IN THE HIGH COURT OF JUDICATURE AT PATNA
CWJC No.12036 of 2010
with
CWJC No.12308 of 2010
M/S J. SONS COMPANY LIMITED, J. SONS HOUSE GARH
ROAD, MEERUT 250002(U.P.) THROUGH ITS MANAGING
DIRECTOR AJAI GUPTA, S/O LATE JAI LAL GUPTA, R/O C-6-
SHASTRI NAGAR, MEERUT
....PETITIONER IN BOTH CASES
Versus
1. THE UNION OF INDIA THROUGH GENERAL MANAGER
EAST CENTRAL RAILWAY, HAZIPUR, DISTT.- VAISHALI
2. THE GENERAL MANAGER, EAST CENTRAL RAILWAY
HAZIPUR, DISTT.- VAISHALI
3. THE CHIEF ENGINEER, EAST CENTRAL RAILWAY
HAZIPUR, DISTT.- VAISHALI
4. THE DEPUTY CHIEF ENGINEER/TSP, EAST CENTRAL
RAILWAY HAZIPUR, DISTT.- VAISHALI
...RESPONDENTS IN BOTH CASES
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For the petitioner : M/s Y. V. Giri, Ashwini Kr. Singh,
Sr. Advocates, P.K. Das & Nikhil
Agrawal, Advocates
For the Respondents : Mr. Siddhartha Prasad, Advocate
---------
PRESENT
HON'BLE MR. JUSTICE S. N. HUSSAIN
ORDER
10/ .07.2011 Both the aforesaid writ petitions have been heard together
and are being decided by this common order as the petitioner and the
respondents are same and the matter in dispute as well as the points
involved are also same. The only difference is the date of impugned
letters issued by the Deputy Chief Engineer/TSP, East Central Railway
cancelling the modification advice for different works.
2. In C.W. J.C. No. 12038 of 2010, the petitioner had
claimed the following reliefs :-
(i) For issuance of writ/writs, order/orders,
direction/directions quashing letter no. ECR/ENG/W-7A/04/07/6041/103-104/Part-1/2081 dated 08.06.2010
issued by Deputy Chief Engineer/TSP, East Central
2Railway whereby the modification advice no.
02/04/6041/000104/000066 dated 17.06.2008 has been
cancelled and fresh purchase of enhanced quantity was
ordered to be made at petitioner’s risk & cost and
responsibility (Annexure 15).(ii) For issuance of writ/writs, order/orders,
direction/directions quashing letter no. ECR/ENG/W-
7A/02/10/6195/SP/Tender/2229 dated 22.06.2010,
issued by Deputy Chief Engineer/TSP, East Central
Railway whereby a risk & cost open tender against
extended quantity of petitioner’s modification advices
has been floated vide tender notice no. CE/2010/04
dated 22.6.2010 (Tender no. 02/10/6195/SP due for
opening on 28.07.2010 and petitioner was held liable
for any loss/damages which may be incurred by the
respondents on account of risk purchase (Annexure16).
(iii) For issuance of writ/writs, order/orders,
direction/directions quashing Para-(V) of letter no.
ECR/ENG/W-7A/04/07/6041/104 dated 16.10.2007
issued to the petitioner whereby and whereunder rate
for supply was lowered and it was made applicable
from the date of issuance of this letter simply on the
ground that tenders for subject stores have been
finalized in East Central Railway at lower rate
(Annexure 6).(iv) For issuance of writ/writs, order/orders,
direction/directions quashing letter no. W-07A/6041/104/05 dated 29.05.2008/02.06.2008,
whereby respondent no. 4 has invoked clause no. 15 of
annexure of purchase order no. 000104 dated
29.03.2005 and directed the petitioner to make supply
of increased quantity (+30%) of switches on rate as
fixed and communicated vide letter no. ECR/ENG/W-
7A/6041/104 dated 16.10.2007 and for enhanced
quantity PVC was to be applicable with base month as
December 2005 and delivery period was fixed as
06.10.2008 (Annexure 7).(v) For issuance of writ/writs, order/orders,
direction/directions quashing modification advice no.
02/04/6041/000104/000066 dated 17.06.2008 whereby
and whereunder the respondent authorities have altered
the original purchase order no. 02/04/6041/000104
dated 29.03.2005 and directed the petitioner to make
the supply of enhanced quantity (+30%) on reduced
rates and delivery period has also been reduced up to
05.09.2008 (Annexure 8).(vi) For issuance of writ/writs, order/orders,
direction/directions quashing the letter dated
15.07.2009 issued by respondent no. 4 to the petitioner
directing him to supply the enhanced quantity of
3switches on reduced rates j(Annexure 9).
