IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :03.03.2011 C O R A M THE HONOURABLE MR. JUSTICE B.RAJENDRAN WP No. 3379 and 3623 of 2009 and M.P. No. 1, 1, 2 and 2 of 2009 M/s. Chandragiri Construction Company No.3/402-A, Karat Road West Nadakavu Kozhikode – 673 001 Kerala, rep.by its Partner .. Petitioner in both the K.M. Moideen Kunhi Writ Petitions Versus 1. State of Tamil Nadu rep. by its Secretary to Government Public Works Department Fort St. George Chennai – 600 009 2. The Chief Engineer Public Works Department Chennai Region Water Resources Organisation Chepauk, Chennai – 600 005 3. The Superintending Engineer Public Works Department Water Resources Organisation Project Circle Vellore – 632 006 4. The Executive Engineer Water Resources Organisation Project Division, Sethuvandai Gudiyatham R.S. Vellore District – 635 803 5. The Branch Manager Federal Bank Limited M.G. Road, Kasargode Kerala State .. Respondents in WP 3379 1. State of Tamil Nadu rep. by its Secretary to Government Public Works Department Fort St. George Chennai – 600 009 https://hcservices.ecourts.gov.in/hcservices/ 2. The Chief Engineer Public Works Department Chennai Region Water Resources Organisation Chepauk, Chennai – 600 005 3. The Superintending Engineer Public Works Department Water Resources Organisation Project Circle Vellore – 632 006 4. A.P. Jayaprakash Superintending Engineer Public Works Department Water Resources Organisation Project Circle Vellore – 632 006 5. The Executive Engineer Water Resources Organisation Project Circle, Sethuvandai Gudiyatham R.S. Vellore District – 635 803 6. The Branch Manager Federal Bank Limited M.G. Road, Kasargode Kerala State .. Respondents in WP 3623 WP No. 3379 of 2009:- Writ Petition filed under Article 226 of The Constitution of India praying for a Writ of Certiorarified Mandamus calling for the records relating to the impugned order issued by the first respondent vide Government Letter No. 46434/T.1/2008 dated 12.12.2009 and quash the same and consequently direct the respondents 1 to 4 herein to revise the contract rates as per the Codal Rules framed by the Public Works Department for the year 2007-2008 in respect of the contract work named as "Formation of Reservoir Across Malattar River near Bathalapalli Village in Gudiyatham Taluk of Vellore District (vide Agreement No. 2CR/2005- 2006). WP No. 3623 of 2009:- Writ Petition filed under Article 226 of The Constitution of India praying for a Writ of Certiorarified Mandamus calling for the records relating to the impugned order issued by the 5th respondent in No.10M/F.99/2009/D.O./dated 16.02.2009 and quash the same and consequently direct the respondents to extend the period of contract on a revised rates so as to enable the petitioner to complete the same in respect of the contract work named as "Formation of Reservoir Across Malattar River near Bathalapalli Village in Gudiyatham Taluk of Vellore District (vide Agreement No. 2CR/2005-2006). https://hcservices.ecourts.gov.in/hcservices/ For Petitioners :Mr. R. Krishnamoorthy, Senior Counsel for Mr. S. Srinivasan in both the writ petitions For Respondents :Mr. S. Ramasamy, Addl. Advocate General assisted by V. Arun Additional Government Pleader Mr. R. Murali Government Advocate for RR1 to 4 in WP No. 3379 of 2009 for RR1 to 5 in WP No. 3623 of 2009 Mr. M. Vaidyanathan for R5 in WP No. 3379 and for R6 in WP No. 3623 of 2009 COMMON ORDER The dispute involved in both the writ petitions pertains to one and the same contract, therefore, by consent of counsel for both sides, the writ petitions are disposed of by this common order. 2. The first writ petition namely WP No. 3379 of 2009 is filed by the contractor to quash the Government Letter dated 12.12.2009 rejecting the petitioner's claim for payment at the revised rate. The second writ petition is filed to quash the order passed by the 5th respondent on 16.02.2009 by which the fifth respondent terminated the contract with the petitioner and ordered to forfeit the earnest money deposited, besides invoking clause 57.1 and 57.3 of the agreement for not showing progress in the contractual work. 3. According to the petitioner in both the writ petition, the contract was awarded to the petitioner to construct a reservoir across Malattar river in Gudiyatham Taluk and an agreement dated 26.10.2005 was entered into between the petitioner and the department. The contract value awarded in favour of the petitioner was Rs.22,24,84,340/-. The period for completion of the contract was 18 months, the earnest money deposit paid was Rs.10,75,000/- and a sum of Rs.45,00,000/- was offered by means of bank guarantee by the petitioner. According to the petitioner, originally, the site was handed over to them on 30.12.2005 and immediately thereafter, within a short period of four months time, dispute arose between the parties. Under those circumstances, the petitioner filed three