M/S. VELLAPALLY CONSTRUCTIONS v. UNION OF INDIA & THE SUPERINTENDING ENGINEER, CENTRAL PUBLIC WORKS DEPARTMENT

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **WEDNESDAY, THE 29TH DAY OF MAY 2019 / 8TH JYAISHTA, 1941** ## **WP(C).No. 14504 of 2019** ## **PETITIONER/S:** **M/S. VELLAPALLY CONSTRUCTIONS, POST BAG NO.25, S.H. MOUNT P.O., LIONS ROAD, NAGAMPADAM, KOTTAYAM -686 006, REPRESENTED BY THE GENERAL MANGER (PROJECTS), JITHESH CHANDRAN.** **BY ADVS. SRI.K.L.VARGHESE (SR.) SRI.RAHUL VARGHESE SRI.RANJITH VARGHESE SMT.SANTHA VARGHESE** ## **RESPONDENT/S:** **1 THE UNION OF INDIA, REPRESENTED BY THE EXECUTIVE ENGINEER, CENRAL PUBLIC WORKS DEPARTMENT, COCHIN CENTRAL DIVISION, KENDRIYA BHAVAN, KAKKANAD, KOCHI -682 037. 2 THE SUPERINTENDING ENGINEER, CENTRAL PUBLIC WORKS DEPARTMENT, TRIVANDRUM CENTRAL CIRCLE, CGO COMPLEX, VELLAYANI P.O., TRIVANDRUM - 695 522. BY SHRI.P.VIJAYAKUMAR, ASG OF INDIA** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29.05.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.14504 of 2019 2 ## **JUDGMENT** This writ petition is filed by the petitioner a contractor who has undertaken a work of the 2[nd] respondent Central Public Works Department (CPWD), challenging Ext.P10 order passed by the 2[nd] respondent imposing an amount of Rs.72,98,495/- by way of compensation, as stipulated in Clause-2 of the agreement executed by and between the parties, and for other related and consequential reliefs. Brief material facts for the disposal of the writ petition are as follows: 2. Petitioner is a partnership firm conducting construction activities and an 'A' class contractor registered under the Kerala Public Works Department and is having 'Class I Composite' registration with the Central Public Works Department. In response to a tender relating to “Construction of Hostel-cumLaboratory building including Pile Foundation, Water Supply, Sanitary, Drainage, Internal Electrical Installations etc. etc.”, petitioner became the successful bidder and was awarded the work costing Rs.9,92,99,257/- and a formal agreement was entered into, evident from Ext.P1 letter of award dated 20.08.2016 and Ext.P2 facing sheet of the agreement. W.P.(C) No.14504 of 2019 3 As per Ext.P2, the work had to be completed within 330 days, commencing from 11.09.2016 and the date of completion stipulated was, 08.08.2017. Case projected by the petitioner is that, because of heavy odds and limitations and delay caused by the respondents and also reasons beyond the petitioner's control, there was delay in completion of the work by 119 days. Thereupon, petitioner moved for extension of time which was granted by the Executive Engineer, and it was ratified by the 2[nd] respondent, Superintending Engineer without any levy of penalty or Liquidated Damages. However, there was further delay caused by the respondents and time had to be extended again. 3. Thereupon, yet another application was submitted for extension of time, explaining the reasons on account of which the time was lost. There also, petitioner accuses laches on the part of the respondents in rendering facilities for the work, _inter alia_ , delay in issue of pile drawings and pile cap drawings etc. etc. Other circumstances are also put forth by the petitioner like, _harthals_ , labour union strikes and other allied factors. It was thereupon that petitioner has submitted Ext.P3 application with a covering letter dated 17.01.2019, W.P.(C) No.14504 of 2019 4 seeking to condone the delay and the Executive Engineer who is the authority under the agreement to decide extension of time as per Clause 5 of the General Conditions of Contract (GCC) granted extension of time up to 15.10.2018, evident from Ext.P4. Thus, according to the petitioner, the Executive Engineer, the authority to decide the question of extension of time having granted extension of time for delay of 423 days against the actual entitlement for 532 days shall be treated as final and binding on the parties. However, the present incumbent of the 2[nd] respondent has interfered with the decision of the Executive Engineer in Ext.P4, and as per Ext.P8, the Executive Engineer has clarified and recommended for extension of 304 days. 4. Anyhow, Ext.P9 letter was later forwarded by the Executive Engineer to the Superintending Engineer, clarifying that the extension of time recommended as 219 days. However, as per Ext.P10 dated 10.05.2019, the Superintending Engineer found that petitioner is entitled to extension of time only for 147 days, and thereupon, invoked Clause 2 of the agreement and has imposed the compensation as specified above, and in terms of the conditions contained thereunder. It is W.P.