THE HON'BLE SRI JUSTICE P.S.NARAYANA Writ Petition Nos.14022/05, 2236 & 10481 of 2006 Date: 12th December, 2007 Between :- W.P.No.14022/2005:- V. Balaji .. Petitioner And Divisional Railway Manager, Works Branch, South Central Railway, Vijayawada and 3 others .. Respondents W.P.No.2236 of 2006:_ V. Balaji .. Petitioner And Union of India represented by General Manager, South Central Railway, Secunderabad And 4 others .. Respondents W.P.No.10481/2006:- V. Balaji .. Petitioner And Divisional Railway Manager, Works Branch, South Central Railway, Vijayawada and 3 others .. Respondents THE HON'BLE SRI JUSTICE P.S.NARAYANA Writ Petition Nos.14022/05, 2236 & 10481 of 2006 COMMON ORDER:- These three Writ Petitions are being disposed of by common order in view of the commonality of facts and also the parties being common. 2. Smt. Sesharajyam, the learned Counsel representing the writ petitioner in all these Writ Petitions had demonstrated before this Court several arithmetical calculations and also had pointed out to several proceedings and would maintain that these were made in violation of principles of natural justice, behind the back of the writ petitioner. The learned Counsel also would submit that though no suitable directions as such can be given in W.P.No.2236/06, if appropriate directions are not given, in future, while considering the case of the writ petitioner, this will taken as a stigma and hence, appropriate directions may be given. The learned Counsel also had pointed out how the issue had been prejudged and how after coming to a conclusion, the other formalities subsequently had been complied with and hence it is a clear case of violation of principles of natural justice in the light of the prejudging of the issue. The learned Counsel also pointed out that as far as the amount of Rs.75,000/- is concerned, there is no serious controversy between the parties and hence, the refund of the same may be ordered. The learned Counsel while elaborating her submissions in relation to the other two Writ Petitions W.P.No.10422/05 and 10481/06 would maintain that the writ petitioner in fact was forced to sign and no notice was issued for joint inspection and the petitioner was not present at the time of measurements and it is the stand taken by the Railways that the petitioner was informed on phone and the same was not recorded even in the proceedings and that the general conditions of the contract also had been violated. The learned Counsel also pointed out to the relevant portions of the record and would maintain that the stand taken in the counter affidavits cannot be sustained. This action appears to have been initiated on an anonymous complaint. The Counsel also had pointed out to the relevant portions of the counter affidavits and would maintain that the railways had taken a false stand the summoning of the writ petitioner at late night of about 8.00 pm., on the fateful day had taken a giving notice, after the final bill had been settled, there is no question of approaching the arbitrator. The learned Counsel also pointed out to the alleged CBI Officials’ inspection and this was done in the absence of the petitioner. The learned Counsel also would maintain that despite the directions made by this Court, no proper details had been furnished even thereafter. The learned Counsel also had taken this Court through the order made by this Court in W.P.No.3020/2006 and further would comment that dismantling is not the subject matter of this contract and no doubt in one matter, there was a request to refer the matter to the arbitrator, but in other matter no such request had been made. In the absence of reports, the writ petitioner cannot be fastened with the liability and in the light of the same, these Writ Petitions are to be allowed. 3. On the contrary, Sri Ganga Rami Reddy, the learned standing Counsel representing respondents-Railways would maintain that in the light of the subsequent changes in a way the Writ Petition W.P.No.2236/06 became infructuous. Even otherwise, show cause notice was issued, the statement of charges had been specified and further the Counsel would contend that in the prior Writ Petition, interim stay was granted and the same was vacated, the procedure was followed and there is no prejudging of issue, inasmuch as, at the best, this can be a inter-departmental correspondence, even otherwise, when a higher Officer taken a decision, this may not seriously alter the situation. The learned Counsel also would maintain that let the petitioner make an application in accordance with law and let the competent authority consider the case of the petitioner whether the petitioner can be kept in the list or not in the facts and circumstances. Hence, no orders need be passed in the Writ Petitions. While further elaborating his submissions in relation to the other