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Judgment
M. Sharma, J.—This writ petition has been preferred by the Petitioner, a first class Railway and Government Contractor with a sound financial base for a direction to the Respondent Railway authority-(a) to set aside the letter dated 12.8.98(Annexure-46) by which suggestion was given to withhold Rs. 96,00,000.00 payable to the Petitioner against any other contract; (b) to release the said amount of Rs. 96,00,000.00 of CA No. Con/GL/12 dated 21.10.92; (c) to pay the Petitioner for the extra work for slewing railway contracts and not to give effect of the Price Variation Clause and to pay compensation for wrongly retaining money and to recover formal rate of recovery of short materials and also to claim penal rate.
The Petitioner was allotted with a huge contract work by Respondent Railway authority vide contract Agreement No. Con/GL/12 dated 21.10.92 in connection with Lumding Meter Gauge section of N.F. Railway into Broad Gauge as set forth in the Schedule annexed with the Contract Agreement (Annexure-2) and the said work was completed in 1994. The Respondent authority had been paying the bill amount from time to time to the Petitioner and as the work was extended beyond 12 months, Petitioner prayed for implementation of Price Variation Clause due to inadequate supply of materials and other requisite map, drawing etc. by the Respondents. The Petitioner also contended that Respondent Railway used to supply materials to the Petitioner, only to extend of requirement i.e 52 kgs-the old rail of 90R rails and that the Petitioner also completed the extra work in addition to contract agreement allotted to him by the Respondents and the same was completed duly.
The further case of the Petitioner is that officially 80% of the measurement was taken in April, 1993 by the Respondent Railway and the balance measurement was taken in May, 1994 and after completion, Petitioner had repeatedly requested to the Respondent authority including Respondent No. 7 to receive the surplus release materials(Annexure-27 to 35), but it is alleged, no official of Respondents turned up to receive the same and even no reply was given by Respondent authority to these repeated requests for taking charge of the materials. However, by letter dated 25.11.94 (Annexure- 37) Respondent asked the Petitioner to sack the balance quantity of materials so that ''PW 1'' can take over materials. Annexure-38 is the list of materials wherein in SI. 11,779.30 Rm of 50 kgs rail is shown at site. That by another letter with a list (Annxure-38) Respondent asked the Petitioner to return 779.30 Rm 50 kgs. rail and 5644.855 Rm(90R) along with other materials and against these two letters (Annexure-37 and 38) Petitioner contested the claims (Annexure-39) of the Respondent as unjustified and requested the Respondent Deputy Chief Engineer (Construction) to call a joint meeting inviting concerned officers like AEN/GC, CPWI and P.W. I, Mr. Mandal and his representatives at the earliest to prepare an actual on the spot material statement. It is alleged, this time also no action was taken despite repeated requests.
Further case of the Petitioner is that vide letter dated 11.8.98(Annexuse-45) wherein Respondent authority directed the Respondent No. 4 to withhold the payments to the Petitioner and another constractor firm namely, M/s Kiran Construction wherein allegations were made that Petitioner and other contractor failed to return the huge quantity railway materials and, therefore, directed to withhold the payment until further orders and the same(Annexure-46) was received by the Petitioner from the Respondent No. 4. In this impugned letter (Annexure-46) Respondent No. 4 informed the Petitioner that on the scrutiny, the record prima facie revealed that an amount of Rs. 96,00,000.00 is recoverable from the Petitioner for non return of the released materials and new railway materials and the amount to be recovered relates to the payments to the Petitioner by the Respondent Railway "against any" contract work and statement of materials was annexed with this letter. Respondent has challenged this impugned letter and the proposed action which was actually executed by withholding his due amount of Rs. 96,00,000.00.
