WP(C)No.8130/2009 Page 1 of 32 * IN THE HIGH COURT OF DELHI AT NEW DELHI Judgment delivered on 1st July, 2010 + W.P.(C) 8130/2009 M/S ROSHAN LAL VOHRA & ANR. ..... Petitioners Through: Mr. Shyam Moorjani, Advocate versus MCD & ORS. ..... Respondents Through: Mr. H.S. Phoolka, Sr. Advocate with Mr. Sanjeev Sabharwal, Advocate CORAM: HON'BLE MR. JUSTICE G.S.SISTANI 1. Whether reporters of local papers may be allowed to see the Judgment ? 2. To be referred to the Reporter or not? 3. Whether the Judgment should be reported in the Digest? G.S. SISTANI, J. 1. Rule. With the consent of counsel for the parties, writ petition is set down for final hearing and disposal. 2. The facts of the case, which have led to filing of the present petition, as stated in the writ petition, are that the petitioners, who are contractors, participated in a tender floated by the respondents. The tender was opened on 23.6.2007. After negotiations a work order was issued to the petitioners on 19.2.2008 and thereafter a formal agreement was also executed between the parties on 14.11.2008. As per the petitioners, they started the work on 28.2.2008 within the stipulated period. The completion period was 18 months i.e. by 27.8.2009. Petitioners after carrying out certain work of earth excavation, found that the work cannot be completed as hindrances existed at the site such as clusters of jhuggies, electric poles and further the designs provided by the respondents were faulty. The petitioners approached the respondents for revising the designs / drawings relating to the work as in case the designs were not revised the structure would collapse. The petitioners also submitted modified WP(C)No.8130/2009 Page 2 of 32 drawings and designs with the respondents, however, the respondents sat over the same. 3. It is submitted that the petitioners wrote a letter dated 6.5.2008 to respondent no.3 wherein petitioners clarified that the work had been started in the reach of about 100 meters; the remaining portion is thickly effected with encroachments on route, clusters of jhuggies are existing; and electric poles are also existing on the alignment. The respondents were also informed that further work is likely to get hindered till the encroachments are removed and clear site is made available to the petitioners. 4. The case of the petitioners is that despite the petitioners having pointed out to the respondents with regard to the difficulties being faced by them, the respondents did not bother to take any action for removal of obstructions nor handed over revised drawings. It is the case of the petitioners that in fact, the revised drawings were not received by the petitioners till the date of filing of the writ petition. 5. As per the petition, the petitioners received a communication dated 5.5.2008 from respondent no.3, by which respondent no.3, without addressing any of the issues raised by the petitioners, directed the petitioners to restart the work which had been held up for ten days, failing which action would be initiated. Petitioners are stated to have issued another communication to the respondents on 22.5.2008 wherein while reiterating the difficulties faced by the petitioners it was brought to the notice of the respondents that in case matters are not resolved within one week the petitioners would be constrained to dispense with the work without prejudice to their rights and contentions. 6. It is the case of the petitioners that respondent no.3 had realised its fault with regard to faulty drawings which were handed over to the petitioner initially and had referred the matter back to Water & Power Constancy Services (India) Ltd. (herein after referred to ―WAPCOS‖), who admitted that the drawings were faulty and had revised the drawings. However, as per the petitioners, neither the WP(C)No.8130/2009 Page 3 of 32 revised drawings were supplied to the petitioners nor the petitioners were informed about the same. 7. Respondent no.3 issued a show cause notice dated 27.5.2008 to the petitioners under Clause 2 of the contract wherein the petitioners were asked to reply as to why the compensation should not be levied upon them for not restarting the work. Respondent no.3 also issued a communication to the petitioners on 29.5.2008, by which, respondents had issued various clarifications in response to the petitioners‘ communication dated 6.5.2008. The petitioners were asked to complete the work and thus counsel for the petitioners submits that this communication superseded the show cause notice dated 27.5.2008. 