SIMPLEX INFRASTRUCTURE LIMITED v. NATIONAL HIGHWAY AUTHORITY OF INDIA
2022-01-19
M.R.PATHAK
body2022
DigiLaw.ai
JUDGMENT : MANASH RANJAN PATHAK, J. 1. Heard Mr. G.N. Sahewalla, learned Senior Counsel assisted by Mr. D. Senapati, learned counsel for the petitioner and Mr. C. Baruah, learned counsel, National Highway Authority of India for the respondent Nos. 1 to 4. Also heard Mr. D. Das, learned Senior Counsel assisted by Mr. G. Khandelia, learned counsel for the respondent No. 5. 2. The petitioner company is engaged in the business of executing work contract for Public Sector Undertakings and Government as well as Semi Government establishments. It is stated that it has developed adequate infrastructure, necessary technical know-how, technology resources equipments, materials etc., having fully trained, efficient capable personnel so as to execute construction works on contractual basis. 3. In respect of the project of “Widening and strengthening of the existing National Highway from 2 (two) lane to 4 (four) lane from Km. 183.000 to Km 163.895 of Sonapur to Guwahati Section of National Highway No. 37 in Assam on East-West Corridor under Phase-II programme of NHDP (National Highway Development Project) Package No. EW-II (AS-3)” (hereinafter referred to as the said Project), the respondents in the National Highway Authority of India (NHAI, in short) allotted the said project to the respondent No. 5 (Telecommunications Consultants India Limited and MBL Infrastructures Limited, in short, TCIL-MBL (JV) a Joint Venture through an Open Competitive Bidding Process and in respect of the award of work of the said project, an agreement was executed between the NHAI authorities and the respondent No. 5 on 03.06.2005. 4. Prior to the Award relating to the work of the said Project in favour of the respondent No. 5 by the NHAI authorities, a Joint Venture Agreement was executed on 27.05.2005 between M/s. Telecommunications Consultants India Limited (in short, TCIL) and M/s. Maheswari Brothers Limited Infrastructures Limited, the respondent No. 6 (in short MBLIL), where the MBLIL was the lead partner of the respondent No. 5 with 51% share in the said Joint Venture and the balance 49% share of the said Joint Venture (respondent No. 5) was with M/s. Telecommunications Consultants India Limited (in short, TCIL). 5. As per the RND (Record Notes of Discussion) and discussion had by the petitioner with the respondent No. 6 on 07.04.2007, the said respondent No. 6 vide Reference No. MIL/77 dated 26.04.2007 issued a Work Order to the petitioner for execution of Cross Drainage Work, Bridges, Underpass, Flyovers etc.
5. As per the RND (Record Notes of Discussion) and discussion had by the petitioner with the respondent No. 6 on 07.04.2007, the said respondent No. 6 vide Reference No. MIL/77 dated 26.04.2007 issued a Work Order to the petitioner for execution of Cross Drainage Work, Bridges, Underpass, Flyovers etc. relating to the said Project with certain terms and conditions and the petitioner by its communication dated 24.05.2007 accepted the said Work Order of the respondent No. 6 and submitted its structure wise work programme before the respondent No. 5. The respondents in the NHAI vide letter No. NHAI/11015/AS-03/4/2005/EW-1/650 dated 23.01.2009 gave its approval to the proposal of the respondent No. 5 M/s. TCIL-MBL (JV) to appoint the petitioner as Sub-Contractor for execution of parts of the work with regard to the said Project. 6. Petitioner stated that on the basis of the permission accorded by the authorities concerned in the NHAI and the Work Order allotted to it vide Reference No. MIL/77 dated 26.04.2007 (by respondent No. 6), noted above, the petitioner as Sub-Contractor on 31.12.2011 finally completed the work allotted to it with regard to the said Project and handed over the worksite to the respondent No. 5 and submitted its final bill, which the respondent No. 5 is yet to pay to the petitioner. 7. The petitioner through its reliable source came to know that the NHAI authorities shall disburse an amount of Rs.10,00,00,000/-in favour of the respondent No. 5 and that it is the only amount due to the respondent No. 5 by the NHAI authorities for the said Project. 8. Petitioner stated that if the said amount of Rs. 10,00,00,000/-is disbursed by the NHAI authorities to the respondent No. 5 as proposed, the petitioner shall suffer grave prejudice and shall be put to a precarious financial condition as the respondent No. 5 have not yet paid the bills concerned for the work it has completed with regard to the said Project. 9.
