Rajasthan High Court - Jodhpur

M/S. Ummed Construction Company vs State Of Rajasthan on 11 September, 2023

Bench: Nupur Bhati

[2023:RJ-JD:28056]

      HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
                       JODHPUR


                  S.B. Civil Writ Petition No. 1842/2020

M/s. Ummed Construction Company, Through Its Proprietor
Ummed Bishnoi S/o Shri Teja Ram Ji Bishnoi, Aged About 32
Years, Having Registered Office At C-333, Saraswati Nagar, Basni
1St Phase, Jodhpur.
                                                                             ----Petitioner
                                          Versus
1.       State       Of     Rajasthan,          Through         Principal       Secretary,
         Government Of Rajasthan Public Health And Engineering
         Department, Jaipur.
2.       Chief Engineer (Project), Public Health And Engineering
         Department, Jodhpur.
3.       Superintending Engineer, Public Health And Engineering
         Department, Sirohi Circle, Sirohi.
4.       Executive         Engineer,        Public      Health         And    Engineering
         Department, Sirohi Circle, Sirohi.
                                                                        ----Respondents


For Petitioner(s)                :    Mr. Sajjan Singh Rathore
For Respondent(s)                :    Mr. Pankaj Sharma, AAG with
                                      Mr. Rishi Soni



               HON'BLE DR. JUSTICE NUPUR BHATI

                                     JUDGMENT

Judgment Reserved on                          <><><>                   04/09/2023
Date of Pronouncement                         <><><>                   11/09/2023

1. The instant writ petition has been filed by the petitioner-M/s.

Ummed Construction Company, through its Proprietor Ummed

Bishnoi, under Article 226 of the Constitution of India with the

following prayers:-

"A. By an appropriate writ, order, or directions, the order dated 07.01.2020 (Annex.9), recovery notice dated

[2023:RJ-JD:28056] (2 of 16) [CW-1842/2020]

28.01.2020 (Annex.11) and any notice, order or communication already passed or passed during pendency of the writ petition in pursuance to the order dated 07.01.2020 (Annex.9) may kindly be quashed and set aside.

B. By an appropriate writ, order or directions, any NIT if already issued or issued during the pendency of the writ petition in pursuance to the Order dated 07.01.2020 (Annex.9) for getting the remaining work done at the risk and cost of the petitioner company may kindly be quashed and set aside.

C. By an appropriate writ, order or directions, the respondents may kindly be directed to execute the agreement/contract in pursuance to the work order dated 15.12.2018 (Annex.2) and also to make available the lay out plans for the awarded work.

D. By an appropriate writ, order or directions, the respondents may kindly be restrained from taking any action against the petitioner company for stopping the work, awarded in pursuance to the order dated 15.12.2018 (Annex.2)."

2. With the consent of learned counsel representing the parties,

the matter is heard finally and is being decided today itself.

3. Brief facts of the case are that the petitioner, a proprietor

firm, applied in the NIT No.2018-2019/128 for the work of

'Providing Laying Jointing and Commissioning of various sizes

HDPE Pipeline, other allied works under UWSS Sirohi against Old

and Polluted Pipe Line.' The petitioner-company being the lowest

bidder, was issued the work order dated 15.12.2018 with a

condition that the petitioner-company should execute the formal

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agreement with a non-judicial stamp of Rs.12,180/- on receipt of

this letter and further that the date of commencement of the work

will be the date of issuance of the order i.e. 15.12.2018 and the

date of completion was the date after two months from the date of

commencement, meaning thereby that the petitioner-company

was required to complete the said work within a period of two

months.

4. In the work order, it was also mentioned that the work is to

be started within ten days of the passing of the order or else, it

will be get done from the other party at the risk and cost of the

petitioner-company. The petitioner-company immediately

contacted the office of the respondent-Executive Engineer for

execution of formal agreement, but due to unavoidable

circumstances and the occupation of the office in some other

work, formal agreement was not executed.

5. The petitioner-company started working in pursuance of the

work order dated 15.12.2018. The formal agreement was not

executed even after about one and a half month and therefore,

the petitioner-company stopped the work and requested the

respondent to execute the formal agreement.

