Rajasthan High Court – Jodhpur
Gvpr Engineers Limited vs The State Of Rajasthan … on 9 September, 2024
Author: Kuldeep Mathur
Bench: Kuldeep Mathur
[2024:RJ-JD:37248-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Spl. Appl. Writ No. 835/2024
GVPR Engineers Limited, through its Authorized signatory Mr.
Kamal Hindonia son of Sh. Madan Mohan, aged about 54 Years,
having its office, 8-2-293/82/a, Plot No. 739-A, Road No. 37,
Jubilee Hills, Hyderabad-33, Telangana and Project Office at
House No. 07, BMK Residency, Talbi Road, Bhinmal, Rajasthan.
----Appellant
Versus
1. The State of Rajasthan, through Chief Engineer (Project)
Public Health Engineering Department, Jodhpur
(Rajasthan).
2. The Additional Chief Engineer, Public Health Engineering
Department, Project Region, Bhinmal, (Jalore) Rajasthan.
3. The Superintending Engineer, Public Health Engineering
Department, Project Circle, Sanchore, Rajasthan.
4. The Executive Engineer, Public Health Engineering
Department, Project Division Bhinmal, Rajasthan.
----Respondents
For Appellant(s) : Mr. M.S. Singhvi, Sr. Adv.
assisted by Mr. Abhishek Mehta
For Respondent(s) : Mr. Sajjan Singh Rathore, AAG
Ms. Aditi Moad, AAAG
HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR
HON’BLE MR. JUSTICE KULDEEP MATHUR
Order
09/09/2024
Per, Shree Chandrashekhar, J.
GVPR Engineers Limited is aggrieved by the order dated 29 th
July 2024 by which S.B. Civil Writ Petition No.12533/2024 has
been dismissed observing as under:-
“5. Further, admittedly, the deductions sought to
be made by the respondent-Department are being
made in terms of Clause 2 of the agreement in
question. Firstly, as is the settled position of law, no
writ is maintainable in contractual matters. Secondly,
so far as Clause 2 of the agreement is concerned, it
provides for deduction of amount from running bills if
the pro-rata progress, as required, is not maintained.
The dispute as to whether the pro rata progress was
maintained and as to whether the amount of deduction
as sought to be made, could be made, are totally(Downloaded on 12/09/2024 at 08:41:08 PM)
[2024:RJ-JD:37248-DB] (2 of 17) [SAW-835/2024]disputed questions of fact. Thirdly, the fact as to whom
the delay in completion of the work was attributable,
is also a totally disputed question of fact which cannot
be gone into by this Court in writ jurisdiction. The
remedy of the petitioner lies somewhere else.”
2. The appellant-firm has pleaded that pursuant to NIB dated
2nd February 2022 for supply of drinking water to 306 villages in
the District of Jalore under the Jal Jeevan Mission (JJM), it was
declared L1 bidder. On 3rd June 2022, the subject works under the
NIB were awarded to the appellant-firm for a total cost of
Rs.8,33,48,61,509/- the operation and maintenance of which was
to continue for ten years; the scheduled completion period was 21
months. The appellant-firm raised various grievances particularly
relating to handing over of Elevated Storage Reservoir (ESR) &
Clear Water Reservoir (CWR) and also requested the respondent-
authority to demarcate OHSR and CWR-cum-PH (Pump House)
locations. According to the appellant-firm, the reason for slow
progress of the project was attributable to inaction on the part of
the respondent-authority. However, a letter dated 23rd September
2022 was served upon it as regards slow progress of the project
which was duly replied by it on 10 th October 2022. In this appeal,
we are not required to refer to the rival stand taken by the parties
and it would suffice to observe that in the letter dated 2 nd February
2024 seeking extension of time up to 12 th March 2025, the
appellant-firm raised issues relating to (a) land (b) major scope of
work (c) changes in the survey requirements in the Project (d)
delay in release of pending payments (e) effect of Biparjoy
Cyclone and (f) non-release of 6% GST, etc.
