Madras High Court
M/S.Subaya Constructions Company ... vs The Chief Engineer (A/C) on 16 October, 2024
Author: V.Bhavani Subbaroyan
Bench: V.Bhavani Subbaroyan
W.P.No.2673 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 16.10.2024
CORAM
THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN
W.P.No.2673 of 2023
and
W.M.P.No.2774 of 2023
M/s.Subaya Constructions Company Limited,
Represented by its Director S.Meenakshi,
No.21, Soundarapandian Street,
Ashok Nagar,
Chennai – 600 083. ... Petitioner
Vs.
1.The Chief Engineer (A/C),
TWAD Board,
No.30, Bharathi Park Road,
Siruvani Nagar,
Coimbatore – 641 043.
2.The Superintending Engineer,
TWAD Board,
Coimbatore.
3.The Executive Engineer,
TWAD Board,
Sewerage Division,
Pollachi. ...Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India
for issuance of a Writ of Mandamus, directing the respondents to
release the withheld amount of 25% on substituted items/additional
items, the final bill, withheld amount and other pending bills as per
1/40
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W.P.No.2673 of 2023
contract with interest at the rate of 24% from the date of passing the
respective running account bills, within a period stipulated by this
Court.
For Petitioner : Mr.N.L.Rajesh
Senior Counsel
for Mr.B.Natarajan
For Respondents : Mr.T.Mohan
Senior Counsel
for Mrs.Y.Kantha
ORDER
The present Writ Petition is filed for issuance of a Writ of
Mandamus, directing the respondents to release the withheld amount
of 25% on substituted items/additional items, the final bill, withheld
amount and other pending bills as per contract with interest at the rate
of 24% from the date of passing the respective running account bills,
within a period stipulated by this Court.
2.The brief facts, leading to the filing of this Writ Petition,
are as follows:
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2.1.According to the petitioner, the petitioner is a Public
Limited Company incorporated under the Companies Act, 1956 and the
petitioner Company is a highly reputed civil contractor in Tamil Nadu
and has executed project work worth about 1,500 crores under Ground
Sewage Scheme in Tiruchirappalli, Srirangam, Thanjavur, Tirunelveli,
Sivagangai, Ramanathapuram, Villupuram, Udumalpet, Arokkonam,
Avadi, Ambattur, Maduravoyal and Salem and Sewage Treatment Plant
in Villupuram, Udumalpet, Arokkonam and Salem.
2.2.While so, the first respondent, who is the Chief
Engineer of the Tamil Nadu Water Supply and Sewerage Board, invited
tender for laying an underground sewerage system in Udumalpet
Municipality in Tiruppur District. The petitioner was the successful
bidder in the tender and the first respondent issued a work order vide
letter No.Udumalaipet UGSS/T3/CE/CBE/2013, dated 27.03.2013. The
scope of work given to the petitioner was 'supply, delivery, laying and
joining of sewer line for Zone I and II, pumping main, house service
connection, one lifting station and construction sewage treatment plant
adopting activated sludge process technology for 7.81 MLD including
the construction of office-cum-lab and compound wall including one
year maintenance etc' and the value of the contract was
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Rs.38,43,44,115/-. The period of completion of the entire work was 30
months from the date of the work order followed by 6 months trial run.
The entire works were completed on 30.06.2016, the trial run was
completed on 31.12.2016, the maintenance period was completed on
31.12.2017 and the defect liability was completed on 30.06.2018.
2.3.During execution of the works, mainly excavation of
dense medium rock was required to be excavated at i) 0 to 2 m depth
and ii) 2 to 3 m depth besides some more additional items. These
items were essential and necessary for the completion of work and
without these additional items, the project could not progress further
and was later commissioned. However, the contract does not provide
rates for these additional items. The respondents wanted the petitioner
to do these works and the petitioner obliged and wanted the
respondents to confirm the rates as proposed.
2.4.The Employer has to execute works as per agreement
Clause 16, which specifies as follows:
'Clause 16 Additional items (Page No:
543 of Original Agreement) – If additional items that
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are not contemplated in the contract are to be
executed, the Engineer in charge will execute the
works either through the main contractor/firm or
through any other agency. Payments for such works
shall be made based on the rates derived by the
Engineer in charge as per rules in force.'
2.5.Based on the above clause, the Engineer in charge
derived rates for additional works from agreement rates. As per Clause
16, the department has to obtain consent from the main contractor for
execution at derived rates and based on request by the Engineer in
charge as per request, the petitioner had also given their consent for
the rates derived by the Engineer in charge without disputing the
derived rates. The consent letter forms part of the supplemental
agreement.
2.6.Based on consent rates, additional works are to be
executed as per Clause 17 of the agreement which specifies as follows:
'Clause 17: Order Book -
An Order Book will be kept by the officer in
charge of the site (Junior Engineer/Assistant Engineer)
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of the particular component of the works. Orders
entered in this book by the Engineer in charge or any
higher authority shall be held to have been formally
communicated to the contract/firm. The officer in
charge of the site will sign each other as it is entered
and will hand over the duplicate to the contractor/firm
or his agent, who shall sign the original in
acknowledgment of having received the order.'
