Full Text
HIGH COURT OF DELHI
Date of Decision: 16th FEBRUARY, 2024 IN THE MATTER OF:
M/S KANTI PRASHAD MITTAL ..... Petitioner
Through: Mr. Manish Gupta, Mr. Harshal Gupta, Ms. Deepti Verma and Mr. Amaresh Kumar Jha, Advocates.
Through: Mr. Jivesh Tiwari, SPC
Mr. Aman Preet Singh Rahi and Mr. Yogender Chauhan, Advocates for
R-7.
JUDGMENT
1. Vide the present Writ Petition the Petitioner seeks to challenge the Order dated 15.06.2023, passed by the Respondent No.3 herein/Executive Engineer, PWD (NH Works), Chandmari, Guwahati, Assam. The Respondent No.3 by the said Order has justified the grant of Performance Certificates to the Respondent No.7.
2. The facts, in brief, leading to the present Writ Petition, are that a Request for Proposal No. NHC/BR/21/2018/Pt/18 dated 12.09.2019 was issued by the Respondent No.1 through the Public Works Department (Govt. of Assam) to carry out: a) strengthening of pavement from Km 61/00 to Km. 69/00 and; b) widening of 1.[5] meter paved shoulder on either side and strengthening from Km. 103/00 to Km. 106/00 of NH-39 under Annual Plan for the year of 2018-19 under Golaghat NH Division in the State of Assam on EPC Mode. The Petitioner herein made his bid for the said project and a Letter of Award dated 25.10.2019 was issued to the Petitioner pursuant to which a Work Order was also issued. Consequently, the Petitioner and Respondent No.1 entered into an Engineering, Procurement and Construction Agreement on 27.11.2019. The work was to be completed by 25.12.2020. At this juncture, it is pertinent to mention that Clause 4.[2] of the EPC Agreement provides that if any sub-contract or works or the aggregate of such sub-contracts with any Sub-contractor exceeds 5% of the Contract price, the Contractor shall communicate the name and particulars, including the relevant experience of the Sub-contractor, to the Authority prior to entering into any such sub-contract and the Authority shall examine the particulars of the Sub-contractor from the national security and public interest perspective and may require the Contractor, no later than 15 days from the date of receiving the communication from the Contractor, not to proceed with the sub-contract. Clause 4.2(i) provides that the Contractor, whether Joint Venture or sole, shall not sub-contract any Works in more than 49% of the Contract Price and shall carry out Works directly under its own supervision and through its own personnel and equipment in at least 51% of the Contract Price. Respondent No.3 was designated as the Authority Engineer and Authority Representative to act on behalf of the Government. On 01.12.2019 the Petitioner sent a letter to Respondent No.7 for sub-contracting of the work. The said letter reads as under: "Ref: KPM/PIRPL/GOLAGHAT/001 Date: 01/12/2019 To Prachi Infra and Roads Pvt. Ltd. Ward No-04, Barpathar Golaghat, Assam-785602 Reference: Strengthening of pavement from KM 61/00 to KM 69/00 and widening of 1.[5] M paved shoulder on either side and strengthening from KM 103/00 to KM 106/00 of NH-39 under annual plan for the year of 2018-19 under Golaghat NH division in the State of Assam on EPC mode (Job No. 039/AS/2018-19/186) and agreement with The Chief Engineer, PWD (NH Works), Chandmari, Guwahati-3, Assam vide agreement No. 02/CE/NH(BR)/NCB 2019-20 dated 27- 11-2019 Sub: Subcontract of Work on back to back basis As per discussion held for the above referenced work regarding the various general and payment terms and conditions in respect of your proposal to execute the work, we are pleased to offer you the work on subcontact on back to back basis. Terms & Conditions: This understanding is arrived between M/s Kanti Prasad Mittal hereinafter known as First Party and M/s Prachi Infra & Roads Pvt. Ltd. hereinafter known as Second Party.
1. First Part shall act as main contractor and second part as its sub-contractor for the execution of work.
2. The scope of work shall be as defined in technical specifications, design, drawings, BOQ, instruction issued time to time and conditions as in the contract document.
3. The completion time limit shall be 12 months after start of work.
4. All men, material, machinery, tools & plants, infrastructure resource, etc. as required for timely completion of work to the required specifications shall be arrange by Second Part.
5. Second part shall bear all expenses of any kind in connection with work.
6. For the services already rendered by the first part and further administrative expenses second part will allow first part to deduct 8% on gross amount of work done which will be deduct from each running &final bill. Other expenditure already incurred or to be incurred by first part will be borne by second part and which will be deducted from the bills.
7. Any raw material procured by First Part in any case, which will relate to your scope of works after that the actual cost with applicable GST will be debited to your account and tax invoice for the same will be issued to your company by the first party, if applicable.
8. Payment as & when received by first part from concern dept. will be released to second part on receipt after making deductions as in para 6 above and any other deduction which second party has made it liable for.
