Allowed

M/S C.P.Mohanty v. State of Odisha

Orissa HC5 Sept 2022WP(C)/37363/2021

Case brief

AI extract

What is this about?

The High Court quashed an order imposing a penalty on a contractor for delayed work completion. The court held that applying a code provision regarding termination penalties was unjustified since the contract was extended rather than terminated.

What did the court decide?

Annexure-23 is quashed to the extent of levy of penalty @ 0.25%; Opposite Parties directed to release withheld bill value within two months.

M/S C.P.Mohanty Vs State of Odisha — Service and Employment | Orissa HC (2022)

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IN THE HIGH COURT OF ORISSA AT CUTTACK

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W.P.(C) No. 37363 of 2021

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M/s C.P. Mohanty Petitioner Mr. S.K. Achar y a, Advocate

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-versus-

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State of Odisha and others

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…. Opposite Parties Mr. P.P. M o hanty, AGA

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

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ORDER 05.09.2022

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Order No.

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1. This mat t er is taken up through hybrid mode.

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The Peti t ioner challenges the order dated 29^th J u ly, 2021 of Opposite P a rty No.1 in respect of imposition o f penalty @ 0.25% on the value of the work executed beyond t h e stipulated period.

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The Petitioner is a Super-class Contractor and executed an agreement f or the work “ Construction of H.L. bridge over Padamala N a llah (Pada Nallah) at 2.70 Km on P W D road to Baneswarna s i (PMGSY) road in the district of C u ttack under PMGSY Mi s sing Link ” with stipulation to complete the same by 6^th January, 2018. The work could not be completed within the stipulated p e riod and continued up to 28^th January, 2021. Such completion o f work beyond the stipulated date was p ermitted by the Opposite Parties subsequently in order dated 29^t^h July, 2021 under Annexure-1. The Petitioner’s

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grievance is that in the said order while granting sanction for extension of t ime, the condition to levy penalty @ 0.25% has been imposed illegally and arbitrarily without conside r ing genuine causes of hin d rances.

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Learned counsel appearing for the Petitioner s ubmits that before levy i ng such penalty, no notice was s e nt nor any opportunity of being heard was granted to the P e titioner. He further submits that due to hindrances relating to issu e s like as the bridge on ri v er Kaliganga at channel 1.80 k.m. is n o t completed and the roa d is not accessable beyond this chain a ge and etc., Petitioner co u ld not complete the work within the sti p ulated time. It is also su b mitted that para 3.5.5 (V) of the OP W D Code as referred in t h e impugned order does not prescribe i m position of penalty whil e granting extension of time, but it speaks otherwise.

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Mr. P.P. M ohanty, learned Additional Governm e nt Advocate submits that since the Petitioner could not compl e te the work within the st i pulated time, as per recommendation of t he technical committee, t h e penalty was levied in terms of the p rovision in para 3.5.5 ( V ) of the OPWD Code, Vol.I.

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Clause ( V ) of para 3.5.5 of the OPWD Code, V o l.I reads as under:

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“Pe r centage Contract will be in addition o f item rate , lump sum contractors etc. In such contr a cts the sch e dule of quantities shall mention estima t ed rate of such item and amount thereof. The Co n tractor has to mention percentage excess or less o ver the esti m ated cost (in figures as well as words ) in the pre s cribed format appended to the tender do c ument. The Contractors participated in the tender f o r more

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tha n one work may offer conditional rebate. Rebate offe r submitted in separate sealed envelope s hall be ope n ed, declared and recorded first. The rebate so offe r ed, shall be considered after opening of all pac k ages called in the same tender noti c e. The Co n tractors who wish to tender for two o r more wor k shall submit separate tender for eac h . Each ten d er shall have the name and number of the wor k s to which they refer, written on the envelope.

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The adopted format for percentage rate is s ame as that of the form adopted for item rate ten d ers but the word “item rate” shall be replac e d by “pe r centage rate” and the contract form m ay be na m ed as P-1. In this for time is the essen c e. The Co n tractor is required to maintain a certain rate of pro g ress specified in the contract. The cont r act can also be terminated with penalty when the p rogress of w ork is not as per the conditions of contr a ct. The qua n tity mentioned can be increased or red u ced to the extent of 10% for individual items subj e ct to a ma x imum of 5% over the estimated cost. If it exc e eds the limit stated above prior appr o val of co m petent authority is mandatory before making any payment. The period of completion is fi x ed and can n ot be altered except in case of exc e ptional circ u mstances with due approval of next higher aut h ority.

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In case of percentage Rate tenders, only percentage quo t ed shall be considered. Percentage qu o ted by the Contractor shall be accurately filled in figures and words, so that there is no discrepancy. If any disc r epancy is found in the percentage q u oted in wor d s and figures, then the percentage qu o ted by the C ontractor in words shall be taken as co r rect. If any discrepancy is found in the percentage quoted in p ercentage excess/less and total rate qu o ted by the Contractor then percentage will be t a ken as correct. The percentage quoted in the tender wit h out mentioning excess or less a n d not sup p orted with the corresponding amount w ill be

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trea t ed as excess. The Contractor wil l write per c entage excess or less upto one decim a l point onl y . If he writes the percentage excess or l e ss upto two or more decimal point, the first decim a l point shall only be considered without roundi n g off. Wh e re the Contractor has omitted to quote t h e rates eith e r in figures and words the officer ope n ing the ten d er should record the omission.

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Bill s for percentage rate tenders shall be pre p ared at the e stimated rates for individual items only and the per c entage excess or less shall be ad d ed or sub s tracted from the gross amount of the bill.

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Thi s may not be applicable to the works fu n ded by Wo r ld Bank and other external agencies, i n which cas e their guidelines shall be followed.”

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(emphasis su p plied)

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As per th e submission of the Petitioner, impositi o n of penalty @ 0.25% is grossly illegal and arbitrary since the contract has not been terminated, b ut extension of time has been granted . Further as per Annexure-1, extension of time was granted wit h out any price escalation a n d without any monetary compensa t ion. We find substantial f o rce in the contention of the Petitioner. B ecause, it is not the case where the contract has been terminated for non- completion of the work w ithin the stipulated time. Clause (V) o f para 3.5.5 of the OPWD Code Vol.I prescribes that the c o ntract can be terminated w ith penalty when the progress of work i s not as per the conditions o f contract. So when the contract h as not been terminated, rather an extension of time has be e n granted as permissible i n the terms of contract (Clause-4), the l evy of penalty @ 0.25% b y resorting to para 3.5.5 (V) of the OPWD Code, appears unj u stified in the circumstances of the cas e . Accordingly,

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the same is l i able to be quashed.

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The writ p etition is allowed and Annexure-23 is q u ashed to the extent of le v y of penalty @ 0.25%. The Opposit e Parties are further direc t ed to release the withheld bill value of t h e Petitioner for the work , if any, in favour of the Petitioner withi n a period of two months from the date of receipt of a certified copy of this order.

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Urgent c e rtified copy of this order be grante d on proper application.

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Ashok/Kishore

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( DR. B.R. SA R ANGI )
JUDG E
( G. SATA P ATHY)
JUDGE

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M/S C.P.Mohanty v. State of Odisha

Case brief

What is this about?

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M/S C.P.Mohanty v. State of Odisha

Case brief

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What did the court decide?

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