IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC MONDAY, THE 23RD JUNE 2008 / 2ND ASHADHA 1930 WP(C).No. 26721 of 2006(F) ----------------------------------------- PETITIONER: -------------------- M/S.M.K.ABRAHAM & CO., GOVT.CONTRACTOR, MADAIKAL HOUSE, VENGOLA P.O., PERUMBAVOOR REPRESENTED BY IT'S MANAGING PARTNER BOSE ABRAHAM, AGED 37, S/O.M.K.ABRAHAM. BY ADV. SRI.ABRAHAM VAKKANAL (SR.) SRI.PAUL ABRAHAM VAKKANAL SRI.ARUL KUMAR.P RESPONDENTS: ------------------------- 1. STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, P.W.D.SECRETARIAT, THIRUVANANTHAPURAM. 2. THE SUPERINTENDING ENGINEER, N.H.CENTRAL CIRCLE, VYTILA, ERNAKULAM. * 3. THE SUPERINTENDING ENGINEER, ROADS AND BUILDINGS, CENTRAL CIRCLE, ALUVA. *ADDRESS OF R3 IS CORRECTED AS: R3. THE SUPERINTENDING ENGINEER, ROADS AND BRIDGES, CENTRAL CIRCLE, ALUVA. (AS PER ORDER DTD. 25/01/2007 IN I.A.NO.836/07) 4. THE CHIEF ENGINEER, P.W.D., NATIONAL HIGHWAYS, THIRUVANANTHAPURAM. 5. THE DEPUTY TAHASILDAR (RR), KUNNATHUNADU, PERUMBAVOOR. BY GOVERNMENT PLEADER SRI. K.V. MANOJKUMAR – R1 TO R5 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.26721/2006 F APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE PRELIMINARY AGREEMENT DTD.27/02/2002. EXT.P2: COPY OF THE SELECTION NOTICE WITH ACCEPTED SCHEDULE DTD. 03/05/2002. EXT.P3: COPY OF THE FRESH SELECTION NOTICE WITH SCHEDULE DTD. 05/12/2002. EXT.P4: COPY OF JUDGMENT OP NO.1870/03 DTD. 19/12/2003. EXT.P5: COPY OF THE LETTER BY 2ND RESPONDENT DTD.26/2/2004. EXT.P6: COPY OF THE BANK GUARANTEE NO.38/04 FOR RS.9,49,844/- DTD. 08/03/2004. EXT.P7: COPY OF THE BANK GUARANTEE NO.39/04 FOR RS.10,00,000/- DTD. 08/03/2004. EXT.P8: COPY OF THE COVERING LETTER SENT BY PETITIONER ALONG WITH BANK GUARANTEE DTD. 09/03/2004. EXT.P9: COPY OF LETTER NO.W2-D2-160/01 SENT BY 2ND RESPONDENT TO PETITIONER DTD. 05/03/2004. EXT.P10: COPY OF ORDER NO.W2D2-160/2001 DTD.10/03/2004. EXT.P11: COPY OF LETTER NO.W2.D2.160/01 SENT BY 2ND RESPONDENT TO PETITIONER DTD. 31/05/2004. EXT.P12: COPY OF THE PETITION SENT BY PETITIONER TO 2ND RESPONDENT DTD. 14/06/2004. EXT.P13: COPY OF SHOW CAUSE NOTICE ISSUED BY THE 3RD RESPONDENT TO PETITIONER DTD. 30/11/2004. EXT.P14: COPY OF THE REPLY SENT TO THE 3RD RESPONDENT BY THE PETITIONER DTD. 17/12/2004. EXT.P15: COPY OF THE RENEWAL APPLICATION SUBMITTED BY THE PETITIONER DTD. 31/12/2004. EXT.P16: COPY OF REPLY SENT TO THE PETITIONER BY THE 3RD RESPONDENT DTD. 17/01/2005. Kss ..2/- ...2..... WPC.NO.26721/2006 F EXT.P17: COPY OF ORDER NO.FCR-4148/93 OF THE 3RD RESPONDENT DTD. 15/04/2005. EXT.P18: COPY OF LETTER SENT BY THE PETITIONER TO THE 3RD RESPONDENT DTD. 12/05/2005. EXT.P19: COPY OF REMINDER LETTER SENT BY THE PETITIONER TO THE 3RD RESPONDENT DTD. 17/12/2005. EXT.P20: COPY OF FINAL REMINDER LETTER SENT BY THE PETITIONER TO THE 3RD RESPONDENT DTD. 05/07/2006. EXT.P21: COPY OF THE DEMAND NOTICE NO.D3-8800/06 ISSUED BY 5TH RESPONDENT DTD. 19/09/2006. RESPONDENT'S EXHIBITS: EXT.R2A: COPY OF SELECTION NOTICE DTD. 5/12/02. EXT.R2B: COPY OF THE REGISTERED NOTICE DTD. 6/01/03. EXT.R2C: COPY OF ACKNOWLEDGEMENT CARD DTD. 8/01/03. EXT.R2D: COPY OF THE REGISTERED NOTICE DTD. 14/01/03. EXT.R2E: COPY OF THE TERMINATION ORDER DTD.11/02/03. EXT.R2F: COPY OF LETTER DTD. 23/01/04. EXT.R2G: COPY OF ACKNOWLEDGEMENT CARD DTD. 29/01/04. EXT.R2H: COPY OF EXPRESS PHONOGRAM DTD.10/02/04. EXT.R2I: COPY OF REGISTERED LETTER DTD. 26/02/04. EXT.R2J: COPY OF TELEGRAPHIC MESSAGE DTD. 26/02/04. EXT.R2K: COPY OF THE NOTICE DTD. 5/03/04. EXT.R2L: COPY OF ACKNOWLEDGEMENT CARD DTD. 8/03/04. EXT.R2M: COPY OF ORDER NO.W2.D2.160/01 DTD. 31/05/04. EXT.R2N: COPY OF LETTER NO.E2 285/03 DTD. 6/11/04. EXT.R2O: COPY OF LETTER NO.E2-285/03 DTD. 23/03/05. /TRUE COPY/ P.A.TO JUDGE Kss ANTONY DOMINIC, J ----------------------------------------------------------------- W.P.