9. TDS and other applicable taxes if any shall be deducted as per relevant laws applicable on amount of running account bills submitted by second part to first part"
3. The said letter indicates that virtually the entire work has been subcontracted by the Petitioner to the Respondent No.7 which is beyond the permissible limit of 49%. The Petitioner also sent a letter dated 10.12.2019 to the Respondent No.3 informing him that they are proposing Respondent No.7 as their sub-contractor and that they wish to sub-contract the work on back to back basis to Respondent No.7. Thereafter, the Respondent No.4/Assistant Executive Engineer sent a letter to the Respondent No.3 regarding the proposal sent by the Petitioner for subcontracting the work to Respondent No.7. Vide letter dated 16.03.2020, the proposal of subcontracting the work of strengthening of pavement from Km 61/00 to Km. 69/00 and widening of 1.[5] meter paved shoulder on either side and strengthening from Km. 103/00 to Km. 106/00 of NH-39 was accepted by the Respondents.
4. On 24.03.2020 a Performance Certificate for a sum of Rs.12,89,13,850/- was issued by the Respondent No.3 to the Respondent No.7. Material on record also indicates that another Performance Certificate dated 20.09.2020 for a sum of Rs.22,31,67,000/- was issued by the Respondent No.3 to the Respondent No.7. On 25.08.2020, a completion certificate was issued to the Petitioner by the Respondent No.4.
5. It is stated that disputes arose between the Petitioner and the Respondent No.7 and a complaint was made by Respondent No.7 to the Officer in Charge, Police Station Borpathar, regarding non-payment of Rs.8,17,98,747/- by the Petitioner. Consequent to the said complaint, an FIR beingFIR No.70/2020, dated 29.10.2020, was registered against the Petitioner at Police Station Borpathar for offences under Sections 406/420/506 IPC. Material on record also indicates that a completion certificate dated 16.10.2021 was issued to the Petitioner by the Respondent No.3. Material on record also discloses that the Petitioner filed an application challenging the final report given by the Investigating Officer in FIR No.70/2020 before the Sub-Divisional Magistrate, Bokajan, Karbi Anglong, Assam. The Ld. SDM vide Order dated 30.11.2022 directed for further investigation by another Investigating Officer.
6. The Petitioner also gave representations to the Respondents challenging the Performance Certificate given by the Respondents No.3 & 4 to the Respondent No.7 by stating that Respondents No.3 & 4 were not the competent authorities to issue Performance Certificates. Since the representation given by the Petitioner was not being considered, the Petitioner filed W.P.(C) 7896/2023 before this Court seeking quashing of the Performance Certificates. The said Writ Petition was disposed of by this Court vide Order dated 31.05.2023 with a direction to the Respondents No.1, 2, 3 & 4 to treat the Writ Petition as a representation and decide the same by passing appropriate orders within six weeks from that date. Liberty was also granted to the Petitioner to approach this Court in case the Petitioner is aggrieved by the order passed by the Respondents. By Order impugned herein, the Respondent No.3 has held that the physical work execution experience completion certificate dated 10.09.2020 for a sum of Rs. 22,31,67,000/- is justified. The impugned Order discloses that the Respondent No.3 is satisfied by the execution of work by Respondent No.7. Respondent No.3 is of the opinion that there is no reasonable doubt that the complete physical execution of the above said work had been done by the sub-contractor i.e. Respondent No.7. Respondent 3 also stated that the work was completed 4 months ahead of the scheduled date of completion and that giving Experience certificate for executing the work physically to the subcontractor is not only a recognition towards his technical experience of executing such similar civil works in future, it is also an indicator of the experience they hold which is very much necessary in promoting competition in the field of civil construction works. Relevant portion of the said Order reads as under:
7. The Respondent No.1, thereafter, wrote a letter to Respondent No.3 on 10.07.2023 stating that the Petitioner had not sought any prior permission from Respondent No.1 before sub-contracting the work to the Respondent No.7. It is pertinent to mention that the completion certificate dated 16.10.2021 given to the Petitioner has been withdrawn by a letter dated 17.07.2023 on the ground that the Petitioner could not have subcontracted more than 49% of the work.
8. The Petitioner has filed the present Writ Petition challenging the Order dated 15.06.2023.
9. It is the contention of the Petitioner that the Performance Certificate ought not have been given to the Respondent No.7 because Respondent No.3 was not the Authority to issue Performance Certificates. Petitioner has relied on letter dated 10.07.2023 issued by Respondent No.1 wherein the Chief Engineer has objected to the sub-contract.
10. The stand of Respondent No.3 is that it has the authority to permit the sub-contract of the work. Ld. Counsel for Respondent 3 referred to a letter dated 28.09.2019 issued by Respondent 1 to Respondent 3 appointing him as the Authority Representative. He therefore stated he was the competent authority to approve the sub-contract of Respondent 7 under the contract.