Mr. Phukan, learned senior counsel for the Petitioner drawing attention to the Annexure-48 has submitted that the document, Annexure-48 is the material statement prepared by Respondent Railway showing in detail the quantity issued, quantity consumed, balance quantity, quantity in the hands of the contractor and the quantity in the hand of Railway. Pointing to the contradictory statement made particularly in SI. 16 and 17 in this document Mr. Phukan submits that there is a big discrepancy in calculating and giving the statement both in Annexure-46 and 48 and that, therefore, when the Respondent Railway asked the Petitioner to sign the documents vide its letter dated 18.8.98(Annexure-50) the Petitioner protested on the ground that the same was prepared behind the back of the Petitioner and without informing the Petitioner that some of 90R rails were shifted by the Respondent Railway and old rails materials were auctioned by the Railway authority and in this situation the Petitioner repeated the request to hold a joint meeting to have the true picture of the materials in question and after that to prepare a fresh materials statement. Responding to his request Respondent Deputy Chief Engineer issued a letter dated 24.8.98(Annexure 52) to P.W. 1 Sri Mandal directing him to conduct joint inspection and to submit report accordingly and the same was done on 25.8.99(Anx-54). In support of the stand, Mr. Phukan has submitted that the discrepancies are in face of it as it is seen (Annexure-54 1st and 2nd page) that Railway has found 3356.62 RM of 90R rails and 3689.48 RM of 52 kgs rails at the work site, whereas in the statement prepared by the Respondent Deputy Chief Engineer(Annexure-46) shortage was shown as of 52 kg rails of 3406.226 RM; that this joint survey report(Annexure-54) shows that surplus 52 kgs of rails were found at the work site which itself contradict the material statement(Annexure-46) which shows that 1306.397 RM of 90 Kg rails are lying with the contractor. Apparently, it was reiterated that in view of survey report (Annexure-54) 3356.62 RM of 90 kg, rails were found at the time of survey by Mr. Mandal PWI which supports the stand of the Petitioner that these can not be any shortage; more so, when both annexure 46 and 54, the contradictory documents are prepared by the Respondent Railway itself. Further, Mr. Phukan has submitted that those two documents do not show the correct picture of the materials issued by the Respondent Railway were consumed in the work site and the quantity left in the hand of the contractor and that allegation of Respondent has no leg to stand when the materials in question were auctioned by the Respondent Railway themselves without the knowledge of the Petitioner and those auctioned materials were not taken into account at the time of joint survey dated 25.8.98.
Denying the allegation of non return of the materials in question, for which the due amount to the Petitioner has been held up by the Respondents, Mr. Phukan has submitted that Petitioner had executed various works (letter dated 2.11.98 with annexed copy) and against that work an amount of Rs. 1,02,00,000.00 is payable to the Petitioner in addition to a substantial amount payable in connection with the existing/present contract work and that sufficient amount of Petitioner is at the disposal of the Railway to recover the cost of the materials, if any, from that deposit It was further submitted that vide letter dated 11.8.98(Annexure-48) the amount of both the Petitioner and the Kiran Constructions were held up by the Respondent Deputy Chief Engineer on suspicion, that the materials issued to M/s. Kiran Construction were lying at the site of the Petitioner and prepared materials statement for recovery of Rs 1.48 crores, but M/s Kiran Construction''s amount has been released after verification which clearly established the fact that, Respondent authority is not consistent and is confused to locate the responsibility either to the Petitioner or to the Kiran Construction and in its confusion imposed the responsibility to the Petitioner as scapegoat.
Mr. Phukan in support of the Petitioner''s stand has submitted that circular dated 4.10.90 of the Apex Authority, the Railway Board, in clear items clarified that whenever Clause No. 52 of GCC is involved by the Railway, contractors dues should not be withheld from any other contract during the progress of the work. This proposal was vetted by the concerned Railway Board and accordingly Clause 52 of GCC stand amended and that in that view of the matter, the amount payable to the Petitioner can not be withheld.