8. Mr. Shyam Moorjani, learned counsel for the petitioners, submits that the respondents, without adverting to the issues raised by the petitioners, issued another show cause notice to the petitioners on 15.10.2008 pointing out that the progress of the work was slow. By a communication dated 20.10.2008, the petitioners informed respondent no.3 that the work cannot be resumed due to non-supply of revised drawings and designs. In response to this communication of the petitioners, respondent no.3 addressed a letter to the petitioners dated 24.10.2008 informing the petitioners that designs have been revised by WAPCOS, however, the petitioners‘ contention that despite the designs / drawings having been revised, a copy of the drawings were not handed over to them, was denied. In the same communication, it was also brought to the notice of the petitioners that the work was being carried out by the petitioner as per the revised drawings/designs of which the petitioners as well as the petitioners‘ site engineer are well aware and the work was held up on account of fault of the petitioners by not removing the malba/silt from the site. 9. It is contended by counsel for the petitioners that despite various verbal and written requests the respondents did not supply to the petitioners a copy of the revised drawings / designs, although the malba/silt was removed, excavation of earth work was completed WP(C)No.8130/2009 Page 4 of 32 and lean concrete laid at the site during the period from 23.10.2008 to 18.11.2008. The petitioners were, however, left with no option but to stop the work as the petitioners did not want to risk the lives of labourers to execute the structural work on their earlier faulty designs as the revised drawings and designs were not supplied to the petitioners. It is further contended by counsel for the petitioners that the petitioners were again informed by the respondents vide communication dated 1.12.2008 that they have carried out only 7% of the work and the work was held up since 18.11.2008. Petitioners were requested to expedite the progress so that the work can be completed within the stipulated period of time. 10. According to the petitioners, they had reliable information that in the revised drawings the consultant had altogether altered the designs and scope of the work and in view thereof the respondents were concealing the revised designs. The petitioners, by a communication dated 24.12.2008 addressed to respondent no.3, stated that the petitioners had learnt that designs and scope of the work were completely altered by the consultant agency. Petitioners clarified that they had completed the work to the tune of 20% and not 7% as alleged by the respondents. Petitioners further in its letter clarified to the respondents that the work had been held up for the approval of the designs and rates in the order of merit and conditions of the award letter. 11. It is contended by counsel for the petitioners that as per the work order dated 19.2.2008 when orders are given for execution of any extra/substitute item the petitioners had to obtain an order from the competent authority before executing the same to avoid any further complications. Therefore, the allegation with regard to supply of revised designs/drawings was per se false as even in case the designs had been supplied to the petitioners the work could not have been started as no order was given to the petitioners from the competent authority for executing the substituted items of work included due to revision of drawings/designs, which was one of the main reasons for the WP(C)No.8130/2009 Page 5 of 32 respondents in not providing a copy of the revised drawings to the petitioners and, thus, in fact, the respondents have played a fraud on the petitions and did not supply any copy of the drawings to the petitioners. It is further contended that the respondents were aware that the drawings have been completely changed and in case a copy of the same was handed to the petitioners, the petitioners would raise hue and cry and the erring respondents and officials would be in serious trouble as the earlier drawings were completely faulty. It is also contended that the respondents have made the petitioners a scapegoat. 12. Counsel for the petitioners submits that another show cause notice was issued to the petitioners under Clause (2) of the contract agreement on 5.1.2009. While referring to their earlier letter dated 24.12.2008, petitioner replied to the respondents vide letter dated 14.1.2009 rendering clarifications, reasons and the circumstances for not resuming the work for want of approval of designs and rates. The respondents instead of considering the reply, on 20.1.2009 issued another show cause notice to the petitioners as to why the action under clause, sub-clause 3(a), and / or 3 (b) and / or 3(c) of the agreement be not taken against the petitioners. Reply to the show cause notice dated 20.1.2009 was submitted by the petitioners on 28.1.2009 denying the allegations made by the respondents in their show cause notice. The respondents did not