PANNERY DINESHAN v. KERALA STATE ROAD TRANSPORT CORPORATION

SRI DEEPU THANKAN-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON

22.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 7322 OF 2023 2 JUDGMENT The petitioner asserts that he had completed the work entrusted to him under a contract with the first respondent – Kerala State Road Transport Corporation (KSRTC), qua the construction of an Administrative Building and Staff Retiring Room at Kannur; and that even though he completed the work to the full satisfaction of the Authorities and though a completion certificate has been issued to him on 24.05.2019, showing the date of completion as being 30.11.2018, certain amounts - particularly the “retention sums” of Rs.4,75,581/-, along with the EMD for Rs.1,00,000/- and an illegal penalty of Rs.1,60,000/- deducted from his final bill- remains denied to him. He thus prays that the competent Authority of the first respondent be directed to immediately release the afore said amounts within a time frame to be fixed by this Court.

2. In response to the afore submissions of Sri.Sreejith – learned counsel for the petitioner, Sri.Deepu Thankan – learned standing counsel for the first respondent, submitted that a counter affidavit has been filed on record by respondents 1 to 3, wherein, it has been explained that the penalty of Rs.1,60,000/- was imposed upon the petitioner as per the contractual terms, WP(C) NO. 7322 OF 2023 3 since he had completed the construction with nearly two years of delay. He then added that, as regards the rest of the amounts, the same had been withheld because some defects, notified to him through Ext.R1(a), remain unrectified. He, therefore, prayed that this writ petition be dismissed.

3. In reply, however, Sri.Sreejith – learned counsel for the petitioner, pointed out that, since the completion certificate certifies the completion of work as being 30.11.2018, the defect liability period - as per clause 19 of the contract between the parties - is only 12 months thereafter. He argued that, even going by the counter affidavit of respondents 1 to 3, the alleged defects in the work were noticed only on 04.08.2021, leading to Ext.R1(a) being issued to his client on 06.08.2021. He contended that this is much beyond the defect liability period; and therefore that his client is not responsible for the same.

4. As regards the penalty of Rs.1,60,000/- imposed, Sri.Sreejith submitted that the delay in completion of work was not on account of any fault that can be attributed to his client but, because of the inaction of the respondent; and therefore, that it was improper for them to have deducted the said sum from his client's final bill. He thus prayed that this writ petition WP(C) NO. 7322 OF 2023 4 be allowed as prayed for.

5. The afore rival positions make it clear that the main disputation between the parties is as regards two heads of sums, namely penalty and retention amounts.

6. As regards the “penalty”, the counter affidavit of respondents 1 to 3 avers as under in paragraph 3 thereof: “3. It is submitted that the petitioner was successful bidder of the tender of the Corporation for the construction of administrative building and staff retiring room of the Corporation at Kannur Depot for an amount of The Rs.95,50,000/- by using MLA-LAC ADS fund. petitioner had executed an agreement dated 29/12/2015 for executing the said work. The work site was handed over to the petitioner on 8/2/2016 and the date of completion of the work as per terms of the contract agreement was on 7/12/2016. However, the petitioner actually completed the construction only on 13/10/2018. As the delay has occurred only due to the inaction on the part of the petitioner, an amount of Rs.1,60,000/- was deducted from the bill. It is submitted that the petitioner had submitted the part bill on 1/11/2016 and the same was passed for an amount of Rs.47,55,812/-. After scrutiny and making the statutory deductions, a net amount of Rs. 39,46,824/- was paid to the petitioner.”

7. Coming to the “retention amounts”, the withholding of the same is sought to be explained by respondents 1 to 3 through the further averments in paragraphs 4 to 7 of the said counter affidavit, which reads as under: “4. Further, payment to the petitioner was made WP(C) NO. 7322 OF 2023 5 based on the measurements recorded on M Block by the Assistant Engineer and check measured by the Assistant Executive Engineer. The petitioner has accepted the measurement and signed the M Block. Therefore, there cannot be any dispute with respect of the payment effected date. Corporation

5. It is submitted that the completion certificate was issued to the petitioner on 24/5/2019 by the Assistant Engineer treating 30/11/2018 as the date of completion.

6. It is submitted that the revised estimate was placed before the meeting of the Board of Directors held on 12/10/2020 and the Board of Directors had taken a decision to check the structural stability and quality of the work through Project Management Consultants. Accordingly,M/s. HLL Lifecare Ltd, an accredited agency by the government of Kerala was entrusted to assesse the structural stability by the Corporation. Later, as per the 409th board meeting the revised estimate was approved and bill paid to the petitioner. It is submitted that the M/s. HLL Lifecare Ltd., as per the structural stability report dated 4/8/2021, noted the following defects in the work carried out by the petitioner: a) In the front portion of the first floor there were continuous major cracks at the lintel level passing besides the air holes. b) Leak was seen in the building beneath the water tank. c) Fire safety staircases are not constructed as per the approved drawing. d) The open terrace should be re-plastered with proper slope and drainage.