2.7.Based on Clause 17, 53 site orders were issued for
additional items of work by Department Engineers of various cadres up
to the level of Chief Engineer and works were executed as directed.
The additional items of work which were carried out as per site orders
were properly recorded by the competent authorities in the
measurement book. Regarding the rate of additional work, the rates
derived as per the contract and the consent given were adopted by the
execution wing for the bill. However, while making the payment, 75%
of the value was paid and the balance 25% is yet to be released. The
contract does not provide for retention of 25% of the value of work
done. Hence withholding of 25% balance amount is against the
contract.
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2.8.The Engineer in charge is the final authority in technical
matters and payment consideration as per GCC Clause 3 Authority of
the Engineer in charge specifies as follows:
'It shall be accepted that the authority of
the engineer in chief shall be an integral part of the
contract in the matters regarding the quality of
materials, workmanship, removal of improper work,
interpretation of contract drawings and specifications,
mode and procedure of carrying out the works where
the decision of the engineer in chief shall be final and
binding of the contractor. The engineer in chief shall
have absolute authority on all technical matters and
payment considerations.'
2.9.The rates were available in the contract for SDR and
DMR items, but in the case of DMR, there was no rate available for
depths from 0-2 m and 2-3 m. As per the contract, rates can be
derived from similar items of work in the accepted agreement, based
on the agreement condition and the Engineer in charge (Executive
Engineer) derived the rates accepted by the contractor and work was
also executed and completed and the scheme was also put to public
beneficial use. As per the contract, the rates were derived from the
rates available in the contract by the engineer in charge ie., the
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Executive Engineer and finalized for the depth of 0 m to 2 meters at
the rate of Rs.1818/- per cu.m and for the depth of 2 m to 3 meters at
the rate of Rs.1863- per cu.m. The derived rates by the Engineer in
charge/the Executive Officer have also been accepted by the petitioner
without any hesitation, vide letter dated 26.06.2014. The acceptance
of rates by both parties constitutes a contract as there was an offer
and acceptance and consensus ad idem between both parties and
hence a concluded contract was arrived at. Therefore, entering into a
supplemental agreement was a mere empty formality. Based on the
site orders and on the acceptance of the rate for the additional works,
the petitioner completed the works on the bonafide belief that
payments for the said additional works would be made. It is stated that
accordingly, the respondent also released 75% of the payments and
did not release the balance 25% viz., Rs.47,26,050/-.
2.10.Hence, the petitioner approached the Engineer in
charge/Chief Engineer (Employer) for the release of 25% balance
pending payment. The Engineer in charge stated orally that the internal
approval in the department is under process and the balance 25%
payment will be released on internal approval by the Department.
Based on the repeated requests, the Chief Engineer in their letter
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dated 02.09.2015, to the Managing Director, TWAD Board, clearly
stated as follows:
'The DMR for the depths (i) 0-2 M& (ii) 2-3 M
have been derived from the rates of similar items of
works in the accepted agreement, the lifting charges
have been derived from the rates of difference in cost of
SDR in subsequent two depths and worked out in the
supplemental proposal as per B.P.NO.27/COM
WING/Dated 05.02.2002 (Note under item No.7a, 7b &
7c does not arise) since the rates for similar items of
works in the accepted agreement are available. It was
also requested in the said letter that the supplemental
proposal please be approved by the competent authority
and communicated to this office early for taking further
action.'
2.11.It is evident that the rates accepted were the settled
one and derived by the competent authorities in the work order and as
per the provisions of the concluded contract.
2.12.Clause 34 of the General terms and conditions reads
as follows:
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'If these rates do not apply to the
additional works ordered to be carried out, then prior
to execution of the additional work, a rate of such
work shall ordinarily be agreed upon and entered in a
supplemental schedule and signed by both the
Engineer in charge and the contractor/firm.'
2.13.The rates were derived by the Engineer in
chief/Executive Engineer and accepted by the petitioner. Hence, these
correspondences constitute a valid contract which is binding. The stand
of the respondent is that no supplemental agreement was entered into
and hence, the rates agreed cannot be paid and cannot be accepted
at all.
2.14.However, there has been much delay with the
respondent Department for the release of pending payment even after
the petitioner sent several letters, due to internal approval procedures
of the respondent, even though the payment to the petitioner has been
recommended by the Chief Engineer (Employer).
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2.15.Hence, the petitioner was constrained to seek for
convening the redressal committee vide letters, dated 04.08.2016 and
30.09.2016 pertaining to the release of the balance 25% payment.
