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Gauhati High Court · body

2022 DIGILAW 852 (GAU)

Mahams Enterprises, Represented By Its Constituted Attorney Sri Yagindar Yadav v. State Of A. P. , represented by the Secretary, Deptt. Of UD and Housing, Govt. Of AP, Itanagar

2022-08-04

ROBIN PHUKAN

body2022
JUDGMENT : 1. Heard Mr. A. Dasgupta, learned counsel for the petitioner and also heard Mr. P. Taffo, learned standing counsel (Urban Development Department) for respondent Nos. 2, 3, 4, & 6 and also heard Mr. Y. Riram, learned Junior Government Advocate for respondent Nos. 1 & 5. 2. In this writ petition, under Article 226 of the Constitution of India, the petitioner has put to challenge the order dated 30.03.2015, issued by the respondent No.3 rescinding the contract of construction of Guest House and Staff Quarter at Khonsa, and also for issuing direction to the respondent authority for measuring the work done and the additional work done by him and to direct the respondent authority to make payment for the same. 3. The factual background leading to filing of the present petition is briefly stated as under:- “On 30.03.2012, the respondent No.3 issued one Notice Inviting Tender (NIT) for construction of a Guest House at Khonsa, at the cost of Rs. 1,98,36000.00/-. The petitioner had participated in the said bidding process and he was declared successful and the work was allotted to him on an agreed cost of Rs. 2,04,75,504.00/-(Two Crore four lakhs seventy five thousand five hundred four only) and a letter, dated 12.07.2012, was issued by the respondent No.3 to him, conveying acceptance of his bid and asked him to sign formal agreement within 7 days. Accordingly, the petitioner No.2 signed the formal agreement on 12.07.2012, which is registered vide registration No. 554 containing the terms and conditions of the contract and the scope of the work of construction of Guest House and Staff quarter, Type-1 (4 Nos.). The stipulated period of time of completion of the work was 18 months. Accordingly, the petitioner No.2 signed the formal agreement on 12.07.2012, which is registered vide registration No. 554 containing the terms and conditions of the contract and the scope of the work of construction of Guest House and Staff quarter, Type-1 (4 Nos.). The stipulated period of time of completion of the work was 18 months. But the petitioner had failed to carry out the execution of the work within the stipulated period of 18 months as there was existing building in the said construction site, which was required to be dismantled and to be developed and erection of boundary wall, protection wall and approach road etc, were also included in the same work and due to heavy rain in the month of April 2012 to October 2012, and April 2013 to October 2013, which affected the progress of the work and also because of non release of running bills at appropriate time and withholding of substantial amount from running bills which caused financial hardship to the petitioner No.2, and the same caused delay in execution of the work. Though the date of completion of the project was 21.01.2014, yet, the drawing of Type-1 Staff Quarter was handed over to him on 17.12.2013. Thereafter, on 19.03.2014, the respondent No.3, vide his order dated 25.03.2014, asked the petitioner No.2 for extension of time for completion of work from their competent authority and vide his letter dated 03.04.2014, he directed the petitioner No.2 to stop construction work till extension of time and accordingly, on 28.04.2014, he had file an application seeking for extension of time for 11 months. However, the respondent No.3, had extended the time till 30.09.2014 vide letter dated 08.08.2014. It is the contention of the petitioner that due to nonpayment of money in time and additional works allotted, the execution of the work got delayed and despite, respondent No.3,knowing the same fully well, in a most illegal manner rescinded the contract vide letter dated 10.10.2014, without giving an opportunity of being heard. Thereafter, the respondent No.3, vide order dated 30.03.2015, terminated the contract and forfeited the bill and other dues such as the Performance Security, Bid Security, and deducted the same from the running bills. Thereafter, the respondent No.3 again allotted the work to petitioner No.2 for carrying out the remaining work and executed a fresh agreement with him. Thereafter, the respondent No.3, vide order dated 30.03.2015, terminated the contract and forfeited the bill and other dues such as the Performance Security, Bid Security, and deducted the same from the running bills. Thereafter, the respondent No.3 again allotted the work to petitioner No.2 for carrying out the remaining work and executed a fresh agreement with him. But, due to nonpayment of dues the work could not be completed and then the respondent no.3 again terminated the contract with him. Thereafter, the respondent No.3 got the work done by another person. Being aggrieved by the action of the respondent No.3, the petitioner approached this Court by filing the present petition”. 