Phunu Chetia vs The Union Of India And 5 Ors
2021 Latest Caselaw 2576 Gua

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                THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                      Case No. : WP(C)/2083/2015

             PHUNU CHETIA
             S/O LT. KAMALA KANTA CHETIA P.O. MARGHERITA DIST.
             TINSUKIA, PIN- 786181.


             VERSUS

             THE UNION OF INDIA AND 5 ORS

             REP. BY THE SECRETARY TO THE GOVT. OF INDIA, MINISTRY OF
             RAIWAYS, RAIL BHAVAN, NEW DELHI, PIN - 110001.

             2:THE N.F. RAILWAY

             REWP. BY GENERAL MANAGER
             MALIGAON
             GUWAHATI- 781011
             ASSAM.

             3:THE DIVISIONAL RAILWAY MANAGER W
             N.F. RAILWAY
             TINSUKIA DIVISION
             TINSUKIA
             ASSAM
             PIN - 786125.

             4:THE SENIOR DIVISIONAL ENGINEER

             N.F. RAILWAY
             TINSUKIA DIVISION
             TINSUKIA
             ASSAM
             PIN - 786125

             5:THE DIVISIONAL ENGINEER/II
             N.F. RAILWAY
             TINSUKIA
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              PIN - 786125.

              6:THE SENIOR SECTIONAL ENGINEER
              N.F. RAILWAY
              TINSUKIA DIVISION
              TINSUKIA
              ASSAM
              PIN - 786125

Advocate for the Petitioner : MS.J SAIKIA
Advocate for the Respondent :


                         BEFORE
          HONOURABLE MR. JUSTICE SOUMITRA SAIKIA
                          ORDER

Date : 28-10-2021

Heard Ms. P. Barman, learned counsel for the petitioner. Also heard Mr. D. K. Dey, learned standing counsel for the NF Railway.

2. This writ petition has been filed by the petitioner being aggrieved by the Communication dated 20.02.2015 issued by the Divisional Engineer/II, N.F. Railway, Tinsukia.

3. By the said communication, it was informed that after scrutiny it was found that there was an amount of Rs.15,15,817.71/- (Rupees Fifteen Lakh Fifteen Thousand Eight Hundred Seventeen and Seventy One Paisa) only which was overpaid to the petitioner. He was, therefore, directed to deposit the overpayment at the earliest and failing which such overpayment shall be deducted from the earnest money deposit, performance guarantee money and security deposit deposited by the petitioner.

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4. The petitioner was awarded the contract of Provision of military siding Bridge No. 18 & 19 Box culvert size 1.20 m Br. No. 20 to 24 hume pipe, Circulating area, PF approach road and including ramp.

5. The total value of the said contract was Rs.1,95,50,118.33/- (Rupees One Crore Ninety Five Lakh Fifty Thousand One Hundred Eighteen and Thirty Paisa) only and the period of completion was 11(eleven) months from the date of acceptance. Pursuant to the award of the contract, by order dated 17.08.2007, the N.F. Railways directed the petitioner to proceed with the work and complete the works allotted. The contract agreement was duly executed by and between the petitioner and the N.F. Railways. It is submitted that the petitioner in right earnest proceeded with the works allotted in terms of the contract. A certificate of completion of works was issued by the Senior Divisional Engineer/II, N.F. Railway, Tinsukia dated 09.05.2012 stating that the work was completed up to 98% and the balance work is in progress. It is to be mentioned here that although the period of completion was 11(eleven) months subsequently the Railway extended the contract and as per Certificate issued, the 98% of the works were completed upto 30.06.2012. In the meantime, part-payment in respect of the works completed was also released, on the basis of the CC bills prepared by the authorities upon measurements of the works completed.

