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Madhya Pradesh High Court · body

2022 DIGILAW 1363 (MP)

N. D. Grover v. State of Madhya Pradesh

2022-11-16

AMAR NATH (KESHARWANI), VIVEK RUSIA

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ORDER : The applicant/contractor has filed the present Civil Revision No. 117/2005 and the State of M.P. has filed the present Civil Revision No. 512/2005 under Section 19 of the M.P. Madhyastam Adhikaran Adhiniyam, 1983 against the Award dated 30.08.2003 passed by M.P. Arbitration Adhikaran, Bhopal in Reference Case No. 111/1993. Since both the Civil Revisions arise out of the award dated 30.08.2003 passed by the M.P. Madhyatam Adhikaran, Bhopal hence, both are being decided by this common order. The facts of the case, in short, are as under: Facts of the case are being taken from Civil Revision No. 117/2005 for deciding both cases. 1. Shri N.D. Grover is an Engineer and Contractor registered in A-B categories both in The Public work and the Water Resource Department State of M.P. Respondent No. 1 is the Water Resources Department of State of M.P. and respondent No. 2 is Executive Engineer, Water Resources Department Division No. 1. 2. The respondents issued an NIT for work of construction of Malipura Tank, Dhar on 03.11.1988 on an item rate basis. The applicant quoted rates 44.366% below USR. The applicant submitted the bid and vide letter dated 10.04.1989 bid was accepted by Chief Engineer, Narmada Tapti Basin. Thereafter agreement No. 8/T-89-90 was executed for an estimated contract cost of Rs.26,82,302.60. The Executive Engineer issued a work order to the applicant on 01.06.1989 to be completed within 18 months including three months of rainy season i.e. upto 31.05.1991. 3. According to the applicant, he submitted a construction program on 07.10.1989 and started the work as per schedule but the local tribals created a hindrance in the work as the Government did not pay the compensation to their land after acquisition. The applicant was attacked by the villagers led by Gangaram Sarpanch on 08.12.1989, which he reported to the police. According to the applicant, the local villagers are under impression that the land has been acquired by the Government without payment of compensation, and the department did not support him, hence it became impractical for him to give progress. 4. According to the applicant, he applied for advance payment on 14.11.1989 but the sanction was given by S.E. on 28.12.1989 which was the reason for the delay in starting the work. 4. According to the applicant, he applied for advance payment on 14.11.1989 but the sanction was given by S.E. on 28.12.1989 which was the reason for the delay in starting the work. The running bills were not paid to him within time and due to non-cooperation by respondent No. 2 and his sub-ordinate staff, the progress could not be shown. The applicant executed the puddle trench except for a strip of 10 m length in the month of Feb.1990 itself despite that respondent No. 2 vide letters dated 04.04.1990 and 09.04.1990 threaten him to take up the work of excavation of the puddle trench departmentally under the provisions of Clause 4.3.16 of the General Conditions of Contract-Agreement. According to the applicant, permission for filling the puddle in the trench was not forthcoming so he shifted heavy machinery for working at other sites in the third week of May 1990. Respondent No. 2 had made up his mind to terminate the contract on this petty issue. 5. It is further submitted that respondent No. 2 issued a fresh tender for the balance work vide NIT dated 17.12.1990, even without terminating the existing contract. The notice was issued to the applicant on 13.12.1990 which was replied to vide letter dated 19.12.1990. It appears that the reply was not found satisfactory, therefore, respondent No. 2 vide order dated 18.02.1991 rescinded the contract in exercise of the power conferred under Clause 4.3.3.3 of the agreement. Being aggrieved by the aforesaid action, vide letter dated 08.04.1991 the applicant represented to the Superintending Engineer Water Resources Department that the stipulated date of completion is yet to come on 30.11.1991 and he is in a position to complete the work, however, the Superintending Engineer vide letter dated 29.04.1991 upheld the action of the respondent No. 2, hence, the applicant approached the M.P. Arbitration Tribunal by way of Reference No. 111/1993 by submitting the claim of Rs. 6,21,932/-. The details of the claim are as under: Claim No. 1 Claim for the final bill and refund of Earnest Money and Security Deposits Rs. 1,00,240.00 Claim No. 2 Claim for loss of overhead charges and loss of profit. Rs. 4,08,820.00 Claim No. 3 Claim for escalation charges on labour wages materials and POL Rs. 60,312.00 Claim No. 4 Claim for interest @ 12% P.A. On the amounts wrongfully held by the deptt. Rs. 52,560.00 Total Rs. 6.21,932/- 6. 