The High Court
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (C) No. 4748 of 2022 ---- M/S. ANAND CONSTRUCTIONS & INFRASTRUCTURE PVT. LTD., a company incorporated under Companies Act, 2013, having registered office at 504, Mangal Murti Heights, Rani Bagan, Harmu Road, Ranchi, Jharkhand 834001 through its director Rajesh Kumar Agarwal, Son of Radheshyam Agarwal, aged about 48 years, Resident of Ward No. 19, S.S. High School Road, Gumla, P.O. & P.S. Gumla, District Gumla, Jharkhand-835207. … … Petitioner Versus 1.The State of Jharkhand 2.The Chief Engineer, Building Construction Department, Jharkhand, P.O.-G.P.O, P.S. Kotwali, Dist-Ranchi-834001, Jharkhand. 3.Engineer-in-Chief, Building Construction Department, Jharkhand, P.O. –G.P.O., P.S.-Kotwali, Dist-Ranchi-834001, Jharkhand. 4.Superintending Engineer, Building Circle No. 2, P.O.- G.P.O., P.S. Kotwali, Dist-Ranchi-834001, Jharkhand. 5.The Executive Engineer, Building Division, P.O. & P.S. – Gumla, Dist-Gumla, Jharkhand. … … Respondents ------- CORAM: HON’BLE THE ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE ARUN KUMAR RAI ------ For the Petitioner For the Respondents : Mr. Mohan Dubey, AC to AG : Mr. Nitin Kumar Pasari, Advocate Order No. 10 : Dated 24th July, 2024 Per Sujit Narayan Prasad, ACJ -------- Prayer: 1. The instant writ petition has been filed under Article 226 of the Constitution of India for the following relief(s): A. For issuance of an appropriate writ(s), order(s) or direction(s), directing upon the Respondents to show cause as to why the price adjustment as per Schedule of Rates 2021 would not be available to the Petitioner pertaining to - 1 - W.P. (C) No. 4748 of 2022 construction of proposed SDO Office Building, Gumla, since extended beyond 11 months by the Respondents for their own reasons. B. Consequent upon showing cause, if any, and on being satisfied that the delay in execution of contract awarded in the year 2019 was not for any fault of the Petitioner, but due to non-availability of land for construction, the Petitioner’s entitlement for price adjustment in forms of Schedule of Rates 2021 cannot be rules out and as such, necessary direction be issued upon the Respondents to consider the claim of the Petitioner for price adjustment. C. For issuance of any other appropriate writ(s)/order(s)/direction(s) as Your Lordships may deem just and proper in the facts and circumstances of the case for imparting substantial justice to the Petitioner.
Legal Reasoning
Brief facts of the case: 2. The brief facts of the case, as per the pleading made in
Decision
the writ petition reads as under: 3. The respondents floated a tender vide e-procurement notice no. BCD/Gumla/319/2019-20 dated 11.07.2019 for construction of SDO Office building at Gumla with an estimated cost of Rs. 6.16 crores approximately. The petitioner participated in the bid process and was declared to be lowest bidder vide letter dated 08.08.2019 and the petitioner was awarded work vide letter dated 16.08.2019. - 2 - W.P. (C) No. 4748 of 2022 4. For some reasons or the other, the project though got delayed and finally an agreement was entered into between the parties on 30.01.2021 for carrying out the said construction work, based upon the price as was prevalent at that time. But due to world-wide spread over of Covid-19 pandemic the work could not be started. 5. However, on 11.10.2021 the petitioner was informed that the land on which the proposed SDO Office is to be constructed is now available after dismantling old building and felling of trees, as such revised work order was issued vide letter dated 11.10.2021. 6. It is the case of the petitioner that in the meantime, the Government of Jharkhand notified the schedule of rates in the month of May, 2021 superseding the earlier rates, which was prevalent prior to Covid-19 pandemic for all the ongoing construction works. 7. The writ petitioner, as per revised work order dated 11.10.2021 commenced the work, thereafter claimed for price adjustment in view of condition as stipulated in the contract in particular Clause 47 but the same having not been considered, the petitioner has approached this Court by filing the instant writ petition invoking the power conferred to this Court under Article 226 of the Constitution of India. Argument of learned counsel for the petitioner: - 3 - W.P. (C) No. 4748 of 2022 8. Mr. Nitin Kumar Pasari, learned counsel for the petitioner has submitted that contract although was entered between the parties in the month of January, 2021 but the State-respondents after taking into consideration the world- wide prevalence of Covid-19 pandemic and the fact that due to imposition of lockdown the work cannot be completed, extended the period of contract and as such revised work order was issued in the month of October, 2021. 