Partly allowed

Diya Constructions v. State of Kerala

Kerala HC22 Sept 2022WP(C)/2732/2022

Case brief

AI extract

What is this about?

The Kerala High Court disposed of a writ petition filed by a construction firm against Kerala Water Authority and others. The court directed authorities to upload bills for supplied materials within one month, allowing the petitioner to claim the amount. The court held that claims regarding compensation for loss and interest on delayed payments were disputed questions of fact unsuitable for adjudi

What did the court decide?

The Court directed respondents 2 to 5 to upload bills for supplied materials within one month, and respondent (KIIFB) to sanction the amount subsequently. The claim for compensation for loss and inter

Diya Constructions Vs State of Kerala — Contract and Commercial Disputes | Kerala HC (2022)

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WP(C).2732/22

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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 V.G.ARUN

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THURSDAY, THE 22^ND DAY OF SEPTEMBER 2022 / 31ST BHADRA, 1944

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WP(C) NO. 2732 OF 2022

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PETITIONER/S:

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DIYA CONSTRUCTIONS 33/3341A, KAKKANATT, THOTTILPEEDIKA, CHEVARAMBALAM P.O., KOZHIKODE POST-673017, REPRESENTED BY ITS MANAGING PARTNER K.D.JOSEPH, AGED 68 YEARS, S/O.DEVASIA, KOOTNAL HOUSE, CHARAL P.O., AKYYANKUNNU, IRITTY, KANNUR DISTRICT-670706.

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BY ADVS. GEORGE MATHEW PRAVEEN S. M.D.SASIKUMARAN SUNIL KUMAR A.G DIPU JAMES MATHEW K.T. GEORGE K.V. STEPHY K REGI

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RESPONDENT/S:

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1 STATE OF KERALA REPRESENTED BY ITS SECRETARY, WATER RESOURCES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695001.

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2 KERALA WATER AUTHORITY (KWA), REP. BY ITS MANAGING DIRECTOR, JALA BHAVAN, THIRUVANANTHAPURAM-695033.

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3 THE SUPERINTENDING ENGINEER, PUBLIC HEALTH CIRCLE, KERALA WATER AUTHORITY, THIRUVALLA, PATHANAMTHITTA DISTRICT-689101.

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4 THE EXECUTIVE ENGINEER, PUBLIC HEALTH DIVISION, KERALA WATER AUTHORITY, THIRUVALLA, PATHANAMTHITTA-689101.

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5 THE ASSISTANT EXECUTIVE ENGINEER, KERALA WATER AUTHORITY, PUBLIC HEALTH DIVISION,

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WP(C).2732/22

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THIRUVALLA, PATHANAMTHITTA DISTRICT-689101.

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6 KERALA INFRASTRUCTURE FUND BOARD (KIIFB), REP. BY ITS CHIEF EXECUTIVE OFFICER, FELICITY 2ND SQUARE, MAHATMA GANDHI ROAD, STATUE, THIRUVANANTHAPURAM-695001.

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BY ADVS. P.BENJAMIN PAUL B.G.HARINDRANATH GEORGIE JOHNY

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OTHER PRESENT:

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GP Appu PS

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.09.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).2732/22

V.G.ARUN, J.

----------------------------------------------W.P(C).No. 2732 of 2022

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Dated this the 22^nd day of September, 2022 JUDGMENT

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The petitioner firm was awarded the work of replacing the old existing 150 mm AC conveyance main line with 200 mm DI K9 pipe from Mittayi Company Fathimapuram to Thrikkodithanam Boosting Pump House, under the projectKIIFB RWSS to Thrikkodithanam. The work is funded by the KIIFB/sixth respondent and the contract awarded through the Kerala Water Authority/second respondent, the Special Purpose Vehicle (SPV) for the project. The petitioner firm was awarded the work for Rs.98,14,082/-. Thereupon, petitioner remitted an amount of Rs.13,93,500/- towards performance guarantee and additional performance guarantee and executed the agreement. As per the agreement, the work had to be completed on or before 22.7.2020. As the petitioner was required to place orders for pipes and other necessary materials, such as differentials, those materials were purchased by expending more than Rs.40 lakhs. In spite of making all arrangements and bringing the materials and machinery to the site, the work could not be commenced, since

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WP(C).2732/22

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the roads through which the pipes were to be laid was recently repaired by the PWD and the defect liability period with respect to that work was not over. The stalemate continued beyond the contract period. While so, the petitioner came to know that the sixth respondent had recommended cancellation of the subject tender.

