IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC FRIDAY, THE 13TH FEBRUARY 2009 / 24TH MAGHA 1930 WP(C).No. 9786 of 2008(M) --------------------------------------- PETITIONER(S): ------------------------- K.BABURAJ (S/O.LATE KARUNAKARAN NAIR), GOVT, CONTRACTOR, NARAYANA MANDIRAM, OORAMANA (P.O.) MUVATTUPUZHA, ERNAKULAM DISTRICT. BY ADVS. MR.T.K.MARTHANDAN UNNITHAN, MR.V.JAYAKUMAR RESPONDENT(S): --------------------------- 1. THE STATE OF KERALA REPRESENTED BY THE SECRETARY, RURAL DEVELOPMENT, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. 2. PRADHAN MANTHRI GRAM SADAK YOJANA [PMGSY] FOR KERALA STATE REPRESENTED BY THE SUPERINTENDING ENGINEER, KERALA STATE RURAL DEVELOPMENT AGENCY, RTC/24/507, PANAVILA JUNCTION, THIRUVANANTHAPURAM-695 014. 3. THE SUPERINTENDING ENGINEER,COMPETENT AUTHORITY UNDER THE PRADHAN MANTHRI GRAM SADAK YOJANA [PMGSY] FOR CONSTRUCTION/MAINTENANCE, PANAVILA JUNCTION, THIRUVANANTHAPURAM-695 014. 4. THE MEMBER SECRETARY, KERALA STATE RURAL DEVELOPMENT AGENCY [ROADS], PANAVILA JUNCTION, THIRUVANANTHAPURAM-695 014. 5. THE EMPOWERED COMMITTEE REPRESENTED BY THE CHAIRMAN, EMPOWERED COMMITTEE, COMMISSIONERATE OF RURAL DEVELOPMENT, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. Kss ...2/- ....2..... WPC.NO.9786/2008 M *ADDL.R6 IS IMPLEADED: R6. MR.E.S.WILSON, SUPERINTENDING ENGINEER, KERALA STATE RURAL DEVELOPMENT AGENCY, TC28/885, CSI BUILDING, PULIMOODU JUNCTION, PUTHENCHANTHAI, THIRUVANANTHAPURAM-695 001. (*ADDL.R6 IS IMPLEADED AS PER ORDER DTD. 14/10/2008 IN I.A.NO.12883/08) BY GOVERNMENT PLEADER SMT. M.R.SREELATHA THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.9786/2008 M APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE AGREEMENT DTD. 10/10/2005 EXECUTED BETWEEN THE SUPERINTENDING ENGINEER AND THE PETITIONER. EXT.P2: COPY OF THE BANK GUARANTEE NO.11/2005 FURNISHED BY THE SOUTH INDIAN BANK. EXT.P3: COPY OF THE STANDARD BIDDING DOCUMENT OF PRADHAN MATHRI GRAM SADAK YOJANA (PMGSY)(SECTION 1). EXT.P4: COPY OF THE PART-I GENERAL CONDITIONS OF CONTRACT UNDER THE STANDARD BIDDING DOCUMENT FOR PMGSY KERALA STATE. EXT.P5: COPY OF CONTRACT DATA TO GENERAL CONDITIONS OF CONTRACT UNDER STANDARD BIDDING DOCUMENT FOR PMGSY KERALA STATE. EXT.P6: COPY OF COMPLAINT-PETITION DTD. 5/04/2007 SUBMITTED BY THE PETITIONER. EXT.P7: COPY OF REPRESENTATION DTD. 27/04/2007 SUBMITTED BY THE PETITIONER BEFORE THE SUPERINTENDING ENGINEER. EXT.P8: COPY OF REPRESENTATION DTD. 10/05/2007 SUBMITTED BY THE PETITIONER BEFORE THE COMPETENT AUTHORITY. EXT.P9: COPY OF LETTER BEARING NO.ENGG.1007/2004 CRD DTD. 15/06/2007 ISSUED BY THE SUPERINTENDING ENGINEER. EXT.P10: COPY OF REPLY DTD. 5/07/2007 SUBMITTED BY THE PETITIONER BEFORE THE SUPERINTENDING ENGINEER. EXT.P11: COPY OF JUDGMENT DTD. 1/08/2007 IN WP(C) NO.23457/2007 OF THIS HON'BLE COURT. EXT.P12: COPY OF ORDER DTD. 5/10/2007 PASSED BY THE COMPETENT AUTHORITY. EXT.P13: COPY OF GOVERNMENT ORDER DTD. 19/02/2007 ISSUED BY THE GOVERNMENT OF KERALA. EXT.P14: COPY OF LETTER DTD. 2/03/2007 ISSUED BY THE ASSISTANT ENGINEER PAMPAKUDA BLOCK PANCHAYAT. Kss ..2/- ...2.... WPC.NO.9786/2008 M EXT.P15: COPY OF LETTER DTD. 26/06/2007 ISSUED BY THE SECRETARY BLOCK PANCHAYAT, PAMPAKKUDA. EXT.P16: COPY OF LETTER DTD. 28/06/2007 FROM THE EXECUTIVE ENGINEER TO THE SUPERINTENDING ENGINEER. EXT.P17: COPY OF THE APPEAL MEMORANDUM DTD. 12/10/2007 FILED BY THE PETITIONER BEFORE THE EMPOWERED COMMITTEE. EXT.P18: COPY OF STATEMENT OF FACTS DTD.01/02/2008 FILED ON 12/02/2008 BY THE SUPERINTENDING ENGINEER. EXT.P19: COPY OF ORDER DTD. 27/02/2008 PASSED BY THE STANDING EMPOWERED COMMITTEE. EXT.P20: COPY OF NOTICE DTD. 26/03/2008 ISSUED BY THE 3RD RESPONDENT SUPERINTENDING ENGINEER. EXT.P21: COPY OF ORDER DTD. 5/04/2008 ISSUED BY THE THIRD RESPONDENT SUPERINTENDING ENGINEER. EXT.P22: COPY OF COVERING LETTER DTD. 12/06/2008 ISSUED BY THE PUBLIC INFORMATION OFFICER. EXT.P23: COPY OF THE ORDER DTD. 23/02/2008 PASSED BY THE 3RD MEMBER OF THE EMPOWERED COMMITTEE. EXT.P24: COPY OF RECOMMENDATION LETTER DTD. 13/11/2006 SUBMITTED BY THE EXECUTIVE ENGINEER TO THE SUPERINTENDING ENGINEER. EXT.P25: COPY OF ORDER NO.ENGG.1007/2004/CRD DTD. 15/12/2006 ISSUED BY THE SUPERINTENDING ENGINEER. EXT.P26: COPY OF ORDER DTD. 10/09/07 ISSUED BY THE EXECUTIVE ENGINEER. EXT.P27: COPY OF LETTER DTD. 4/08/2008 ISSUED BY THE ASSISTANT EXECUTIVE ENGINEER. EXT.P28: COPY OF CIRCULAR DTD. 10/10/2008 ISSUED BY THE GOVERNMENT OF KERALA. RESPONDENT'S EXHIBITS: EXT.R4-1: EXTRACT OF THE CLAUSE 53.1 OF STANDARD BIDDING DOCUMENT FOR PMGSY- KERALA STATE. EXT.R4-2: COPY OF TENDER NOTICE NO.PQ-02/SE/CRD/2005-06. Kss ...3/- ...3.... WPC.NO.9786/2008 M EXT.R4-3: COPY OF THE JUDGMENT IN WP(C) NO.29269/2005. EXT.R4-4: COPY OF THE CLAUSE 236. EXT.R4-5: COPY OF THE ACKNOWLEDGEMENT FORM. EXT.R5-1: EXTRACT OF THE CLAUSE 24 OF STANDARD BIDDING DOCUMENT FOR PMGSY – KERALA STATE. EXT.R5-2: EXTRACT OF THE ITEM NO.16 OF STANDARD BIDDING DOCUMENT FOR PMGSY – KERALA STATE. EXT.R5-3: COPY OF G.O.