Kerala High Court
Jabir Usman C.K vs State Of Kerala on 5 March, 2021
W.P(c) Nos.23018/2020-B,
21811/2020-B & 28668/2020-G 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE SMT. JUSTICE P.V.ASHA
FRIDAY, THE 05TH DAY OF MARCH 2021 / 14TH PHALGUNA, 1942
WP(C).No.23018 OF 2020(B)
PETITIONER:
JABIR USMAN C.K.
AGED 50 YEARS
CHALATHILKALLADITHODI HOUSE, MELMURI P.O,
MALAPPURAM DISTRICT.
BY ADVS.
SRI.JOMY GEORGE
SRI.R.PADMARAJ
SRI.M.J.BENNY
SRI.DEEPAK MOHAN
SMT. CHITRA N. DAS
SHRI.RISHAB S.
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY CHIEF SECRETARY, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM - 695001.
2 THE SECRETARY
PUBLIC WORKS DEPARTMENT, GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM - 695001.
3 THE SUPERINTENDING ENGINEER
PWD ROADS AND BRIDGES NORTH CIRCLE, PWD COMPLEX,
MANANCHIRA, KOZHIKODE - 673001.
4 THE EXECUTIVE ENGINEER
PWD ROADS DIVISION, MANJERI,
MALAPPURAM DISTRICT - 676121.
BY SR.GOVERNMENT PLEADER SRI K.V.MANOJKUMAR
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
05.03.2021, ALONG WITH WP(C).21811/2020(B), WP(C).28668/2020(G),
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P(c) Nos.23018/2020-B,
21811/2020-B & 28668/2020-G 2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE SMT. JUSTICE P.V.ASHA
FRIDAY, THE 05TH DAY OF MARCH 2021 / 14TH PHALGUNA, 1942
WP(C).No.21811 OF 2020(B)
PETITIONER:
M/S.PERUVAYAL CONSTRUCTION COMPANY
PERUVAYAL P.O., KOZHIKODE-673024, REPRESENTED BY
ITS MANAGING PARTNER, E.C.VINOD.
BY ADV. SHRI.TOM K.THOMAS
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY SECRETARY, PUBLIC WORKS DEPARTMENT,
GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM,
PIN-695001.
2 THE EXECUTIVE ENGINEER,
PUBLIC WORKS DEPARTMENT,
ROAD DIVISION, KOZHIKODE-673520.
BY SR.GOVERNMENT PLEADER SRI.K.V.MANOJ KUMAR
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
05.03.2021, ALONG WITH WP(C).23018/2020(B), WP(C).28668/2020(G),
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P(c) Nos.23018/2020-B,
21811/2020-B & 28668/2020-G 3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE SMT. JUSTICE P.V.ASHA
FRIDAY, THE 05TH DAY OF MARCH 2021 / 14TH PHALGUNA, 1942
WP(C).No.28668 OF 2020(G)
PETITIONER:
MUKESH VARKEY
AGED 38 YEARS
S/O.K.J. VARKEY, PWD CONTRACTOR,
KARIMPANAKKAL HOUSE, PLACHIKARA P.O.
KASARAGODE.
BY ADVS.
SRI.JOMY GEORGE
SRI.R.PADMARAJ
SRI.M.J.BENNY
SRI.DEEPAK MOHAN
SMT. CHITRA N. DAS
SHRI.RISHAB S.
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY CHIEF SECRETARY, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM 695 001.
2 THE SECRETARY,
PUBLIC WORKS DEPARTMENT,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM 695 001.
3 THE SUPERINTENDING ENGINEER,
PWD ROADS AND BRIDGES NORTH CIRCLE, PWD COMPLEX,
MANANCHIRA, KOZHIKODE 673 001.
4 THE EXECUTIVE ENGINEER,
PWD ROADS DIVISION, PWD COMPLEX,
PULIKKUNNU, KASARAGOD-0671 121.
BY SR.GOVERNMENT PLEADER SRI K.V.MANOJKUMAR
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
05.03.2021, ALONG WITH WP(C).21811/2020(B), WP(C).23018/2020(B),
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P(c) Nos.23018/2020-B,
21811/2020-B & 28668/2020-G 4
P.V.ASHA, J.
