RDS PROJECTS LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) The above writ petition is filed challenging Ext.P49 order whereby the petitioner was blacklisted, barring the petitioner from quoting for any work for a period of 5 years. The brief facts necessary for the disposal of the above writ petition are as follows:

(2.) The petitioner is a company incorporated under the Companies Act, 1956 and it is a leading engineering and general contracting company, offering building solutions for a broad range of construction and engineering projects since 1992. The petitioner submits that it has completed over 100 projects throughout India, out of which 45 projects are in Kerala, of which 23 are construction of bridges. The Petitioner Company has also received quite a lot of appreciation for its endeavors in the field of construction and was also awarded for excellence in construction. It is submitted that the Roads and Bridges Development Corporation (hereinafter referred to as RBDCK) invited tenders for the construction of a flyover in N.H.66 at Palarivattom, Ernakulam. The petitioner was awarded the said work being the lowest tenderer and executed Ext.P3 agreement dtd. 4/3/2014. The site was handed over on 1/6/2014 and the work has to be completed within 24 months from the date of agreement. The petitioner submits that the structural work except the wearing coat was completed by June 2016 before the onset of the monsoon. The petitioner submits that since the inauguration of the flyover was scheduled to be held on 12/10/2016, the petitioner was forced to complete the wearing coats in monsoon period itself. Therefore, the petitioner completed the work by 20/9/2016. In view of the urgency, bituminous wearing coats were done in wet conditions and therefore the wearing coat compaction by maintaining temperature was not possible and this resulted in developing potholes and the bituminous layer got damaged progressively due to the increase in traffic. Due to the development of potholes, water stagnation and dust collection occurred on the expansion joints, thereby choking the movement of deck continuity expansion joints. As deck continuity joints were not functioning, additional stress developed in girders and pier caps. The petitioner also submits that there was an error in the approved drawings in the placement of bearings in 2 spans, P9-P10, P18-AP2. Since the above said defects happened due to the formation of the potholes and stagnation of water could be remedied forthwith, the matter was reported to the structural consultant, M/s. Nagesh Consultancy for their expert advice. The consultant inspected the site along with the representatives of RBDCK and KITCO and forwarded their drawings for the rectification of joints. A review meeting was held by RBDCK on 16/11/2016 and as per Ext.P5 minutes, it was decided to take corrective steps to rectify the expansion joints between two strip seal expansion joints. As per the decision in the meeting held on 16/11/2016, the balance drain works were started on 18/11/2016. Based on the views of the consultant, Exts.P6 and P7 requests were made by the petitioner, but the same was not considered and permission for rehabilitation as suggested in Exts. P6 and P7 at its own costs was never heeded to, but the traffic continued to ply. Thereupon, Ext.P8 communication was also sent by the petitioner. In Ext.P8, it was also intimated that purchase orders were placed with M/s. Sanfield India Pvt. Ltd. for the supply of the bearings and the materials were fabricated and ready for inspection. Later on, the POT bearing and strip seal expansion joints required for replacement at deck continuity joints were tested by the manufacturers on 10/10/2017 and 11/10/2017 at the factory of M/s. Sanfield India Pvt. Ltd., Bhopal in the presence of the representatives of the Government and RBDCK. It was also informed that the deck continuity joint is not withstanding the traffic and it was decided to introduce strip seal expansion joint. By Ext.P9 the test result of M/s. Sanfield and the mobilization of specialized agency were also brought to the notice of RBDCK and KITCO. As requested by the petitioner, Dr. Aravindan, retired professor of IIT and Head of M/s.Sree Giri Consultants along with his team inspected the flyover on 7/11/2016 and 29/10/2017 and prepared a detailed structural design check and submitted Ext.P11 report before