Partly allowed

M/S. Paulose George Construction Co.(P)Ltd. v. the State of Kerala

Kerala HC12 Jan 2018WP(C)/429/2018

Case brief

AI extract

What is this about?

Petitioner challenged termination of a government contract by the Superintending Engineer due to non-acceptance of rate variations. Court held mere rate dispute does not justify termination without hearing. Exts.P19 and P20 quashed; matter remanded to re-consider rate enhancement per PWD Manual 2012.

What did the court decide?

Exts.P19 and P20 quashed; direction to 1st respondent to reconsider rate enhancement within one month after hearing the petitioner.

M/S. Paulose George Construction Co.(P)Ltd. Vs… — Public Procurement and Tenders | Kerala HC (2018)

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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 SHAJI P.CHALY

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FRIDAY, THE 12TH DAY OF JANUARY 2018 / 22ND POUSHA, 1939

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WP(C).No. 429 of 2018

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PETITIONER:

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M/S PAULOSE GEORGE CONSTRUCTION CO.(P)LTD., ENGINEERS & CONTRACTORS, AISWARYA TOWERS, KARIMUGAL P.O, KOCHI - 682 303, REP. BY ITS MANAGING DIRECTOR, T.V PAULOSE, THURUTHIYIL HOUSE, BRAHMAPURAM P.O, AMBALAMEDU(VIA), KOCHI - 682 303.

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BY ADVS.SRI.K.BABU THOMAS SMT.MARYKUTTY BABU

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RESPONDENTS:

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1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, WATER RESOURCES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

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2. THE SECRETARY TO THE GOVERNMENT FINANCE DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

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3. THE CHIEF ENGINEER, PROJECT - II, PUBLIC OFFICE BUILDINGS, THIRUVANANTHAPURAM - 695 033. 4. THE SUPERINTENDING ENGINEER, PROJECT CIRCLE, MUVATTUPUZHA - 686 671.

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5. THE EXECUTIVE ENGINEER, PAMBAR PROJECTS DIVISION, PALA KOOTHATUKULAM, ERNAKULAM DISTRICT - 686 662.

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BY SR. GOVERNMENT PLEADER SRI.K.V. MANOJ KUMAR

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12-01-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 429 of 2018 (C)

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PETITIONER(S)' EXHIBITS

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EXHIBIT P1	TRUE COPY OF RELEVANT PORTION OF AGREEMENT NO.4/SEPCM/2014-15.
EXHIBIT P2	TRUE COPY OF LETTER FOR EXTENSION OF TIME.
EXHIBIT P3	TRUE COPY OF LETTER OF THE 3RD RESPONDENT INTIMATING DECISION ON HIGHER LEVEL IS REQUIRED.
EXHIBIT P4	TRUE COPY OF REPRESENTATION OF THE PETITIONER REQUESTING TO SUPPLY APPROVED DESIGN AND DRAWINGS.
EXHIBIT P5	TRUE COPY OF REPRESENTATION OF THE PETITIONER FOR THE DESIGN AND DRAWINGS- PAYMENT AT CURRENT RATES.
EXHIBIT P6	TRUE COPY OF NOTICE OF THE 1ST RESPONDENT TO ATTEND THE HEARING ON 3-2-2017.
EXHIBIT P7	TRUE COPY OF MINUTES OF THE MEETING.
EXHIBIT P8	TRUE COPY OF LETTER FORWARDING REVISED ESTIMATE FOR RS.42,02,35,328/- PRICED AT 2012 PWD SOR.
EXHIBIT P9	TRUE COPY OF REPRESENTATION OF THE PETITIONER FOR PAYMENT AT THE CURRENT SCHEDULE OF RATES.
EXHIBIT P10	TRUE COPY OF REPRESENTATION OF THE PETITIONER FOR PAYMENT AT THE CURRENT SCHEDULE OF RATES.
EXHIBIT P11	TRUE COPY OF MINUTES OF THE MEETING.
EXHIBIT P12	TRUE COPY OF LETTER OF 1ST RESPONDENT FOR ILLEGAL RETENDER OF THE WORK.
EXHIBIT P13	TRUE PHOTOGRAPH DISPLAYING EXCAVATION FOR FOUNDATION OF THE DAM.
EXHIBIT P13(A)	TRUE PHOTOGRAPH DISPLAYING EXCAVATION FOR FOUNDATION OF THE DAM.