Subsequently, the petitioner preferred an appeal, dated 04.08.2016,
before the dispute redressal committee. Since the said appeal was
pending before the dispute redressal committee without disposal, the
petitioner was constrained to file a Writ Petition in W.P.No.36007 of
2016 and this Court, by order, dated 17.10.2016, directed the
respondents, especially, the fifth respondent therein to dispose of the
appeal filed by the petitioner, dated 04.08.2016 within a period of six
weeks. Pursuant to the order passed by this Court, dated 17.10.2016,
the Redressal committee disputed the derived rates given by the
Employer (Chief Engineer) and denied the derived rates given by the
Employer vide its order, dated 06.04.2017.
2.16.According to the petitioner, after extracting works fully
at rates finalized by the Employer (Chief Engineer) with the consent of
the contractor and after completion of the project and putting it to
beneficial use, the redressal committee denied the agreed rates by the
Employer and contractor. The decision of the redressal committee was
surprising, shocking, unsustainable and arbitrary. The redressal
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committee cannot after execution of additional works, deny the
mutually consented rates as the same is against agreement conditions.
2.17.While so, the petitioner filed a Writ Petition in
W.P.No.16018 of 2018 seeking for a Writ of Certiorarified Mandamus, to
quash the minutes of the meeting dated 06.04.2017 on the file of the
dispute redressal committee and to refer the claim of the petitioner for
fresh consideration by the dispute redressal committee. However, this
Court by order dated 07.07.2020 passed the following order:
'4.The petitioner has an effective
alternative remedy to work out its grievance and
this Court does not want to exercise its writ
jurisdiction when there is an effective alternative
remedy. That apart, this Court cannot undertake
the exercise of appreciating the facts involved in
this case. Therefore, this Court is not inclined to
entertain this writ petition.
5.This writ petition is disposed of by granting
liberty to the petitioner to work out the remedy
before the concerned District Court as per the
terms of agreement, which has been extracted
supra. The District Court shall entertain the petition
filed by the petitioner and the concerned Court
shall take note of the period during which this writ
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petition was pending before this Court and the
petition need not be rejected on the ground of
limitation if its otherwise in order. Except giving
this liberty, no further orders can be passed by this
Court. No costs. Connected miscellaneous petition
is closed.'
2.18.At this juncture, the petitioner filed a Writ Petition in
W.P.No.20805 of 2018 seeking for issuance of a Writ of Mandamus,
directing the seventh respondent therein to pay the tender agreed final
pending bill amount of Rs.3,92,01,666/-. When the said W.P.No.20805
of 2018 came up for hearing on 17.03.2023, it was represented that
since the present Writ Petition W.P.No.2673 of 2013 is already pending,
liberty was sought to withdraw W.P.No.20805 of 2018 and to canvas
the same in W.P.No.2673 of 2023 and the said W.P.No.20805 of 2018
was closed with the above liberty vide order, dated 17.03.2023. The
present Writ Petition is filed seeking for a narrow relief of release of the
balance 25% payment.
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3.The learned counsel appearing for the petitioner would
submit that the first respondent/the Chief Engineer (Employer) derived
rates for the substituted/additional items as per the contract letter
No.4560/F. UDUMALPET UGSS/CE/CBE/ dated 02.09.2015. However,
the third respondent/the Executive Engineer withheld 25% of the
derived rates while making payment. The cause of action for
W.P.No.16018 of 2018 is different from the present writ petition. The
dispute redressal committee considered the board proceedings 7(i) &
7(c). The petitioner sent several letters dated 21.06.2021, 06.12.2021
and 31.01.2022 to settle the undisputed amounts early. The redressal
committee sent a letter to convene a meeting on 24.02.2022 and the
redressal meeting was held on 25.02.2022. Again, the petitioner has
sent a letter dated 28.02.2022 before the redressal committee to
resolve the issues. Based on the letter, dated 28.02.2022, the
Executive Engineer vide letter dated 18.05.2022 requested the
petitioner to furnish the details of their grievances and he had also
furnished the same to the Executive Engineer vide letter dated
19.05.2022 and by further reminders on 20.06.2022, 08.08.2022 and
20.10.2022 etc. Even after such repeated requests, there was no
response from the redressal committee about releasing the disputed
payment of the balance 25%.
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4.The learned counsel appearing for the petitioner would
further submit that there was no dispute in the rates and quantities
executed; the action of the respondents withholding payment of the
amount of 25% on substituted items/additional items, the final bill and
other pending bills are arbitrary; the actions of the respondents
withholding payment is unfair since the scheme was completed on
30.06.2016 and the respondents have a duty to act fairly. The third
respondent/the Executive Engineer (Engineer in charge), who is the
competent authority, derived the rates as per clause 16 and site orders
issued by competent authority up to the level of Chief Engineer as per
clause 17 and is only seeking approval for supplemental proposal from
the Managing Director/TWAD Board. The Chief Engineer (Employer)
vide letter dated 02.09.2015 to Managing Director/TWAD Board clearly
stated that 'the rates derived were as per accepted agreement and no
dispute in rates. The supplemental proposal as per B.P.No.27/COM
Wing/ dated 05.02.2002 (Note under item No.7 a), b) & c) does not
arise since the rates for similar items works in the accepted agreement
are available.' The Chief Engineer (Employer) requested that the
supplemental proposal please be approved by the competent authority.
