1. The State of Jharkhand through Principal Secretary, Department of Road Construction, Public Works v. With C.O. No.02 of 2018 M/s R.D. Construction, Dumka. ----- Cross Object
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI L.P.A. No.64 of 2015 ------ 1. The State of Jharkhand through Principal Secretary, Department of Road Construction, Public Works Department, Government of Jharkhand, Ranchi. 2. The Engineer in Chief, Public Works Department, Government of Jharkhand, Ranchi. 3. The Superintending Engineer, Road Construction, Public Works Department, Dumka. 4. The Executive Engineer, Road Construction, Public Works Department, Godda. --- Appellants M/s R.D. Construction, Dumka. -----Respondent Versus With C.O. No.02 of 2018 M/s R.D. Construction, Dumka. ----- Cross Objector Versus 1. The State of Jharkhand through Principal Secretary, Department of Road Construction, Public Works Department, Government of Jharkhand, Ranchi. 2. The Engineer in Chief, Public Works Department, Government of Jharkhand, Ranchi. 3. The Superintending Engineer, Road Construction, Public Works Department, Dumka. 4. The Executive Engineer, Road Construction, Public Works Department, Godda. --- Respondents ------
Legal Reasoning
CORAM : HON'BLE MR. JUSTICE RONGON MUKHOPADHYAY HON’BLE MR. JUSTICE DEEPAK ROSHAN For the Appellants For the Respondents : Mr. V.P. Singh, Sr. Advocate : Mr. Ratnesh Kumar, S.C.(L&C)-1 ------- For the State Ms. Vani Kumari, Advocate Ms. Bandana Kumari Singh, Advocate : Mr. Mithilesh Singh, G.A.-IV Mr. Anuj Burman, A.C. to G.A.-IV ------- Per Rongon Mukhopadhyay, J. 14/04.01.2024 Heard Mr. Ratnesh Kumar, learned S.C. (L & C)-I appearing for the appellant in L.P.A. No.64 of 2015, Mr. V.P. Singh, learned Senior Counsel appearing for the respondent/writ petitioner and Mr. V.P. Singh, learned Senior Counsel appearing for the petitioner in C.O. No.02 of 2018 and opposed by Mr. Ratnesh Kumar, learned S.C. (L & C)-I. 2. In L.P.A. No. 64 of 2015 the State being the appellant is aggrieved with the order dated 08.10.2014 passed -2- in W.P.(C) No.5731 of 2013 wherein the prayer of the writ petitioner to the extent of refund of Rs.67,56,073/- towards liquidated damages was allowed with which the State is aggrieved and have filed the present appeal. 3. C.O. No.02 of 2018 which is by way of cross a objection in terms of Order XLI Rule 22 of the C.P.C. has been preferred by the writ petitioner since in the impugned order dated 8.10.2014 passed in W.P.(C) No.5731 of 2013 no interest
Decision
has been awarded to the writ petitioner on the amount of Rs. 67,56,073/- which has been directed to be refunded to the writ petitioner. 4. The factual aspects of the case reveal that the writ petitioner is a construction company and is registered as a Class-I contractor with the Public Works Department, Government of Jharkhand for the period from 20.2.2009 to 19.2.2014. A tender was floated by the department concerned in which the writ petitioner had participated and being the lowest bidder was declared as L-1 and the work was allowed to the writ petitioner on the basis of the decision of the Tender Committee dated 24.07.2009. An agreement was entered into with the Executive Engineer, Road Construction Department on 15.10.2009 for widening and strengthening of Godda- Pirpaiti Road in the district of Godda from 53 kilometers to 61.875 kilometers, total length 9.875 kms. worth Rs. 10,97,79,167/- vide SBD No.04/2009-10. The schedule date of completion of work was 31.12.2010 but the same could not completed on time on account of the Parliamentary General Election held in the year 2009 as well as the Legislative Assembly Election and Panchayat election in the State of Jharkhand. On account of deployment of vehicles on election duty, non-availability of materials including bitumen, stone chips and other factors, the progress of the work suffered. 5. It is the case of the petitioner that the extension of time for completion of work was granted to the petitioner from time to time and finally the scheduled completion period was -3- extended up to 31.3.2012. The agreement was rescinded on 2.12.2011 and it was revived vide order dated 9.1.2012. The agreement was once again rescinded on 10.7.2012 which was challenged by the writ petitioner before this Court in W.P.(C) No.4408 of 2012 and vide order dated 1.10.2012 the scheduled completion period was extended up to 31.12.2012 by which time the work was completed by the writ petitioner. However, the completion certificate was not issued to the petitioner and an amount of Rs.67,56,073/- was illegally deducted from the running bill of the writ petitioner which compelled the writ petitioner to approach this Court for redressal of his grievances. 6. During pendency of the writ application, an amendment application was also filed which was allowed and the writ petitioner was permitted to challenge the communication dated 4.5.2012. A further claim for award of interest @ 12% on the amount deducted from the writ petitioner had also been made. Vide order dated 8.10.2014 passed in W.P.(C) No.5731 of 2013 the writ petition was partly allowed to the extent that the writ petitioner was granted refund of the amount of Rs. 67,56,073/-. However, no interest was ordered to be awarded on the said amount. 