(vii) It is further prayed that after quashing Para (V) of letter
no. ECR/ENG/W-7A/6041/104 dated 16.10.2007
whereby and whereunder rate for supply was lowered
and it was made applicable from the date of issuance
of this letter respondent authorities may be further
directed to pay the money to the petitioner as per
original purchase order no. 000104 dated 29.03.2005
including PVC.(viii) For any other relief/reliefs as may be deemed fit and
proper in the facts and circumstances of the case.3. In the aforesaid case, the matter arises out of tender
notice no. CE/2004/07 for tender no. 02/04/6041/SP issued by the
Engineering Department of East Central Railway, for the following
works :-
a) Fan shaped switches 60 Kg 1 in 8½ to RDSO’s Drg. No.
T-4966(b) Fan shaped switches 52 kg 1 in 8½ to RDSO’s Drg. No.
T-4866(c) Fan shaped switches 60 kg 1 in 12 to RDSO’s Drg. No.
T-4219(d) Fan shaped switches 52 kg 1 in 12 to RDSO’s Drg. No.
T-4733(e) Fan shaped Derailing switches 60 kg 1 in 8½ to RDSO’s
Drg. No. TA-6068(f) Fan shaped Derailing switches 52 kg 1 in 8½ to RDSO’s
Drg. No. TA-58364. In C.W.J.C. No. 12308 of 2010, the petitioner had claimed
the following reliefs :-
(i) For issuance of writ/writs, order/orders,
direction/directions quashing letter no. ECR/ENG/W-
7A/04/07/6041/103-104/Part-1/2081 dated 08.06.2010
issued by Deputy Chief Engineer/TSP, East Central
Railway whereby the modification advice no.
02/04/6041/000104/000065 dated 17.06.2008 has been
cancelled and fresh purchase of enhanced quantity was
ordered to be made at petitioner’s risk & cost and
responsibility (Annexure 15).(ii) For issuance of writ/writs, order/orders,
direction/directions quashing letter no. ECR/ENG/W-
7A/02/10/6195/SP/Tender/2229 dated 22.06.2010,
issued by Deputy Chief Engineer/TSP, East Central
Railway whereby a risk & cost open tender against
4extended quantity of petitioner’s modification advices
has been floated vide tender notice no. CE/2010/04
dated 22.6.2010 (Tender no. 02/10/6195/SP due for
opening on 28.07.2010) and petitioner was held liable
for any loss/damages which may be incurred by the
respondents on account of risk purchase (Annexure16).
(iii) For issuance of writ/writs, order/orders,
direction/directions quashing Para-(V) of letter no.
ECR/ENG/W-7A/04/07/6041/103 dated 16.10.2007
issued to the petitioner whereby and whereunder rate
for supply was lowered and it was made applicable
from the date of issuance of this letter simply on the
ground that tenders for subject stores have been
finalized in East Central Railway at lower rate
(Annexure 6).
(iv) For issuance of writ/writs, order/orders,
direction/directions quashing letter no. W-
07A/6041/103/06 dated 02.06.2008, whereby
respondent no. 4 has invoked clause no. 15 of
annexure of purchase order no. 000103 dated
28.03.2005 and directed the petitioner to make supply
of increased quantity (+30%) of switches on rate as
fixed and communicated vide letter no. ECR/ENG/W-
7A/6041/104/656 dated 16/26.10.2007 and for
enhanced quantity PVC was to be applicable with base
month as December 2005 and delivery period was
fixed as 06.10.2008 (Annexure 7).
(v) For issuance of writ/writs, order/orders,
direction/directions quashing modification advice no.
02/04/6041/000104/000065 dated 17.06.2008 whereby
and whereunder the respondent authorities have
altered the original purchase order no.
02/04/6041/000103 dated 28.03.2005 and directed the
petitioner to make the supply of enhanced quantity
(+30%) on reduced rates and delivery period has also
been reduced up to 05.09.2008 (Annexure 8).
(vi) For issuance of writ/writs, order/orders,
direction/directions quashing letter dated 15.07.2009
issued by respondent no. 4 to the petitioner directing
him to supply the enhanced quantity of switches on
reduced rates (Annexure 9).
(vii) It is further prayed that after quashing Para (V) of letter
no. ECR/ENG/W-7A/6041/103 dated 16.10.2007
whereby and whereunder rate for supply was lowered
and it was made applicable from the date of issuance
of this letter respondent authorities may be further
directed to pay the money including PVC to the
petitioner as per original purchase order no. 000103
dated 28.003.2005.
