Disposed

Samuel Mathew v. Pathanamthitta District Panchayat

Kerala HC25 Mar 2008WP(C)/2500/2006

Case brief

AI extract

What is this about?

The Court addressed a writ petition by a contractor seeking reimbursement for higher bitumen costs. Relying on jurisdictional concerns regarding Section 191 of the Panchayat Raj Act, the judge did not decide the merits. Instead, he directed the Panchayat to release an interim sum of Rs.50,000 subject to refund if the Government decides against the petitioner.

What did the court decide?

Directed the Panchayat to release Rs.50,000 as interim payment subject to undertaking to refund with interest if the Government decides against the petitioner; relegated petition to remedy under Secti

Samuel Mathew Vs Pathanamthitta District… — Contract and Commercial Disputes | Kerala HC (2008)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE

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TUESDAY, THE 25TH MARCH 2008 / 5TH CHAITHRA 1930

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WP(C).No. 2500 of 2006(V)

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PETITIONER:

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SAMUEL MATHEW, KARIMKUTTIYIL HOUSE, ANGADI P.O., RANNY, PATHANAMTHITTA.

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BY ADV. SRI.JACOB P.ALEX

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RESPONDENTS:

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1. PATHANAMTHITTA DISTRICT PANCHAYAT, REPRESENTED BY ITS SECRETARY, DISTRICT PANCHAYAT OFFICE, PATHANAMTHITTA.

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2. EXECUTIVE ENGINEER, LSGD (PW), DISTRICT PANCHAYAT DIVISION, PATHANAMTHITTA, DISTRICT PANCHAYAT OFFICE, PATHANAMTHITTA.

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BY ADV. SRI.S.P.ARAVINDAKSHAN PILLAY - r1 SMT.N.SANTHA SRI.K.A.BALAN SRI.PETER JOSE CHRISTO

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 25/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W.P.(C) NO.2500/2006

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APPENDIX

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PETITIONERS EXHIBITS

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EXT.P1:- TENDER SCHEDULE PREPARED BY 2ND RESPONDENT.

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EXT.P2:- COPY OF THE LETTER TO PETITIONER DT. 6.11.03.

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EXT.P3:- COPY OF THE REPLY LETTER SEND BY 2ND RESPONDENT.

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EXT.P4:- COPY OF THE SELECTION NOTICE ISSUED BY THE 2ND RESPONDENT DT. 22.12.03.

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EXT.P5:- COPY OF THE LETTER DT. 12.2.04 ISSUED BY 2ND RESPONDENT.

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EXT.P6:- COPY OF THE LETTER DT. 27.2.04 ISSUED BY 2ND RESPONDENT.

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EXT.P7:- ABCDEFGH ( 8 NUMBERS):- COPY OF THE INVOICES AND CERTIFICATES EVIDENCING PURCHASE OF BITUMEN FROM KOCHI REFINERIES.

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EXT.P8:- COPY OF THE TRANSPORT BILL DT. 7.4.04.

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EXT.P9:- COPY OF THE LETTER DT. 2.4.04 BY PETITIONER.

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EXT.P10:- CONTRACT BILL PREPARED BY 2ND RESPONDENT.

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EXT.P11:- COPY OF THE LETTER DT. 5.2.05 ISSUED BY PETITIONER TO RESPONDENTS.

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EXT.P12:- COPY OF THE GO(P) NO.84/97/PW&T DT. 19.8.97.

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EXT.P13:- COPY OF THE LETTER DT. 1.7.95 ISSUED BY PETITIONER.

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EXT.P14:- COPY OF THE LETTER BEARING NO.A1/24/03 DT. 16.9.04 ISSUED BY 2ND RESPONDENT TO 1ST RESPONDENT.

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EXT.P15:- COPY OF THE JUDGMENT OF THIS HONOURABLE COURT IN WPC 23475 OF 2005.

