M/S M.K.Gupta And Company Through ... vs The Union Of India
2021 Latest Caselaw 4996 Patna

         IN THE HIGH COURT OF JUDICATURE AT PATNA
                   Civil Writ Jurisdiction Case No.7977 of 2020
     ======================================================

M/S M.K. Gupta & Company, through its Partner Bishnu Kumar Gupta Male, aged about 58 Years, S/o Late Ram Niwash Gupta, R/D Metro Heights, 2.5 Mile, Sevoke Road, P.O. and P.S. Siliguri District-Darjeelilng-734001 (West Bengal).

... ... Petitioner/s Versus

1. The Union of India through the General Manager (W), Northeest Frontier Railway, Maligaon Gauhati-781011.

2. The Divisional Railway Manager (Works) DRM Office, Katihar Division, Northeast Frontier Railway, P.O. Katihar, District Katihar-854105.

3. The Senior Divisional Finance Manager (Incharge) Katihar Division, Northeast Frontier Railway, District-Katihar-854105.

4. The Senior Divisional Engineer, Coordination Katihar Division, Northeast Frontier Railway, Distreict-Katihar-854105

5. The Divisional Engineer Line Katihar Divisional, Northeast Frontier Railway, District-Katihar-854105

6. The Assistant Divisional Engineer/1/New Jalpaiguri Katihar Division, Northeast Frontier Railway, District-New Jalpaiguri-734004

7. The Senior Section Engineer Wotks , NEW JALPAIGURI Katihar Division, Northeast Frontier Railway, District-New Jaipaiguri-734004

... ... Respondent/s ====================================================== Appearance :

For the Petitioner/s : Ms.Anukriti Jaipuriyar, Adv. For the Respondent/s : Mr. Anshuman Singh, Adv. ====================================================== CORAM: HONOURABLE MR. JUSTICE VIKASH JAIN ORAL JUDGMENT Date : 26-10-2021

Heard learned counsel for the petitioner and counsel for

the respondents. Learned counsel for the petitioner has filed an

undertaking to remove all defects pointed out by the Stamp

Reporter as and when required. It is accordingly directed that all

defects pointed out by the Stamp Reporter be removed within one

month hereof.

Patna High Court CWJC No.7977 of 2020 dt.26-10-2021

2. The present writ petition has been filed for the

following reliefs as formulated by the petitioner-

"1(i) For issuance of writ in the nature of

Certiorari to quash and set aside the Memorandum No.

W/362/17-18/ROB/Fulbari- Gazoldova/L/ W-2 dated

03.06.2020 whereby and whereunder the penalty of

liquidated damages to the tune of Rs. 53,50,108.85/-

(Rupees Fifty Three Lakhs Fifty Thousand One Hundred

Eight and Eighty-Five Paise) have been imposed upon the

Petitioner for the grant of extension of time of work

contract during the COVID-19 pandemic period from

31.03.2020 to 31.07.2020.

(ii) To hold and declare that the imposition of

penalty of Rs. 53,50,108.85/- for grant of extension of time

of work contract during the COVID-19 global pandemic

from 31.03.2020 to 31.07.2020, despite the Force Majeure

Clause 17 of Indian Railways Standard General Conditions

of Contract (hereinafter to be referred as "the GCC") in

effect is illegal and unjust.

(iii) For issuance of writ in the nature of

Mandamus directing and commanding the Respondent

authorities to allow the Petitioner to complete the approved

balance work which is less than 10% of the work contract

and has been put on hold by the Railway authorities vide Patna High Court CWJC No.7977 of 2020 dt.26-10-2021

Letter No. W/362/17-18/ROB/Fulbari-Gazoldova/L/W-2

dated 15.07.2020.

(iv) To pass any other relief or reliefs for which

the petitioner is found to be entitled in the facts and

circumstances of the case."

3. The short facts of the case, according to the petitioner-

firm, are that it participated in Tender Notice No. KIR/Engg./03 of

2018 floated by the respondent authorities for construction of road

overbridge at Fulbari-Gazoldoa Canal Road, and on being found

duly eligible, a letter of acceptance was issued on 25.05.2018.