10,00,00,000/-is disbursed by the NHAI authorities to the respondent No. 5 as proposed, the petitioner shall suffer grave prejudice and shall be put to a precarious financial condition as the respondent No. 5 have not yet paid the bills concerned for the work it has completed with regard to the said Project. 9. As such, the petitioner by its letters No. 012/PC/NHAI/C2222/001/ Vol./115347 dated 28.09.2021 and No. 012/PC/NHAI/C2222/001/Vol./115351 dated 25.10.2021 represented before the General Manager, North Eastern Region of the NHAI to exercise its power under Clause 59 as well as Circular No. COVID-19/Road Map/JS (H)/2020[E-183777] dated 08.10.2021 issued by the Government of India, stipulating that arrangement of direct payment to approve Sub-Contractors through escrow accounts and requested the said authority to release the legitimate claims of the petitioner amounting to Rs.10,18,69,300.56/-for the work done by it relating to the said Project and set-off the said amount from the payment to be made by the NHAI authorities to the respondent No. 5 relating to the said Project. 10. The petitioner stated that it made such demand before the respondent NHAI in terms of Clause 59.5 of the Contract Agreement that provides that the employer shall be entitled to pay directly to the Sub-Contractor and deduct by way of set-off from any sums due by the employer to the contractor, if the contractor fails to supply any proof of payments done to the Sub-Contractor for the work done. 11. Petitioner also stated that the respondent NHAI authority through its Acting Team Leader/Engineer M/s. RITES (Rail India Technical and Economic Service) Limited also came to know that the said Engineer/Team Leader requested the respondent No. 5 to furnish the details of payment made to the Sub-Contractor, i.e., the petitioner and the due to be paid to it, but the respondent No. 5 Contractor denied of any amount due to the petitioner. 12. The respondent NHAI also informed the petitioner that the said Acting Team Leader/Engineer M/S. RITES Ltd. have informed NHAI that though the petitioner was a Sub-Contractor, but relating to the work of the said Project, all the running bills were submitted by the main Contractor (respondent No. 5) and accordingly, all payments were made to the account of the respondent No. 5 and that no due was pending against the works completed and bills raised (with regard to the said Project).
The NHAI authority also informed the petitioner that the Contractor (respondent No. 5) by its letter dated 01.11.2019 informed that the petitioner was fully paid for the work executed by it and since bills were not raised by the petitioner/Sub-Contractor directly to the Engineer/the Acting Team Leader M/s. RITES Ltd., the said Contractor, respondent No. 5 had no records about the amount paid to the petitioner/Sub-Contractor. 13. Since the respondent authorities in the NHAI did not exercise the said power specified under Clause 59 of the Contract Agreement, the petitioner preferred this writ petition praying, amongst others, for a direction to the respondent authorities to release the outstanding payment of Rs.10,18,69,300.56/-to the petitioner for the said work directly to it with interest. The petitioner also made an interim prayer for a direction to the respondents in the NHAI not to disburse any amount to the respondent No. 5 for the said work. 14. The Court on 12.11.2021 directed the respondents in the NHAI to apprise the Court regarding the payment to be made to the petitioner for completion of the said work under the respondent No. 5 fixing the matter on 25.11.2021, observing that till then the respondents in the NHAI shall not release any further amount to the respondent No. 5 for the work, relating to said Project without the leave of the Court. 15. The respondent No. 6 by filing a preliminary affidavit on 03.12.2021 submitted before the Court that the prayers made by the petitioner in the present writ petition are not tenable since the monetary claim made by the petitioner is against the respondent Nos. 5 and 6 who are not State Entities and therefore, the writ petition itself is not maintainable. Respondent No. 6 stated that with regard to the work allotted to the petitioner relating to the said Project was on the basis of Work Order that was issued by the said respondent (respondent No. 6) and the relevant contract was between the petitioner and the respondent No. 6 and that with regard to the claim of the petitioner, it did not execute any contract with the respondent Nos. 1 to 4 in NHAI authorities and that the present matter being purely a commercial dispute between the petitioner and the respondent No. 6, the present writ petition preferred by the petitioner is not maintainable. 16.