6. The respondents issued communication dated 07.02.2019

and 14.02.2019 (Annexure-3) to the petitioner-company to

complete the work. The petitioner approached the respondents

and requested them to execute the formal agreement in order to

start the work but no action whatsoever was taken in this regard.

[2023:RJ-JD:28056] (4 of 16) [CW-1842/2020]

The petitioner-company made a communication dated 12.04.2019

(Annexure-4) to the respondents that the rates which are being

reserved are not proper and therefore, the work order may be

cancelled. The petitioner-company again started the work upon

the assurance of the respondents that soon, the agreement would

be executed but when the agreement was not executed, the

petitioner-company again stopped the work on 14.06.2019.

7. The petitioner-company was issued several notices dated

16.09.2019, 19.09.2019, 14.10.2019 and 22.10.2019 (Annexure-

5), mentioning in it that the petitioner-company should start the

work and if the work is not started, then, the action as per clause

2 and 3 of the agreement/contract would be initiated. The

petitioner-company, again approached the respondents and

requested them to execute the formal agreement, but, despite

such request, the respondents issued final notice dated

29.11.2019 (Annexure-6), calling upon the petitioner to submit

reply in reference to the proposed action as per clause 2 and 3 of

the contract, or else, ex-parte proceedings would be initiated

against the petitioner-company.

8. The petitioner-company submitted the reply dated

12.12.2019 to the notice dated 29.11.2019, stating therein that

the petitioner-company was ready to perform the work and the

same was stopped as the formal agreement was not executed

between the parties. The respondents made a communication

dated 03.01.2020 amongst themselves while informing that the

petitioner-company has done the work of about Rs.1,03,653/- till

[2023:RJ-JD:28056] (5 of 16) [CW-1842/2020]

14.06.2019 and thereafter, the work was stopped and despite

several notices, the petitioner-company did not start the work

again and thus, the respondents proposed to take action against

the petitioner-company.

9. The respondent No.3-Superintending Engineer, passed an

order dated 07.01.2020 (Annexure-9) against the petitioner-

company and imposed penalty of Rs.4,76,764.61/- i.e. 10% of

remaining work of Rs.47,67,646.10/- and also directed to get the

remaining work done at the risk and cost of the petitioner-

company after issuing fresh NIT. The petitioner-company

submitted a representation dated 16.01.2020 (Annexure-10), but

the respondent No.4-Executive Engineer, vide recovery notice

dated 28.01.2020 (Annexure-11), directed the petitioner-company

to deposit the penalty amount in light of the order dated

07.01.2020, within 7 days and thus, the petitioner-company being

aggrieved of the impugned orders viz. 07.01.2020 (Annexure9)

and 28.01.2020 (Annexure-11), preferred the present writ

petition.

10. Learned counsel Mr. Sajjan Singh Rathore, appearing for the

petitioner, made following submissions that:-

(a) The action taken against the petitioner-company, is based on

the clauses and conditions of the agreement which was not

executed on a proper paged stamp duty and thus, in the absence

of any agreement having signatures of both the parties, the action

of the respondents is not sustainable.

[2023:RJ-JD:28056] (6 of 16) [CW-1842/2020]

(b) The petitioner-company on various occasions made a request

to the respondents to execute the formal agreement, but the

respondents did not pay any heed to it and despite the same not

being executed, the petitioner-company started the work on two

occasions but as the formal agreement was not executed, the

petitioner-company had no choice but to stop the work on

14.06.2019.

19.09.2019, 14.10.2019 and 22.10.2019, have not pointed out

anywhere that the agreement has not been executed, despite

that, the petitioner-company had been requested for execution of

the formal agreement time and again whereas, in all the notices,

the respondents have simply stated that the work has been

stopped by the petitioner-company but the particular reason for

stopping the work has not been mentioned.

(d) In accordance with clause 25.1 of the Tender Document

(Annexure-1), it is mandatory that the successful bidder shall sign

the contract agreement within ten days of the department notice,

but the respondents have failed to sign the contract agreement

with the petitioner-company.

(e) Under clause 25.1, only following documents can be

considered as a contract agreement i.e. agreement placed as

Annexure-3 in the tender document, letter of award and the bid

documents with all addendum contained in it. But in the present

case, as the agreement has not been signed between the parties,

therefore, the respondents could not have initiated proceedings

[2023:RJ-JD:28056] (7 of 16) [CW-1842/2020]

against the petitioner-company under clause 2 and 3 of the

contract agreement.

