Rajasthan High Court - Jodhpur
M/S Mewar Associates vs The State Of Rajasthan ... on 9 January, 2025
Author: Madan Gopal Vyas
Bench: Madan Gopal Vyas
[2025:RJ-JD:1545-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
D.B. Civil Misc. Appeal No. 539/2020
M/s Mewar Associates, through its Proprietor Shri Rajeshwar
Singh son of Shri Ram Singh Chundawat, aged 47 years, resident
of Village and Post Thada Tehsil Salumbar, District Udaipur
(Rajasthan)
----Appellant
Versus
1. The State of Rajasthan, through the District Collector,
Dungarpur, Rajasthan
2. The Water Resources Department, Udaipur through its
Additional Chief Engineer
3. The Water Resources, Division Dungarpur, through its
Executive Engineer.
----Respondents
For Appellant(s) : Mr. Manoj Bhandari, Sr. Advocate
assisted by Mr. Aniket Tater
For Respondent(s) : Mr. S.S. Rathore, AAG
HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR
HON'BLE MR. JUSTICE MADAN GOPAL VYAS
Order
09/01/2025
Per, S.Chandrashekhar,J:
The challenge laid by M/s. Mewar Associates through its
Proprietor is to the judgment dated 18th September 2019 passed in
Case No.144/2018 (Original Suit).
2. On the basis of the pleadings of the parties, the following
issues were framed by the Commercial Court: (1) whether the
claimant is entitled for damages to the tune of Rs.16,02,249/- with
interest due to delay and failure on the part of the opposite party,
(2) whether the decision of the Empowered Standing Committee
dated 7th December 2012 is liable to be interfered with on the
ground that the claimant was not provided an opportunity of
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hearing, (3) whether the suit is barred by limitation, (4) whether
the Court has jurisdiction and power to entertain the suit and (5)
whether relief can be granted to the claimant. On the issue of loss
caused to the M/s. Mewar Associates (hereinafter referred to as
the appellant-firm) to the tune of Rs.16,02,249/-, the Commercial
Court held that no supporting evidence was produced by it except
some letters relating to acquisition of land. As regards the decision
of the Empowered Standing Committee dated 07 th December
2012, the Commercial Court came to a conclusion that the
appellant-firm was given an opportunity of hearing and that is the
reason it had the knowledge about the said decision. The issues of
limitation and jurisdiction were decided by the Commercial Court
in favor of the appellant-firm.
3. Mr. Manoj Bhandari, the learned Senior Counsel appearing for
the appellant-firm has raised manifold contentions to criticize the
judgment dated 18th September 2019. One of the submissions
made on behalf of the appellant-firm is that the Administrative
Engineer (in short, "Employer") did not provide full stretch of the
land on which irrigation canal was to be constructed. Another
substantial ground urged on behalf of the appellant-firm is that
there is no discussion about the documentary evidence laid on
behalf of the appellant-firm as to acquisition of a part of the
subject land and that has, therefore, resulted in an erroneous
decision by the Commercial Court at Udaipur. Mr. Manoj Bhandari,
the learned Senior Counsel for the appellant-firm has also referred
to various documents concerning land acquisition, investigation
report dated 14th December 2007 and communication from the
Executive Engineer dated 19 th March 2007 to challenge the
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decision of the Commercial Court rendered in Case No.144/2018
(Original Suit).
4. On the other hand, Mr. Sajjan Singh Rathore, the learned
Additional Advocate General submits that it is not a fact that the
possession of the land was not given to the appellant-firm rather
there was some dispute as to payment of compensation to the
land holders which had nothing to do with the execution of work
by the appellant-firm. The learned Additional Advocate General
would further submit that the appellant-firm had not carried any
construction over Chain 0 to Chain 40 which was unhindered and
the possession thereof was already handed over to the appellant-
firm. The learned Additional Advocate General has referred to
clauses 2 and 3 of the conditions of contract to support the
decision rendered by the Commercial Court.
5. Briefly stated, the Canal work from 0.0 km to 1.9 km and CD
works at Amarpura projects were awarded to the appellant-firm
the total contract value of which was Rs. 98,67,614/-. Pursuant to
work order dated 16th December 2004 issued in favour of the
appellant-firm, an agreement was executed under which the
scheduled completion period for the work under contract was
24th December 2005. However, the subject Canal work was not
completed by 24th December 2005 and an order extending the
period for completion of the work till 30 th June 2006 was issued on
31st March 2006. A second extension order extending the time for
completing the work till 31st July was issued on 28th June 2006.
