M/S Bhullar Construction (A ... vs State Of Chhattisgarh
2021 Latest Caselaw 3218 Chatt

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                                                                           AFR
          HIGH COURT OF CHHATTISGARH, BILASPUR
                        Reserved for orders on :16/09/2021
                           Order passed on : 18/11/2021
                              CR No. 68 of 2018
    M/s Bhullar Construction (A Registered Partnership Firm) Having Its
     Office At Bhullar Complex, Darri Road, Korba, Chhattisgarh Through
     Their Authorised Partner Mr. Jaswinder Singh Bhullar S/o Shri Harbant
     Singh Bhullar, Aged About 49 Years, R/o Darri Road Korba, Po Korba,
     Police Station Kotwali Korba, Tahsil Korba, District Korba, Chhattisgarh,
     Pin - 495677.
                                                                 ---- Applicant
                                   Versus
   1. State of Chhattisgarh Through Its Secretary, Public Works Department,
      Mantralaya (New Secretariat), Mahanadi Dwar, Naya Raipur, Raipur,
      P.O. And P.S. Mana Raipur, Tahsil and District Raipur, Chhattisgarh, Pin
      - 492015.
   2. The Superintending Engineer, Raipur Circle, Public Works Department,
      Baloda Bazar, P.O. And Tahsil Baloda Bazar, District Raipur (Now
      District Baloda Bazar), Chhattisgarh. Pin - 493332.
   3. The Executive Engineer, Public Works Department, Baloda Bazar, P.O.
      And Tahsil Baloda Bazar, District Raipur (Now District Baloda Bazar),
      Chhattisgarh. Pin - 493332.
                                                             ---- Respondents

For Applicant - Mr. Rajkamal Singh with Mr. Suryapratap Yuddhveer Singh, Advocates.

For Respondent/State - Mr. Sameer Oraon, Govt. Advocate.

Hon'ble Shri Justice Rajendra Chandra Singh Samant CAV Order 18-11-2021

1. This civil revision is brought being aggrieved by the award dated

14.3.2018 passed in Reference Case No.12/2008 by the Chhattisgarh

Madhyastham Adhikaran, Raipur, Chhattisgarh.

2. Brief facts of the case are these, that the applicant firm is a registered

civil contractor firm. Work order was issued in favour of applicant for

construction work of "Bhatapara-Lawan-Mahanadi-Road of length 22

km". Cost of work was Rs.575.13 lacs. Applicant deposited earnest

money of Rs.2,88,000/-. After execution of formal agreement, the work

was scheduled to start on 6.9.2005. Time allowed for completion of work

was 18 months. Applicant also made security deposit of Rs.56,99,584/-.

As per terms of agreement, progress of work could not be taken up at

sufficient pace. Respondent No.3 issued show-cause notice to applicant

on 5.4.2006 (just after six months from the date of issuance of work

order). Thereafter, applicant was blacklisted by order dated 13.4.2006

by the respondents and contract was rescinded vide letter dated

22.4.2006. Reason assigned by respondents for blacklisting the

applicant and rescinding contract is that the work done by applicant was

not as per specification and quality of work was also very poor.

Applicant has written letter dated 26.12.2006 to the Minister of Public

Works Department alleging that the rescission of contract and the

blacklisting of the applicant by the department is illegal. The Ministry

referred the matter to the Technical Advisor of Public Works Department.

3. Applicant then preferred Writ Petition No.1469 of 2007 before this Court

and this Court vide order dated 13.03.2007 allowed the petition and

declared that act of rescission of contract and blacklisting of the

applicant by the respondents was illegal. The Chief Engineer vide order

dated 17.02.2007 informed the applicant that his name has been

withdrawn from blacklist and he was advised to make an application

under clause 29 of the agreement for revival of agreement. The

applicant moved an application on 22.02.2007 before the Chief

Engineer requesting for issuance of fresh work order. Request of

applicant was telephonically approved and on that basis the applicant

resumed construction work. Respondent No.3 again issued notice on

17.12.2007 to show cause as to why rescission of contract should not

be ordered. Subsequent to that the petitioner was granted extension

vide order dated 03.01.2008. The contract was again terminated by the

respondents on 1.3.2008. The applicant placed its claim before

respondent No.2 on 14.04.2008. Subsequent to that Reference Petition

was filed before the Chhattisgarh State Arbitration Tribunal on

05.12.2008, making a total claim of Rs.2,47,67,152/- against the

respondents. The learned Tribunal decided the claim by the impugned

award holding that the applicant is not entitled for any compensation,

damages or costs.