(f) The clause 26.3 of the tender document, stipulates that it

was mandatory upon the respondents to execute the agreement

with the petitioner-company and it was a prerequisite condition

and without fulfilling the prerequisite condition, the respondents

could not have initiated the proceedings against the petitioner-

company by imposing penalty and getting the remaining work

done at the risk and cost of the petitioner-company by third party.

(g) Learned counsel for the petitioner submitted that as per

Article 299 of the Constitution of India, the respondents were

under an obligation to execute the agreement on behalf of Hon'ble

the Governor of Rajasthan, but the respondents have failed to do

so.

11. Learned counsel for the petitioner placed reliance upon the

judgment rendered by Hon'ble Apex Court in the case of State of

Punjab Vs. Om Prakash Baldev Krishan reported in 1988 64

CCC 817, decided on 23.08.1988. Relevant portion of the said

judgment is reproduced hereinbelow:-

"This Court reiterated that under that section a contract entered into by the Governor of a Province must satisfy three conditions, namely, (i) it must be expressed to be made by the Governor; (ii) it must be executed; and (iii) the execution should be by such persons and in such manner as the Governor might direct or authorise. These three conditions are required to be fulfilled. This position was reiterated by this Court again in Seth Bikhraj Jaipuria v.

Union of India, (1962) 2 Scr 880: (air 1962 Se 113). This Court explained that three conditions as mentioned in State of Bihar v. Karam Chand Thapar (air 1962 Sc 110) (supra)

[2023:RJ-JD:28056] (8 of 16) [CW-1842/2020]

had to be fulfilled, and further reiterated that the object of enacting these provisions was that the State should not be saddled with liability for unauthorised contracts and, hence, it was provided that the contracts must show on their faces that these were made by the Governor-General and executed on his behalf in the manner prescribed by the person authorised. It is based on public policy. No question of waiver arises in such a situation. If once that position is reached, and that position is well-settled by the authorities over a long lapse of time, no question of examining the purpose of this requirement arises. In Union of India v. A.1. Rallia Ram (1964) 3 Ser 164 (air 1963 Sc 1685), this Court again reiterated that the agreement under arbitration with the Government must be in accordance with section 175(3) of the Government of India Act, 1935. These principles were again reiterated by this Court in Timber Kashmir Pvt. Ltd. v. Conservator of Forests, Jammu, (1977) 1 Scr 937: (air 1977 Sc 151). There, the Court was concerned with section 122(1) of the Jammu & Kashmir Constitution which corresponded to Article 299(1) of the Constitution of India. In that case all the three applications filed by the respondent State for a reference to an arbitrator under section 20 of the Jammu & Kashmir Arbitrator Act, were dismissed by a single Judge of the Jammu & Kashmir High Court on the ground that the arbitration clause was, in each case, a part of an agreement which was not duly executed in accordance with the provisions of section 122(1) of the Jammu & Kashmir Constitution which corresponded to those of Article 299(1) of the Constitution of India. But the Division Bench allowed the appeals holding that if contracts were signed by the Conservator of Forests in compliance with an order of the Government, the provisions of section 122(1) of the Jammu & Kashmir Constitution could not be said to have been infringed. This Court held that the contract could not be executed without the sanction. Nevertheless, if the sanction could be either expressly or impliedly given by or on behalf of the Government, as it could, and, if some acts of the Government could fasten some obligations upon the Government, the lessee could also be estopped from questioning the terms of the grant of the sanction even where there is no written contract executed to bind the lessee. But, once there had been a valid execution of lease by duly authorised officers, the documents would be the best evidence of sanction. In that case, the contracts were executed on behalf of the Government of Jammu and Kashmir. The only question with which the Court was concerned in that case was whether the contracts executed by duly authorised officials had been proved or not. It was held that it was so proved."

[2023:RJ-JD:28056] (9 of 16) [CW-1842/2020]

12. Learned counsel for the petitioner, thus, urged, that the writ

petition deserves to be dismissed and the impugned orders dated

07.01.2020 (Annex.9) and 28.01.2020 (Annex.11) may be

quashed and set aside.