(RT) NO.50/2008/LSGD DTD. 4/01/2008. /TRUE COPY/ P.A.TO JUDGE Kss ANTONY DOMINIC,J. ----------------------- W.P.(C).No. 9786 OF 2008 ------------------------ Dated this the 13th day of February, 2009. JUDGMENT Petitioner is a PWD Contractor. He was awarded the work of PMGSY 2004-05(Phase-IV), Package No.KR-02-07, Pampakuda Block, Ernakulam District. The work included construction and maintenance of 3 roads having a total distance of 4.36 Kms. The project was to be implemented under the PMGSY scheme and Ext.P1 is the agreement and Ext.P4 is the scheme governing the same. In so far as this case s concerned, clauses 24.1 to 24.3 of Ext.P4 being relevant, are extracted below for reference. 24.1. If any dispute or difference of any kind what- so-ever shall arises in connection with or arising out of the Contract or the execution of works or maintenance of the work there under, whether before its commencement or during the progress of works or after the termination, abandonment or breach of the contract, it shall, in the first instances,be referred for settlement to the competent authority, described along with their powers in the Contract Data, above the rank of the WP(c).No.9786/08 2 Engineer. The competent authority shall, within a period of forty-five days after being requested in writing by the Contractor to do so, covey his decision to the Contractor. Such decision in respect of every matter as referred shall, subject to review as hereinafter provided, be final and binding upon the contractor. In case the works is already in progress, the contractor shall proceed with the execution of the works, including maintenance thereof, pending receipt of the decision of the competent authority as aforesaid, with all due diligence. 24.2. Either party will have the right of appeal, against the decision of the competent authority to the Standing Empowered committee if the amount appealed against exceeds rupees one lakh. 24.3. The composition of the Empowered Standing Committee will be i. The official member, Chairman of the Standing Empowered Committee, not below the rank of Additional Secretary to the State Government. ii. One official member not below the rank of Chief Engineer and iii. One non-official member who will be technical expert of Chief Engineer's level selected by the contractor from a panel of three persons given to him by the Employer.” 2. In terms of the agreement between the parties, the work was to be concluded within 12 months and the period of which expired on 9.10.2006. The site was handed over to the WP(c).No.9786/08 3 petitioner on 20.10.2005 and according to the petitioner, in the project site of all the three works, there were obstructions in the nature of a buildng, electric posts of KSEB, cables laid by BSNL and also water pipes laid by the Kerala Water Authority. In terms of the agreement, according to the petitioner, these obstructions ought to have been removed by the employer in order to enable the contractor to commence the work. Despite this, it is stated that not only the employer did not take steps for removal of the obstructions which included even residential houses, the representations made by the petitioner in this behalf also did not yield any result. 