4. It is submitted by the counsel for applicant, that duration for completion

of work fixed under the work order was 18 months. Conduct of the

Officers of the respondent had been totally non-cooperative throughout,

who now and then raised false and frivolous issues interfering with

process of construction work. The work was started by the applicant in

time even then contract was rescinded on 24.4.2006 and the applicant

was blacklisted by order dated 13.4.2006. The applicant challenged

these orders in Writ Petition No.1469 of 2007 in which by order dated

13.3.2007, it was held that rescission of contract and blacklisting of

applicant was illegal. It is submitted that prior to this order the Chief

Engineer of the respondent informed the applicant by order dated

17.02.2007 to move application for revival of contract. It is further

submitted that there is no such clause present in the agreement by

which rescinded contract can be revived. After the technical instruction

from the officer of the respondent, applicant resumed construction work,

but again attitude of respondents was non-cooperative regarding which

the applicant filed complaint against the SDO and Sub-Engineer of the

respondents. Applicant firm was pressurized to apply for extension of

time for completion of contract and officer of the respondents

deliberately did not inspect and report the construction work done by the

applicant firm. Finally the contract of the applicant was terminated on

1.3.2008, which was totally illegal and contrary to terms of contract. It is

submitted that once High Court held in Writ Petition No.1469 of 2007

that rescission of contract and blacklisting of the applicant was illegal,

there was no requirement for the applicant to apply for revival of

contract. The learned Tribunal has made a mention of clause-3(v) of the

agreement for dismissing the claim made by the applicant. Clause 3(v)

of the agreement, as mentioned in the impugned order, does not exist in

contract agreement, therefore, it is submitted that the applicant is

entitled for the claim. The learned Tribunal has erroneously passed the

impugned order, which is illegal, arbitrary and unsustainable, hence, the

impugned order be set aside and relief, as prayed, be granted to the

applicant.

5. Learned State counsel submits on behalf of respondents, that the work

order was issued on 6.9.2005 and expected date of completion of work

was 5.3.2006. Performance of work by the applicant firm was not only at

slow pace but also of sub-standard quality. Inspection report dated

4.1.2006 clearly points out lapses on the part of applicant firm regarding

which applicant was given reminders by the department from time to

time, but applicant firm did not make any effort to remove lapses present

in construction work. It is submitted that in Clause-2 of the general

conditions of contract there is a clear provision of consequences of

delay in completion of contract work. Respondents under their authority

had passed orders of rescission of contract and finally termination of

contract and also for making recovery from the applicant firm. Clause-3

of the general conditions of contract empowers the respondents for

action to be taken in case of work left incomplete, abandoned and

delayed which has been lawfully exercised by the respondents. The

construction work was already delayed by the applicant firm because of

which by letter dated 17.4.2007 the applicant was advised to file

application for extension of time but applicant did not file any such

application. It is submitted that under Section 55 of the Contract Act

there is provision of consequences in case of failure to perform under a

contract. The work order granted to the applicant was never completed

and respondent department had to get the said work done through other

agency, therefore, finding of the learned Tribunal that applicant was not

entitled for any kind of relief of compensation is correct finding which

needs no interference. It is further submitted that in this particular case

time was essence of contract and applicant firm failed to complete the

work within the time fixed. Hence, impugned order is sustainable and

civil revision filed by the applicant is liable to be dismissed.