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3. The appellant-firm has raised a grievance that in the garb of
the order issued by the Chief Engineer (Project), Public Health
Engineering Department (PHED), Jodhpur digitally signed on 9th
February 2024 provisional time extension for completion of the
subject work under the NIB was approved; whereby an extension
till 31st December 2024 was given to the appellant-firm. Mr. M.S.
Singhvi, the learned senior counsel for the appellant-firm submits
that the order dated 29th July 2024 does not record any reason
and on the contrary it says that the department shall have right to
recover compensation for delay, as admissible. The learned senior
counsel would refer to clause 2 of the bid document captioned as
‘Compensation for delay’ vide annexure-13 at page 119 of the writ
Court’s record to submit that it is only if the contractor fails to
complete the work in accordance with the time schedule and the
delay in execution of work is attributable to the contractor, the
contractor shall be liable to pay compensation to the Government
as provided in the table appended below clause 2. The learned
senior counsel has also referred to Note appended to clause 2 to
submit that dismissal of the writ petition has in fact foreclosed all
options to the appellant-firm.
4. The learned senior counsel for the appellant-firm has relied
on the decisions in “Unitech Ltd. & Ors. v. Telangana State
Industrial Infrastructure Corporation & Ors.” reported in (2021) 6
SCC 35, “M.P. Power Management Company Ltd. Jabalpur v. Sky
Power South East Solar India Pvt. Ltd. & Ors.” reported in (2023)
2 SCC 703 and “Madras Aluminum Company Ltd. v. Tamilnadu
Electricity Board & Anr.” reported in (2023) 8 SCC 240. With
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reference to these judgments, Mr. M.S. Singhvi, the learned senior
counsel appearing for the appellant-firm would submit that the
projected disputed questions of fact cannot be made a smoke
screen to guillotine grievance raised by the contractor.
5. A preliminary objection has been taken by the respondents
on the ground that serious disputed questions of fact are involved
and, therefore, this Special Appeal is or for that matter the writ
petition was not maintainable. It is pleaded that under clause-23
of the general terms and conditions of contract, any question,
difference or objection arising from the contract shall be referred
to the Standing Committee for settlement of the dispute. In the
counter affidavit, the respondent- Public Health Engineering
Department, Jodhpur has taken the following stand:-
“Preliminary Objections:-
1. That, the Special Appeal Writ as well as the Writ
Petition filed by the appellant/ petitioner is not maintainable
for the reason that it involves serious disputed questions of
facts which cannot be decided by this Hon’ble Court under its
extraordinary writ jurisdiction as the same are required to be
proved by leading proper evidence.
2. That, the present Special Appeal Writ as well as the
Writ Petition is not maintainable as the whole controversy in
the matter resolves around general terms of the contract, as
per clause 23 of the terms it is specifically provided that if
there is any dispute, question, differences or objections
arises out of the instrument then the matter shall be referred
to the standing committee for the settlement of the dispute.
The clause 23 of the general terms and conditions is
reproduced for the ready reference as under:-
Clause 23: STANDING COMMITTEE FOR
SETTLEMENT OF DISPUTES
If any question, difference or objection,
whatsoever shall arise in any way, in connection
with or arising out of this instrument, or the
meaning of operation of any part thereof, or the
rights, duties or liabilities of either party then, save
in so far, as the decision of any such matter, as
herein before provided for, and been so decided,
every such matter constituting a total claim of
Rs.50,000/- or above, whether its decision has(Downloaded on 12/09/2024 at 08:41:08 PM)
[2024:RJ-JD:37248-DB] (5 of 17) [SAW-835/2024]been otherwise provided for and whether it has
been finally decided accordingly, or whether the
Contract should be terminated or has been rightly
terminated, and as regards the rights or obligations
of the parties, as the result of such termination,
shall be referred for decision to the empowered
Standing Committee, which would consist of the
followings:-
(i) Administrative Secretary concerned.
(ii) Finance Secretary or his nominee, not below he
rank of Deputy Secretary.
(iii) Law Secretary or his nominee, not below the
rank of Joint Legal Remembrance.
(vi) Chief Engineer-cum-Addl. Secretary of the
concerned department.
(v) Chief Engineer concerned (Member-Secretary).