9. It has been submitted that contract was awarded as per the price prevalent before Covid-19 Pandemic but in the meantime i.e., till the date the work order was issued in the month of October, 2021 there was huge escalation in the price/cost of goods, however the petitioner considering the nature of work, which was for public utility service, commenced the work and thereafter made representation to the authorities concerned for adjustment of payment of difference of amount due to price escalation, as per the condition no. 47 as stipulated in the contract itself. 10. It has further been submitted that since the Government of Jharkhand has notified the schedule of rates in the month of May, 2021 superseding the earlier rates, which was prevalent prior to Covid-19 pandemic for all the ongoing construction works, and revised work order was issued later on in the month of October, 2021 after - 4 - W.P. (C) No. 4748 of 2022 notification of revised schedule of rate in May, 2021, the petitioner submitted representation for adjustment of differential amount due to revised schedule of rates. 11. The argument has been advanced that there is no fault on the part of the writ petitioner and that is the reason the extension was also granted by the State for granting six months extension and the State has taken a conscious decision in the month of May, 2021 superseding the earlier rates, which was prevalent prior to Covid-19 pandemic for all the ongoing construction works. 12. Hence, the writ petitioner is entitled for the differential amount as per the schedule rate, which was prevalent on the day when the revised work order was issued i.e., in the month of October, 2021. Submission of learned counsel for the respondent-State: 13. Mr. Mohan Dubey, learned AC to Advocate General appearing for the respondents-State of Jharkhand has submitted by taking aid of averments made in the counter affidavit. 14. It has been submitted by making reference of Clause 42 of the agreement wherein the parameters have been given for the purpose of consideration of price adjustment but according to learned counsel for the State as per the condition stipulated in the agreement particularly 42.2 the - 5 - W.P. (C) No. 4748 of 2022 petitioner is not coming under the aforesaid fold, hence the writ petitioner is not entitled for price adjustment. Analysis: 15. This Court has heard learned counsel for the parties and gone through the pleadings made by learned counsel for the parties. 16. The issue which requires consideration for adjudication of lis is as to: I. Whether the writ petitioner is entitled for price adjustment in view of condition as stipulated under Clause 47.1 of the bid document? II. Whether the ground which has been taken by the State by taking the aid of clause 42.2 can be said to be applicable for denying the claim of price adjustment? 17. Since both the issues are inter-linked, as such they are taken up together. 18. This Court, before delving into the merit of the case, deems it fit and proper to refer Clause 47 of the bid docuemnt, which is pari material to the clause no. 42 as mentioned in the agreement which speaks about price escalation. For ready reference, the same is quoted as under: “Price Adjustment 47.1 Contract Price shall be adjusted for increase or decrease in rates and price of materials in accordance with the following - 6 - W.P. (C) No. 4748 of 2022 principles and procedures and as per formula given in the contract data: (a) The price adjustment shall apply for the projects to be completed in more than 12 months for the work done from the start date given in the contract date up-to end of the initial intended completion date or extensions granted by the Engineer and shall not apply to the work carried out beyond the stipulate time for reasons attributable to the contractor. (b) The price adjustment shall be determined during each month from the formula given in the contract data. (c) Following expressions and meanings are assigned to the work done during each month: R=Total value of work done during the month. It will exclude value for works executed under variations for which price adjustment will be worked separately based on the terms mutually agreed. 47.2. To the extent that full compensation for any rise or fall in costs to the contractor is not covered by the provisions of this or other clauses in the contract, the unit rates and prices included in the contract shall be deemed to include amounts to cover the contingency of such other rise or fall in costs.” 19. It is evident from the aforesaid clause that price adjustment was also the part of contract but it depends upon the conditions as stipulated under Clause 47.1 (a), (b) and (c). 