7. Mr. Ratnesh Kumar, learned S.C. (L&C)-I appearing for the appellants in L.P.A. No.64 of 2015 has submitted that the learned Single Judge had committed an error to the effect that Clause-49 of the agreement executed between the writ petitioner and the Department was not appropriately construed. It has been submitted that in terms of Clause-49.1 of the agreement for each day after the intended completion date the contractor is liable to pay the liquidated damages to the employer and in the present case, though time was extended for completion of the work, but the liquidated damages were being deducted from the running bills of the petitioner after the intended completion date had passed. It has been submitted that though the writ petitioner had preferred a -4- writ application earlier and on the basis of an undertaking given by the writ petitioner the date of completion of work was extended till 31.12.2012 and the supplementary counter affidavit filed by the State in the said writ application does not indicate that the State had waived the time enumerated in the agreement. 8. Learned S.C. (L&C)-1 appearing for the appellant has further submitted that the Writ Court was made aware of the fact that in the case of several other contractors similarly placed, liquidated damages were recovered from their running bills. Merely on account of the fact that there has been certain extensions given to the writ petitioner for completion of work, the same would not absolve the writ petitioner of the liability to make payment of the liquidated damages in terms of Clause- 49.1 of the agreement. He thus submits that the impugned order dated 8.10.2014 passed in W.P.(C) No.5731 of 2013 suffers from misinterpretation of Clause-49 of the agreement and accordingly the same is liable to be set aside. It has also been submitted by Mr. Ratnesh Kumar, learned S.C. (L&C)-I that it has wrongly been construed by the learned Single Judge that time was not the essence of contract and in fact time was the essence of contract and the extension of the period for completion of work was primarily made in order to get the work which was with respect to strengthening and widening of a considerable stretch of road from Godda to Pirpaiti completed. 9. Mr. V.P. Singh, learned senior counsel appearing for the respondent writ petitioner has submitted that the issues which were framed by the learned Single Judge has been correctly decided in favour of the writ petitioner so far as the refund of amount of Rs. 67,56,073/- is concerned. It has been submitted that WP(C) No.4408 of 2012 was preferred by the writ petitioner against the act of the respondents rescinding the contract on 10.07.2012 and during pendency of the said writ application a supplementary affidavit was also preferred by the State wherein the department had taken a decision to -5- allow the writ petitioner to complete the work if the writ petitioner is ready to give an undertaking that he will complete the work within a period of three months. Thus, the order passed in W.P.(C) No.4408 of 2012 was never challenged by the State and according to Mr. Singh the same has attained finality and therefore the State cannot be allowed to circumvent their statement made in the supplementary counter affidavit in W.P.(C) No.4408 of 2012. It has also been submitted that though the schedule date of completion of work was 31.12.2010, but it was extended from time to time by the concerned department and there is nothing to indicate that Clause-49.1 of the agreement was ever invoked by the department once the intended period of completion had come to an end on 31.12.2010. Learned Senior Counsel has also submitted that in the case of one of the contractors the liquidated damages recovered from him was subsequently refunded to the said contractor. Learned Senior Counsel adds that the conduct of the respondents State clearly indicates that the clause for liquidated damages was never invoked by the respondent State and therefore the learned Single Judge was correct in allowing the writ application partly by ordering refund of the amount of Rs. 67,56,073/- to the writ petitioner. 10. In C.O. No.02 of 2018 Mr. V.P. Singh, learned Senior Counsel appearing for the writ petitioner has submitted that the writ petitioner was precluded by sufficient cause not to complete the work within time and since an illegality had been committed by the department in deducting an amount of Rs. 67,56,073/-, the learned Single Judge had committed an error in not allowing interest on the said amount. 11. Mr. Anuj Burman, learned A.C. to G.A.-IV submits that there was a delay on the part of the writ petitioner to complete the work and therefore the learned Single Judge was correct in not allowing interest of the deducted amount. 12. We have heard learned counsels for the respective parties and have also perused the entire records. -6- 13. It appears that though the schedule period of completion of the work granted to the writ petitioner came to an end on 31.12.2010 but subsequently it was extended on some occasions so that the work be completed. The last extension granted by the department for completion of work was till 31.3.2012 and since the work was not completed within the said period, the agreement was rescinded on 10.7.2012. The same was challenged by the writ petitioner in W.P.(C) No.4408 of 2012 and vide order dated 1.10.2012 the schedule period of completion was extended up to 31.12.2012. This extension of the schedule period of completion passed in W.P.(C) No.4408 of 2012 was on the basis of an undertaking given by the writ petitioner who had assured that the construction of the road will be completed by 31.12.2012. The department was also directed to file a supplementary counter affidavit in view of the undertaking given by the petitioner in W.P.