R.M. Mohite & Co-Bhoorathnom Construction Company v. The Superintending Engineer, Irrigation & CAD., AVR-HNSS Circle No.1, B-Camp, Kurnool

THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.13800 OF 2010 ORDER : The petitioner company was the lowest bidder with 13.1064% less than the estimated contract value in the tenders invited by the respondents for the work of Investigation, Preparation of Hydraulic particulars, Designs, Drawings and Formation of Pathikonda Reservoir and Distributory System under Package No.29 of HNSS Project. Accordingly, an agreement dated 10.03.2005 was entered into for execution of the said work. As per the terms and conditions of the contract the petitioner furnished Bank Guarantees for a total sum of Rs.1,71,73,000/-. The estimated contract value was Rs.68,69,00,000/- and the period for completion of the project was initially stipulated as 24 months from the date of the agreement. The petitioner states that as there was delay in land acquisition proceedings, the actual handing over of the site by the respondents 1 to 3 took place 18 months after entering into the agreement. In the meanwhile, since the period of 24 months was coming to an end, the Government extended the time for completion of the project from time to time. The last of such extension was upto 30.09.2009. While so, as there was lot of escalation in the cost and prices of the raw material as well as the wages of labour, cost of machinery and etc., the petitioner made a representation dated 18.11.2009 requesting the 1st respondent to apply the current SSR rates for the work already completed and to refund the interest on mobilisation advance charged until the work was completed. The petitioner also sought extension of time upto 30.06.2011 for completing the work. However the respondents failed to consider the said request. On the other hand, the 2nd respondent by letter dated 12.5.2010 called upon the petitioner to start the work immediately by mobilizing men and machinery failing which the work would be allotted to some other agency for execution and the cost paid to the other agency would be recovered from the petitioner. The petitioner gave a reply dated 3.6.2010 stating that non- completion of the work in time was not on account of any lapses on their part and made a further request to consider its grievances in proper perspective. The 2nd respondent issued a final notice dated

7.6.2010 to the petitioner to commence the work as per the agreement conditions making it clear that if the work was not started before 15.6.2010 action would be initiated as per the agreement conditions. It was also stated in the said final notice that the claims of the petitioners would be addressed to the higher authorities and that linking the said claims with the execution of the work and stopping the work was against the conditions of the agreement. Aggrieved by the action of the respondents and apprehending encashment of the Bank guarantees furnished by the petitioner, the present writ petition is filed seeking a declaration that the action of the respondents 1 to 3 in insisting upon the petitioner to complete the entire work without making payment for the work completed and without providing required facilities for completion of the work under threat of termination of the contract and encashment of Bank guarantees is arbitrary and illegal.

The learned counsel for the petitioner, while submitting that the bills for an amount of Rs.1.50 crores for the work completed by the petitioner has not been paid so far by the respondents on the ground that the letter of credit was not received from the Government, vehemently contended that the impugned action of the respondents in coercing the petitioner to complete the works under the threat of encashment of Bank Guarantees and termination of contract is arbitrary and illegal. In support of his contention, the learned counsel relied upon the decision of the Supreme Court in STATE OF HARYANA v. CONTINENTAL CONSTRUCTION LIMITED[1]. At the outset, it is to be noticed that the grievance of the petitioner arises out of a concluded contract voluntarily entered into between the parties. All the rights and liabilities of the parties are regulated by the terms and conditions of the agreement. Moreover, as noticed above, the matter involves various questions of fact which cannot be resolved on mere affidavits.