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Faced with such a situation, the petitioner submitted Exhibit P5 request to relieve it from the contract after releasing the amounts deposited towards performance guarantee and additional performance guarantee and paying the amounts already expended. As there was no proper response to the request, the petitioner filed WP(C) 11869 of 2021. That writ petition was disposed of by Exhibit P7 judgement, requiring the third respondent to take a decision on the petitioner’s request. Accordingly, the third respondent considered the request and passed Exhibit P9 order terminating the contract and deciding to rearrange the balance work. It was decided to pay cost of materials purchased by the petitioner from the AS amount, after getting permission from KIIFB to upload the bill in the PFMS portal. The petitioner is aggrieved by the non-payment of the amount as per Exhibit P9 and also regarding the absence of

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a decision to refund the amount deposited towards performance and additional performance guarantee. Hence, this writ petition seeking the following reliefs;

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WP(C).2732/22

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"I. to issue a writ in the nature of mandamus or any other appropriate writ, or order direction, commanding the respondents to draw up and disburse the amount due to petitioner towards cost of materials supplied without deductions as per NIT No.12/2019-20/KWA/PHC/TVLA for project viz., KIIFB RWSS to Thrikodithanam - Replacing old existing 150mm AC conveyance main line with 200 mm DI K9 pipe from Mittayi Company, Fathimapuram to Thrikodithanam boosting pump house (KIIFB-TRAN-2-WRD 005-123) and Ext.P1 within a time frame to be fixed by this Hon’ble Court;

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ii. to issue a writ in the nature of mandamus or any other appropriate writ, order or direction, commanding the respondents 2 to 5 to release the security deposits made by petitioners as per NIT No.12/2019-20/KWA/PHC/TVLA for project viz., KIIFB RWSS to Thrikodithanam - Replacing old existing 150 mm AC conveyance main line with 200 mm DI K9 pipe from Mittayi Company, Fathimapuram to Thrikodithanam boosting pump house (KPPFB-TRAN-2WRD005-123) and Exhibit P1 by wayh of Treasury Saving Bank deposits as performance guarantee and additional performance guarantee within a time frame to be fixed by this Hon'ble Court;

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iii. To issue a writ in the nature of mandamus or any other appropriate writ order or direction, commanding respondents release the amounts due to the petitioner as per NIT No.12/2019-20/KWA/PHC/TVLA for project viz., KIIFB RWSS to Thrikkodithanam – Replacing old existing 150 mm AC conveyance main line with 200mm D1 K9 pipe from Mittayi

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WP(C).2732/22

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Company, Fathimapuram to Thrikkodithanam boosting pump house (KIIFB-TRAN-2-WRD 005-123) and Ext.P1 with interest @ 18% for the delay caused.”

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Adv.George Mathew, learned Counsel for the petitioner, submitted that the second respondent had committed gross illegality in conducting the tender and awarding the work without obtaining prior clearance/permission from the Public Works Department. It is contended that the laxity on the part of the second respondent has resulted in the petitioner suffering huge loss, which aspect is not properly dealt with in Exhibit P9.

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Adv.Georgie Johnny, learned Standing Counsel for the Kerala Water Authority submitted that Exhibit P9 order was rendered by the second respondent after taking into consideration all relevant aspects. The second respondent is prepared to effect payment of the amount due towards the cost of materials supplied by the petitioner, once the sixth respondent grants permission for uploading the bill.