The Engineer in charge has released payment of 75% of accepted rates
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pending acceptance of the supplemental proposal.
5.The learned counsel appearing for the petitioner would
submit that the Writ Petition is maintainable even in case of contracts
with the State. The Hon'ble Supreme Court in MP Power Vs. Sky
Power reported in (2023) 2 SCC 703, has specifically held that the
relief of seeking payment of amounts due from the State is
maintainable and State can be called upon to honour its obligations of
making payment unless there is a serious and genuine dispute raised
relating to the liability of State to make the payment. Only if there is a
genuine dispute and that too if the dispute surrounds dissatisfying of
documents, the Court relegate the party to a civil suit. In the present
case, there cannot be a dispute with regard to payment towards works
executed and the respondent is also not denying the same.
6.The learned counsel appearing for the petitioner would
further submit that there was no dispute in rates and quantities; 25%
of payment was withheld only for getting approval from the higher
authorities which is the internal procedure of the Department and not
binding on the parties and the parties are bound by the contract
entered between the parties; as per clause 42 payment schedule, all
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the payment has to be released on completion of maintenance period
on 31.12.2017, which amounts to Rs.2,22,86,363/-; as per clause
43.2, 2.5% out of the total 5% of the retention amount has to be
released on 31.12.2017 but not yet released which amounts to
Rs.86,48,798/-, which is an undisputed amount; as per clause 43.1,
the retention money has to be released after the guarantee period of 2
years from the completion and commissioning that is after 30.06.2018
and the balance amount yet to be released for additional work amounts
to Rs.47,26,049/- or regarding the recovery proposal of
Rs.1,41,78,149/- by the respondent. Even assuming without admitting
that the amount payable for the additional items is a disputed amount,
the petitioner is entitled for the undisputed amount of
Rs.3,95,83,959/-. The TWAD Board has got no authority to recover this
amount from the undisputed amount without adjudicating and finishing
the issue as per contract. The amount regarding additional items
cannot be ordered to be released, the petitioner prays to order release
of the undisputed amount of Rs.3,95,83,959/- (ie., final bill + retention
with interest form the date of entitlement at the rate of 21% per
annum till the realization of the payment).
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7.The learned counsel appearing for the petitioner relied on
the following Judgments:
'(i) Union of India and others Vs. N.Murugesan
and others reported in (2022) 2 SCC 25.
(ii) Army Welfare Education Society, New Delhi
Vs. Sunil Kumar Sharma and others reported in 2024
SCC Online SC 1683.
(iii) M.P.Power Management Company Limited,
Jabalpur Vs. Sky Power SouthEast Solar India Private
Limited and others reported in (2023) 2 SCC 703.'
8.The third respondent filed a counter affidavit, wherein,
inter alia it is stated that the work of providing under Ground Sewerage
Scheme to Udumalpet Municipality in Tiruppur District was
administratively approved vide G.O.Ms.No.96, Municipal Administration
and Water Supply Department, dated 27.05.2010 for Rs.3933.00 lakhs
and technically sanctioned, vide order dated 23.12.2011 for
Rs.3893.00 lakhs. Subsequently, revised administrative sanction was
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accorded vide G.O.Ms.No.38, Municipal Administration and Water
Supply (MA3) Department, dated 30.03.2012 for Rs.5607.00 lakhs.
The work was awarded to the petitioner by the Chief Engineer, vide
agreement dated 15.04.2013 for a sum of Rs.38,43,44,115/-. During
execution of works, mainly excavation of Dense Medium Rock (DMR),
certain additional and substituted items were executed based on the
site orders of the execution wing, as per the site condition. In the
contract agreement entered between the petitioner and the Tamil Nadu
Water Supply and Drainage Board, the rates for the above additional
items have not been provided. Clause 16 of the agreement deals with
substitute and additional items.