Writ Petitions W.P.No.10422/05 and 10481/06, the Counsel pointed out to the order made in W.P.No.3020/06 and would maintain that reasons had been recorded and certain particulars also had been furnished. The learned Counsel also would submit that the writ petitioner signed in the report and the petitioner accepted discrepancy and hence, the petitioner cannot complain about the remittance again, having paid the amount, the petitioner cannot question the same again in W.P.No.10422/05. The Counsel also had referred to the relevant arbitration clauses and would maintain that the remedy by way of Writ Petition in a statutory contract like this is a misconceived remedy. Either the writ petitioner may have to approach the Civil Court or may have to invoke the arbitration clause. The learned Counsel also placed strong reliance on several of the decisions to substantiate his submissions. 4. Heard the Counsel and perused the material produced before this Court. 5. W.P.No.2236/06 is filed for issuance of Writ of Mandamus declaring that the Memo.B/W.496/I/4/ALC/Tenders, dated 6-1-2006 (in Form-I) issued by the 4th respondent i.e., Divisional Railway Manager, S.C.Railway, Vijayawada, where under the name of the petitioner was removed from the list of approved contractors for a period of 5 years with effect from 6-1- 2006 as illegal, improper, arbitrary, without jurisdiction, opposed to principles of natural justice and unenforceable and pass such other suitable orders. 6. This Court issued rule nisi on 7-2-2006 and granted interim suspension in W.P.M.P.No.2722/06. 7. It is averred by the petitioner that he had been executing civil works of South Central Railways for the last 5 years, without any complaint from any quarter and that he was enlisted in the list of Approved List of Contractors in Category III Class B in 2004 upto 30-6-2007. It is also stated that in June 2004, the 5th respondent had called for tenders relating to the work of repairs to Sewage Pumping Main from Drainage Pump House to Septic Tanks along with Type 1 Quarters 132 to 137 and Type III Quarters 119 to 121 at W/WS/Railway Colony Rayanpadu and that the petitioner offered his tender on 21-7-2004 and that the 5th respondent had called for negotiations on 17-11-2004 and tender quotation amount was reduced during negotiations and that ultimately, the petitioner’s tender was accepted by the proceedings No. B/W.496/1/4/T.81/DEN/I/2004/T.V. dated 30- 11-2004 and the agreement was executed on 4-1-2005. Further it is stated that there are special and general conditions of contract binging both the parties and that the agreement period was three months with maintenance period of 6 months and the actual work commenced on 4-2-2005. Further it is averred that the petitioner had executed the entire work and extra work also as per the instructions of the Departmental Officials and that the final measurements were taken by the representatives of the 5th respondent i.e., Senior Section Engineer (Works) Rayanapadu. Further it is stated that after all the measurements were taken and certified in all respects only the final bill was approved and payments were made after due check measurements were made by the Asst.Divisional Engineer and Sr.Divisional Engineer Coordination and also stated that the 5th respondent also certified the work as per clause 1355(ii) of Engineering Code regarding Technical aspects of the work. It is also averred by the petitioner that to his surprise and annoyance, he was called to the office of the S.S.E./W(W.A.)/Rayanapadu on 29-5-2005 at about 8,00 p.m., by the 4th respondent where he found Divisional Engineer East BZA and A.D.E./BZA and he was asked to sign a Special Investigation Report stating that there was some discrepancy regarding the work executed by him in laying the Pipe Line and there were some excess payments made and that he brought it to the notice of the respondent No.5 that he was not present when they have conducted inspection, no notice was given to him and he cannot be made responsible for the inspection made behind his back that too after the entire work was executed and certified by the Department Officials. It is also averred in para 5 that inspite of protest, the respondent No.5 and the other officials present have forced the petitioner to sign report stating that the recovery would be subject to further inspection etc. It is also stated that the petitioner had been executing other works of the Department and heavy amount of bills and works are pending with the department and that the petitioner had no other go to sign the report and pay the amount as demanded by them on the assurance that the matter would be only regarding excess payments and subject to further inspection. The petitioner also further stated that after the receipt of amount, the 5th respondent had issued proceedings