the RBDCK. Even though as per Clause 20.2 of the agreement dtd. 4/3/2014, it is the responsibility of the petitioner to rectify any defects during the defect liability period at his own cost to the satisfaction of Engineer/KITCO, in spite of intimation to RBDCK through several communications regarding the nature of defects and the methodology to rectify the same, RBDCK never took any action or any steps so as to enable the petitioner to execute such works at its expense. On the basis of the same, it is contended by the petitioner that RBDCK has committed breach of contract and that the petitioner is never liable to rectify or compensate with regard to any defects which are the result of blatant violation of provisions of the agreement executed with RBDCK. Without considering the various proposals submitted by the petitioner for rehabilitation of the flyover which was approved by the Engineer, the RBDCK engaged IIT Madras to carry out the assessment of the condition of the flyover and to suggest the rehabilitation measures. The IIT Madras after conducting a scientific study approved the methodology for bearing replacement for span P18-AP2 submitted by KITCO. By Ext.P12 letter dtd. 19/3/2019, IIT Madras informed the RBDCK about the corrected methodology submitted by the Engineer approved by IIT Madras. Thereupon by letter dtd. 28/3/2019, RBDCK directed the petitioner to conduct the repairs as per the methodology suggested by KITCO and approved by IIT Madras in its letter dtd. 19/3/2019. The petitioner submits that the methodology approved by IIT Madras was the same in essence as the methodology submitted by the petitioner and the inordinate delay in engaging IIT Madras and approving the methodology was not attributable to the petitioner. The petitioner contends that even the report of IIT Madras only recommended for rehabilitation of the flyover since the flyover was not in such distress so as to be demolished. RBDCK, despite the long requests of the petitioner for traffic closure, finally by Ext.P14 letter intimated the petitioner for the traffic closure with effect from 1/5/2019. The petitioner completed the repairs as instructed by the IIT as suggested in Ext.P13 under the supervision of IIT and RBDCK and the expert panel of three Chief Engineers deputed by the State. The petitioner expended Rs.2.63 Crores for the repair works. All the repair works as specified by RBDCK were commenced on 1/5/2019 and completed on 2/6/2019 under the supervision of the representatives of the Engineer and Dr. P. Alagasundaramoorthy of IIT, Madras except for the expansion joint of the span P18-AP2, since the work was stopped by RBDCK. The petitioner by Ext.P15 letter informed RBDCK and KITCO that the site was ready for the replacement of the final bearing in span P18-AP2 and sought permission for the completion of all the rectification works by 5/8/2019. The petitioner, again by Ext.P16 dtd. 18/9/2019 intimated RBDCK for completion of the balance work of the expansion joint at span P18-AP2, but no reply or response has been evoked to the said letters. Petitioner submits that it appears that being dissatisfied with the inspection report and remedial measures of IIT Madras, the Government of Kerala sought clarification from Dr. E Sreedharan, the Principal Advisor of Delhi Metro Rail Corporation (DMRC) and that Dr. E Sreedharan without conducting much scientific study and even without conducting any physical verification submitted reports dtd. 3/7/2019, 14/9/2019 and 19/9/2019 contrary to the report of IIT Madras. Dr. E. Sreedharan, submitted a recommendation dtd. 3/7/2019 before the Government of Kerala for the rehabilitation of the bridge by dismantling 17 RCC spans and to replace with PSC girders. Thereby Government of Kerala constituted a committee to examine the reports of IIT Madras and Dr. E.Sreedharan and the committee so constituted, without conducting any scientific study, submitted a report dtd. 4/10/2019. Without reference to the contractual obligations in pursuance of the agreement dtd. 4/3/2014, and especially Clause 49.2(b), Clause 49.4 and Clause 50.1 of Part I of the General Conditions of the contract, the Government of Kerala as per Ext.P17 order dtd. 25/10/2019 accepted the recommendation of the technical committee, appointed by the Government to resolve the dispute in the conflicting reports of IIT Madras and Dr. E Sreedharan, and further accepted