9.The rates for earthwork excavation in Dense Medium
Rock for the initial depths ie., 0-2 m and 2-3 m were derived as
Rs.1818/- and Rs.1863/- respectively based on the rate available at 3-
4 m and 4-5 m in the original agreement for the soil classification of
Dense Medium Rock. Subsequently, supplemental items (Earthwork of
DMR at 0-2m and 2-3m) were executed accordingly and 75% payment
viz., a sum of Rs.1,52,29,171/- was also paid to the petitioner. During
scrutiny of supplemental proposal at Head Office, it was observed that,
the supplemental work was executed in the year 2013-14 whereas, the
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rate for earthwork excavation in Dense Medium Rock (DMR) was
available in the TWAD SoR 2013 to 2014 itself. Hence, the matter was
referred to Chief Audit Office, TWAD Beard, Chennai. In the meanwhile,
the Under Ground Sewerage Scheme to Udumalet Municipality in
Tiruppur District was completed in all aspects on 30.06.2016. After the
trial run for a period of 6 months, the paid maintenance period of one
year was commenced on 01.01.2017 and the same was completed on
31.12.2017. On getting approval for supplemental proposal and after
concluding supplemental agreement, balance 25% of payment will be
made by the Tamil Nadu Water Supply and Drainage Board. The
payment already paid to the petitioner is Rs.33,34,99,101/-. The
balance payment has not been paid in view of the dispute pertaining to
the rate adopted in the supplemental proposal. The Deputy Chief
Engineer stated that when the schedule of rates have changed in the
middle of work, the rates for extra item shall be taken from the current
schedule of rates without any tender premium. Hence, the request of
the petitioner was not accepted and the supplemental proposal was
returned to the Chief Engineer on 06.09.2016. Hence, the petitioner
filed a Writ Petition in W.P.No.36007 of 2016 seeking to release the
pending 25% of the balance amount as per supplemental proposal
based on the rate arrived from the agreement and this Court, by order
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dated 17.10.2016, directed the fifth respondent therein to dispose of
the appeal by the petitioner within a period of six weeks. Accordingly, a
Dispute Redressal Committee meeting was conducted on 06.04.2017
and in that meeting, the petitioner company expressed that the rates
quoted by them for the supplemental item of work are reasonable one
according to the field conditions.
10.The period of execution is during 2013-2014 and as the
schedule of rates have changed from the schedule of rates on the date
of receipt of the tender, the rates for the supplemental item shall be
taken from schedule of rates 2013-2014 without tender premium.
Hence, the Committee decided to make the payment as per the rates
available in TWAD schedule of rates for the year 2013-2014 without
tender premium. Aggrieved by the same, the petitioner filed a Writ
Petition in W.P.No.16018 of 2018 and this Court, by order, dated
07.07.2020, granted liberty to the petitioner to approach the
concerned District Court.
11.In these circumstances, a Dispute Redressal Committee
meeting was held on 21.02.2023 and by letter dated 11.04.2023, it
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has been concluded that the supplemental proposal value is
Rs.35,54,840/-. Upon confirmation from the petitioner company, the
supplemental proposal will be approved by the competent authority
and the supplemental agreement will be entered between the
petitioner and the Chief Engineer (parties of the original agreement).
Thereafter, the concerned Executive Engineer will prepare the
Authorised Extra and Omission Statement (AEO Statement) and the
same needs to be approved by the concerned authority. The final bill
will be prepared and payment will be released to the Petitioner. Hence
the above Writ Petition is premature.
12.The petitioner filed a rejoinder to the counter-affidavit
filed by the third respondent stating that based on the
acknowledgment contractor's consented the rates accepted by the
contractor, the additional items were recorded in the measurement
books and 75% of the payments at the accepted rates were released
and balance 25% is to be released. The petitioner had approached DRC
during later part of 2022 and on 04.02.2023 only for release of
eligible/accepted/undisputed pending payments. But DRC miserably
failed to understand the issue and deviated from our prayer.
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13.The learned counsel appearing for the third respondent
would submit that the Hon'ble Supreme Court has refused to intervene
in a contractual dispute in the case of Noble Resources Limited Vs.
State of Orissa and others reported in 2006 (10) SCC 236, since
there was no violation of Article 14 of the Constitution of India. In the
present case, there is no violation of Article 14 of the Constitution of
India and there is no arbitrariness or favouritism that has been alleged
as against TWAD Board to invoke Article 226 of the Constitution of
India and hence, the Writ Petition is not maintainable.
14.In M/s Bio Tech Systems Vs. State of U.P and
others reported in 2020 SCC Online All 1361, the Allahabad High
Court has held that in a case where the contract entered into between
the State and the person aggrieved is of a non-statutory character and
the relationship is governed purely in terms of a contract between the
parties, in such situations the contractual obligations are matters of
private law and a Writ would not lie to enforce a civil liability arising
purely out of a contract and the proper remedy in such cases would be
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to file a civil suit for claiming damages, injunctions or specific
performance or such appropriate reliefs in a civil Court.
15.The respondent TWAD Board has already released a
sum of Rs.33,34,99,301/- vide LS XCIII & Part Bill and has also
released excess payment of Rs.1,52,29,171.00/- against the additional
DMR work, out of the total value of work done being Rs.35,70,56,339/-
, unless final bill is processed, the payment cannot be released as per
agreement dated 15.04.2013.
16.The petitioner instead of filing a suit before the District
Court, as directed by this Court in W.P.No.16018 of 2018, dated
07.07.2020, approached the Dispute Redressal Committee seeking for
redressal. As per the agreement vide minutes dated 25.02.2022, the
Dispute Redressal Committee confirmed that the rates as per current
schedule of rates ie., rate as per TWAD SoR 2013-2014 without any
tender premium shall be adopted. The revisit or reagitation cannot be
used as a way to avoid complying with the earlier order of this Court.