13. Per contra, Mr. Pankaj Sharma, learned AAG assisted by Mr.

Rishi Soni, Advocate, vehemently opposed the submissions

advanced by the petitioner's counsel and made following

submissions that:-

(a) The petitioner-company raised the issue of alleged non-

execution of the agreement only after issuance of final notice

dated 19.11.2019 and prior to that, the petitioner-company never

came to the respondents for execution of the formal agreement so

much so, that the petitioner-company at the midst of the work,

asked for cancellation of the work order while raising objection

regarding the reserved rates by way of submitting an application

placed on record as Annexure-4 dated 12.04.2019.

(b) The said stand of the petitioner-company reveals the

intention and the fact that the petitioner-company was having the

complete knowledge and understanding that the letter of

acceptance and other documents, form a binding contract between

petitioner-company and the person authorized and there was no

valid reason that the petitioner-company stopped the work and

thus, to escape the consequential liabilities for non-completion of

the work, the petitioner-company has admitted to take undue

benefits while concocting false and cooked up story.

[2023:RJ-JD:28056] (10 of 16) [CW-1842/2020]

specifically stated in the writ petition that the formal agreement

has not been executed in regard to the work in question, which is

in itself false and no such ground exists in the matter as terms of

the tender document as well as the letter of acceptance are clear

and the two documents together constituted a binding contract

agreement to which, a number has also been allotted in favour of

the petitioner-company as 117/2018-19 and thus, there was no

requirement of a formal agreement to be executed between the

petitioner-company and the respondents.

(d) The objection raised by the petitioner-company before

issuance of final notice dated 29.11.2019, is only in respect to the

rates and thee is no whisper regarding the non-execution of

formal agreement between the parties and the petitioner-company

has also not placed on record any document whatsoever to

substantiate that the petitioner-company took the necessary steps

for execution of the formal agreement.

(e) The letter of acceptance (Annexure-2) also mentions the

duration of the period during which, the said work ought to have

been completed by the petitioner-company which is :-

"(a) Stipulated Dt. of commencement date of issue of this order.

(b) Stipulated Dt. of completion 02 (Two) Month after stipulated Dt. Of Commencement.

The work is to be started immediately, so in case of work is not started with in 10 days from date of issue of this order then it will allotted to other party on your risk and cost."

[2023:RJ-JD:28056] (11 of 16) [CW-1842/2020]

The petitioner-company though, started the work in time but

failed to complete the same within the stipulated time period of

two months and the letter dated 07.09.2019 issued by the Office

of Assistant Engineer, PHED, Sub-Division, Sirohi, reflected that

upon such non-completion of the said work by the petitioner-

company, it was causing grave inconvenience to the public at

large.

(f) The petitioner-company was served upon various

notices/letters, but the petitioner-company never replied to the

said notices/letters and never raised any objection that upon non-

execution of the formal agreement between the parties, the

petitioner-company had stopped the said work. The petitioner-

company chose to remain silent even after issuing various number

of notices (Annexure-5) and the impugned orders dated

07.01.2020 (Annexure-9) and 28.01.2020 (Annexure-11), were

passed after affording the petitioner-company a reasonable

opportunity of hearing and despite the fact that the period of

completion of the work order was over, the petitioner-company

was given several opportunities to complete the work order, but

the petitioner-company did not complete the same.

Learned AAG, thus, urged, that the writ petition deserves to

be dismissed with costs.

14. Heard learned counsel representing the parties as well as

perused the material available on record.

[2023:RJ-JD:28056] (12 of 16) [CW-1842/2020]

15. This Court finds that the petitioner-company was duly issued

the letter of acceptance (Annexure-2) dated 15.12.2018 wherein,

it was categorically stipulated that the said work was to be started

immediately within ten days from the date of issue of the order

dated 15.12.2018 or else, it will be allotted to other party at the

risk and cost of the petitioner-company. Also, in the said order

dated 15.12.2018, it was categorically mentioned that the said

work has to be completed within the stipulated time period of two

months. Undoubtedly, the petitioner started the said work well

within time. Though, the formal agreement on non-judicial stamp

paper of Rs.12,180/- was not executed between the petitioner-

company and the respondents but the petitioner company utterly

failed to complete the allotted work within the stipulated time

period.

