IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 2ND APRIL 2009 / 12TH CHAITHRA 1931 WP(C).No. 33556 of 2006(T) ----------------------------------- PETITIONER : -------------------- SIBI J.VACHAPARAMBIL, SON OF K.C.JOSEPH, RESIDING AT THE `ARK', PALLIMUKKU, PETTAH POST, THIRUVANANTHAPURAM. BY ADV. SRI.K.L.NARASIMHAN RESPONDENTS: ---------------------- 1. STATE OF KERALA, REPRESENTED BY THE SECRETARY (FINANCE) SECRETARIAT, THIRUVANANTHAPURAM. 2. SECRETARY, PUBLIC WORKS DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. 3. SUPERINTENDING ENGINEER AND DEPUTY CHIEF ENGINEER, MECHANICAL, PUBLIC WORKS P.W.D., TRIVANDRUM. SRI. MUHAMMOD FAZIL, GOVERNMENT PLEADER- R1TOR3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 2/04/2009 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R.RAMACHANDRA MENON, J. --------------------------------------- W.P.(C) No.33556 OF 2006 --------------------------------------- Dated this the 2nd day of April, 2009 JUDGMENT The petitioner has approached this court challenging Ext.P12 order passed by the first respondent rejecting the claim for escalation of the rates in connection with the work awarded to him and also against Ext.P16 order passed by the very same respondent ordering re-tender of the incomplete/remaining works at the risk and cost of the petitioner. 2. The petitioner, a PWD Contractor, was awarded the work of construction and supply of two 'Junghars' and the terms and conditions were put into writing as per agreement dated 07.03.2000, wherein the works were instructed to be completed by different stages with reciprocal agreement on the part of the Government to release the payments on completion of every stage. 3. It is the case of the petitioner that there occurred serious delay on the part of the Government/Departmental W.P.(C) No.33556 of 2006 2 authorities in disbursing the due amount despite the completion of stages 1, 2 and 3. The delay in releasing the payment stands rather admitted in the counter affidavit filed by the respondents and it is also reflected in the various letters/orders issued in connection with the above proceedings. The petitioner had also requested for extension of time to complete the works; which were granted and even after years, the work is still to be completed due to various reasons. 4. In the meanwhile, the cost of the raw materials and labour had gone up by several folds, which made the petitioner to request the departmental authorities to provide 'price escalation' so as to enable him to complete the works, despite the fact that Clause 26 of the Agreement made it clear that no price escalation would be provided during the period of contract under any circumstance. It is the case of the petitioner that the departmental authorities were very much convinced over the default/lapses on the part of the Government in releasing the payments then and W.P.(C) No.33556 of 2006 3 there as demanded by the petitioner on completion of the appropriate stage. It is submitted by the petitioner that the departmental authorities had also written to the higher authorities/Government, admitting the lapse and recommended to increase the rate by 40% of the agreed rate. Copies of the above proceedings, obtained by the petitioner invoking the relevant provisions of the Right to Information Act 2005, have been produced as Exts.P5 and P6. The second respondent after considering the recommendation given by the third respondent arrived at a specific finding that the request for price escalation was sustainable and accordingly, prepared a revised calculation statement and the same was recommended to be sanctioned and forwarded to the first respondent/Government vide Ext.P6. 5. Further steps pursued by the petitioner did not attract any positive result, when he approached this court by filing W.P.(C) No.17869/2006 which led to Ext.P9 judgment, whereby this court directed the first W.P.(C) No.33556 of 2006 4 respondent/Government to consider and finalise the matter, after going through all the relevant records and after giving an opportunity of hearing to the petitioner. It was also observed that the petitioner could approach the first respondent for interim orders, not to terminate the petitioner's contract in the meanwhile. It is the case of the petitioner that the first respondent, pursuant to Ext.P9 judgment passed Ext.P12 order in quite a mechanical manner, without any application of mind and turning down the request, simply stating that the original contract specifically stipulated that no price escalation was possible under any circumstance. It was further stated in Ext.P12 that even though stage payment was stipulated in the agreement, it was not an obligation on the part of the Government to have released the payment then and there. The petitioner also contends with reference to Ext.P13 that the Government has been sanctioning similar price increase in cases involving 'fixed price contracts' and that the petitioner is sought to be discriminated. It is also pointed W.P.(C) No.33556 of 2006 5 out that the third respondent, even after passing Ext.P12, has issued Ext.P14 asking the petitioner to file a representation for “further extension of time” which was replied by the petitioner vide Ext.P15, stating that he was prepared to complete the work on escalation of the price as recommended by the departmental authorities. This however did not persuade the respondents who issued Ext.P16 fresh tender notification in respect of the remaining works, which in turn has also been subjected to challenge by amending the writ petition. 