Allowed

M/S Raitani Engineering Works Pvt. Ltd. v. the Union of India and 5 Ors.

Gauhati HC4 Aug 2022WP(C)/1463/2021

Case brief

AI extract

What is this about?

This Division Bench allowed a writ petition challenging the withholding of paid bills by Railway authorities due to the petitioner's failure to submit a Forest Royalty Clearance Certificate. The court held that without a specific statutory provision or express contract clause, the Railway authorities lacked jurisdiction to demand Forest Royalty for ordinary earth usage.

What did the court decide?

Impugned letters directing deposit of Forest royalty set aside; respondents directed to process pending bills without insisting on FRCC.

M/S Raitani Engineering Works Pvt. Ltd. Vs… — Contract and Commercial Disputes | Gauhati HC (2022)

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GAHC010039622021

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : WP(C)/1463/2021

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M/S RAITANI ENGINEERING WORKS PVT LTD

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A COMPANY CONSTITUTED UNDER THE INDIAN COMPANIES ACT, 1956 HAVING ITS REGISTERED OFFICE AND HEAD OFFICE AT CAMPUS OF M.M CHOUDHURY P.B ROAD, REHABARI, GUWAHATI 781007, ASSAM, REPRESENTED BY ONE OF ITS DIRECTOR, SRI MAYUR RAITANI, S/O SRI ANAND RAM RAITANI, RESIDENT OF 4TH FLOOR, NIRMAL SAGAR APARTMENT, OLD POST OFFICE LANE, REHABARI, GUWAHATI 781008, KAMRUP M ASSAM

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VERSUS

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THE UNION OF INDIA AND 5 ORS REPRESENTED BY THE GENERAL MANAGER (CONSTRUCTION) N.F RAILWAY, MALIGAON, GUWAHATI 11, DIST KAMRUP M ASSAM 781011

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2:THE CHIEF ENGINEER (CONSTRUCTION -1) N.F RAILWAYS MALIGAON GUWAHATI 11 DIST KAMRUP M ASSAM 781011

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3:THE DEPUTY CHIEF ENGINEER (CONSTRUCTION -1) N.F RAILWAY SILCHAR DIST CACHAR ASSAM 788001

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4:THE EXECUTIVE ENGINEER (CONSTRUCTION -1) OFFICE OF THE DEPUTY CHIEF ENGINEER CONT. 1 NF RAILWAY SILCHAR

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DIST CACHAR ASSAM

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5:THE PRINCIPAL CHIEF CONSERVATOR OF FOREST AND HOFF ASSAM ARANYA BHAWAN PANJABARI GUWAHATI DIST KAMRUP M ASSAM 781037

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6:THE DIVISIONAL FOREST OFFICER

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KARIMGANJ DIVISION KARIMGANJ ASSAM 78871

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Advocate for the Petitioner : MR. A BISWAS

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Advocate for the Respondent : SC, RAILWAY

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BEFORE HONOURABLE MR. JUSTICE SUMAN SHYAM

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ORDER

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04.08.2022

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Heard Mr. A. Biswas, learned counsel for the petitioner. I have also heard

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Ms. G. Sarma, learned Standing Counsel, N. F. Railway appearing for the respondent Nos.1 to 4 and Mr. D. Gogoi, learned Standing Counsel, Forest Department, Assam appearing for the respondent Nos.5 and 6.

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Pursuant to the NIT floated by the respondent No.2, the writ petitioner herein was awarded the contractual work viz., “Earth work in formation for

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raising/widening of existing formation in layers to make profile as per BG stand in between station Karimganj-Mahishasan (11 Km) and By pass (3 Km) including rebuilding/extension/strengthening of minor bridges, platform, P.P. shed, RBG room and other ancillary works in connection with the Gauge Conversion work of Karimganj to Mahisasan and construction of Karimganj By pass line”. After

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execution of the work the petitioner had raised bills seeking payment in respect thereof. There is no dispute as regards the execution of the work. However, the bills have been withheld on the ground that Forest Royalty Clearance Certificate (FRCC) has not been submitted by the petitioner.

