State Of Kerala & Ors vs M.K.Jose

The present appeal, by special leave, assails the correctness of the judgment dated 24.02.2014 passed by the High Court of Kerala at Ernakulam in W.A. No. 1912/2013 whereby the Appellate Bench has reversed the decision of the learned Single Judge rendered in W.P.(C) No. 22541 of 2013 whereunder he had declined to interfere with the order of the Secretary, Public Works Department, Road and Projects of the State terminating the contract awarded to the respondent and forfeiting the security deposit placed by the contractor for the work to the state and further stating that the work had been put an end to at the cost and risk of the contractor.

2. Exposition of facts with essential details is imperative to appreciate the controversy in proper perspective and also to consider the manner in which the Appellate Bench has exercised the writ jurisdiction under Article 226 of the Constitution in respect of a matter relating to termination of contract. The respondent was awarded the work, namely, “Stimulus package-improvements to Kannavam-Idumba-Trikadaripoyil Road Km. 0/000 to 9/100 in Kannur District” and accordingly an agreement was executed between the parties on 18.12.2010. The site for the work was handed over to the respondent on 27.12.2010 and the work was to be completed within a period of 12 months. Thus, the work, as requisite, under the terms of the contract was to be completed in all respects as on 26.12.2011. The respondent could not complete the work in time and on a request being made, time was initially extended up to 30.06.2012 and thereafter further extension was granted upto 31.03.2013.

3. As is perceptible from the order of termination of the contract, despite issue of several notices and instructions, the contractor failed to complete the work even during the extended period. The Executive Engineer of the Department issued a memorandum on 14.02.2013 stopping the work. As there was some deviation of work, the revised estimate was required to be done but the same was not sanctioned by the Government. At that juncture, the respondent preferred W.P.(C) No. 5672 of 2012 seeking appropriate direction to the Government to pass orders sanctioning the revised estimate. The High Court disposed of the writ petition directing the Principal Secretary to take a decision on the proposal of revised estimate. Thereafter, the respondent filed a contempt petition which was eventually dropped.

4. As the factual matrix would further unfurl, the respondent submitted a representation to the Government and thereafter filed W.P.(C) No. 23087 of 2012. The High Court directed the Principal Secretary, PWD to consider and pass orders on his representation. It is apt to note here that the respondent had filed series of writ petitions, namely, W.P.(C) No. 26075 of 2012 and W.P.(C) No. 5690 of 2013 and the High Court vide order dated 08.04.2013 in W.P.(C) No. 5690 of 2013, directed the Secretary, PWD to pass appropriate orders in accordance with law. Eventually, as has been stated earlier, the contract was terminated.

5. The said order of termination was assailed in WP(C) No. 22541 of 2013. The learned Single Judge noted the facts and took note of prayer no.

6. The aforesaid order was assailed in the writ appeal. When the appeal was listed for admission, the Appellate Bench, on 17.12.2013, passed the following order:-

9. The Appellate Bench on the basis of the said report came to hold that the order of termination was founded on erroneous facts inasmuch as the competent authority had opined that more than 50% of the work remained to be done. The Division Bench opining that as there was a factual defect, which was evident from the commission’s report, the order of termination of contract was liable to be quashed and accordingly axed the same. After quashing the same, the High Court directed the Superintending Engineer, PWD, (Roads and Bridges) to consider and dispose of the matter afresh after affording an opportunity to the contractor of being heard. It also directed that the Commission’s report and the Engineer’s report and the accounts shall be produced by the contractor before the competent authority who shall take the same into account before taking final decision in the matter. After so directing, the High Court eventually ruled that:

11. The thrust of the matter is whether the Appellate Bench in intra- court appeal arising from a petition under Article 226 of the Constitution, should have carried out the exercise that it has done and eventually quashed the order terminating the contract by the competent authority of a Department on the ground that it was passed on erroneous facts, for the respondent contractor, as per the Commission’s report, had done higher percentage of work. We would not like to comment anything on the order passed by the learned Single Judge as that was not challenged by the State before the Appellate Court in appeal. The learned Single Judge had directed measurement to be carried out prior to floating of tender for the balance work. That direction, as is evident, has been accepted by the State.

reply from the respondents, and should have proceeded to try the petition instead of relegating the appellants to a separate suit.” [Emphasis added]

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21. Consequently, the appeal is allowed and the judgment and order passed by the Appellate Bench is set aside. However, in the facts and circumstances of the case, we refrain from imposing costs.

[Prafulla C. Pant] New Delhi August 14, 2015