No.B/W/148/I/8095/WA Coord., dated 30-5-2005 received by him on 3-6-2005 calling upon him to pay an amount of Rs.6,01,248/- which has been paid in excess of the works executed by him and also stated that the amount is only provisional. It is also stated by the petitioner that an investigation has been done on the work entrusted to him by a Committee of Officers in his presence on 28-5-2005 and 29-5- 2005 which is not correct and also stated that he was never given a notice of any appointment of any Committee or the so- called Investigation by the Committee and that he was never present on 28-5-2005 or on 29-5-2005 at the time of any investigation. In fact, as per the General Conditions of the contract (condition No.4) all notices and communications references and complaints made by the Railway or the Engineers representative or the Contractor, interse concerning the works shall be in writing and no notice communication, reference or complaint not in writing shall be recognized. Further it is stated by the petitioner that every step of work i.e., measurement, certificates, payment etc., was governed by the General and Special condition of the contract, in his case also entire process was carried out as per the conditions of the contract. It is also stated that as the action of the respondents in conducting Review (reopen/Inspection/enquiry/Investigation) was unilateral, behind back of the petitioner, without giving any notice, without jurisdiction. The petitioner filed W.P.No.14022/2005 before trial Court. The petitioner also alleged that the respondents have given departmental instructions to all Wings not to accept any Tender from him, not to settle pending bills. It is also stated that when the matter came up before this Court after notice on 21-7-2005 the learned standing Counsel for Railways had represented to this Court that “no instructions have been issued to stop the amount due to the petitioner and the petitioner is not prevented from participating in any recorded tender or from executing any other work” and the same is recorded. The petitioner further averred that after a lapse of about 20 or 30 days, the bills kept pending in Divisional Office were paid to him but certain bills were stopped at ADEN’s Office/SSC/W/Office without sending them to Division Office. Further it is stated that the respondents have filed their counter affidavit in the above said Writ Petition stating that the petitioner had got a remedy of invoking the arbitration clause No.63 and 64 of General Conditions of Contract. Further it is stated that the respondents have issued another memo calling upon the petitioner to pay an amount of Rs.26,082/- as interest on the amount of Rs.6,10,248/- already collected under pressure and coercion and the same is subject matter of the above said Writ Petition and that the amount of Rs.26,082/- was deducted from him on account bill in respect of Agrt.No.5/BZA/C/05, dated 19-1-2005. In para 10 of the affidavit the petitioner stated that: “I submit that while the matters stood thus, I was served with a Memorandum dated 15-7-2005 in Form No.1 on 15- 7-2005 proposing to remove my name from the list of approved contractors and I was given time up to 22-8- 2005 to submit any representation against the proposed action. I submit that a statement of charges/Misconduct is enclosed to the said memo dated 15-7-2005 in which it is stated that a post payment audit was conducted under clause 51(2) OF General Conditions of Contract by a Committee of Officers consisting of DEN/East BSA and ADEN/Bldgs/BSA under the supervision of Sr.DEN/Coord/BZA as proposed by Sr.DEN/Co.ord/BZA with the approval of DRM/BZA in the presence of SSE/Works/WA/RYP and SE/Works/BZA and Special Report is drawn. It is alleged that measurements recorded are more than the quantities executed and regarding certain items of works the work was not at all executed. It is also alleged that I have accepted the discrepancies. It is submitted that the very inspection report itself is the subject matter of W.P.No.14022/2005 and the same is pending. I submit that the respondents are relying on the conditions of contract for fastening the liability on me under the guise of Post Payment Audit. As already submitted that the very special and General condition of the contract specifies that all correspondence between the Contractor and the Railway should be in writing and communication which is not in writing is of no value. I submit that no measurements were taken in my presence, no notice was given to me at any point of time. I submit that clause 51(2) reads as follows: Post Payment Audit:- “It is an agreed term of contract that the Railway reserves to itself the right to carryout a post-payment audit and technical examination of the works and the final bill including all supporting vouchers, abstracts, etc., and