B. ANAS BABU ENGINEERS, CONTRACTORS AND BUILDERS v. UNION OF INDIA

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU FRIDAY, THE 20TH DAY OF OCTOBER 2017/28TH ASWINA, 1939 WP(C).No. 22391 of 2012 (Y) ---------------------------- PETITIONERS/PETITIONERS: ------------------------ 1. B.ANAS BABU ENGINEERS, CONTRACOTRS AND BUILDERS, FIRDOUS, PANDIT COLONY, KOWDIAR, THIRUVANANTHAPURAM-695003 2. A UNNI ENGINEERING CONTRACTOR,'VILAYIL VEEDU',KIZHAKKUMKARA, KULATHOOR P.O.,THIRUVANANTHAPURAM-695583 3. M/S.SILPI CONSTRUCTION CONTRACTORS OPP.INTERNATIONAL AIRPORT, AIRPORT ROAD, THIRUVANANTHAPURAM - 695008,REP.BY THE MANAGING PARTNER,TOMSON SABU ABILIUS BY ADVS.SRI.K.L.VARGHESE (SR.) SMT.SANTHA VARGHESE SRI.RAHUL VARGHESE SRI.RANJITH VARGHESE RESPONDENTS: ------------ 1. UNION OF INDIA REP.BY THE ENGINEER(SE),CIVIL ENGINEERING DIVISION, DEPARTMENT OF SPACE, THUMBA, THIRUVANANTHAPURAM 695 001. 2. THE SECTION HEAD (CMG) ISRO, VIKRAM SARABHAI SPACE CENTRE, THUMBA, THIRUVANANTHAPURAM 695 001 3. THE DIRECTOR, VIKRAM SARABHAI SPACE CENTRE, THUMBA, THIRUVANANTHAPURAM 695 001 R1 BY ADV. SRI.P.PARAMESWARAN NAIR,ASG OF INDIA R1-R3 BY ADV. SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20-10-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC No.22391 of 2012 WPC No.22391 of 2012 APPENDIX PETITIONER'S EXHIBITS EXT.P1:TRUE COPY OF THE WORK ORDER DTD 04/01/2007 ISSUED TO THE IST PETITIONER EXT.P2:TRUE COPY OF THE REPRESENTATION DTD 22/8/2008 SUBMITTED BY THE IST PETITIONER TO THE ENGINEER IN CHARGE EXT P3:TRUE COPY OF TH EREPRESENTATION DTD 20/10/2008 SUBMITTED BY THE IST PETITIONER TO THE SECTION HEAD EXT P4:TRUE COPY OF TH EREPRESENTATION DTD 20/10/2008 SUBMITTED BY THE IST PETITIONER TO THE SECTION HEAD EXT.P5:TRUE COPY OF LETTER DTD 30/03/2009 ISSUED BY THE ENGINEERIN-CHARGE OF THE IST RESPONDENT TO THE IST PETITIONER EXT.P6:TRUE COPY OF LETTER DTD 3/6/2009 ISSUED TO THE 2ND PETITIONER EXT.P7:TRUE COPY OF REPRESENTATION DTD 22/10/2009 SUBMITTED BY VSSC CONTRACTORS ASSOCIATION, EXT.P8:TRUE COPY OF LETTER DTD 22/8/2012 ALONG WITH ANNEXURE I(D)II(A),II(B)AND II(C) ISSUED TO THE 3RD PETITIONER EXT.P9:TRUE COPY OF LETTER DTD 10/5/2012 ISSUED BY THE SENIOR ADMINISTRATION OFFICER OF THE RESPONDENT TO SHRI S SATISH, CENTRAL PUBLIC INFORMATION OFFICER ALONG WITH ANNEXURES 1(A), 1(B), AND 2 (H) EXT.P10:TRUE COPY OF LETTER DTD 22/3/2012 ISSUED BY SANDHYA VANUGOPAL SHARMA, DIRECTOR(PROJECTS)OF THE RESPONDENTS. EXT.P11 TRUE COPY OF LETTER DTD.12/17.8.2011 ISSUED BY THE THIRD RESPONDENT TO THE ADDL.SECREETARY, DEPARTMENT OF SPACE, BANGALORE. EXT.P12(A) TRUE COPY OF LETTER DTD.25.3.2008 ISSUED BY THE EPTITIOENR TO THE ENGINEER-IN-CHARGE. EXT.P12(b) TRUE COPY OF LETTER DTD.5.5.2008 ISSUED BY THE EPTITIOENR TO THE ENGINEER-IN-CHARGE. EXT.P12(C) TRUE COPY OF LETTER DTD.12.8.2008 ISSUED BY THE PETITIONER TO THE ENGINEER-IN-CHARGE. EXT.P12(D) TRUE COPY OF LETTER DTD.22.8.2008 ISSUED BY THE EPTITIOENR TO THE ENGINEER IN CHARGE. WPC No.22391 of 2012 EXT.P12(e) TRUE COPY OF LETTER DTD.20.10.2008 ISSUED BY THE EPTITIONER TO THE 2ND RESPONDENT. EXT.P12(f) TRUE COPY OF LETTER DTD.20.11.2008 ISSUED BY THE EPTITIOENR TO THE 2ND RESPONDENT. EXT.P12(g) TRUE COPY OF LETTER DTD.26.82010 ISSUED BY THE EPTITIONER TO THE GROUP HEAD. EXT.P12(h) TRUE COPY OF LETTER DTD.12.3.2012 ISSUED BY THE PETITIONER TO THE GROUP HEAD. EXT.P13 TRUE COPY OF LETTER DTD.28.7.2011 ISSUED BY THE THIRD RESPONDENT. EXT.P14 TRUE COPY OF LETTER DTD.8.9.2008 ISSUED BY THE THIRD PETITIONER TO THE ENGINEER IN CHARGE. ## RESPONDENTS' EXHIBITS - EXT.R1(a) TRUE COPY OF THE WORK ORDER DTD.2326.9.2005. - EXT.R1(b) TRUE COPY OF THE WORK ORDER DTD.5.9.2007. - EXT.R1(c) TRUE COPY OF THE LETTER DTD 20.8.2007. - EXT.R1(d) TRUE COPY OF THE LETTER DTD.9.7.2008. - EXT.R1(e) RELEVANT PAGE OF CONTRACT CONTAINING CLAUSES 2 & 5. - EXT.R1(f) LETTER SENT TO 2ND PETITIONER DTD.10.9.2009. - EXT.R1(g) LETTER SENT TO 3RD PETITIONER DTD.30.5.2007. - EXT.R1(h) LETTER SENT TO 3RD PETITIONER DTD.13.6.2007. - EXT.R1(i) CLAUSE 10 CC OF THE CONTRACT. ## TRUE COPY ## P.S.TO JUDGE CSS/ **C.R.** ## **DAMA SESHADRI NAIDU, J.** **.................................................. W.P.