1 to 4 in NHAI authorities and that the present matter being purely a commercial dispute between the petitioner and the respondent No. 6, the present writ petition preferred by the petitioner is not maintainable. 16. The respondent No. 6 also pointed out that the matter relates to contractual dispute between the petitioner and the respondent No. 5 containing disputed facts and as such, the present petition preferred by the petitioner on that count is also not maintainable. 17. The respondent No. 6 also placed before the Court that on 26.04.2007, Work Order was issued to the petitioner by the said respondent and the petitioner on 24.05.2007 accepted the said Work Order of the respondent No. 6. Respondent No. 6 stated that it made payments to the petitioner for the work done by it. It is also placed by the said respondent that the petitioner in the writ petition itself stated that it completed the work on 31.12.2011, whereas it claimed for payment on 23.10.2019 and as such, the petition suffers from unexplained delay and laches. 18. The respondent No. 6 also stated that the petitioner abandoned the site of the work and on 15.12.2011, it removed limited machinery and material deployed by it and it is the respondent No. 6, who completed the work and the petitioner by filing this petition wanted to gain illegally from the respondents, alleging for recovery of more than 10 Crores, that too after seven years of abandoning the site of the work concerned. 19. The respondent No. 6 in its said preliminary affidavit placed before the Court that the letter of the respondent No. 5 dated 01.11.2019 annexed by the petitioner, which was also enclosed to the letter dated 18.12.2019 of the respondent NHAI (Annexure-10 to this petition) clearly reflects that the petitioner was informed that the respondent No. 5 had fully paid the petitioner for the work executed by it and that there was non-performance/under performance by the petitioner causing loss and damage to the respondent No. 5 and even otherwise the claims made by the petitioner were barred by law of limitation and provisions of Insolvency and Bankruptcy Code, 2016.
Respondent No. 6 further placed before the Court that the respondent No. 5 by its letter dated 27.07.2021 (Annexure-XIX to the writ petition) reiterated its earlier information that no amounts were due and payable to the petitioner and that no Work Order was ever issued by the respondent No. 5 and regarding the proceeding against the respondent No. 6 under IBC, the consequential Resolution Plan had already been approved under Section 31 of the said 2016 Code of IBC. 20. The petitioner filed its reply against the said preliminary affidavit of the respondent No. 6, reiterating its claim regarding the unpaid dues to it for the work that it had done in terms of the said Work Order dated 26.04.2007 relating to the said Project. 21. The respondent NHAI by filing an affidavit relating to Clause 59.5 ‘Certification of Payment to nominated Sub-Contractors’ and regarding the claim of the petitioner made in this petition, submitted that in the contract signed between the respondent NHAI and the respondent No. 5 relating to the said Project, there was a provision in nomination of Sub-Contractor by the main Contractor and the NHAI authority requested the Engineer/Supervision Consultant M/s. RITES India Limited to finalize the quantity executed by the petitioner, i.e., the approved Sub-Contractor with regard to the work done by it relating to the said Project about which the said Supervision Consultant had already certified. But it was found that neither the NHAI nor the said Supervision Consultant M/S. RITES Ltd. had any knowledge regarding the amount of payment paid to the petitioner by the respondent No. 5 the main contractor, as such, the NHAI cannot take any action in terms of Clause 59.5 of the said agreement between it and the respondent No. 5. The NHAI clarified that as per Clause 59.5 of the Contract Agreement, the employer, i.e., the NHAI was required to pay the nominated Sub-Contractor directly upon certificate of the Engineer and that in terms of said Clause 59.5 of the Contract Agreement, it is M/s. RITES Ltd. is the Engineer in the case in hand. The respondent NHAI clarified its stand that it will not be in a position to act as per Sub-Clause 59.5 of the Contract Agreement between the NHAI and the respondent No. 5 with regard to the said Project unless the main contractor, i.e., the respondent No. 5 discloses the same. 22.