The Engineer-in-charge, on receipt of application
along with non-refundable prescribed fee, (the fee
would be two percent of the amount in dispute, not
exceeding Rs.One lac) from the Contractor, shall
refer the disputes to the committee, within a
period of three month from the date of receipt of
application. Procedure and Application for referring
cases for settlement by the Standing Committee
shall be, as given Form RPWA 90
That as per the clause 23 of the contract the appellant
petitioner ought to have made application for the dispute if
any, to the authority provided under clause 23.
3. That, the present writ petition is also not maintainable as
there are disputed questions of facts regarding the delay and
calculation of the penalty and also the performances of the
terms of the contract therefore, the clause 51 of the contract
defining jurisdiction of civil court, which is reproduced for the
ready reference of the Hon’ble Court as under:-
Clause 51: Jurisdiction of Court
In the event of any dispute arising between
the parties hereto, in respect of any of the mattes
comprised in this agreement, the same shall be
settled by a competent Court having jurisdiction
over the place, where agreement is executed and
by no other court, after completion of proceedings
under Clause 23 of the Contract.
It is clear from the above provisions that the appellant
petitioner must have approached the standing committee
under clause 23 of the contract and invoked clause 51 of the
contract, therefore, the writ petition is not maintainable and
deserves to be set rejected. The copy of relevant portion of
the general terms of the contract is annexed herewith and
marked as Annexure R/1.
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PARA WISE REPLY:-
2. That, the contents of para 2 of the appeal are denied,
The learned Single Judge has rightly rejected the Writ
Petition filed by the appellant as the same being not
maintainable. It is denied that the deductions of liquidated
damaged from the running bills have been made without
adhering to the general conditions of contract and the
prescribed procedure for deduction. The answering
respondent’s authorities have very well acted in accordance
with Clause 2 of the General Conditions of the Contract,
under Clause 2 of the General Conditions of the Contract,
there is specific provision for recovery of liquidated damages
from the running bills. As prescribed under clause 2 of the
General Terms and Condition of the Contract, if the delay is
caused on the part of the contractor, then 10% of the total
value of work can be recovered for the delay in the form of
liquidated damages from the running bills. It is pertinent to
mention here that the provisional time extension is given
when the contractor applies for the extension of the time, to
keep the contract alive and to also get the work executed at
the earliest possible time. If there is any delay in the
completion of the work and provisionally time has been
extended, then the amount of liquidated damages is
provisionally withheld from the running bills as per clause 2
of the General Terms and Conditions of the Contract and the
same is kept in the security deposit head. Once the
contractor submits the final certificate of the work
completion, at that time the competent authority i.e. Finance
Committee finally decide time extension application and
determines the final amount of liquidated damages. That
after determination of the final liquidated damages to be
recovered, the amount so withheld is adjusted against the
recoverable liquidated damages and remaining amount, if
any is refunded to the contractor. The Answering
Respondents have not withheld the amount of liquidated
damages other than what’s prescribed under the clause of
the Contract. That, as per the work order and the conditions
of the contract the stipulated date for the commencement of
the work was 13.06.2022 and date for completion was
12.03.2023. To the contrary, the prorate progress of the
appellant petitioner firm was very slow and has not complied
with the stipulated date for completion of the project. The
stipulated date for completion of project was 12.03.2024, till
the time the appellant petitioner has executed the work of
amount Rs.3831334852/- which is just 52% of the total
capital cost of the work, hence the firm was not working in
accordance with the work order, regarding the same the
answering respondents penned various letters to the
appellant petitioner firm, but all remained in vain. On(Downloaded on 12/09/2024 at 08:41:08 PM)
[2024:RJ-JD:37248-DB] (7 of 17) [SAW-835/2024]23.09.2022 a letter has been written by Executive Engineer
Project Division Bhinmal to the appellant to work according to
action plan and to increase the prorated progress. Again, on
24.01.2023 letter has been sent to the appellant petitioner
firm stating that the civil work (construction of Overhead
Tank and Pump House) and the HDPE pipeline work is going
on at a very slow rate. Further, it is submitted that on
02.02.2023 the respondent no.4 has written a letter to the
appellant petitioner to increase the prorated progress rate as
per the stipulated time span of the wise actions will be taken
under Clause 2 and 3 of the General Terms and Condition of
the Contract. Another letter was issued on 29.03.2023 to
increase the prorated progress for the second span as the LD
has already been imposed for the 1 st span. Similarly, various
notices were sent to the appellant petitioner to increase the
pro rata work progress but the appellant/ petitioner firm has
not worked in accordance to the terms of the agreement as
well as work order, therefore, the LD has been withheld till
then amount of liquidated damages be decided by the
competent authority. The following table provides a brief
about the slow financial progress and technical progress of
the appellant/ petitioner at different span of time as per the
work order:-
S.No. Particulars 1/4th upto 1/2th upto 3/4th upto Full Upto
21.11.22 28.04.23 05.10.23 12.03.2024
1. Work to be 1/8th 3/8th 3/4th 4/4 Full
Executed
2. Amount of 1015013169 3045039506 6090079012 8120105349
work to be
executed (Rs.)