writ petitions namely WP No. 3977 of 2006 to quash the resolution of the Tender Award Committee and the consequential order of the Chief Engineer dated 13.01.2006 in respect of the construction of check dam across Palar river; WP No. 45060 of 2007 to quash the termination of contract work dated 04.05.2006 and consequential re-tender notice dated 01.11.2006 regarding the very same work and WP No. 45057 of 2007 to quash the order of the Superintending Engineer, Pollachi dated 10.10.2006 regarding cancellation of registration of the petitioner's name as Class I contractor with the public works department. All these writ petitions were jointly heard by this Court and a common order dated 26.04.2007 was passed in which the petitioner herein was permitted to rectify the defects or sub- standard work in relation to the Malatar river work and liberty was given to the petitioner to participate in the re-tender along with https://hcservices.ecourts.gov.in/hcservices/ other tenders. Accordingly, the three writ petitions were closed by this Court. Thereafter, on 18.05.2007, the petitioner sought permission to commence the rectification work, as per the common order passed by this Court, followed by a reminder on 07.06.2007. Ultimately, on 25.10.2007, the petitioner was permitted to resume the work as per the order passed by this Court. According to the petitioner, by 18.12.2007, he completed the sub-standard work and also rectified all the mistakes. Thereafter, the petitioner was permitted to carry out the balance work, thereby, the petitioner had completed atleast 35% of the work. In view of the resumed work performed by the petitioner, the petitioner sought to revise the rate of the current year PWD price index by means of letters dated 07.01.2008, 10.01.2008, 16.02.2008 and 16.12.2008. Further, the Superintending Engineer, by his proceedings dated 18.02.2008 extended the time for completion of work upto 18.02.2009, In that letter, it was stated that in so far as approval for the revision of rate is concerned, it will be done at a later point of time only after approval of the work. Since the petitioner's request for consideration of higher price was not approved by the department, the petitioner filed another writ petition in WP No. 27633 of 2008 for a Mandamus directing the respondents to revise the agreement rate as per Public Works Department scheduled rates prevailing for the financial year, corresponding to the work executed by the petitioner, including payment of idling charges as claimed by the petitioner and handover the canal site after completing the land acquisition process so as to enable the petitioner to complete his contractual obligations in respect of the contract work. Pending writ petition, by letter dated 27.11.2008 of the third respondent, the petitioner was called upon to expedite the work but rejected the request of the petitioner for revision of the rate. In the meanwhile, WP No. 27633 of 2008 was disposed of by this Court on 17.12.2008 directing the respondents to consider the petitioner's letter dated 16.12.2008 and pass orders within a period of six weeks. Thereafter, by notice dated 22.01.2009, the Superintending Engineer alleged that there is no progress in the work and that the contract would be terminated due to the lethargic attitude of the petitioner. Immediately, the petitioner filed WP No. 3378 of 2009 to quash that letter dated 22.01.2009 of the third respondent and obtained an interim stay on 17.03.2009. The petitioner also made a further representation dated 31.01.2009 to the Secretary to the Government of Tamil Nadu. In the meanwhile, pursuant to the earlier directions issued by this Court, the Secretary to the Government rejected the request of the petitioner by an order dated 12.02.2009. Subsequently, by an order dated 16.02.2009, the Executive Engineer terminated the contract, forfeited the earnest money deposit and also invoked the Bank Guarantee on the ground that there was slow progress in the work and that the contractor had not adhered to the instructions given by the department. Challenging the same, the above writ petitions are filed. In view of filing of WP No. 3379 of 2009, the relief sought for by the petitioner in the earlier writ petition in WP No. 3378 of 2009 has become infructuous. 4. As far as the first writ petition is concerned, the learned senior counsel appearing for the petitioners would contend that the impugned orders are arbitrary in view of the fact that the Chief Engineer himself inspected the site and made a note on 23.09.2008 https://hcservices.ecourts.gov.in/hcservices/ that pillway and canal work could not be carried out due to certain bonafide reasons, whereas the Executive Engineer states that there is no bar for the petitioner to carry out the work. The Superintending Engineer further stated that 35% of the work was completed as early as on 18.02.2008 itself, whereas the Executive Engineer, in the impugned order had stated that only 14.35% work was completed. Further, the Executive Engineer never sent any proposal for revised rate even after the directions given by the Superintending Engineer and no reason was given to reject the valid explanation offered by the petitioner. Further, no pre-decision hearing was given to the petitioner and therefore, both the impugned order is liable to be set aside. 