C. Rajeev v. State of Kerala and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **MONDAY, THE 29TH DAY OF JULY 2019 / 7TH SRAVANA, 1941** ## **WP(C).No.4390 of 2016** ## **PETITIONER/S:** **C. RAJEEV, SREE SOUDHAM, PERUMPUZHA P.O., KOLLAM, PIN- 691 504. BY ADV. SRI.ANCHAL C.VIJAYAN** ## **RESPONDENT/S:** |**1**|**THE STATE OF KERALA**| |---|---| ||**REPRESENTED BY SECRETARY TO GOVERNMENT,**| ||**WATER RESOURCES DEPARTMENT, GOVERNMENT SECRETARIAT,**| ||**THIRUVANANTHAPURAM- 695 001.**| |**2**|**THE SUPERINTENDING ENGINEER,**| ||**KIP (RB) CIRCLE, KOTTARAKKARA,**| ||**KOLLAM DISTRICT, PIN- 691 506.**| |**3**|**THE EXECUTIVE ENGINEER,**| ||**KIP (RB) DIVISION NO.II,**| ||**KOTTARAKKARA, KOLLAM DISTRICT, PIN- 691 506.**| |**4**|**THE ASSISTANT EXECUTIVE ENGINEER,**| ||**KIP (LB) SUB DIVISION NO.I, PUNALUR,**| ||**KOLLAM DISTRICT, PIN- 691 305.**| |**5**|**THE ASSISTANT ENGINEER,**| ||**KIP (LB) SECTION NO.I, PUNALUR,**| ||**KOLLAM DISTRICT, PIN- 691 305.**| ||**BY ADVS.**| ||**R1 TO R5 - SRI. B.VINOD, SENIOR GOVERNMENT PLEADER**| **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29.07.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.4390 of 2016 2 ## **JUDGMENT** Petitioner was a contractor engaged by the State and its Department for the construction of a bridge across the Right Bank Main Canal of the Kallada Irrigation Project. According to the petitioner, the site was handed over to the petitioner on 24.07.2013, and due to heavy rain, petitioner could not start the work up to November, 2013. So also, the sanction for the purchase of departmental materials was issued only on 12.11.2013. When petitioner started the work, due to landslide, petitioner was constrained to execute excess work at the instance of respondents. Anyhow, the contract was terminated at the risk and cost of the petitioner and petitioner was informed that the final liability will be informed after re-arranging and completing the work, as per Ext.P15 order dated 31.12.2015. Case of the petitioner is that, since petitioner had to do additional work, 2[nd] respondent i.e., the Superintending Engineer had directed the 3[rd] respondent to revise the estimate and get sanction. 2. Matters being so, from 03.02.2014 to 30.06.2014, work was stopped for distribution of water through the canal, and in the meanwhile, 10 months time stipulated to complete the work was over on 23.05.2014. W.P.(C) No.4390 of 2016 3 It is the case of the petitioner that, though the revised estimate and part bill for disbursement of the amount due to the petitioner was pending consideration before the respondents, without considering that fact, and without any lapse or negligence on the part of the petitioner to complete the work within the stipulated time, 2[nd] respondent issued Exts.P7 to P11 notices with a view to terminate the contract. Thereupon, petitioner filed W.P.(C) No.29201 of 2014 before this Court and Ext.P14 judgment was secured, directing the 2[nd] respondent to consider the request of the petitioner to foreclose the contract. However, without taking into account the directions contained therein, Ext.P15 order is issued terminating the contract at the risk and cost of the petitioner, which, according to the petitioner, is arbitrary and illegal, liable to be interfered with by this Court. 3. The 3[rd] respondent has filed a detailed counter affidavit, refuting the allegations made by the petitioner, and among other contentions, it is submitted that, the work was awarded to the petitioner on 15.07.2013 at 7.77% below the estimate rate, and the site was accordingly handed over on 24.07.2013, with the specific stipulation for completion of the work W.P.(C) No.4390 of 2016 4 within ten months, which has expired on 23.05.2014. However, petitioner did not apply for extension of time or did not take any initiative to complete the balance works. The part bill submitted by the petitioner on 10.02.2014 was passed and paid during July, 2015. But, petitioner did not carry on with the work, and on the other hand, approached this Court and secured Ext.P14 judgment. However, it is stated that, during the time period, the portion of the canal where the bridge is constructed was made by filled up embankments, and during the excavation of the work, elevated land has collapsed along with a portion of the adjacent canal bank road portion, and on the basis of the directions issued by the Superintending Engineer, the estimate was revised for the re-construction of the canal bank road to ensure public transport and submitted for sanction on 07.02.2014, and the original works continued as per the direction up to February, 2014. However, the revised estimate was returned on 27.10.2014 from the office of the Chief Engineer for certain clarifications. The revised estimate was sanctioned by the agreement authority. According to the 3[rd] respondent, the delay in completing the work had occurred solely due to the negligence and lapses on the W.P.