(C) No. 22391 of 2012 ................................................... Dated this the 20[th] day of October 2017** ## **JUDGMENT** ## **Introduction:** A few contractors execute civil works for a government entity, a public-sector undertaking. The execution results in delay and extra expenditure. Citing the abnormal, unexpected price escalation as the cause, the contractors want the Government to compensate them. The Expert Committee that considered the issue recommends compensation. The Government pays compensation to some and denies to others. 2. Questioning the denial, three contractors approached this Court. The issue is whether the Government has acted irrationally and arbitrarily. ## **Facts:** 3. All the three petitioners, contractors, have performed many civil works for the Government and various Government Departments. They W.P.(C) No. 22391/2012 : 2 : have, this time, completed the works with delay, though. The contractors assigned the delay to the increased scope of the work and also some other unforeseen factors—they assert—not attributable to them. 4. When the petitioners had been executing certain works entrusted to them by the Vikram Sarabhai Space Centre ('the Space Centre') in 2007-2008, there had been enormous increase in the construction costs. In fact, the cost of steel was increased by about six times. That apart, other construction material, too, witnessed steep price rise; it prompted the governmental agencies, including the Space Centre, to float a scheme to compensate the contractors over and above the agreed rate, to offset the price escalation. 5. As a part of that measure, the Director of the Space Centre constituted Claims Redressal Committee comprising experts, apparently, in construction and other activities, to recommend the ways and means. This recommendation to compensate is based on clause 10 CC, as seen from Ext.R1(i). 6. In course of time, the committee of experts recommended certain measures, besides quantifying the amounts to be paid to the W.P.(C) No. 22391/2012 : 3 : contractors who had suffered loss because of the unforeseen, uncertain escalation in construction-material costs. The Director, Space Centre, forwarded Ext.P11 recommendations (given by the Head of the Space Centre) along with Ext.P13 experts’ opinion. But the decision-making authority at the apex level of the organization rejected the committee's recommendations. 7. Unaware of what weighed with the authorities to reject the recommendations, the contractors took recourse to Right to Information Act and raised certain queries. The Space Centre, through Ext.P8, informed the contractors that the information to be provided stretches to 22 pages. So the applicant was asked to pay ₹44/- (22 pages @ ₹2/- per page) towards the cost of information. The applicant was informed to pay the balance amount within 15 days. 8. The information ostensibly concerns why the petitioners' claim could not be entertained. Ext.P10, however, contains the reasons why the petitioners’ request had not been acceded to: The amount claimed over and above clause 10 CC is an extra-contractual obligation. Aggrieved, the petitioners have filed this writ petition. W.P.(C) No. 22391/2012 : 4 : ## **Submissions:** ## **Petitioners’:** 9. Sri K.L.Varghese, the learned Senior Counsel, has taken me through the entire record. He has submitted that there is no factual dispute about the execution of the works. According to him, the Space Centre had never raised dispute that the project was delayed solely because of the petitioners, except as had been pleaded in the counter affidavit filed by them. 10. Taking me through Exts.P8 and P10, Sri Varghese has emphatically submitted that the alleged reasons cited in Ext.P10 should be applying uniformly to all contractors. Despite that, the Space Centre has applied the Committee’s recommendations only to a select group of contractors. And how those select few have been favoured remains elusive, for the Space Centre never divulged the grounds, if any. 11. Sri Varghese has also emphasized that the defence set up by the Space Centre in Ext.P10 should stand or fall on its own strength. And the Department cannot supply reasons especially by inventing them post W.P.