4. The respondent No.6, the Chief Engineer-cum-Director, Urban Development & Housing has submitted his affidavit-in-opposition denying all the averments made in the petition. It is stated that the construction work of Guest House at Khonsa was awarded to petitioner No.1 and the agreement was signed with the petitioner No.2, who is the attorney holder of petitioner No.1, and the respondent authority, on 12th July 2012, with specific terms and conditions that construction shall be completed within 18 (eighteen) months from the date of agreement and payment shall be released as per physical achievement on ground as well as availabilities of funds and LOC. The petitioner was well aware that construction was to be carried out by demolishing old buildings, and the works, which were not included in the contract agreement would be paid by the department after carrying out measurement of the same. 4.1 It is also stated that the progress of the work was going on snail pace but, the petitioner frequently demanded release of payment without physical development of contract work and then respondent No.6, issued a notice on 30.01.2013, to speed up the construction work as the project was under Centrally Sponsored Scheme and a time bound project, and instructions were received for early completion of project with time frame from higher authorities and there was no response from the petitioner. Therefore, on 14th May 2013, the authority had issued another notice to the petitioner No.2 after the 1st notice, and thereafter, on 7th June 2013, respondent No.6 had issued another notice to him for timely completion of the project and thereafter, the petitioner No.2 executed an agreement with one Shri Chafiang Aran as sub-contractor on 9th July 2013, for construction of retaining wall and also entered another agreement to complete the work of Guest House by December, 2013 and further, promised to complete all components of work of the Guest House and T-II units by 31st March 2014. Thereafter, the petitioner entered into an agreement with third person for construction of retaining wall without cleaning the debris lying inside the premises of Guest House. Thereafter, one letter was issued to the petitioner No.1 on 25th June 2013, clearly stating that after crossing of 11 months, only 25% of work was completed and the petitioners were directed to speed up the work and it is further, stated that delay will be viewed seriously and as per the clauses of contract agreement and considering the cause of hindrances, the department has approved the time extension of period of 6 months from 01.04.2014 to 30.09.2014. 4.2 Subsequently, review meeting to assess the progress of work was conducted by the Hon’ble Minister, Urban Development and Housing on 5th August, 2014 and there also, the petitioner was directed to complete the project by 30th September, 2014. It is also stated that 65% of the amount for construction of Guest House were released by July, 2013 but, the progress of physical work was not commensurate with the financial achievement. It is also stated that the authorities had not caused any financial hardship to the petitioner and all the drawing of the project was furnished in time and there was no delay on the part of the department in furnishing drawing of the staff quarter and vide his letter dated 29th January, 2014, the respondent No.3 informed the petitioners that contract period is going to expired by 31st January, 2014 and only 30% of the contract work was carried out till then and the authorities suggested the petitioner to take steps for extension of the contract period. 4.3 It is also stated that show cause notice, under clause 3(a) & (b) of the contract agreement vide No. DDUD/KSA/GH-07/2013-14/3618-22 dated 28th February, 2014 was issued to the petitioner as to why action shall not be taken against petitioner No.2 and the authorities were considerate enough and suggest the petitioner to apply for extension of time vide letter dated 25th March, 2014. The incompetency of petitioner No.2 was also brought to the notice of the higher authorities vide letter dated 25th March, 2014 and thereafter, vide letter dated 3rd April 2014, the petitioner was asked to stop the work without further extension of time but, the petitioner did not pay heed to the same and that more than 75% of the contract amount were already paid to the petitioner till 15th July, 2014 and the petitioner had fail to apply for further extension of time and thereafter, spot verification was done by a team and work done by the petitioner was measured in presence of the petitioner No.2, as the contract work expires on 30.09.2014, and to the show cause notice issued on dated 10th October, 2014 the contract agreement was terminated. Further it is stated that there was no illegality in termination of the contract and prior to the termination of the contract, the respondent No.3 vide letter No. DDUD/KSA/GH-07/2012-13/73-75 dated 8th December 2014, it was suggested to form a committee to assess the actual physical progress and financial expenses, component wise and accordingly, a committee was formed. The committee submitted the report after verification and thereafter, vide letter dated 11th March 2015, respondent No.3 sought approval from respondent No.2 for termination of contract as per tender agreement clause-3, and as three years already elapsed and vide letter dated 30th March 2015, higher authority approved the termination of contract agreement and accordingly, vide order No. DDUD/KSA/GH-0/2012-13 dated 30th March 2015, contract