(C) No.4390 of 2016 5 part of the petitioner, and therefore, there was no other option than to terminate the contract, since the petitioner has not improved in spite of issuance of various communications. 4. The 4[th] respondent has also filed a counter affidavit in similar lines. The sum and substance of the contention of the respondent is that, petitioner is not entitled to get any reliefs as is sought for in the writ petition. 5. The 2[nd] respondent has also filed a detailed counter affidavit, justifying the stand adopted in the termination of the contract, and submitted that the Agreement authority is vested with ample powers to terminate the contract and realize the damages suffered by the respondents. 6. A reply affidavit is also filed by the petitioner, producing series of photographs to establish that the work was delayed consequent to landsliding and there was no manner of negligence or lapses on the part of the petitioner. 7. I have heard Sri. Anchal C. Vijayan, learned counsel for the petitioner and Sri. B. Vinod, learned Senior Government Pleader appearing for the respondents and perused the pleadings and the documents on record. W.P.(C) No.4390 of 2016 6 8. The paramount contention advanced by learned counsel for the petitioner is that, there is no power vested with the agreement authority to terminate the contract and assess the damages. That apart, it is contended that, since the termination of contract is challenged by the petitioner, respondents are not entitled to quantify the damages alleged to be suffered by the respondents. Learned counsel has invited my attention to the judgment of the apex court in ' _**State of Karnataka v. Rameshwara Rice Mills, Thirthahalli**_ ' [AIR 1987 SC 1359] and the judgment of a Full Bench of this Court in ' _**Abdul Rahiman v. Divisional Forest Officer**_ ' [1988 (2) KLT 290 (F.B.)] to canvass the said proposition. 9. On the other hand, learned Senior Government Pleader pointed out that, petitioner is bound by the agreement conditions and so also, the stipulations of the Kerala PWD Manual Revised Edition 2012 and has specifically invited my attention to Clause 2116.1 dealing with termination due to the default of Contractor, which stipulates that, as per general conditions of contract, the agreement authority has the power to cancel the contract and arrange the work otherwise in the event of default by the contractor. W.P.(C) No.4390 of 2016 7 It is further stipulated that the agreement authority in exercising the power vested with him shall follow the procedure outlined in the general conditions of the contract. So also, it deals with compensation for delay/Liquidated Damages and power is vested with the authorities to terminate the contract if the contractor does not show the proportionate progress during the extended period of time of completion. So also, it is submitted that, petitioner has not submitted any application for extension of time for completion of the work. Therefore, according to the learned Government Pleader, there is ample power vested with the agreement authority to terminate the contract and to assess the damages, since the work was terminated at the risk and cost of the petitioner. 10. I have evaluated the contentions advanced by the respective counsel across the Bar. Going through the pleadings and the reliefs sought for by the petitioner, it is clear that, petitioner is challenging the termination of the contract. Then the question emerges for consideration is, whether the agreement authority is vested with powers to assess the damages. The said question was considered by the apex court in ' _**Rameshwara Rice Mills, Thirthahalli**_ ' ( _supra_ ), and held W.P.(C) No.4390 of 2016 8 that, if termination of the contract is challenged, the agreement authority who is a party to the contract is not entitled to assess the damages. The same was the proposition of law laid down by this Court in the Full Bench judgment referred to _supra_ . Therefore, in my considered opinion, since the termination of the contract is under challenge, the agreement authority is not entitled to assess the damages. 11. In that view of the matter, petitioner is entitled to succeed in the writ petition to that extent, since I find that the agreement authority is not vested with powers to assess the damages, when the termination of the contract is under challenge. However, in my considered view, sufficient opportunity was provided to the petitioner to improve the work, evident from Exts.P7 to P11 notices and in spite of the same, petitioner has not taken any steps to improve or accelerate the work, so as to achieve progress and complete the work within time. 12. Though various contentions are raised with respect to the impossibility in carrying on with the work, I am of the view, petitioner is an experienced contractor, who was expected to understand and evaluate the site conditions before participating in the tender. W.P.