In the affidavit-in-opposition, the Respondent Railway denied the allegations made in the petition and at the outset raised the question of maintainability of the writ petition on the ground that in view of the arbitration clause in the agreement, Petitioner is required to go into such disputed question of fact to arbitration and further writ petitions involved disputed question of facts and contractual obligation which cannot be gone into by the Writ Court. Reliance of the Petitioner on documents i.e. Annexure 47 and 48 has been challenged by the Respondent stating that those documents are not authentic documents as they are in the process of scrutiny and the statements are under preparation and scrutiny in the office of the Respondents and no forwarding formal letter was issued as contended by the Petitioner. Deponent further averred in their affidavit that while issuing the impugned order (Annexure-46), statements were recorded after examining the materials already auctioned and the materials not refunded by the Petitioner; that Petitioner, after execution of the work, left the site leaving the materials without taking any care and did not submit any statement of account, though as per the terms of contract agreement, the Petitioner is bound to return the materials and to maintain proper accounts of the same. It is further averred that the survey report (Annexrue-54) does not relate to contract agreement and the materials pertaining to the agreement in question were properly accounted and recovery statement (Annexure-57) has been made and that the circular, said to be circulated by Railway Board is not a Board''s circular and is not applicable in Petitioner''s case; that Clauses 52 and 52A of the general condition of contract, the Respondent Railway authority is entitled to withhold and retain any to the extent of such sum on payable by the contractor Railway from the security deposit of the contractor as well as from any sum/sums payable or which, at any time, thereafter may become payable to the contractor under the same contract or any other contract with the railways/any other department of central government, pending finalisation/adjudication of such claim; and that the impugned order has been passed in exercise of their power vested under terms and conditions of the contract. It is further averred that it is open to the Petitioner to settlement of the dispute under Clause 9 of the Special conditions of the contract and Clause 62 and 63 (renumbered 63 and 64) of the general condition of contract (GCC) for settlement by way of arbitration and that Petitioner cannot invoke court writ jurisdiction without availing the alternative relief under the procedure.
In view of the backdrops of the facts and circumstances of the dispute, the main question posed for consideration is whether Petitioner can invoke court''s writ jurisdiction when alternative relief is provided in the GCC itself.
The documents annexed and relied by both the parties are the main points for dispute. In that view of the matter, the petition does not involve any disputed question of facts, nor the Petitioner invokes any right under the contract, but seeks mandamus challenging the sustain,ability of Respondent''s action by which Petitioner''s due amount related to present running bills, though the contract work for the year 1992 has been completed and Petitioner has been allotted with further contract works subsequent to that. Apparently Petitioner grievance in this writ petition is that the action of the Respondent Railway in withholding the payment for running bills of the present/existing contract work against the work completed years back is not sustainable, that the very source of power of the Respondent is wholly an arbitrary exercise of power. Further, Petitioner alleges malafide intention in withholding the huge amount from his running bills of existing works and in that case, I hold that this Writ Court has definitely jurisdiction to entertain the petition. Repeated assertion of the counsel for Respondent Railways, Mr. B.K. Sharma, that Petitioner has alternative relief to go to arbitration is not sustainable from the facts and circumstances of the present case and in that view of the matter the reference of this Court''s judgment passed in CR Case No 203/94 is not applicable in this case. In this present Writ petition Petitioner invokes writ jurisdiction alleging malafide, arbitrary action of the Respondent authority in withholding the huge amount from his running bills due from the existing work on the purported exercise of power conferred to the Respondent authority under Clause 52 and 52A of the GCC, which forms a part of the agreement. The admitted position is that the same authority after completion of the contract work allotted in 1992 have cleared the entire amount. After 5 (five) years of completion of work and payment, the Respondent authority by the impugned order withhold the amount of Rs. 96.00 lakhs from the running bills for the existing contract work of the Petitioner on the purported exercise of power as stated above, which, I hold, is use of power arbitrarily. Apparently, the Respondent authority after being satisfied on the terms of the G.C.C. released the amount for that earlier contract work and taking resort