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WP(C).No. 429 of 2018 (C)

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EXHIBIT P13(B) TRUE PHOTOGRAPH DISPLAYING EXCAVATION FOR FOUNDATION OF THE DAM.

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EXHIBIT P13(C)	TRUE PHOTOGRAPH DISPLAYING EXCAVATION FOR FOUNDATION OF THE DAM.
EXHIBIT P14	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P14(A)	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P14(B)	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P14(C)	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P14(D)	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P14(E)	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P14(F)	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P14(G)	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P14(H)	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P14(I)	TRUE PHOTOGRAPH DISPLAYING STONE AGGREGATES STOCKED BY THE PETITIONER.
EXHIBIT P15	TRUE PHOTOGRAPH DISPLAYING M-SAND STOCKED BY THE PETITIONER.
EXHIBIT P15(A)	TRUE PHOTOGRAPH DISPLAYING M-SAND STOCKED BY THE PETITIONER.
EXHIBIT P15(B)	TRUE PHOTOGRAPH DISPLAYING M-SAND STOCKED BY THE PETITIONER.
EXHIBIT P15(C)	TRUE PHOTOGRAPH DISPLAYING M-SAND STOCKED BY THE PETITIONER.

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WP(C).No. 429 of 2018 ©

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EXHIBIT P15(	D) TRUE PHOTOGRAPH DISPLAYING M-SAND STOCKED BY THE PETITIONER.
EXHIBIT P15(	E) TRUE PHOTOGRAPH DISPLAYING M-SAND STOCKED BY THE PETITIONER.
EXHIBIT P16	TRUE PHOTOGRAPH DISPLAYING UTILITY BUILDING CONSTRUCTED AT SITE BY THE PETITIONER.
EXHIBIT P17	TRUE COPY OF REPORT OF THE 3RD RESPONDENT TO THE GOVERNMENT ADMITTING COLLECTION OF MATERIALS AND EQUIPMENTS BROUGHT TO SITE.
EXHIBIT P18	TRUE COPY OF LETTER OF THE 1ST RESPONDENT DIRECTING TERMINATION OF THE CONTRACT.
EXHIBIT P19	TRUE COPY OF LETTER OF THE 3RD RESPONDENT TO THE 4TH RESPONDENT DIRECTING TERMINATION OF THE CONTRACT.
EXHIBIT P20	TRUE COPY OF ORDER NO. D2-2866/2013.
EXHIBIT P21	TRUE COPY OF LETTER OF THE 5TH RESPONDENT DIRECTING TO REMOVE THE MATERIALS COLLECTED AT THE SITE.
EXHIBIT P22	TRUE COPY OF REPRESENTATION OF THE PETITIONER TO THE RESPONDENTS TO REVOKE ILLEGAL TERMINATION.
EXHIBIT P23	TRUE COPY OF CLAUSE 2111 OF THE PWD MANUAL REQUIRING NEGOTIATION AND SETTLEMTN OF RATES PAYABLE FOR EXTRA ITEMS AND QUANTITIES BEYOND THE SEILING LIMIT OF 125% STIPULATED

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RESPONDENT(S)' ANNEXURES

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ANNEXURE R4(A)	TRUE COPY OF THE RELEVANT PAGE OF THE CONTRACT
ANNEXURE R4(B)	TRUE COPY OF THE RELEVANT PAGE OF THE CONTRACT
ANNEXURE R4(C)	TRUE COPY OF THE RELEVANT PAGE OF THE CONTRACT

TRUE COPY

P.S. TO JUDGE

SHAJI P. CHALY, J.

