IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 15440 of 2007(K)
1. CHANDRAGIRI CONSTRUCTION COMPANY,
... Petitioner
Vs
1. STATE OF KERALA, REP. BY THE PRINCIPAL
... Respondent
2. THE PROJECT DIRECTOR, KERALA PWD,
3. THE CHIEF ENGINEER (PROJECTS),
4. THE SUPERINTENDING ENGINEER,
5. THE EXECUTIVE ENGINEER, KERALA PWD,
6. THE EXECUTIVE ENGINEER,
7. THE EXECUTIVE ENGINEER,
8. SRI.JOSEPH UMMEN, FINANCE CONTROLLER,
9. THE FEDERAL BANK LTD., M.G.ROAD BRANCH,
For Petitioner :SRI.K.BABU THOMAS
For Respondent :SRI.A.ANTONY
The Hon'ble MR. Justice HARUN-UL-RASHID
Dated :02/04/2009
O R D E R
HARUN-UL-RASHID, J.
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W.P.(C) No. 15440 of 2007
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Dated this the 2nd day of April, 2009
JUDGMENT
Ext.P10 letter dated 16.5.2007 issued by the 1st respondent is
under challenge. The dispute relates to Contract i.e KSTP-RMC-34-
periodical maintenance of Kumali-Pooppara Road (part-I) km 0/000 to km-
35/400 under agreement No.28/KSTP/PWD/2004-2005 dated 29.12.2004
valued at Rs. 15,46,63,065/-
2. Ext.P10 was issued by the 1st respondent to the Senior
Manager, Federal Bank Limited, Kasaragod, stating that the contractor
(petitioner) has failed to perform his contractual duties and the
Government of Kerala is demands payment of a sum of Rs.
1,09,28,300/-(Rupees One Crore Nine Lakhs Twenty Eight Thousand
Three hundred only) under the unconditional Guarantee issued by the
bank. It is also directed the bank in Ext.P10 that payment should be
made immediately by way of DD/TT to the S.B account maintained by the
Chief Executive KSTP with State Bank of Travancore Vellayambalam
Thiruvananthapuram, . This writ petition is filed seeking to quash Ext.P10
order
3. The 1st respondent awarded 4 contracts including RMC 34
relating to periodical maintenance of Kumali-Pooppara Road. It is the
petitioner’s case that he had already carried out and completed the work
W.P.(C) No. 15440 of 2007 -2-
valued Rs. 600 lakhs as on 1.5.2007, that unpaid value works carried
under Ext.P1 agreement as on 1.5.2007 is more than Rs. 200 lakhs for
which the bill is under preparation by the officials. It is the stand of the
petitioner that it was due to the default of the respondents to effect timely
payments, the progress of the work in Ext.P1 was stalled and the
respondents are liable for the same. The Petitioner further alleged that the
1st respondent is resorting to illegal invocation of bank guarantees and in
that event the petitioner will be put to severe hardships and the credit
facilities enjoyed by him for long from the bank would be discontinued.
4. This writ petition is filed among other reliefs for a direction to
respondents 1 to 4 interdicting them from encashing Ext.P12 demand
drafts issued pursuant to Ext.P10 and to return the same to the 9th
respondent.
5. In the counter affidavit filed by the 2nd respondent on behalf
of respondents 2 to 8, the averments in the writ petition are denied as
incorrect. It is contended interalia that the averment of the petitioner that
the value of work worth Rs.200 lakhs remained unpaid is not correct
Ext.P4 copy of statement of bills are also denied by the 2nd respondent. In
the counter affidavit filed by the 2nd respondent and the exhibits produced
which are produced as Exts.R2(a) to R2(k) shows the details of actual
payments due to the petitioner regarding RMC 10 RMC 25 RMC 40 and
RMC 34. it is also submitted that as per the contract agreement the
petitioner has been given opportunities to raise various issues regarding
W.P.(C) No. 15440 of 2007 -3-
extension of time, extra rate etc through adjudication and then arbitration.
The contractor has not raised any objection so far, as per contract clause
for the actions as pointed by the petitioner. Therefore it is a violation of
agreement. The contractor has to seek remedy in the first instance
through the mechanisms provided by the contract before referring the
matters on claiming extension of time. It is also submitted that the
petitioner furnished 2 bank guarantees amounting to Rs.1,09,28,300/-. The
averment of the petitioner that Rs. 712.28 lakhs is withheld is false. No
amount is due with respect to the work for which the Bank Gurantee is
issued. The claim for Rs.712.28 lakh is fictitious and no claim is pending
with the respondent so far. The RMC-10, 25 ,40 and RMC-34 are separate
contract agreements tendered separately. There is failure on the part of
the petitioner in performing the contract under RMC-34. As per the contract
the contract period was 23 months for completing 34.5 Km whereas till date
the contractor has completed only 15 Km i.e 15 Km within 30 months.
This shows that the contractor can complete only 0.43 Km per month and
will take another 3 to 4 years to complete the project. Hence the
performance of the Contractor was evaluated as “non performing” and as
per the conditions of Bank Guarantee, the respondent concerned was
forced to invoke the Bank Gurantee and it is not illegal and there is no
malafides or fraud on the part of the respondents. It is also submitted by
the 2nd respondent that due to the non performance of the petitioner
Government is suffering huge loss on account of escalation in price, idling
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of supervision staff, cost of rearrangement of works with other agencies
and that in view of the subsequent events as stated above the contract was
terminated on 10.12..2007 .
6. It is submitted at the Bar that the petitioner had already
approached the Arbitrator in the matter of performance of works regarding
KSTP-RMC 34 and the matter is now pending before the Arbitrator, The
grievance raised in this writ petition are based on the terms of
Ext.P1agreement executed between petitioner and the 1st respondent.
I am of the view that the questions regarding the evaluation of the work
done , unpaid bills and the invocation of the Bank guarantee are to be
agitated before the Arbitrator. The petitioner is free to move the Arbitrator
for appropriate reliefs. This writ petition is disposed of .The Arbitrator
shall pass final orders within a period of six months from today.
(HARUN-UL-RASHID, JUDGE)
es.
HARUN-UL-RASHID, J.
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W.P.(C) No. 15540 of 2007
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JUDGMENT
26th March, 2009