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2022 DIGILAW 148 (TRI)

Utpal Datta v. State of Tripura

2022-03-23

S.TALAPATRA

body2022
JUDGMENT S. Talapatra, J. - Heard Mr. R. Datta, learned counsel appearing for the petitioner as well as Mr. D. Bhattacharya, learned G.A. assisted by Mr. P. Saha, learned counsel appearing for the respondents. 2. There is no dispute that the petitioner is a category-1 Contractor as registered under the Public Works Department, Government of Tripura, NBCC, NPCC, ONGC, HSCL and several other Government and Public Sector Enterprises. The petitioner has claimed his robust experience in the business. In response to the DNIT No. 62/CE/PWD (R & B)/SQC/PD-III/2007-08 for up-gradation of Panisagar to Sailen Bari Road under 40% renewal under Bharat Nirman Programme, the petitioner participated in the tendering and got selected. The work order No. 31-713/EE/(DD)/6065-6082 dated 06.11.2018 was issued in his favour. According to the petitioner, he had the liability to provide maintenance for a period of five years and that period came to end on 09.05.2017. He had been pressing for payment of the final bill and release the performance security and security deposits. But that was not so done, notwithstanding the fact that the petitioner has satisfactorily completed the whole work. 3. The petitioner had submitted the final bill amounting to Rs. 6,94,000/- to the respondents after completion of the work. The said final bill, the security deposit and the performance security deposit amounting to Rs. 16,69,000/- had not been paid or released till the day of filing of the writ petition despite serious persuasion from the end of the petitioner. On 02.12.2019, the petitioner asked the respondents for payment of the said amount but without any yield. Thereafter, on 21.10.2020, the petitioner issued a notice of demand for releasing the security deposits and payment of the final bills amounting to Rs. 23,63,000/- (in aggregate) along with interest within a period of fortnight. But again, there was no response. The petitioner has asserted that the performance security can be retained only for the five years for purpose of ensuring the routine maintenance in terms of the agreement. For withholding of the said amount, the petitioner has been put to serious financial stress and hence he has approached this court for directing the respondents to release security deposit and performance security deposit amounting to Rs. 16,69,000/- and the final bill amounting to Rs. 6,94,000/- along with interest etc. 4. For withholding of the said amount, the petitioner has been put to serious financial stress and hence he has approached this court for directing the respondents to release security deposit and performance security deposit amounting to Rs. 16,69,000/- and the final bill amounting to Rs. 6,94,000/- along with interest etc. 4. The respondents however have raised the plea in the reply that the writ petition itself is not maintainable, inasmuch as the dispute arises from the contract. That apart, it has been stated that the petitioner has neither executed any maintenance work nor has corrected any defect during the five years by way of maintenance in terms of clause-32 of the agreement. Clause-32 of the agreement provides that the defect be corrected by the Contractor but the petitioner did not correct the defects. It has been projected in their reply that the final deviation bill has not been approved. As the petitioner did not execute the maintenance work in terms of the agreement he cannot ask for release of the security deposit or the performance security deposit. The petitioner does not have any indefeasible right as claimed by him. 5. In response thereof, the petitioner has filed the rejoinder stating inter alia that there had been no notice to the Contractor (the petitioner) in terms of the Clause-32.1.1 from the Engineer by delineating the defects which are to be corrected by the petitioner. This is an imaginative plea that has been taken by the respondents in order to defeat the justice. It has been also stated by the petitioner in the rejoinder that the amount of money has been settled for maintenance work against each year during the period of five years. The petitioner had never prayed for any amount nor the petitioner was requisitioned to correct any defect. That apart, the petitioner has stated that the final deviation statement has been approved by the communication dated 28.01.2022 [Annexure-8 to the rejoinder]. 