The claim made by the petitioner is not maintainable. The petitioner
can seek remedy only in terms of the contract. As per the Circular,
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dated 02.01.2018, the final payment can be made by TWAD Board only
after the preparation and approval of the supplementary proposals for
the additional items. Even though the petitioner is not willing to enter
into the supplementary agreement, he has not approached the District
Court till date and prayed for dismissal of the Writ Petition.
17.The learned counsel appearing for the third respondent
relied on the following Judgments:
'(i) Noble Resources Limited Vs. State of
Orissa and another reported in (2006) 10 SCC 236.
(ii) Bio Tech System Vs. State of U.P and
others reported in 2020 SCC Online All 1361.
(iii) Bharat Coking Coal Limited and
others Vs. AMR Dev Prabha and others reported in
(2020) 16 SCC 759.
(iv) Jagdish Mandal Vs. State of Orissa
and others reported in (2007) 14 SCC 517.
(v) In Oil & Natural Gas Corporation
Limited (ONGC Limited) Vs. Saw Pipes Limited
reported in (2003) 5 SCC 705.
(vi) In Tata Motors Limited Vs. Brihan
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Mumbai Electric Supply & Transport Undertaking
(BEST) and others reported in 2023 SCC Online SC
671.'
18.The petitioner filed a response to the written arguments
filed by TWAD and stated that as per Clause 3 of the contract, the
respondent derived the rates and it was accepted by the petitioner. The
respondent has released 75% of payment at the concluded rate itself is
an evident that the rates were settled. The employer in his letter dated
02.09.2015 substantiated the rates derived and subsequently after
extracting the work reducing accepted rates. According to the
petitioner, the amount payable was Rs.47,26,049/-, whereas according
to the respondent, the amount to be recovered from the payment
already released towards additional items was Rs.1,41,78,149/-. These
payments cannot be deducted towards alleged over payment towards
additional works. The respondent relied on a circular, dated 02.01.2018
and this is an internal circular for adoption by the officials. Further, the
circular is on 02.01.2018 ie., after the completion of execution of
additional works. The petitioner submits that the total value of Final bill
payment and retention amount viz., Rs.2,21,50,006.00 and
Rs.1,75,52,595.00 and works out to Rs.3,97,02,601/- as per the
working sheet of the respondent, whereas the petitioner makes out a
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claim of Rs.3,95,83,959/- leaving the amount payable for additional
items. The respondent is not at liberty to recover the disputed amount
without adjudication from the entitled undisputed payment.
19.Heard the learned senior counsels appearing on either
side and perused the materials available on record.
20.On perusal of the materials available on record, it is
seen that as per Clause 16 of the Contract, if additional items that are
not contemplated in the contract are to be executed, the Engineer in
charge will execute the works either through the main contractor/firm
or through any other agency. Payments for such works shall be made
based on the rates derived by the Engineer in charge as per rules in
force. Accordingly, the Chief Engineer is the employer. Engineer means
the Executive Engineer or any other engineer appointed from time to
time by the employer to act as an engineer for the purpose of the
works broad under the contract. Engineer in charge means the
executive engineer or any other engineer authorized by him the
Executive Engineer is the Engineer in charge in this case. The Engineer
in charge is the final authority in technical matters and payment
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consideration as per GCC Clause 3, the Authority of Engineer in Charge
specifies that it should be accepted that the authority of the Engineer
in charge shall be an integral part of the contract in the matters
regarding the quality of materials, workmanship, removal of improper
work, interpretation of contract drawings and specifications, mode and
procedure of carrying out the works where the decision of the Engineer
in charge shall be final and binding of the contractor. The Engineer in
charge shall have absolute authority on all technical matters and
payment considerations. The rates were available in the contract for
SDR and DMR items, but in the case of DMR, there was no rate
available for depths from 0-2 m and 2-3 m. As per the contract, rates
can be derived from similar items of work in the accepted agreement,
based on the agreement condition and the Engineer in charge
(Executive Engineer) derived the rates from the accepted agreement
and the derived rates accepted by the contractor and work was also
executed and completed and the scheme was also put to public
beneficial use. The Engineer in charge ie., the Executive Engineer has
finalized the rates as a depth of 0 m to 2 metres at the rate of
Rs.1818/- per cu.m and for a depth of 2 m to 3 meters at the rate of
Rs.1863/- per cu.m. The derived rates by the Executive Engineer have
also been accepted by the petitioner without any hesitation in a letter
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dated 26.06.2014 addressed to the Executive Engineer, who is the
Engineer in charge. As there was acceptance of rates by both the
parties constituted a contract as there was an offer and acceptance and
consensus ad idem between both the parties and hence a concluded
contract was arrived at. Even though there was no supplemental
agreement entered into, the letter arrived at the Engineer in charge
and was accepted by the petitioner additional works were carried out
and the respondents also released 75% of the payments and did not
release the balance 25%. The contract does not provide for withholding
of 25% of the value of work done which is against the agreement GCC
clause 42-payment schedule, the respondent shall release the same.
