingly, work order was issued to the petitioner on 07.11.2013 in respect of both the contract works. Therefore, this Court is compelled to draw inference that as on 05.10.2013, when this Court was allowing the writ petition filed by the petitioner, the petitioner did not express his reservation to do the contract work at his own quoted rates. Had the rates quoted by him were unworkable on 07.11.2013, the date when work orders were issued to the petitioner, the petitioner could have moved immediately the respondents for claiming increase in rates in accordance with the prevailing SoR by invoking clauses providing for compensation event before accepting the work orders and before entering into the contract in the prescribed APWD F-2 Form of Contract, thereby unequivocally accepting Clause 20 of the Terms and Conditions (General) of the IFB reads as follows- "20. No escalation of price will be allowed for the work under any circumstances.". 10. It is seen that in terms of Clause 21.1, possession of the site was required to be given by the respondent No. 3 within the date stated in the Contract Data. Similarly, in Clause 44.1(a), compensation event would occur if the employer i.e. Respondent No. 3 did not give access to a part of the site by the Site Possession Date stated in the Contract Data. Under Clause 44.1(b), compensation event would occur if the employer modifies the schedule of other contractors in a way, which affects the work of the petitioner, and under Clause 44.1.(c), compensation event would occur if the respondent No. 3 orders a delay or does not issue drawings, specifications or instructions required for execution of works on time. Moreover, in terms of Clause 28, the respondent No. 3 had not granted extension of intended completion date either on the ground of existence of compensation event or on ground of a variation of work is issued. Thus, there is no material on record to show that the possession of the two work sites at Bajali and Sonari were not handed over in terms of the Contract Data. Moreover, the document regarding Contract Data is not brought on record. On a perusal of the representation dated 21.02.2014, the petitioner had not claimed that there was any delay in handing over the work site, but it is claimed that the work order was issued lately. Moreover, the document regarding Contract Data is not brought on record. On a perusal of the representation dated 21.02.2014, the petitioner had not claimed that there was any delay in handing over the work site, but it is claimed that the work order was issued lately. Moreover, on a perusal of the representation dated 15.09.2016, it is seen that the petitioner had not raised any grievance that the work site was not handed over within the agreed time, but it is projected that: "... The aforesaid contract was allotted to me after a lapse of about 18 months from the date of opening of the price bid thereby causing considerable delay in handing over the site to me for execution of the contract work though there was no fault on my part for such delay." This Court is unable to accept that there is anything on record in the Contract Agreement, Conditions of Contract, Work Order, etc., that compensation event would become calculable from the date of opening of the price bid. Therefore, in view of the discussions above, this Court is constrained to hold that there are no materials before this Court to hold that there exists any compensation event within the scope and ambit of Clause 21.1 read with Clause 28 and 44 of the Conditions of Contract. 11. It is seen that by order dated 6.9.2016, passed by this Court in W.P.(C) No. 2023/2014, the respondent No. 3 was directed to be mindful of the terms and conditions as stipulated in the Contract while disposing of the representation dated 21.02.2014. Accordingly, while disposing of the petitioner's representation dated 21.02.2014, the respondent is found to have examined the claim of the petitioner in light of Clause 20 of the Conditions of Contract. In view of the discussions above, this Court has found no reason to interfere with the impugned order under Memo No. EE-G-/HC/640/2014/69/1103-07 dated 14.10.2016, by the respondent No. 3. 12. On examining the cases relied upon by the learned advocate for the petitioner, it is observed that in all the cases cited, the dispute between the contractor and the employer were adjudicated in arbitration and upon finding of fact, the challenge was brought against the arbitral award. In none of the cases, the dispute between the contractor and the employer was decided by the High Court under Article 226 of the Constitution of India. In none of the cases, the dispute between the contractor and the employer was decided by the High Court under Article 226 of the Constitution of India. Therefore, on facts, the cited cases of (i) Assam State Electricity Board (supra), (ii) K.N. Sathyapalan (supra), and (iii) Food Corporation of India (supra) are found distinguishable. Thus, the ratio laid down in the case of Varindera Constructions Ltd. (supra) is found applicable in this case, wherein it has been held therein that if the contract agreement did not contain escalation clause, it could not be granted. 13. Accordingly, this writ petition fails and the same is dismissed. However, leaving the parties to bear their own cost.