IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE SIXTEENTH DAY OF JULY TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO : 11163 of 2007 Between: M/s. Sri Shirigi Sai Balaji Constructions, rep. byits Managing Partner, B. Bhagyalakshmi, W/o. B.Appa Rao, R/o. Srikakulam, Srikakulam District. ..... PETITIONER AND 1 The Superintending Engineer, Tribal Welfare Circle, M.V.P. Colony, Visakhapatnam. 2 The Executive Engineer, Tribal Welfare Division, Parvathipuram Post, Vizianagaram. 3 The Chief Engineer, Tribal Welfare Masab Tank, Telugu Samkshema Bhavan, Hyd. 4 The Manager, State Bank of Hyd, Srikakulam, Srikakulam District. .....RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue a Writ or order more particularly one in the nature of Writ of Mandamus declaring the proceedings in Rc.No.552/2000/DB, dt. 15.5.2007, issued by the 1st respondent as being illegal and unconstitutional and violation of Articl3 14 of the Constitution of India and consequently direct the respondent No.1 1 to 3 to pay the balance amount and settle the entire issue without any fine, taken into consideration of the 3rd respondent letter No.TAI/AEE3/RIDF/IX/NKPJ/EOT/1135/06, dt. 30.08.2006. Counsel for the Petitioner: MR.C.H.SATISH KUMAR Counsel for the Respondents: GP FOR SOCIAL WELFARE The Court made the following : O R D E R: This Writ Petition has been filed by Ms/.Sri Shiridi Sai Balaji Constructions represented by its Managing Partner B.Bhagyalakshmi with a prayer to issue a writ of mandamus declaring the proceedings in Rc.No.552/2000/DB, dated 15.5.2007 issued by 1st respondent- Superintending Engineer, Tribal Welfare Circle, M.V.P.Colony, Visakhapatnam as being illegal and unconstitutional and violative of Article 14 of the Constitution of India. 2. The writ affidavit averments, in brief, are: The petitioner is a registered contractor of Government of Andhra Pradesh. 1st respondent called for tenders for providing B.T. road from Neelakantapuram to Jarada O/o. to 6/0 KM in Vizianagaram District. The work came to be allotted to him under an agreement dated 20-2-2005. The cost of the works was Rs.1.06 lakhs. The entire work had to be completed within a stipulated period as agreed. After completion of work entrusted to him, the 1st and 2nd respondents respondent asked the petitioner to do some extra works to the tune of Rs.23.00 lakhs. The petitioner requested the 1st and 2nd respondents to enter into a supplemental agreement for the extra works, but the 1st respondent refused to enter into supplemental agreement. The petitioner faced lot of financial problems due to exorbitant delay in making payments by the respondents. The petitioner has been requesting the authorities to arrange for timely payment for the works done through series of letters addressed to respondents. The original estimate cost of the work was Rs.1.06 lakhs and it was revised to Rs.1.29 lakhs resulting in excess amount of Rs.23.00 lakhs due to extra earth work and hard rock excavation which necessitated in gradient correction of road from 2/200 Km to 2/500 KM and 5/0 KM to 6/00 KM. Even though the agreement did not cover the extra works, the petitioner completed them with a fond hope that the department would arrange immediate payments. The proposal for grant of extension of agreement till 31.12.2006 has been recommended to the higher authorities by the 2nd respondent. Since the time left over for B.T. surface work is two months, the petitioner requested 2nd respondent to take appropriate action under a letter dated 14.10.2006. The 3rd respondent addressed a letter dated 30.8.2006 to the Government where under he recommended the case of the petitioner. At no point of time the petitioner was at fault in executing the works entrusted to him. As per the terms of the contract the petitioner furnished bank guarantees through State Bank of India, Srikakulam Branch. The 1st respondent issued proceedings in Rc.No.552/2000/DB, dated 15.5.2007 cancelling the contract under clause 60(a) of APDSS. The petitioner requested the respondents to pay Rs.23.00 lakhs for execution of extra works. The cancellation of the contract without paying Rs.23.00 lakhs towards extra work is arbitrary and illegal. As per G.O.Ms.No.23, dated 5.3.1999 issued by the Irrigation and Command Area Development Department, any dispute arising between the parties has to be referred to the District Level Committee headed by the District Collector within the District. But the respondents 1 and 2 did not follow the procedure contemplated under G.O.Ms.No.23, dated 5.3.1999. The petitioner filed an appeal before the 3rd respondent assailing the termination of the contract and the said appeal is pending consideration. Pending the appeal, the authorities are contemplating to invoke the Bank Guarantees. Hence, the petitioner was constrained to file this writ petition with a prayer stated supra. 3. Notice before admission came to be ordered on 15.6.2007. Learned Government Pleader for Social Welfare entered appearance on behalf of respondents. 