-----------------------------------------------------
W.P(c) Nos.23018 of 2020-B,
21811 of 2020-B
and
28668 of 2020-G
----------------------------------------------------
Dated this the 5th day of March, 2021
JUDGMENT
Petitioners in all these cases are contractors, who were awarded work by the
PWD and have executed agreements and furnished performance guarantee by
adjusting the amount from pending bills. They are requesting for releasing the bills
from which performance guarantee was adjusted, by offering other bills which are
due for payment, in substitution. They point out that they are having other bills
covering equal or more amount towards the work already executed and became
due for payment. Relying on the Government orders issued on 23.06.2020 as
modified by the order dated 16.10.2020 produced as Exts.P4 and P5 in
W.P(c).No.23018 of 2020, they claim that bills can be adjusted even for ongoing
works.
2. The respondents have filed a statement. According to them,
substitution of bills is not permissible as per the order issued on 23.06.2020 as well
as 16.10.2020. In the statement filed by the Superintending Engineer -the 3 rd
respondent in W.P.(C) No.23018 of 2020, it is stated as follows in paragraphs 8
and 9 :
W.P(c) Nos.23018/2020-B,
"8. Now the petitioner requested this office on 20.10.2020 to release the third
pledged bill and to accept another two pending bill as security. Government has issued
order on pledging of pending bills as security as per G.O(Rt) No.3834/20/Fin dated
23.06.2020. As per Exhibit P4 Government order the amount under the audited and
passed bills of contractors will be accepted as Performance Guarantee/Additional
Performance Guarantee for new contract being awarded on the conditions enumerated
in the said Government Order. As per the para V of said order the Government has
directed to accept work bill as guarantee for new work being awarded only on the basis
of indemnity certificate issued online in the EMLI application.
9. Moreover it is humbly submitted that in continuation of G.O. mentioned
above another G.O is issued by the Government vide G.O.(Rt) No.5989/2020 dated
16.10.2020 in which the Government has given permission to accept audited and passed
bills of contractors as Performance guarantee/additional performance guarantee for
ongoing works also. But all conditions mentioned in earlier Government order for
accepting pending bill as guarantee will exist as such. In Government order dated
16.10.2020 also, Government does not permits substitution of bills already pledged. The
request made by the petitioner herein is to substitute the bill already submitted instead
of bank guarantee and therefore as per G.O dated 16.10.2020 also the petitioner is not
entitled for the reliefs prayed for. The ongoing works referred relates only to the
purposes of submission of Performance Guarantee/Additional Performance Guarantee,
etc., which became necessary to be submitted by the contractors like extension of time
etc., in ongoing works and it does not pertains to substitution of bills already
submitted."
3. Heard the learned counsel for the petitioners as well as the learned
Senior Government Pleader Sri K.V.Manoj Kumar. According to the learned
Senior Government Pleader, the issue is covered against the petitioners by
judgment in W.P.(C) No.17967 of 2020.
4. The learned counsel for the petitioners point out that when there is a
modification to the order dated 23.06.2020 specifically stating that the audited and
passed bills would be accepted for ongoing works also, the petitioners are entitled
to get the bills substituted and the rejection of their applications is illegal and that
W.P(c) Nos.23018/2020-B,
the judgment in W.P.(C) No.17967 of 2020 was rendered without considering the
modification ordered in the Government Order dated 16.10.2020.
5. In order to determine the effect of modification brought about by the
order issued on 16.10.2020 it is necessary to have a look at the relevant provisions
in the Government order dated 23.06.2020 as well as the order issued on
16.10.2020. In G.O.(Rt) No. 3834/2020/Fin dated 23.06.2020 (Ext.P4 order in
W.P.(C) No. 23018/2020) the Government ordered as follows in para.3:
"3. The amounts under the audited and passed bills of contractors will be
accepted as Performance Guarantee/Additional Performance Guarantee for new
contracts being awarded subject to the following conditions.
(i) This facility will be available only for the bills processed for payments
in the EMILI application by the Works Departments (i.e. Public Works Department,
Irrigation Department, Harbour Engineering Department etc.
(ii) This facility will be applicable to the audited and passed contract bills
only.
(iii) The indemnified amount for Guarantee of a work shall be transferred
permanently to the disposal of the officer, who is the agreement authority for the new
work in which agreement is to be executed and the balance amount after deducting the
statutory recoveries and other liabilities, if any, will be paid to the contractor when the
work bill is cleared.
(iv) The indemnified amount will not be considered for discounting under
the Bill Discounting Scheme (BDS) (i.e. The contractor can opt BDS for the balance
payment after deducting the indemnified amount as Performance Guarantee/Additional
Performance Guarantee).
(v) Work bill amount will be accepted as Guarantee for new works being awarded
only on the basis of indemnity certificate issued online in EMLI application."