agreement dated 12th July 2012, 18th July 2012, and as per the deed of agreement No.233, dated 14.08.2012, was terminated on the basis of approval accorded by higher authority. Thereafter, vide letter dated 31st March 2015, approval for construction of remaining portion of Guest House was sought for from the Chief Engineer-cum-Director, Urban Development & Housing and the same was approved vide letter dated 2nd April 2015, and agreement was signed on 3rd April 2015, thereafter, also the petitioner No.2 failed to complete the remaining work and on expiry of abovementioned agreement, one Shri Rankuam Anyiam was allotted to carry out the remaining work vide order dated 2nd July 2015. And accordingly, the remaining work was carried out and Completion Certificate was submitted on 18th August 2015. It is also stated that there was no mala-fide and illegality in rescinding the contract agreement and ample time was given to the petitioner No.2 to complete the given work but, time and again petitioner No. 2 has failed to carry out the work at the stipulated time. 5. Mr. A. Dasgupta, the learned counsel for the petitioner submits that the contract agreement was terminated illegally and with malafide intention as the petitioner was not given reasonable opportunity of being heard before termination of the said contract. He further, submits that during the period of execution of the contract work, there was heavy rain from the month of April, till the month of October and there was delay in payment of running bill by the respondent authority and also the respondent authority could not furnish the drawing of the project in time and therefore, the same could not be executed within the stipulated period. 5.1 Mr. Dasgupta, referring to a case law of Hon’ble Supreme Court in UMC Technologies Private Limited Vs. Food Corporation of India and Ors., reported in (2021) 2 SCC 551 , submits that the intention of the parties to terminate the contract agreement is to be clearly spelled out in the notice and as the same has not been done in the case in hand, and as such the termination order is illegal and therefore, it is contended to set it aside and to allow the petition. 6. On the other hand, Mr. P. Taffo, learned counsel for the respondent Nos. 6. On the other hand, Mr. P. Taffo, learned counsel for the respondent Nos. 2, 3, 4 & 6 submits that the petition, by now, has become infructous and that there was no illegality in termination of the contract agreement as he had failed to execute the contract work within the stipulated time twice and before termination, show cause notice was issued to him and as such, the termination order suffers from no illegality or infirmity requiring any interference of this Court. 6.1 Referring one case law Ashish Kumar Dey Vs. Food Corporation of India & Ors. reported in 2016 (1) GLT (TR) 507, Mr. Taffo, submits that the dispute arising out the terms of a contract is not amenable to writ jurisdiction unless the contract is a statutory contract by a statutory authority in exercise of statutory power and the contract between statutory authority and a private person, writ petition is not amenable and the proper course is to approach the Competent Court of Civil Jurisdiction. 7. Having heard the submissions of learned Advocates of both the sides, I have carefully gone through the petition and the documents placed on record and also gone through the case laws referred by the learned counsel of both sides. 8. It appears that the petitioner No.2, who is the Attorney holder of petitioner No.1, was allotted the construction work of the Guest House at Khonsa, vide letter dated 12th July 2012, which is annexed with the petition as Annexure No.1, with specified terms and conditions that construction shall be completed within the stipulated period of 18 months, from the date of agreement, dated 12th July, 2012, which is annexed with the petition as Annexure No.2. And it was also clearly spelled out in the agreement that payment shall be released as per the physical achievement on ground, and a deed of agreement was also signed between the respondent No.3 and petitioner No.2. The project was a time bound project and was under Centrally Sponsored Scheme. It also appears that the work to be carried out on the ground was clearly spelled out and the drawing of the project was furnished in due time. And despite, the petitioner No. 2 had failed to execute the work within time. The project was a time bound project and was under Centrally Sponsored Scheme. It also appears that the work to be carried out on the ground was clearly spelled out and the drawing of the project was furnished in due time. And despite, the petitioner No. 2 had failed to execute the work within time. And therefore, the respondent No.3 was constrained to rescind the contract vide letter No. DDUD/KSA/GH-07/2012-13/501-05, dated Khonsa, the 30th March, 2015 (Annexure No.13 of the writ petition). 9. It also appears that before termination of the contract finally, several notices were issued to him, reminding him that the progress is not commensurate with the payment made by the department. It also appears that there was no delay also in payment of running bills to the petitioner No.2. 