The respondent NHAI clarified its stand that it will not be in a position to act as per Sub-Clause 59.5 of the Contract Agreement between the NHAI and the respondent No. 5 with regard to the said Project unless the main contractor, i.e., the respondent No. 5 discloses the same. 22. The respondent NHAI also clarified that it has settled all the disputes with the Contractor respondent No. 5 with regard to the work relating to the said Project and for that purpose, the NHAI and the respondent No. 5 on 01.10.2021 had already executed a full and final settlement agreement for that purpose and a settlement was arrived at between them that the NHAI shall pay an amount of Rs.42.00 Crores in addition to the payment of final bill including escalation VOs (Variation Orders), withheld amount, release of Performance Security and Retention Money Bank Guarantee on actual basis to the respondent No. 5 with certain obligations on the part of the Contractor, i.e., the respondent No. 5. The respondent NHAI specified that pertaining to any dues payable to the petitioner with regard to any work done by it as a Sub-Contractor of the respondent No. 5, relating to the said Project; it is the Contractor respondent No. 5, who is required to settle the dues and the case with the petitioner and not by the respondent NHAI. 23. The respondent No. 5 Contractor in its affidavit stated that the claim of the petitioner relates to the year 2011 and therefore, the writ petition is barred by limitation. Respondent No. 5 also submitted that the this petition is not maintainable under the provisions of Section 31 (1) of the Insolvency and Bankruptcy Code, 2016 as the National Company Law Tribunal, Kolkata had approved the Resolution Plan in respect of the respondent No. 6 that has been confirmed by the National Company Law Appellate Tribunal and admittedly the petitioner did not make any claim nor before the Resolution Professional and/or National Company Law Tribunal, Kolkata. It is also submitted by the respondent No. 5 that since respondent Nos. 5 and 6 are private individuals, therefore, this writ petition is not maintainable, stating further that the present writ petition involves various disputes questions of facts that cannot be adjudicated in a writ petition filed under Article 226 of the Constitution and that the petitioner did not approach the Court with clean hands.
5 and 6 are private individuals, therefore, this writ petition is not maintainable, stating further that the present writ petition involves various disputes questions of facts that cannot be adjudicated in a writ petition filed under Article 226 of the Constitution and that the petitioner did not approach the Court with clean hands. 24. The respondent No. 5 also clarified that the respondent No. 6 engaged the petitioner as a Sub-Contractor in terms of Clause 4.1 of the Contract Agreement between the NHAI and the respondent No. 5 relating to the work of the said Project and the respondent No. 6 accordingly informed the respondent No. 5 in that regard and in turn, the respondent No. 5 applied before the respondent NHAI for approval of the petitioner as Sub-Contractor under Clause 4.1 of the said Agreement for a worth value of Rs. 18.18 Crores vide letter dated 23.01.2009 and that the NHAI authorities gave its approval under Clause 4.1 of the said Agreement and not under Clause 59.5 of the said Agreement. 25. The petitioner by filing a reply denied all the objections made by the respondent No. 5 and reiterated its claim made in the writ petition against the respondent Nos. 5 and 6 claiming its dues from respondent NHAI authorities. 26. Perused the provisions of Sub-Contracting under Clause 4.1 of the Contract Agreement along with the substitutions made in that clause signed between the NHAI authorities and the Contractor respondent No. 5 on 03.06.2005 relating to the work of the said Project which reads as follows: “The contractor shall not sub-contract more than 33% of the contract amount including where otherwise provided by the contract of the Works. Except where otherwise provided by the Contract the Contractor shall not subcontract any part of the Works without prior written permission of the Engineer. Any such consent shall not relieve the Contractor from any liability or obligation under the Contract and he shall be responsible for the acts, defaults and neglects of any Sub-Contractor, his agents, servants or work man as fully as if they were the acts, defaults or neglects of the Contractor, his agents, servants or work man.