(C).NO.26721/2006 ----------------------------------------------------------------- Dated this the 23rd day of June, 2008 JUDGMENT Challenge in this writ petition is against Exts.P11,P17 and P21. 2. Ext.P11 is a communication issued to the petitioner fixing his liability following termination of the contract at the risk and cost of the petitioner. Consequently, by Ext.P17, petitioner was blacklisted and by Ext.P21 the amount allegedly due from the petitioner as a result of Ext.P11 is sought to be recovered by taking recourse to the provisions of the Revenue Recovery Act. 3. Petitioner is an A-class contractor, who was the successful bidder of a road work in connection with N-H 47. Petitioner submits that, at the time he submitted the tender he had executed Ext.P1 preliminary agreement in favour of the respondents. Soon after the petitioner was W.P(c).No.26721/06 2 intimated of the selection, dispute arose between the parties on furnishing performance of guarantee and security deposit. According to the petitioner, after resolving the dispute, he was willing to furnish a bank guarantee towards performance guarantee and security deposit and made available Exts.P6 and P7 bank guarantees on 8.3.2004. 4. It is stated that at that stage he was given a notice that his selection was cancelled and that the work was awarded to the second lowest tenderer at his risk and costs. It is stated that, while his offer was to execute the work at below 36% of the estimated rate, the second lowest tender was for below 22.32% of the estimated rate. It is stated that the difference between the rates was 11% equivalent to Rs.11,81,260/-. 5. Petitioner submits that, the second lowest tenderer, executed the work and long thereafter, he was issued Ext.P11 informing him that the difference between the rate offered by the petitioner and the second lowest tenderer was Rs,11,81,260/-. It was also informed that due to the W.P(c).No.26721/06 3 non execution of the work by the petitioner 3 works were arranged to keep the road traffic worthy and during Sabarimala season one more renovation work was also arranged. It is stated that the total expenditure incurred by the department for these works was Rs.31,94,471/- Adding the aforesaid two figures, the petitioner was called upon to pay a total amount of Rs.47,20,627/-. 6. The petitioner submits that, following the quantification of his liability as per Ext.P11, he was issued Ext.P13, a show cause notice calling upon him to show cause as to whether why he should not be blacklisted for non-payment of the amount indicated in Ext.P11. It is submitted that, on receipt of Ext.P13, petitioner submitted Ext.P14 reply, disputing the allegations in Ext.P13 and also seeking an opportunity of hearing. It is stated that, without considering any one of the contentions raised and without even affording an opportunity of hearing, he was issued Ext.P17 order of blacklisting. As a consequence of Exts.P11 and P17, in order to recover the amount that is allegedly due, respondents have taken recourse to revenue recovery W.P(c).No.26721/06 4 proceedings and and on that basis Ext.P21 revenue recovery notice was issued seeking to recover an amount of Rs.47,20,627/- together with other charges. 