to make a claim on the contractor for the refund any excess amount paid to him, if as a result of such examination any over-payment to him is discovered to have been made in respect of any works done or alleged to have done by him under the contract.” I submit that clause 51(2) itself is silent when the Audit/Inspection can be carried out, by whom and the period before which such exercise can be undertaken and who has to do it. I submit that clause 51(2) of General Condition of the contract is liable to be declared as bad in law as it confers unguided and unlimited power on the officials concerned. In my case, 5th respondent who is associated with the work, who is part of misconduct if any as the entire work is carried out under his supervision and issued necessary satisfaction certificates cannot constitute a committee with all his subordinates to fasten the responsibility against an innocent contractor. I submit that the officers associated with Inspection report are all subordinates to the 5th respondent and they are also associated with the works. The witnesses are subordinates to the so-called Inspecting Officers. I submit that the 5th respondent in a hurry to save himself has hurriedly drawn of a report through his subordinates and made me to sign under pressure. I submit that under the GCC the contractor who signs no claim certificate on the final bill has no right for raising any dispute either regarding payment/work executed or even to raise a dispute for arbitration. But the respondents have reserved their right to examine the work at any time and right to recover money at any time and the said clause itself is bad. Even otherwise if any such discrepancy is found, they are entitled only for recovery of the amount and the same cannot be made ground for taking penal action. I submit that the respondents cannot take penal action against me without waiting for invoking the arbitration clause and result thereof. I submit that though the respondents have issued notice now for removing my name from the list of approved contractors, the action is proposed by the 4th in May 2005 itself which shows the pre-concluded mind of respondents 4 and 5. Simultaneously, along with the recovery of money and the same is evident from various correspondence filed along with Writ Petition. I submit that the 4th respondent cannot act on the note and the action proposed by the 5th respondent who is part of the agreement and associated with the execution of work certificates and payment of final bill. I submit that the 4th respondent is shielding the 5th respondent who is responsible for the excess payments or wrong measurements recorded in M.Book etc.” Further it is stated that there were many complaints regarding other works executed by other contractors under the supervision of the 5th respondent and as a preventive measure for action against him, he has reopened works executed by innocent contractor like the petitioner. The petitioner also stated that the 5th respondent had written to all Departments that his name has already been deleted from the approved list of contractors along with 4 others and given instructions to all the Departments by his note dated 23-6-2005 and also stated that the memo issued by the 4th respondent is only at the behest of 5th respondent who cannot be associated with Post-Audit Inspection as against his certification. Further it is stated that 5th respondent is the person responsible for any discrepancies, irregularities in taking measurements, certifications payment etc., if he is permitted to be associated with taking action, it amounts to allowing him to sit in Judgment against himself. Further it is stated that excess payments made to the petitioner even it is admitted for arguments sake having opted for recovering the same subject to further orders cannot take penal action against him and also stated that though the Memo is issued in the name of the 4th respondent and it is shown as if the opportunity is given to the petitioner, it is only a formality and the decision is taken long back by the 5th respondent himself and it is circulated to all departments stating that it is proposed to block list the petitioner and 4 others for which proposal shall be sent to Headquarters and also further stated that having regard to the above stated facts, no purpose would be served in approaching the respondents with an explanation/representation. It is also stated that turning the discrepancy even if it is noticed as misconduct and issuing a charge memo is not authorized and the petitioner cannot be treated as the employee of the respondent and also stated that the misconduct if any has to be attributed to all Officers who are connected to the work and not to the contractor. The petitioner further stated that the respondents have already decided to remove his