(C) No.4408 of 2012 in which an affidavit was filed and it was clearly mentioned that the department has taken a decision to allow the writ petitioner to complete the work if the writ petitioner is ready to give an undertaking before the Court that he will complete the work within three months. Consequent to the supplementary counter affidavit filed by the State and the undertaking given by the writ petitioner, the writ application was disposed of and subsequent thereto the work of strengthening and widening of the concerned road was completed by the writ petitioner on 31.12.2012. 14. While considering the case of the parties, the learned Single Judge had formulated the following issues for consideration :- (i) Whether the time was the essence of the contract? (ii) Whether the respondents have expressly waived their right of recovering liquidated damages? (iii) Whether in view of the order dated 01.10.2012 the respondents cannot recover/ appropriate the liquidated damages in terms of Clause 49 of the Agreement? -7- 15. Clause 49 of the agreement seems to hold center stage in the case of either of the parties as much reliance has been placed by the learned State Counsel on the provisions of Clause-49 of the agreement. Clause-49.1 of the agreement is quoted herein below :- “49.1. The Contractor shall pay liquidated damages to the Employer at the rate per day stated in the Contract data for each day that the Completion Date is later than the Intended Completion Date (for the whole of the works or the milestones as stated in the contract data). The total amount of liquidated damages shall not exceed the amount defined in the Contract Data. The Employer may deduct liquidated damages from payments due to the Contractor. Payment of liquidated damages does not affect the Contractor’s liabilities. 49.2. If the Intended Completion date is extended after liquidated damages have been paid, the Engineer shall correct any over payment of liquidated damages by the Contractor by adjusting the next payment certificate. The Contractor shall be paid interest on the over payment calculated from the date of payment to the date of repayment at the rates specified in Sub Clause 43.1.” 16. On a perusal of Clause 49.1 of the agreement, it would be apparent that the contractor shall be liable to pay the liquidated damages once he fails to complete the work within the intended completion date. In the present case, as noted above, the work was to be completed on 31.12.2010 and it was extended from time to time and ultimately on 30.12.2012 the work was completed during the final stretch of the extended time. There is nothing on record to indicate save and except the pleading made by the learned S.C. (L&C)-1 that the liquidated damages were being deducted from the running bills of the writ petitioner after the intended completion date came to an end. The department it seems had not deducted the liquidated damages in terms of Clause 49.1 of the agreement and went on extending the period for completion of work till the agreement was rescinded on 10.7.2012 and subsequently revived by virtue of the order passed by this Court in W.P.(C) -8- No.4408 of 2012. The learned Single Judge has rightly come to a conclusion that time was not the essence of the contract in view of the repeated extensions of time in completion of the work. Moreover, as submitted by Mr. V.P. Singh, learned senior counsel appearing for the respondent writ petitioner in the supplementary counter affidavit filed by the State in W.P.(C) No.4408 of 2012 a specific statement had been made to the effect that the department has taken a decision to allow the writ petitioner to complete the work if he is ready to give an undertaking that he will complete the work within a period of three months. The undertaking given by the writ petitioner was pursuant to the supplementary counter affidavit filed by the State. 17. It appears to be an admitted fact that W.P.(C) No.4408 of 2012 had attained its finality as the said order was never challenged by the department before the appellate forum. The entire scenario would therefore indicate that the department had repeatedly extended the time for completion of the work and the supplementary counter affidavit further reveals the conduct of the department and in absence of there being anything on record to indicate that the liquidated damages were deducted after the intended completion date i.e. 31.12.2010, the department was therefore precluded from deducting the amount of Rs.67,56,073/- towards the liquidated damages. 18. So far as the cross objection preferred by the writ petitioner being C.O. No.02 of 2018 is concerned, the writ petitioner has not made out a case for grant of interest on the amount of Rs.67,56,073/- and therefore on both the scores we are not inclined to interfere in the impugned order dated 8.10.2014 passed in W.P.(C) No.5731 of 2013 and consequent thereto L.P.A. No.64 of 2015 as well as C.O. No.02 of 2018 stand dismissed. 19. Since it has been submitted at the bar by Mr. V.P. Singh, learned senior counsel appearing for the writ petitioner -9- that the amount of Rs.67,56,073/- has not yet been refunded to the writ petitioner on account of a stay operating in L.P.A. No.64 of 2015, we hereby direct the Engineer-in-Chief, Public Works Department, Ranchi to process the refund amount of the writ petitioner and extend the same to him within a period of 4 weeks from the date of receipt/production of a copy of this order. Pending interlocutory applications, if any, stand closed. (Rongon Mukhopadhyay, J.) (Deepak Roshan, J.) Shamim/-