6. Mr. R. Datta, learned counsel has further submitted that the plea of non-maintainability is without any substance. The act of the respondents by withholding the due money is a serious breach of the contractual obligation. There is no dispute regarding completion of the work. There is no demand for corrective measure in the form of maintenance. Despite that, arbitrarily for the last four years the amount due to the petitioner is being withheld by the respondents. The act of the respondents by withholding the due money is a serious breach of the contractual obligation. There is no dispute regarding completion of the work. There is no demand for corrective measure in the form of maintenance. Despite that, arbitrarily for the last four years the amount due to the petitioner is being withheld by the respondents. In respect of the maintainability, Mr. Datta, learned counsel has relied on a decision in Unitech Limited and Others v. Telangana State Industrial Infrastructure Corporation (TSIIC) and Others. In that report the apex court having relied on ABL International Ltd. v. Export Credit Guarantee Corporation of India reported in (2004) 3 SCC 553 has observed as follows: '39. A two judge Bench of this Court in ABL International Ltd. v. Export Credit Guarantee Corporation of India (2004) 3 SCC 553 [ABL International] analyzed a long line of precedent of this Court to conclude that writs under Article 226 are maintainable for asserting contractual rights against the state, or its instrumentalities, as defined under Article 12 of the Indian Constitution. Speaking through Justice N Santosh Hegde, the Court held: '27. ...the following legal principles emerge as to the maintainability of a writ petition: (a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. (b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. (c) A writ petition involving a consequential relief of monetary claim is also maintainable.' 40. This exposition has been followed by this Court, and has been adopted by three-judge Bench decisions of this Court in State of UP v. Sudhir Kumar and Popatrao Vynkatrao Patil v. State of Maharashtra: Civil Appeal 1600 of 2000 (Supreme Court of India). The decision in ABL International, cautions that the plenary power under Article 226 must be used with circumspection when other remedies have been provided by the contract. But as a statement of principle, the jurisdiction under Article 226 is not excluded in contractual matters. Article 23.1 of the Development Agreement in the present case mandates the parties to resolve their disputes through an arbitration. But as a statement of principle, the jurisdiction under Article 226 is not excluded in contractual matters. Article 23.1 of the Development Agreement in the present case mandates the parties to resolve their disputes through an arbitration. However, the presence of an arbitration clause within a contract between a state instrumentality and a private party has not acted as an absolute bar to availing remedies under Article 226. If the state instrumentality violates its constitutional mandate under Article 14 to act fairly and reasonably, relief under the plenary powers of the Article 226 of the Constitution would lie. This principle was recognized in ABL International: '28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. (See Whirlpool Corpn. v. Registrar of Trade Marks [ (1998) 8 SCC 1 ].) And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction.' (emphasis supplied) 41. Therefore, while exercising its jurisdiction under Article 226, the Court is entitled to enquire into whether the action of the State or its instrumentalities is arbitrary or unfair and in consequence, in violation of Article 14. The jurisdiction under Article 226 is a valuable constitutional safeguard against an arbitrary exercise of state power or a misuse of authority. In determining as to whether the jurisdiction should be exercised in a contractual dispute, the Court must, undoubtedly eschew, disputed questions of fact which would depend upon an evidentiary determination requiring a trial. The jurisdiction under Article 226 is a valuable constitutional safeguard against an arbitrary exercise of state power or a misuse of authority. In determining as to whether the jurisdiction should be exercised in a contractual dispute, the Court must, undoubtedly eschew, disputed questions of fact which would depend upon an evidentiary determination requiring a trial. But equally, it is well-settled that the jurisdiction under Article 226 cannot be ousted only on the basis that the dispute pertains to the contractual arena. This is for the simple reason that the State and its instrumentalities are not exempt from the duty to act fairly merely because in their business dealings they have entered into the realm of contract. Similarly, the presence of an arbitration clause does oust the jurisdiction under Article 226 in all cases though, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked. The jurisdiction under Article 226 was rightly invoked by the Single Judge and the Division Bench of the Andhra Pradesh in this case, when the foundational representation of the contract has failed. TSIIC, a state instrumentality, has not just reneged on its contractual obligation, but hoarded the refund of the principal and interest on the consideration that was paid by Unitech over a decade ago. It does not dispute