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EXT.P16:- COPY OF THE DECISION NO.3(4) DT. 24.11.2005 OF THE IST RESPONDENT PATHANAMTHITTA DISTRICT PANCHAYAT.

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EXT.P17:- COPY OF THE CIRCULAR BEARING NO.DB4/2929/2005/CE/LSGD DT. 14.3.06.

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EXT.P18:- COPY OF THE LETTER DT. 31.3.04 ISSUED TO THE PRESIDENT OF IST RESPONDENT PANCHAYAT.

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EXT.P19:- COPY OF THE LETTER DT. 2.9.04 ISSUED TO THE 2ND RESPONDENT BY MR. ARUN K.ABRAHAM.

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W.P.(C) NO.2500/2006

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EXT.P20:- SERIES(3 NUMBERS):- THE SELECTION NOTICE, REQUEST LETTER BY 2ND RESPONDENT FOR PROVIDING BITUMEN AND FINAL BILL PRAPARED FOR THE WORK OF MR.ARUN K.ABRAHAM.

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RESPONDENT'S EXHIBITS

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EXT.R1(a):- COPY OF THE GOVERNMENT CIRCULAR NO.39465/DP1/03/LSGD DT. 20.9.2003.

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EXT.R1(b):- COPY OF THE GOVERNMENT CIRCULAR NO.23872/DP1/04/LSGD DT. 3.6.04. EXT.R1(c):- COPY OF THE SUPPLEMENTAL AGREEMENT DT. 16.9.04.

/ TRUE COPY/

P.S. TO JUDGE

tss

PIUS C. KURIAKOSE,J.

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- - - - - - - - - - - - - - - - - - - - - - - - - W.P.(C) No.2500 of 2006

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- - - - - - - - - - - - - - - - - - - - - - - - - Dated: 25^th March, 2008

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JUDGMENT

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The issue arising in this Writ Petition is whether the first respondent, the Pathanamthitta District Panchayat is justified in rejecting the petitioner-Contractor's request for reimbursement of the differential cost of bitumen which had to be purchased from the market on account of its non-availability in the P.W.D.Department store. The petitioner is a Government Contractor and the 1^st respondent is the Pathanamthitta District Panchayat. The 2^nd respondent is the Executive Engineer, LSGD(PW) who is in charge of the work of providing 20 mm thick chipping carpet (tarring) of Marankulam-Kulathoormoozhy Road which was awarded by the first respondent to the petitioner. The petitioner submitted his tender for the work in response to Ext.P1 tender schedule prepared by the 2^nd respondent on behalf of the 1^st respondent. Initially the petitioner quoted 5% above the amount in Ext.P1 which is prepared on the rate of schedule rate prevailing in the Public Works Department. But the 2^nd respondent issued Ext.P2 letter on 6.11.2003 to the petitioner stating that the amount quoted by the petitioner is high. To Ext.P2 the petitioner submitted Ext.P3 reply dated 13.11.2003 agreeing to

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execute the work as per the estimate rate in Ext.P1. But relying on a Government Order which provides for payment of differential cost of bitumen to the contractors who purchased the same from the open market it was requested that financial assistance shall be given for payment of such differential cost. The petitioner in this context relies on two circulars and an Order of the Government mandating payment of differential cost and points out that it is the obligation of the Panchayat to provide bitumen at the P.W.D. Schedule of rates. Ext.P4 is the selection notice dated 22.12.2003 by the petitioner when the tender submitted by him was accepted. When the preparatory works for tarring was over the 2^nd respondent informed the petitioner that bitumen is not available with the Panchayat at schedule rates. Thereafter arrangements were made by the 2^nd respondent for making bitumen available from Kochi Refineries at higher rate. Exts.P5 and P6 letters were issued by the 2^nd respondent to the K.R.L. enabling the petitioner to purchase bitumen. By Exts.P5 and P6 the petitioner became compelled to pay cost of bitumen at higher rate. The total cost incurred by the petitioner on account of bitumen is Rs.6,67,722.93 as against the price of Rs.3,68,617.50 if price is calculated as per Ext.P1 (P.W.D.Rates). Thus due to the inability of the 2^nd respondent to

