Full Text
Date of Decision: 24th April, 2019
UNION OF INDIA (CPWD) ..... Appellant
Through : Mr. Rajesh Gogna, Standing Counsel for UOI.
Through : None.
HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
JUDGMENT
CM Nos. 13662-63/2019 (for exemption)
Allowed, subject to just exceptions.
CM No. 13660/2019 (for condonation of delay)
For the reasons stated in the application, the delay of 38 days in filing the appeal is condoned.
The application stands disposed of.
2019:DHC:2264-DB
1. The Central Public Works Department (“CPWD”), Ministry of Urban Development, Union of India has filed the present Letters Patent Appeal (“LPA”) under Clause 10 of the Letters Patent of the Delhi High Court challenging judgment dated 13.12.2018 rendered by the learned single Judge in W.P.(C) No. 9281/2017. The writ petition was filed by M/s. Shapoorji Palonji & Co. Pvt. Ltd. (“Shapoorji”); and allowing the writ petition, the single Judge quashed communications dated 18.08.2017, 05.09.2017, 20.09.2017 and 12.10.2017 issued by CPWD demanding that Shapoorji pay-up a sum of Rs.30.80 crores. The single Judge also quashed Memorandum dated 09.10.2017 whereby CPWD had called upon various other CPWD regional offices and establishments to withhold the sum of Rs.30.46 crores from any amounts that may be due and payable to Shapoorji.
2. The demand made by CPWD was premised on its interpretation of Clause 29 of the General Conditions of the Contract in relation to a bid given by Shapoorji for construction of „fixed tensile membrane roofing‟ over the seating area of the Jawaharlal Nehru Stadium, New Delhi, including civil and electrical works, as part of the upgradation/renovation and new construction of the stadium for hosting the Common Wealth Games, 2010 at New Delhi.
3. Shapoorji's bid was accepted and the work was awarded for a lump sum amount of Rs. 3.08 crores. Disputes arose between the parties by reason of delay in execution of the work awarded, with each party contending that the delay was attributable to default on the part of the other.
4. It is relevant to mention that Shapoorji sought extension of time for completion of the project milestones from time-to-time, which extension was granted by CPWD. Shapoorji sought extension of time last by letter dated 18.01.2011, in response to which CPWD granted extension by its reply dated 14.12.2011, which reply said thus: “Dear Sir, Extension of time for completion of the above mentioned work is granted upto 26.08.2010 (actual date of completion) without levy of compensation by the Competent Authority. Provided that notwithstanding the extension hereby granted, time is and shall still continue to be the essence of the said agreement.” (Emphasis Supplied) As recorded in letter dated 14.12.2011 the project was actually completed on 26.08.2010; and therefore ex-post-facto extension was in fact granted by CPWD in terms of the letter.
5. It is relevant at this point to extract the provisions of Clause 29 of the General Conditions of the Contract which reads as under: “CLAUSE 29 i) Whenever any claim or claims for payment of a sum of money arises out of or under the contract or against the contractor, the Engineer-in-Charge or the Government shall be entitled to withhold and also have a lien to retain such sum or sum in whole or in part from the security, if any deposited by the contractor and for the purpose aforesaid, the Engineer-in-Charge or the Government shall be entitled to withhold the security deposit, if any, furnished as the case may be and also have a lien over the same pending finalization or adjudication of any such claim. In the event of the security being insufficient to cover the claimed amount or amounts or if no security has been taken from the contractor, the Engineer-in-Charge or the Government shall entitled to withhold and have a lien to retain to the extent of such claimed amount or amounts referred to above, from any sum or sums found payable or which may at any time thereafter become payable to the contractor under the same contract or any other contract with the Engineer-in-Charge of the Government or any contracting person through the Engineer-in-Charge pending finalization of adjudication of any such claim. It is an agreed term of the contract that the sum of money or moneys so withheld or retain under the lien referred to above by the Engineer-in-Charge or Government will be kept withheld or retained as such by the Engineer-in- Charge or Government till the claim arising out of or under the contract is determined by the arbitrator (if the contract is governed by the arbitration Clause) by the competent court, as the case may be and that the contractor will have no claim for interest or damages whatsoever on any account in respect of such withholding or retention under the lien referred to above and duly notified as such to the contractor. For the purpose of this clause, where the contractor is a partnership firm or a limited company, the Engineer-in-Charge or the Government shall be entitled withhold and also have a lien to retain towards such claim amount or amounts in whole or in part from any sum found payable to any partner/limited company as the case may be, whether in his individual capacity or otherwise.