6. Learned counsel for the applicant submits in rebuttal, that in this

particular case, time was not essence of contract looking to the events

that have occurred in between. It is submitted that the petitioner has

brought evidence to prove correctness of his claims. Reliance has been

placed on the judgment of Supreme Court in case of Vincent

Panikurlangara Vs. Union of India & Ors., reported in (1987) 2 SCC 165,

Macadum Makers Vs. State of Chhattisgarh & Ors., reported in 2012

SCC OnLine Chh 363, State of Rajasthan Vs. Nav Bharat Construction

Co., reported in (2006) 1 SCC 86, Manalal Prabhudayal Vs. Oriental

Insurance Company Limited, reported in (2009) 17 SCC 296, South

East Asia Marine Engineering and Construction Limited Vs. Oil India

Limited with Oil India Limited Vs. South East Asia Marine Engineering

and Construction Limited, reported in (2020) 5 SCC 164, J.G. Engineers

Private Limited Vs. Union of India and another, reported in (2011) 5

SCC 758 & Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd.,

reported in (2003) 5 SCC 705.

7. I have heard both the parties and perused the documents on record.

Also perused the record of the C.G. Arbitration Tribunal.

8. Question for consideration framed by learned Tribunal in Paragraph

No.7 of the impugned order is whether on account of illegal and

unwanted acts of the respondents, the applicant failed to complete the

work under the contract in time? In Paragraph No.13 of the impugned

order the learned Tribunal has held that applicant commenced the work

and upto 80% work was completed before rescission of contract on

13.4.2006. It is also observed that the applicant firm had received 80%

of cost of the work from running bills which goes to show that there was

no substantial hindrance in execution of work and therefore about 80%

of the total work was completed within seven months. Later on, the

applicant firm did not comply with direction of the respondent because of

which the contract was rescinded and applicant firm was blacklisted. It is

also observed in paragraph-14 that despite direction of the respondents,

the applicant firm neither filed application for revival of contract nor filed

application for extension of time for completion of work. Reference of

clause-3 (v) of agreement has been made which appears to be a clerical

mistake, infact it is clause-3(c) of agreement which dis-entitles a

contractor to claim for any cost of work done in case the work contract is

terminated.

9. Before the learned Arbitration Tribunal, both the parties have led

evidence and exhibited documents in support of their respective cases

and the same have been appreciated by the learned Tribunal before

passing the impugned order. The applicant was given letter of

acceptance dated 29.8.2005 (Ex.P/4). Subsequent to which, after

execution of agreement, the applicant started construction work.

Applicant firm made complaint vide letter dated 10.3.2006 (Ex.P/6) to

the Executive Engineer that the SDO and Sub-Engineer are not

cooperating as they are not taking measurement of the collected

material. The SDO has verbally directed to stop work on 10.3.2006.

There is no reply to this letter, however, on 5.4.2006 the Executive

Engineer issued a show-cause notice to the applicant mentioning about

slow pace of work and delay and called upon applicant to show-cause

as to why proceedings in accordance with clause-3 of agreement be not

initiated against the applicant. Vide order dated 5.4.2006 (Ex.P/7) the

Chief Engineer mentioning that construction was delayed by the

applicant firm; applicant did not submit any reply to show-cause notice

thereafter vide order dated 13.4.2006(Ex.P/8) Chief Engineer (PWD),

has ordered for blacklisting of applicant firm. Subsequent to that the

applicant was informed by letter dated 22.4.2006 Ex.P/9 regarding the

rescission of contract.

10. The applicant then challenged the order dated 13.4.2006 by which the

applicant firm was blacklisted in WPC No.1469/2007. A Division Bench

of this Court vide order dated 13.3.2007 held that the orders of

blacklisting applicant firm was contrary to the terms and conditions of

the contract and accordingly order dated 13.4.2006 was quashed. It is

relevant to mention here that rescission of contract was not ordered in

the order dated 13.4.2006 (Ex.P/8), decision of rescission of contract

was taken separately and applicant firm was intimated about the same

by order dated 22.4.06(Ex.P/9), therefore, decision of the respondents

rescinding the contract was not under challenge in WPC No.1469/2007.

