Vikas Builders vs M.P. Rural Road Development Authority

Sanjay Yadav, J

(1) This revision under section 19 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (referred as “Adhiniyamâ€) is directed

against the order dated 28.4.2017 passed by the Madhyastham Adhikaran (referred as “Tribunalâ€) dismissing the Reference Petition

No.123/2015.

(2)  Relevant facts briefly are that a contract for “Construction, up-gradation and maintenance of rural roads under Pradhan Mantri Gram Sadak

Yojana Package No.MP-0452 in District Bhind MP†was awarded to the petitioner vide Agreement No.7/2006-2007 dated 19.7.2016. The period

allowed for completion was 12 months including rainy season.

The stipulated data of completion was 3.8.2007. The extension was granted upto 30.3.2009. As the work could not be completed by the extended

time, the contract was rescinded and security deposit was forfeited as per clause 52 of the Agreement vide order dated 3.11.2009.

(3) That by letter dated 11.12.2009 the petitioner was informed for joint measurement of work done by him on 23.12.2009. That a committee was

constituted by order dated 9.10.2010 to take measurement and to submit final bill by 20.8.2010. Both these letters, it is urged, were never served on

the petitioner. Be that as it may. The respondents issued notice inviting tender for completion of balance work of Package No.MP0452 on 22.12.2010.

Work order was issued on 15.6.2011 to M/s Ramendra Singh. That by communication dated 10.10.2014 invoking clause 24.1 of the agreement the

petitioner was called upon to pay Rs.4265247/- (Rs.2835900/- towards minus bill, Rs.353835/- towards Royalty and Rs.1075512 towards penalty).

Revenue Recovery certificate was issued on 22.4.2015 which was challenged by the petitioner vide Writ Petition No.2670/2015 which was disposed

of on 2.9.2015 in the following terms:

“Having heard the learned counsel for the petitioner on this issue and in view of the law laid down by the Full Bench of this Court in the case of

B.B. Verma (supra) it is ordered that while the respondent authorities shall not be entitled to recover any disputed claims or any recovery being made

towards damages from the petitioner till decision in the arbitration proceedings which shall necessarily be initiated by the petitioner within three weeks

from today, however, statutory dues like dues towards royalty, etc. which are sought to be recovered from the petitioner are not stayed and the

authority would be at liberty to recover the same.

With the aforesaid liberty and observation, the petition filed by the petitioner stands disposed of.â€​

(4) Prior to issuance of Revenue Recovery Certificate the petitioner had raised the objection on 30.12.2014 and reiterated on 24.1.2015. The petitioner

deposited an amount of Rs.5,00,000/- with General Manager RRDA, Bhind and Rs.50,000/- with the Tahsildar Etawah on 14.7.2015. Meanwhile

petitioner raise the dispute involving clause 24 of the agreement on 1.3.2015 for returning the security deposit, royalty amount and for final payment of

bill. The request was turned down on 27.7.2015 by the Chief Engineer, M.P.R.R.D.C. as time barred. The petitioner filed an application under section

7 of the Adhiniyam, 1983 seeking following reliefs:

“(a) order of termination of contract and forfeiture of security amount dated 03-11-2019, Annexure A-15, order dated 27-07-2015, Annexure A-26

rejecting dispute of petitioner being time barred by respondent No.1 as well as order of recovery and RRC issued by respondent No.2 dated 10-10-

2014 & 24-01-2015, Annexure A-18, A-23 & A-25.

(b) direct respondents to refund following amount to petitioner -

i) Amount of Security deposit - Rs.8,16,522.00

ii) Amout deducted & kept in Miscellaneous deposit - Rs.4,73,901.00

iii) Security deposit furnished by way of fixed deposit receipt - Rs.17,07,065.00

Total Rs.29,97,488.00

along with antilite pendentilite and future interest @ 18% per annum on the amounts awarded by this Hon'ble Tribunal and Award to that effect be

passed and cost of Arbitration may also be allowed.â€​

(5) The Tribunal declined to entertain the reference on the finding that the same is time barred. The reasons find mention in paragraphs 46 and 47:

“46- orZeku izdj.k esa ;g fufoZokfnr gS fd vuqca/k fnuakd 3-11-2009 dks fujflr fd;k x;k Fkk bl fLFkfr esa ;kfpdkdrkZ dks vuqca/k ds fujLrhdj.k ds

laca/k esa vuqca/k ds mica/k 24 ds rgr l{ke izkf/kdkjh ds ikl vius nkos@fookn izLrqr djus Fks D;ksafd mDr mica/k 24 ds vuqlkj ,sls fookn Hkh tks fd

xq.kkRed nkos u gksa vkSj voS/k fujLrhdj.k ds laca/k esa Hkh gks rks Hkh mldk fujkdj.k l{ke izkf/kdkjh djus ds fy;s izkf/kd`r gSA ,slh fLFkfr esa

