SVEC Constructions Ltd. vs Secretary, Water Resources Department and Another

At the outset learned Counsel for the State submitted that he has instructions to inform the Court that the State does not propose to file any further or additional return.

Parties are heard on the question of admission.

The petitioner was awarded a contract for construction of the canal, the period for completion was 21 months including rainy season and the work was to be completed on 31-7-2008.

According to the petitioner, because of the defaults on the part of the respondents which were manifest under the terms, the work could not be commenced in time nor could be completed by the due date. The petitioner prayed for an extension which was granted to him but as the delaying tactics were being adopted by the Department, the petitioner terminated the contract. However, almost after about eight weeks of the said termination by the petitioner, the respondent Executive Engineer rescinded the contract under Clause 4.3.3.1 of the terms of the contract and directed forfeiture of the security and all other amounts which were deposited with the Department.

In the petition it is submitted that unless the claims of the parties were decided by the Competent Authority/Tribunal, the respondents had not right to forfeit the security lying with the respondents. Placing reliance upon certain judgments of this Court and the Supreme Court it was submitted that the respondents have no authority to become Judge in their own case and direct forfeiture.

It is submitted that the matter was referred to the authority named in the contract for resolution of their dispute but the said authority is sitting tight over the subject which is compelling the petitioner now to go to the Arbitration Tribunal. It is lastly contended that till the disputes are finally resolved, the respondents be restrained from encashing the fixed deposit receipts which are pledged with the respondents.

Shri Kaurav, learned Counsel for the respondents, on the other hand submitted that the judgments on which reliance is being placed are such matters where without there being any adjudication upon the claim of the respondent State, the State wanted to make recovery from the contractor as revenue recovery. His submission is that there would be a sharp distinction between proposal of recovery and forfeiture of the security. It is submitted that under the terms of the contract if the respondents are entitled to forfeit the security deposited/lying with the respondent/Department then the said judgments would not apply.

Undisputedly, under Clause 4.3.3.1 the respondents have a right to rescind the contract and forfeit the security deposited/lying with the respondents. Present is not a case where the respondents have decided and have observed that they have suffered losses, therefore, they are entitled to recover money from the petitioner. The question of recovery on basis of some disputed claims would be different from forfeiture of the security lying with the respondent/Department. If the petitioner feels that the amount of the security is being wrongfully or illegally forfeited or misappropriated then he can lodge a claim before the Appropriate Tribunal for the losses suffered by him and even for recovery of the amount which is being forfeited by the respondents.

We are sure that in case the petitioner satisfies the Tribunal, the Tribunal would award appropriate interest on such amount. We find no reason to interfere. The petition is dismissed.