A.G. Vijayakumar vs Pazhayannur Block Panchayat

A.V. Ramakrishna Pillai, J.—Aggrieved by the non-consideration of the petitioner''s request to relieve him from a contract without risk and cost by the respondent Block Panchayath, the petitioner has come up before this Court.

The petitioner was awarded the work, "NABARD-RIDF XI-Formation work to Mappilakulambu-Amaloor-Kanassery Road in Pazhayannur Block", by the 1st respondent panchayath. The probable amount of contract (PAC) of the said work was 98 lakhs. This was prepared on the basis of the 2004 PWD schedule of rates. The petitioner alleges that the funding of the aforesaid work was to be shared between the 1st respondent panchayath and NABARD in the ratio of 20:80; i.e., 19,60,000 was to be funded by the 1st respondent and the remaining amount of 78,40,000/- was to be funded by NABARD; and the amount funded by NABARD was to be disbursed to the 1st respondent panchayath through respondents 4 and 5. Thus, according to the petitioner, as far as the subject work is concerned, respondents 4 and 5 were the disbursing agents of the share allotted by NABARD. The petitioner alleges that on 05.03.2007, he entered into Ext. P1 agreement with the 2nd respondent (for and on behalf of the 1st respondent panchayath) for the due execution of the subject work. As per Ext. P1 agreement, the subject work was to be completed on or before 30.06.2009. The petitioner alleges that pursuant to execution of Ext. P1 agreement, though he was ready and willing to commence the work immediately, the same could not be done owing to reasons solely attributable to respondents 1 and 2 such as non-handing over of the site, non-measurement/approval of initial levels, non-removal of electric posts etc. The site was handed over to the petitioner on 06.07.2007 and the initial levels were measured and approved on 23.11.2007; and later, on 14.03.2008 and 30.10.2008, the encroachments and electric posts were removed from the site. According to the petitioner, he somehow managed the heavy loss on account of tremendous increase in materials and labour costs to complete 75% of the work and the only work remained to be done was tarring. The petitioner alleges that by that time, the cost of bitumen increased several folds making it impossible for the petitioner to purchase the same at the current market price. According to the petitioner, he could have purchased the required quantity of bitumen at far lesser rate during the time stipulated in Ext. P1 if the work had not been unduly delayed by the panchayath. The petitioner further alleges that though he requested for revision of rates, the same was also not granted by the 1st respondent panchayath. Therefore, according to the petitioner, owing to the reasons solely attributable to the 1st respondent panchayath and for reasons beyond the control of the petitioner, the subject work has become totally frustrated. Later, on being fully convinced that subject work has become totally frustrated and that the petitioner is in no way responsible for the same, the 1st respondent panchayath, as per Exts. P23 and P27 resolutions, held that the petitioner is entitled to be relieved from the work without any risk and cost after settling the bills for the work already done by the petitioner. The petitioner''s grievance is that thereafter, the 1st respondent referred the matter for the concurrence/permission of the 5th respondent for relieving the petitioner from the subject work and till date, no orders have been passed and communicated to the petitioner by the 5th respondent in the matter. The petitioner''s grievance is that while so, without referring to Exts. P23 and P27 resolutions, the 2nd respondent has issued Ext. P28 to the petitioner stating that the time for completion of the subject work has been extended up to 31.03.2011, and accordingly, directed the petitioner to complete the subject work before the said period and to submit the final bill. It was further stated in Ext. P28 that the petitioner would be made responsible for all the consequential losses that may be occasioned to the 1st respondent panchayath or the Government, which, according to the petitioner, is absolutely illegal and unjust. It is with this background, the petitioner has come up before this Court.

Respondents 1 to 4 filed a counter affidavit, wherein they have admitted the factual averments in the writ petition. They would contend that Circular no. 60/2003/Fin. dated 10.10.2008 was issued by the Government due to abnormal rise in the cost of cement and steel in the public market and according to para 2.4 of the circular, the re-tendering of the work after exempting the contractor from risk and cost can only be allowed in the case of materials like cement and steel used for the work and this benefit will not be applicable to any other constructions using materials other than steel and cement. According to them, in this case, only tarring work of the road is remaining for execution; and hence, the petitioner is not eligible for getting the benefit under the aforesaid circular. It is also stated that in future, no funds would be received from the NABARD and according to the agreement, the entire work would have to be done by the contractor himself; and hence, the petitioner cannot be relieved from the contract without risk and cost. They have taken the stand that as the request of the petitioner will not come under the purview of the aforesaid circular, there is no provision for relieving the petitioner from the contract; and hence, he was directed to complete the work before 31.03.2011 informing him that he would be made responsible for all the loss. They would contend that though there was some delay in shifting the electric posts and evicting the encroachments, those factors have not affected the progress of the work. It is stated that up to date, the total value of work done came to 72,62,842/-, out of which an amount of 60,01,113/- has been paid to the contractor. An amount of 7,26,284/- has been recovered from the bills towards retention and an amount of 4,55,330/- has been remitted towards taxes, welfare fund etc. They have further contended that the petitioner had enough time to complete the work within the prescribed time limit, i.e., before 30.06.2009, and he has not completed the work without any valid reason and stopped the work before 30.06.2009. According to respondents 1 to 5, this was against the provisions of the agreement; and since the petitioner has not turned up to complete the work, the balance amount has not been paid to him. The work was tendered on 23.02.2007 and 80% of expenditure of the work is met by NABARD. According to them, even though the initial levels were taken early, it was approved on 23.11.2007 and there was no inordinate delay in shifting the utilities and evicting the encroachment. They have further contended that the petitioner''s request for revising the rate is against the conditions of the agreement and there is no provision in the agreement for revising the contract. As Circular no. 60/2003/Fin. dated 10.10.2008 was issued by the Government in the cases of works, where cement and steel are used, the petitioner cannot be relieved from the contract without risk and cost as per the resolutions of the Block Panchayath. Therefore, respondents 1 to 5 justify the stand taken by them.

