M/S. Raripur Rotocast-Ravi & ... vs Union Of India & Another
2009 Latest Caselaw 2890 Del

R-24
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

+      W.P.(C) 1354/1995

                                             Date of decision: 29th July, 2009

       M/S RARIPUR ROTOCAST-RAVI & CO.                    ..... Petitioner
                      Through Mr. Arvind K. Nigam, Sr. Advocate with Mr.
                      Raghu Tandon & Mr. Rohit Singh, Advocates.

                         versus

       UNION OF INDIA & ANR.                               ..... Respondents
                       Through Mr. Jagjit Singh, Advocate.

       CORAM:
       HON'BLE MR. JUSTICE SANJIV KHANNA

       1. Whether Reporters of local papers may be
       allowed to see the judgment?
       2. To be referred to the Reporter or not ?
       3. Whether the judgment should be reported
       in the Digest ?

                                  O R D E R

%

1. The petitioner M/s Raipur Rotocast-Ravi and Company is a joint venture

partnership firm, which was awarded contract for conversion of meter gauge

railway lines into broad gauge railway lines from Jodhpur to Jaisalmer and

loading of rails, sleeper points, cutting, drilling, pairing and dispatching to the

work site at Bhagat-ki-Kothi/Banar vide letter dated 18th May, 1994. The said

works were required to be completed within six months. It is the contention of

the petitioner that after initial formalities were completed, the petitioner W.P. (C) No. 1354/1995 Page 1 contacted the respondent officers and commenced the work on the site on 20th

May, 1994 by mobilization of resources, which involved bringing to the site

highly specialized equipment for unloading of rails, their cutting, drilling, pairing

and dispatching. The petitioner's claim that between 20th May, 1994 to 4th June,

1994 they had executed work to the tune of Rs.25,00,000/-.

2. On 4th June, 1994, the respondent verbally informed the petitioner to

suspend the work, which the petitioner did under protest. The petitioner wrote

letters dated 6th June, 1994, 20th June, 1994 and 23rd June, 1994 to the

respondents protesting against the closure/suspension of work.

3. The respondents by their letter dated 28th July, 1994 terminated the

contract of the petitioner under Clause 61 of the General Conditions of Contract

to invite fresh tenders for the same work.

4. The petitioner filed W.P. (C) No. 3215/1994 against the said termination.

While the writ petition was pending, fresh tenders were opened and the

petitioner, who had participated in the fresh tenders under protest, was awarded

the same contract. On the basis of statement made by the respondents, on 26th

August, 1994 the following order was passed in the said writ petition.

"CW 3215 & CM 6013/94 Mr. Birbal states that after the fresh tenders were opened and processed the petitioner was still found to be the lowest tenderer. He says, on instructions:

1. That the work will be awarded to the petitioner.

2. As far as the work already done by the petitioner under the earlier tender is concerned his bill will be processed

W.P. (C) No. 1354/1995 Page 2 expeditiously as per rule and payment made to him within six weeks from today.

3. Whatever further amount, if any, is due to the petitioner under the earlier contract that shall also be processed and paid within three months as a committee will have to be constituted for the purpose.

In this view of the matter, Mr. Jaitley does not press this petition. Dismissed as withdrawn.

Interim order made earlier shall stand vacated.

Copy of the order be given to counsel for both the parties."

5. In terms of the said order, the petitioner made a representation in form of

a claim petition dated 28th September, 1994. The said claim petition has been

rejected by Chief Engineer vide letter dated 15th December, 1994. The said

letter reads as under:

" Dear Sirs, The claims submitted by you under clause 61(2) of the General condition of contract in connection with above noted contract have been examined carefully. It has been decided that nothing is due to you. Payment as due for the work done has already been made to you."

6. The aforesaid order rejecting the claim petition is cryptic and a non-

speaking order. It does not deal with the contentions of the petitioner/claim

raised by the petitioner and why and for what reason the same is not acceptable.

It may be appropriate here to refer to Clause 61 of the General Conditions of

Contract, which applies in case of determination of contract by the Railways.

The said Clause reads as under:-

W.P. (C) No. 1354/1995                                                      Page 3
               "DETERMINATIION OF CONTRACT

              61. (1)     Right of Railway to determine contract.-
              The Railway shall be entitled to determine and

terminate the contract at any time should, in the Railway's opinion, the cessation of work becomes necessary owing to paucity of funds or from any other cause whatever, in which case the value of approved materials at site and of work done to date by the Contractor will be paid for in full at the rates specified in the contract. Notice in writing from the Railway of such determination and the reason therefor shall be conclusive evidence thereof.