3. Actual Work 438515954 1707861802 3002387710 3831334852
Done (Rs. In
crore)
4. Work 576497215 1337177704 3087691302 4288770497
remained
unexecuted
(in crores)
5. LD to be 2.50% 5.00% 7.50% 10%
deducted of
unexecuted
work @
6. LD to be 14412430 66858885 231576848 428877050
deducted of
unexecuted
work (Rs. In
Crores)
7. Span wise 14412430 52446455 164717962 197300202
deduction
8. Span wise LD 14412430 52446455 164717962 30227121
deducted(Downloaded on 12/09/2024 at 08:41:08 PM)
[2024:RJ-JD:37248-DB] (8 of 17) [SAW-835/2024]The above table clarifies that the petitioner has not
completed the work as per the terms and conditions of the
contract and the work order, therefore as per clause 2 of the
General Terms and Conditions of the Contract the liquidated
damages have been imposed, that too was only been withheld
till the decision from the competent authority.
The copy of letters dated 23.09.2022 are collectively
annexed herewith and marked as Annexure R/2. The copy of
letters dated 24.01.2023, 02.02.2023, 05.04.2023,
15.04.2023, 10.05.2023, 16.05.2023, are collectively annexed
herewith and marked as Annexure R/3. The copy of letters
dated 01.06.2023, 07.06.2023, 15.06.2023 are annexed
collectively as Annexure R/4. The copy of letters dated
16.01.2024, 31.01.2024, 02.02.2024, 17.04.2024, 19.04.2024
are collectively annexed herewith and marked as Annexure R/5.
The copy of notice under clause 2 and 3 dated 1.05.2024 are
annexed collectively herewith and marked as Annexure R/6.
The copy of notice for slow progress dated 05.06.2024,
12.06.2024 are annexed herewith collectively and marked as
Annexure R/7. The copy of letters dated 15.07.2024,
23.07.2024 are annexed herewith collectively and marked as
Annexure R/8. The span wise calculation is annexed herewith
and marked as Annexure R/9.”
6. Objecting to this Special Appeal, Mr. Sajjan Singh Rathore, the
learned Additional Advocate General submits that 10% deduction
from running bills payable to the appellant-firm is by way of
abundant precaution and such amount has been kept under the
“security head” which may be released to the appellant-firm if the
Finance Committee comes to a conclusion that there was no fault
on the part of the contractor in execution of the subject works
under the NIB. The learned Additional Advocate General further
submits that the extension of time granted on 9th February 2024 is
only provisional in nature and a final decision is yet to be taken by
the Finance Committee.
7. Mr. Sajjan Singh Rathore, the learned Additional Advocate
General has endeavored to support 10% deduction from the
running bills payable to the appellant-firm with reference to the
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decisions in “BTL EPC Ltd. v. Macawber Beekay Pvt. Ltd. and Ors.”,
“Kerala State Electricity Board and Anr. v. Kurien K. Kalathil and
Ors” reported in (2000) 6 SCC 293, “State of U.P. and Ors. v.
Bridge & Roof Company (India) Ltd.” reported in (1996) 6 SCC 22
and “State of Gujarat through Chief Secretary and Anr. v. Amber
Builders” reported in (2020) 2 SCC 540.
