P. Thyagarajan vs Executive Engineer, Central Public Works Department And Ors

The petitioner, who is an A class civil works contractor, has filed this writ petition aggrieved by Ext.P6 order dated 8.12.2020 of termination of the

contract. He seeks a direction to the respondent to permit him to complete the construction within a reasonable time.

As per Ext.P1 letter dated 16.7.2018 the respondent accepted the e-tender submitted by petitioner for the work of “construction of 0.75 unit

dormitory (G+1) for girls at Navodaya Vidyalaya, Vithura, District Thiruvananthapuram, Kerala including water supply, sanitary installations, drainage

and internal electrical installations, fans and fittings.†It is stated that after furnishing performance guarantee on 25.7.2018, he started the work in

August 2018; but he was unable to complete the work within the stipulated time because of the outbreak of Covid-19 pandemic. He has further stated

that, in answer to a show cause notice from the respondent, he had submitted Ext P2 explanation on 4.6.2020, undertaking to complete the work by

30.9.2020. It is his further case that the Principal of the School, where the construction was going on, had requested him as per Ext.P3 letter, dated

29.07.2020, to stop the work due to the fear of spread of Covid-19, pointing out that the teachers were residing there with family. It is also submitted

that he was constrained to stop the work on the basis of the said letter as well as the oral direction of the respondent. While so, the petitioner was

issued with Ext.P4 show cause notice on 30.10.2020 proposing termination of the contract invoking Clause 3(a)(b) of General Conditions of Contract

for Central PWD works 2014. It is stated that though petitioner submitted Ext.P5 explanation on 10.11.2020 explaining the entire circumstances, the

respondent issued Ext.P8 order on 8.12.2020, terminating the contract and forfeiting the performance guarantee as well as the earnest money deposit.

Petitioner was directed to report before the respondent for joint measurement. It is stated that contract is terminated without appreciating the fact that

the work had to be stopped at the request of the Principal; without taking note of the scarcity of labourers after the Covid-19 outbreak and without

considering any of the factual circumstances pointed out in his explanation. It is stated that he had already requested for extension of time up to

30.01.2021 and not to take any penal action against him.

According to the petitioner, he would be able to complete the work, in case he is given three months' time as he has made all arrangements for the

same. The learned counsel for the petitioner submitted that a re-tender at this stage would only be contrary to public interest as it would involve more

expenditure to the Government as the rate of work would be different.

The learned central Government Counsel has filed a statement on behalf of the respondent refuting the contentions raised by the petitioner. It is

stated that pursuant to Ext.P1 letter of acceptance, an agreement was entered into between the petitioner and the Executive Engineer, wherein it was

stipulated that the period of completion of the work would be 210 days, specifying the date of commencement of the work as 31.07.2018 and due date

of completion as 25.2.2019. It is therefore stated that the outbreak of Covid-19 pandemic which occurred after an year could not have been the

reason for delay in completion of work. It is stated that the respondent had been asking the petitioner to accelerate the progress of work with due

diligence issuing Annexure R1(b) to R1(p) letters issued between 25.01.2019 and 27.11.2019 and thereafter, informing him the violation of contractual

conditions and obligations from his part with warning that the department would be forced to take action under Clause 3 of the contract on failure to

maintain desired progress of the work. It is stated that during inspections several defects in the work and lapses in safety were found. He was given

several chances to improve the quality of work, speed etc. to abide by the programme of work, in each of the notices issued to him, where the lapses

were explained. On expiry of the time schedule on 25.02.2019, extension was granted upto 31.08.2019 without prejudice to the right of Government to

recover liquidated damages; the Chief Engineer had also examined the case and it was found that petitioner was responsible for the delay. It is stated

that despite the direction of the Chief Engineer in Annexure R1(e) letter dated 08.08.2019, while giving another opportunity to petitioner, even after

finding the petitioner solely responsible for the delay, petitioner did not submit the application for rescheduling of milestone for completion of work on

war footing, in a proper format, even after reminding him the same in Annexure R1(i) letter of the respondent or in Annexure R1(j) letter of the