Thereafter, the contract agreement was entered into between the

petitioner and the respondents on 01.08.2018 for total estimated

cost of the work of Rs. 10,00,09,289.13/- which was scheduled to

be completed by 24.11.2019. Owing to certain reasons, the work

was delayed and a request for extension of time under Clause 17A

of the General Conditions of Contract (the "GCC") on 08.11.2019

was made by the petitioner, which was granted without liquidated

damages till 31.03.2020 vide letter dated 09.01.2020 issued by the

respondents. On the same day i.e. on 09.01.2020, the respondents

also proposed for variation in quantities of work which was also

required to be sanctioned by the Railway authorities in writing,

pending which the work was not to proceed in terms of Clause 41

of the GCC. The proposed variation was not sanctioned and Patna High Court CWJC No.7977 of 2020 dt.26-10-2021

approved by the respondent authorities within the extended time

till 31.03.2020. Besides, in view of the outbreak of COVID-19 and

consequent national lock-down on 24.03.2020 onwards, the work

could not proceed and accordingly, a request was made on

27.03.2020 for extension of time till 31.07.2020. On such request,

the Sr. Section Engineer, Work, New Jalpaiguri noted that 90% of

the work had been completed and that the Railway would not

suffer any loss if such extension were granted. However, by the

impugned letter dated 03.06.2020, a penalty of Rs. 53,50,108.85/-

was imposed upon the petitioner for grant of extension of time

from 31.03.2020 to 31.07.2020.

4. Ms. Anukriti Jaipuriyar, learned counsel for the

petitioner submits that the action of the respondent Railway in

imposing the penalty is completely arbitrary and unjustified in the

facts and circumstances of the case. It is submitted that in view of

the variation proposed by the Railway on 09.01.2020 (Annexure-

P/5), the petitioner could not execute the work in view of Clause

41 of the GCC until modification was made in writing and signed

by the parties. It is the specific stand of the petitioner that the

proposed modification has not been sanctioned in writing until

expiry of the extended time of 31.03.2020 rather the same was Patna High Court CWJC No.7977 of 2020 dt.26-10-2021

communicated much later vide letter dated 10.06.2020 by the

Railways (Annexure-P/10).

5. It is then submitted on behalf of the petitioner that in

any event, in view of COVID-19 pandemic, complete lock-down

in the country had been imposed on 24.03.2020. Accordingly, the

petitioner vide letter dated 25.03.2020 requested for extension of

time to complete the work till 31.07.2020. The request of the

petitioner was found to be justified as evident from the very fact

that the Sr. Section Engineer forwarded the request to the

Divisional Engineer, observing that no loss to the Railway would

be caused upon extension of time. In this regard, the petitioner

invites reference to Clause 17 of the GCC which contemplates that

in the event of Force Majeure, either party was required to give

notice within a period of 30 days from the date of occurrence and

neither party was entitled to terminate the contract by reason of

such event.

6. Learned counsel for the respondent Railway appears

and has been heard. He relies on the counter affidavit to oppose the

writ petition, submitting that the petitioner cannot take advantage

of the short overlapping period of lock-down with effect from

24.03.2020 for about a week till expiry of the extended time of

31.03.2020. It is submitted that admittedly 90% of the work had Patna High Court CWJC No.7977 of 2020 dt.26-10-2021

already been completed and the petitioner could have very well

have completed the remaining work before 31.03.2020, especially

in the backdrop of the fact that girders were launched over the

piers by the petitioner.

7. Having heard the parties and on consideration of

materials on record, this Court finds merit in the writ petition. It is

not in dispute that by letter dated 09.01.2020, the respondent

Railway proposed variation in the quantities of work which was

finally sanctioned by letter dated 10.06.2020 (Annexure-P/10). It

is relevant to advert to the provisions of Clause-41 of the GCC at

this stage -

"41. Modification To Contract To Be In Writing : In the event of any of the provisions of the contract requiring to be modified after the contract documents have been signed, the modifications shall be made in writing and signed by the Railway and the Contractor and no work shall proceed under such modifications until this has been done. Any verbal or written arrangement abandoning, modifying, extending, reducing or supplementing the contract or any of the terms thereof shall be deemed conditional and shall not be binding on the Railway unless and until the same is incorporated in a formal instrument and signed by the Railway and the Contractor, and till then the Railway shall have the right to repudiate such arrangements."