accept the stand of the petitioners and informed the petitioners vide letter dated 07.02.2009 that the respondents proposed to proceed against them in accordance with Clause 2 and 3 of the Contract Agreement and Clause 22 of the Contractor Enlistment Rules. However, with a view to adhere to the principle of natural justice a final opportunity of personal hearing was granted to the petitioners and the petitioners were directed to appear before the Chief Engineer VII on 16.2.2009 at 3.00 p.m. Thereafter by a communication dated 16.2.2009 personal hearing was fixed for 20.9.2009 at 3.00 p.m., on which date, petitioners are stated to have appeared and also gave written submissions on 21.2.2009. By a communication dated WP(C)No.8130/2009 Page 6 of 32 25.2.2009 respondent no.3 supplied a copy of the speaking order passed by respondent no.2 on 24.2.2009 to the petitioners. 13. In consequence to the speaking order dated 24.2.2009 respondent no.3 vide order dated 16.3.2009 rescinded / determined the contract and fortified the earnest money and the security deposited. The respondents also took out such part of the work from the hands of the petitioners, which remained unexecuted, for giving it to another contractor for completion of the work. Further the right to claim compensation with regard to purchasing and procurement of any material and entering into any engagement by the petitioners had been curtailed and a notice for measurement of the work was given for 20.3.2009. On 16.3.2009 respondent no.3 had given a notice whereby the petitioners were called upon as to why the amount of Rs.36,84,846/- i.e. 10% of the contractual cost should not be recovered by the Department from the security deposit lying with the respondents within a period of seven day. 14. It is the case of the petitioners that these letters were received only on 21.2.2009 and 23.3.2009 by which date the stipulated time had already elapsed. The respondents thereafter passed an order dated 12.3.2009 debarring the petitioners from tendering in MCD for three years. 15. It is contended by counsel for the petitioners that the order dated 12.3.2009, debarring the petitioners, was passed without issuing any show cause notice and in total violation of the principles of natural justice. It is further contended that the order dated 24.3.2009, by virtue of which, the petitioners have been black listed as well as the order dated 12.3.2009 and also two orders dated 16.3.2009 are totally arbitrary, illegal, unreasonable and against the prescribed principles established by law. It is next contended that the orders passed by the respondents are unconstitutional, ex facie, colourable exercise of power and in violation of Articles 14(1)(g) and 21 of the Constitution of India and are, thus, liable to be quashed. It is also contended that the order of black listing has been passed without issuing any show WP(C)No.8130/2009 Page 7 of 32 cause notice as to why the petitioners should not be black listed, without giving any opportunity of hearing to the petitioners and thus the respondents have failed to comply with the principles of natural justice and in view of this the order of black listing is liable to be quashed. 16. Learned counsel for the petitioners submits that the orders passed by the respondents are with a view to tarnish the unblemished record of the petitioner of 50 years. Counsel further submits that the speaking order which has been passed is without any jurisdiction in view of the fact that the same has been passed by the Chief Engineer, who is not competent to pass the order. Counsel also submits that the contract has been rescinded with a view to save the skin of the officials of the MCD. Counsel next submits that the work had to be stopped by the contractor on account of two measure factors (i) that the site was not clear of obstructions, there were jhuggies and electric polls in the alignment of the work to be carried out; and (ii) revised drawings were not supplied to the petitioners. 17. Counsel for the petitioners has placed strong reliance on the communications issued by the petitioners dated 6.5.2008 wherein various issues were raised by the petitioners which were not addressed by the respondents, which led to the work coming to a standsill. 18. It is contended by learned counsel for the petitioners that petitioners made all efforts to carry on with the work and the work commenced from both the sides but had to stop on account of the fact that the obstructions were to be cleared by the MCD. The second issue, which has been raised by the petitioners for non- completion of work is that the revised drawings were not supplied to the petitioners. It is further contended that various letters were written by the petitioners to the MCD to supply the revised drawings but no satisfactory response has been received. The respondents were only trying to show by implication that revised drawings were handed over to the petitioners and there is nothing WP(C)No.8130/2009 Page 8 of 32 on record, which would show that, in fact, the revised drawings were handed over to the petitioners. 