20. It is evident from condition stipulated under clause 47.1(a) that the price adjustment shall apply for the projects to be completed in more than 12 months for the work done from the start date given in the contract date up-to end of the initial intended completion date or extensions granted by the Engineer and shall not apply to the work carried out beyond the stipulated time for reasons attributable to the contractor. - 7 - W.P. (C) No. 4748 of 2022 21. The aforesaid condition, thus, stipulates that if there is any escalation in the cost the contractor will not be entitled if delay in completion of work is attributable to the contractor but if the delay is attributed to the State then in such circumstances the price adjustment can be considered. 22. It is further evident from clause 47.2 that full compensation for any rise or fall in costs to the contractor is not covered by the provisions of this or other clauses in the contract, the unit rates and prices included in the contract shall be deemed to include amounts to cover the contingency of such other rise or fall in costs. 23. There is no dispute that the similar conditions are there under clause 47.1 of the bid document and 42 of the agreement but the admitted case of the parties and we are conscious of the fact that the day when the contract was executed in the month of January, 2021, the world was facing pandemic Covid-19. Therefore, the work could not have been proceeded in pursuance to the contract, which was executed in the month of January, 2021. 24. The State has considered the aforesaid aspect of the matter as also other reasons, as mentioned at paragraph 13 of the counter affidavit and granted extension of six months’ time and consequent upon the same in the month of October, 2021 the work order was issued. - 8 - W.P. (C) No. 4748 of 2022 25. But in the meanwhile, in the month of May, 2021 the Government of Jharkhand notified the schedule of rates superseding the earlier rates, which was prevalent prior to Covid-19 pandemic for all the ongoing construction works. 26. The writ petitioner has started the work in terms of revised work order issued in the month of October, 2021. Subsequently, he made an application for consideration of price adjustment based upon the condition as stipulated under Clause 47.1 of the bid document and clause 42 of the agreement. 27. The State has filed counter affidavit stating inter alia that the petitioner is not entitled for differential amount or price adjustment for the reason that the contract was entered into between the parties in the month of January, 2021 and the revised schedule rate has come in the month of May, 2021. Hence, the same cannot be made applicable to prior date. 28. But this Court is not in agreement with the aforesaid ground for the reason that when State has admitted the fate of pandemic Covid19 which led the State-respondent to grant extension of time for issuance of revised work order as also in the meanwhile the revised schedule rate has come into being in the month of May, 2021 superseding the earlier rates, which was prevalent prior to Covid-19 pandemic for all the - 9 - W.P. (C) No. 4748 of 2022 ongoing construction works, which means that neither the State nor the contractor can be said to be at fault rather the same will be said to be a forced measure beyond the control of anybody due to the effect of Pandemic Covid-19. 29. Therefore, when the issue of forced measure is there then certainly the respondent being the welfare State is duty bound to consider the issue of price adjustment as per clause 47 of the bid document. Although under clause 47, the price adjustment is subject to attributability of delay, if caused by the contractor then certainly the contractor will not be entitled for price adjustment but vice versa if the State is found to have attributed in delay the price adjustment is to be considered by the State. 30. Since we have already referred hereinabove that the delay cannot be attributable either to the State or the contractor rather it was due to forced measure of pandemic Covid-19 of which the entire world had faced the consequence then in that circumstance if the State has come consciously by notifying the schedule rate then it will be unjust and improper for the State to deny the claim of the petitioner for price adjustment. 31. This Court, in view of the aforesaid reason, exercising the power conferred to this Court under Article 226 of the Constitution of India, is of the view that a direction is - 10 - W.P. (C) No. 4748 of 2022 required to be issued upon the State to consider the case of the writ petitioner in the light of the observations made hereinabove, to extend the benefit of price adjustment as per Clause of the agreement, on the basis of revised schedule of rates issued in the month of May, 2021 and take decision thereon within stipulated period of three months from the date of receipt/production of copy of this order. 32. The consequential follow up action regarding the monetary relief will be granted after two months from the date of taking such decision. 33. With the aforesaid observations and direction, the instant writ petition stands disposed of. (Sujit Narayan Prasad, A.C.J.) (Arun Kumar Rai, J.) Alankar/ N.A.F.R. - 11 - W.P. (C) No. 4748 of 2022