5. As far as the second writ petition in WP No. 3623 of 2009 is concerned, which relates to termination of the contract, the learned senior counsel for the petitioner would contend that there is malafide on the part of the third respondent/Superintending Engineer and therefore, he was impleaded in his individual capacity as well as official capacity. It was further contended that the fourth respondent had terminated the contract without any basis and that the contract was terminated only due to malafide and he prayed for allowing of the writ petitions. 6. The respondents filed a detailed counter. The learned Additional Advocate General appearing for the respondents would mainly contend that the writ petitions are not maintainable as the disputes involved in both the writ petitions relate to contractual dispute inasmuch as the parties are governed by the terms and conditions of the contract. As per the terms and conditions of the contract between the parties, there is a clause for arbitration and if any party is aggrieved by any act of the other, they can invoke the arbitration clause and approach the Arbitrator. Without invoking the arbitration clause, the writ petitions filed by the petitioner are not maintainable. Hence, on the preliminary point of maintainability, the learned Additional Advocate General prayed for dismissal of both the writ petitions. 7. The learned Additional Advocate General would further contend that as per the earlier consent order passed by this Court in WP Nos. 3977, 45056 and 45057 of 2006 dated 26.04.2007, it was very clearly stated that the petitioner shall be permitted to participate in the re-tender. Therefore, it is clear that the tender itself was originally cancelled and when the cancellation was challenged this Court only permitted the petitioner to participate in the re-tender along with others. The fact remains that the contract awarded to the petitioner, which was terminated by the respondents, was never set aside by this Court. Though it is superfluous, by virtue of the order passed by this Court, even after termination, the petitioner was permitted to resume the work, which are to be rectified. Therefore, the petitioner has no legal right to challenge the orders impugned in these writ petition. 8. In so far as the direction to consider the representation of the petitioner is concerned, seeking for revised rate, as per the approved price, even though the property was handed over to the petitioner way back in the year 2007, he has not chosen to complete https://hcservices.ecourts.gov.in/hcservices/ the work and the delay is only on the part of the petitioner. Taking into consideration the nature of work done by the petitioner and the slow progress of the work, the request made by the petitioner was rejected by the respondents. The impugned orders were passed validly and the petitioner's interpretation of the grant of time by the Superintending Engineer by one year would mean that the time for completion of the rectification work was extended, whereas, the actual letter states that for extension of one year only, in so far as it relates to the extension, as granted to rectify the mistakes pursuant to the order passed by this Court. Therefore, the petitioner cannot be permitted to make his own interpretation at this point of time to say that the extension was for completion of the whole contract work. The intention of the parties in extending the work was only to complete the rectification work, which remained incomplete, after the order of termination was originally passed by the respondents. The learned Additional Advocate General denied the averments relating to malafide on the part of the Superintending Engineer, Public Works Department, Vellore Circle and the petitioner alone has to be blamed for the slow progress in the contract work. 9. Heard the counsel for both sides. Mr. R. Krishnamoorthy, learned senior counsel appearing for the petitioner would mainly contend that even though the contract was awarded in favour of the petitioner, the department did not handover the site and only a portion of the site was handed over to the petitioner. The reason being, certain portion of the site were not acquired by the competent authority properly or there were disputes in respect of acquisition was still pending without being resolved. Therefore, the petitioner could not complete the work within the stipulated time as mentioned in the contract. Under those circumstances, the