6. Learned Government Pleader submits, with reference to the statement as well as the counter affidavit filed by the third respondent, that the delay was only on the part of the petitioner and that extension of time sought for at different points of time was granted always. The learned Government Pleader further submits that the contract was awarded in the year 2000 clearly stipulating that no escalation of the price rate would be considered as stated in the agreement executed in between and also as provided in W.P.(C) No.33556 of 2006 6 the tender conditions. It is further pointed out by the learned Government Pleader that the termination of the contract as per Ext.R3(a) order has not been subjected to challenge. 7. Normally, this court would not have entertained this writ petition, particularly being a matter seeking to enforce the relative rights and liabilities arising under a contract. But the facts and figures to the extent they are admitted by the respondents 2 and 3 as contained in Exts.P5 and P6 proceedings/recommendations observing that the claim for escalation put forth by the petitioner was genuine, suggest that the delay was also because of the non disbursement of the due amounts by the Government at the appropriate time/stage-completion, adversely affecting the works. This court had also directed the first respondent to look into all such aspects in connection with the tender and to pass a reasoned order as borne by Ext.P9. It is not discernible from Ext.P12 order passed by the first respondent as to whether the various aspects pointed out by W.P.(C) No.33556 of 2006 7 the departmental authorities-second and third respondents vide Exts.P5 and P6 sustaining the price escalation and recommending increase by 40% have been considered or not, which hence requires reconsideration, with proper application of mind. 8. Another aspect to be looked into in this context is that the termination of the contract as per Ext.P12 and the subsequent re-tender notification in respect of the remaining works pursuant to Ext.P16 have not led to any subsequent proceedings. In other words, despite the cancellation of the work awarded to the petitioner and the re-tender of the balance work as per Ext.P16, the learned Government Pleader submits that the work has not been awarded to anybody else because of the pendency of the above writ petition, though there was no stay. Since nobody else has been entrusted with the work, reconsideration of the matter will not cause any prejudice to anybody or even to the Government. 9. Learned counsel for the petitioner submits that, if W.P.(C) No.33556 of 2006 8 on reconsidering the matter permitting the petitioner to continue the work, the petitioner will definitely effect all necessary repairs at his cost and that the work already completed in respect of the junghars would be made worthy of proceeding further; thus without causing any additional loss to the Government. The apprehension of the third respondent in para 12 of the counter affidavit that the partly built junghars may not be usable any further is stated as wrong and unfounded. It is more so, when the request of the petitioner is only regarding the price escalation for the “balance work” and obviously the re-tender notification as per Ext.P16 is also for the “balance works” in respect of the junghars. It is submitted by the learned counsel that once the petitioner effects necessary repair works to the existing partly constructed junghars, there is no more impediment for the Government to consider his claim with regard to the balance work to be performed. The learned counsel has also brought to the notice of this court a Circular bearing No.60/2008/Fin. dated 10.10.2008, whereby it is provided W.P.(C) No.33556 of 2006 9 that price escalation could be granted in respect of the works under the PWD which were started pursuant to the Schedule of Rates 2004 and which were still to be completed. Even though the said Circular is not applicable to the instant case as such, the principle/logic behind that with regard to the necessity for providing such measures in appropriate cases has to be looked into. 10. In the above circumstances, taking note of the utmost necessity to preserve the public money and also taking note of the fact that no prejudice is going to be caused to anybody else and further since the remaining works have not been allotted to anybody on re-tender, the first respondent is hereby directed to reconsider the matter in the light of Exts.P5 and P6 recommendations and also the scheme/object behind the Circular dated 10.10.2008-to the extent it could be treated as a guideline. Ext.P12 and all consequential orders/notifications are set aside, for enabling the first respondent to reconsider the matter as above. Such exercise shall be finalised after giving a W.P.(C) No.33556 of 2006 10 reasonable opportunity of being heard to the petitioner, as expeditiously as possible, at any rate within a period of two months from the date of receipt of copy of this judgment. The petitioner will produce the copy of the judgment along with copies of Exts.P5, P6, Circular No.60/2008/Fin. dated 10.10.2008 and such other materials sought to be relied upon, before the first respondent, for finalizing the matter as aforesaid. The writ petition is disposed of as above. P.R.RAMACHANDRA MENON JUDGE pac