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W.P.(C) No.429 of 2018

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Dated this the 12^th day of January, 2018

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JUDGMENT

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This writ petition is filed by the petitioner seeking to quash Exts.P18 to P21, by which, the work awarded to the petitioner as per Ext.P1 was directed to be terminated, and in effect terminated as per Ext.P20 order. Material facts for the disposal of the writ petition are as follows:

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Petitioner is awarded with a contract and Ext.P1

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agreement is executed. The work progressed, however, due to the tough terrain and the peculiar nature of the land, the work could not be carried on, as is expected of. It is also an admitted fact that, the design had to be changed. However, due to various factors, petitioner has requested the respondents to vary the rate agreed upon by and between the parties as per Ext.P1 agreement. The same was taken into consideration, however, Ext.P12 decision is taken, by which, the rate requested for the petitioner in accordance with 2016 DSR was declined, and so also, the request made by the petitioner to reimburse the GST amount was not acceptable to

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W.P.(C) No.429 of 2018

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the respondents.

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Matters being so, petitioner was directed to carry on the work with the rate agreed by and between the parties, as per Ext.P1 agreement. According to the respondents, the petitioner did not carry on with the work as is directed, and thereupon, Exts.P18 and P19 directions were issued by the respective statutory authorities, and accordingly, the Superintending Engineer terminated the contract as per Ext.P20, without the risk and cost of the petitioner. It is thus challenging basically Ext.P20, this writ petition is filed.

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According to the petitioner, the Superintending Engineer is the authority entered into contract with the petitioner, who is vested with powers to consider the subject issues arising by and between the parties during the tenure of the contract. Therefore, dictates made by the higher authorities as per Exts.P18 and P19 cannot be sustained under law, and therefore, arbitrary and illegal.

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For and on behalf of the 4^th respondent, a statement is filed refuting the allegations and claims and demands raised by the petitioner. The foundational contention raised in the statement is that, Clause 82 of the Special Conditions of

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W.P.(C) No.429 of 2018

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Contract provides that, “on actual execution, if any extra item of work is found necessary, the contractor must carry out such items as per the instructions of the Department”. The relevant page of Clause 82 is produced as Annexure-R4(a). That apart, Clause 86 of the Special Conditions provides that, the rates given in the schedule are inclusive of all conveyance charges of all sorts, and no further claim of contractor will be entertained later, after the settlement of contract. So also, Clause 23(d) of notice inviting tender which is part of the contract provides that, no authorised variations shall vitiate the contract but additions and omissions shall be measured and dealt with in accordance with clause 23(b).

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It is also contended that, as per Clause 23(e), the execution of an extra item of work and payment therefore will be based on:

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(i) There shall be an order in writing to execute the extra items of work duly signed by an Engineer not below the rank of Assistant Engineer before its commencement.

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(ii) If the contractor finds, after examining the specifications and plans that extras are involved,

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W.P.(C) No.429 of 2018

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he should give notice to the Engineer to this effect and shall proceed with the execution of the extra item, only after receiving instructions in writing from the Engineer.

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Other contentions are also raised with respect to the legality in Ext.P20 terminating the work as per Ext.P1. It is also submitted that the petitioner is bound by the terms and conditions entered into by and between the parties as per Ext.P1 contract, and therefore, there is no illegality committed by the respondents in termination of the contract of the petitioner justifying interference of this Court under Article 226 of the Constitution of India.

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A reply affidavit is filed by the petitioner reiterating the stand adopted in the writ petition and also producing Ext.P23 relevant page of the PWD Manual Revised Edition, 2012. Learned counsel for the petitioner has invited my attention to Clause 2111 dealing with Deviations and Extra Items of work, which read thus:

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“ 2111. Deviations and Extra Items.

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Alterations in sanctioned designs, except of a minor nature, shall not be made in a work without the approval of the TS authority. The agreement authority shall be kept informed then and there of all deviations

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W.P.(C) No.429 of 2018

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ordered by authorities subordinate to him. All deviations, which involve major structural alterations, whether excess cost is involved or not shall be reported to the authority who technically sanctioned the estimate and his approval obtained before effecting the deviation.