1,00,240.00 Claim No. 2 Claim for loss of overhead charges and loss of profit. Rs. 4,08,820.00 Claim No. 3 Claim for escalation charges on labour wages materials and POL Rs. 60,312.00 Claim No. 4 Claim for interest @ 12% P.A. On the amounts wrongfully held by the deptt. Rs. 52,560.00 Total Rs. 6.21,932/- 6. The respondents filed a reply denying all the claims of the applicant by submitting that the applicant was informed about the acceptance of tender by the Government on 10.04.1989 but he approached the office of the Executive Engineer on 30.05.1989 to sign the agreement which caused the delay of issuing the work order. From the very inception, the applicant caused a delay of 45 days in completing the formalities of deposit of Security deposit and signing of the contract as well. The applicant submitted the construction program on 07.10.1989 i.e. four months. The submission of the applicant about the trouble created by the local tribals is absolutely incorrect. The applicant has personal dispute with Gangaram Sarpanch because he had no reason to create a hurdle as his land did not come in submergence. However, the department gave full cooperation by reporting the matter to S.P. Dhar vide letter dated 11.12.1989. The department had acquired the land much before the work was started and a sufficient area of land was available for starting the work. 7. It is further submitted by the State that the applicant applied for advance for machinery on 11.11.1989 and within a reasonable time, the aforesaid amount was paid to him. All the issues raised by the applicant duly replied to him vide letter dated 03.03.1990. Running bills paid on time. It is further submitted that the applicant was directed to excavate a puddle trench upto the required depth so as to rest the foundation upto suitable strata. In-spite of issuing various notices, the applicant shifted machinery to another site. After issuing a warning to the applicant the excavation upto the required level was got done at the risk and cost of the applicant. Infact the applicant had already made up his mind not to carry out the work therefore, he shifted his manpower between 15.05.1990 to 17.05.1990, and the machinery also for which the advances were given by the department. The applicant was not in a position to puddle or cut off the trench without his resources. Infact the applicant had already made up his mind not to carry out the work therefore, he shifted his manpower between 15.05.1990 to 17.05.1990, and the machinery also for which the advances were given by the department. The applicant was not in a position to puddle or cut off the trench without his resources. The applicant got another work in Shajapur so he abandoned the work and shifted his machinery to the site in Shajapur. The balance work was got done by the department through the applicant’s brother Mr. V.P. Grover at much higher rates from the same machines and men who were engaged by him earlier. It is emphasised that as a matter of fact, the applicant was not interested in doing this work as his quoted tender rate on very lower side i.e. 44.336% below the unified schedule of rates. The applicant was asked to attend the work site on 04.03.1991 but he could not present himself, hence, the contract was likely terminated. The respondents submitted counter claim of Rs.15,37,358.00, the details are as under: Counter No. 1 Claim Excavation of puddle trench through piece work under the contract Rs. 21,053.00 Counter No. 2 Claim Extra cost involved for doing the balance work through another agency. Rs. 12,40,150/- Counter No. 3 Claim Balance work still to be done by Shri V.P. Grover, Contractor Rs. 1,53,078- Counter No. 4 Claim Balance of machinery advance including interest of Rs. 6,509/- til 10.03.1994 Rs. 1,76,212/- Total Amount adjusted of Security Deposit and final bill (-) Rs. 54,035.00 Net amount claimed Rs. 15,37,358/- 8. The applicant filed his own affidavit and got exhibited 38 documents Ex.P/1 to Ex.P/38. Likewise, the respondents examined the Executive Engineer, and Site Engineer and got exhibited 47 documents as Ex. D/1 to D/47. After considering the material available on record, the learned tribunal has upheld the recession of the contract. So far claim No. 1 is concerned, the applicant has been entitled to receive the amount of Rs. 89,775/-. For claim No. 2, the Tribunal has rejected the said claim. Claim No. 3 of Rs.60,317/-for the claim for escalation charges on labour, wages, materials and POL for work done by the applicant has been allowed. Claim No. 4, claim for interest @ 12% P.A. on the amounts wrongfully has been dismissed and accordingly claim of Rs.1,50,087/-has been allowed. 