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provide bitumen to the petitioner at the P.W.D.Schedule of rates, the petitioner incurred additional amount of Rs.2,99,105.43. The petitioner submits that immediately on purchasing bitumen from K.R.L. he sent Ext.P9 letter dated 2.4.2004 to the respondents requesting for immediate steps to pay the differential cost of the bitumen. In the meantime the work was completed and Ext.P10 bill was prepared by the 2^nd respondent. On 20.1.2005 the petitioner has given payment also. But the bill does not include the differential cost of bitumen claimed by the petitioner. On learning that only schedule rate is taken as the basis of Ext.P10 the petitioner submitted Ext.P11 letter dated 5.2.2005 claiming payment of a total amount of Rs.3,27,006.43 which takes in differential cost and transportation charges amounting to Rs.27,999/-. Referring to Rule 18 of the Kerala Panchayat Raj (Execution of Public Works) Rules, 1997 the petitioner submits that unless otherwise expressly provided in those Rules, rules and methods adopted in the P.W.D. regarding payment for contract works are to be followed in Panchayats also. The petitioner refers to G.O.(P) NO.84/97/PW&T dated 19.8.1997 and submits that the contractors of P.W.D. who purchases bitumen from the open market are entitled for the differential costs. Ext.P12 is copy of that Government Order. The

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petitioner then points out that he came to know that the first respondent who had not paid the differential cost to him, paid the differential cost to other contractors after payment of final bills to them. Ext.P13 is copy of the letter dated 1.7.2005 sent by the petitioner to the first respondent pointing out details of payment of differential cost to another contractor. Ext.P14 is copy of letter issued by the 2^nd respondent to the 1^st respondent asking the latter to effect payment of differential cost to another contractor who had completed

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a similar work, i.e. providing 20 mm CC to VechoochiraChathanthara,Mukkuttuthara road and that contractor was paid differential cost on 29.6.2005. After issuing Ext.P13 the petitioner personally met the Secretary of the 1^st respondent-Panchayat and requested for release of differential cost to him but in vain. Thereafter the petitioner filed W.P.C.No.23475 of 2005 before this court which was disposed of by Ext.P15 judgment directing the first respondent to take appropriate action on Exts.P11 and P13. Pursuant to Exts.P15, Ext.P16 decision dated 24.11.2005 was taken by the 1^st respondent deciding that the petitioner is not entitled for differential cost of bitumen on the reason that there is no provision in the agreement or in the tender schedule for paying the differential cost. Being aggrieved

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the petitioner files the Writ Petition on various grounds seeking the following reliefs:

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Quashment of Ext.P16 and

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A writ of mandamus directing the 1^st respondent to forthwith pay the differential cost and transportation charges incurred by the petitioner as detailed in Ext.P11.

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A detailed counter affidavit is filed by the 1^st respondent justifying Ext.P16 and challenging the maintainability of the Writ Petition on the ground that an effective alternate remedy is available to the petitioner under Section 191 of the Panchayat Raj Act. It is pointed out that by Ext.P3 the petitioner informed that he was prepared to execute the works as per the rates in Ext.P1 but only requested to help him by paying the different in cost of bitumen purchased paying price above the schedule rates. The petitioner's request for payment of the differential cost of bitumen was not acceded to and there was no agreement to pay such differential cost. The work was executed by him without any demur knowing fully well that there was no agreement to pay the differential cost of bitumen. Copies of the two Government Circulars referred to in the Writ Petition are produced along with the counter affidavit as Ext.R1(a) and Ext.R1