(viii) For any other relief/reliefs as may be deemed fit and
5
proper in the facts and circumstances of the case.
5. In the aforesaid case, the matter arises out of tender
notice no. CE/2004/07 for tender no. 02/04/6041/SP issued by the
Engineering Department of East Central Railway, for the following
works :-
a) Fan shaped switches 60 Kg 1 in 8½ to RDSO’s Drg. No.
T-4966
(b) Fan shaped switches 52 kg 1 in 8½ to RDSO’s Drg. No.
T-4866
(c) Fan shaped switches 60 kg 1 in 12 to RDSO’s Drg. No.
T-4219
(d) Fan shaped switches 52 kg 1 in 12 to RDSO’s Drg. No.
T-4733
(e) Fan shaped Derailing switches 60 kg 1 in 8½ to RDSO’s
Drg. No. TA-6068
(f) Fan shaped Derailing switches 52 kg 1 in 8½ to RDSO’s
Drg. No. TA-5836.
6. Thereafter, the procedures of both the tenders were
exactly the same and hence they are being jointly considered. The date
of opening of tenders was 02.11.2004 and in response to the aforesaid
notice several candidates including the petitioner applied and when the
tenders were opened, the petitioner’s bids were found to be lowest and
were accepted, whereafter supply order no. 000104 dated 29.03.2005
was issued by the authorities for the items included in the first writ
petition, whereas, supply order no. 000103 dated 11.03.2005 was issued
by the authorities for the items included in the second writ petition.
7. As per the terms of the tender, Railway was to supply rails
and only then the petitioner was to perform its part of contract and
hence the petitioner sent letter dated 08.04.2005 enclosing original
Bank Guarantee 02/05-06 dated 07.04.2006 for Rs. 20 lacs.
Furthermore, supply was to be made proportionately per month so as to
6
complete the supplies within nine months from the date of purchase
order, subject to extension on R.O. rail supply. The petitioner received
the first consignment of rail on 02.05.2005 and supply was started
immediately thereafter. The petitioner further claimed that nine months’
period expired on 28.12.2005, but full supply could not be made to the
respondents as the rails were not provided to the petitioner by the
respondents within time as per the purchase order. Considering their
failure, Railway extended the time on three occasions and lastly the
time was extended till 31.12.2006 vide letter dated 23/24.08.2006
(Annexure 4), issued by the authorities of the Railway to the petitioner
subject to the condition that it would be with liquidated damages and
without PVC. To the aforesaid condition, the petitioner sent its
objection on 02.09.2006 (Annexure 5) and also filed letter dated
08.01.2007 to extend the delivery period by eight months without
Liquidated damages stating that it was ready to execute work on the
last accepted rate.
8. Railway vide letter dated 16.10.2007 (Annexure 6)
accepted the proposal of the petitioner and extended the delivery period
up to 15.06.2008. Thereafter, the petitioner sent its acceptance letter
dated 29.10.2007. Respondent no.4 also issued letter dated 02.06.2008
to the petitioner invoking clause 15 of the purchase order and directing
the petitioner to make supply of increased quantity of switches for
which the PVC was to be applicable with base months as December,
2005 at the rate as communicated earlier. Thereafter, the respondents
vide letter dated 09.06.2008 mentioning it as Corrigendum extended the
7
delivery period for enhanced quantity and refixed up to 06.10.2008 and
immediately thereafter they issued another letter dated 17.06.2008
(Annexure 8) asking the petitioner to supply 30% more quantity at the
same rate. Respondents again issued letter dated 15.07.2009 (Annexure
9) to the petitioner directing it to supply the enhanced quantity of
switches, failing which, action would be taken as per IRS Conditions of
contract.
9. The petitioner replied vide letter dated 16.08.2008
(Annexure 10) stating that the period of contract was up to 28.12.2005
and, thus, extension of quantity was not within the currency of the
contract and hence it was unlawful. So far the extension of time was
concerned, it was stated that it was not due to any fault of the petitioner
rather it was delayed due to non-availability of rails, which were to be
supplied by the respondents to the petitioner. Thereafter, there were
communications between the parties and the petitioner specifically
stated that as per the agreement and supply order it was not required to
supply further quantity on the earlier rate as the period of contract had
ended much earlier. Finally the Deputy Chief Engineer (respondent
no.4) sent letter dated 08.06.2010 (Annexure 15) to the petitioner
cancelling the purchase order and stating that supply by the petitioner
during the refixed delivery period against enhanced quantity was nil,
which expired on 05.09.2008 and hence the petitioner’s failure to
comply purchase order despite sufficient opportunities was a breach of
contract and modification letter dated 17.06.2008 was cancelled and
fresh purchase of enhanced quantity was directed to be made at the
8
petitioner’s risk, cost and responsibility.