(C) No.14504 of 2019 5 thus challenging Ext.P10, this writ petition is filed. 5. It is admitted by learned Senior Counsel for the petitioner that, as per the GCC, the parties have agreed that, in the event of any dispute by and between the parties, it shall be resolved by Alternative Disputes Resolution Mechanism, as provided under Clause 25 of the GCC, wherein, before proceeding for arbitration, various means and measures are provided, enabling the affected person to settle the disputes. 6. I have heard Sri. K.L. Varghese, learned Senior Counsel appearing for the petitioner, assisted by Sri. Rahul Varghese and the learned Central Government Counsel Smt. S. Krishna, and perused the pleadings and the documents on record. 7. The paramount contention advanced by learned Senior Counsel for the petitioner is that, there is clear violation of the fundamental rights guaranteed, and therefore, this Court is vested with ample powers to interfere with Ext.P10 order, even though there is a remedy provided to resolve the disputes by Alternative Disputes Resolution mechanism. My endeavour is to find out whether any interference is warranted to Ext.P10 order passed by the 2[nd] respondent, invoking Article 226 of the Constitution of India. It is an admitted W.P.(C) No.14504 of 2019 6 fact that there was delay on the part of the petitioner to complete the work and the Executive Engineer, on the basis of Ext.P3 application submitted by the petitioner, has issued Ext.P4 extension without levy of compensation for 304 days. However, later the Executive Engineer has issued Ext.P9 letter dated 02.05.2019, altering the recommendation from 304 days to 219 days, and placed the matter before the Superintending Engineer, stating that the earlier recommendation made as per Ext.P4 may be treated as withdrawn. 8. It is an admitted fact that, as per the GCC for Central P.W.D Works, 2014, if the contractor fails to maintain the required progress in terms of Clause 5, or to complete the work and clear the site on or before the contract or extended date of completion, he shall, without prejudice to any other right or remedy available under the law to the Government on account of such breach, pay as agreed compensation the amount calculated at the rate of 1.5% per month of delay, in accordance with schedule 'F', which shall be final and binding. However, as per the proviso, it is stipulated that the total amount of compensation for the delay to be paid under the condition shall not exceed 10% of the W.P.(C) No.14504 of 2019 7 Tendered Value of the work or of the Tendered Value of the item or group of items of work for which a separate period of completion is originally given. It is also an admitted fact that, in accordance with the said Clause, the authority for fixing the compensation is the Superintending Engineer, Trivandrum Central Circle of CPWD. Therefore, the contention advanced by the learned Senior Counsel is that, the Executive Engineer is the authority to condone the delay as per the GCC and grant extension of time, and there is no enabling provision for the Superintending Engineer to interfere with grant of extension of time. However, the Superintending Engineer is vested with powers to impose penalty as per Clause 2, which thus means, when there is extension of time granted by the Executive Engineer, necessarily, such order will have to be forwarded by the Executive Engineer to the Superintending Engineer, in order to identify whether there is wilful delay on the part of the contractor, taking into account Clause 2 of the GCC. Thereupon, 2[nd] respondent has issued Ext.P11 show cause notice dated 27.03.2011 to the petitioner, directing the petitioner to show cause why Clause 2 shall not be invoked, to which, petitioner has submitted Ext.P12 detailed reply dated 08.04.2019. W.P.(C) No.14504 of 2019 8 9. On a perusal of the documents produced by the petitioner and discussed above, I am of the considered opinion that, the Executive Engineer has carried out his duty by forwarding the recommendation to the Superintending Engineer, who, in turn, has found that petitioner is entitled extension of 147 days alone, and thereupon, found that petitioner is responsible for the delay occurred for the balance period, and accordingly, calculated the compensation in terms of Clause 2 of the GCC discussed above. 