The applicant firm made correspondence with the respondent vide

letters dated 1.2.2007 (Ex.P/12) and dated 22.2.2007 requesting that

intermediate period be regarded as suspended period. The applicant

refused to make any prayer for revival of the contract on the ground that

it is the duty of the department to revive the contract. Although there is

no specific order for revival of contract but it appears that applicant firm

was allowed to resume contract work, hence, it can be considered as

deemed revival of contract and this is confirmed by letter dated 3.1.2008

issued by the Superintending Engineer to the applicant firm mentioning

the slow progress of work. Ex.P/16 is the application dated 12.6.2008

of the applicant firm to the Chief Engineer PWD, Raipur praying for

reference under clause-29 of the agreement for settlement of claims. A

negative response was given by the Chief Engineer PWD vide letter

dated 17.6.2008 (Ex.P/17). Subsequent to which Reference Petition

was filed before the learned Tribunal.

11. The work order was issued to the applicant by a communication dated

6.9.2005 ExD/5. The Executive Engineer issued memo dated

16.12.2005 ExD/6 that after lapse of 3 months from the date of work

order the applicant was expected to complete 17% of the work, but so

far only 0.33% work was completed. Another memo dated 16.1.2006

ExD/7 was issued to the applicant informing that it was found in the

inspection that sufficient machineries are not present on the site of

construction regarding which the applicant was instructed to arrange for

new machineries and start construction work. Another memo dated

18.1.2006 ExD/8 was issued to the applicant informing that proper

compaction work was not being done, regarding which instruction was

given for compliance. It is subsequent to that the applicant was given

show-cause notice Ex.D/9 dated 5.4.2006 as to why the contract should

not be rescinded and then the contract was rescinded by order dated

22.4.2006. The order of blacklisting of the applicant firm was separately

passed.

12. Vide Ex.D/12 the memo dated 17.2.2017 the applicant was asked to

move an application for revival of contract regarding which it has been

held earlier that revival of the contract can be deemed. Ex.D/14 is the

letter 20.3.2007 issued by the Executive Engineer to the Chief Engineer

informing that construction work has been resumed by applicant firm

and the same is in progress. It further confirms deemed revival of the

contract.

13. Considered on the submissions. After taking into consideration the

evidence present in the record of learned Tribunal, the only question for

consideration, which appears to be present in this case, is whether the

respondents had entitlement to proceed against the applicant as per

condition contained in clause-3 of the agreement.

14. Clause-3 of agreement reads as under:-

"In any case in which under any clause of this contract the contractor shall have rendered himself liable to pay compensation amounting to the whole of his security deposit(whether paid in one sum or deducted by installments) or committed a breach of any of the rules contained in clause-24 or in the case of abandonment of the work, except due to permanent disability or death of the contractor or any other cause, the Divisional Officer on behalf of the Governor of Chhattisgarh, shall give a notice before 15 days for work costing up to -Rs.10.00 lacs and before 30 days for works costing above 10.00 lacs, and in the event of the contractor failing to comply with the direction contained in the said notice, shall have power to adopt any of the following courses, as he may deem best in the interests of the Government.

(a) To rescind the contract(of which rescission notice in writing to the contractor under the hand of the Divisional Officer shall be conclusive evidence) and in which case the security deposit of the contractor shall stand forfeited and be absolutely at the disposal of Government.

(b)To employ labor paid by the Works Department and to supply material to carry out the work or any part of the work, debiting the contractor with the cost of the labor and the price of materials(of the amount of which cost and price certificate of the Divisional Officer shell be final and conclusive against the contractor) and crediting him with the value of the work done in all respects in the same manner and the same rates as if it had been carried out by the contractor under the terms of his contract or the cost of the labour and the price of the materials as certified by the Divisional

Officer, whichever is less. The certificate of the Divisional Officer as to the value of the work done shall be final and conclusive against the contractor.