(ii) Government shall have the right to cause and audit and technical examination of the works and final bills of the Contractor including all supporting vouchers, abstract, etc. to be made after payment of the final bill and if as a result of such audit and technical examination any sum is found to have been over paid in respect of any work done by the contractor under the contract or any work claimed to have been done by him under the contract and found not to have been executed, the contractor shall be liable to refund the amount of over payment and it shall be lawful for Government to recover the same from him in the manner prescribed in sub-clause (i) of this Clause or in any other manner legally permissible and if it is found that the contractor was paid less than what was due to him under the contract in respect of any works executed by him under it, it amount of such under payment shall be duly paid by Government to the contractor without any interest thereon whatsoever. Provided the Government shall not be entitled to recover any sum overpaid nor the contractor shall be entitled to payment of any sum paid short where such payment has been agreed upon between the Superintending Engineer or Executive Engineer on one hand and the contractor on the other under any term of the contract permitting payment for work after assessment by the Superintending Engineer or the Executive Engineer.”
6. As part of the audit of various contracts relating to work done for the Common Wealth Games 2010, an audit was also conducted by the Comptroller & Auditor General of India (“CAG”) of the project awarded to Shapoorji; and the report placed by the CAG before the Public Accounts Committee of Parliament (“PAC”) in relation to many such projects contained inter-alia a report on Shapoorji‟s contract that is subject matter of these proceedings. On the CAG‟s report, the Public Accounts Committee (2016-17) (Sixteenth Lok Sabha) made the following observations in relation to the contract awarded to Shapoorji: “5.46 According to Audit, CPWD in December 2007 awarded a lump sum contract for construction of fixed tensile membrane roofing over the seating area in Jawaharlal Nehru stadium at a cost of ₹308.08 crore to Shapoorji Pallonji & Co. Ltd. (SPCL) for completion by September 2009. Completion of work was delayed by over eleven months due to various reasons, attributable at least partly on the contractor/sub-contractors such as three months delay due to rectification of the defective geometry of the alignment of head plates of the erected columns; non resolving of the issues regarding fabrication and erection of ramps and cat walk, erection of cable, casting of staircase, fixing of railing, drainage pipeline, etc. as of December 2009; non-installation of about 61 curbed beams, 40 RT[1] beams, RB beams, flood light most and some catwalk structure units and the entire parapet even as of 4 January 2010; flaws in laying of cable; inadequate deployment of manpower, tools and machinery; inadequate expertise for fabric installation etc. The site became hindrance free by January 2010 and CPWD issued several. notices including on 28th April 2010, 5 May 2010 and 16 August 2010 holding the contractor responsible for slippages, slow progress of work and non-achievement of revised milestones: However, CPWD apartfrom issuing notices for imposition of penalty/compensation, never enforced contractual remedies against the contractor to levy compensation estimated at a maximum of ₹30.80 crore. CPWD also made payment of ₹7.02 crore, as of September 2010 towards escalation of costs for periods beyond the stipulated date of completion i.e. 3rd September
2009.
XXXXX “5.52 Asked to spell out the steps taken to impress upon the contractor to expedite the work and achieve the milestones, CPWD stated that notices were served on the contractor as an administrative measure to accelerate the work and to achieve the milestone, even though the delay was not on the part of the contractor. The main objective of issuing such notices was for early completion of the work as required. Irrespective of good speed and progress of work, notices were served on the agency for accelerating the work and putting constant pressure to achieve the target and have better performance. Since, this project was time bound, and lot of other activities were to be carried out after the roof work, CPWD had no option but to adopt the above method for better results by serving several letters and notices to the contractor time and again.