8. The writ petition was dismissed on the ground that the
disputed questions of fact are involved inasmuch as whether or
not pro rata progress was maintained and whether or not
deduction from running bills was justified such issues would
involve disputed questions of fact. The writ Court further held that
this shall also be a question of fact whether the delay in
completion of the work was attributable to the employer or the
contractor. However, in the background of the afore-mentioned
discussions by the writ Court in paragraph No. 5, we are inclined
to observe that no such findings could have been recorded by the
writ Court without taking response of the respondents on affidavit.
9. Admittedly, an affidavit-in-opposition was not filed by the
respondents before the writ Court. In the present proceeding, the
respondents have endeavored to challenge maintainability of the
writ petition and referred to various clauses of the agreement.
Now they seem to project a dispute on facts by referring to
physical progress report and some disputes between appellant-
firm and the local contractors to whom some work was sublet. We
are, however, not impressed by these objections for the reason
that there is no discussion in the order dated 09 th February 2024
regarding any disputed question of fact. On the other hand, the
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[2024:RJ-JD:37248-DB] (10 of 17) [SAW-835/2024]
Chief Engineer (Project) in his order dated 9 th February 2024 did
not even controvert the statements made in the letter for
extension of time regarding the difficulties faced by the appellant-
firm in executing the subject works under the NIB.
10. While the writ Court was correct in observing that in
contractual matters a writ petition shall normally not be
entertained, but then, this is not the law of universal application.
Wherever it is found that the action of the respondent-authority is
arbitrary and whimsical the writ petition under Article 226 of the
Constitution of India shall be entertained. In the context of the
arbitrary state action even in contractual matters, we are
reminded of the judgments in “Jagdish Mandal v. State of Orissa”
reported in AIR 2006 SC 645. and “Mahabir Auto Stores v. Indian
Oil Corporation & Ors.” reported in (1990)3 SCC 752 and, more
particularly in “ABL International Ltd. & Ors. v. Export Credit
Guarantee Corporation of India Ltd.” reported in (2004) 3 SCC
553, wherein the Hon’ble Supreme Court has held as under:-
“From the above discussion of ours, following
legal principles emerge as to the maintainability of a
writ petition:-
(a) In an appropriate case, a writ petition as
against a State or an instrumentality of a State
arising out of a contractual obligation is maintainable.
(b) Merely because some disputed questions of
facts arise for consideration, same cannot be a
ground to refuse to entertain a writ petition in all
cases as a matter of rule.
(c) A writ petition involving a consequential
relief of monetary claim is also maintainable.”
11. We are not inclined to multiply judgments on this issue and
would only reproduce what the Hon’ble Supreme Court observed
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in “Unitech Ltd.” cited by the learned senior counsel for the
appellant-firm:-
“39.4 If the state instrumentality violates
its constitutional mandate under Article 14 to act
fairly and reasonably, relief under the plenary powers
of the Article 226 of the Constitution would lie. This
principle was recognized in ABL International [ABL
International Ltd. v. Export Credit Gurantee Corpn.
Of India Ltd., (2004) 3 SCC 553]: ( ABL International
case [ABL International Ltd. v. Export Credit
Guarantee Corpn. Of India Ltd., (2004) 3 SCC 553],
SCC p. 572, para 28)
“28. However, while entertaining an
objection as to the maintainability of a
writ petition under Article 226 of the
Constitution of India, the court should
bear in mind the fact that the power to
issue prerogative writs under Article 226
of the Constitution is plenary in nature
and is not limited by any other provisions
of the Constitution. The High Court having
regard to the facts of the case, has a
discretion to entertain or not to entertain
a writ petition. The Court has imposed
upon itself certain restrictions in the
exercise of this power. (See Whirlpool
Corpn. v. Registrar of Trade Marks
[(1998) 8 SCC 1] .) And this plenary right
of the High Court to issue a prerogative
writ will not normally be exercised by the
Court to the exclusion of other available
remedies unless such action of the State
or its instrumentality is arbitrary and
unreasonable so as to violate the
constitutional mandate of Article 14 or for
other valid and legitimate reasons, for
which the Court thinks it necessary to
exercise the said jurisdiction.”