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Mr. Biswas submits that taking the plea of non-submission of FRCC the respondent Railway authorities have issued two letters dated 31.07.2020 and 21.11.2022 (Annexures-E-2 and E-3, respectively) directing the petitioner to deposit the Forest Royalty for processing its bills. According to the learned counsel for the petitioner, payment of Forest royalty is a matter between the contractor and the Forest Department, Assam and the Railway authorities do not have any jurisdiction to interfere in such matters. Mr. Biswas has further submitted that there are number of decisions of this Court, both by the Single Bench as well as by the Division Bench, wherein it has been held that in the absence of any statutory provision or specific clause in the contract

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agreement, demand of payment of Forest Royalty Clearance Certificate (FRCC) cannot be made for usage of ordinary earth. Under the circumstances, submits Mr. Biswas, the impugned letters are illegal and therefore, are liable to be set aside by this Court. Mr. Biswas has, however, submitted, in his usual fairness, that if such a demand for Forest Royalty is raised by the Forest Department, Assam in accordance with law, the petitioner would certainly comply with the same.

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Ms. G. Sarma, learned Standing Counsel, N. F. Railway, has, however, supported the stand of the authorities and submitted that unless the FRCC is produced or the amount is deposited the petitioner’s pending bills cannot be cleared.

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Mr. D. Gogoi, learned Standing Counsel, Forest Department has

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submitted that the law governing the subject is well settled and therefore, in the absence of any clause in the contract agreement, the Railway authorities cannot insist on production of FRCC as no such authorization has been issued to the N. F. Railways by the Forest Department.

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The issue as to whether a contractor is required to produce FRCC or pay Forest royalty for release of contractual dues came up for consideration before this Court in a number of similar writ petitions wherein, it has been held by the learned Single Judge that no such Forest royalty would be payable in case of usage of ordinary earth unless there is a statutory provision governing the same or there is express provision made in the contract accordingly. In the case of

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State of Assam & others vs. Muslim Ali reported in (2013) 2 GLR 505 the Division Bench had dismissed an appeal preferred by the State Government against the decision of the learned Single Judge by affirming the views expressed by the Court in the matter. The relevant observations of the Division Bench of this Court in the case of Muslim Ali is available in paragraph 18 which is extracted herein below for ready reference :-

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“ 18. We are in agreement with the views expressed by the learned Single Judge. No appropriation of money from the contractual dues is permissible unless backed by statutory provision or by express provision contained in the contract agreement binding the parties to the contract. In absence thereof, such deductions would be unauthorized. Learned counsel for the appellants have not been able to show any such provision to persuade us to take a different view.”

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There is no doubt or dispute about the fact that there is no such clause in

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the contract agreement entered by and between the parties paving the way for payment of Forest royalty for the usage of ordinary earth in execution of the contract. There is also nothing on record to show that the Forest department has authorized or requested the Railway authorities to recover Forest royalty from the contractors on its behalf. The learned departmental counsel has further submitted that although in the notification dated 01.09.2009 issued by the Government of Assam, Forest Department, Forest royalty rates have been prescribed for sand, stone, gravel etc., no such rate has been prescribed for ordinary earth. Mr. Gogoi, has however, submitted in his usual fairness that if the department has any claim against the petitioner, it would raise such claim by following the due process.

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Having heard the learned counsel for the parties, this Court is of the opinion that the respondent Railway authorities not have any jurisdiction or authority under the law to withhold the pending bills of the petitioner on the ground of non-payment of Forest royalty or non-production of FRCC. There is also no condition in the contract agreement which permits such a recourse by the respondents. Situated thus, the impugned letters dated 31.07.2020 and 21.11.2020 are hereby set aside. The respondent Nos.1 to 4 are directed to process the pending bills of the petitioner in accordance with law without insisting on FRCC.

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The writ petition stands allowed.

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JUDGE

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Comparing Assistant

M/S Raitani Engineering Works Pvt. Ltd. v. the Union of India and 5 Ors.

Case brief

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M/S Raitani Engineering Works Pvt. Ltd. v. the Union of India and 5 Ors.

Case brief

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