(C) No.4390 of 2016 9 Therefore, it can only be visualised and think that, petitioner was satisfied with the site conditions, and it was accordingly that he quoted below the estimate Probable Amount of Contract (PAC). Moreover, if any unforeseen natural causes have taken place to any adverse climatic conditions or otherwise, petitioner was duty bound to seek extension of time in terms of the PWD Manual. It cannot also be thought of carrying on the contract works smoothly, especially during rainy season, and the petitioner was well aware that if the work was delayed, there is every likelihood of the monsoon interfering with the work. In reality, the breach of contract happens when one party breaks his promise, and neglects and fails to perform his obligations under a contract. So also, petitioner was not expected to abuse the freedom of contract. That is why I am of the opinion that, if there was any delay on the part of the respondents or due to any natural causes, petitioner was duty bound to seek extension of time, and instead of doing that, petitioner wanted to foreclose the contract, which by itself is a significant indicator to determine that, petitioner was not interested to carry on with the work. If such a stand is adopted by every contractor, then the State W.P.(C) No.4390 of 2016 10 would be put to innumerable difficulties and the public at large may have to face severe inconveniences. 13. The discussion of the provisions of the Kerala PWD Manual Revised Edition 2012 made above makes it clear that, if and when extended time is required for completion of the work, application shall be filed requesting to extend the time for completion of the work. Petitioner has not filed any application seeking extension of time, however, application was filed seeking to withdraw from the work. Moreover, sufficient opportunity was provided to the petitioner, evident from the notices referred to above. However, petitioner has not taken adequate steps, in order to complete the work in accordance with the terms and conditions of the agreement. I am also of the view, respondents have taken sufficient steps, necessitating the petitioner to complete the work as is contemplated under the provisions of the PWD Manual Revised Edition 2012. Therefore, it cannot be said that there was any lapses or laches on the part of the respondents in terminating the work awarded to the petitioner. 14. In that view of the matter, no interference is required in the termination of the contract by the agreement authority as per Ext.P15, however, the W.P.(C) No.4390 of 2016 11 agreement authority is not at liberty to assess the damages as is stipulated in Ext.P15 termination order, for the reasons specified above, and to that extent, Ext.P15 will stand quashed. But, it is made clear that the respondents will be at liberty to take appropriate action for recovery of damages, if any, suffered, in accordance with law. The writ petition is partly allowed. **Sd/-** ## **SHAJI P.CHALY** **JUDGE** St/30.07.2019 W.P.(C) No.4390 of 2016 12 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE LETTER NO.D4-748/2011 DATED 06/06/2013 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P2 TRUE COPY OF THE AGREEMENT NO.4/SE/KIP/RBC/KTR DATED 15/07/2013. EXHIBIT P3 TRUE COPY OF THE COMMUNICATION NO.D31112/2011 DATED 12/11/2013 ISSUED BY THE 3RD RESPONDENT TO THE 4TH RESPONDENT FOR THE PURCHASE OF MATERIALS FOR THE WORK COVERED UNDER EXHIBIT P2 AGREEMENT.** **EXHIBIT P4 TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT DATED 27/01/2014. EXHIBIT P5 TRUE COPY OF THE PART BILL ALONG WITH COVERING LETTER PREPARED BY THE 4TH RESPONDENT AND SUBMITTED TO THE 3RD RESPONDENT. EXHIBIT P6 TRUE COPY OF THE LETTER SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT DATED 20/04/2014. EXHIBIT P7 TRUE COPY OF THE LETTER NO.D4-748/2011 DATED 16/09/2014 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P8 TRUE COPY OF THE LETTER NO.DB/E/1/13 DATED 03/09/2014 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER. EXHIBIT P9 TRUE COPY OF THE LETTER NO.SN.6/02/2004 DATED 04/10/2014 ISSUED BY THE 5TH RESPONDENT TO THE PETITIONER. EXHIBIT P10 TRUE COPY OF THE LETTER DATED 24/09/2014 AND REGISTERED ON 10/10/2014 TO THE 2ND RESPONDENT. EXHIBIT P11 TRUE COPY OF THE LETTER NO.D4-748/2011 DATED 16/10/2014 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** **EXHIBIT P12 TRUE COPY OF THE COUNTER AFFIDAVIT FILED BY THE 4TH RESPONDENT IN WP(C) NO.29201/2014.** |W.P.(C) No.4390 of 2016|13| |---|---| |**EXHIBIT P13**|**TRUE COPY OF THE LETTER NO.D4-748/2811**| ||**DATED 15/10/2015 ISSUED BY THE 2ND**| ||**RESPONDENT TO THE PETITIONER.**| |**EXHIBIT P14**|**TRUE COPY OF THE JUDGMENT DATED 25/11/2015**| ||**IN WP(C) NO.29201/2014.**| |**EXHIBIT P15**|**TRUE COPY OF THE ORDER NO.D4-748/2011 DATED**| ||**31/12/2015 ISSUED BY THE 2ND RESPONDENT.**| |**EXHIBIT P16**|**TRUE PHOTOS SHOWING THE POSITION OF THE**| ||**WORK SITE DUE TO SLIDING.**| |**RESPONDENTS'**|| |**EXHIBITS:**|| |**EXHIBIT R2(A)**|**TRUE COPY OF THE LETTER NO.D4-748/2011**| ||**DATED 15.10.2015.**| |**EXHIBIT R4(A)**|**TRUE COPY OF THE RESOLUTION DATED 02.03.16.**| |**EXHIBIT R4(B)**|**PHOTOGRAPHS OF PRESENT CONDITION.**| ||**//TRUE COPY//**| ||**P.S. TO JUDGE**| |**St/-**||