(2) Payment on determination of contract.-

Should the contract be determined under sub-clause (1) of this clause and the Contractor claims payment for expenditure incurred by him in the expectation of completing the whole of the works, the Railway shall admit and consider such claims as are deemed reasonable and are supported by vouchers to the satisfaction of the Engineer. The contractor shall have no claim to any payment of compensation or otherwise how so ever on account of any profit or advantage which he might have derived from the execution of the work in full but which he did not derive in consequence of determination of the contract. The Railway's decision on the necessity and propriety of such expenditure shall be final and conclusive."

7. Under Clause 61(1), Railways have the right to determine and terminate a

contract owing to paucity of funds or for any other cause and thereupon the

contractor is entitled to payment of value of the approved material at site and

the work done. Under Clause 61(2), the contractor upon termination of contract

can make a claim for payment of expenditure incurred by him in expectation of

W.P. (C) No. 1354/1995 Page 4 the whole work and the Railways are required to consider the claims. Only such

claims, which are deemed to be reasonable and supported by vouchers to the

satisfaction of the Engineer, are required to be paid. No claim for compensation

or damages or loss of profit or advantage can be entertained. Clause 61(2)

further states that the decision of the Railways, i.e., the Engineer on the

necessity and propriety of expenditure is final and conclusive. Clause 61 falls

under the category of "excepted" matters and the decision of the Engineer and

the satisfaction of the Engineer under Clause 61(2) cannot be made subject

matter of arbitration in view of Clause 63 of the General Conditions of Contract.

In other words, as far as Railways are concerned, there is finality attached to the

said determination and satisfaction of the Engineer.

8. Keeping in view the nature of he said clause, the finality attached to it and

the language used in the said clause stipulating that the Railways shall admit and

consider claims, which are reasonable and supported by vouchers, a speaking

and a reasoned order is required and necessary. The petitioner along with the

claim petition had submitted vouchers and had tried to justify the claim. The

petitioner also relies upon parawise reply submitted to the Committee for

Settlement of Disputes. It is alleged that the reply contains admissions both on

admissibility as well as quantification in some cases and admissibility in other

cases, while some claims are disputed. Learned counsel for the respondents, on

the other hand, has drawn my attention to confidential report attached to the

W.P. (C) No. 1354/1995 Page 5 counter affidavit as per which a committee had recommended rejection of all

claims. The said confidential report/recommendation of the committee was not

circulated and informed to the petitioner. It is also the contention of the

petitioner that Clause 36 of the General Conditions of Contract and Clause 21(5)

of the Special Conditions of Contract and Instructions to Tender of contract were

not relied upon by the respondent Railways and the petitioner was never

confronted and asked to meet objections based upon the two clauses. It is

submitted that Clause 61(2) has to be read harmoniously along with Clause 36 of

the General Conditions of Contract and Clause 21(5) of the Special Tender

Conditions and Instructions to Tenders. It may be also noticed that the

confidential report of the committee attached with the counter affidavit is only a

recommendation. Ultimately, it is satisfaction of the Engineer, i.e., the Chief

Engineer in the present case, which matters as per Clause 61(2) of the General

Conditions of Contract. The order dated 15th December, 1994 passed by the

Chief Engineer does not mention any reason or ground for rejection of the claim

under Clause 61(2) of the General Conditions of Contract. The petitioner was

not confronted and asked to reply to the report of the Committee. It is not

possible for the Court to decipher what weighed with the Chief Engineer to reject

the claims. It is thus difficult to sustain the said order. Order dated 15th

December, 1994 is accordingly quashed and set aside and the matter is

remanded back to the Chief Engineer (Construction) for fresh decision.

W.P. (C) No. 1354/1995 Page 6

9. In view of the reorganization in the Railways, the matter will have to be

decided by the concerned Chief Engineer of North West Railway, Jodhpur as

stated by the counsel for the respondents. Fresh decision will be made

expeditiously and preferably within a period of five months from today.

10. The petitioner will appear before the Chief Engineer, North West Railway,

Jodhpur on 10th August, 2009 at 2 p.m., when further date will be fixed .

11. It is clarified that this Court has not expressed any opinion on the merits

of the claim made by the petitioner and whether the claims fall within Clause

61(2) of the General Conditions of Contract or whether the claims are barred in

view of Clause 36 of the General Conditions of Contract or Clause 21(5) of the

Special Tender Conditions or Instructions to Tenders. In case the petitioner is

aggrieved by the decision, they will be entitled to challenge the same in

accordance with law.

12. The writ petition is disposed of. In the facts and circumstances of the

case, there will be no order as to costs.

SANJIV KHANNA, J.

       JULY 29, 2009
       VKR




W.P. (C) No. 1354/1995                                                      Page 7