10. From the letter dated 28th February 2014, No. DDUD/KSA/GH-07/2013-14/3618-22, which is annexed with the affidavit-in-opposition as Annexure-X A, issued by the respondent No. 6 Deputy Director under Urban Development & Housing, Khonsa Division, it appears that the petitioner No.2 was asked to show cause within 20.03.2014, as to why action under Clause 3 (a) & (b) of the above mentioned agreement will not be taken against him, in the stipulated time period and that if the cause shown is found to be not to his satisfaction, then actions against him, as contemplated under Clause 3 (a) & (b), as provided under the said agreement and or other clause thereof, without further notice. And prior to issuance of the said show cause notice also, vide letter dated 29th January 2014, the petitioner No.2 was asked for early completion of the project particularly, the main component of the building and also vide letter dated 5th December 2013, the petitioner No.2 was directed to speed up the pace of work within the tender stipulated time and complete the same by 31.03.2014, and prior to that also vide letter dated 25th June 2013, the petitioner No. 1 was asked to speed up the construction work by deploying more labourers, as after 11 months from the date of agreement, progress of the work was not satisfactory. 11. It is also to be noted here that as laid in CPWD Manual Vol.-II, under contract agreement Clause 3 sub-clause 3A, 3B and 3C, the contract work, allotted to the petitioner No.2 was terminated. 11. It is also to be noted here that as laid in CPWD Manual Vol.-II, under contract agreement Clause 3 sub-clause 3A, 3B and 3C, the contract work, allotted to the petitioner No.2 was terminated. As per, Clause 3 of the agreement dated 12th July 2012, the Engineer In-Charge has power to take action on one or more sub-clause 3A, 3B and 3C, in the event of excessive delay or wrongful suspension of work in the execution of project of the Government for benefit of the citizens of Khonsa Township. 12. It also appears that before rescinding the contract, the respondent No. 3 has obtained approval from the respondent No. 2 and a committee was formed by the respondent No. 3 to examine the work done by the petitioner on the ground, and on the basis of verification report of the committee, the respondent No. 2 approved the letter of respondent No. 3 for termination of the contract agreement. The minutes of the departmental meeting held on 8th August 2014, under the Chairmanship of the Hon’ble Minister, Urban Development is annexed with the affidavit-in-opposition as Annexure-XII (E). All these letters and the documents annexed with the affidavit-in-opposition left this Court unimpressed that no opportunity of being heard was given to the petitioner before rescinding the contract. Thus, it cannot be said that the construction work was terminated by the respondent No.3 without affording of any opportunity of being heard to the petitioner. 13. In view of above, this Court find no substance in the submission of Mr. A. Dasgupta, learned counsel for the petitioner that the contract work was terminated illegally by the respondent No.3. Also, I have carefully gone through the case law UMC Technologies Private Limited(supra), referred by him and I find that the ratio laid down in the said case law, referred by learned counsel for the petitioner, would not come into his aid as no illegality or infirmity appears to have been committed by the respondent No.3, while rescinding the contract to the petitioner No. 2. The intention of the respondents to terminate the contract is clearly spelled out in the notice given to the petitioner No. 2 14. The intention of the respondents to terminate the contract is clearly spelled out in the notice given to the petitioner No. 2 14. Further, it appears that after termination of the contract work, the same was again allotted to the petitioner No.2 by executing a fresh agreement; vide agreement dated 3rd April 2015, which is annexed with the affidavit-in-opposition as Annexure-XVII, with the petitioner No.2. But this time also he had failed to complete the remaining work before expiry of the stipulated time and then the agreement was again rescinded and remaining work was allotted to one Rankuam Anyian, vide order dated 2nd July 2015, which is annexed with the petition as Annexure-XVIII-A & B and Shri Rankuam Anyian has completed the remaining work and submitted the Completion Certificate, and payment was made to him. Thus, this petition becomes infructuous on this court also. Mr. P. Taffo, the learned counsel for the respondent had rightly pointed this out during argument and I find substance in the same. I have carefully gone through the case law -Ashish Kumar Dey (supra) referred by Mr. Taffo and I find that the ratio laid down therein also bolstered his submission. 15. Further, I find from the record that the work done by the petitioner was measured and the amount due was already paid and in fact, the petitioner was altogether paid a sum of Rs. 3,17,00,784.97/-on 07.04.2015 and another sum of Rs. 25,40,900/-on 10.04.2015. Though, the petitioner No.2, in his reply to the affidavit-in-opposition submitted by the respondent No. 6, denied the same yet, his denial simpliciter is found to be not sound convincing. 16. In the result, I find no merit in this writ petition and accordingly, the same stands dismissed. There is no order as to the costs.