XXXXX “23.... Considering all the above factors, it is inappropriate on the part of CPWD to say that the contractor was not liable for recovery of compensation upto maximum of Rs.30.80 crore. While deploring inaction in the matter, the Committee recommend that the CPWD recover the compensation from the contractor at the earliest. As for the failure of the Sports Authority of India/Organizing Committee in ensuring timely availability of hindrance free site which had also contributed to time and cost overruns, the Committee desire that the total amount paid towards cost escalation for periods beyond the stipulated date of completion (3rd September 2009), if admissible, be recovered from them.”
7. On the basis of the PAC report, CPWD issued to Shapoorji letters dated 18.08.2017, 05.09.2017, 20.09.2017 and 12.10.2017 purporting to be recovery notices, the relevant portions whereof have been extracted here for ease of reference: “As regards the above noted work executed by you for CWG-2010, it is submitted that as per PAC's Seventy Fourth Report received recently, You are liable to pay Rs.
30.80 crore to the Govt. In view of above, as per provision contained in Clause-29 of the contract, I hereby serve a notice to you to deposit the said amount in this office in the form of DD/Pay order in favour of Executive Engineer, SMCD, CPWD, New Delhi, within seven days after issue of this notice, failing which the department shall recover aforesaid amount by taking legal action under relevant clause of contract.” (extract from letter dated 18.08.2017) “With reference to above mentioned letter vide which you were requested to deposit Rs. 30.80 crore in compliance of PAC's Seventy Fourth Report but till date you have not deposited the same to this office. In view of the above you are once again requested to deposit the same to this office within 7 days after issue of this notice. Failing which the department shall recover aforesaid amount by taking legal action under relevant clause of contract.” (extract from letter dated 05.09.2017) “... As per provision contained in para No.
(ii) of Clause- 29 of the Contract, the govt. has right to recover excess/over payment if any found letter on (after final bill) during technical examination/statutory audit by the competent authority.” (extract from letter dated 20.09.2017) “Please refer to the enclosed memorandum of the Executive Engineer, SAI Maintenance Civil Division, Indira Gandhi Stadium Complex, New Delhi – 110002 in which it is stated that an amount of Rs. 30,46,80.865 is due from you to the Government of India towards recovery on account of delayed completion of your work "Upgradation, renovation and new construction for commonwealth Games-2010 in JN Stadium Sports Complex, New Delhi (SH: Construction of New Fixed Tensile Membrane Roofing over the Seating Area of JN Stadium, New Delhi: Agreement NO. 01/EE/CWGD-II/2007-08) at New Delhi. Copy from the executive engineer is enclosed herewith for your ready reference. In this regard, reference is made to clause 29 A of the general conditions of contract of the agreement wherein “Any sum of money due and payable to the contractor (including the security deposit returnable to him) under the contract may be withheld or retained by way of lien by the Engineer-in-Charge or the Government or any other contracting person or persons through Engineer-In Charge against any claim of the Engineer-In-Charge or Government or such other person or persons in respect of payment of a sum of money arising out of or under any other contract made by the contractor”. You are requested to remit the amount of Rs.30,46,80.565 to the EE, SAI Maintenance Civil Division and submit the proof of the same to this office within 15 days of receipt of this letter, failing which this office shall withhold the amount due to you in respect of the contract under agreement number 03/CE/IIMTPD/2014-15 as per the above mentioned provisions of the agreement.” (extract from letter dated 12.10.2017)
8. As stated in the extract from letter dated 12.10.2017 quoted above, CPWD also issued a Memorandum dated 09.10.2017 to its regional offices and establishments calling upon them to withhold a sum equivalent to the amount claimed to be due from Shapoorji or any partial amount thereof from other dues that may be owed by such regional offices of CPWD to Shapoorji in the following words: “A sum of Rs.30,46,80,565 (Rupees Thirty Crores Forty Six Lakh Eighty Thousand Five Hundred Sixty Five only) towards the recovery on accounts of delayed completion of the subject work as per Public Accounts Committee (PAC) {2016-17} Seventy Fourth Report (Sixteenth Lok Sabha) has become recoverable from M/s. Shapoorji Pallonji and Company Private Ltd. formerly known as M/s. Shapoorji Pallonji Co. Ltd.... XXXXX “It is, therefore, requested that under Clause 29 of the agreement, the said amount/Partial amount whatever is available may please be withheld from the dues of “M/s. Shapoorji Pallonji Company Private Limited” and be intimated to the under signed. In case nothing is due to the said Agency in the Division(s) under your control, an nil report may please be sent to this office.”