89,775/-. For claim No. 2, the Tribunal has rejected the said claim. Claim No. 3 of Rs.60,317/-for the claim for escalation charges on labour, wages, materials and POL for work done by the applicant has been allowed. Claim No. 4, claim for interest @ 12% P.A. on the amounts wrongfully has been dismissed and accordingly claim of Rs.1,50,087/-has been allowed. So far as the counter claim is concerned, claim No. 1 of Rs.21,953/-for the excavation of the puddle trench through piece work under the contract has been allowed. The claim No. 2 for the extra cost involved for doing the balance work through another agency of Rs.12,40,150/-and remaining work of Rs. 1,53,078/-have been rejected as no notice was given to the applicant for the aforesaid claims before filling the counterclaim . The learned Tribunal has allowed claim No. 4, Rs. 1,76,212/-as the same has not been denied by the applicant. After adjusting the amount, the respondents have been entitled to receive the amount of Rs.41,209/-with future interest @ 9% from the applicant. Being aggrieved by the aforesaid award, the applicant has filed Civil Revision No. 117/2005 and the respondents have filed Civil Revision No. 512/2003. We have heard the learned counsel for the parties and perused the entire record. 9. So far as the issue of rescission of the contract of the applicant is concerned, after elaborate discussion the learned Tribunal has held that the applicant delayed the work from the very beginning by not signings the agreement for nearly 45 days and submitting the construction program on 07.10.1989 i.e. after four months. The applicant was not willing to go deeper than the desired level as the strata met with is not good for resting the foundation of the dam. Despite repeated reminders by the respondents, the applicant did not excavate the cut of the trench upto the desired level and ultimately, respondent No. 2 got excavated through another agency and intimated the applicant vide letter dated 09.04.1990. The applicant was asked to do the puddle filling work as excavation is completed upto to the required depth, but by that time the applicant had already shifted his machinery to another site, therefore, the respondent/Executive Engineer had no option but to rescind the contract on 18.02.1991 under the clause 4.3.3.3 of the agreement as the applicant himself abandoned the work. The balance work was awarded to the applicant's brother Shri V.P. Grover vide agreement 18/1991-92. The learned tribunal has also held that the applicant took the work at very low rate i.e. 44.336%. From the very beginning, he was not interested to complete the work. The machinery brought to the site was very old and already in possession of the applicant. It has also been held that the running bills were paid on time. There was no delay in sanctioning the advance, therefore, the applicant ought to have completed the work. We do not find any perversity in these findings in the impugned order, hence in a limited revisional jurisdiction, we are not inclined to interfere and hence upheld. 10. So far as claims No. 1 and 3 are concerned, both have been allowed. Since the applicant was not served any notice for forfeiture of final bills, earnest money and security deposit, therefore, the applicant has rightly been held entitled to a refund of Rs.89,775/-. So far as the major claim of the applicant i.e. No. 2 in respect of loss of overhead charges and loss of profit of Rs.4,08,820.00 is concerned, the tribunal found that the applicant did not submit any calculation or document to prove the anticipated profit. The applicant simply calculated it on a percentage basis without supporting documents. Once it has been held that the applicant is for responsible the rescission of the contract and we have upheld the said findings, therefore, the applicant is not entitled to claim for loss of overhead charges and loss of profit. 11. Claim No. 3 has already been allowed. The applicant worked for 10 and half months from 01.06.1989 i.e. date of the work order and 19.04.1990 till he abandoned the work. Since the construction period was more than 12 months, hence, as per clause 2.40.1, the applicant has rightly been held entitled to claim for escalation charges for the work done by him i.e. Rs.60,312.00. 12. Claim for interest on the amounts wrongfully withheld by the department has rightly been rejected as the rescission of the contract has been upheld. Since the respondents have adjusted the number of final bills as security deposit and earnest money against the advance given to the applicant which has been admitted by the applicant hence, the applicant is not entitled to interest. 13. Since the respondents have adjusted the number of final bills as security deposit and earnest money against the advance given to the applicant which has been admitted by the applicant hence, the applicant is not entitled to interest. 13. So far as counterclaim No. 2 which is the major claim of Rs.12,40,150.00 is concerned, the learned tribunal has rightly rejected it as the respondents have claimed the said amount by way of counter claim. It is settled law that before approaching the learned Tribunal the dispute should be raised before the competent authority of the department and after its rejection, the same is liable to be referred to the tribunal. The respondents before claiming Rs. 12,40,150.00 under the head of extra cost involved for doing the balance work through another agency directly by way counter claim before demanding from the applicant or raising a dispute before Superintending Engineer. 