the offer of DMRC to take over the bridge for rehabilitation and further directed the RBDCK to realize the loss sustained from the petitioner in the light of the reports of IIT Madras, Dr. E.Sreedharan and FIR in vigilance case No.1 of 2019 of the Court of Vigilance and Anti-Corruption Bureau, Muvattupuzha. The petitioner has a specific case that if at all any rehabilitation of the flyover is required, necessarily RBDCK has to invoke Clause 49.2(b) of Part I of the General Conditions of Contract. As a matter of fact, after obtaining the report of the Technical Committee, the Government of Kerala has accepted the offer of DMRC for rehabilitation of the Flyover, which is in total violation of the above-stated clause in the agreement executed between the petitioner and RBDCK. The petitioner challenged Ext.P17 order by filing W.P.(c) No. 30487 of 2019 and this Court was pleased to stay all coercive action including the attachment of the bank account of the petitioner. The petitioner also filed another writ petition, WP(C) No.26030 of 2019 seeking a direction to conduct a load test on the bridge. The above writ petition came up for hearing along with other writ petitions on 21/11/2019 and this Court as per Ext.P19 common order directed the Government to conduct load test of the Palarivattom Flyover at the expense of the petitioner. Aggrieved by Ext.P19, the Government approached the Apex Court in SLP(Civil) Nos.3008-3015 of 2020. The Apex Court as per Ext.P20 judgment set aside Ext.P19 common order passed by this Court directing to conduct load test. Pursuant to Ext.P20 judgment by the Apex Court, the Government of Kerala issued Ext.P21 Order granting administrative sanction for the rehabilitation of the Palarivattom Flyover through M/s Delhi Metro Rail Corporation (DMRC) with a further direction to realise the cost of the rehabilitation from the petitioner. The specific contention of the petitioner is that the Government has no right or authority to engage DMRC to do the rehabilitation work, especially when the contract between the petitioner and RBDCK was subsisting. Petitioner submits that RBDCK committed several instances of breach of the agreement and has shown reluctance in permitting the petitioner to carry out the rectification works. These aspects were pointed out to RBDCK by the petitioner as per Ext.P22 letter. Since RBDCK has violated the terms and conditions envisaged in the agreement, the petitioner has filed a suit as C.S.No.80 of 2021 before the Commercial Court, Ernakulam seeking recovery of the amount due to the petitioner and for a declaration that the Government orders dtd. 25/10/2019 and 7/10/2020 (Exts.P18 to P21) are illegal, ab initio void and non-est in law. The petitioner further submits that the RBDCK has also instituted a suit as C.S No. 240 of 2022 before the Commercial Court, Ernakulam for the realization of a sum of Rs.24,52,22,498.00 being the alleged loss incurred in the demolition and re-construction of the Flyover. Petitioner submits that in connection with another work tendered by the petitioner, which was a joint venture, the Government decided to exclude the L1 bid of the Joint Venture of the petitioner alleging irregularities and registration of vigilance case in connection with the construction of the Palarivattom Flyover. Thereupon the petitioner has approached this Court by filing W.P.(C) No. 31556 of 2019, which was disposed of as per Ext.P31, wherein it was held that the blacklisting proceedings shall be initiated and completed within a time limit and if it is found that the petitioner is liable to be blacklisted, work involved in the said writ petition shall be re-tendered and if it is found in the proceedings that the petitioner is not liable to be blacklisted, the work shall be awarded to the Joint Venture of the petitioner. Despite the said direction in Ext.P31 judgment, no steps were taken to blacklist the petitioner and the work was awarded to the Joint Venture of the petitioner as is evident from Ext.P32. The petitioner further submits that subsequently, works have been awarded to the petitioner, as is evident from Exts.P33 to P40. While so, the 3rd respondent issued Ext.P42 notice directing the petitioner to appear before the 3rd respondent to attend a hearing regarding the initiation of the process of blacklisting the petitioner in connection with the irregularities found in the construction of