9. For purposes of the present appeal it is not necessary for us to delve any further into the factual disputes between the parties, except to say that one of the essential elements of such disputes was CPWD‟s claim that it had suffered losses on account of delay in completion of work by Shapoorji; and arising therefrom, CPWD claimed damages from Shapoorji.
10. On the other hand Shapoorji disputed that there was delay on its part in completing the work; and also contended that in any case CPWD had granted extension of time for completion of work, inter-alia by letter dated 14.12.2011 as extracted above, with the express understanding that no compensation would be levied for such extension.
11. However in the aforesaid circumstances, the final bill raised by Shapoorji was not paid by CPWD in its entirety, whereupon Shapoorji made a claim in arbitration for the balance amount on various counts, including a claim for damages towards alleged loss suffered by Shapoorji by reason of delay in completion of work attributable to CPWD.
12. Counsel for CPWD confirms that arbitral proceedings initiated by Shapoorji against CPWD are still pending and that CPWD has also made counter-claims against Shapoorji in the arbitral proceedings.
13. As is clear from the above, CPWD had claimed the amount of Rs.
30.80 crores from Shapoorji on the premise that the Government was entitled to demand such monies straightaway on the basis of the audit objection raised by the CAG as affirmed by the PAC.
14. In the writ petition, Shapoorji sought quashing of demand letters dated 18.08.2017, 05.09.2017, 20.09.2017 and 12.10.2017 as also Memorandum dated 09.10.2017 issued by CPWD in relation to the claim. Shapoorji‟s stand was that demand letters dated 18.08.2017, 05.09.2017, 20.09.2017 and 12.10.2017 were untenable; and prayed that no amount due by CPWD to Shapoorji against other projects and works be withheld on the basis of Memorandum dated 09.10.2017.
15. The claim made in the writ petition was dealt with by the single Judge in the impugned judgement dated 13.12.2018 in the following way:
and on the above ratiocination the single Judge disposed of the writ petition; however, reserving for CPWD the liberty to initiate proceedings for adjudication of its claim in accordance with law in the following words:
16. To be sure, a perusal of Chapter XXVI of the Rules of Procedure and Conduct of Business in Lok Sabha shows that the Public Accounts Committee, formally known as the Committee on Public Accounts, is one of the Standing Committees of the Lok Sabha. On point of law, the probative and evidentiary value of a Parliamentary Standing Committee report has been considered in detail in a recent judgment of a Constitution Bench of the Supreme Court in the case titled Kalpana Mehta & Ors. vs. Union of India & Ors. reported as (2018) 7 SCC 1. In three separate but concurring judgments authored by Hon‟ble Mr. Justice Dipak Misra the then Chief Justice of India, Hon‟ble Dr. Justice D.Y. Chandrachud and Hon‟ble Mr. Justice Ashok Bhushan, speaking for the Constitution Bench, have opined as under: “3.... The factual score that has given rise to the present reference to be dealt with by us is centred on the issue as to whether a Parliamentary Standing Committee (PSC) report can be placed reliance upon for adjudication of a fact in issue and also for what other purposes it can be taken aid of. … XXXXX “9...., the two-Judge Bench framed the following questions for the purpose of reference to the Constitution Bench: (Kalpana Mehta case, SCC p. 322, para 73) “73.1. (i) Whether in a litigation filed before this Court either under Article 32 or Article 136 of the Constitution of India, the Court can refer to and place reliance upon the report of the Parliamentary Standing Committee?
73.2. (ii) Whether such a report can be looked at for the purpose of reference and, if so, can there be restrictions for the purpose of reference regard being had to the concept of parliamentary privilege and the delicate balance between the constitutional institutions that Articles 105, 121 and 122 of the Constitution conceive?” Because of the aforesaid reference, the matter has been placed before us.