the entitlement of Unitech to the refund of its principal.' [Emphasis added] 7. The crux of the said decision is that the jurisdiction under Article 226 of the Constitution cannot be ousted only on the basis that the dispute pertains to the contractual arena. This is for the simple reason that the State and its instrumentalities are not exempt from the duty to act fairly merely because in their business dealings they have entered into the realm of contract. Even it has been observed that existence of an arbitration clause does not oust the jurisdiction of the Article 226 in all cases. But this is an area which depends on the fact adverted in each case. The said judgment has also reminded that going beyond the boundaries of the contract may not be suggestible under the jurisdiction as conferred by Article 226 of the Constitution of India. 8. Mr. But this is an area which depends on the fact adverted in each case. The said judgment has also reminded that going beyond the boundaries of the contract may not be suggestible under the jurisdiction as conferred by Article 226 of the Constitution of India. 8. Mr. Datta, learned counsel has thereafter referred to paragraph-9 of the reply filed by the respondents where it has been averred that the work was completed on 10.05.2012, but the work was not completed within the date as stipulated in the work order. Stipulated date for completion of the work was 19.11.2009. Time extension was granted by the competent authority by the communication No. F. 36(269)/SE(I)/KGT/2222-23 dated 08.02.2020 on levy of compensation for an amount of Rs. 75,116.00. It has been also stated by the respondents that the petitioner has not executed any maintenance work during the routine maintenance period of five years as per clause-32 of the agreement 'in spite of several persuasion'. Unless the defects are not corrected, the petitioner cannot claim the final payment. That apart, the petitioner has not been issued the completion certificate. In para-13 of the reply filed by the respondents, it has been stated that the petitioner's final bill has been calculated at Rs. 6,96,417.00/-. But the amount could not be released because the final deviation statement has not been approved. Mr. Datta, learned counsel has taken this court to clause-32.1.2 of the agreement which reads as under: 'Every time notice of Defect/Defects is given, the Contractor shall correct the notified Defect/Defects within the length of time specified by the Engineer's notice.' Mr. Datta, learned counsel has with reference to the said clause 32.1.2, succinctly submitted that at no point of time, any notice was issued to the Contractor for correcting any defect by the Engineer. Therefore, there is no question of correcting defects as asserted by the respondents. 9. In this regard, Mr. R. Datta, learned counsel has also taken us to the Bill of Quantities for Percentage rate bids [page-78 to the writ petition] where for each year the amount has been provided for purpose of maintenance after completion of the construction. For purpose of the post-construction maintenance is an amount is Rs. 1,53,14,243.00 had been approved. But Mr. R. Datta, learned counsel has also taken us to the Bill of Quantities for Percentage rate bids [page-78 to the writ petition] where for each year the amount has been provided for purpose of maintenance after completion of the construction. For purpose of the post-construction maintenance is an amount is Rs. 1,53,14,243.00 had been approved. But Mr. Datta, learned counsel has categorically stated for the petitioner that there had no claim on behalf of the petitioner on that amount as there had been no requisition for maintenance during the stipulated five years after completion of the work. 10. Mr. Datta, learned counsel has finally submitted that withholding of the said amount is entirely arbitrary and violative of Article 14 of the Constitution of India and hence the petition deserves to be allowed by this court. 11. Per contra, Mr. Bhattacharya, learned G.A. has stated that the certificate of completion has not been issued as yet in favour of the petitioner. The petitioner has not paid the levied amount for extension of time and at the time of filing the reply, the final deviation statement was not approved by the competent authority. That apart, the compensation recoverable from the contractors has not been determined in terms of the Clauses-44.1 and 44.2. For purpose of reference, those clauses are reproduced hereunder: '44.1 The Contractor shall pay liquidated damages to the Employer at the rate per week or part thereof stated in the Contract Data for the period that the Completion Date is later than the Intended Completion Date. Liquidated damages at the same rate shall be withheld if the Contractor fails to achieve the milestones prescribed in the Contract Data. However, in case the Contractor achieves the next milestone the amount of the liquidated damages already withheld shall be restored to the Contractor by adjustment in the next payment certificate. The total amount of liquidated damages shall not exceed the amount defined in the Contract Data. The Employer may deduct liquidated damages from payments due to the Contractor. Payment of liquidated damages shall not affect the Contractor's other liabilities. The total amount of liquidated damages shall not exceed the amount defined in the Contract Data. The Employer may deduct liquidated damages from payments due to the Contractor. Payment of liquidated damages shall not affect the Contractor's other liabilities. 