Palarivattom Flyover. Since Ext.P42 did not state the particular grounds for the initiation of black listing proceedings, the petitioner approached this Court in W.P(C) No.5722 of 2023 seeking to quash Ext.P42 and this Court was pleased to dispose of the writ petition as per Ext.P44 judgment directing the Superintending Engineer, PWD to provide the details with respect to the blacklisting procedure adopted by the respondents, so as to enable the petitioner to file a suitable reply. Pursuant to Ext.P44, the 3rd respondent issued Ext.P45 notice stating the reasons for initiating blacklisting proceedings against the petitioner and giving 3 weeks' time to prefer an appropriate reply to the said notice. Thereupon, the petitioner submitted Ext.P46 reply to the same. Petitioner submits that Ext.P45 notice was issued only to harass the petitioner and the same is ill-motivated. The 3rd respondent has no authority to issue the same when the subject matter of the dispute is pending consideration before the competent Civil Court. Ext.P45 is issued only as an eyewash and to cause hardship to the petitioner. Without considering any of the contentions in a proper manner, by Ext.P49 order, it was decided to blacklist the petitioner in connection with the irregularities in the construction of the Palarivattom Flyover and the petitioner was barred from quoting for another work for a period of five years and the 'A' class license issued to the petitioner was also cancelled. The petitioner submits that the Government acted arbitrarily, and capriciously against the interest of the public by engaging to demolish the bridge without any supporting materials. The materials already available on record eloquently speak of rehabilitation of the bridge and the decision to demolish flyover is malafide and with sinister motives. Exts. P45 and P49 are also another move which is politically motivated and leaving the petitioner a scapegoat to it. The petitioner has undertaken various works in the State of Kerala and the same are in progress and any coercive action by virtue of Ext.P45, which itself is without any authority, would cause great hardship and financial loss to the petitioner. Initiation of action as is evident from Ext.P49, while civil suits in this regard are pending consideration before the competent court is an arbitrary action. Ext.49 is a non-speaking order issued without any application of mind and was passed on compulsion since RBDCK apparently recommended the blacklisting of the petitioner. There was no subjective satisfaction on the part of the 3rd respondent for blacklisting and the 3rd respondent has just followed the recommendations of the RBDCK to blacklist the petitioner. None of the contentions taken by the petitioner in Ext.P46 reply was taken into consideration while issuing Ext.P49. The 3rd respondent did not take into consideration that a substantial portion of the repair work was carried out by the petitioner and that the balance work in respect of one expansion work was abruptly stopped by the RBDCK and therefore the petitioner cannot be held responsible for the same. The petitioner further submits that in Ext.P23 counter affidavit, the consultant KITCO had disowned the report of Dr. E. Sreedharan and also the decision to forgo the load test and to demolish the flyover. The petitioner has executed all the works undertaken so far to the full satisfaction of the employer and has earned goodwill and reputation throughout the country. Exhibit P49 is ill-motivated solely to tarnish the reputation of the petitioner for the illegal gains of the respondents. In support of the contentions, the petitioner relies on the judgments in Commissioner of Police, Bombay v. Gordhandas Bhanji (1952 KHC 291), Mohinder Singh Gill and Another v. The Chief Election Commissioner, New Delhi and others (1978 KHC 478), Chairman and Managing Director, United Commercial Bank and Ors. v. P. C. Kakkar (2003 KHC 971), U. O. I. and others v. Jai Prakash Singh and another (2007 KHC 4322), Kulja Industries Limited(M/s) v. Chief General Manager, W. T. Proj.BSNL and others (2013 KHC 4798), Tulsi Narayanan Garg v. M. P. Road Development Authority (2019 SCC online SC 1158), Ramsons Garments Finishing Equipments Pvt. Ltd(M/s.), Bangalore v. Government of India, Ministry of Railways (2022 KHC 5175) and the decision in Abcon Engineering(M/s) v. Superintendent of Engineer [2023 (4) KHC 501].