Superintending Engineer. In the absence of any proper application for ROM or for extension of time and taking note of the slow pace in the work the

Chief Engineer issued Annexure R1(k) show cause notice on 27.11.2019 under Clause 2 of the agreement proposing action against the petitioner for

imposing compensation for the prolonged delay and the casual approach of the petitioner, stating that there was no likelihood of completion of work

within 07.02.2020, as per the work schedule submitted by petitioner. It is stated that the respondent had issued another show cause notice Annexure

R1(l) dated 03.05.2020 to petitioner for action under Clause 3 and after considering the explanation of the petitioner and taking note of the outbreak of

Covid-19 and the lockdown measures the respondent had, in Ext.R1(m) letter dated 04.06.2020, recommended extension of time till 30.09.2020. But

even thereafter petitioner did not take any pro-active steps. Therefore Ext.P4 show cause notice was issued for proceeding under clause 3. It is stated

that Annexure R1(n)and R1(o) letters would show that the explanation of petitioner was considered. While terminating the contract the reasons for

the same are also stated in Ext.P6, which are sufficient for termination. It is stated that the Principal as well as the Chairman of the managing

Committee had expressed serious concern over the delay in completion of the work in their letters Annexure R1(p) dated 27.11.2019, Annexure

R1(r)letter dated 25.02.2020. It is stated that the Principal had as per Annexure R1(s) letter dated 06.10.2020 requested to hand over the building

immediately, pointing out the inconvenience caused to them. It is stated that petitioner himself assumed that extension was given till 31.01.2021, even

in the absence of any such orders. He used to raise false allegations against the department. It is also pointed out the petitioner has already been found

responsible for the delay in completion of construction of other two hostels also in Thiruvananthapuram.

The petitioner filed a reply affidavit stating that though the respondent never extended the period of contract fixed as on 25.02.2019, the request of

petitioner for extension till 30.01.2021 was never objected. It is stated that he has satisfactorily completed several works like those covered by Exts.P6

and P7 produced along with the reply affidavit, under the respondent and that he had been carrying out the present work also with due diligence.

According to him, the delay occurred because of the inaction of the respondent in furnishing the drawings, non-finalisation of location lay out, etc. It is

stated that the revised structural drawings for foundation details of the building were made available only on 08.11.2018; plinth level and foundation

details were finalised only on 12.11.2018; architectural drawings were issued only on 16.04.2019, that too after a series of correspondence in Exts.P9

to P12 letters sent to the respondent between 03.09.2018 and 23.02.2019, in which he had explained the hindrances occurred in the execution of work.

It is stated that the drawings of the part plan basement level and ground level of toilet block was issued only on 17.08.2019, as evident from Ext.P8

letter of the respondent, whereas the actual completion of the work stipulated was 25.01.2019. It is also his case that his application for extension of

period of contract was accepted by the respondent without any reservation. It is stated that the work which was stopped at the instance of the

Principal of the School could be restarted only with the minimized structural resources in the absence of sufficient number of labourers. Pointing out

Ext.P13 payment agreement as well as 7th RA bill approved in Ext.P15 by the respondent on 30.10.2020 and 5.12.2020 respectively and the payment

effected as per Ext.P16 memorandum on 21.12.2020, the petitioner claims that the respondent had impliedly granted extension based on his request in

Ext P14 letter dated 07.09.2020. According to him payment could not have been made to him in the absence of extension of time for completion of

work or after termination of contract. It is stated that the work, which he had to stop in July 2020 at the instance of Principal, could be restarted only

after permission was granted on 26.08.2020. The work could be restarted by 15.09.2020, after arranging sufficient labourers, and materials. According

to petitioner, he had explained the reasons for the delay, in the explanation he had submitted and had assured to complete the work by 30.01.2021.