11. Learned Counsel for Respondent No.1 has taken this Court through letter dated 16.06.2023, issued by the Respondent No.1 to Respondent No.3 seeking documents regarding the approval provided by him. It is stated by the learned Counsel for the Respondent that the said letter has been responded to and that the Respondent No.1 had been given all the necessary letters and has subsequently complied with by Order dated 10.07.2023.
12. Heard the Counsels for the parties and perused the material on record.
13. Respondents No.1 & 3 are taking contrary stands. The Union of India has appointed only one counsel to represent Respondents No.1 to 6. The completion certificate dated 16.10.2021 has been withdrawn by a letter dated 17.07.2023. The Deputy Secretary (B&NH), Govt. of Assam, sought for the details of correspondence between the Petitioner and the Respondent No.3. Respondent No.1 has replied to the said letter categorically stating that more than 49% of the work could not have been subcontracted.
14. As it stands today, the completion certificate given to the Petitioner had been withdrawn by the letter dated 17.07.2023 on the ground that he could not have subcontracted more than 49% of the work. The letter dated 17.07.2023 which has been issued by the Executive Engineer, PWD after filing of the writ petition reads as under:
15. Since the completion certificate issued in favour of the Petitioner stands withdrawn, consequently, the Performance Certificate given to Respondent No.7 also cannot survive and the impugned Order dated 15.06.2023 has become infructuous. The Performance Certificate to Respondent No.7 is automatically rendered nullified once the completion certificate granted to the Petitioner, who is the main contractor, has been withdrawn.
16. Be that as it may, what troubles this Court is that when the subcontract was given on 16.03.2020, the Respondent No.3 was aware that it is more than the permissible limit. Respondent No.1, being the Chief Engineer cannot say that it was not aware as what was happening in the project. When W.P.(C) 7896/2023 was filed, no objections were raised by the Respondents No.1 to 6 regarding the subcontract of Respondent 7. It is only when Respondent No.1 wrote letter questioning the subcontract, the completion certificate has been withdrawn.
17. The facts of the present case cry loud of the foul play in the department. The Respondents have conferred an advantage to Respondent No.7 by permitting sub contract beyond the permissible limit.
18. The material on record indicates of corruption in the matter of awarding sub-contracts. Respondents No.1 & 3 are speaking in completely different tune but are represented by the same Counsel.
19. Admittedly, what has been sub-contracted is completely contrary to the terms of the contract. Respondents No.1 to 6 cannot be absolved of their duties and they are all collectively responsible for the work and the pecuniary advantage given to the Respondent No.7.
20. It is trite law that a High Court while exercising its powers under Article 226 of the Constitution can direct an inquiry by the CBI to investigate matters where there exists sufficient material to come to a prima facie opinion that there is a need to call for an inquiry, and where there is a question of absolute justice.
21. In Secretary, Minor Irrigation & Rural Engineering Services, U.P. vs. Sahngoo Ram Arya and Anr., (2002 SCC OnLine SC 580) a Division Bench of the Apex Court noted that the High Court can direct CBI inquiry when there is a sufficient material to come to a prima facie conclusion of corruption. Relevant Portion reads as under:
22. The same was followed by a decision by a Constitutional Bench of the Apex Court in State of West Bengal and Ors v. Committee for Protection of Democratic Rights, West Bengal and Ors, 2010 SCC OnLine SCC 297, has stated that the High Courts while exercising their jurisdiction under Article 226 of the Constitution of India can initiate an enquiry. Relevant portion reads as
23. It is evident from the directions by the Hon’ble Apex Court in Sahngoo Ram Arya (supra) and Committee for Protection of Democratic Rights (supra) that the High Courts have the power to direct an inquiry, and the present case also fits within the guidelines laid down by the Apex Court.
24. It is an admitted position by all the respondents that the subcontract for more than 49% of the work order was given and executed by respondent
7. Material on record also discloses that during the execution of the project, none of the respondents raised suspicion over the subcontract either being above the prescribed limit or raise any contentions regarding the subcontract not being approved by a competent authority. It is only after this court’s directions in W.P.(C) 7896/2023 that the above-mentioned contentions have been raised. It is evident from the discussion that the respondents are handin-glove and the officers of the department are engaging in corrupt practices.
25. Material on record also discloses that an FIR No. No.70/2020 was registered at PS Bosparthar, investigation of which had to be reordered by a different Investigating Officer and is still pending despite a lapse of more than 3 years.
26. In view of the above, this Court is of the opinion that this is an exceptional situation and directs the CBI to conduct an enquiry into the issue of the subcontracting of the work in question to the Respondent No.7 and also to take action in the matter in accordance with law and submit a report to this Court.
27. With these directions, the Writ Petition is dismissed. Pending applications, if any, also stand dismissed.
SUBRAMONIUM PRASAD, J FEBRUARY 16, 2024