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2019 DIGILAW 690 (KER)

D. Girija v. State of Kerala

2019-08-22

SHAJI P.CHALY

body2019
JUDGMENT : This writ petition is filed by the petitioner, a contractor, seeking direction to the respondents to take measurements of the works carried out at site and release the payment within a time frame fixed by this Court, and a further direction to quash Ext.P11 communication dated 17.02.2016, directing the petitioner to start the work within 5 days, failing which, action will be taken to terminate the contract at the risk and cost of the petitioner, and for other related and consequential reliefs. Brief material facts for the disposal of the writ petition are as follows: 2. Petitioner is a contractor having 'A' class registration and undertaking works of the Public Works Department. The work relating to “PWD-LAC-2012-13 - Kundara Constituency -Construction of New Building for Government Rest House at Kundara, Kollam District” was awarded to the petitioner by the 4th respondent i.e., the Superintending Engineer, PWD (Buildings) South Circle, Thiruvananthapuram, on 17.08.2013, and a formal agreement was executed on 29.08.2013 undertaking to complete the work within 9 months from the date of handing over of the site, i.e., 10.06.2014. The agreed value of the contract was Rs.1,26,53,434/-. 3. Petitioner has earlier approached this Court by filing W.P.(C) No.9057 of 2015 and has secured Ext.P1 judgment dated 01.04.2015, whereby the respondents were directed to pass orders on Ext.P6 letter therein, dated 13.10.2014, addressed to the 5th respondent, i.e., the Executive Engineer, PWD Buildings Division, Kollam, and to effect the disbursement of the due amount as covered by part bills, at the earliest, and at any rate, within one month from the date of receipt of a copy of the judgment. The said representation is produced as Ext.P2 in this writ petition. However, according to the petitioner, in spite of the directions issued in the judgment, no action was taken to comply with the same, and thereupon, a lawyer notice dated 08.07.2015 was issued seeking to comply with the directions in Ext.P1 judgment and the said communications are produced as Exts.P3 to P5 respectively. 4. According to the petitioner, the respondents were adamant that petitioner should opt for a 'bill discounting system' to secure payment and a supplemental agreement should be executed. 4. According to the petitioner, the respondents were adamant that petitioner should opt for a 'bill discounting system' to secure payment and a supplemental agreement should be executed. It is also submitted that, extension of time as per the 'Extension of Time Performa' annexed therewith was also sought, reiterating its earlier representations and sought for effecting payments, since the petitioner had availed loan from financial institutions to complete the work. Ext.P6 letter was subsequently issued on 23.07.2015 to the 5th respondent. 5. Matters being so, a portion of the 1st part bill was paid on the basis of 'bill discounting system', after withholding Rs.5 lakhs, allegedly because petitioner removed materials from the site during the period of stalemate, which, according to the petitioner, is contrary to the directions contained in Ext.P1 judgment. Anyhow, the said amount of Rs.5 lakhs was released later. As regards the remaining works carried out, no measurements were taken by the respondents, and hence no bill could be certified for payment. 6. As per Ext.P7 communication dated 12.10.2015, the 5th respondent Executive Engineer requested the 4th respondent Superintending Engineer to extend the period up to 30.05.2016 as per rules, as per the report of the Assistant Executive Engineer, on the reason that non completion of work was due to non-payment for the work done. According to the petitioner, no extension of time has been approved by the agreement authority. That apart, it is submitted that, part II bill was also paid on the basis of bill discounting system, and according to the petitioner, petitioner is liable to pay 12% interest to the Bank. Anyhow, as per Ext.P8 letter dated 16.12.2015, petitioner requested for payment of part bill in which reference to removal of earmarking the boundary, planting boundary stones and cutting and removing standing trees etc. hindering the work were indicated. 7. Anyhow, subsequently, the work had come to a stalemate, which, according to the petitioner, is due to the failure on the part of the respondents to carry out measurements for work done and disbursing payment. Thereupon, Ext.P9 lawyer notice dated 19.12.2015 was issued to the 4th respondent, assigning the reasons for the delay which prolonged the work and attributable to the respondents. Thereupon, Ext.P9 lawyer notice dated 19.12.2015 was issued to the 4th respondent, assigning the reasons for the delay which prolonged the work and attributable to the respondents. Case of the petitioner is that, in spite of the earnest efforts of the petitioner to secure the bill and proceed with the work, no action was initiated by the respondents to redress the grievances of the petitioner. That apart, it is pointed out that, as per Ext.P10 letter, petitioner requested to extend the contract up to 30.06.2016 and to enhance the rate by 100%. Anyhow, no action was initiated on the same, is the contention. While so, Ext.P11 letter is received by the petitioner, directing the petitioner to start the work within five days from the date of receipt of the letter. These are the background facts projected by the petitioner to secure the reliefs specified above. 