(emphasis supplied)
Interpreting the aforesaid provisions, I had in the judgment in W.P.(C) No.17967
of 2020 held that the adjustment of bill amount towards performance guarantee or
W.P(c) Nos.23018/2020-B,
additional performance guarantee is permissible only for new works for which
agreement is "to be executed" and therefore contractors cannot be permitted
substitution or adjustment any time as the order did not provide for the same.
While rendering the said judgment though a reference was made to the
Government Order dated 16.10.2020, the said order was not part of the pleadings.
Therefore, arguments raised by the counsel on either side were mentioned in the
judgment.
6. Now it is relevant to have a look at the G.O.(Rt) No. 5989/2020/Fin
dated 16.10.2020 (Ext.P5 in W.P.(C).No.23018/2020). Opening paragraph of the
order would show that the General Secretary to Kerala Government Contractors
Federation submitted a representation complaining that the Government order
dated 23.06.2020 limited the adjustment of bills only to new works which were
being awarded and therefore they requested to modify the order extending the
benefit of adjusting the amount under audited and pending bills towards
performace guarantee/additional performance guarantee for ongoing works also.
Government has thereupon ordered the following modification to para.3 of the
order dated 23.06.2020:
"The amounts under the audited and passed bills of contractors will be accepted
as Performance Guarantee/Additional Performance Guarantee for ongoing works and
new works being awarded."
(emphasis supplied)
That would show that the amount under audited and passed bills can be accepted
as performance guarantee/additional performance guarantee not only to new works
W.P(c) Nos.23018/2020-B,
but also to ongoing works. The adjustment of bills is therefore no longer confined
to the new works at the stage of execution of agreement. When the Government
found it necessary to extend the benefit of the order dated 23.06.2020 to the
ongoing works also, seeing that the applicability of the earlier order was confined
to the new works alone which were at the stage of award and for which agreements
were to be executed, the respondents will not be justified in stating that that is
limited to only for additional performance guarantee or for the purpose of
performance guarantee on extension of agreement. No such condition is stipulated
in the order dated 16.10.2020. Therefore, a conjoint reading of both these orders
would show that the adjustment of pending and audited bills is permissible at any
stage of a work, before or after execution of agreement. The ongoing work can
only be a work for which agreement is already executed and performance
guarantee is already furnished. Acceptance of the amount under an audited and
passed bill for an ongoing work can be made only by substitution of what is
already accepted towards performance guarantee. Therefore, performance
guarantee, which was already furnished in whatever form, can be substituted by
adjusting the amount under an audited and passed bill.
7. Yet another condition in both the orders is that the amount under the
bills can be accepted only on the basis of indemnity certificate issued online in
EMLI application. Though the Government ordered modification of the EMLI
software to enable the adjustment ordered on 23.06.2020 by the very same order,
so far no such modification is made. Hence, the adjustment of bill amount towards
W.P(c) Nos.23018/2020-B,
performance guarantee permitted under the order dated 23.06.2020 is being made
manually, on directions from this Court in a series of cases. The position continues
to be the same even now. Therefore, in order to extend the benefit of both these
orders to the eligible contractors the competent autorities would have to do the
adjustment manually till the software is updated.
8. The petitioners in these cases are contractors, who have already
pledged the bills towards performance guarantee. They have requested the
respective Executive Engineers for releasing the bills already pledged substituting
the same by other bills and their requests are declined. In the light of the order
dated 16.10.2020, the Executive Engineers have to reconsider the request made by
the petitioners for substitution of the bills by other bills.
9. In W.P(c).No.23018 of 2020, the petitioner seeks substitution of the
pledged bill by way of Exts.P3(a) and P3(b) bills towards performance
guarantee/additional performance guarantee, and requested for releasing the bill
which was pledged.
10. Therefore, W.P(c).No.23018 of 2020 is disposed of with a direction that
the representation submitted by the petitioner before the 4 th respondent in Ext.P3
for substitution of the bill shall be reconsidered and in case the same is
admissible, orders shall be passed without insisting for indemnity certificate
through EMILI , within a period of one month.
11. W.P(c).No.28668 of 2020 is disposed of with a direction to the 3rd
respondent to consider Ext.P2 application submitted by the petitioner for
W.P(c) Nos.23018/2020-B,
substitution by Ext.P3 bill and to take appropriate action and pass orders within a
period of one month.
12. In W.P(c).No.21811 of 2020, the Executive Engineer has already
issued Ext.P5 letter informing the petitioner that request would be considered as
soon as the petitioner produces the indemnity certificate upon getting activated in
EMILI software. As EMILI software is not so far modified, the competent
authority shall take action manually. Therefore, W.P(C).No.21811 of 2020 is
disposed of with a direction to the respondents to proceed on the request of the
petitioner without insisting on indemnity certificate through EMILI and to take
appropriate action for enabling substitution of the pledged bill and to pass orders
within a period of one month.
