IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.13573 of 2008 WITH CWJC No.13574 of 2008 WITH CWJC No.13597 of 2008 M/s Debashree Constructions (India) Pvt. Ltd., a Company incorporated under Under the Indian Companies Act, 1956 having its office at New Area, Nawajadik Complex, Old G.T. Road, Aurangabad, Bihar through it’s Managing Director Smt. Geeta Singh, wife of Sri Kaushal Kumar Singh, resident of New Area, Aurangabad, Bihar. …………… Petitioner. VERSUS 1. The IRCON International Ltd., a Government of India Undertaking having its Registered Office at Plot No. C-4, District Centre, Saket, New Delhi- 110017, through its Director (Projects). 2. The Additional General Manager, IRCON International Ltd., 1st Floor, Sone Bhawan, Daroga Prasad Rai Path, Patna. …………… Respondents. ----------- Counsel for the Petitioner : Mr. Raj Kishore Prasad. Counsel for the IRCON : Mr. Mahtab Ahmad. ----------- 03 03.12.2008 The petitioner had undertaken the road construction and strengthening and repair work under Pradhan Mantri Gramin Sadak Yojana (PMGSY) from the respondent-IRCON International Limited. The funds for the project are to come from the Central Government through the State Government and to be paid by IRCON to the petitioner. IRCON International Limited is merely to receive a fee in the matter and does not have to do the work itself. The agreement having been entered into for the work, in question for the petitioner and IRCON. The work having started pursuant to policy decision of the government in the Ministry of Petroleum Oil and Natural Gas. The Oil Companies abnormally increased the cost of bitumen, which is used in substantial quantities in the project. This increase could not be anticipated nor was taken into account, when bill of quantity was drawn 2 up. Petitioner seeks direction to the respondents to ensure payment of this escalated cost of bitumen, otherwise for no fault of his he would suffer loss and the State would make an unjust enrichment by forcing the petitioner to complete the work at a substantial higher price without payment, thereof. On behalf of petitioner, it is submitted that realizing this abnormal rise in price the State Government itself issued a circular stating that similar agreements being in Form F- 2, which did not provide for price escalation, notwithstanding the same contractors would be given, price escalation, inter alia, for bitumen. Petitioner wants the same direction from the respondent-IRCON also, as the roads are for the same State Government and the funds have to flow through the State Government. IRCON submits that the contract is a fixed term and fixed price contract with no price variation. IRCON is entitled only to fix fee on the project value and as such it cannot permit price escalation. Having considered the matter, In my view, IRCON, which is a Government of India undertaking has to act fairly and reasonably in all matters including contractual matters. If the contract had been with the State Government, notwithstanding, no price escalation clause being there, the State of Bihar acted fairly and reasonably in permitting payment of price escalation. Because everybody knows the rise in price was abnormal phenomenon decided by the government. It would be highly iniquitous to hold that at one hand government can freely increase the price of a commercial input 3 and the same government through its agency would not permit payment of increased price to contractors using the same for governmental work itself. This, in my view, would not only lead to incongruous result but it would lead to unjust enrichment on the part of the government itself. I may refer to Clause 36.3 of the agreement where from which certain light can be taken on the authority of IRCON engineers to assess price variations depending on the market value when the goods are used or appropriated to the contract. This is equitable principle and it cannot be said that once a contract has been entered equity subjects apply, all the more so, when one of the contracting party is the State. It is well settled in the decision of the Apex Court in the case of M/s Hindustan Sugar Mills vs. The State of Rajasthan & Ors. AIR 1981 Supreme Court 1681 that the State must act fairly and reasonably and must not deny legitimate claims of citizens and drive the citizens to litigation in matters. The petitioner’s claim is just and equitable. The rise in price of bitumen is not because of any commercial consideration, but because of policy decision taken by the government itself. The price rise being abnormal, IRCON would be acting fairly and reasonably in accepting the variation, which even a government like State of Bihar has rightly accepted. I may sure that if IRCON accepts the liability the government concern would surely reimburse the same. Keeping in view the aspects as noted above, I direct the petitioner to make a detailed representation with regard to its claim along with a copy of this order to the Incharge Engineer of the IRCON concerned with this contract, who would forward the same for redressal 4 of petitioner’s dispute and see that the same is decided within three months from the date such a representation is filed. In case, IRCON feels that there is no question of giving any price escalation then they may consider supplying the bitumen itself to the contractor, as per the bill of quantity. It would avoid the entire controversy. With these observations and directions, the writ petitions are disposed of. Trivedi/ ( Navaniti Prasad Singh, J.)