Notwithstanding the extensions of time granted by the Employer,
the appellant-firm could not complete the work and the appellant-
firm was saddled with penalty and an order to this effect was
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issued on 12th July 2006 directing it to deposit Rs.5,16,038.00/-
under Clause 2. The appellant-firm was further informed that the
remaining work shall be completed through another agency and
the difference of amount shall be recovered from it under Clause 3
(C). But before that, the Superintending Engineer issued an order
vide letter dated 5th July 2006 according approval for termination
of the contract and recovery of damages under Clauses 2 and 3
(C). Later on, the appellant-firm was informed that it was required
to deposit Rs.4,86,746.00/- under Clause 2 and that amount was
adjusted against the security deposit. Additionally, damages to the
tune of Rs.25,76,076.00/- under Clause 3 (C) was required to be
deposited by it and an order to this effect was issued on
21st October 2007.
6. Before the Commercial Court, the case pleaded by the
appellant-firm was that there were serious defaults and non-
performance of its obligations by the Employer inasmuch as
possession of the bed level cross-section of the land was not given
to it and the Employer remained completely indifferent to the
problems faced by the appellant-firm at the work site. According to
the appellant-firm, possession of a part of the land was given on
20th January 2005 and it had mobilized essential items of the value
of Rs.7,00,000/- and Tractor, JCB machines, Mixture machines,
Vibrators, Tankers and other machinery were employed by it but
the work could not progress at the desired pace on account of
non-cooperation from the Employer and protest by the land
holders who were not paid the compensation for the acquired land.
The appellant-firm claimed loss of profit to it on account of
direction issued by the Assistant Engineer, Siwalwara for stopping
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the work through Letter No.419 and failure on the part of the
Employer not to identify the place for disposal of waste materials
during the digging of the canal and stone cutting between RD 29
to 40. For these reasons, the appellant-firm pleaded that it had to
bear additional charge for carriage and disposal of the waste
materials. The appellant-firm further pleaded that the enquiry
report dated 5th March 2008 made favourable recommendations in
its favour but the Employer unilaterally imposed penalty of
Rs.25,62,806/- under Clauses 2 and 3 (C) of the contract. The
appellant-firm also pleaded loss on account of idle man power and
machinery for more than three months. The claims raised by the
appellant-firm were to the following effect:(a) the order of the
Empowered Standing Committee dated 7 th December 2012 should
not be accepted and the appellant-firm be given compensation, (b)
the compensation to the tune of Rs.2,00,000/- on account of idle
men and machinery between the period 19th April 2005 and
26th July 2005 be given to it, and (c) loss of profit to the tune of
Rs.5,00,000/- on account of unfinished work to the tune of
Rs.49,00,000/- be given to it. The appellant-firm also made
further claims such as: (a) Refund of Rs.5,00,000/- with interest
@ 18%, (b) Refund of Rs.1,55,249/- paid as advance, (c) Return
of National Savings Documents worth Rs.4,00,000/-, (d) Payment
of Rs.5,000/- with interest, (e) Payment of Rs.7,000/- with
interest, (f) Return of demand draft of Rs.14,000/- with interest,
and (g) Payment of Rs.20,000/- on account of expenses and legal
fee.
7. On the other hand, the Employer contested the
afore-mentioned claims pleading that lay-out was given to the
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appellant-firm on 17th December 2004 and it had provided all
cooperation and support to the appellant-firm but the total extent
of work executed was only to the tune of Rs.50,00,154/-. The
appellant-firm was given several notices between 18th January
2005 to 20th May 2005 and the last notice was given to it on
08th May 2006 but it failed to complete the work. Therefore, the
Superintending Engineer vide letter dated 05 th July 2006 granted
permission to proceed against the appellant-firm under Clauses 2
and 3 (C) of the contract. The stand of the Employer is that it is
entitled to recover the penalty/damages to the tune of
Rs.36,62,822/-. The allegations of non-cooperation and loss
caused to the appellant-firm were denied and it was specifically
pleaded by the Employer that out of the total stretch of the canal
the land holders had lands stretching to chain 23+1C meter and
the rest of the land belonged to the Government. It was further
pleaded that the appellant-firm had in fact completed the work
between chain 40 to chain 60 which belonged to the land holders
and the appellant-firm had failed to complete the work between
chain 0 to chain 40 and that stretch consisted of the Government
land.