10. Thereafter the Deputy Chief Engineer (respondent
no.4) wrote letter dated 22.06.2010 (Annexure 16) to the petitioner
stating that a risk & cost open tender against unsupplied quantity of
modification advice dated 17.06.2008 has been floated vide tender
notice dated 22.06.2010 and as such the petitioner was made liable for
any loss/damages, which would be incurred by the respondents on
account of the risk purchase. Thereafter, the petitioner wrote a letter to
respondent-authorities dated 23.06.2010 (Annexure 17) that there was
no concluded contract between the petitioner and respondent-authorities
to supply the enhanced quantity and as such there was no occasion
available for cancelling the modification advice at the petitioner’s risk,
cost and responsibility. However, when no step was taken by the
authorities in that regard, the petitioner filed these writ petitions.
11. Learned counsel for the petitioner argued that the
authorities themselves were fully aware that supply could not be made
by the petitioner due to the failure of respondents themselves to provide
rails to the petitioner and hence the respondents extended the period and
within extended period the petitioner supplied the materials fully at the
reduced rate. It was also stated that direction of the respondents to the
petitioner for enhanced supply of switches at reduced rate was not legal
and proper as the contract had already terminated after full supply of the
contractual quantity by the petitioner and nothing remained after the
concluded contract for the respondents to demand anything as per the
agreement after expiry of the contract. He further stated that according
9
to the contract itself, supply has to be made as per the rate fixed in the
contract and hence the respondents were not justified in directing the
petitioner for enhanced supply at the reduced rate. In this connection,
learned counsel for the petitioner relied upon a decision of the Apex
Court dated 18.04.2011 in case of Union of India & others vrs. Tantia
Construction Private Limited bearing Special Leave Petition No. 18914
of 2010.
12. Learned counsel for the petitioner raised another
question as to the validity of corrigendum dated 09.06.2008 for
extending the time when the entire supply had already been completed
on 14.05.2008 as per the earlier directions of the authorities concerned.
On the point of delay of the respondents in supplying rails to the
petitioner, reliance was also placed upon a decision of this court in case
of Navshardul Construction Pvt. Ltd. vrs. Union of India & ors,
reported in 2007(4)B.B.C.J. 571.
13. On the other hand, learned counsel for the respondents
vehemently opposed the contentions of learned counsel for the
petitioner and submitted that the demand for supply of enhanced
quantity of materials vide letter dated 29.05.2008 was less than 30% of
the quantity included in the supply order and was in terms of clause 15
of the contract. Thereafter, the authority was competent enough to issue
corrigendum dated 09.06.2008 with respect to Railway’s earlier letter
dated 16.10.2007. Learned counsel for the respondents further argued
that the decision of the Supreme Court cited by the petitioner was not
applicable to the instant case as it was with respect to an original
10
contract worth Rs.19 crores but in the name of enhanced rate, works of
Rs. 35 crores were asked to be done. It was also stated that in the said
case no clause was there with respect to 30% enhancement and fresh
tender had separately been issued for the work and in those
circumstances, the Apex Court found it to be a separate work requiring
a separate proceeding.
14. Learned counsel for the respondents averred that the
plea of delay raised by the petitioner cannot be raised now after the
respondents had allowed the petitioner to complete the work. Learned
counsel for the respondents also averred that the rates were reduced
only to waive the liquidated damages, which was accepted by the
petitioner as earlier the third extension was granted on 28.03.2006 with
liquidated damages i.e. 2% each month with maximum of 10%,
whereafter contract was to be terminated. It was further stated that on
08.01.2007 the petitioner sent letter for extending delivery period
without liquidated damages and the authorities accepted the offer of the
petitioner, waived the liquidated damages and extended the delivery
period and modified the rates by order dated 16.10.2007, whereafter the
petitioner wrote a letter to the authorities on 29.10.2007 thanking them
and accepting the offer of the Railway. He also stated that all these
steps were taken within the currency of the contract. In this regard,
reliance was placed by him upon a decision of the Apex Court in case
of M/s New Bihar Biri Leaves Co. & Ors. vrs. State of Bihar & Ors.,
reported in A.I.R. 1981 S.C. 679.
15. Learned counsel for the respondents lastly argued that
11
when the petitioner even thereafter did not fulfil the terms of the
contract and comply the directions of the authorities issued in regard to
the contract, respondent-authorities had no option left but to retender
the said enhanced requirement at the risk and cost of the petitioner as
due to his refusal the respondents had suffered a lot.