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6. According to the petitioner, the balance work was subsequently carried out and the entire contract was executed to the satisfaction of the Railway authorities. However, the Railways persistently disputed the completion of the works and from time to time issued communications to the petitioner to execute the balance work. It is submitted by the petitioner that in the year 2012, the contract works awarded was completed and no balance work was left. It is the grievance of the petitioner that in spite of the works completed, the outstanding amount required to be released by the respondent-Railways, has not been released. Several communications were exchanged between the petitioner and the Railway authorities. Finally, by the impugned communication dated 20.02.2015, the Railway authorities directed the petitioner to deposit the amount stated to have been overpaid to the petitioner, failing which the said amount will be adjusted with the earnest money deposit, performance guarantee money and Security Deposit money already deposited by the petitioner with the N.F. Railways. Being aggrieved the present writ petition has been filed praying for setting aside and quashing of the impugned letter dated 20.02.2015 and consequential reliefs.

7. The Railways have contested the case by filing their counter affidavit. An additional affidavit has also been filed by the Railways to bring on record the contract agreement. According to the learned Standing counsel for the Railways, Page No. 1/2

the work was never completed, rather in spite of several requests made to the petitioner, he had failed to complete the work in time in spite of extensions being granted. Referring to Clause 5 of the special conditions available in the contract agreement, the learned Standing submits that as per the said provisions, completion of the work has to be to the satisfaction of the Engineer and the contractor will be responsible for maintenance of the work for a further period of 6(six) months but it must cover the period of monsoon from the 1st June upto 30th November. The further provision is that the maintenance period can be extended, where required. The learned Standing counsel has also referred to Clause 16 to show that the works were required to be completed within 11(eleven) months from the date of the letter of the acceptance. However, he has fairly submitted that subsequently the Railways had given extensions to the petitioner to complete the works allotted.

8. The learned standing counsel, however, does not dispute the completion certificate issued to the petitioner by the Railway authorities (Annexure-C, Page-23 of the writ petition) that 98% of the works have been completed. He also fairly submits that the said completion certificate has not been cancelled or recalled and further that no departmental enquiry or any action has been taken against any officer charged with making of overpayment to the petitioner which is now sought to be recovered.

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9. The learned counsels for the parties have been heard and the pleadings on record are also carefully perused. The contract agreement signed by and between the parties lays down the various conditions for the works to be executed by the contractor. There is no dispute that the petitioner had undertaken the work and although the same could not be completed within the period mentioned in the contract agreement, the same was carried out on the extensions granted by the Railways authorities.

10. According to the petitioner, the works were completed in the year 2012. The Railway authorities completed the measurements of the works executed relating to the works of earth filling were measured by the Railways authorities in the month of January, 2014.

11. There is no dispute that the Railways had issued the completion certificate relating to 98% work completed. That certificate as on date has never been withdrawn by the Railways authorities. The said certificate was issued as far back as 09.05.2012. The measurements, if any, in terms of the contract ought to have been carried out immediately prior to issuance of the said certificate and any shortfalls in the works required to be initiated to the petitioner for due execution. However, it is seen that the measurements of the works were conducted in the month of January, 2014 by the Railways authorities. The Railways authorities contend that Page No. 1/2

after taking due measurements, it is found that there is a shortfall in earth filling because after rains the earth has settled down. Although, the learned standing counsel has referred to Clause 5 of the Special conditions, the period mentioned in Clause 5 is for the monsoon period from 1st June to 30th November. However, such contention cannot be accepted in view of the specific provisions in the contract at Clause- 5 of the Special conditions. The measurement in respect of works ought to be carried out immediately after completion of the works and before issuance of any completion certificate. The responsibility of the contractor for maintenance is for the further period of only 6(six) months covering the monsoon period from 1st June to 30th November. Once that period elapses, there is no responsibility cast upon the petitioner/contractor for undertaking further maintenance under the provisions of the Contract Agreement. The relevant clause of special condition of contract is reproduced below:

"5 The completion of the work to the satisfaction of the Engineer it will be taken ever. From the date of taking ever the contractor shall be responsible for the maintenance of the work for a further period of 6(six) months maximum but it must cover the period of monsoon from 1st June upto 30th November to cover the monsoon period. The maintenance period will be extended where required."