(C) No. 22391/2012 : 5 : factum—in a counter affidavit, at that. The learned Senior Counsel has drawn my attention to the settled principles of law as has been held in _Mohinder Singh Gill v. The Chief Election Commissioner_[1] and other decisions, which will be referred to by and by. 12. Sri Varghese has taken pains to elaborate on the concepts of arbitrariness and distributing State’s largesse. He has submitted that the Space Centre's action smacks of invidious discrimination, for it remains uninformed by any rational justification. According to him, the petitioners cannot be treated as a different—and disadvantaged—class and be placed on a different pedestal from the one the Space Centre put the favoured ones on, to be denied the concessional advantage. 13. Eventually the learned Senior Counsel has also emphasized the doctrine of non-arbitrariness and claimed that the Space Centre’s action is a classic case of arbitrariness and discrimination, uninformed by reason or rationale. To support his contention, the learned Senior Counsel has placed reliance on these decisions: (i) _Raman Dayaram Shetty v. International Airport Authority,_[2] _(ii) Netagi Bag v. State of West Bengal,_[3] _(iii)_ > 1 (1978) 1 SCC 405 2 AIR 1979 SC 1628 3 (2008) 8 SCC 622 W.P.(C) No. 22391/2012 : 6 : _Saroj Screens Private Ltd. v. Ghanshyam and Others_[4] _;_ (iv) _Natural Resources Allocation, In Re, Special Reference No.1 of 2012_[5] _; (v) General Manager, Northern Railway v. Sarvesh Chopra;_[6] (vi) _J.G.Engineers v. Union of India_[7] _._ ## **Respondents’:** 14. Sri N. Nagaresh, the learned Assistant Solicitor General, on the other hand, has taken me into the case’s factual nitty-gritty. He has, first, submitted that all the three petitioners were assigned the work of strategic importance. And the entrustment was with a stipulation that time is the essence. He contends, second, that despite the stipulation and the importance of the works, the petitioners could complete the works with enormous delay. To elaborate, he has submitted that the first petitioner was assigned the work on 10.01.2007 with the stipulation that it should be completed within 12 months. 15. The work must have commenced on 25.01.2007, but it did not. The Space Centre had to remind the first petitioner on 28.08.2007 and on 09.07.2008 to complete the work. But the first petitioner still went on > 4 (2012) 11 SCC 434 5 2012 (10) SCC 1 6 (2002) 4 SCC 45 7 (2011) 5 SCC 758 W.P.(C) No. 22391/2012 : 7 : dragging his feet. The learned Assistant Solicitor General has drawn my attention to Ext.R1(e) to hammer home his contention about the consequences that would follow if the contractor delayed the assigned work. The work was completed with a delay of 217 days. So, the Space Centre penalized the first petitioner and asked him to compensate it by paying `24,000/-. 16. About the second petitioner, Sri Nagaresh submitted that the work was assigned on 05.09.2007, and here, too, the officials went on reminding him. Eventually, clause (2) of Ext.R1(e) was invoked, and the second petitioner was made to pay `1,75,180/- to the Department as compensation. 17. About the third petitioner, the learned ASG submits that he was assigned work on 26.09.2005 with the stipulation that he should complete it in 11 months. As seen, after 8 months, the third petitioner completed only 78%. Despite the exigency, and despite the reminders on 30[th] May, 2007 and 30[th] June, 2007, the third respondent did not adhere to the time-frame. Then, the Space Centre mulcted him with a penalty of `90,840/-. W.P.(C) No. 22391/2012 : 8 : 18. The learned ASG has further drawn my attention to clause 10(cc) in Ext.R1(i) to contend that the provision applies only to the works completed within the stipulated time and that no action should have been taken under clause (2) of Ext.R1(e). According to him, the petitioners fulfil neither condition. 19. Finally, referring to the impugned Ext.P10 response by the Director (Projects) to the petitioners' demand, the learned ASG has submitted that one of the criteria set forth for fixing the eligibility of the cases for special price escalation was that the works should cost more than `100 lakhs, and the works executed should be after 01.01.2006. According to him, the price escalation was analyzed on case to case basis, and the cases considered were mainly for those works where most delays were attributable to the Department. The special price escalation was considered only up to the justified date of completion. The petitioners, contends Sri Nagaresh, have enormously delayed their projects, and the works awarded to them were below 100 lakh rupees. In the end, the learned Assistant Solicitor General has urged this Court to dismiss the writ petition. W.P.