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(b) respectively and contended that those circulars will not enable the petitioner to get the differential cost of bitumen claimed by him. It is pointed out that Ext.R1(a) applies only to the works under the annual plan of the District Panchayat to be executed utilising the plan fund allotted by the Government. But the work executed by the petitioner was only a maintenance work which was executed utilising the maintenance grant provided by the Government. As regards Ext.R1(b) it is pointed out that the same was issued after the work in question was executed and even after the final bill respect of the work was prepared. It is also pointed out that Ext.R1(b) applies only to works for which there is provision in the tender notice itself to the effect that bitumen may be provided by the Panchayat, a provision which is absent in the tender notice in question. It is contended that Ext.P12 Government Order is not applicable to the work in question and the work was not one to be executed according to the provisions of P.W.D.Code. The work was governed by the provisions of the Kerala Panchayat Raj (Execution of Public Works) Rules, 1997 and Rule 8(3) of the said Rule is referred to contend that there will be no condition for securing supply of steel, cement etc. by the Panchayat to the contractor for a tendered work and it is for the contractor to purchase

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and utilise them and the concerned Engineer will satisfy the quality of the materials by testing them. It is then contended that no agreement is executed for payment of differential cost for bitumen. The counter affidavit disputes the claim of the petitioner that the purchaser purchased bitumen as per the instructions from the 2^nd respondent. The respondents are not bound to provide bitumen on the rates mentioned in Ext.P1. Exts.P5 and P6 were issued by the 2^nd respondent only to enable the petitioner to purchase bitumen from Kochi Refineries Limited without delay. If the bitumen is required for execution of the work for Government or local bodies, K.R.L. will give preference to such purchase. As regards the allegation that there has been discrimination in the matter of payment of differential cost amongst contractors, it is contended that the contractor who was paid the differential cost was not similarly circumstanced as the petitioner. In the case of that contractor, there was an agreement with him providing for such payment. If there was a similar agreement like the one which was there in the case of Mr.Arun K.Abraham in the petitioner's case the petitioner also would have been paid the differential cost. The non-payment of differential cost and transportation charge to the petitioner is not in violation of any

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agreement between the petitioner and the respondents. It is then contended that the amount claimed in Ext.P11 is not an admitted amount. Being not an admitted amount, there is no obligation for the respondent to pay the same. It is also pointed out that going by the bills produced by the petitioner the quantity of bitumen purchased is 54610 kgms. while according to the measurement book the quantity of bitumen used is 56343 kgms. And the transportation charge is seen claimed in respect of 64340 kgms. Even the petitioner does not have a consistent case which disentitles him to contend that there is no dispute regarding the amount. No other contractor similarly placed as the petitioner, i.e. the contractor with whom there was no agreement has been paid differential cost. There is no violation of fundamental rights guaranteed under Articles 19 and 21 of the Constitution. If the petitioner has borrowed huge amount of money he had done so on his own volition and the respondents cannot be made accountable for the same. Several disputed questions will have to be decided which this court is not expected to do in this proceeding under Article 226 of the Constitution.

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The petitioner filed a reply affidavit refuting the contentions raised by the respondent. It is contended that Ext.P16 which is a

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routine decision taken by the Panchayat on a request for additional payment does not qualify as a resolution for the purposes of Section 191 or Section 192(3) of the Panchayat Raj Act. Neither the Statute nor the Rules provided for any other remedy against the decisions like Ext.P16. The reply affidavit reiterates the contention that there is no specific provision in the Kerala Panchayat Raj (Execution of Public Works) Rules, 1997 dealing with payment for public works and therefore the provisions in the P.W.D.Rules, Code and relevant Government Orders are applicable for all works other than for which express provision is made in the rules, rules and methods adopted in P.W.D. is applicable. It is contended that no separate agreement is necessary for paying differential cost of the bitumen actually purchased by the contractor executing works for the Panchayat. Ext.P17 clarificatory circular dated 14.3.2006 issued by the Local Self Government Department which says that the usual practice which is being followed by the Local Self Government in the matter of purchasing bitumen by the contractors is detailed, is relied on. It is contended that if Ext.P17 is juxtaposed with the usual P.W.D. practice, it will be clear that no separate agreement is necessary for effecting payment of differential cost to a contractor. The 2^nd respondent himself