3. In the meanwhile as the contract period ended on 9.10.2006, on a mutual agreement the period was extended up to 30.4.2007. As there was no progress in the removal of the obstructions, finally, the petitioner states that he submitted Ext.P6 representation to the competent authority, the Superintending Engineer, seeking his intervention in terms of clause 24 of Ext.P4. It is stated that there was no response WP(c).No.9786/08 4 even to Ext.P6 and therefore, the petitioner approached this court and filed WP(c).No.23457/07. That writ petition was disposed of by Ext.P11 judgment directing the competent authority, to pass orders on the representation of the petitioner, as expeditiously as possible and at any rate within 2 months from the date of receipt of a copy of the judgment. In pursuance to Ext.P11 judgment, the competent authority issued Ext.P12 order dated 5.10.2007 finding that there were lapses on the part of the petitioner. Conclusion of Ext.P12 reads as under. “There is lapse on the part of the petitioner in not doing the tarring work and all other works necessary for the completion of the work as per the specifications. Under the above circumstances it is ordered that; (a) the petitioner is not eligible for any rate enhancement for dong the work as per the agreement. (b) the petitioner is not to be paid any amount for the price escalation for bitumen; (c) he is also not to be paid anything for the payment of interest, if any, payable by him for WP(c).No.9786/08 5 the procurement of working capital for doing the work or for furnishing security deposits. (d) the time of completion shall be extended suitably on application in proper form; (e) the amount due, if any to the petitioner shall be paid on getting the time of completion extended suitably.” 4. Aggrieved by Ext.P12, in terms of clause 24.2.of Ext.P4 petitioner filed an appeal. It is to be noted that in terms of the constitution of the Standing Empowered Committee, he was provided a panel of 5 members, who are technical experts and out of them petitioner also nominated one, who hereinafter, is referred to as the non-official member . The committee heard the parties and Ext.P19 dated 27.2.2008, is the order passed by the two official members of the Committee, upholding Ext.P12. Ext.P23 is the order passed by the non-official member nominated by the petitioner dissenting with the view taken in Ext.P19. 5. It is stated that, following Ext.P19, the Superintending Engineer, the competent authority, issued Ext.P21 order dated WP(c).No.9786/08 6 5.4.2008, terminating Ext.P1 agreement. Petitioner submits that following Ext.P21 the Bank Guarantee furnished by him was invoked and the balance amount due for the work done also has been withheld. In addition to this the Superintending Engineer also issued directions to his counter parts in other departments to withhold the payments that are due to the petitioner. Petitioner also refers to Ext.P27, to show that the signatory thereto has informed him that in view of Ext.P21 the amount due to him have been withheld. It is in these circumstances, the writ petition has been filed seeking essentially to quash Exts.P12,P19 and P21 and for releasing the payments that are due to him. 6. The respondents have filed separate counter affidavits, answering the plea of the petitioner that it was mainly on account of the delay caused by respondents in removing the obstructions as agreed by them in Ext.P1 agreement between the parties, that the work could not be completed. The respondents stated that though there was WP(c).No.9786/08 7 delay on their part, that delay and default in completing the work can be attributed only to the petitioner. In support of this they are also referring to the amount of work executed by the petitioner and contend that despite the existence of the obstructions the petitioner could have completed the work. It is on this basis, the respondents are justifying the finding of breach of contract on the part of the petitioner and the termination of the contract and consequential action that they have taken. 7. Facts canvassed by both sides would lead to following undisputed conclusions. First is that there has been a delay on the part of the respondent in removing the obstructions that were available at the work site and the record is that the petitioner did execute a major portion of the work even in spite of the obstructions that were available. The third is that the petitioner did not complete the work either during the original time or within the extended time. While the admitted facts are as above, both sides are accusing each other of WP(c).No.9786/08 8 having committed breach of their respective obligations under the contract. The question which arises for consideration in such circumstances is, whether the petitioner could be penalized as has been done in Ext.P21. 