19. Learned counsel for the petitioners submits that, even otherwise, as per CPWD manual another copy of the revised drawings could have been handed over to the contractor on payment of Rs.1500/- which amount could either have been recovered by the MCD from the bills of contractor or demanded in cash. Counsel further submits that, in fact, the MCD wanted to shift the burden on the petitioners and with mala fide intentions the revised drawings were not handed over to the petitioners in view of the fact that as the concrete mixture had to be changed from M-20 to M-35 and on account of this revision, the expenditure of the project would have increased manifolds and in case of revised drawing only half the work could have been completed within the estimated cost. Even otherwise the MCD failed to grant prior permission in relation to the work which was to be carried out as per the revised drawing, as this was a condition precedent for carrying out additional and substitute work. Counsel further submits that the Orders dated 16.03.2009, by virtue of which, the contract of the petitioners has been rescinded is without any jurisdiction. Counsel also submits that the two orders dated 16.03.2009 (Annexure P-3) passed by the Executive Engineer are without any jurisdiction and that he was neither competent nor authorized to issue the orders as per the terms of the contract. Counsel next submits that to the best of the knowledge of the petitioners the structural designs have not been made in respect of the revised drawings and the same could not have been made without the participation of the petitioners as the MCD was to supply the sample of the necessary material. The second order dated 16.03.2009 has been assailed by the petitioners as the petitioners could not have imposed 10% penalty on the value of the contract as only the Superintending Engineer has the power of jurisdiction to impose the penalty and that too after giving a show cause notice and after granting hearing to the petitioners and only after the petitioners had admitted the breach could the damages have WP(C)No.8130/2009 Page 9 of 32 been imposed. The respondents cannot be a judge of his own cause and cannot pass the order against the petitioners. 20. Respondents have filed an affidavit in opposition to the writ petition as also the synopsis have been handed over in Court with supporting documents. 21. Mr. H.S. Phoolka, learned senior counsel for the respondents, submits that the present petition involves disputed questions of fact, which cannot be adjudicated upon in the present writ petition. Senior counsel further submits that the existence / removal of clusters of jhuggis, electrical poles, which as per the petitioners are a hindrance in execution of the work are strongly disputed as according to the MCD the work could have been executed and some work has, in fact, been executed without removal of the clusters of jhuggis and electrical poles. Senior counsel also submits that the second issue raised by the petitioners with regard to non-submission of revised designs / drawings is also vehemently denied and disputed as the petitioners were well aware of the revised drawings, which is evident from the fact that the petitioners had executed the allotted work as per the revised drawings. Senior counsel next submits that it is also a disputed question as to the extent of work executed by the petitioners, who have contended that they have executed 20% of the work, whereas as per the MCD only 7% of the awarded work has been executed, which has led to the cancellation of the contract. 22. It is contended by senior counsel for the respondents that the reasons for delay in execution of the work also cannot be adjudicated in the present proceedings which question would require detailed evidence and in view thereof petition under Article 226 of Constitution of India, is not the appropriate remedy and, thus, liable to be dismissed. It is further contended that the subject matter of the writ petition involves contractual disputes arising out of contract dated 14.11.2008 and the disputes have arisen during the execution of the contract and thus a writ court cannot adjudicate upon the disputes arising out of contractual WP(C)No.8130/2009 Page 10 of 32 matters. It is also contended by counsel for the respondent that the petitioners have failed to make out a strong prima facie case for judicial review of the action taken by the respondents as the respondents have issued repeated show cause notices to the petitioners