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The Engineers under the control of the work shall be careful to adhere to the estimate as far as possible and shall not carry out excess quantities as a matter of course. If, however, in any item, excess over estimate quantity is inevitable and has to be carried out, the authority competent to sanction the excess amount involved shall deal with the case and concurrently report the fact to the Agreement Authority. If excess is due to additional works not contemplated in the estimate, it will not be justifiable to carry out the additional works without sanction of the authority that sanctioned the estimate. Once it is decided that excess quantity in an item shall be carried out, the contractor shall be notified in writing to that effect by the Engineer. The agreed rate for the concerned item shall be applicable for excess quantity in that item upto 25% of the agreed quantity and upto 1% of the contract price. For excess beyond this limit, and for the extra items the agreement authority shall fix the rate by negotiation with the contractor for works within their powers of T.S. and by the Chief Engineer of the Government in other cases.”

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Therefore, the contention advanced by the petitioner is that, whenever there is extra items of work to be carried out by the petitioner in excess of the quantity prescribed thereunder, petitioner is entitled to get variation in the rates. Therefore, according to the petitioner, the termination of the contract, looking in any manner, is illegal and arbitrary.

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W.P.(C) No.429 of 2018

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I have heard learned counsel for the petitioner and the learned Senior Government Pleader appearing for the respondents. Perused the documents on record and the pleadings put forth by the respective parties.

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The fact discussions made above would make it clear that, the question to be decided is whether any manner of interference is warranted to Ext.P20 termination order passed by the 4^th respondent. There are certain facts admitted by the respective parties. Even according to the respondents, the work could not achieve at the desired pace, since the terrain in which the work was carried out by the petitioner is very hard and of a peculiar nature, and therefore, a time consuming process. It is also an admitted fact that, design was changed by the respondents and the copies of the design were not provided to the petitioner. However, in my considered opinion, the issue is not lying there. The issue is whether the petitioner is interested in carrying on with the work at the rates agreed by and between the parties as per Ext.P1 agreement. Learned counsel for the petitioner pointed out that, since the quantity of work exceeds as is prescribed under Clause 2111 of PWD Manual Revised Edition, 2012,

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W.P.(C) No.429 of 2018 7

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petitioner is entitled to enhancement of the rate as is contemplated.

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Learned Senior Government Pleader objected to the same, by contending that, it is quite evident from Ext.P12 communication issued by the State Government that the quantity of work as per the revised design will not exceed the quantity that is prescribed under Clause 2111 of the PWD Manual specified above. Learned Government Pleader also submitted that, in the counter affidavit filed, in a writ petition filed by the petitioner i.e. W.P.(C) No.33204 of 2017, the said issue is pointed out.

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Anyhow, having regard to the facts and circumstances of the case and evaluating Clause 2111 of the PWD Manual, I am of the considered opinion that, a re-look is to be made by the competent among the respondents in respect of the termination of the contract, after providing an opportunity of hearing to the petitioner. Therefore, Exts.P19 and P20 are quashed, and there will be a direction to the 1^st respondent to re-consider the matter in respect of the rate enhancement sought for by the petitioner, taking into account Clause 2111 of PWD Manual, 2012, and a decision shall be

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W.P.(C) No.429 of 2018

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taken at the earliest possible time, and at any rate, within one month from the date of receipt of a copy of this judgment. I make it clear that, If any adverse circumstances are pointed out in any of the communications issued by the State Government or its officers, it will not stand in the way in taking a decision on the merits of the matter.

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This writ petition is disposed of accordingly.

Sd/-

SHAJI P. CHALY

JUDGE

St/12.01.2018

M/S. Paulose George Construction Co.(P)Ltd. v. the State of Kerala

Case brief

What is this about?

What did the court decide?

M/S. Paulose George Construction Co.(P)Ltd. v. the State of Kerala

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

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