16. Considering the arguments of learned counsel for the
parties as well as the materials on record, it is quite apparent that the
dispute between the parties is only with respect to the enhanced quantity
demanded by the respondents to be supplied by the petitioner. So far the
original contract and the work order is concerned, admittedly, articles
included in the work order had been supplied by the petitioner to the
respondents. So far the delay in supply by the petitioner is concerned,
several enhancements of delivery period had been granted by the
respondents. This point raised by the petitioner could not be validly
negated by the respondents and, thus, the delay in supply of the articles
was not due to any fault of the petitioner as it supplied the required
articles within the time extended by the Railway due to their own fault
and to save the petitioner from any loss on that account.
17. From letter dated 08.01.2007, it is quite apparent that
the petitioner had merely written to the respondents for extension of
time as due to none of its fault the supply could not be made and even
then he was ready to execute the work on the last accepted rate. The
said letter was replied by the respondents vide letter dated 16.10.2007,
in which time was extended up till 15.06.2008 with liquidated damages
and with denial clause. It was also noted in that letter that the tenders
12
for supply stores have been finalized in the Railway at lower rate and,
therefore, lower rate accepted for RDSO Pt.-I approved firm would be
adopted for the supply made after date of issue of the latest purchase
order, in which rate duly escalated and enumerated in that letter would
be adopted for the supply and PVC would not be applicable and for the
said enhanced supply other terms and conditions of the purchase order
would remain unchanged. In response to the aforesaid letter, the
petitioner sent letter dated 29.10.2007 to the respondents thanking for
extension of delivery period of purchase order no. 02/04/6041/000103
dated 28.03.2005 and the enhanced supply as per letter dated
16.10.2007 was accepted. The said enhanced quantity demanded by the
respondents was, admittedly, within 30% of the original supply order.
18. The basic concept of law is that if the contractual
work is not completed within the time prescribed in the contract, the
terms of the contract will continue till the time of contract is extended
by mutual consent of the parties. In the instant case, the work,
admittedly, having been completed on 14.05.2008, it was within time
extended up to 15.06.2008 by the respondents vide letter dated
16.10.2007, which was accepted by the petitioner vide its letter dated
29.10.2007 and, accordingly, the entire work of supply was completed
by the petitioner on 14.05.2008 i.e. within that time and until then the
terms of contract would be legally deemed to have been extended.
19. Clause 15 of the purchase order/supply order dated
29.03.2005 (Annexure 2) provided as follows :-
” The purchaser shall be entitled at any time during the
currency of the contract to increase/decrease the ordered
total quantities by not more than 30% of the ordered
13quantity at the same price, terms and conditions as
stipulated in the contract by giving a notice in writing to
that effect to the contractor & the contractor shall be
bound to supply the quantities so ordered according to the
revised schedule advised by the purchaser fixed on the
basis of the contracted delivery schedule”.
20. The notice for increase of the supply, which was,
admittedly less than 30% of the ordered quantity, had already been
given by the respondents to the petitioner much earlier on 16.10.2007
during the currency of the contract and the same having been accepted
by the petitioner vide letter dated 29.10.2007, it was the duty of the
petitioner to supply the aforesaid enhanced quantity within the time
granted and non-supply of such materials within the said period clearly
amounted to violation of the terms of contract.
21. So far reliance of the petitioner upon the decision of
the Apex Court in case of Union of India vs. Tantia Construction Pvt.
Ltd. (supra), it is quite apparent that in the said order there was no
enhancement clause in the original contract and more so the original
contract being for only Rs. 19 crores the enhancement of Rs.35 crores
was ordered and for that a fresh tender had also been separately issued
and hence the Apex Court found that it was a separate work not
connected with the original contract and a separate supply order had to
be passed. In the said circumstances, the aforesaid case law is not
applicable in the facts and circumstances of this case.
22. So far reliance of learned counsel for the petitioner
upon a decision of this Court in case of Navshardul Construction Pvt.
Ltd. (supra) is concerned, the said decision is not applicable to the facts
and circumstances of this case as it was a case of termination of the
14
contract and subsequent issuance of fresh tender, whereas, in the instant
case there is no termination of contract before issuance of fresh tender
at the risk and cost of the petitioner.
23. In the aforesaid facts and circumstances, this Court
does not find any illegality in the impugned action taken by the
authorities concerned. Accordingly, both the writ petitions are hereby
dismissed.
MPS/ ( S. N. Hussain, J. )