4. The respondents filed counter affidavit. The counter affidavit, in brief, is : The writ petition is not maintainable in view of the fact that as per Article 3 of Articles of Agreement claims above Rs.50,000/- are to be settled only by way of filing a Civil Suit in appropriate Court having jurisdiction over the subject matter. Entrustment of the work “Providing B.T. Road from N.K.Puram to Jarada 0/0 to 6/0 KM” in Kurupam Mandal, Vizianagaram District to the petitioner under an agreement No.46/04-05, dated 21.2.2005 at an estimated cost of Rs.97.00 lakhs is not in dispute. The contention of the petitioner that he executed extra works to the tune of Rs.23.00 lakhs as per the request of the respondents and that the respondents did not enter into supplemental agreements is not correct. As per clause 39.1) of the agreement, if any extra items need to be executed as per field conditions, the agency is bound to execute extra items of work as directed by the Engineer in charge. The rates for extra items worked out by Executive Engineer, as per the condition of the contract, are binding on the contractor. The rates for the extra items were also got approved by the competent authority i.e. 3rd respondent vide memo No.TA1/AEE3/NABARD/NKPJ/3315/04, dated 29.3.2006 of the Executive Engineer, Tribal Welfare, Parvathipuram. The petitioner executed the works only upto L2 stage within the agreement period and completed work upto L3 stage in the extended agreement period. The time allowed for completion of the works came to be extended from time to time and finally till 31.12.2006. Payments came to be made to the petitioner periodically in 13 spells for the works executed by him till L3 stage. The petitioner failed to lay B.T. and gravel shoulders. Despite repeated reminders the petitioner failed to complete the balance works, instead the petitioner started claiming that the Department is due some payments. The petitioner while submitting the application seeking extension of agreement time furnished no claim certificate stating that he will not claim any extra rates for the items to be executed beyond the agreement period. Basing on the no claim certificate, proposals for extension of agreement time were submitted on 15.7.2006. The petitioner stated in the application seeking extension of agreement time that he could not complete the work because of non-availability of B.T. and setting of monsoons early. Even though extension of agreement time was not entered, payments to the extent of works done by him were made from time to time believing that the petitioner would resume B.T. work and complete the balance works by 31.12.2006. The petitioner took the last payment on 16.9.2006 and submitted representation vide his letter dated 18.9.2006 with certain unlawful conditions which infracture agreement conditions for taking up B.T. work. The contention of the petitioner that he was to get Rs.40.00 lakhs for the works carried on by him is incorrect. As per the agreement conditions clauses 16 and 51.1, loss or damage to the works between the starting date and the end of the defects correction period shall be remedied by the petitioner at his own cost. As per the conditions of the contract, the petitioner is not entitled for any price escalation. The petitioner willfully delayed the completion of the works. With regard to imposing of penalty while granting extension of agreement by the government, the agency has to represent separately for the claim but he cannot stop the work and leave the work throwing additional burden on the Government to complete the balance works in full shape. The agreement has been cancelled as per the conditions No.27.2 and 27.3 after issuing several notices and providing chances to the petitioner to resume the work. Since the contract is in no way in force all the deposits as a penalty are forfeited and the Bank guarantees are invoked. The stoppage of work resulted in huge loss to the government apart from inconvenience to the public. G.O.Ms.No.23, dated 5.3.99 is not applicable to the Tribal Welfare Engineering Department since there is a separate government order in respect of tribal welfare engineering department for streamlining the tender procedure vide G.O.Ms.NO.65/SW, dated 3.7.99. 5. Heard Sri.N.Subba Reddy, learned counsel representing Sri Ch.Satish Kumar, learned counsel appearing for the petitioner-company and learned Government Pleader for Social Welfare appearing on behalf of the respondents. 6. Sri.N.Subba Reddy, learned counsel submits that the termination of the contract is arbitrary and illegal and therefore forfeiture of the amounts of the petitioner as well as invocation of the bank guarantees is wholly unjustified. A further submission has been made that the revised estimates of the contract works was not approved by the government as on the date of termination of the contract and therefore the question of the petitioner carrying out the works beyond the original estimates does not arise. In a way he submits that unless the administrative sanction for the revised estimates was accorded by the government, there would not be any scope for the authorities to make payment beyond the original estimates and in which case compelling the petitioner to carry out the additional works would be asking him to do works which had no administrative sanction. In elaborating his arguments, learned counsel submits that administrative sanction for an amount of Rs.129.00 lakhs against the original estimation of Rs.106 lakhs came to be issued by the government on 29.5.2007 and therefore cancellation of the agreement even before the department secured administrative sanction is unjustified. During the course of arguments learned counsel submitted that the petitioner is not interested in carrying out any further works and he is interested to get the amounts for the works which had already been carried out by him. According to the petitioner, he carried out additional works to the tune of Rs.23.00 lakhs and therefore the respondents are bound to make the payment of Rs.23.00 lakhs. 