delay could not be attributed to the petitioner. Further, the Chief Engineer himself had inspected the site on 23.09.2008 and made a note to the effect that "If the land acquired for canal portion is not continuous, there is no use of casting the precast slabs for the part of the reaches only. Similarly, the excavation of canal should not be taken up here and there. Therefore, the Executive Engineer is instructed to report the stage of Land Acquisition and the same may be expedited. The excavation, precast casting of slab land lining etc., for canal portion should be taken up only after completion of the land acquisition process." Therefore, the learned senior counsel for the petitioner would contend that even as per the inspection note of the Chief Engineer there is still portion of the land unacquired by the department and hence, it can be inferred that the site, as a whole, was not handed over to the petitioner. Consequently, the respondents cannot allege any delay or slow progress on the part of the petitioner for non-performance of the contract. At the same time, by letter No. 10M/F.99/2009/D.O/dated 16.02.2009 of the Executive Engineer, fifth respondent herein, which is challenged in WP No. 3623 of 2009, it was stated that there is no bar for the petitioner to carry out the work in spite of the delay in the acquisition proceedings. Therefore, there is total contradiction in the summations made by the Chief Engineer and that of the Executive Engineer, fifth respondent herein. In fact, in the proceedings dated 27.11.2008 of the Superintending Engineer, Vellore, it was categorically stated that 35% of the work was completed by the petitioner as on that date. Whereas, the Superintending Engineer, in https://hcservices.ecourts.gov.in/hcservices/ his subsequent communication dated 22.01.2009 would state that the petitioner had completed only 14.35% of the work. The Executive Engineer never sent any proposal for the revised rate even after the Superintending Engineer, by his proceedings dated 18.02.2008 had extended the time for completion of the work by 14 months upto 18.02.2009. Under those circumstances, the impugned orders passed by the respondents are arbitrary and illegal. The respondents have not applied their mind before passing the impugned orders. No reason was given for rejecting the explanation offered by the petitioner. The learned senior counsel for the petitioner would contend that as per the letter dated 18.02.2008, in compliance of the orders passed by this Court, what was extended is the time for completion of the contractual work and not the rectification work. Even as per the proceedings of the Executive Engineer, he directed to submit a report for revised rate, which would indicate that the time extended was for completion of the contract as a whole. If that be so, the present order of termination passed by the fifth respondent is without any basis and consequently the impugned orders are liable to be set aside. 10. Contra, the learned Additional Advocate General would mainly contend that the delay is totally on the part of the petitioner. Even the original contract was cancelled or repudiated on the ground of inordinate delay in completing the contract work inspite of the fact that the site was handed over to the petitioner as early as on 30.12.2005. Inspite of the handing over of the site, the petitioner did not complete the work as per the contract. At the time of argument, the learned Additional Advocate General has also produced a map along with the details of the lands handed over to the petitioner and the lands to be acquired. By relying on the map produced to this Court, the learned Additional Advocate General would contend that the patta lands forms a very meager portion from Om to 380M in the main canal and in the left main canal also, the patta land is more. The map also indicates the work which can be executed between the two levels as follows:- Work may be executed 1. LS 360 - 520 160M 2. LS 520-700 180M 3. LS 4000-4750 750M 4. LS 6050-8500 2510 M ---------- 3800 M ---------- 11. The learned Additional Advocate General also relied on the chart indicating the details of the works to be executed which are as follows:- I. Work may be executed in Canals https://hcservices.ecourts.gov.in/hcservices/ S.No. Description Total length Length of Canal of canal may be executed 1. Right main canal 8560 3600 2. Sathampakkam Distributory 560 -- 3. Left Main Canal 32610 9430 4. Chendathur Distributory 9030 00 5. Valathur Distributory 3660 3660 ----------- ------------ Total 54220 M 16690 M ----------- ------------ II. CD work may be executed S.No. Description Total No. of No. of CD works CD work may be executed 1. Right main canal 37 12 2. Sathampakkam Distributory 3 -- 3. Left Main Canal 100 35 4. Chendathur Distributory 47 11 5. Valathur Distributory 5 4 ----------- -------- Total 192 62 ----------- -------- 