Any such consent shall not relieve the Contractor from any liability or obligation under the Contract and he shall be responsible for the acts, defaults and neglects of any Sub-Contractor, his agents, servants or work man as fully as if they were the acts, defaults or neglects of the Contractor, his agents, servants or work man. The Engineer should satisfy whether (a) the circumstances brought out warrant such subcontracting and (b) the Sub-Contractor so proposed for the work possesses the necessary experience, qualifications and equipment for the job proposed to be entrusted to them in proportion to the quantum of work to be sub-contracted. Provided that the Contractor shall not be required to obtain such consent for (a) the provision of labour, (b) the purchase of material which are in accordance with the standards specified in the contract or (c) the sub-contracting of any part of the Work for which the Sub-Contract is named in the contract.” 27. Clause 59.1 of the said Contract Agreement defines “Nominated Subcontractors” which reads as: “All specialists, merchants, tradesman and others executing any work or supplying any goods, materials, Plant or services for which Provisional Sums are included in the Contract who may have been or be nominated or selected or approved by the Employer or the Engineer, and or persons to whom by virtue of the provisions of the Contract the Contractor is required to subcontract shall, in the execution of such work or the supply of such goods, materials, Plant or services, be deemed to be subcontractors to the Contractor and are referred to in this Contract as “Nominated Subcontractors.” 28. The letter of the NHAI under No. NHAI/11015/AS-3/4/2005/EW-1/650 dated 23.01.2009 to the Project Director of the NHAI, Guwahati (Annexure-1 to this petition) relates to the approval of the proposal of the respondent No. 5, Contractor to appoint the petitioner as Sub-Contractor for execution of part of the work of the said Project for an amount of Rs.15.18 Crores (10.90% of the Contract Value) of the said Project.
Said letter dated 23.01.2009 of the respondent NHAI clearly reflects that the NHAI authority accorded approval permitting the respondent No. 5 to appoint the petitioner as Sub-Contractor for execution of part of the works mentioned in the said letter dated 23.01.2009 for an amount of Rs.15.18 Crores (10.90% of the Contract Value) as per the provision of Clause 4.1 of GCC & COPA observing further that said approval was subject to the condition that the consent for sub-contracting shall not relieve the contractor for any liability or obligation under the Contract and he shall be responsible for the acts, default and neglects of the Sub-Contractor, his agents, servants and work man etc. 29. Neither the petitioner nor the respondents in the NHAI clarified that subcontracting under Clause 4.1 of the said Contract Agreement between the NHAI authority and the Contractor respondent No. 5 relates to Nominated Sub-Contractor as defined under Clause 59.1 of the said Contract Agreement, but from the perusal of Subcontracting under Clause 4.1 and Nominated Sub-Contractors under Clause 59.1 of the said Contract Agreement between the NHAI authority and the respondent No. 5 relating to the said Project appears to be two different identities/sub-contractors, one subcontracting not more than 33% of the contract amount under Clause 4.1 and the other for which provisional sums are included in the contract itself under Clause 59.1 and that Clause 59.5 of the said Contract Agreement relates to Nominated Sub-Contractors only. 30. Petitioner neither annexed nor placed the agreement executed by it with the respondent No. 6 M/s. MBL Infrastructures Limited who issued the Work Order under Reference No. MIL/77 dated 26.04.2007 to the petitioner pertaining to certain work relating to the said Project. The respondent NHAI authorities clearly stated that with regard to any dues payable to the petitioner with regard to the work done by it as a Sub-Contractor of the respondent No. 5, relating to the said Project; it is the concerned Contractor, i.e., the respondent No. 5, who is required to settle the dues with the petitioner and not by the respondent NHAI. 31. Petitioner did not place anything before the Court that it raised bill(s) for the work rendered by it as a Sub-Contractor of respondent Nos.