8. During the trial, the proprietor of the appellant-firm tendered
evidence as PW-1 and several documents were produced which
were marked as Exhibit-1 to Exhibit 58. On behalf of the Employer,
Ashok Regal who was the Assistant Engineer tendered evidence as
DW-1 and proved the documents vide Exhibit-A-1 to Exhibit-A-11.
9. After having gone through the materials on record, we
observe that the Commercial Court proceeded in the matter on
such assumptions and presumptions that cannot have any
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foundation in law. The decision of the Commercial Court on issue
no.2 is clearly erroneous. Even if it is accepted that any
representative of the appellant-firm, which is referred to as
contractor in the decision dated 07 th December 2012, was present
during the hearing before the Committee, a glance at the said
decision would reveal that as regards the stand of the appellant-
firm not even a word has been recorded in the said order. Any
administrative order which ensures civil consequence to a party
must be taken after a proper consideration of stand taken by the
rival parties. The decision of the Empowered Standing Committee
dated 07th December 2012 is a unilateral order which only records
the stand of the Employer and a cryptic conclusion of the
Committee that the claims of the claimants are not tenable and,
therefore, rejected. In "Rajkishore Jha v. State of Bihar" (2003) 11
SCC 519 the Hon'ble Supreme Court held that reason is the
heartbeat of every conclusion and without the same it becomes
lifeless. For a better appreciation of the decision of the Commercial
Court on issue no.2, we would extract the said decision dated
07th December 2012 of the Committee which reads as under:-
"The meeting of Empowered Standing Committee was held
on 07.12.12 at 06.00 PM under the Chairmanship of Principal
Secretary, Water Resources Department, Rajathan, Jaipur to
decide the claims/ disputes of Shri Rajeshwar Singh Chudawat
(CLAIMANT) and respondent Department for the construction of
RMC 0 to 1.90 Km including CD works of Amarpura Irrigation
Project.
The following were present in the meeting:
1. Shri PL Solanki Chief Engineer cum Addl. Secretary, Water
Resources, Rajasthan, Jaipur.
2. Shri Prakash Tekwani, Joint Secretary (Exp-III) Finance
Department
3. Shri Ashok K. Vyas, Joint L.R., Law Department
4. Shri AK Bhardwaj as authorised by Addl. Chief Engineer, WR
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Zone,Udaipur
Executive Engineer, Water Resoruces Division, Dungarpur
was present as respondent and Contractor was present as
claimant.
Committee heard the arguments of claimant in support of
his claim and arguments of respondent in support of his reply.
Executive Engineer, Water Resources Division, Dungarpur
informed the Committee that work of RMC from 0-1.9 Km
awarded to contractor. In this portion partial excavation was
done under NREGP/Famine Relief works. From chain 0-26 and
29-38 (total 36 chain of 1080 m) canal alignment was in
Government land and from chain 27-28 and 38-63 (total 27 chain
or 810m) in private land. Timely layout was given to contractor
and there was no hindrance due to land acquisition because most
part of work site was Government land. Progress of contractor
could not continue the work and in spite of notices he did not
complete the work then action under Clause 2 and 3(C) was
taken. The remaining work got completed from other contractor
on risk and cost. As per request of the contractor Additional Chief
Engineer, WR Zone, Udaipur also examined the case and
submitted report to CE, Water Resources, Rajasthan, Jaipur
according to which objections are not sustainable.
Committee perused the facts and record produced before
Commitee and observed that claims of claimant is not tenable.
Therefore committee decided to reject the claim."
10. Under Clause 2 which deals with compensation for delay, the
appellant-firm is bound in all cases to complete 1/8th of whole of
the work if the time allowed for any work was for one month
except special jobs. There are further stipulations for completing
the extension of time and if the appellant-firm fails to complete
the work and the delay in execution of work is attributed to the
appellant-firm it is provided that he shall be liable to pay
compensation to the Government as prescribed thereunder. The
stipulation under Clause 2 proceeds on a premise that the delay in
execution of work is attributable to the appellant-firm. It is also
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provided under Clause 2 that the entire amount of compensation
to be levied shall not exceed 10 percent of the value of the
contract. It is further provided thereunder that while granting
extension of time on account of the delay attributable to the
Government the reasons shall be recorded for each delay. It is
therefore necessary that while granting extension of time the
Employer should record reasons but that is completely absent in
the letters dated 31st March 2006 and 26th June 2006. For easy
reference, we would extract the letters dated 31 st March 2006 and
28th June 2006:-
Government of Rajasthan
Irrigation Department
Serial No. Accts.-3/10826 Date:- 31.03.06
M/s Mewar Associates
Proprietor Shri Rajeshwar Singh Chundawat
Village and Post -Thada, Tehsil
Salumbar District Udaipur (Raj.)