44.2 If the Intended Completion Date is extended after liquidated damages have been paid, the Engineer shall correct any overpayment of liquidated damages by the Contractor by adjusting the next payment certificate.' It is apparent that the Contractor is under obligation to pay the liquidated damages to the employer at the rate per week or part thereof as stated in the Contract data for the period from the completion date as stipulated the actual completion date. Liquidated damages at the same rate shall be realised if the Contractor fails to achieve the milestones prescribed in the Contract data. 12. When Mr. Bhattacharya, learned G.A. is queried by this court whether any such damage has been reflected in their reply he has candidly submitted that no such plea has been raised by the respondents. According to Mr. Bhattacharya, learned G.A. only after the completion certificate is issued, the final payment can be made. Release of security deposit and performance/security deposit can be caused only thereafter. The petitioner does not have any right in priori, to claim release of the said amount. 13. Having appreciated the submission of the learned counsel appearing for the petitioner and the respondents, and scrutinized the records produced with the writ petition and the rejoinder, this court is of the view that by filing the reply, the respondents have admitted two pertinent facts namely (a) completion of the assigned work and (b) lapse of five years of time for routine maintenance. 14. True it is that, no final certificate of completion has been issued but in para-6 of the reply filed by the respondents they have admitted that the outstanding bill amount is Rs. 6,96,417/- and the total security deposit including performance security is Rs. 16,69,222/-.In para-13, they have stated that since the final deviation statement is not approved, the final bill amounting to Rs. 6,96,417/- could not be released. But the petitioner with the rejoinder enclosed the communication dated 28.01.2022 [Annexure-8] wherefrom it appears that the final deviation statement has been approved by the Chief Engineer, PWD (PMGSY). 16,69,222/-.In para-13, they have stated that since the final deviation statement is not approved, the final bill amounting to Rs. 6,96,417/- could not be released. But the petitioner with the rejoinder enclosed the communication dated 28.01.2022 [Annexure-8] wherefrom it appears that the final deviation statement has been approved by the Chief Engineer, PWD (PMGSY). Therefore, there is no more impediment to release the security deposit and the performance security deposit in favour of the petitioner and also to make payment of the final bill. The objection that has been raised by Mr. Bhattacharya, learned G.A. that the certificate of completion of the work has not been issued is mere valid. If this objection is read with their statement in paragraphs 6 & 13 together, it will be apparent that non-issuance of the said completion certificate is absolutely arbitrary and violative of the constitutional spirit as enshrined under Article 14 of the Constitution of India. For such arbitrary action, as apparent on the face of the records, this writ petition is maintainable in view of the law laid down by the apex court in Unitech Limited (supra). As such, the requirement of the issuance of certificate of completion is liable to be waived and accordingly it is ordered. 15. In this resume of facts as noted above, the respondents are directed to make payment of the amount of Rs. 6,96,417/- as the final bill for the aforesaid work and to release the security and performance deposit to the extent of Rs. 16,69,322/- within a period of one month from the date when the petitioner shall furnish a copy of this order. It is also clearly mentioned that if the amount levied for delay in completing the work to the extent of Rs. 75,116/- has not been paid by the petitioner, the said amount shall be deducted at the time of making payment. This court however is not inclined to grant the interest from the date when this amount fell due, but if this amount is not paid within one month from the delivery of the copy of the judgment and order that shall carry interest @7% till the money is realized by the petitioner. In terms of the above, this writ petition stands allowed. There shall be no order as to costs.