8. A detailed counter affidavit is filed by the 5th respondent, refuting the allegations and claims and demands raised by the petitioner. Among other contentions, it is submitted that, the work was awarded to the petitioner at a quoted rate of 8.8% above estimate rate based on the revised SOR 2010 with an agreed PAC of Rs.1,26,53,434/-, and stipulated 9 months time period for completion of the work. As an 'A' class contractor, petitioner was well aware of the fact that the payment of bills will be made based on the receipt of letter of credit from the Government on a priority basis. Soon on receipt of the head of account in the software, LOC proposals for the two part bills were submitted along with the pending bills for the month of October, 2014, and there was no delay in submitting the details to the Government. However, the Government have issued letter of credit up to the month of January, 2014, while the directions were issued by this Court as per Ext.P1 judgment. 9. It is submitted that, the initial levels were taken and reported to the Chief Technical Examiner on 04.11.2013, and the same was submitted to the Superintending Engineer as per letter dated 20.12.2013. The initial level proposal quantity of earth work cutting for road, outer yard levelling comes to 1069.41m3. 9. It is submitted that, the initial levels were taken and reported to the Chief Technical Examiner on 04.11.2013, and the same was submitted to the Superintending Engineer as per letter dated 20.12.2013. The initial level proposal quantity of earth work cutting for road, outer yard levelling comes to 1069.41m3. After 7 days from the date of reporting to Chief Technical Examiner, the earth cutting can be started as per rules, and as a well experienced contractor, petitioner is well aware of these facts and in the contract in question, the earth cutting for road formation and outside yard levelling does not affect the construction of building and the contractor has already started the work and the date of recording measurement of earth work in M.Book No.291/13-14 dated 04.10.2013 reveals the same. Therefore, according to the 5th respondent, the argument advanced by the petitioner that the delay in earthwork execution is due to the delay in taking and approving initial levels is baseless. 10. That apart, it is submitted that, the standing tree in front of the building is around 3.7 metres away from the building and the tree is not an obstruction for completing the work of either compound wall or Rest House building, and the contractor was free to start the work of compound wall within three days. However, she has not taken interest in executing the work in time. The structural design was prepared and finalized from the Buildings Sub Division, Kollam, and hence no delay was occurred in sanctioning the structural design. Moreover, as per the M-Book, structural steel work for column footing and column were recorded on 10.10.2013, which is prior to the date i.e., 13.03.2014 agreed by the contractor. 11. Further, it is submitted that, immediately on receipt of Ext.P1 judgment, the matter was reported to the higher authorities for specific direction regarding the payment. Moreover, application was filed before this Court for extension of time limit specified to comply with the directions. However, the Government was not in a position to process the bill of a single contractor separately, as it will upset the Statewide seniority and is against the spirit of the orders dated 11.04.2001 and 18.10.2002 of the Full Bench of this Court in CCC No.803/2000 and connected cases. However, the Government was not in a position to process the bill of a single contractor separately, as it will upset the Statewide seniority and is against the spirit of the orders dated 11.04.2001 and 18.10.2002 of the Full Bench of this Court in CCC No.803/2000 and connected cases. Accordingly, the Chief Engineer as per letter dated 28.05.2015 has expressed the inability of the Department in complying with the directions and, therefore, the contractor was requested as per the letter of the Executive Engineer dated 01.07.2015 to receive the payment of the bills through Bills Discounting System. Thereupon, application was submitted by the contractor on 09.07.2015 and it was accordingly that action was taken for payment of CC 1st and Part Bill on 10.07.2015 itself. Moreover, 25% of the interest portion would be borne by the Government under the Bill Discounting System. 12. It is also submitted that, as per CC 1st and Part Bill, an amount of Rs.32,21,057/-was paid to the contractor, after effecting statutory recoveries as per the agreement conditions, which cannot be avoided under any circumstances. So also, CC 2nd and Part Bill amounting to Rs.15,56,119/-, after deducting 30% of the bill amount as per the recommendation of the Assistant Executive Engineer, PWD Buildings Sub Division, Kollam towards guarantee fund for the due fulfilment of the contract, as the contractor was not earnest in execution of the work, and he has removed all material including steel from the work site and kept the work in an abandoned stage. That apart, it is pointed out that, the amount so deposited could be released to the petitioner only after the receipt of Letter of Credit from the Government, because the amount deducted towards PW Deposit will be credited to the account only after the receipt of Letter of Credit. The deposit was released to the petitioner in compliance with the directions issued by this Court. 