After the respondent allowed the petitioner to continue with the work, the termination of contract by Ext.P6 order is mala fide. It is stated that the

work awarded to him at 2016 schedule of rates would have to be re-arranged only at escalated rate of 2018 which would incur more expenditure to

Government. It is the case of the petitioner that he has not violated any of the conditions of contract and it would be in furtherance of public interest to

permit him to complete the work.

I heard Sri.Sachithanada Pai the learned Counsel for the petitioner and the learned CGC appearing for the respondent. The learned counsel for the

petitioner submits that petitioner requires only three more months' time to complete work. The learned Central Government Counsel on instructions

submitted that the respondent as well as the Department has lost confidence in the petitioner. The learned Central Government Counsel also points out

that when the respondents have arrived at the decision to terminate the contract only after taking note of all the circumstances, the progress of work

etc. this Court may not interfere with the same. It is also argued that nothing prevents the respondent from making payment for the work that have

been already carried out and such payment cannot imply grant of extension of time for completion of work.

When the petitioner submits that he has completed major part of the work, it is disputed by the respondent. Similarly the reason for the delay caused

in completion, according to petitioner, is on the respondent; whereas it is solely on petitioner, according to the respondent. Petitioner claims that there

was implied extension of time for completion which is stoutly opposed by respondent. \

Admittedly there is no order granting extension of time to the petitioner for the period up to 30.01.2021. Petitioner claims only implied extension.

It is seen that the contract is terminated in accordance with the provisions contained in the agreement executed between the parties as well as the

provisions contained in the General Conditions of Contract. There is serious dispute as to the reason for the delay apart from the plea of loss of

confidence on the petitioner. In such circumstances, this Court will not be justified in interfering with the issue. Though the petitioner pointed out that

he would complete the work within a period of three months or that there would be additional expenditure on account of enhancement of rate in the

event of a re-tender, when the respondents submit that they have lost confidence in a party, this Court cannot compel the respondents to permit the

petitioner to work. It is seen that a number of notices were being issued to petitioner to accelerate the progress of work, though petitioner asserts that

delay was caused at the instance of respondent. The termination is seen effected after a lot of correspondence between the parties and it is stated

that the said termination is in accordance with clause 3 of the agreement. Therefore it is only appropriate for the petitioner to co-operate with the

respondent to complete the joint measurement.

The scope of judicial review in contractual matters is very limited. In the judgment in State of Kerala v. M.K. Jose: (2015) 9 SCC 433 the Apex

Court held that Court should ordinarily not entertain a writ petition, if there is a breach of contract when factual disputes are involved. The Apex Court

was considering an appeal against the judgment of this court which permitted the contractor to proceed with the work after setting aside the

termination of contract based on the report filed by the Advocate Commissioner, regarding the quantum of work executed. In the judgment in ABL

International Ltd. v. Export Credit Guarantee Corpn. of India Ltd.: (2004)3SCC 553, the Apex Court, held that though judicial review in contractual

matters is not totally excluded, the plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court unless the

action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and

legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction. In Noble Resources Ltd. v. State of Orissa: (2006)10SCC

236 it was held that the question whether power to exercise judicial review should be exercised, should be decided in the factual circumstances of

each case. While considering the challenge against award of contract the Apex Court, in Tata Cellular: Union of India: (2004)6 SCC 651, held that the

role of the court in matters involving contracts is only to review the manner in which the decision is taken and the Court which does not have expertise

in matters covered by the tender would not venture to correct the administrative decision and there should be a fair play in the joints for an

administrative body and that the administrative decision must not only be tested by the application of principle of reasonableness while it should also be

free from arbitrariness not affected by bias or actuated by mala fides.

Therefore, I am of the view that interference with the Ext.P6 order is not warranted under Article 226 of the constitution of India. The writ petition

accordingly dismissed. In order to enable the respondents to re-tender the work, the petitioner shall co-operate with the respondents for the joint

measurement without any delay. Admitted payment if any due to the petitioner shall also be made after the same.

It is made clear that the dismissal of the writ petition will not stand in the way of the petitioner invoking the remedies available to him in accordance

with law.