Quashed

M/S Bansal Infraprojects Pvt. Ltd., Bolangir v. State of Odisha

Orissa HC17 Aug 2022WP(C)/20632/2022

Case brief

AI extract

What is this about?

This High Court quashed an impugned authority order rejecting the petitioner's claim for price escalation on construction work. The order was set aside due to a lack of hearing and the authority's failure to consider a relevant prior judgment of the same court. The matter was remitted for reconsideration.

What did the court decide?

The writ petition is disposed of by quashing the impugned orders dated 22.09.2021 and 28.09.2021. The matter is remitted to Opposite Party No.2 to reconsider the claim with an opportunity of hearing w

M/S Bansal Infraprojects Pvt. Ltd., Bolangir… — Contract and Commercial Disputes | Orissa HC (2022)

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IN THE HIGH COURT OF ORISSA AT CUTTACK

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W.P (C) No. 20632 of 2022

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M/s. Bansal Infraprojects Pvt. Ltd., Bolangir

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….. Petitioner

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Mr. P.C. Nayak, Advocate

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Vs.

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….. State of Odisha & Ors. Opposite Parties Mr. P.P. Mohanty, AGA

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CORAM:

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DR. JUSTICE B.R. SARANGI MR. JUSTICE G. SATAPATHY

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ORDER 17.08.2022

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Order No. 1

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This matter is taken up through hybrid mode.

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Heard Mr. P.C. Nayak, learned counsel appearing for the petitioner and Mr. P.P. Mohanty, learned Additional Government Advocate for the State opposite parties.

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The petitioner has filed this writ petition seeking to quash the order dated 22.09.2021 under Annexure-1 and the office order dated 28.09.2021 under Annexure-2 to the extent not approving the price escalation amount for the extended period in spite of recommendation under Annexure-4 by opposite party no.5 and further to issue direction to the opposite parties to release the balance price escalation amount in terms of agreement and in terms of the judgment of this court in Raghunath Sahu v. State of

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Page 1 of 6

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Odisha , AIR 2022 Orissa 37 for the work “construction of 2-lane carriageway of Sohela-Nuapada road (SH-3) from 60/000 km to 70/000 km for 4-lane carriageway under Biju Expressway” within a stipulated period as per the recommendation of opposite party no.5 under Annexure-4.

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Mr. P.C. Nayak, learned counsel appearing for the petitioner contended that rejection of claim of the petitioner by the authority vide order dated 22.09.2021 under Annexure-1 cannot sustain in the eye of law, in view of the fact that no opportunity of hearing was given to the petitioner. Had the opportunity been given, the petitioner would have brought to the notice of the authority with regard to the judgment rendered by this Court in Raghunath Sahu (supra). Thereby, gross illegality and irregularity has been committed by the authority in passing the order impugned, which is liable to be quashed.

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Mr. P.P. Mohanty, learned Addl. Government Advocate appearing for the State-Opposite Parties contended that since this question has already been decided by this Court in Raghunath Sahu (supra), while considering the case of the Petitioner, the Authority could have considered the same and passed appropriate order in accordance with law. As the said benefit has not been given to the Petitioner, the Order so passed by the Authority cannot have any justification.

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Though the matter was listed under the heading ‘fresh admission’, but with the consent of learned counsel for the parties,

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Page 2 of 6

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this writ petition is being disposed of at the stage of admission. 7. Having heard learned counsel for the parties and after going through the records, it appears that similar matter had come up for consideration before this court in Raghunath Sahu (supra) and this Court in paragraphs-20, 21, 22 and 25 held as follows:

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“20. Therefore, taking into consideration the meaning attached to the word ‘escalation’, as per terms and conditions of the agreement, the petitioner is entitled to get escalation cost but not the compensation, for which the blockage of the escalation benefit has been made. Needless to say, an ‘undertaking’ is nothing but a standard form, which every contractor has to sign and submit to the effect that he shall not claim for compensation for delay in work and extend the period of work. This is submitted whenever extension of time is granted for completion of work or else extension will not be granted. This document is signed, without adjudicating the merits of the claim of the petitioner, and is done under duress or else the contract would be liable to be terminated with penalty, even though the petitioner may not be responsible for delay in execution of work.

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21. The Government of Odisha in Works Department, vide letter dated 28.06.1996 under Annexure-12, introduced the provision of escalation clause in P.W.D. Contract form for payment of escalation charges to the contractor during the extended period, relying upon the extract of the proceedings of the Codes Revision Committee Meeting held on 25.11.1995 at 11.30 A.M. in the Office Chamber of Engineer-in-Chief-cumSecretary to Government, Works Department in Item -1, which is extracted hereunder:-

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“Item -1: Payment of escalation charges to Contractors.