Sd/- (P.V.ASHA, JUDGE)
rtr/
W.P(c) Nos.23018/2020-B,
APPENDIX OF WP(C) 23018/2020
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE SELECTION NOTICE NO. DC-
05-9518/2017 DATED 09.11.2018 ISSUED BY THE
3RD RESPONDENT.
EXHIBIT P2 TRUE COPY OF THE PROFORMA WITH REGARD TO
EXHIBIT P-1 WORK ISSUED BY THE 3RD
RESPONDENT.
EXHIBIT P3 TRUE COPY OF THE APPLICATION DATED
20.10.2020 FILED BY THE PETITIONER BEFORE
THE 4TH RESPONDENT.
EXHIBIT P3(a) TRUE COPY OF THE BILL DATED 22.09.2020.
EXHIBIT P3(b) TRUE COPY OF THE BILL DATED 22.09.2020.
EXHIBIT P4 TRUE COPY OF THE GO(RT) NO.3834/2020/FIN
DATED 23.06.2020.
EXHIBIT P5 TRUE COPY OF THE GO(RT) N.5989/2020/FIN
DATED 16.10.2020.
EXHIBIT P6 TRUE COPY OF THE REPLY LETTER NO.
E3/PLEDGE/2020 DATED 21.10.2020 ISSUED BY
THE 4TH RESPONDENT.
EXHIBIT P7 TRUE COPY OF JUDGMENT DATED 25.08.2020 OF
THIS HON'BLE COURT IN WPC NO.17500/2020.
W.P(c) Nos.23018/2020-B,
APPENDIX OF WP(C) 21811/2020
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE COVERING LETTER ALONGWITH
CERTIFICATE ISSUED BY THE 2ND RESPONDENT
DATED 08.10.2020.
EXHIBIT P2 TRUE COPY OF THE GOVERNMENT ORDER G.O.
(RT).NO.4776/20/FIN DATED 18.08.2020.
EXHIBIT P3 TRUE COPY OF THE COVERING LETTER ALONGWITH
PROCEEDINGS OF THE 2ND RESPONDENT DATED
08.10.2020.
EXHIBIT P4 TRUE COPY OF THE REPRESENTATION DATED
27.10.2020 SUBMITTED BY THE PETITIONER
REQUESTING THE ADJUSTMENT OF THE
PERFORMANCE GUARANTEE AS AGAINST THE VTH
BILL.
EXHIBIT P5 TRUE COPY OF THE LETTER NO.A1/WP(C)-
21811/2020 DATED 16.11.2020 ISSUED BY THE
2ND RESPONDENT AND TYPED COPY.
EXHIBIT P6 TRUE COPY G.O(Rt) NO.5989/2020/FIN. DATED
16.10.2020.
W.P(c) Nos.23018/2020-B,
APPENDIX OF WP(C) 28668/2020
PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE SELECTION NOTICE NO.
DC06/2017/9522 DATED 28.01.2019 ISSUED BY
THE 3RD RESPONDENT.
EXHIBIT P2 TRUE COPY OF THE APPLICATION DATED
28.09.2020 SUBMITTED BY THE PETITIONER
BEFORE THE 3RD RESPONDENT.
EXHIBIT P3 TRUE COPY OF THE LETTER DATED 16.10.2020
SUBMITTED BY THE 4TH RESPONDENT TO THE 3RD
RESPONDENT.
EXHIBIT P3 (a) TRUE COPY OF THE PROFORMA ISSUED BY THE 4TH
RESPONDENT.
EXHIBIT P3 (b) TRUE COPY OF THE BILL NO. RD/2019/8929-
FINAL ISSUED BY THE 4TH RESPONDENT.
EXHIBIT P4 TRUE COPY OF THE G.O.(RT). NO.
3834/2020/FIN DATED 23.06.2020.
EXHIBIT P5 TRUE COPY OF THE G.O. (RT) NO.
5989/2020/FIN DATED 16.10.2020.
EXHIBIT P6 TRUE COPY OF THE REPLY LETTER NO.
DC06/2017/9522 DATED 30.11.2020 ISSUED BY
THE 3RD RESPONDENT.
EXHIBIT P7 TRUE COPY OF JUDGMENT DATED 25.08.2020 OF
THIS HONBLE COURT IN WPC NO. 17500/2020.