Arguments have been heard.

It was submitted by the learned counsel for the petitioner that after execution of Ext. P1 agreement on 05.03.2007, the petitioner was ready and willing to immediately commence the work. However, the same could not be done owing to reasons solely attributable to respondents 1 and 2 such as non-handing over of the site, non-measurement/approval of initial levels, non-removal of electric posts etc. Subsequently, the site was handed over to the petitioner on 06.07.2007 and the initial levels were measured and approved on 23.11.2007. It was still later on 14.03.2008 and 30.10.2008 that the encroachments and electric posts were removed from the site. This long delay was only on account of the laches on the part of respondents 1 to 3. The petitioner alleges that in spite of the above, the petitioner was able to complete 70% of the work and the only work remained to be done was tarring. However, by that time, cost of bitumen has been increased. Therefore, the petitioner was unable to purchase the same at the current market price. The argument advanced by the learned counsel for the petitioner is that had the work not been unduly delayed by the respondent panchayath, the petitioner could have purchased the required quantity of bitumen at a far lesser rate during the currency of original time stipulated in Ext. P1 agreement, i.e., on or before 30.06.2009. Pointing out the above, though the petitioner requested for revision of rates, the same was not granted by the 1st respondent panchayath. Therefore, the petitioner alleges that owing to the reasons solely attributable to the 1st respondent panchayath and for reasons beyond the control of the petitioner, the subject work has become totally frustrated. Therefore, according to the petitioner, it is only just and proper that the 1st respondent panchayath terminates the subject work without any risk and cost to the petitioner and disburses the security deposit as well as the amounts payable to the petitioner for the work already carried out by him.

As far as Ext. P1 agreement is concerned, the privity of contract under the said agreement is between the petitioner and the 1st respondent panchayath. The 1st respondent has, vide Exts. P23 and P27 resolutions, found that the petitioner is entitled to be relieved from Ext. P1 agreement without any risk and cost. Therefore, the learned counsel for the petitioner pointed out that there is absolutely no legal requirement for the 1st respondent panchayath to seek the approval/permission of respondents 4 and 5 for implementing the said resolutions as much as there is no privity of contract between the petitioner and respondents 4 and 5. It was further pointed out that as far as the subject work is concerned, respondents 4 and 5 are only disbursing agents of the share allotted by NABARD. Therefore, once the 1st respondent has resolved to relieve the petitioner from the subject work without any risk and cost after settling all the bills for the work already done by the petitioner, it is not within the realm of jurisdiction of respondents 4 and 5 to sit in appeal over the said decision of the 1st respondent panchayath and to examine whether the said decision is valid or not.

The learned counsel for the petitioner, inviting my attention to certain decisions of the apex court, submitted that the State shall act fairly and reasonably and in conformity with the requirements of Article 14 of the Constitution of India. There cannot be any quarrel against the proposition that the State and its instrumentalities are enjoined with the obligation to act with fairness in the area of contractual relations also as the State''s constitutional obligation co-exists with the contractual obligation.

It is crucial to note that the 1st respondent panchayath, vide Exts. P23 and P27 resolutions, concluded that the subject work has become frustrated owing to delay, which is solely attributable to the omissions and latches of respondents 1 to 3. Therefore, the 1st respondent should relieve the petitioner from the subject work without any risk and cost.

The learned Senior Government Pleader would argue that the writ petition is not at all maintainable as disputed questions of facts are involved. The learned Senior Government Pleader also referred to the second relief in the writ petition, wherein it was prayed that respondents 1 to 3 be directed to ascertain the loss sustained by the petitioner due to the delay that has been occasioned owing to the latches of respondents 1 to 3. However, the learned counsel for the petitioner fairly conceded that he is not pressing the second relief as he is intending to seek remedies in respect of the same through a competent civil forum.

As far as the first relief is concerned, this Court is of the view that there is no harm in allowing the said prayer in the light of the matters now placed on board. As the respondent panchayath itself has admitted through Exts. P23 and P27 resolutions that the work became frustrated owing to the delay, which is solely attributable to the omissions and latches on the part of respondents 1 to 3, this Court is of the view that the petitioner is entitled to get the first relief as prayed for in this writ petition.

In the result, the writ petition is allowed.

Respondents 1 and 2 are directed to relieve the petitioner from the work without any risk and cost after disbursing to the petitioner the security deposit as well as the balance amounts due for the work already done by the petitioner. This shall be done within a period of one month from the date of receipt of a copy of this judgment.