(emphasis supplied)
39.5 Therefore, while exercising its jurisdiction under
Article 226, the Court is entitled to enquire into
whether the action of the State or its
instrumentalities is arbitrary or unfair and in
consequence, in violation of Article 14. The
jurisdiction under Article 226 is a valuable
constitutional safeguard against an arbitrary exercise
of State power or a misuse of authority.
39.6 In determining as to whether the jurisdiction
should be exercised in a contractual dispute, the
Court must, undoubtedly eschew, disputed questions
of fact which would depend upon an evidentiary
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[2024:RJ-JD:37248-DB] (12 of 17) [SAW-835/2024]
determination requiring a trial. But equally, it is well-
settled that the jurisdiction under Article 226 cannot
be ousted only on the basis that the dispute pertains
to the contractual arena. This is for the simple reason
that the State and its instrumentalities are not
exempt from the duty to act fairly merely because in
their business dealings they have entered into the
realm of contract. Similarly, the presence of an
arbitration clause does (sic not) oust the jurisdiction
under Article 226 in all cases though, it still needs to
be decided from case to case as to whether recourse
to a public law remedy can justifiably be invoked.
12. We would also indicate that in “BTL EPC Ltd.” the Hon’ble
Supreme Court held that judicial interference in contract matters
should be restricted to examining arbitrariness or malafide and
interference in the writ appeals should be confined to the cases of
perversity or error. However, the decision in “BTL EPC Ltd.”
pertains to the controversy as regards pre-qualification
requirement for bidders. In “Kerala State Electricity Board” the
Hon’ble Supreme Court held that the matters relating to payment
to the contractor on the basis of the minimum wages notification
and whether any amount was actually due are the matters for
adjudication by a civil Court or an arbitrator. Similarly, “Bridge &
Roof Company (India) Ltd.” is an authority to the preposition that
the writ Court shall not exercise its extra-ordinary jurisdiction
under Article 226 of the Constitution in the face of a provision for
arbitration in the agreement. Mr. Sajjan Singh Rathore, the
learned Additional Advocate General has laid much emphasis on
the judgment in “Amber Builders” to justify deduction of 10%
from the running bills payable to the appellant-firm. In “Amber
Builders” the issue before the Hon’ble Supreme Court was the
power of Arbitral Tribunal to grant interim relief in cases of
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statutory arbitrations under other Acts, such as, under the Gujarat
Act, 1992. In the said case a plea was raised on behalf of the
Amber Builders that till the demand of the Government is
crystallized or adjudicated upon the Government could not have
withheld the money of the contractor and in support of this
submission a reference to the judgment in “Gangotri Enterprises
Ltd. v. Union of India” (2016) 11 SCC 720 was made. The Hon’ble
Supreme Court after examining the previous judgments in “Union
of India v. Raman Iron Foundry” (1974) 2 SCC 231 and “H.M.
Kamaluddin Ansari v. UOI” (1983) 4 SCC 417 found that the
judgment in “Gangotri Enterprises Ltd.” does not hold the field as
the decision in “Raman Iron Foundry” was expressly overruled by
a three-Judge Bench of the Hon’ble Supreme Court in “H.M.
Kamaluddin Ansari”. Just to indicate, in “Raman Iron Foundry”
the Hon’ble Supreme Court has affirmed the power of the
Government to recover the damages by appropriating any sum
which became due to the contractor from the pending bills in other
contract. The Hon’ble Supreme Court, however, disagreed with
such a view in “Raman Iron Foundry” and held as under:
“21…With profound respect we find that the
aforesaid observation is incongruous with the proposition
of law laid down by this Court just before this
observation. We find it difficult to agree with the
observation of the Court that the impugned order in form
and substance being the negative the respondent could
refuse to pay such amounts if it thinks it has a valid
defence, and if it chooses to do so there would be no
breach of the injunction order.