(C) No. 22391/2012 : 9 : ## **Discussion:** 20. The issue, as submitted by the learned Senior Counsel for the petitioners, contains no disputed questions of fact. There are, indeed, many contractors who executed works for the space Centre. And most overshot the time frame and also incurred extra expenditure. The government acknowledged the price escalation and appointed a Committee of Experts to suggest ways and means to compensate the contractors if permissible. 21. As seen from the record, the Committee recommended that the contractors be compensated. And the list included the petitioners, too. But, undeniably, the space Centre accepted the Committee’s recommendations to favour only a few; it refused to extend the benefit to others who include the petitioners, as well. Exts.P9 to 10 contains no reasons why the space Centre denied the benefit, among others, to the petitioners. 22. In Ext.P10 the space Centre has contested the petitioners’ claim, primarily, on these grounds: (1) that the compensation sought is over and about what is provided under clause 10 CC, and it is an extra W.P.(C) No. 22391/2012 : 10 : contractual obligation; (2) that if the price hike had affected, it would have affected across the board; (3) that the Space Centre’s concession or indulgence will amount to a precedent for other Centres, and it may give rise to similar claims all over; and (4) that the concession given to others should not open avenues to the unqualified or ineligible persons. 23. Indeed, as rightly contended by the learned Senior Counsel for the petitioner, the objections now raised must have a universal application. What is good for goose is good for the gander. Indisputably, the space Centre extended the benefit for a few persons. And it omitted a few others, despite the Expert Committee’s recommendations. Ext.P10 contains no justification, either. 24. Ext.P8 is information provided by the Space Centre under the Right to Information Act. It contains “a list of the compensation amount or in the bow the 10 CC amount already paid to each person from the Department”. Annexure attached to it reveals the names of the persons or contractors recommended for compensation. Ironically, the very third petitioner is a beneficiary, although it is for another project it executed. Indeed items 8, 9 and 11 in the table relate to the petitioners 2, 1, and 3, W.P.(C) No. 22391/2012 : 11 : respectively. Despite the recommendation by the expert committee, the Space Centre denied them the benefit, though the amounts are comparatively paltry—`3.91 lakh, `2.98 lakh, and ` 9.66 lakh. In the same table, the highest compensation paid was ` 54.48 lakh, followed by other payments in the region of ` 20 lakh. 25. The annexed table to Ext.P10 belies the Space Centre’s contention that all the compensated contractors executed works above ` 100 lakh. 26. We cannot be oblivious to the fact that the space Centre never offered these reasons of rejection until the petitioners approached the Court. Only as a defence did the Space Centre now offer these reasons. So the question is, can such an executive action be countenanced? 27. In _Commissioner of Police, Bombay v. Gordhandas Bhanji_[8] _, Mohinder Singh Gill v. the Chief Election Commissioner_[9] _, Chandra Singh v. State of Rajasthan_[10] _, Hindustan Petroleum Corpn. Ltd., v. Darius Shapur Chenai_[11] _, Dipak_ > 8 AIR 1952 SC 16 9 (1978) 1 SCC 405 10 (2003) 6 SCC 545 11 (2005) 7 SCC 627 W.P.(C) No. 22391/2012 : 12 : _Barbaria v. State of Gujarat_[12] _,_ and _State of Punjab v. Bandeep Singh_[13] the Supreme Court has uniformly held that “public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.” 28. Any judicial, quasi-judicial, or administrative action must be informed by reason. Reason is the life breath of fairness, and fairness is fundamental to a society founded on the rule of law. True, the space Centre has drawn my attention to a few precedents which, seemingly, took a different view. 29. Succinctly stated, _Gordhandas Bhanji_ to _Bandeep Singh_ , the above precedents, have been consistent: that the State cannot supply reasons _post factum_ brooks no exception. > 12 (2014) 3 SCC 502 13 (2016) 1 SCC 724 W.P.