Subject - Construction of R.M.C. 0 to 1.90 K.M. Including C.D.
Works of Amarpura Minor Irrigation Project (Contract
No. 24 Year 2004-05)
District Dungarpur (Contract No. 8 Year 2005-06)
Context - Your letter no. 106 dated 15.11.2005 and letter no.
7527 dated 24.12.2005 of this office.
Sir,
In the above context, it is submitted that while
reserving the right to impose the interest and compensation of
the State Government contained in clauses 2 and 3 of the
contract of the said work and to get the work completed at
your own expense, the time period of the said work is
temporarily extended till 30.06.2006.
yours sincerely,
Executive Engineer.
Water Resources Divison, Dungarpur
..........................................................................................................
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Government of Rajasthan
Irrigation Department
No.:- Account - 3 / Date:- 28.06.2006
M/s Mewar Associates,
Proprietor Shri Rajeshwar Singh Chundawat,
Village and Post-Thada,
Tehsil- Salumbar,
District- Udaipur (Rajasthan)
Subject- Construction of RMC 0 to 1.90 km. including C.D. Works of
Amarpura Minor Irrigation Project (Contract No. - 24, Year 2004-05)
District- Dungarpur (Contract No. 8, Year 2005-06)
Reference:- This office's letter no. 10826, Dated 31.03.2006
Sir,
Under the above subject it is submitted that keeping the
interest of the State Government contained in clauses 2 and
3 of the contract and the right to impose compensation and
get the work completed at your cost, the time period of the
said work is temporarily extended till 31.07.2006.
Sd.
Yours sincerely,
Executive Engineer,
Water Resources Division,
Dungarpur"
11. Clause 3 of the contract refers to "risk and cost clause"
which provides under Sub-clause (C) that after giving notice to the
appellant-firm the unexecuted work may be given to another
contractor and in that case any expenses which may be incurred in
excess of the sum which would have been paid to the original
contractor, the said amount shall be recovered from the original
contractor. The employer has undoubted power under Clauses 2
and 3(C) to resort to any punitive measure but existence of such
power would not justify the unilateral action of the Employer.
There should have been some meaningful consideration of the
defence raised rather than to ritually reject them and proceed to
take drastic measures against the appellant-firm. There cannot be
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a golden scale but the administrative authority is obliged in law to
weigh whether the defence version is a probable one, keeping in
mind the rule of preponderance of probablity. The action taken by
the Employer vide letters dated 5th July 2006, 12th July 2006 and
21st October 2007 are punitive actions which could not have been
resorted to on mere assumption of a hypothetical situation without
any supportive evidence. Even the principles of preponderance of
probability does not give leverage to an authority to create a
hypothesis by its own imagination without any evidence. In "Miller
v. Minister of Pensions" (1947) 2 All ER 372, Lord Denning, J.
defined the preponderance of probability in the following terms :
(All ER p. 373 H)
"(1).... It need not reach certainty, but it must carry a high
degree of probability. Proof beyond reasonable doubt does
not mean proof beyond the shadow of doubt. The law would
fail to protect the community if it admitted fanciful
possibilities to deflect the course of justice. If the evidence
is so strong against a man as to leave only a remote
possibility in his favour which can be dismissed with the
sentence, "of course it is possible, but not in the least
probable" the case is proved beyond reasonable doubt, but
nothing short of that will suffice."
12. On the claim made by the appellant-firm on account of loss
of profit, the Commercial Court completely shut its eyes to the
documents laid in evidence by the appellant-firm. Vide Exhibit-45,
the notification under Section 4 of the Land Acquisition Act, 1894
dated 15th September 2006, notification under Section 6 vide
Exhibit-47 dated 09th March 2007, gazetted publication dated
17th March 2007 vide Exhibit-46 and objections of the agriculturist
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vide Exhibits-4,5,6 and 7 were produced. The appellant-firm also
brought on the record its objections given to the Employer from
time to time and were marked as Exhibits-8, 10, 11, 36, 39, 40,
55 and 56 but all these documents were overlooked by the
Commercial Court only for the reason that there appears signature
of the appellant-firm on the measurement book. Whereas, the
witness DW-1 examined by the Employer admitted in his cross-
examination that the signature of the appellant-firm was not
matching with his admitted signature. DW-1 was given
suggestions with the reference to the documents laid in evidence
by the appellant-firm to the effect that compensation was not paid
to the land holders, the villagers had taken away machinery
mobilized at the site and that the delay in execution of the work
was caused due to non payment of compensation and disturbances
created by the villagers. However, this witness denied such
suggestions and he went to the extent of denying even the official
documents pertaining to land acquisition.