22. It is true that the order of injunction in that
case was in negative form. But if an order injuncted a
party from withholding the amount due to the other side
under pending bills in other contracts, the order
necessarily means that the amount must be paid. If the
amount is withheld there will be a defiance of the
injunction order and that party could be hauled up for(Downloaded on 12/09/2024 at 08:41:08 PM)
[2024:RJ-JD:37248-DB] (14 of 17) [SAW-835/2024]infringing the injunction order. It will be a contradiction in
terms to say that a party is injuncted from withholding
the amount and yet it can withhold the amount as of
right. In any case if the injunction order is one which a
party was not bound to comply with, the court would be
loath and reluctant to pass such an ineffective injunction
order. The court never passes an order for the fun of
passing it. It is passed only for the purpose of being
carried out. Once this Court came to the conclusion that
the court has power under Section 41 (b) read with
Second Schedule to issue interim injunction but such
interim injunction can only be for the purpose of and in
relation to arbitration proceedings and further that the
question whether any amounts were payable by the
appellant to the respondent under other contracts, was
not the subject-matter of the arbitration proceedings and,
therefore, the court obviously could not make any interim
order which, though ostensibly in form an order of interim
injunction, in substance amount to a direction to the
appellant to pay the amounts due to the respondent
under other contracts, and such an order would clearly be
not for the purpose of and in relation to the arbitration
proceedings; the subsequent observation of the Court
that the order of injunction being negative in form and
substance, there was no direction to the respondent to
pay the amount due to the appellant under pending bills
of other contracts, is manifestly inconsistent with the
proposition of law laid down by this Court in the same
case.”
13. This is not that the appellant-firm did not raise any grievance
against deduction from its running bills and, in fact, this issue was
dealt with by the writ Court with reference to clause-2 of the
agreement which provides for the deduction from running bills if
pro rata progress is not maintained. However, in the order dated
9th February 2024 (Annexure 10 on page 112 of the writ Court’s
record), the Chief Engineer (Project) has simply recorded that:
“The Provisional Time Extension for completion of the
aforesaid work against above cited award/agreement is
granted up to 31.12.2024 to keep the contract alive without
prejudice to the terms and conditions of the contract and all
right reserved with the department to recover compensation
for delay, as admissible.”
14. Under clause 2 of the bid document, the following provision has
been made:-
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[2024:RJ-JD:37248-DB] (15 of 17) [SAW-835/2024]
“Clause 2: Compensation for delay
The time allowed for carrying out the work as entered
in the bid, shall be strictly observed by the Contractor and
shall be reckoned from the 10th day after the date of written
order to commence the work is given to the Contractor. If
the Contractor does not commence the work within the
period specified in the work order, he shall stand liable for
the forfeiture of the amount of Bid Security and Security
Deposit. Besides, appropriate action may be taken by the
Engineer-in- Charge/competent authority to debar him from
taking part in future bids for a specified period or black list
him. The work shall, throughout the stipulated period of
completion of the contract, be proceeded with all due
diligence, time being essence of the contract, on the part of
the Contractor. To ensure good progress during the
execution of work, the contractor shall be bound, in all cases
in which the time allowed for any work exceeds one month
(save for special jobs), to complete 1/8th of the whole of the
work before 1/4th of the whole time allowed under the
contract has elapsed, 3/8th of the work before ½ of such
time has elapsed and 3/4th of work before 3/4th of such
time has elapsed. If the contractor fails to complete the
work in accordance with this time schedule in terms of cost
in money, and the delay in execution of work is attributable
to the contractor, the contractor shall be liable to
pay compensation to the Government at every time span as
below:-
A. Time Span of 1/4th 1/2th 3/4th Full
Full Stipulated
period
B. Work to be 1/8th 3/8th 3/4th Full
completed in (Rs. ........) (Rs. ........) (Rs. ........) (Rs. ........)
terms of money
C. Compensation Delay up to one fourth period of the prescribed
payable by the time span – 2.5% of the work remained
contractor for unexecuted
delay Delay exceeding one fourth period but not
attributable to exceeding half of the prescribed time span-5%
contractor at of the work remained unexecuted
the stage of :
Delay exceeding half of the prescribed but not
exceeding three fourth of the time span –
7.5% of the work remained unexecuted
Delay exceeding three fourth of the prescribed
time span- 10% of the work remained
unexecuted
Note: In case delayed period over a particular span is split up and is
jointly attributable to Government and contractor, the competent
authority may reduce the compensation in proportion of delay
attributable to Government over entire delayed period over that span
after clubbing up the split delays attributable to Government and this
reduced compensation would be applicable over the entire delayed
period without paying any escalation.