7. As per the terms of the contract, it was a duty of the contractor to rectify the defects, the same has been properly communicated to the petitioner by the Corporation, as per letter dated 6/8/2021. A true copy of the communication issued by the Corporation to the petitioner dated 6/8/2021 is produced herewith and marked as Exhibit R-1(a). Subsequently, as per the communication dated 05/10/2021, the petitioner informed the Corporation that the defects noted as a, b and d were routine maintenance works which have to be done by the WP(C) NO. 7322 OF 2023 6 Corporation and that the same was not included in the work order. The petitioner in same letter also stated that he had cured the other defect as requested by the Corporation. A true copy of the communication of the petitioner dated 5/10/2021 is produced herewith and marked as Exhibit R-1 (b). Again as per the communication dated 18/1/2022 the Corporation has further informed the petitioner that subsequent to the rectification carried out by the petitioner, onsite inspection by the Assistant Engineer and overseer it was found that the defects still persists and it was as if no rectification work has been done by him. Hence, he was directed to complete the renovation work urgently and report compliance of the same. However, till this date the petitioner has not taken any initiative to rectify the defects. Since the defects still persists and has not yet been rectified, Rs. 4,75,581/- was put on hold by the Corporation and the reasons stated by the Corporation are genuine.” retention amount

8. As is luculent from the afore, on the issue of penalty, this Court cannot come to the aid of the petitioner because, the amount of Rs.1,60,000/- was deducted from his final bill as early as in the year 2018 and he does not appear to have raised any objection against it until now. Obviously, he will have to invoke other remedies, if he is interested, to seek refund of the said amounts. This is because, when the respondents say that the delay in construction of nearly two years, was on account of reasons that can only be cast against the petitioner, it was for him to have disputed it and proved it otherwise, which cannot be done through a writ petition filed under Article 226 of the Constitution of India.

9. As regards the “retention amount”, there is some force WP(C) NO. 7322 OF 2023 7 in the submissions of Sri.Sreejith because, normally, any defect could have been noticed and its responsibility cast upon the petitioner only had it been detected and notified to him during the defect liability period, or such other time frames as are mentioned in the contract between the parties.

10. Prima facie, when the date of completion has been certified by the competent Authority of the first respondent to be

30.11.2018 and if the defect liability period is only for one year thereafter, then the detection of the alleged defects on

04.08.2021 - to be then notified to the petitioner through Ext.R1(a) dated 06.08.2021, appears to be beyond the time frames, within which, the petitioner is obligated to answer the same. However, this again is a question of fact, hinged on the various provisions of the contract; and am, therefore, of the view that the first respondent must hear the petitioner and take a decision on this issue without any avoidable delay, so that he can then invoke his remedy of judicial review before this Court, if so required in future.

11. In the afore circumstances, I allow this writ petition to the limited extent of directing the competent Authority of the first respondent to immediately hear the petitioner with respect WP(C) NO. 7322 OF 2023 8 to the “retention amount”, as also the amount covered by the EMD, adverting to my observations above; thus culminating in an appropriate order and necessary action thereon, expeditiously as is possible, but not later than one month from the date of receipt of a copy of this judgment.

12. Needless to say, if, through the afore exercise, any amounts are found due to the petitioner, the same shall be disbursed to him within a period of two months thereafter. That said, all other contentions including on the question of penalty are left open to be impelled by the petitioner before appropriate forums. Sd/- DEVAN RAMACHANDRAN JUDGE WP(C) NO. 7322 OF 2023 9 APPENDIX OF WP(C) 7322/2023 PETITIONER EXHIBITS Exhibit P1 THE TRUE COPY OF CONTRACT CERTIFICATE DT. 24/5/2019 AGREEMENT NO. C-68/2015-16 Exhibit P2 THE TRUE COPY OF THE LETTER DT. 7/12/2015 OF ENTRUSTMENT OF CONTRACT Exhibit P3 Exhibit P4 Exhibit P5 Exhibit P6 Exhibit P7 THE TRUE COPY OF THE LETTER DT. 2/2/19 ADDRESSED TO THE CHIEF ENGINEER (P&CW) TRANSPORT BHAVAN, FORT, TRIVANDRUM THE TRUE COPY OF THE NOTICE ISSUED BY THE ESTATE OFFICER DIRECTING THE PETITIONER TO DO THE RECTIFICATION DT. 6/7/2021 THE TRUE COPY OF THE LETTER ADDRESSED TO DTO, KANNUR AFTER RECTIFYING THE DEFECTS DT. 5/10/2021 THE TRUE COPY OF THE COMMON JUDGMENT IN CON. CASE (C) NO. 2135/2021 IN W.P. (C) NO. 27545/2020 ON THE FILE OF HON'BLE HIGH COURT OF KERALA, ERNAKULAM DT. 9/3/2022 THE TRUE COPY OF THE LETTER ISSUED DT. 14/9/2021 BY THE PUBLIC INFORMATION OFFICER ADDRESSED TO THE PETITIONER'S COUNSEL RESPONDENT EXHIBITS Exhibit R-1 (a) true copy of the communication issued by the Corporation to the petitioner dated 6/8/2021 Exhibit R-1 (b) true copy of the communication of the petitioner dated 5/10/2021