to the power claimed to be conferred under the G.C.C. withheld the amount from the running bills. As per the contract agreement completion of payment be made subject to compliance of the conditions and documents which are annexed with die writ petition clearly established the fact that, officials of the Respondent Railway are not even sure about the amount, quantity of Railway materials auctioned or not returned by the Petitioner and apparently the confusion is the creation of the authority itself and the assessment made by the Railway authority on the basis of their own documents which is found exaggerated. I find merit in the argument of Mr. Phukan that the amount withhold by the Respondent Railway includes 100 % penalty which cannot be imposed without giving an opportunity of hearing. When Petitioner has sufficient security lying with the Respondent Railway, the whole action of the said officials of the Respondent Railway, the whole action of the said officials of the Respondent Railway is malafide and wholly arbitrary. Top of it, Respondent Railway''s action is liable to be set aside on the ground that withholding of such a huge amount from the running bill of a contractor consequently effects the speed and progress of the present work of the Petitioner due to financial hardship to invest money in the work and I hold that the action of the Respondent is against public interest for which present contract work relating to public welfare shall suffer. Taking resort to technicality of the conditions of the contract, Respondent authority cannot impose such impediment in the process of its own development work and such action and attitude only delayed the work at the cost of public interest. Admittedly, Petitioner has sufficient security with the Railways and release of the running bills can not effect the interest of the Railway authority to impose conditions and take action for violation but in so doing the State or its instrumentality can not act arbitrary. Compliance of the conditions in a contract is applicable to both the parties of the contract which is reciprocal and must be in conformity with their own action.
In view of the above discussion, I hold that the impugned action of the Respondent fails to satisfy the test of reasonableness and public interest. Any instrumentality of the State cannot act in a manner which affect the progress of public work being carried out as a welfare scheme for the benefit of common people. There may be a variety of considerations which may have to be taken in a given case by the authority but it has to be taken on a total evaluation of the situation. As stated above, having satisfied, payment etc. has been released for the earlier work but, after five years action was taken withholding huge amount from the running bill of the subsequent contract work clothed with the purported power under the GCC. When the Court is satisfied that action and attitude of the Respondent is arbitrary, malafide, the Court under its writ jurisdiction can set aside such action when by its own action earlier work was cleared and payments was released after being satisfied. In such cases even in a contract work, an statutory authority is required to be restrained by a writ court when it lacks reasonableness in its action. Then in such a situation, writ court can decide that due to some reason, in a given case, the Writ court being a court of Equity, can give relief to the aggrieved party, when court is satisfied that condition/clause can not give relief as sought for. I find merit in the submission of Mr. Phukan that due to the withholding of running bill amount created financial hardship to invest in the existing contract work of the Petitioner allotted to him by the Railway for which the progress and speed in the entire existing work has been affected and the likelihood of the Petitioner has been disturbed as this contract work under Railway is his only source of livelihood. Further, I accept the submission of Mr. Phukan that holding up of such a big amount the business activity of the Petitioner has appeared and a large number of labourers/machineries are lying idle as a result of which Petitioner has been suffering from huge loss per day.
By order dated 25.9.98 this Court directed to release 50% of the amount withheld by the Respondent finding a prima facie case in favour of the Petitioner. This direction was not complied with as Mr. Sharma, counsel for the Petitioner urged that the case may be heard and disposed of if the interim order is not vacated. As the petition is allowed by quashing the impugned order/letters Respondent authority is directed to release the amount which is withheld from the running bill from the present/existing work as sufficient amount as security is lying with the Respondent and it is open to them to adjust any payment from the future/final payment to be paid from the existing contract work. It is further directed that immediately 75% of the total amount from the aforesaid Rs. 96,00,000.00 be released and the remaining 25% shall be kept till final payment for the existing work. Payment shall be released within four weeks from the date of receipt of this order. Petitioner shall produce copy to the Respondent.
With this direction, the writ petition is allowed. No costs.