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prepared the estimate in which cost of bitumen is calculated based on P.W.D. schedule rates and not on the actual market price. The 2nd respondent himself issued request letters for purchase of bitumen at the higher rate. It is therefore only logical to conclude that the contractor is entitled to reimbursement of additional expenditure which he actually incurred. Exts.P5 and P6 are standard form of letters issued to all contractors. In the reply affidavit there is strong exception to the contention that Arun K.Abraham, the other contractor was not similarly circumstanced as the petitioner. Ext.P18 is copy of the letter dated 31.3.2004 issued by Arun K.Abraham to the President of the 1st respondent Panchayat requesting the latter to make arrangements for making payment of the differential cost is relied on. Also produced as Ext.P19, copy of another letter dated 2.9.2004 issued to the 2nd respondent by Arun K.Abraham. In Ext.P19 Arun K.Abraham mentions about Ext.R1(b) circular dated 3.6.2004. On receiving Ext.P19 the Secretary of the 1st respondent fowarded the request with favourable note vide Ext.P14 dated 16.9.2004. Issuance of Exts.P18 and P19 and similar letter in the nature of Ext.P14 will show that the statement in the counter affidavit that there was already an agreement with Mr.Arun K.Abraham for payment of differential cost is incorrect.

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Ext.P18 request and Ext.P14 forwarding letter based on Ext.R1(b) circular are issued after execution of agreement bearing No.108/EE/DP/03-04 dated 5.11.2003 between Mr.Arun K.Abraham and the 1st respondent. From Ext.P14 it is clear that the right claimed by Arun K.Abraham for getting differential cost is based on Ext.R1(b) alone and this shows that there is no prior agreement in his case. The selection notice, the request letter by the 2nd respondent for providing bitumen and the final bill prepared in respect of the work executed by Arun K.Abraham are produced as Ext.P20 series along with the reply. It is pointed out that Ext.P20 series correspond to the selection notice, the request letter and the bill in the case of the petitioner. The terms of the selection notice are same and it is stated that the tender (prepared based on scheduled rate) includes the entire cost of work. This circumstance is highlighted in the reply affidavit in support of the contention that in the case of Arun K.Abraham there is no separate agreement.

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In view of the reply affidavit, an additional counter affidavit is also filed by the 1^st respondent. It is reiterated that an agreement is absolutely necessary for payment of the differential cost and that nobody the Panchayat has paid the differential cost in the absence of

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an agreement. The petitioner's case that for public works undertaken by the Local Self Government Institutions and executed through contractors there are only two methods for obtainment of bitumen, i.e., that the Local Self Governments make it available directly or that the contractors will purchase the bitumen directly is not correct. Rule 8 (3) of the Kerala Panchayat Raj (Execution of Public Works) Rules, 1997 is referred to once again and it is stated that for reasons to be recorded if the construction materials are supplied by the Panchayat, the cost of the materials shall be realised from the contractor in accordance with the rules in force in the P.W.D. As regards Ext.P17 it is contended that the same does not have any retrospective effect and will not be applicable to the work in question. It is also contended that there is no practice of reimbursing the contractor after the work the differential cost. The circumstance that the estimate is prepared by the 2^nd respondent and that the 2^nd respondent issued letters to K.R.L. will not entitle the petitioner for reimbursement of additional expenditure. The supplemental agreement dated 16.9.2004 entered into between Arun K.Abraham and the 2nd respondent is produced along with the additional counter affidavit as Ext.R1(c). It is submitted that an agreement similar to Ext.R1(c) is absent in the case of the petitioner