13. It is submitted that the time of completion of the work has expired on 09.06.2014, and the contractor has to apply for the extension of time of completion before the time of submission of CC 2nd and Part Bill. Anyhow, in spite of lapses on the part of the contractor, the Department has submitted the Letter of Credit proposal of the CC 2nd and part bill in order to avoid loss of seniority to the contractor. Anyhow, in spite of lapses on the part of the contractor, the Department has submitted the Letter of Credit proposal of the CC 2nd and part bill in order to avoid loss of seniority to the contractor. Though several notices were issued, no action was taken by the petitioner, however, an application for extension of time of completion was submitted by the petitioner in the office of the Assistant Engineer on 23.07.2015, and accordingly certain directions were issued to the Assistant Executive Engineer to report the present stage of the work. Thereupon, the Assistant Executive Engineer submitted a fresh application dated 22.09.2015 with a report of the present stage of the work. 14. It is further submitted that, though the time of completion of work has expired on 09.06.2014, petitioner applied for extension of time only on 02.09.2015, which was submitted to the Superintending Engineer on 12.10.2015. The Superintending Engineer sought reason for delay in submitting application for extension of time of completion. Moreover, directions were already given to the contractor to submit the application for extension of time of completion. However, no application was submitted within the time, and due to the poor progress of work after the expiry of original time of completion, the Superintending Engineer could not take a decision on granting the extension of time on the belated request of the contractor. Thereupon, the Assistant Executive Engineer was directed to prepare the bill for the work done after the CC 2nd and Part Bill and the bill is under preparation. 15. According to the 5th respondent, no amounts are illegally retained and in the custody of the Department. The retention of amount of 10% of the part bills, amounting to Rs.4,77,718/-is recovered as per clause 9 of the conditions of contract, and it will be released to the petitioner after successful completion of the work. Anyhow, the enhancement of rates sought for by the petitioner is stoutly opposed by the respondents. So also, it is submitted that, PWD contracts being fixed rate contracts, no enhancement of agreed rates can be allowed, and if enhancement of rates is made beyond the agreement conditions, it will lead to filing of so many applications for enhancement of rates for other works, which will ultimately result in similar unreasonable claims, which will incur heavy loss to the exchequer. Therefore, according to the 5th respondent, petitioner is not entitled to get any relief as is sought for in the writ petition. 16. A reply affidavit is filed by the petitioner, reiterating the stand adopted in the writ petition, and disputing the contentions and allegations raised in the counter affidavit filed by the 5th respondent. Other documents are also produced to substantiate the contentions raised by the petitioner and denying the contentions put forth by the 5th respondent. 17. I have heard Sri. K.L. Varghese, learned Senior Counsel appearing for the petitioner, assisted by Advocate Rahul Varghese and Sri. K.V. Manoj Kumar, learned Senior Government Pleader appearing for the respondents, and perused the pleadings and the documents on record. 18. The discussions made above would make it clear that, the sole question to be considered is, whether any manner of interference is warranted to Ext.P11 notice issued by the Superintending Engineer dated 17.02.2016, directing the petitioner to start the work within five days from the date of receipt of the letter, failing which, action will be taken to terminate the work at the risk and cost of the petitioner. 19. When this writ petition was admitted to the files of this Court, an order of 'status quo' was granted and the interim order was extended until further orders on 01.06.2016. Therefore, it is clear that the work has come to a standstill, and no action was taken either to complete the work or proceed in accordance with the recitals contained in Ext.P11 notice. The facts and circumstances would show that there was some delay on the part of the respondents to process the bills submitted by the petitioner, and it was paid only after directions were issued in Ext.P1 judgment. The letters produced by the petitioner would show that petitioner was requesting for payment in order to carry on with the construction. However, the respondents were of the opinion that the seniority in the matter of bill payment cannot be overlooked and later the payments were effected to the petitioner under the 'Bill Discounting System' and petitioner was liable to pay interest, though 25% of the total interest is to be borne by the Government. 20. Equally, petitioner has also not taken steps to extend the contract period in accordance with the stipulations contained in the PWD Manual. 20. Equally, petitioner has also not taken steps to extend the contract period in accordance with the stipulations contained in the PWD Manual. Anyhow, more than three years have elapsed from the date of granting of interim order by this Court, and I am of the considered opinion that, the writ petition can be disposed of, issuing suitable directions to the parties. So much so, there was no termination of contract, though threatened so in Ext.P11 notice. Therefore, it is better that, a feasible method is worked out in order to avoid further complexities and to save time. This I say, because, even if the work is terminated at the risk and cost of the contractor, it will take further time to award the contract and complete the work, apart from the fact that petitioner is familiar with the work already carried out and is aware and conscious of the balance work to be completed, which will also save considerable money, and avoid protracted litigations, severely affecting public interest. 21. Accordingly, petitioner is directed to submit a representation before the 2nd respondent, i.e., the Finance Secretary, Public Works (E) Department, Thiruvananthapuram, within three weeks from the date of receipt of a copy of this judgment, requesting for enhancement of rate, and there will be a direction to the 2nd respondent to consider and finalize the same within one month thereafter, taking into account all attendant circumstances, including efflux of time, increase in rate, economic feasibility and other relevant aspects and circumstances, and after providing an opportunity of hearing and participation to the petitioner. The writ petition is disposed of accordingly.