(3.) A detailed counter affidavit has been filed on behalf of the 3rd respondent wherein it is stated that Ext.P49 order has been issued by the licencing authority after properly assessing the allegations raised by the implementing authority RBDCK and after hearing the arguments of the petitioner against the blacklisting as per the directions of this Court and thereupon arrived at a decision to proceed with the blacklisting and cancellation of the licence issued by the licence issuing authority. Ext.P49 was issued considering the irregularities in the construction of the Palarivattom Flyover and the same was mentioned in the order itself. The order issued was not to damage the reputation and goodwill earned by the contractor in accepting other projects but only as per the terms of prevailing rules and conditions of the contract. This blacklisting and licence cancellation need not affect other ongoing works of the petitioner and they can continue with the ongoing works to full satisfaction of the respective agreement authorities. Irregularities in connection with the work were noticed in the year 2019. The implementing agency of the work ie., RBDCK reported the allegations and intimated the recommendation to blacklist the contractor to the Government on 6/11/2020. The subject work was awarded under the SPEEID project of the Government of Kerala and aided by the fund of KRFB. There were defects noticed in the construction undertaken by the petitioner, but the petitioner did not turn up to rectify the defects of the project in time. The vigilance enquiry report submitted to the Government concluded that the flyover is in a dangerous condition. Even though rectification works under the supervision of IIT Madras were done, it was found that there is every chance that the flyover will become a threat to the life and property of the public at any time. Therefore, the Government had no other option but to engage other competent agency to rectify the defects and recover the cost of rectification from the defaulted contractor, which is specifically mandated as per the general condition of the contract. The Vigilance and Anti-Corruption Bureau has also reported as per Ext.R3(c) report that there are serious irregularities on the part of the contractor in the construction of the project. The Government engaged a technical evaluation Committee to assess the proposals of rehabilitation submitted by the IIT Madras and DMRC and the proposal submitted by the DMRC ensured a guarantee period of 100 years to the bridge, which was not present in the proposal submitted by IIT Madras. Thereupon, the Government approved the recommendation of the technical committee and opted for the proposal of the DMRC. As per the general conditions of the contract, if the contractor does not satisfactorily rectify the defects, the executing agency can depute any other agency and recover the cost of rectification from the defaulting contractor. The contractor has filed W.P. (C)No.30487/2019 and the interim order granted in the said case prevented the Government from taking any coercive steps against the contractor including blacklisting. Due to the pendency of the case, Government could not go ahead with the blacklisting procedure. Later as per the judgment dtd. 4/2/2022, this Court dismissed the said writ petition as withdrawn with liberty to the petitioner to raise the contentions before the civil court. Thereupon, proceedings were initiated to blacklist and to cancel the license of the contractor. Since blacklisting proceedings and the coercive steps, to be taken against the petitioner were stayed by this Court, further works tendered by the petitioner were considered on merits and works were awarded to them. Ext.P49 order has been issued after complying with all the procedures mandated and following the principle of natural justice. The petitioner was issued with notice and given sufficient time for submitting his reply and after considering the reply submitted by the petitioner, Ext.P49 order has been issued and the contract licence was cancelled on account of poor workmanship as reported by RBDCK. Petitioner never turned up to rectify the damages to the Palarivattom Flyover to the satisfaction of the agreement authority. The contention of the petitioner that though they were ready to rectify the defects, RBDCK never acceded to any of the proposals and committed inordinate delay is not true to the facts. It is the case of RBDCK that despite notice and report submitted by IIT Madras regarding the rectification works, which is notified to the petitioner, rectification works were not attended by him, but at the same time under the pretext of the objection to the report submitted by IIT Madras, petitioner has not complied with their contractual obligations. It is clear from the report submitted by the RBDCK and also Ext.R3(c) report submitted by the Vigilance and Anti Corruption Bureau, that only by reconstruction of the bridge to the extent required, it cannot be put to use. Further contention of the petitioner that clause 2116.2 of the PWD manual does not contemplate blacklisting of the petitioner/contractor in the above-said circumstances of the case, cannot be accepted since pursuant to the directions issued by this Court in W.P.(C) No.21597/2017, 'poor workmanship' also has been incorporated in the Manual as per Ext.R3(d) Government order, as a reason for blacklisting the contractors and on the basis of the said contentions raised in the counter affidavit sought for dismissal of the writ petition.