159.1. XXXXX
159.2. Judicial notice can be taken of the Parliamentary Standing Committee report under Section 57(4) of the Evidence Act and it is admissible under Section 74 of the said Act.
159.3. XXXXX
159.4. Where the fact is contentious, the petitioner can always collect the facts from many a source and produce such facts by way of affidavits, and the court can render its verdict by way of independent adjudication.
159.5. XXXXX ” In his concurring judgment, Hon‟ble Dr. Justice DY Chandrachud holds as under:
XXXXX
XXXXX “449.5. That mere fact that document is admissible in evidence whether a public or private document does not lead to draw any presumption that the contents of the documents are also true and correct. “449.6. When a party relies on any fact stated in the Parliamentary Committee report as the matter of noticing an event or history no exception can be taken on such reliance of the report. However, no party can be allowed to “question” or “impeach” report of Parliamentary Committee. The parliamentary privilege, that it shall not be impeached or questioned outside Parliament shall equally apply both to a party who files claim in the court and other who objects to it. Any observation in the report or inference of the Committee cannot be held to be binding between the parties. The parties are at liberty to lead evidence independently to prove their stand in a court of law.
XXXXX “449.11. Admissibility of a Parliamentary Committee report in evidence does not mean that facts stated in the Report stand proved. When issues of facts come before a court of law for adjudication, the court is to decide the issues on the basis of evidence and materials brought before it.”
17. It therefore stands authoritatively concluded that a lis between parties, where there are disputed questions of facts, cannot be decided merely on the basis of what is contained in the report of a Parliamentary Standing Committee. Therefore, the claim made by CPWD merely on the basis of what is contained in the PAC report is unsustainable in view of the fact that Shapoorji has denied the claim and has in fact filed arbitral proceedings against CPWD seeking the recovery of monies under various heads of claims. It is of course open to CPWD to cite the observations in the PAC report as evidence in support of its claim against Shapoorji; but the observations in the PAC report alone would not be dispositive of the demand made by CPWD against Shapoorji.
18. On a conspectus of the foregoing, the following position emerges: (a) the claim of Rs.30.80 crores made by CPWD against Shapoorji is towards alleged delay in completion of work; (b) admittedly, CPWD had granted extension of time as sought by Shapoorji from time-to-time; and letter dated 14.12.2011 issued by CPWD even recorded in so many words that extension was being granted “without levy of compensation by the Competent Authority”.
(c) a claim by CPWD for delay in completion of work would, at the highest, be a claim for damages towards alleged loss suffered by CPWD by reason of such delay;
(d) whether there was delay in completion of work; and if so, what was the extent of the delay; on whose account; resulting in what loss to CPWD; and whether CPWD had waived its claim for compensation for such delay, are all disputed questions of fact and/or law which have not yet been adjudicated as between the parties; (e) the contents of the CAG report and observations made thereon in the PAC report do not constitute adjudication of CPWD‟s claim against Shapoorji; nor do they afford reason for CPWD to invoke Clause 29 of the General Conditions of Contract.
19. Accordingly, we are of the view that on the strength of Clause 29 of the General Conditions of the Contract and based merely on the audit objection raised by the CAG as approved by the PAC in its report, CPWD could not have claimed any amount from Shapoorji by issuing demand notices dated 18.08.2017, 05.09.2017, 20.09.2017 and 12.10.2017 or through Memorandum dated 09.10.2017. Neither the CAG report nor the PAC report amounts to adjudication of CPWD‟s claim against Shapoorji.
20. We also note that while disposing of the writ petition, the single Judge has left it open for CPWD to initiate appropriate proceedings for adjudication of its claim in accordance with law and thereby CPWD‟s right has neither been pre-judged nor foreclosed.
21. Accordingly, finding no infirmity in the impugned judgment, the present appeal is dismissed; without however, any order as to costs.
22. All the pending applications, if any, stand disposed of accordingly.
ANUP JAIRAM BHAMBHANI, J CHIEF JUSTICE APRIL 24, 2019