name from the list of contractors and proposal even before issuance of show cause notice to block-list his name and the same amounts prejudging the issue without allowing him to avail to his remedies available and that when his name has already been removed from the list of approved contractors as per the Departmental Instruction going before the 4th respondent with a representation would of no use and hence he filed W.P.No.18092/2005 before this Court and this Court was pleased to admit the Writ Petition and granted interim suspension of the show cause notice and the respondents have filed counter affidavit and vacate stay petition and the matter came up on 26-12-2005 and when the case came up, his Counsel could not be present as she was engaged in the other case and this Court was pleased to pass orders vacating the interim orders in the absence of his Counsel and that on coming to know of the same, he had filed an application to set aside the exparte orders but by the time the matter came up before this Court, 4th respondent had already passed orders in proceedings No.B/W 496/1/4/ALC/Tenders dated 6-1-2006 removing his name from the approved list of contractors operating Engineering Department Vijayawada Division from all classes and categories for a period of 5 years with effect from 6- 1-2006. It is also stated that no reasons are given for passing the order except stating that this Court was pleased to vacate the interim order. The petitioner also stated that as his Counsel was not present, the interim stay was vacated but the case is not decided on merits. Even otherwise, the 4th respondent is bound to given reasons. It is also stated that by the petitioner that the right accrued to him cannot be taken away by a non- speaking order by authority who is not competent to do so and also averred that as he is the person associated with the works, he had raised the ground that he should not have been associated with the issue and has no jurisdiction also as the inclusion of his name in the approved list is by the 5th respondent. Further the petitioner averred that on receipt of order dt.6-1-2006, he made a representation that his Writ Petition is still pending and he had filed an application to set aside the exparte order and the order dt.6-1-2006 cannot be given effect till the disposal of his case in this Court and further stated that the order of the 4th respondent is illegal, improper, arbitrary without jurisdiction besides being opposed to principles of natural justice and is liable to be set aside. It is also stated that as the respondents have stated that the subject matter of excess payment has to be settled through arbitration, the petitioner requested the authorities to refer the matter for arbitration including the competency of the 5th respondent to constitute a committee and the said committee submitting a report without any inspection and drawing up a report and making the petitioner to sign on the report using pressure, coercion etc., as the action of the respondents is without jurisdiction and opposed to principles of natural justice. In such circumstances, the writ petitioner approached this Court praying for appropriate reliefs. 8. In the counter affidavit filed by respondents 1 to 5, the same was sworn to by the Senior Divisional Engineer (Co- ordination), South Central Railway, Vijayawada, and it is averred that it is a fact to the petitioner had executed the work in the Vijayawada Division and that the execution of work was done under the direct supervision of Senior Section Engineer/Works/Watering Arrangements/ Rayannapadu and also with monitoring and checking by Assistant Divisional Engineer/Buildings, South Central Railway, Vijayawada. Sri K.Venkateswara Rao, Senior Section Engineer/Works/Watering Arrangements/Rayannapadu recorded the measurements for the work in question. The check was carried out in all the contract works executed in the jurisdiction of Senior Section Engineer/Works/Watering Arrangements/Raynapadu. The work referred in the present is one of the works checked in this manner. The measurements have been certified as technically checked by the Chief Draftsman of the Works Branch, Vijayawada. During the check, the petitioner was also very must present and other witnesses Sri B.Timothy, Section Engineer/Works/Vijayawada was also present. The special report on the verification conducted on 28-5-2005 and 29-5- 2005 pertains to the contract in question. On verification of the said work, it is found that the petitioner has been paid an excess amount of Rs.6,01,248/- over and above the work done by him for the works not actually executed by him. Hence, the respondents are entitled to recover the said amount from the petitioner. Further, it is stated that it is not mandatory on the part of the respondent No.5 to carry out complete check