7. It is stated that, at this stage, in order to give a quietus to the dispute, petitioner had made repeated offers to pay Rs.11,81,260/- and that there was no response to any such offers made. 8. According to him, while his offer remains without response and as recovery proceedings were continuing, he filed this writ petition seeking to quash the aforesaid proceedings and for getting himself exonerated of the liability. At the stage, when the writ petition was admitted by this court, an order of stay was passed and that order has been extended until further orders and is continuing even now. 9. A counter affidavit has been filed by the respondents. According to the respondents, initially selection notice was issued to the petitioner on 19.3.2002, accepting his offer to execute the work at below 36% of the estimated rate. It is stated that right from that period W.P(c).No.26721/06 5 onwards, disputes were raised by the petitioner and litigations were also initiated before this court. After the disputes were resolved he was again issued a second selection notice as Ext.R2(a) and despite this the petitioner did not commence work and as a result of which, repeatedly notices were again issued to the petitioner calling upon him to at least commence the work. The last notice that was thus issued is Ext.R2(d) dated 14.1.2003. As even this notice was not responded, according to the respondents, they had to terminate the contract by Ext.R2(e) issued on 11.2.2003 and Ext.R2(e) was challenged before this court in O.P.No.1870/2003. That Original Petition was dismissed as withdrawn as is evident from Ext.P4. 10. Respondents would submit that, even thereafter, notices to start work and to comply with the undertaking given in Ext.P4 judgment were issued but there was no response and Exts.R2(f), (g) and (h) are the notices that were issued. Respondents would submit that, there has not been any progress in the work and that in the meantime about 2 years had elapsed. In these circumstances, it is W.P(c).No.26721/06 6 stated that the work had to be rearranged with the 2nd lowest tenderer who had undertaken to do the work at 22.32% below the estimated rate. It is stated that this arrangement was made on 15.2.2004. 11. Thus what is submitted by the respondents is that for getting the work executed by rearranging the same, they had incurred an additional expenditure of 11,81,260/-. It is also stated that, on account of the delay, they had to keep the road traffic worthy and one more renovation was arranged on account of Sabarimala season, incurring a total expenditure of Rs.31,94,471/-. It is stated that, it was to recover these amounts that Ext.P11 was issued and for non- payment of which the petitioner was blacklisted by Ext.P17. It is also stated that it is to recover the amount thus due, recovery proceedings were initiated. It is also stated in the counter affidavit that the offer of the petitioner to pay Rs.11,81,260/-, as stated by him in the writ petition was not received by the respondents. 12. Learned Senior Counsel for the petitioner mainly argued that the quantification of the liability of the W.P(c).No.26721/06 7 petitioner as per Ext.P11 is unsustainable. According to him, a party to the agreement, cannot be a judge of his own cause and quantify the liability and that too without notice to the other side. Counsel would refer me to clause 15 of Ext.P1, the preliminary agreement. Clause 15 provides as follows; “If the contractor does not come forward to execute the original agreement after the said work is awarded and selection notice issued in his favour or commits breach of any of the conditions of the contract as stipulated in clause 13 of the notice inviting tenders as quoted above within the period stipulated for them, the Government may re- arrange the work otherwise or get it done departmentally at the risk and cost of the contractor and the loss so sustained by the Government can be realised from the contractor under the Revenue Recovery Act, as if arrears of land Revenue as assessed, quantified and fixed by an adjudicating authority consisting of the W.P(c).No.26721/06 8 Secretary (public works). Chief Engineer (Arbitration) and Chief Engineer(Administration) or any other officer or officers authorised by Government in this behalf, taking into consideration the prevailing Public Works Department rates and after giving due notice to the contractor.” 