;kfpdkdrkZ ;g ugha dg ldrk fd ml le; rd vafre ns;d ugha cuk Fkk ;k dksbZ jkf'k :i;s 50000 ;k mlls Ã…ij dh pqukSrh ;ksX; ugha gksus ls og vuqca/k ds

mica/k 24 ds rgr l{ke izkf/kdkjh ds ikl tkus ds fy;s ck/; ugah FkkA ;fn ;kfpdkdrkZ us vuqca/k fujLrhdj.k dk fookn vuqca/k ds mica/k 24 ds rgr l{ke

izkf/kdkjh ds ikl tkus ds fy;s ck/; ugha FkkA;fn ;kfpdkdrkZ us vuqca/k fujLrhdj.k dk fookn vuqca/k ds mica/k 24 ds rgr l{ke izkf/kdkjh dks izsf""kr dj

fn;k gksrk rks ;g ekuk tkrk fd ;kfpddrkZ us vuqca/k ds vuqlkj fookn mRiUu gksus ij vuqca/k ds mica/k 24 dk ikyu dj fy;k rc ,slh fLFkfr esa ;fn vafre

ns;d rS;kj gksrk mlds i'pkr iqu% ;kfpdkdrkZ vuqca/k ds mica/k 24 dk mi;ksx dj ldrk Fkk ml le; mls xq.kkRed jkf'k dh tkudkjh gks tkrh rks og l{ke

izkf/kdkjh ds le{k nkos esa la'kks/ku ;k uohu nkok izLrqr dj ldrk Fkk tks mlus ugha fd;Ka rc bu ifjfLFkfr;ksa esa ;g ugh dgk tk ldrk fd ;kfpdkdrkZ us

vuqca/k ds mica/k 24 ds eqrkfcd vuqca/k ds fujlu dks loZizFke vuqca/k ds mica/k 24 ds rgr fookfnr dj mldk mipkj izkIr ugha fd;kA ;gkW ij fufoZfookn

:i ls vuqca/k ds fujLrhdj.k ds fo:) ;kfpdkdrkZ l{ke izkf/kdkjh ds ikl fu/kkZfjr rhu o""kZ le;kof/k esa ugah x;k gS vFkkZr ;gh ekuk tk;sxk fd ;kfpdkdrkZ us

e/;izns'k ek/;LFke vf/kdj.k vf/kfu;e 1983 dh /kkjk 1&ch ¼1½ ¼,½ ds rgr vuqca/k ds micaa/k 24 dk ikyu ugh fd;k x;k gSA vuqca/k fujLrhdj.k dk

vkns'k vafre Lo:i dk gks pqdk gS] mldh oS/kkfudrk ;k vkSfpR;rk dks rhu o""kZ ds i'pkr pqukSrh ugha nh tk ldrh gSA vr% ;g funsZ'k ;kfpdk Lohdkj

ugha dh tk ldrhA

mijksDr U;k; n`""Vkar lat; nqcs fo:) e-iz- 'kklu 2012¼4½,e- ih-,y-ts-212 ds pj.k dzekad 13 esa Hkh ;gh vfHkfu/kkZfjr fd;k x;k gS fd loZizFke fookn

dks vuqca/k ds mica/kksa ds rgr l{ke izkf/kdkjh ds ikl fu.kZ; ds fy;s izsf""kr fd;k tkuk vko';d gSA mijksDr U;k; n`""Vkar dk pj.k dzekad 13 ¼1½

fuEukuqlkj gS%&

“13. In view of the preceding analysis, we proceed to state our conclusions as under:-

(i) Where the works contract contains a clause like Clause 29, the jurisdiction of the Tribunal can be invoked only after approaching the Authority as

provided under the terms of the works contract.â€​

47- Li""V :i ls ;kfpdkdrkZ us orZeku izdj.k esa /kkjk 24 dk mi;ksx vuqca/k ds fujLrhdj.k ds laca/k esa ugha fd;k gSA vc ,slh fLFkfr esa ;kfpdkdrkZ dk