16. It has been vehemently submitted by the learned counsel for

the petitioner that the petitioner-company time and again,

requested the respondents to execute the formal agreement so

much so, that the petitioner-company also personally approached

the respondents requesting them for the execution of the formal

agreement, but no heed was paid by the respondents. It has also

been contended that the petitioner-company stopped the work

and again started the work upon the verbal assurance of the

respondents that soon the agreement would be executed but the

work was again stopped on 14.06.2019 upon non-execution of the

agreement. The petitioner-company in order to substantiate the

steps taken by it, has not placed on record any document in order

[2023:RJ-JD:28056] (13 of 16) [CW-1842/2020]

to show that repeatedly, it requested the respondents to execute

the agreement and no action was taken by them and therefore,

the petitioner-company was left with no option but to stop the

work.

17. It is also seen that the respondents issued several notices to

the petitioner-company which have been placed on record as

Annexure-5 whereby, the petitioner-company was repeatedly

cautioned to complete the work and in the notice dated

16.09.2019, it has also been mentioned that vide letter dated

03.06.2019, issued by the Assistant Engineer, PHED, Sirohi, the

petitioner-company was directed to get the measurements of the

work done by him, but neither the petitioner-company was

present nor its representative for getting the measurement of the

said work done.

It is an admitted fact that despite several notices being

served upon the petitioner-company for completing the work

within a period of 15 days from the issuance of such notices, the

petitioner-company neither completed the work, nor showed its

inability to complete the work on the ground of non-execution of

the agreement, nor bothered to respond to the notice dated

16.09.2019, showing its or its representative's inability to get the

measurements of the work done by it. It is also important to note

that despite stipulated period of two months being over, the

respondents gave several opportunities to the petitioner-oompany

by way of repeated notices (Annexure-5) to complete the work but

the petitioner-company did not avail the said opportunities and left

[2023:RJ-JD:28056] (14 of 16) [CW-1842/2020]

the work incomplete. The petitioner-company was served upon the

final notice dated 29.11.2019 (Annexure-6), by the respondents

for submitting its explanation in regard to violation of the

condition No.2 and 3 of the contract and it was for the first time

that the petitioner-company responded to the said final notice by

filing reply dated 12.12.2019 (Annexure-7) stating therein that

the petitioner had stopped the said work as there was no

agreement entered between the petitioner and the respondents.

Thereafter, the respondent No.4-the Executive Engineer vide

communication dated 03.01.2020 (Anenxure-8) directed the

respondent No.3-the Superintending Engineer to take appropriate

action against the petitioner-company upon non-completion of the

said work, a copy of which was duly sent to the petitioner-

company as the same has not been denied.

18. The petitioner-company did not respond to the said

communication dated 03.01.2020 (Annexure-8), as nothing has

been placed on record, even though, the petitioner received a

copy of the said communication. This fact also cannot also be

ignored that the petitioner himself had written a letter to the

respondents dated 12.04.2019 (Annexure-4), requesting the

respondents to cancel the work order on the ground that the

reserved rates were improper. The said communication is

reproduced hereinbelow:-

"दिनां क : 12.04.19

श्रीमान अधिशाषी अभियन्ता

जन स्वा० अभि० विभाग

सिरोही

[2023:RJ-JD:28056] (15 of 16) [CW-1842/2020]

विषय :- आपके द्वारा दिया गया कार्य आदे श सं . 4821/2013-1 15.12.2018 के बारे में

उपरोक्त निवे दन है कि मेरी फर्म सं . UWES Sirohi against old and Polluted Pipe Lines का कार्य डाला था। जो की इस टे ण्डर से दरें गलत रक्षित हो गई थी जो की दरें कार्य करने से उचित दर नही ं है । अतः कार्य आदे श को निरस्त करवाने के आदे श करावे।

सही /-"

The said communication reflects that the petitioner was not

inclined to complete the work order allotted to it, as the

petitioner-company found the reserved rates to be improper and

thus, requested the respondents to cancel the said work order and

later on, while realizing the consequences of not discharging the

liability of completing the work order within the stipulated period

of two months, the petitioner took altogether a different stand

that the said work was not completed on account of the non-

execution of the agreement between the petitioner-company.

19. The respondents while issuing several notices to the

petitioner-company placed on record as Annexure-5, granted the