12. The Railways also have not been able to demonstrate as to how the amount stated to have been overpaid was Page No. 1/2

released by the authorities when on the basis of the works completed measurements are undertaken by the authorities and the bills are to be prepared by the authorities on the basis of the works completed and measurements taken. In the contract agreement, there is also no specific provision for forfeiture of the earnest money deposit, performance guarantee money and security deposit after completion certificate is issued. When the contract is executed between the parties, they are bound by the agreement executed by and between the parties.

13. The learned standing counsel has not been able to point out the contract provisions leading to the proposed recovery sought to be made from the petitioner. The contract agreement specifically provides that the payments required to be made will be on the basis of measurements made and the bills raised by the Railways authorities and certificates thereto to be issued.

14. There is no dispute that the Railways authorities have issued a certificate indicating that 98% of the works have been completed and payment thereto has been released and which till date has not been withdrawn. And further the communications referred to by the Railways, clearly states the works were completed in the year 2012-13.

15. There is no restraint on the Government in its freedom enter into business with any person it likes however subject Page No. 1/2

to the condition of reasonableness and fair play as well as public interest. The contract was awarded in exercise of statutory power by the N.F. Railways which is a statutory authority. Though, the issue relates to contract it can be said that falls within the sphere of public law as it relates to exercise of statutory power by statutory authority. As such, it cannot be said that the matter falls purely in a contractual field in order to oust the jurisdiction of this Court in judicial review under Article 226 of the Constitution of India1.

16. In this context, it is pertinent to refer to the law laid down by the Apex Court in Rammana Dayaram Shetty -Vs- International Airport Authority of India and Others2, the Apex Court held that executive authority must follow the standards by which it professes its actions to be judged. The procedure defined must which binds such an agency must be scrupulously followed. That apart every action of the executive Government must be informed with reason and should be free from arbitrariness that is the true essence of Rule of law and its bare minimal requirement. It was further held that the State (which includes the Railways in the present proceeding) need not enter into with any but if

(2001) 8 SCC 344 : 2001 SCC OnLine SC 1115 Verigamto Naveen -Vs- Govt. of A.P. and Others & A.P. Mineral Development Corporation -Vs- Y.S. Vevekananda Reddy and Others.

(1979)3 SCC 489- Rammana Dayaram Shetty -Vs- International Airport Authority of India and Others Page No. 1/2

does so it must do so fairly and without discrimination and without unfair procedure.

17. The relevant paragraphs of the Judgments is extracted below:-

"12.

................................................................................................... ................................................................................................... ........................................................................................... The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure". This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas, licences, etc. must be confined and structured by rational, relevant and non- discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory".

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18. In such view of the matter, we do not find under what circumstances and with reference to which provision(s) of the contract agreement, the Railways authorities have issued the impugned letter seeking recovery of payment stated to have been made in excess. It is well settled once the agreement is executed between the parties, they are bound by the terms and conditions contained in the agreement. The respondent did not specifically refer to any provisions of the contract agreement which are stated to have been violated by the petitioner and on the basis of which there could have been a shortfall in works allotted and in view of completion certificates issued by the Railways and which was not recalled till date, we are constrained to hold that the impugned action of the Railways authorities, seeking recovery of excess payment made vide dated 20.02.2015 cannot be allowed to be sustained. As discussed above, perusal of the contract agreement does not reveal any conditions which permit the Railways authorities in the facts of the present case to make any deduction from the earnest money deposit, performance guarantee money and security deposit. Accordingly, the impugned letter dated 20.02.2015 is hereby set aside and quashed.

19. The Railway authorities will release the earnest money deposit, performance guarantee money and security deposit to the petitioner. In view of the above, this writ petition is allowed to the extent indicated.

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20. The writ petition is accordingly allowed and disposed of. No order as to costs.

JUDGE

Comparing Assistant