10. I also find from Annexure-A of Ext.P10 that each and every circumstances leading to the delay were elaborately considered by the 2[nd] respondent, and thereafter arrived at a conclusion that petitioner is liable to be imposed with penalty in accordance with the terms of the GCC. It is also clear from Ext.P10 that necessary documents required for consideration of the issue was taken into account by the 2[nd] respondent, and therefore, it cannot be said that there was any arbitrariness or illegality on the part of the 2[nd] respondent in passing Ext.P10 order against the petitioner susceptible to be interfered with by this Court under Article 226 of the Constitution of India. W.P.(C) No.14504 of 2019 9 11. Learned Senior Counsel has invited my attention to the judgment of the apex court in ' _**J.G.**_ _**Engineers Private Limited v. Union of India and Another**_ ' [(2011) 5 SCC 758], wherein it is held that, in spite of the prevalence of the arbitration clause and anything contrary, if there is violation of the fundamental rights, the constitutional courts are vested with powers to interfere with any orders passed. However, on an elaborate consideration of the facts and circumstances dealt with thereunder, it is clear that the same has no correlation with the facts and circumstances involved in this case, and therefore, the proposition of law laid down in the afore-judgement is clearly distinguishable. 12. In that view of the matter, I am of the considered opinion that, petitioner is duty bound to submit itself to the settlement disputes mechanism provided as per Clause 25 of the GCC. However, learned Senior Counsel submitted that, in accordance with the communications issued by the respondents, it is clear that, there is every likelihood of coercive action being taken against the petitioner to recover the amount. Even assuming that there are any coercive action initiated against the petitioner, petitioner has W.P.(C) No.14504 of 2019 10 got a clear remedy in accordance with Sec.9 of the Arbitration and Conciliation Act, 1996, to approach the District Court, seeking any interim relief, before initiating arbitration proceedings, and therefore, petitioner is not entitled to get any coercive action quashed, there being clear alternative remedy available under law. Circumstances being so, learned Senior Counsel sought reasonable time to approach the Court in accordance with Sec.9 of Act, 1996. 13. In the above circumstances, I am of the considered opinion that, reasonable time can be granted to the petitioner. Accordingly, there will be a direction to the respondents to keep in abeyance any coercive action pertaining to Ext.P10 for a period of three weeks from the date of receipt of a copy of this judgment. The writ petition is disposed of accordingly. ## **Sd/-** ## **SHAJI P.CHALY** ## **JUDGE** St/30.05.2019 W.P.(C) No.14504 of 2019 11 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE LETTER OF AWARD DT. 20.8.2016 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER.** - **EXHIBIT P2 TRUE COPY OF THE FACING SHEET OF THE AGREEMENT.** - **EXHIBIT P3 TRUE COPY OF THE APPLICATION FOR EXTENSION OF TIME ALONG WITH COVERING LETTER DATED 17.1.2019.** - **EXHIBIT P4 TRUE COPY OF THE LETTER SANCTIONING OF EXTENSION OF TIME DATED 2.2.2019.** - **EXHIBIT P5 TRUE COPY OF THE APPLICATION FOR EXTENSION OF TIME PART-1 AND PART II.** - **EXHIBIT P6 TRUE COPY OF CLAUSE 5 CONTAINING CLAUSE 5.1. TO 5.4. OF THE GENERAL CONDITIONS OF CONTRACT.** - **EXHIBIT P7 TRUE COPY OF CLAUSE 2 AND SCHEDULE 'F' GENERAL RULES AND DIRECTIONS OF THE GENERAL CONDITIONS OF CONTRACT.** - **EXHIBIT P8 TRUE COPY OF LETTER DATED 1.5.2019 ISSUED BY THE 1ST RESPONDENT TO THE 2ND RESPONDENT.** - **EXHIBIT P9 TRUE COPY OF LETTER DATED 2.5.2019 ISSUED BY THE 1ST RESPONDENT TO THE 2ND RESPONDENT.** - **EXHIBIT P10 TRUE COPY OF THE DEMAND NOTICE DATED 10.5.2019 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER ALONG WITH ENCLOSURES.** - **EXHIBIT P11 TRUE COPY OF THE SHOW CAUSE NOTICE DATED 27.3.2019 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** - **EXHIBIT P12 TRUE COPY OF THE REPLY TO THE SHOW CAUSE NOTICE SUBMITTED BY THE PETITIONER DATED 8.4.2019 TO THE 2ND RESPONDENT.** W.P.(C) No.14504 of 2019 12 **EXHIBIT P13 TRUE COPY OF CLAUSE 25 OF THE GENERAL CONDITIONS OF CONTRACT PROVIDING FOR ARBITRATION FOR THE PURPOSE OF SETTLEMENT OF DISPUTES.** ## **RESPONDENTS' EXHIBITS: NIL** **//TRUE COPY//** **P.S. TO JUDGE**