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xxx xxx xxx

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(ii) While granting extension of time to the Contractors “no claim certificate” is obtained from them in the prescribed form of the Department. The significance of such certificate is that the Contractor surrenders his claim for “compensation on any account”. But it is seen in many cases that contractors are putting up their claims for escalation in spite of no claim certificate given

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by them earlier. It is to be decided if such claim of the contractors are consistent with the non claim certificate. At this point, Secretary, Works Department observed that compensation and escalation are not one and the same. The object of payment of compensation is to make good the loss suffered by the contractor on account of negligence, default or fraud committed by the other party and does not cover escalation. Hence “no claim certificate” will not be a bar to te claim of escalation. The members endorsed the above views of the Engineer-in-Chief-cum-Secretary.

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xxx xxx xxx”

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In view of the above mentioned provision, even though the petitioner executed “no claim certificate”, but that will not be a bar for him to claim escalation cost.

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22. In the present case, the bill dated 27.08.2002 was raised towards escalation cost to the tune of Rs.16,06,147/-, but the authority considered the same, after the order was passed by this Court on 19.02.2008 in W.P.(C) No.15922 of 2007, and sanctioned a sum of Rs.11,85,207/- towards escalation cost, by deducting Rs.4,20,940/- without any rhyme or reason, for which the said amount of Rs.11,85,207/- was received by the petitioner with protest. Thereby, the opposite parties have agreed that the petitioner is entitled to escalation cost during extended period of work and as such, extension of work was not due to fault of the petitioner. As a matter of fact, the escalation cost was granted in part to the petitioner, relying upon no claim undertaking submitted by the petitioner, which is absolutely a myth. The opposite parties, having accepted the entitlement of escalation cost by the petitioner as per Clause-32 of the agreement, have taken into consideration the “value of work done in rupees during the quarter under consideration”. The said value of the work in rupees of the relevant quarter has already been decided and sanctioned by opposite party no.1 vide sanction order dated 18.08.2003. As per certificate dated 18.08.2003, the Junior Engineer F4 Engineering, Sub-Division, Bhadrak and Sub-Divisional Officer, Balasore, F4 Engineering Sub-Division, Bhadrak have certified the value in rupees of

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quarter-wise work, which states as follows:

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Serial No.	Running Bill	Date of measurement by oppositeparty	Related quarter	Value of work in rupees
1	1st	18.2.2000	1^stquarter of 2000	Rs.35,74,433

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2	2^nd	12.5.2000	2^ndquarter of 2000	Rs.46,89,274
3	3^rdand 4th	23.6.2000 & 11.8.2000	3^rdquarter of 2000	Rs.18,15,326
4	5^thand 6^th	1.3.2001	1^stquarter of 2001	Rs.15,00,596

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The bill dated 27.08.2002 also reflects the same value even though it has been submitted earlier. As it appears, instead of taking note of own certified document dated 18.08.2003, the opposite parties, while dealing with the escalation bill of the petitioner dated 22.11.2010, have reduced the value of the work arbitrarily, so far it relates to the value of 1^st quarter of 2000. Instead of reflecting the value as Rs.35,74,433/-, it has been reflected as Rs.1,21,600/-, which has resulted in arriving at a different amount as escalation cost and that is how instead of Rs.16,06,147/- the escalation cost has been calculated as Rs.11,85,207/-.

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25. Considering the facts and law, as discussed above, this Court is of the considered view that the opposite parties are liable to pay the blockage amount of Rs.4,20,940/- towards escalation cost as per the bill submitted on 27.08.2002 along with interest @ 12% per annum w.e.f. 22.08.2012 till the actual payment is made. As such, the payment shall be made within a period of three months from the date of communication/production of the judgment, failing which it will carry further interest @ 18% per annum w.e.f. from 22.08.2012 till the actual payment is made.”

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In view of the aforesaid principles, this Court is of the considered view that Opposite Party No.2 has lost sight of the fact that this question has already been decided by this Court. More so, while passing the Order impugned, no opportunity of being heard was given to the Petitioner. Had opportunity been given to the Petitioner, he would have brought to the notice of the Authority with regard to the judgment of this Court in Raghunath Sahu (supra).

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Page 5 of 6

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In the above view of the matter, the Order impugned dated 22.09.2021 in Annexure-1 cannot sustain in the eye of law and the same is liable to be quashed and is hereby quashed. The matter is remitted back to Opposite Party No.2 to reconsider the same in the light of the judgment of this Court in Raghunath Sahu (supra) and pass appropriate order by affording opportunity of hearing to the Petitioner in accordance with law, as expeditiously as possible preferably within a period of two months.

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With the above observation and direction, the Writ Petition is disposed of.

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Issue urgent certified copy as per Rules.

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Alok /Subha

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(DR. B.R. SARANGI)
JUDGE
(G. SATAPATHY)
JUDGE

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M/S Bansal Infraprojects Pvt. Ltd., Bolangir v. State of Odisha

Case brief

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M/S Bansal Infraprojects Pvt. Ltd., Bolangir v. State of Odisha

Case brief

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