7. Learned Government Pleader for Social Welfare submits that the petitioner has to work out his remedies in a Civil court for recovery of any amounts due as per Article 3 of the agreement and therefore this writ petition is wholly misconceived. He further submits that the petitioner after submitting application seeking extension of time abandoned the works and he did not resume the works during the extended agreement period and therefore the 2nd respondent is justified in terminating the contract and forfeiting the amounts and invoking the bank guarantees. 8. In response to the contention of learned Government Pleader for Social Welfare with regard to maintainability of the writ petition, learned counsel appearing for the petitioner submits that the rule of exclusion of writ jurisdiction by availability of alternative remedy is a rule of discretion and not one of compulsion. In appropriate cases in spite of availability of alternative remedy, the High court may still exercise writ jurisdiction. In support of his submission, reliance has been placed on the decisions of Supreme Court in HARBANSLAL SAHNIA AND ANOTHER V. INDIAN OIL CORPN. LTD. AND OTHERS[1], ABL INTERNATIONAL LTD. V. EXPORT CREDIT GUARANTEE CORPN. OF INDIA LTD[2] and a decision of Orissa High Court in NOBLE RESOURCES LTD. V. ORISSA[3]. 9. Learned counsel appearing for the petitioner laid much emphasis on the letter dated 30.08.2006 whereunder the Chief Engineer, Tribal Welfare, Hyderabad informed to the Secretary to Government, Tribal Welfare (SW) Department, Hyderabad, that the delays in execution of the work are not attributable to the contractor. Relevant portion of the letter reads as hereunder: “The contractor in his representations has requested for granting Extension of agreement time up to 31.12.2006 without imposing any penalty stating that the work is delayed due to following administrative reasons. 1. Change of alignment during execution. 2. Gradient correction. 3. The work is completed except B.T. by 30.5.2006 and B.T. work could not be started due to early on set of monsoon. B.T. will be taken up only after retreat of monsoon, as per instructions issued by the department. In this regard I wish to inform that due to the deviations the estimate cost of the work is revised to Rs.129.00 Lakhs from Rs.97.00 lakhs sanctioned in original and reasons for the delay are not attributable to the contractor.” Thereafter, the Executive Engineer-2nd respondent under letter Rc.No.44/04/DB(TW), dated 09.10.2006, informed the petitioner to rectify certain defects in laying B.T. road. As a reply to the said letter, the petitioner made certain claims and put certain conditions for completing the balance left over works through his letter dated 14.10.2006. The relevant portion of the said letter reads as hereunder: “We further submit that in order to take up B.T. work from the first week of November, 2006 and to complete it before the end of 31.12.2006, we request you to take appropriate action on the following items. 1) Payment for the work done to the tune of Rs.27.40 lakhs may be arranged at least by end of October, 2006. 2) Damages to the road occurred due to floods may be got rectified by the Department and handover the site at least by 1.11.2006. 3) The increase in rate of B.T. as per Government orders is to be paid. 4) Losses sustained by us to the tune of Rs.67,58,000/- as per our letter dated 30.4.2006 to be made good. If the above four items are solved and the payment to us arranged by end of October, 2006, we will take up the B.T. work during winter season (i.e.) from 1.11.2006 and complete it by end of 12/2006. If the Department is not in a position to solve the above problems by end of October, 2006, it is not at all possible to us to complete the work by end of 12/2006. We once again inform you that if there is any further delay beyond 10/2006 in solving our above problems, we request your goodself to kindly close our contract and finalise our accounts duly taking into consideration of the metal chips stacked at site of work during 2/2006 for laying B.T. surface and the losses we have sustained during execution as per our letter dated 30.4.2006 as we are not in a position to bear further the increased cost of materials,, labour wages and interest charges from our Bankers and financiers. This may kindly be treated as our final request as our repeated requests since inception of the work for arranging payment for the work done became futile and on account of delayed payments we have already incurred heavy loss.” The Superintending Engineer T.W., Visakhapatnam-1st respondent under proceedings Rc.No.552/2000/DB, dated 15.05.2007 proceeded to terminate the contract by invoking clause 60(a) of APDSS. Thereafter, the petitioner submitted a representation to the Chief Engineer on 22.05.2007 by way of an appeal assailing the order of termination of contract. The said appeal is stated to be pending. It is evident from the record that the petitioner is not inclined to complete the left over works. She has attributed various laches on the part of the Department for not releasing the amounts within reasonable time after submitting the bills. Since her appeal is stated to be pending, I am not inclined to express any opinion on the points urged by the learned counsel appearing for the petitioner. 10. Accordingly, the writ petition is disposed of directing the Chief Engineer, Tribal Welfare, Hyderabad-3rd respondent to consider the representation submitted by the petitioner on 25.05.2007 and pass appropriate orders thereon within four weeks from the date of receipt of a copy of this order. No costs. _________________________ B.SESHASAYANA REDDY, J. Date:16th July, 2008. Note: Issue C.C. within a week. B/O Cs/tnb ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{JGK} [1] (2003) 2 SCC 107 [2] (2004) 3 SCC 553 [3] 2006(9) SCALE 181