According to the petitioner, the balance of 25% payment was not paid
by the respondents, who took a belated hypertechnical stand that a
supplemental agreement was not entered into between the parties.
Clause 34 reads that if these rates do not apply to the additional works
ordered to be carried out, then prior to execution of the additional
works ordered to be carried out, then prior to execution of the
additional work, a rate for such work shall ordinarily be agreed upon
and entered in a supplemental schedule and signed by both the
Engineer in charge and the contractor/firm.
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21.According to the petitioner, payment towards works
executed (undisputed/admitted) was a sum of Rs.2,22,86,363/- and
the balance refund of retention amount is Rs.1,72,97,596/-
(undisputed/admitted) and payment towards additional works ie., 25%
balance of Rs.47,26,050/- (admitted). According to the respondents,
the Writ Petition is not maintainable. As per the agreement, the
redressal forum is the civil forum and the petitioner has to approach
the civil Court only. According to the respondent, they had overpaid by
paying 75% as the rates agreed by them during the works were higher
than their schedule of rates and hence, there is no supplemental
agreement was entered into.
22.The Hon'ble Supreme Court in 2023 (2) SCC 703 [MP
Power Vs. Sky Power] has specifically held that the relief of seeking
payment of amounts due from the State is maintainable. Only if there
is a genuine dispute and that too if the dispute surrounds the
demystifying of documents, the Court relegate the party to a civil suit.
As there is no supplemental agreement has been entered into, but as
per the letter of the engineer-in-chief, the petitioner agreed to execute
the additional works at the rates derived by the executive engineer
from similar items in the BOQ. The executive engineer had already
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issued site orders directing the petitioner to execute the works. The
petitioner completed the works to the respondents and the
respondents also released 75% of the agreed payment amount
between the period 2015 and 2017 the balance 25% was not paid and
the respondent took a hyper-technical stand that a supplemental
agreement was not entered into between the parties.
23.It is to be seen that the respondents have made the
petitioner to execute the additional works and then breach the
promises without any basis by stating that the petitioner himself had
approached the dispute redressal committee and the committee has
rejected the claim made by the petitioner. The grievance raised before
the redressal committee on 28.02.2022 was only to intervene and sort
out the issues regarding the release of payment, whereas, the
redressal committee vide order, dated 21.02.2023 confirmed the
earlier order dated 06.04.2017. There should be a decision resolving
the pending payment, but the redressal committee has passed an
order stating that the rate which was given by the respondents and
accepted by the petitioner is binding on both the petitioner and the
respondents. The rates were derived by the respondents and agreed
upon by the petitioner. If the respondent had arrived at the rates as
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that of now at the time of execution itself the petitioner would have
avoided carrying out this work. The action of the respondents in
revising the rates specifying as 'the rates are on the higher side' after
concluding the rates and extracting the work is arbitrary.
24.According to the petitioner, as per clause 43.1, retention
has to be released after the guarantee period of two years has gone by
from the completion and commissioning on 30.06.2017 and till date,
no amount has been paid by the authorities. When the rate was
derived by the Engineer in charge and was accepted by the petitioner
on 26.06.2014, the Chief Engineer also derived the rates from the
rates available for similar items in the contract and the petitioner states
that it is not mandatory to enter into a separate supplemental
agreement. The rates were settled with mutual consent and there is no
dispute in the rates between contractor and employer is not accepted
by the respondents. The Chief Engineer, vide letter dated 02.09.2015
has stated that the supplemental proposal as per B.P.No.27/COM
WING/dated 05.02.2002 (item Nos.7a, 7b & 7c does not arise) since
the rates for similar items of works in the accepted agreement are
available. The same Chief Engineer after becoming Engineering
Director, after 20 months on 06.04.2017 stated that 'cannot be
deemed to be similar item as the work' in the redressal committee
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meeting and the same was rejected and the redressal committee has
no jurisdiction to fix or refix prices. Hence, the petitioner seeks the
following reliefs:
a) 25% payment was withheld only for getting approval
from the higher authorities which is the internal procedure of the
Department and not binding on the parties.
b) As per clause 42 payment schedule, all the payment has
to be released on completion of the maintenance period on
31.12.2017, which amounts to Rs.2,22,86,363/-. There is no dispute
on this. This Rs.2,22,86,363/- is an undisputed amount.
c) As per clause 43.2, 2.5% out of the total 5% of the
retention amount has to be released on 31.12.2017 but has not yet
been released which amounts to Rs.86,48,798/-, which is an
undisputed amount.
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d) As per clause 43.1, the retention money has to be
released after the guarantee period of 2 years from the completion and
commissioning that is after 30.06.2018, which amounts to
Rs.47,26,049/-.
e) The balance amount yet to be released for additional
work amounts to Rs.47,26,049/-. Since the rates were settled this is
an undisputed amount. But the respondent is not honouring the settled
rate and imposing a recovery of Rs.1,41,78,149/- and attempting to
recover. If at all any dispute ie., only regarding the payment of
Rs.47,26,049/- or regarding the recovery proposal of Rs.1,41,78,149/-
by the respondents.