granting opportunity of filing replies; personal hearing was also granted to the petitioners and thereafter a speaking order dated 24.2.2009 has been passed. The respondents have thus followed the due process of law and also complied with the principles of natural justice. The show cause notice dated 5.1.2009 was issued to the petitioner proposing action under Clause 2 of the Contract Agreement; show cause notice dated 20.1.2009 was issued to the petitioners proposing action under clause, sub-clause 3(a) and / or 3(b) and /or 3(c) of the Contract Agreement; and show cause notice dated 7.2.2009 was issued clearly stating that the MCD was contemplating to proceed against the petitioners under Clauses 2 and 3 of the Contract Agreement and Clause 22 of the Contract Enlistment Rules. Receipt of all the show cause notices issued to the petitioners have been admitted in the writ petition filed by the petitioners. Petitioners have also admitted that opportunity of personal hearing was also granted to them on 20.1.2009, 16.2.2009 and 20.2.2009 before the Chief Engineer VII of the MCD. The petitioner did not appear on two dates of hearing. The third opportunity of personal hearing was availed of by the petitioners. 23. It is submitted by learned senior counsel for the respondents that while passing the speaking order dated 24.2.2009 the submissions made by the petitioners have been duly considered by the respondents. It is further submitted that as far as the revised set of drawings are concerned the same was handed over to the Site Engineer of the Contractor as soon as the same was received from the consultant. It is also submitted that a copy of the revised designs / drawings was also handed over to the third party agency i.e. Sh. V.V. Arora, Scientist, NCCBM, and the Site Engineer. This fact was also intimated to the petitioners by EE(Pr)/Central-I vide communication dated 24.10.2008 and the petitioners by their WP(C)No.8130/2009 Page 11 of 32 letter dated 24.12.2008 has admitted that the designs and scope have been altered by the consultant agency and that the petitioners were in the knowledge of the requirement of M/35 grade of concrete in place of M/20 grade of concrete and as such the petitioners had alleged that approval of extra / substitute items were required as per the designs and drawings. It is further submitted that it is only after the drawings were supplied to the petitioners and a copy of the same was handed over to the third party in the presence of the Contractor, Sh. Anil Vohra, and his Site Engineer on 10.9.2008, could the petitioners have learnt that designs and scope had been altered and the grade of concrete was changed from M-20 to M-35 and a demand for extra/ substitute items could have been made. It is further submitted that in case the petitioners were interested in completing the work, the petitioners would have deposited Rs.1500/- and obtained another copy of the drawings. The work was resumed by the petitioners on 23.10.2008 and executed till 18.11.2008. The receipt of revised drawings / designs is also evident from the fact that it has been stated in para 13 of the writ petition that ―malba / silt was removed, excavation of earth work completed and lean concrete laid at the site during the period 23.10.2008 to 18.11.2008”. It is also submitted that this averment would make it clear that for laying the lean concrete, revised drawings / designs were required. As far as demand of extra items is concerned, the changes / deviations in the quantities of item of the contract would be dealt with as per Clause 12 of the Contract Agreement. 24. It is submitted by learned senior counsel for the respondents that the petitioners have completed only 7% of the work is also evident from the fact that the running bill for the work carried out by the petitioners was paid in the month of November, 2008 and the petitioners have accepted the running bill to the tune of 7%. Thus, the submission that the 20% of the work has been completed is false. It is further submitted by counsel for the respondents that since even after lapse of 11 months only 7% of the work had been WP(C)No.8130/2009 Page 12 of 32 completed the show cause notice dated 5.1.2009 under Clause 2 of the Contract Agreement for poor progress of work was issued to the petitioners. It is also submitted As per the respondents the petitioners have been delaying the completion of the work without any justifiable reasons; MCD has not withheld the drawings / designs and, thus, the petitioners have rendered themselves liable for action for breach of the contract. 25. Learned senior counsel for the respondents submits that since the petitioners have committed breach of contract, they have not completed the work as per the schedule and have executed only 7% of the work after a lapse