13. Thus the preliminary agreement between the parties itself provides for assessing, quantifying and fixing the liability of the defaulter and that process has to be undertaken by the adjudicating authority consisting of the officers who are designated for that purpose. In this case, it is not the case of the respondents that such an adjudicating authority assessed or quantified or fixed the liability of the petitioner with notice to him. If that be so, quantification of the entire liability as is seen from Ext.P11 cannot be upheld. 14. However, the fact remains that, the liability of the petitioner for Rs.11,81,260/- stands on a different footing. As already seen he had undertaken to do the work for below 36% of the estimated rate and on its non-execution, the W.P(c).No.26721/06 9 work had to be rearranged with the second lowest tenderer who had executed the work at below 22.32% of the estimated rate. By a simple quantification of the monitory liability arising out of this, the difference comes to Rs.11,81,260/- and it is this amount which the petitioner himself has offered to pay. If that be so, the non- quantification as per clause 15 of the agreement cannot stand in the way of the petitioner paying the aforesaid admitted liability. Therefore, the payment of the aforesaid amount of Rs.11,81,260/- need not await quantification as provided in clause 15 of Ext.P1. 15. Then what remains is the correctness of the order blacklisting the petitioner as per Ext.P13 show cause notice to which Ext.P14 reply has been given by him. He had also sought an opportunity of hearing as well. It is seen from Ext.P14 that the petitioner has raised several factual contentions and a reading of Ext.P17 order of blacklisting shows that these contentions have not been properly adverted. That apart, since the petitioner had sought an opportunity of hearing, that opportunity ought to have W.P(c).No.26721/06 10 given to him. Therefore, I hold Ext.P17 is bad for violation of principles of natural justice and also for not adverting to the contentions that were raised. For that reason Ext.P17 will stand quashed. 16. In so far as Ext.P21 is concerned, that is the revenue recovery proceedings initiated consequent on Ext.P11. Now that I have found that Ext.P11 cannot be upheld ,as a necessary consequence, Ext.P21 also has to be quashed. 17. In the light of the aforesaid discussions, I dispose of this writ petition with the following directions. i. On the petitioner remitting an amount of Rs.11,81,260/-, within one month from today, Ext.P21 revenue recovery proceedings will stand set aside. In order to enable the petitioner to make payment as above, it is directed that further proceedings pursuant to Ext.P21 will not be enforced for one month from now and if payment is not made as above, the respondents will be at liberty to continue recovery. ii. The adjudicating authority will initiate proceedings W.P(c).No.26721/06 11 in the manner as provided in clause (15) of Ext.P1 and with notice to the petitioner, quantifying his liability if any, having regard to the evidence that is tendered by both sides. iii. Ext.P17 order blacklisting the petitioner will stand quashed and the 3rd respondent shall reconsider Ext.P13 in the light of Ext.P14 reply and with notice to the petitioner. , He shall pass fresh orders. It is directed that the 3rd respondent shall initiate proceedings and conclude this issue as expeditiously and without awaiting for the proceedings to be concluded by the adjudicating authority as directed above. Proceedings shall be concluded, at any rate within six weeks from the date of production of a copy of this judgment. ANTONY DOMINIC JUDGE vi. W.P(c).No.26721/06 12