25.The petitioner states that the respondent can release
the undisputed amount of Rs.3,95,83,959/- ie., final bill + retention
with interest from the date of entitlement at the rate of 21% per
annum till the date of realization of the payment. Since the amount has
been withheld, the same shall be released forthwith.
26.The learned counsel appearing for the respondents
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would submit that the supplemental proposal will be approved by the
competent authority and the supplemental agreement will be entered
between the petitioner and the Chief Engineer (parties of the original
agreement). Thereafter, the concerned Executive Engineer will prepare
the Authorised Extra and Omission Statement (AEO Statement) and
the same needs to be approved by the concerned authority. The final
bill will be prepared and payment will be released to the Petitioner.
Hence the above Writ Petition is premature and submits that the
averments in paragraphs 1 to 4 are formal in nature and the petitioner
is put to strict proof of the same. The averments in paragraphs 5 and 6
have been suitably rebutted in the earlier paragraphs. Regarding the
averments in paragraph 7, it is submitted that for additional items of
work executed by the petitioner, the derived rates are adopted taking
into account the dense medium rock rates available in the agreement
in 3rd depth of 3 m to 4 m and 4th depth of 4 m to 5 m. The petitioner
has given a consent letter to execute the additional items at derived
rates. The payment at 75% of the derived rate value has already been
released to the petitioner subject to the approval of the supplemental
proposal by higher authorities. Payment made in the running bills LS
VIII & part LS XVI & part on various dates in order to achieve the
progress without any financial hindrance. With respect to averments in
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para 8 and 9, the petitioner is put to strict proof of the same.
27.According to the respondents, only upon finalising the
supplemental agreement, the petitioner contractor is eligible for the
balance 25% of the value. In this case, due to a dispute in the derived
rate, the supplemental proposal has not been approved and the
supplemental agreement has not been finalized. The dispute redressal
committee, after having a detailed discussion, has decided not to
accept the contractor's claim and allowed the claim to the extent
permitted as per the schedule of rates for the year 2013-2014.
28.Further, according to the respondents, the petitioner
filed a Writ Petition in W.P.No.16018 of 2018 and this Court, by order,
dated 07.07.2020, directed the petitioner to work out its remedy
before the competent District Court as per the terms of agreement and
the Writ Petition is hit by principles of res judicata and this has become
final and he has to approach the competent civil Court as directed by
this Court. According to them, there is no such amount as an
'undisputed amount' and the sum due to the petitioner will be settled
only after entering into a supplementary agreement. Even if the
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petitioner is unable to quantify the 'undisputed amount', the petitioner
cannot maintain the same and he has to approach the competent civil
Court. Further, according to the respondents, it is for the Tamil Nadu
Water Supply and Drainage (TWAD) Board to resolve the issue, prepare
the supplemental proposals and regulate the payment as decided by
the dispute redressal committee.
29.This order was passed by the dispute redressal
committee long ago and till date, they have not entered into a
supplemental agreement for the extra work done, this Court is of the
view that the TWAD Board cannot take the law into their own hands
and state that the redressal committee having detailed discussions
decided not to accept the contractor's claim and allowed the claim to
the extent permitted as per the schedule of rates for 2013-2014.
However, on perusal of the records it is seen that till date, the
respondents have not come out with appropriate figures and it is not
known how they are entitled to retain the said amount without
releasing the retention amount. Further, if the TWAD Board takes a
stand that they will resolve the issue regarding the supplemental
proposals and regular payment as decided by the dispute redressal
committee has also been put forth before this Court to show what the
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amount will be derived at and what is the amount to be paid to the
petitioner is also not known. Then how the respondents can state that
the disputed amount is not quantified and how do the authorities
expect the petitioner to go and approach the civil Court.
30.Hence, this Court is of the view that the third
respondent/the Executive Engineer, TWAD Board has to prepare the
supplemental proposal and proceed further in the manner known to
law in this regard. The writ petitioner is entitled for the amount which
he should be allowed to receive, after the execution of work as per the
original contract which has to be quantified by the authorities, within a
period of three months from the date of receipt of a copy of this order.
It is left open to the parties to proceed further thereafter in accordance
with law.
31.With the above directions, this Writ Petition is disposed
of. No costs. Consequently, connected Miscellaneous Petition is closed.
16.10.2024
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Index : Yes/No
Internet : Yes/No
ps
To
1.The Chief Engineer (A/C),
TWAD Board,
No.30, Bharathi Park Road,
Siruvani Nagar,
Coimbatore – 641 043.
2.The Superintending Engineer,
TWAD Board,
Coimbatore.
3.The Executive Engineer,
TWAD Board,
Sewerage Division,
Pollachi.
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V.BHAVANI SUBBAROYAN, J.
ps
16.10.2024
https://www.mhc.tn.gov.in/judis