8. Ext.P12 is the first order that was issued by the competent authority. Para 4.B of Ext.P12 reads as under. “The presence of Electric Posts, telephone posts and cables and the pipe and pipelines in certain chainages of the Alumchery-Anthiyal road, Illikunnu-Karikulamthody road and Kizhakompu-Karippal road were not obstacles so as to adversely affect the road work as most of them were on the side of the proposed roads. The contractor could have constructed the road without any difficulty. It is to be noted that he has done the road work up to 2nd layer metalling in the Alumchery-Anthiyal Road, first layer mettaling of 800 meters in Illikunnu- Karikilamthodu road and G.S.B laying in Kizhakompu-Karippal road. Though he has done works to the extend noted above the time consumed for this and for other works done was much more than what was agreed to. The residential building owned by Smt. Mnimol M.T. and Sri. George also did not cause any difficulty as obstruction as this was also on the side of the alignment. Later this building was also vacated. WP(c).No.9786/08 9 It is agreed that the petitioner cannot remove the obstacles on his own accord. The employer had taken timely ad fruitful action is removing posts, pipes etc., then and there. Petitioner's statement that these obstacles are not removed yet and that this caused difficulty I carrying out the work is not true to facts.” 9. A reading of the above paragraph of Ext.P12 shows that it was not the case of the respondents that the obstacles were removed but on the other hand according to them the obstacles could not have stood in the way of the petitioner in making progress or completing the work undertaken by him. In this context, Exts.P13 to P16 and P24 and P26 also needs to be referred. These orders also would show that there has been inordinate delay on the part of the respondents in removing obstacles at the work site. 10. The next order which needs to be referred is Ext.P19. Ext.P19 is the order passed by the Chairman and Official member of the Empowered Committee rejecting the appeal made by the Petitioner in terms of clause 24.2 of Ext.P4. A reading of Ext.P19 shows that, apart from referring WP(c).No.9786/08 10 to various provisions of the agreement fastening liability on the petitioner in completing the work, Chairman and the official member have not adverted to the reasons for the delay and the failure of the part of the respondents in removing the obstacles. However, when it comes to Ext.P23, an order passed by the non-official member of the Empowered Committee, it can be seen that the said member has examined the issue in its totality and has recommended discharge of the petitioner. It was despite the positive acceptable findings in Ext.P23, that the Superintending Engineer by Ext.P21 terminated the contract and imposed other consequences on the petitioner. 11. Evidently, what emerges is that this is a case where breach has been committed by respondents also. As already noticed, though the respondent had the obligation to remove the obstacles, that was not removed even during the extended period which expired on 30.4.2007. This is a case of reciprocal promises, such that what was undertaken by the WP(c).No.9786/08 11 petitioner could not admittedly be performed fully unless the obstructions were removed. This was not done during the contract period. In such a situation, the defaulting party, at any rate, cannot claim performance of the contract by the other party. Though not finally pronouncing on this, still, I feel that the facts of this case attracts Section 54 of the Contract Act. Therefore, under any circumstances, the petitioner could not have been penalized, as has been done in Ext.P21. If that be so, there is no reason why the petitioner should be made liable for the consequences as if he has committed a breach of contract. Therefore I am satisfied that the petitioner is entitled to succeed. 12. Accordingly the writ petition is disposed of quashing Ext.P21 order to the extent the security deposit and the bank guarantee has been forfeited. Respondents are directed to disburse the amount towards the security deposit made by the petitioner. Bank guarantee shall be released and the balance if any that is due for the work that the petitioner has done, shall WP(c).No.9786/08 12 be paid as expeditiously as possible. These directions shall be complied with at any rate within 8 weeks from the date of production of a copy of the judgment. Writ petition is disposed of as above. (ANTONY DOMINIC) JUDGE vi/