;g dguk fd vuqca/k rS;kj gksus dh lwpuk fnukad 10-10-2014 ds i'pkr vuqca/k ds mica/k 24 ds rgr l{ke izkf/kdkjh ds ikl vius nkos@ fookn fnukad 1-3-

2015 dks izLrqr dj fn;s Fks vkSj nkos@fookn izLrqr djus ds MsFkh ,oa l{ke izkf/kdkjh ds fu.kZ; fnukad 27-7-2015 ls 1 o""kZ ds vanj gh funsZ'k ;kfpdk bl vf/kdj.k eas fnukad 4-9-2015 dks izLrqr dj nh gS blfy;s ;g

le;kof/k ds Hkhrj gksdj izpyu ;ksX; gS] Lohdkj fd;s tksus ;ksX; ugha gSA D;ksafd ;kfpdkdrkZ us vuqca/k ds fujLrhdj.k ds fu/kkZfjr le;kof/k ds vanj

l{ke izkf/kdkjh ds le{k e/;izns'k ek/;LFke vf/kdj.k vf/kfu;e 1983 dh /kkjk&7&ch ¼1&,½ ds vuqlkj nkos@fookn izLrqr ugha fd;sA orZeku izdj.k esa

;kfpdkdrkZ }kjk tks nkos pkgs x;s gSa og mlh fLFkfr esa izkIr gks ldrs gSa tc vf/kdj.k bl fu""d""kZ ij igqaps fd mRrjoknhx.k ds }kjk fnukad 3-11-2009

dks vuqcaa/k dk fujLrjhdj.k fof/k vuqlkj fd;k x;k gS ;k ughaA blds i'pkr gh ;kfpdkdrkZ ds vU; xq.kkRed nkos vf/kdj.k }kjk fujkd`r fd;s tk ldsxsaA

fdUrq ;kfpdkdrkZ us vuqc/ak ds fujLrhdj.k dks le;kof/k ds vanj l{ke izkf/kdkjh dks izLrqr ugh fd;k gS tks mls vuqca/k ds mica/k 24 ds vuqlkj izLrqr

djuk FkkA vr% ;kfpdkdrkZ } kjk e/;izns'k ek/;LFke vf/kdj.k vf/kfu;e 1983 dh /kkjk 7&ch ¼1&, ½ dk ikyu ugha fd;k x;k gSAâ€​

(6) As regard to non suiting the petitioner in respect of challenge to termination of contract and the refund of amount of security and the deductions, it

is fairly submitted that the challenge to termination and the claim for refund was time barred. Accordingly the petitioner has confined the challenge to

the extent of dispute raised qua recovery effected vide RRC dated 22.7.2015.

(7) It is urged that the Tribunal committed patent error in holding that since the challenge to the termination of contract is time barred; therefore,

raising of dispute against the demand raised vide RRC is also time barred. This aspect is borne out from the verdict of the Tribunal in paragraph 47 of

the impugned judgment.

(8) In Sanjay Dubey Vs. State of Madhya Pradesh, 2012 (4) M.P.L.J. 212, Special Bench of this Court while dwelling upon the issue about the period

within which a reference can be made by an aggrieved person before the Tribunal constituted under Adhiniyam, 1983 answered the issue in the

following terms:

“13. In view of the preceding analysis, we proceed to state our conclusions as under: -

(i) Where the works contract contains a clause like Clause 29, the jurisdiction of the Tribunal can be invoked only after approaching the Authority as

provided under the terms of the works contract.

(ii) However, subject to final adjudication of the issue by the Supreme Court as to whether Tribunal under the Act is a Court or not, in case where the

dispute has arisen under an agreement prior to coming into force of Section 7-B(2- A) of the Act which does not contain a clause like Clause 29, an

aggrieved person has to approach the Tribunal within a period of three years from the date of accrual of cause of action.

(iii) Where the works contract does not contain any provision like Clause 29 and the dispute has arisen after coming into force of Section 7-B(2-A) of

the Act, in such a case, sub-section (2-A) of Section 7-Bof the Act will apply and an aggrieved person can approach the Tribunal within a period of

three years from the date on which the works contract is terminated, foreclosed, abandoned or comes to an end in any other manner or when a

dispute arises during the pendency of the works contract.

(iv) In a case where the agreement is rescinded, two questions may arise for consideration. Firstly, which party to the agreement is at fault and

consequently, claim for damages for breach of contract. Secondly, the claim with regard to payment of amount of the final bill before rescission of the

contract in accordance with the rates prescribed in the agreement. In the first case, the limitation would commence from the date when the agreement

is rescinded whereas in the second case, the limitation would commence from the date when the final bill is prepared.