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and Ext.R1(c) agreement is not entered into after Ext.P14 but one the same day. In paragraph 10 of the additional counter affidavit it is contended that on 20.1.2005 without any protest whatsoever the petitioner accepted the bill amount. At no point of time the petitioner had made a request for differential cost prior to 20.1.2005. But in the case of Arun K.Abraham he received the bill amount only on 28.6.2005 which is months after execution of Ext.R1(c). Ext.P11 letter dated 5.2.2005 and Ext.P13 dated 1.7.2005 were not received in the office of the 1^st respondent. The office of the 1^st respondent could notice Exts.P11 and P13 only as exhibits in W.P.C.No.23475 of 2005. Ext.P1 refers to a letter given by the petitioner claiming differential cost of bitumen. But such a letter was never received in the office of the 1^st respondent. The additional counter affidavit denies the claim of the petitioner in Ext.P13 that at the time of receiving the bill amount he had submitted a letter claiming Rs.327006.43 towards differential cost and describes the claim as false and baseless. The counter affidavit request that the petitioner be directed to produce before this court copies of the letters referred to in Exts.P11 and P13 and also proof to show that those letters and Exts.P11 and P13 were received in the office of the 1^st respondent. Finally it is contended that the petitioner

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has no legal entitlement to the claim raised by him and that if the untenable claim is accepted it will put the first respondent to heavy financial loss and the same will be against public interest also.

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Sri.Jacob P.Alex, learned counsel for the petitioner and Sri.S.P.Aravindakshan Pillai, learned counsel for the District Panchayat addressed me at length on the basis of the pleadings narrated herein before. I feel that there is an element of genuineness in the grievance voiced by the petitioner. Of course in the case of Sri.Arun K.Abraham a distinction could be drawn by Mr.Aravindakshan Pillai. R1(C) agreement is there while no such agreement is available in the case of the petitioner. But the fact remains that bearing the above case of the petitioner and Sri.Arun K.Abraham is almost identical. The case of the petitioner that R1(c) agreement is executed after Ext.P14 though it appears the same date cannot be ruled out. Notwithstanding the above observation regarding the element of genuineness which I notice in the grievance of the petitioner I do not propose to decide the issue on merits. I relegate the petitioner to his remedy before the Government under section 191. If the government receives an application under section 191 within one month of the petitioner receiving a copy of this judgment from the petitioner challenging

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Ext.P16 resolution the Government will dispose of the same after ascertaining the opinion of the Ombudsman for Local Self Government Institutions and after hearing all parties. Considering all the circumstances which attendant o this case I am of the view that the District Panchayat can be directed to release a sum of Rs.50,000/- to the petitioner out of the amounts claimed by him without prejudice to the rival contentions in the case and subject to the decision which will be taken by the Government in the prosecution application to be filed by the petitioner. Accordingly the Panchayat is directed to release a sum of Rs.50,000/- to the petitioner within three weeks of the petitioner presenting a copy of this judgment before the Panchayat along with the affidavit in which the petitioner undertake that in the event of the Government deciding the issue against the petitioner in the application to be submitted by him, he will refund the amount to the Panchayat with interest at the rate of 9% per annum till payment without any demur. The result is that the writ petition is disposed of issuing the following directions.

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(1) Petitioner is relegated to his remedy before the Government under section 191 of the Panchayat Raj Act. If the petitioner files an application before the Government assailing Ext.P16 within one month

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of his receiving copy of this judgment the Government will entertain that application, obtain opinion of the Ombudsman for Local Self Government Institutions and take a decision on the application after hearing both sides in the light of the opinion of the Ombudsman.

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(2) The Panchayat will release a sum of Rs.50,000/- to the petitioner without prejudice to the rival contentions upon the petitioner filing an affidavit on stamp paper of proper value undertaking to refund the same with interest at the rate of 9% till date of refund in the event of Government deciding against the petitioner in the application to be filed by him under section 191.

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(PIUS C.KURIAKOSE, JUDGE)

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srd/ksv

Samuel Mathew v. Pathanamthitta District Panchayat

Case brief

What is this about?

What did the court decide?

Samuel Mathew v. Pathanamthitta District Panchayat

Case brief

What is this about?

What did the court decide?

What the court decided

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