(C) No. 22391/2012 : 13 : 30. According to another line of judicial thought, the rule against _post factum_ justification can be overridden if the issue involves immense public interest. In _PRP Exports v. Chief Secretary, Government of Tamil Nadu,_[14] _Madhyamic Shiksha Mandal, MP v. Abhilash Shiksha Prasar Samiti_[15] _,_ and _Chairman, All India Railway Recruitment Board v. K. Shyam Kumar_[16] _,_ the Supreme Court carved out this exception: The decision-maker can always rely upon later materials to support the decision already taken when larger public interest is involved. The principle laid down in _Mohinder Singh Gill_ case is not applicable where larger public interest is involved, and in such situations, additional grounds can be looked into for examining the validity of an order. 31. There is no gainsaying the proposition of law in _PPR Exports_ and _K. Shyam Kumar_ . The emphasis in _PPR Exports_ , as I see, is more on later developments in the matter than on the material or reasons supplied later— . _post factum_ 32. But deeply examined, the schism between the two sets of decisions is only apparent but not real. We can visualize three situations: 14 (2014) 13 SCC 692 15 1998) 9 SCC 236 16 (2010) 6 SCC 614 W.P.(C) No. 22391/2012 : 14 : 1. An authority takes a decision, and the decision contains reasons; 2. An authority takes a decision, and it contains no reasons. But he supplies the reasons soon thereafter; and 3. An authority takes a decision, and it contains no reasons. Nor does he supply the reasons at any time that after. 33. The first two instances, to my mind, pass the judicial muster. To elaborate, the first one is unexceptionable; the second one gains acceptance if it involves public interest. Now we will examine the third one. 34. With his cause of action complete and crystalised, ventilating his grievance, an aggrieved person goes to court. There, before the court, only as a matter of defence does the authority explain or justify his stand. It is in fact a _post litem motam_ justification, a justification supplied after the litigation has commenced. This justification ought not to have invented pending litigation. In other words, the defence must have been preexisting and must have been known—by way of prior notice—to the aggrieved person. W.P.(C) No. 22391/2012 : 15 : 35. In _Raman Dayaram Shetty, Netagi Bag, Saroj Screens Private Ltd., Natural Resources Allocation, In Re, Sarvesh Chopra,_ and _J.G.Engineers,_ the proposition is that “the Government, is not and should not be as free as an individual in selecting the recipients for its largesse. Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal.” 36. Consistent is the judicial assertion that the Government activities have a public element and, therefore, there should be fairness and equality. “The State need not contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure”. This proposition would hold good in all Government dealings with the public, especially where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or signing contracts or issuing quotas or licences or granting W.P.(C) No. 22391/2012 : 16 : other forms of largesse, the Government cannot act arbitrarily at its sweet will. 37. And, like a private individual, the Government cannot deal with any person it pleases; its action must conform to standard or norms which are not arbitrary, irrational, or irrelevant. The Government’s power or discretion to grant largesse, including award of jobs, contracts, quotas, licenses, and so forth, must be confined and structured by rational, relevant and non-discriminatory standard or norm. If the Government departs from such standard or norm in any particular case or cases, the Government’s action would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.[17] Viewed from any perspective, the Space Centre’s action in disregarding the Expert Committee’s recommendations _vis-à-vis_ the petitioners appears to be irrational and discriminatory, falling foul of Article 14 of the Constitution. So, I allow this writ petition. > 17 Quoted from Ramana Dayaram W.P.(C) No. 22391/2012 : 17 : As a result, I direct the respondents to consider the petitioners’ claims as recommended by the Engineer-in-Charge in Ext.P9 and take all other consequential steps as the Ext.P9 recommendation warrants. No order on costs. **Sd/- DAMA SESHADRI NAIDU JUDGE** css/ true copy P.S.TO JUDGE