WP/18810/2004 of M/s Bhooratnam Construction Company Pvt.Limited Vs The Engineer in Chief, on 30 December 2013

ORDER:

The Petitioner is a Special Class Registered Contractor andexecuted the work of “Tirupati Water Supply Improvements Schemewith K.P. Canal as resource-providing 1100 MM PSC Pumping Mainfrom MD Puthur to Mangalam”. The estimated amount of the contractwas Rs.939.55 lakhs and the Petitioner quoted the rate at 18.713%less than the estimated value. An agreement No.213/96-97 wasentered on 22.03.1997. As per the agreement, the work has to becompleted within 12 months from the date of handing over of the site. The site was handed over only in the month of June 1998. However,the work was completed and the final bill was paid on 28.10.2000. The work which was meant for executing 810 RMT exceeded andultimately 2335 RMT was executed. The agreement says that if thequantity of work increases over and above 30%, revised rates for theextra items of work shall be paid on mutually agreed basis. Since thework exceeded by 30%, the petitioner quoted a rate of Rs.19,000/- perRMT, but ultimately a rate of Rs.15,200/- was agreed between theparties by proceedings dated 25.07.2000. The final bill amount ofRs.9.21 crores was paid to the Petitioner in October 2000. When thePetitioner was executing another work within the jurisdiction of the 3[rd]respondent at Ongole and the said work was in progress, the 2[nd]respondent, on instructions of the 1[st] respondent, issued the impugnedletter dated 10.09.2004 requesting the Petitioner to remit an amount ofRs.33.51 lakhs by way of demand draft. The said order was issued onthe ground that the Comptroller and Auditor General (CAG) in hisreport for the year ended 31.03.2003 stated that the rate for theadditional quantities involved an excess payment of Rs.33.51 lakhs tothe contractor. It was also stated in the said letter that if the amount was not paid the said amount would be recovered from the ongoingworks. Challenging the said notice dated 10.09.2004, the present WritPetition was filed.

A counter was filed by the 2[nd] respondent admitting the factsstated by the Petitioner and justifying the payment of new rate ofRs.15,200 per RMT for the excess quantity executed by the Petitioner. It was stated that on the request of the contractor, the Departmentobtained competitive quotations from the fabricators of M.S. barrelsand the rate was worked out at Rs.15,574/- per 1 RMT. At the sametime, another work was under execution at the rate of Rs.19,220/- perRMT. In view of the same, in order to complete the work within thestipulated time, the work was got executed through mutually acceptedrates. If fresh estimate is prepared and tenders are called, it consumesmore time and there is a possibility to receive tenders at highpremium. It was also stated that there was acute scarcity of drinkingwater in Tirupati and the Government wanted to complete the schemeat once. A statement of mutually agreed rates for extra items wasprepared and submitted to the 1[st] respondent for acceptance, but the1[st] respondent on 18.07.2000 returned the deviation statement andinstructed the 2[nd] respondent to approve the same at his level. Accordingly, the 2[nd] respondent approved the deviation statement on25.07.2000 with a mutually agreed rate of Rs.15,200/- per 1 RMT forthe quantity more than 30% of M.S. Pipes originally incorporated in theestimate i.e., 2335-810-243=1282 meters. During the course of auditin February 2003 in Public Health Division, Tirupati, the AccountantGeneral pointed out the excess amount made to the contractor and theobjections were replied by the 2[nd] respondent and the ExecutiveEngineer, Public Health, Tirupati. At that time, the said subject matterwas pending with the Public Accounts Committee. It was also statedthat the petitioner in his letter dated 22.09.2004 had stated that if thePublic Accounts Committee also decides that the CAG report was

correct, the recovery can be effected from the bills/deposits available inany of the divisions of P.H. Department and requested not to recoverfrom the ongoing work bills.

Heard Sri K Raghuveer Reddy, appearing for Sri N. SridharReddy, Counsel for the Petitioner and learned Government Pleader forthe respondents.

From the facts stated above, it is clear that there is no disputewith regard to the payment of Rs.15,200/- per RMT as mutually agreedbetween the parties. The rate for the excess quantity was based on theprevailing rates at that point of time. But the 3[rd] respondent directed the Petitioner to deposit the amount ofRs.33.51 lakhs at the instance of the Accountant General, A.P.,Hyderabad who stated that it was an excess payment in view of thereport of the CAG, India for the year ended 31.03.2003. It is also clearfrom the record that respondent Nos.2 and 3 justified the fixation of thesaid amount and payment of the amount to the contractor/Petitioner. The amount was sought to be recovered from the Petitioner from theongoing works as the Petitioner was executing some works with the2[nd] respondent. The final bill under the contract was paid in October2000 itself and the impugned letter was issued on 10.09.2004, nearlyafter 4 years. There was no agreement between the Petitioner and therespondents subsisting as on the date of the impugned letter. In theabsence of any agreement between the parties subsisting at the timeof impugned letter, the respondents have no jurisdiction over thepetitioner to demand payment of the amount except in accordance withlaw. Obviously, the respondents could not have filed a suit forrecovery of amount after four years even if it is assumed that there wasan excess payment. The respondents justified the payment of theamount to the Contractor based on the prevailing rates in the marketand as per the agreement conditions. It is a moot question whether therespondents can demand payment of the amount from the Petitioneron the basis of audit objections raised in their report after four years.

The impugned letter does not disclose issuance of any notice to thePetitioner before demanding payment of the amount. The impugnedletter was issued to satisfy the audit objection while justifying thepayment in their reply to the auditors. The impugned letter of the 2[nd]respondent dated 10.09.2004 is unsustainable on any ground, andaccordingly the same is set aside.

The Writ Petition is allowed. No order as to costs.

As a sequel, Miscellaneous Petitions, if any, pending in thispetition shall stand closed.

Date: 30.12.2013ska

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A.RAMALINGESWARA RAO, J