(c) To measure up the work of the contractor and to take such part thereof as shall be unexecuted out of the hands, and to give it to another contractor to complete in which case any expenses which may be incurred in excess of the sum which would have been paid to the original contractor, if the whole work had been executed by his (of the amount of which excess certificate in writing of the Divisional Officer shall be final and conclusive) shall be born and paid by the original contractor and may be deducted from any money due to him by Government under the contract or otherwise or from his security deposit or the proceeds of sale thereof or a sufficient part thereof.

In the event of any of the above courses being adopted by the Divisional Officer the Contractor shall have no claim to compensation for loss sustained by him by reason of his having purchased or procured any materials or entered into any agreements or made any advances on account of, or with a view to the execution of the work or the performance of the contract. And in case the contract shall be rescinded under the provision aforesaid the contractor shall not be entitled to recover or be paid any sum for any work thereto for actually performed under the contract unless and until the Sub-Divisional/Divisional officer will have certified in writing the performance of such work and the value payable in respect thereof, and he shall only entitled to be paid the value so certified.

Whenever action is taken under clause 3a the contractors bill shall be finalised up within three months from the date of rescission both in the case of building works and road and bridge work."

15. As per observations made herein-above, allegation against the applicant

firm that was made by the respondents was with respect to the delay in

completion of work and sub-standard construction. In opening

paragraph of clause-3, the grounds for action against contractor

mentioned are these, that in case the contractor has committed any

breach of any rules contained in clause-24 of the agreement action shall

be taken under clause-3. Clause-24 of the agreement provides for

payment of fair wages to the labourers employed by the contractor and

there is nothing else apart from that. Other ground for action against the

contractor is abandonment of work. There is no such instance present in

the case in hand that applicant firm at any point of time abandoned the

work. During continuation of work the applicant was blacklisted by the

respondent vide order dated 13.4.2006. Subsequent to which the

contract was rescinded by order dated 22.4.2006. Because of rescission

of contract on 22.4.2006, the applicant could not proceed with the work,

for which fault cannot be laid on his part. As per evidence, oral and

documentary, there is proof that the applicant resumed work despite

there being order regarding revival of the contract but the facts show

that there was deemed revival of the contract. The letter dated

16.2.2007, Chief Engineer to the Superintending Engineer directing that

the contractor should be allowed to resume the work and that he should

be granted extension of time for the same. It is subsequent to that the

work was resumed and the applicant was again served with notice of

rescission on 17.12.2007 vide Ex.D/16 on the ground that the work has

not been completed within stipulated/extended date of completion, on

which no reply was submitted by the applicant and the order of

termination of agreement was passed on 1.3.2008.

16. Notice for rescission was given to the applicant after about 10 months

from the date the applicant firm was asked to resume the work. Despite

having time about 10 months after resumption, the applicant firm could

not complete construction work, which was remaining to be completed

after the work was stopped on 22.4.2006. The respondents were willing

to extend duration for the targeted completion of work even then the

applicant did not file any application for extension of time. Show-cause

notice was issued to the applicant on 17.12.2007 but no satisfactory

reply was submitted by applicant firm, explaining reasons for delay. It is

for technical persons to appreciate and consider causes of delay and

draw conclusion, this Court cannot raise any question as to whether

dissatisfaction expressed by the Executive Engineer and the order of

termination of contract dated 1.3.2008 suffer from any infirmity. The

logic is also applicable that after issuance of work order on 6.9.2005

according applicant contention the applicant had completed 80% of

work before rescission of contract on 13.4.2006, which has been

disputed by respondent. The applicant had time of 10 months to

complete remaining work, but the applicant utterly failed to complete the

same. Therefore, under these circumstances, clearly there were

grounds available to the respondents to proceed under clause-3 of the

contract and accordingly the respondents have proceeded against the

applicant. Hence, the learned Tribunal has not committed any error in

holding that the applicant has no entitlement for making any claim for

any compensation, damages or cost. There is no illegality, impropriety,

incorrectness in the impugned order which warrants interference of this

Court in exercise of revisional jurisdiction and this revision being sans

merit is liable to be dismissed.

17. The revision petition is accordingly dismissed.

Sd/-

                                              (Rajendra Chandra Singh Samant)
Nisha                                                  Judge