14. In the case of Sanjay Dubey vs. State of M.P. and Another, 2012 (4) MPLJ 212 , the Full Bench consisting of 5 Judges of this Court has clarified the issue of limitation for approaching the M.P. Madhyatam Adhikaran under section 7-B of the Adhiniyam. The relevant paras are as under: “6. The Tribunal gets the jurisdiction to adjudicate the dispute under the Act, but for the Act, it would have no jurisdiction to adjudicate the dispute in relation to works contract. It is well settled in law that where a tribunal derives its jurisdiction from the statute that creates it and that statute also defines the conditions under which the tribunal can function, it goes without saying that before that tribunal assumes jurisdiction in a matter, it must be satisfied that the conditions requisite for its acquiring seisin of that matter have in fact arisen. Wherever jurisdiction is given to a court by an Act of Legislature and such jurisdiction is only given upon certain specified terms contained in that Act it is a universal principle that these terms must be complied with, in order to create and raise the jurisdiction for if they be not complied with, the jurisdiction does not arise. [See: Mohammed vs. State of Maharashtra, AIR 1979 SC 404 ]. [See: Mohammed vs. State of Maharashtra, AIR 1979 SC 404 ]. In view of aforesaid enunciation of law, it is apparent that in case where an agreement provides for clause like Clause 29, the jurisdiction of the Tribunal can be invoked only after approaching the authority as provided under the terms of the work contract. Section 7-in express terms provides that the Tribunal shall not admit a reference petition unless the dispute is first referred for decision of the final authority under the terms of the contract and that the petition to the Tribunal is made within one year from the date of communication of the decision of the final authority. The proviso to sub-section (1) of Section 7-B provides that if the final authority fails to decide the dispute within the period of six months from the date of reference to it, the petition to the Tribunal shall be made within one year of the expiry of said period of six months. Thus, it is necessary for an person aggrieved to approach the authority under the terms of the work contract before filing the reference petition. On fulfillment of the conditions mentioned in the terms of the works contract alone as provided in Section 7-B(1) of the Act, the jurisdiction of the Tribunal can be invoked by filing a reference petition. 7. There may be cases where the works contract may not contain any provision for dispute redressal like the one provided in Clause 29 of the Agreement. In such a case, subsection 2-A of Section 7-B of the Act will apply and an aggrieved person can approach the Tribunal within three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end in any other manner or when a dispute arises during the pendency of the works contract. It is pertinent to note that Section 7-as it exists today has come into force w.e.f. 29.8.2005. The aforesaid provisions does not have retrospective operation as the language employed therein does not even remotely suggest so, as has been held by the Full Bench in its order dated 27.10.2009. 8. There may be disputes under the agreements which do not contain a clause like Clause 29 in the agreement which may have arisen prior to coming into force of Section 7-B(2-A). 8. There may be disputes under the agreements which do not contain a clause like Clause 29 in the agreement which may have arisen prior to coming into force of Section 7-B(2-A). In such a case, the claimant has to approach the Tribunal within a period of three years from the date of accrual of cause of action. The Supreme Court in the case of State of M.P. vs. Anshuman Shukla, (2008) 7 SCC 487 , while disagreeing with the view taken by another Bench of equal strength in the case of Nagar Palika Parishad, Morena vs. Agrawal Construction, (2004) 2 MPJR 374 has referred the issue with regard to applicability of Section 5 of the Limitation Act, 1963 to the proceedings before the Tribunal for consideration by the larger Bench. The Supreme Court while referring the matter has held that the Tribunal under the Act has to determine a lis. There are two parties before it. It has power to summon records and to record evidence. It's award is executable as a decree of Court. Its proceedings are judicial proceedings subject to the revisional order which may be passed by the High Court. Thus for all intents and purposes, the Tribunal under the Act is a Court. Though we are conscious that the aforesaid matter has been referred to a larger Bench, yet the reference has not been answered. In view of the finding recorded by the Division Bench of the Supreme Court in Anshuman Shukla (supra) that Tribunal under the Act is the Court, which of course is subject to final adjudication by the Supreme Court, the fixation of the time limit for approaching the Tribunal as three years in such cases would also be in conformity with Article 113 of the Limitation Act, 1963. 