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Adv.B.G.Harindranath, learned Standing Counsel for the sixth respondent, submitted that the Government has issued Operational Guidelines for implementation of KIIFB funded projects vide GO(MS)No.69/2018/Fin. dated 24.2.2018. As per Clause 6.7 of the Guidelines, technical sanction for a work should be issued only after ensuring availability of all

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WP(C).2732/22

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necessary statutory clearances. In the case at hand, the SPV failed to obtain road cutting permission from PWD. The PWD refused to grant permission since it had completed BMBC in the entire width of the proposed road and hence, road digging for laying of pipes could be permitted only after the Defect Liability Period (DLP) is over. As a result, laying of pipes was inordinately delayed and the supplied pipes had to be kept idle. As laying of pipes over newly renovated/constructed road was not advisable, the sixth respondent suggested pre-closure of the contract. Accordingly, Exhibit P9 order was passed terminating the contract and deciding to upload the bills in the KIIFB Portal for effecting the payment to the petitioner. It is submitted that the payment due to the contractor can be released only after the amount is quantified and the bills uploaded by the second respondent. It is pointed out that contractual disputes cannot be agitated in a petition under Article 226 and the question whether any amount is due to the contractor and if so, how much and whether refusal to pay the amount is justified are matters to be agitated and decided by the competent civil court. Finally it is contended that there is no privity of contract between the petitioner and the sixth respondent and as such, no mandamus can be issued against the sixth respondent.

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There is no dispute to the fact that the delay in

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WP(C).2732/22

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executing the work is not attributable to the petitioner. This precisely was the reason for terminating the work without risk and cost. The petitioner’s grievance regarding non-refund of the amount deposited towards performance guarantee and additional performance guarantee stands redressed in view of the interim direction dated 16.2.2022 to release the amounts remitted towards performance guarantee and additional performance within one week. As far as the claim towards materials supplied is concerned, Exhibit P9 specifically states that cost of the supplied materials will be paid after getting permission from the sixth respondent. The sixth respondent has also made it clear that the amount will be sanctioned once the second respondent uploads the bill after quantification. As regards the petitioner’s claim for compensation and interest, it is the settled legal position that such disputed questions of fact cannot be decided in a petition under Article 226.

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In the result, the writ petition is disposed of as under;

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(i) Respondents 3 to 5 are directed to upload the bills for the materials supplied by the petitioner in the official portal of the sixth respondent, after due verification and quantification, within one month of receipt of a copy of this judgment.

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(iii) Once the bills are uploaded, the sixth

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WP(C).2732/22

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respondent shall sanction and disburse the amount due under the bills to the second respondent within one month.

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(iv) The second respondent shall disburse the amounts payable to the petitioner within one month thereafter.

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(iii) The petitioner’s claim for compensation for the loss sustained and interest for the delayed payment are left open to be agitated before the competent court.

Sd/-

V.G.ARUN, JUDGE

vgs

WP(C).2732/22

APPENDIX OF WP(C) 2732/2022

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PETITIONER EXHIBITS

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Exhibit P1	TRUE COPY OF TENDER SANCTIONING ORDER NO.SE/PHC/TVLA/1361/2016 DATED 7.1.2020.
Exhibit P2	TRUE COPY OF RELEVANT PAGES OF AGREEMENT NO.13/SE/PHC/TVLA/2019-20 DATED 23.1.2020 ENTERED INTO BETWEEN PETITIONER AND 3RD RESPONDENT.
Exhibit P3	TRUE COPY OF REPRESENTATION DATED 15.6.2020 SUBMITTED BY PETITIONER BEFORE 3RD RESPONDENT.
Exhibit P4	TRUE COPY OF LETTER DATED 20.7.2020 SUBMITTED BY PETITIONER TO 3RD RESPONDENT.
Exhibit P5	TRUE COPY OF LETTER DATED 31.5.2021 SUBMITTED BY PETITIONER BEFORE 3RD RESPONDENT.
Exhibit P6	TRUE COPY OF COUNTER AFFIDAVIT DATED 2.7.2021 FILED BY 6TH RESPONDENT IN WP(C) NO.11869 OF 2021 (WITHOUT EXHIBITS).
Exhibit P7	TRUE COPY OF JUDGMENT DATED 13.9.2021 IN WP(C) NO.11869 OF 2021.
Exhibit P8	TRUE COPY OF REPRESENTATION DATED 29.9.2021 SUBMITTED BY PETITIONER TO 3RD RESPONDENT.
Exhibit P9	TRUE COPY OF ORDER NO.SE/PHC/TVLA/1361/2016 DATED 20.11.2021 ISSUED BY 3RD RESPONDENT.

Diya Constructions v. State of Kerala

Case brief

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Diya Constructions v. State of Kerala

Case brief

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