31. Petitioner did not place anything before the Court that it raised bill(s) for the work rendered by it as a Sub-Contractor of respondent Nos. 5 and/or 6 relating to the said Project either intimating or through the Acting Team Leader/Supervision Consultant/Engineer M/S. RITES India Limited or that it intimated the NHAI authorities as and when they raised any such bill(s) for such work. 32. Matter relates to the claim of non payment of dues for alleged contractual work done by the petitioner in terms of Work Order issued to it by the respondent No. 6 on 26.04.2007 that was accepted by the petitioner on 24.05.2007. Petitioner itself stated that on 31.12.2011, it has finally completed the said contract work allotted to it relating to the said Project and that it had handed over the worksite to the respondent No. 5 and submitted its final bill, which the respondent No. 5 has not paid. On the other hand the respondent No. 5 informed the NHAI authorities that the respondent No. 5 had fully paid the petitioner for the work executed by it and that there was non-performance/under performance by the petitioner causing loss and damage to the respondent No. 5. 33. Moreover, the respondent Nos. 5 and 6 stated that the claims made by the petitioner are also barred by the law of Limitation and not maintainable under the provisions of Section 31 (1) of the Insolvency and Bankruptcy Code, 2016 clarifying that the National Company Law Tribunal, Kolkata had approved the Resolution Plan in respect of the respondent No. 6, which has been confirmed by the National Company Law Appellate Tribunal, Kolkata and that the petitioner did not make any claim before the Resolution Professional and/or the National Company Law Tribunal, Kolkata regarding its unpaid dues, stating further that both the respondent Nos. 5 and 6 are private individuals and they are not Government entity. 34. The above clearly reflects a huge disputed questions of facts as the parties to this proceeding are not agreeing to the truth or accuracy of the facts raised by either of the parties.
5 and 6 are private individuals and they are not Government entity. 34. The above clearly reflects a huge disputed questions of facts as the parties to this proceeding are not agreeing to the truth or accuracy of the facts raised by either of the parties. It is already seen that issues involve in this petition relates to enforcement of right or an obligation created under the contractual agreement i.e., breach of contract and therefore, the remedy available to the petitioner claimant as a Sub-Contractor under respondent No. 6/5 as the case may be, is to get adjudication under the provisions specified in the contract agreement between the petitioner and the respondent No. 6 and/or respondent Nos. 5, as applicable in terms of their agreement. 35. The Hon’ble Apex Court in catena of decisions have settled the law that – Whether or not the High Court should exercise jurisdiction under Article 226 of the Constitution would largely depend upon the nature of dispute and if the dispute cannot be resolved without going into the factual controversy, the High Court should not entertain the writ petition. Where a complicated question of fact is involved and the matter requires thorough proof on factual aspects, the High Court should not entertain the writ petition. [Orissa Agro Industries Corpn. Ltd. Vs. Bharati Industries, (2005) 12 SCC 725 ] 36. With regard to breach of contractual obligation, the Hon’ble Supreme Court in the case of State of Bihar Vs. Jain Plastics and Chemicals Ltd. (2002) 1 SCC 216 , have held that: “In our view, it is apparent that the order passed by the High Court is, on the face of it, illegal and erroneous. It is true that many matters could be decided after referring to the contentions raised in the affidavits and counter-affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road permits by the appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition.
Whether the alleged non-supply of road permits by the appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a court exercising prerogative of issuing writs.” 37. In exercise of the power under Article 226 of the Constitution of India, the claim of the petitioner cannot be ascertained, as a Sub-Contractor how much work it has done for the respondent Nos. 5 and/or 6, as the case may be, and what is the amount due to the petitioner by either or both the respondent Nos. 6 and 5 for such work rendered by the petitioner as its/their Sub-Contractor, more so, dispute regarding such payments have been raised by the private respondent Nos. 5 and 6. 38. For the reasons above and as the case in hand contains disputed questions of facts, the prayers made by the petitioner herein cannot be entertained under Article 226 of the Constitution of India and accordingly, this writ petition, being not maintainable, stands dismissed. 39. Consequently, the interim order passed in this proceeding earlier on 12.11.2021 directing the respondents in the NHAI not to release any further amount to the respondent No. 5 for the work, relating to said Project without the leave of the Court stands vacated/hereby recalled.