(v) The dispute under Clause 29 has to be submitted within the time limit which has been prescribed in the clause. The dispute cannot be submitted to

the Authorities mentioned in Clause 29 of the Agreement within a period of three years as the provisions of Limitation Act do not apply to the

Authorities under the Agreement as they are not the

(vi) Clause 29 of the Agreement is not violative of Section 28(b) of the Indian Contract Act, 1872.â€​

(Emphasis supplied)

(9) It is submitted that the Tribunal though has adverted to the judgment in Sanjay Dubey (supra) but has glossed over the verdict that different period

of limitation prescribed in regard to claim of the amount of final bill before rescission of contract. These submissions no doubt reflect the principle laid

down in Sanjay Dubey (supra) wherein paragraph 13(iv) as noted supra, the Special Bench observed that “in a case where the agreement is

rescinded, two questions may arise for consideration. Firstly, which party to the agreement is at fault and consequently, claim for damages for breach

of contract. Secondly, the claim with regard to payment of amount of the final bill before rescission of the contract in accordance with the rates

prescribed in the agreement. In the first case, the limitation would commence from the date when the agreement is rescinded whereas in the second

case, the limitation would commence from the date when the final is prepared.†In the case at hand the amount which is being recovered vide RRC

is not the amount of final bill but an amount which accrues from the left over work got executed from other agency and the expenses incurred therein.

Evidently, in the case at hand the joint measurement was taken on 23/12/2009. The final bill was submitted on 20/08/2010. NIT for completion of

balance work of Package No.MP0452 was issued on 22/12/2010 and work order was issued on 15/06/2011.

(10) Clause 24.1 of the agreement which stipulates that if any dispute or difference of any kind what-so-ever arise in connection with or arising out of

this Contract or the execution of Works or maintenance of the works there under, whether before its commencement or during the progress of Works

or after the termination, abandonment or breach of the Contract, it shall, in the first instance, be referred for settlement to competent authority,

described along with their powers in the Contract Data, above the rank of the Engineer. The competent authority shall, within a period of forty five

days after being requested in writing by the Contractor to do so, convey the decision to the Contractor. Such decision in respect of every matter so

referred shall, subject to review as hereinafter provided, be final and binding upon the Contractor. In case the Works is already in progress, the

Contractor shall proceed with the execution of the Works, including maintenance thereof, pending receipt of the decision of the competent authority as

aforesaid, with all due diligence. The petitioner did not raise any dispute against the demand by invoking Clause 24. In Sanjay Dubey (supra), it is held:

“9. The first part of Clause 29 of the agreement provides for a dispute resolution mechanism. It provides that the dispute has to be referred to the

Superintending Engineer in writing for decision within a period of 30 days from such occurrence. Thereupon, the Superintending Engineer shall give his

written instructions or decision within a period of 60 days of such request. If the Superintending Engineer fails to give his instructions in writing within

a period of 60 days or mutually agreed time after being requested of, an aggrieved party may file an appeal to the Chief Engineer within 30 days and

shall give his decision within a period of 90 days. Thereafter, an aggrieved person can approach the Tribunal within one year from the date of

communication of decision of the final authority. If the final authority fails to decide the dispute within a period of six months from the date of

reference to it, the petition to the Tribunal shall be made within one year of the expiry period of six months. The contention made on behalf of the

applicants that in view of sub-section (2-A) of Section 7-B, an aggrieved person can approach the Tribunal directly without approaching the authorities

mentioned in Clause 29 of the agreement, cannot be accepted as the same would obliterate the provisions of sub-section (1) of Section 7-B and would

render the same otiose as it is well settled legal proposition that it is incumbent on the Court to avoid a construction if reasonably permissible on the

language which would render part of the statute devoid of any meaning or application. [See: Rao Shiv Bahadur Singh vs. State of U.P., AIR 1953 SC

394]â€​

(11) Furthermore, Clause 25 of the agreement stipulates:

“25. Arbitration

25.1. Either party will have the right of appeal, against the decision of the competent authority, nominated under Clause 24, to the Madhya Pradesh

Arbitration Tribunal constituted under Madhya Pradesh Madhyastham Adhikaran Adhiniyam 1983 provided the amount of claim is more than

Rs.50,000/-â€​

(12) Thus unless the remedy as provided under Clause 24.1 is exhausted, the Tribunal is justified in declining to entertain the reference.

(13) Consequently, Revision fails and is dismissed. No costs.