9. The first part of Clause 29 of the agreement provides for a dispute resolution mechanism. It provides that the dispute has to be referred to the Superintending Engineer in writing for decision within a period of 30 days from such occurrence. Thereupon, the Superintending Engineer shall give his written instructions or decision within a period of 60 days of such request. It provides that the dispute has to be referred to the Superintending Engineer in writing for decision within a period of 30 days from such occurrence. Thereupon, the Superintending Engineer shall give his written instructions or decision within a period of 60 days of such request. If the Superintending Engineer fails to give his instructions in writing within a period of 60 days or mutually agreed time after being requested of, an aggrieved party may file an appeal to the Chief Engineer within 30 days and shall give his decision within a period of 90 days. Thereafter, an aggrieved person can approach the Tribunal within one year from the date of communication of decision of the final authority. If the final authority fails to decide the dispute within a period of six months from the date of reference to it, the petition to the Tribunal shall be made within one year of the expiry period of six months. The contention made on behalf of the applicants that in view of sub-section (2-A) of Section 7-B, an aggrieved person can approach the Tribunal directly without approaching the authorities mentioned in Clause 29 of the agreement, cannot be accepted as the same would obliterate the provisions of sub-section (1) of Section 7-B and would render the same otiose as it is well settled legal proposition that it is incumbent on the Court to avoid a construction if reasonably permissible on the language which would render part of the statute devoid of any meaning or application. [See: Rao Shiv Bahadur Singh vs. State of U.P. AIR 1953 SC 394 ] 10. If the agreement is rescinded, two questions may arise for consideration. Firstly, which party to the agreement is at fault and consequently, the claim for damages for breach of contract. Secondly, the claim with regard to payment of the amount of the final bill before recission of the contract in accordance with the rates prescribed in the agreement. In the first case, the limitation would commence from the date when the agreement is rescinded whereas in the second case, the limitation would commence from the date when the final bill is prepared. 11. It was also submitted on behalf of the petitioners that the time limit prescribed in Clause 29 is not mandatory and therefore, the same need not be adhered to strictly. 11. It was also submitted on behalf of the petitioners that the time limit prescribed in Clause 29 is not mandatory and therefore, the same need not be adhered to strictly. We are not inclined to accept the aforesaid submission as non-submission of timely claims is likely to result in disappearance or destruction of the evidence. A person cannot be permitted to approach the authority at any time which he chooses. It is also relevant to mention here that the applicants have entered into an agreement with the State Government with open eyes and they cannot be permitted now to contend that it is not necessary to adhere to the time schedule provided for redressal of their grievances under clause 29 of the agreement. Similarly, the contention that aggrieved person can approach the Superintending Engineer as well as the Chief Engineer within a period of three years as provided in Article 113 of the Limitation Act also cannot be accepted as it is well settled in law that provisions of Limitation Act apply to Courts only and the authorities under the agreement are admittedly not the Courts. [See: State of Jharkhand and Others vs. Shivam Coke Industries, Dhanbad and Others, (2011) 8 SCC 656 ]. For yet another reason, this submission cannot be accepted, as the Division Bench decision in M/s. Sermen India Road Makers Pvt. Ltd. vs. State of M.P. 2005 (3) MPHT 292 has been over-ruled by the Full Bench vide order dated 27.10.2009 and it has been held that it would not be correct to say that the claimant can raise the dispute within three years before the final authority from the date of accrual of cause of action. 15. Therefore, counterclaims No. 2 and 3 have rightly been rejected. Claim No. 4, the advance paid to the applicant is not in dispute, the respondents have adjusted final bills, earnest money and security deposit in the aforesaid amount recoverable from the applicant, therefore, the interest has rightly been denied. The total counter claim 21,593/-+ 1,69,703/-has rightly been allowed. In absence of any perversity in the award and limited revisional powers of the High Court, we do not find any ground to interfere in the impugned award. 16. In view of the above, Civil Revision No. 117/2005 and Civil Revision No. 512/2003 both are hereby dismissed. No order as to cost.