8. From the above, there can be no gainsaying that a bar

was cast on the petitioner from carrying out the work during the Patna High Court CWJC No.7977 of 2020 dt.26-10-2021

period between 09.01.2020 and 10.06.2020 pending sanction of

the proposed variation. The stand of the respondent Railway that

the petitioner had launched girders over the piers within the

overlapping period of lock-down from 24.03.2020 to 31.03.2020

has been explained in Para-18 of the petitioner's rejoinder to the

effect that in absence of approval of variation under Clause 41 of

GCC, the petitioner was at risk of being denied payment for any

work done until sanction of the proposed variation. However, the

petitioner with the bona fide intention of completing as much of

the project as possible, assumed monetary risk and carried out

minor work of protective nature such as preventing land from

sliding and applying bolts to the several metalize pieces of girder

to create a block of specified metres of girder.

9. It is well known that there was nationwide lockdown

from 24.03.2020 due to COVID-19 pandemic. Clause 17 of the

GCC takes into consideration the untoward situation of this nature

in the following terms -

"17. Force Majeure Clause : If at any time, during the continuance of this contract, the performance in whole or in part by either party of any obligation under this contract shall be prevented or delayed by reason of any war, hostility, acts of public enemy, civil commotion, sabotage, serious loss or damage by fire, explosions, epidemics, strikes, lockouts or acts of God (hereinafter, referred to events) provided, notice of the happening of any such event is given by either party to Patna High Court CWJC No.7977 of 2020 dt.26-10-2021

the other within 30 days from the date of occurrence thereof, neither party shall by reason of such event, be entitled to terminate this contract nor shall either party have any claim for damages against the other in respect of such non- performance of delay in performance, and works under the contract shall be resumed as soon as practicable after such event has come to an end or ceased to exist, and the decision of the Engineer as to whether the works have been so resumed or not shall be final and conclusive, PROVIDED FURTHER that if the performance in whole or in part of any obligation under this contract is prevented or delayed by reason of any such event for a period exceeding 120 days, either party may at its option terminate the contract by giving notice to the other party."

10. The petitioner vide letter dated 16.04.2020

(Annexure-P/8) duly apprised the Railway in compliance with the

said Clause 17 of the GCC which requires notice of such event to

be given by either party within 30 days of the occurrence. A

specific reference was made to Clause 17 of the GCC containing

the Force Majeure clause. In this view of the matter, it is difficult

to appreciate the action of the respondents in imposing penalty by

way of liquidated damages for extension of time which is in the

teeth of the specific terms of Clause 17 of the GCC and prohibits a

party from making claim for damages against the other party in

respect of non-performance or delay in performance of the work.

From the statement made in para-1(iii) of the counter affidavit, it Patna High Court CWJC No.7977 of 2020 dt.26-10-2021

transpires that the work has since been completed on 31.07.2020

within the extended period from 01.04.2020 to 31.07.2020.

11. The respondents have not come up with any

satisfactory reasons in order to justify the imposition of liquidated

damages for extension of time or why the petitioner has been

denied the benefit of Clauses 41 and 17 of the GCC.

12. In these circumstances, I hold that the authorities

have arbitrarily and unjustifiably imposed liquidated damages of

Rs. 53,50,108.85/- upon the petitioner which cannot be sustained.

Accordingly, the impugned order dated 03.06.2020 is set aside and

the petitioner shall be entitled to all consequential benefits.

13. In the result, this writ application stands allowed.

14. Office shall follow-up to ensure that all defects are

removed and compliance with the notices of this Court are made

by the petitioner within the stipulated time provided in para 1

hereinabove, failing which the matter shall be brought to the notice

of this Court.

(Vikash Jain, J) rishi/-

AFR/NAFR                NAFR
CAV DATE                NA
Uploading Date          29.10.2021
Transmission Date