13. The Employer took unilateral decisions and that can be easily
ascertained on a glance at the contents of the letter dated
5th July 2006, 12th July 2006 and 21st October 2007. The orders
granting extensions of time vide letters dated 31 st March and
28th June 2006 do not indicate any reason for granting such
extensions of time and simply record that the Employer has
reserved its right to recover damages under Clauses 2 and 3 (C) of
the contract. The letter dated 5th July 2006 by which the
Superintending Engineer granted approval for termination of
contract was issued with reference to the letter dated 1 st July 2006
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of the Administrative Engineer and the said letter was issued
ignoring the fact that extension of time for completing the work
31st July 2006 was already granted to the appellant-firm. Mr.
Sajjan Singh Rathore, the learned Additional Advocate General
submits that noticing the failure of the appellant-firm to complete
the work the contract was terminated as waiting for expiry of the
extended period of time would have been a mere formality. In our
opinion, the termination of contract during subsistence of the
period for completion of the work was illegal. The letter dated
5th July 2006 records that the appellant-firm was able to complete
the work to the tune of Rs.47,07,236.00/- but without referring to
the reasons put forth by the appellant-firm simply records the
appellant-firm did not take any effort to complete the work. The
letter dated 12th July 2006 is also a unilateral decision of the
Employer and it simply refers to the provisions under Clauses 2
and 3 (C) of the contract and determines the quantum of damages
to be recovered from the appellant-firm.
14. The Commercial Court was required to bestow its
consideration to non-performance of its obligation by the Employer
which goes to the root of the matter. Even if it is held that the
appellant-firm was given possession over the stretch of land
belonging to the agriculturist, the Employer had no right
whatsoever as on 20th January 2005 to give possession of such
land because as on that day even the Notification under section 4
of the Land Acquisition Act, 1894 was not published. The normal
rule which governs the civil proceedings is that a fact is said to be
shown if it is proved by preponderance of probability. Under
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section 3 of the Indian Evidence Act, a fact is said to be proved
when the Court either believes it to exist or considers its existence
show probable that a prudent man under the circumstances would
proceed on the supposition that such fact really exists. The Court
should therefore try to find out whether a prudent man on
weighing the valid probabilities would have found that the
preponderance is in favour of existence of the fact in question.
There may be varied types of probabilities but the Court is
required to ultimately figure out where the preponderance of
probability lies. Furthermore, the preponderance of probability
regarding existence of a fact is examined with reference to the
stand of the parties and the supporting materials thereof, and not
by merely recording stand of the Employer which itself was the
adjudicator. The various documents laid in evidence by the
appellant-firm demonstrating protest by the agriculturist and
difficulties faced by it in execution of subject works could not have
been ignored on a specious plea that the possession of land was
given to the appellant-firm.
15. In an administrative proceeding while strict rules of evidence
are not applicable the general rules of fairness, justice and good
conscience must be followed and a commonsensical approach
should be adopted. This is also well settled that even in the
contractual matters the Employer shall be under an obligation to
act fairly and comply with the basic requirements of Article 14 of
Constitution of India. In a commercial world, it does not satisfy the
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reason that a contractor would submit bid and take a contract only
to incur penalty and pay compensation to the Employer for so-
called delay on its part to complete the work under contract. This
is really beyond any comprehension that a contractor who was
able to complete more than 50 percent of the work would leave
the work midway and invite imposition of penalty and
compensation etc. to the Employer. In our opinion, there was
fundamental breach of the contract inasmuch as the Employer
could not perform its essential obligations under the contract. In a
situation like the present one, the written terms of contract for
recovery of penalty, damages etc. cannot be enforced against the
appellant-firm.
16. For the aforesaid reasons, the decision of the Commercial
Court in Case No.144/2018 is set aside and the said suit is
decreed. Consequently, the appellant-firm is held entitled for its
claims recorded in paragraph nos.4 and 5 of the judgment dated
18th September 2009.
(MADAN GOPAL VYAS),J (SHREE CHANDRASHEKHAR),J
165-Ravi Khandelwal
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