Following illustrations is given:-
First time span is 6 months, delay is of 30 days which is split over as
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[2024:RJ-JD:37248-DB] (16 of 17) [SAW-835/2024]under:-
5 days (attributable to Government) + 5 days (attributable to
contractor) + 5 days (attributable to Government) + 5 days
(attributable to contractor) + 5 days (attributable to Government) + 5
days (attributable to contractor) Total delay is thus clubbed to 15 days
(attributable to Government) and 15 days (attributable to contractor).
The normal compensation of 30 days as per clause 2 of agreement is
2.5% which can be reduced as 2.5*15/30-1.25% over 30 days without
any escalation by competent authority.
Note: The compensation, levied as above, shall be
recoverable from the Running Account Bill to be paid
immediately after the concerned time span. Total
compensation for delays shall not exceed 10 percent of the
total value of the work.
The contractor shall, further, be bound to carry out the work
in accordance with the date and quantity entered in the
progress statement attached to the bid.
In case the delay in execution of work is attributable to
the contractor, the span-wise compensation, as laid down in
this clause shall be mandatory. However, in case the slow
progress in one time span is covered up within original
stipulated period, then the amount of such compensation
levied earlier shall be refunded. The Price escalation, if any,
admissible under clause 45 of Conditions of Contract would be
admissible only on such rates and cost of work, as would be
admissible if work would have been carried out in that
particular time span. The Engineer-in-Charge shall review the
progress achieved in every time span, and grant stage-wise
extension in case of slow progress with compensation, if the
delay is attributable to contractor, otherwise without
compensation.
However, if for any special job, a time schedule has
been submitted by the Contractor before execution of the
agreement, and it is entered in agreement as well as same
has been accepted by the Engineer-in-charge, the Contractor
shall complete the work within the said time schedule. In the
event of the Contractor failing to comply with this condition,
he shall be liable to pay compensation as prescribed in
forgoing paragraph of this clause provided that the entire
amount of compensation to be levied under the provisions of
this Clause shall not exceed 10% of the value of the contract.
While granting extension in time attributable to the
Government, reasons shall be recorded for each delay.”
15. Quite apparently, the Chief Engineer (Project) did not even
whisper about any laches on the part of the appellant-firm or, that,
the delay in execution of the subject work under the NIB was
totally attributable to the appellant-firm. The language employed
under clause-2 clearly says that there should be a determination
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[2024:RJ-JD:37248-DB] (17 of 17) [SAW-835/2024]
and finding recorded by the competent authority that the delay in
execution of the work is solely attributable to the contractor. While
recording that all rights are reserved with the department to
recover compensation for delay, the Chief Engineer (Project)
adopted a procedure which seriously violates the written terms of
the agreement in question causing serious prejudice to the
appellant-firm. This is well remembered that reason is the lifeline
of any order, judicial or quasi-judicial. An order which ensues
serious civil consequences must conform to the requirements of
natural justice. Whereas, the order passed by the Chief Engineer
(Project), Public Health Engineering Department (PHED), Jodhpur
on 9th February 2024 is bereft of any reasons. Therefore, the latter
part of the order dated 9th February 2024 wherein the Chief
Engineer (Project) recorded that all rights are reserved with the
department to recover compensation for delay, as admissible, is
quashed and deductions from the running bills by virtue of the
latter portion of the order dated 09th February 2024 are held illegal
and arbitrary. The amount so deducted from the running bills
allegedly kept in “security head” shall be refunded to the
appellant-firm.
16. D.B. Special Appeal Writ No. 835/2024 is allowed in the
aforesaid terms.
(KULDEEP MATHUR),J (SHREE CHANDRASHEKHAR),J
42-divya/mohit-
Whether fit for reporting: Yes / No
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