12. The map also consists of a Flow chart for patta and poromboke land regarding the left main canal – Bathalapalli Malattar Reservoir Project indicating the following Works may be executed 1. LS 0-440 M 440 M 2. LS 1760-2040 280 M 3. LS 2540-2840 300 M 4. LS 3970-4050 80 M 5. LS 4910-5890 980 M 6. LS 7730-7900 170 M 7. LS 8780-9350 570 M 8. OS 17670-20010 2340 M 9. LS 22800-25130 2330 M 10. LS 26270-28510 1940 M ----------- 9430 m ----------- Total No. of CD works : 100 No. of CD works may be executed : 35 13. Referring to the map and the details contained thereon, the learned Additional Advocate General would contend that the contractor could have undertaken the work unhindered in many of the places and therefore, it is clear that the delay is on the part of the petitioner and consequently, the petitioner is not entitled to the relief prayed for in these writ petitions. https://hcservices.ecourts.gov.in/hcservices/ 14. Earlier, the contract awarded in favour of the petitioner came to be terminated by the respondents. Challenging the same, the petitioner had filed three writ petitions namely WP No. 3977, 45056 and 45057 of 2006. Those three writ petitions were taken up together by this Court and a common consent order was passed on 26.04.2007 which is as follows:- "1. These writ petitions are posted today for reporting settlement 2. The learned Advocate General for the respondents has submitted that in so far as the show cause notice issued for blacklisting the petitioner is concerned, all further proceedings will be dropped and the petitioner will be permitted to rectify the mistakes and that in so far as the re-tender to be invited by the respondents for construction of check dam across Palar River, the petitioner has stated no objection for the same and the petitioner is at liberty to participate in the re-tender along with other tenderers. 3. The learned counsel for the petitioner has submitted that the petitioner agreed for the said proposal. 4. In view of the same, recording the submissions of the learned Advocate General and also the counsel for the petitioner, these writ petitions are disposed of, accordingly. No costs." 15. From a reading of the above order, it will be clear that what was agreed between the parties before this Court was that the petitioner shall be permitted to complete or rectify the defective works within a stipulated time, at the same time the petitioner shall participate in the auction or re-tender that may be flouted by the respondents. Therefore, the order only indicate that the termination order passed by the respondents was not set aside and it remained intact. 15. With this background, we have to analyse the submissions of the learned counsel for both sides. By proceedings dated 18.02.2008, the Executive Engineer had categorically stated that the work carried on by the petitioner is slow and the petitioner had failed to achieve the target fixed. Therefore, the petitioner was directed to bring more men, materials and machineries to the site of work and tempo the progress of work to achieve the target within the stipulated time namely 18.02.2009, failing which, or other wise, penal action will be initiated as per the terms and conditions of the agreement. This proceedings emanated pursuant to the representation dated 09.01.2008 of the petitioner. 16. When we read the representation dated 10.01.2008 of the petitioner, it was stated that after the order of this Court, in https://hcservices.ecourts.gov.in/hcservices/ October 2007, the mistakes were rectified during November and December 2007. According to the petitioner, as per the instruction of the Superintending Engineer, they were directed to proceed further with the balance work from 19.12.2007 and on that date on wards, the petitioner also resumed the balance work and the same is in progress. It was further stated in that letter that the current rates for items of work taken up after 19.12.2007 were to be effected for payment. As the original time frame fixed for the completion of work was 18 months and the site was handed over on 30.12.2005, they have resumed the work from 19.12.2007. Therefore, the petitioner sought for time from 19.12.2007 to 18.02.2009 for 14 months. They have also claimed revised rate for having kept the men and machineries idle for over 19 ½ months. Therefore, what was sought for by the petitioner was extension of time from19.12.2007 for 14 months to complete the contract work, which was given in the order dated 18.02.2008. 17. In the proceedings dated 18.02.2008 of the Superintending Engineer, Vellore it was clearly stated that extension of time is granted from 19.12.2007 to 18.02.2007 i.e., 14 months subject to the following conditions namely (a) the work should be completed within the extension of time now granted (ii) there should be no loss to the Government by way of granting this extension of time (iii) The Revision of