NARMADA CEMENT CO Vs. STATE OF GUJARAT

JUDGEMENT

(1.) The petitioner-Company is engaged in manufacture of cement. Respondent No. 2 Executive Engineer, Irrigation Mechanical Division No. 3, invited tender for supply of ordinary portland cement and possolone portland cement having I.S.I. mark to the extent of 1,00,000 M.T. as per tender notice No. 4 of 1990-91. In response to the said tender notice, the petitioner submitted tender which was accepted and in pursuance thereto an agreement in Form-D was entered into between the petitioner and the respondent No. 2. The petitioner supplied 40,621.75 M.T. cement under the contract costing Rs. 6,76,27,702.31 against which the respondent made payment of Rs. 6,52,38,900.80 by various cheques. An amount of Rs. 23,88,801.49 has been withheld by respondent No. 2 alleging that the said amount has been adjusted on various accounts which is evident from the letter dated 8-8-1994 annexed at Annexure 'B'. The details of the withheld amount of Rs. 23,88,801.49 as pointed out in the aforesaid communication are as under : A) Recoveries towards short supply of cement. Rs. 10,131.90 B) Recovery towards cost of levy cement of drainage division, Navsari Rs. 9,792.71 C) Charges of cement samples Rs. 74,082.60 D) Amount due to be paid as interest on levy dispatches to different irrigation divisions by the Company on different accounts of levy cement Rs.18,68,508.56 E) Penalty for late supply Rs. 17,885.72 F) Penalty for non-marking on cement bags Rs. 4,08,000.00 Total : Rs.23,88,801.49 And further break-up of an amount of Rs. 18,68,508.56 has been given as under : I. Executive Engineer, Ukai Left Bank Canal Investigation Division No. 2, Waldo, towards road freight charges relating to R.O. No. 13 dated 4-11-1988 Rs. 2,920.00 II. Executive Engineer, Ukai Left Bank Canal Investigation Division No. 2, Waldo towards road freight claim as per letter No. 4608 dt. 27-1-1991 Rs. 8,030.00 III. Executive Engineer, Kakrapar Canal Division No. 2, Surat, towards levy of interest claim against amount paid in 1983 Rs. 34,352.51 IV. Executive Engineer, Ver-II Project Division Vyara, Surat towards claim of interest and rate difference against R.O. No. 4 of 1984 to 7 of 1984 Rs. 5,78,206.05 V. Executive Engineer, Medium Irrigation Project Division, Ankleshwar, towards interest for delay in refunding levy credit balance. Rs.12,45,000.00 Total : Rs.18,68,508.56 It is thus evident that different amounts payable to different agencies under separate and distinct contracts of the years 1983 and 1988 are being adjusted from the bills of tender agreement No. D-3 of 1990-91. It is also pointed out that Rs. 12,45,00.00 at item No. 5 was allegedly due and payable by the petitioner to the Executive Engineer, Medium Irrigation Project Division, Ankleshwar. For the recovery of the amount, the said authority has filed Special Suit No. 351 of 1992 before the Court of Civil Judge (S.D.), Surat and the same is still pending. The petitioner has appeared in the said suit and is contesting the same. It is also stated that the amount of Rs. 12,45,000.00 pertains to an agreement entered into between the petitioner and the Executive Engineer, M.T.P. Division, Ankleshwar, who is not a party to the tender agreement No. D-3 of 1990-91. The said contract relates to the period 1983-84. With respect to item No. IV, i.e., Rs. 5,78,206.05, it is stated that the said amount pertains to a contract between the petitioner and the Executive Engineer, Ver-II, Project Division, Vyara, Surat towards the claim of interest relating to the contract of the year 1984. Similarly, the deduction of Rs. 2,920.00 and Rs. 8,030/- at time No. 1 and 2 are at the instance of the Executive Engineer, Ukai Left Bank Canal Investigation Division No. 2, Waldo and the deduction of Rs. 34,352.51 at item No. 3 is at the instance of Executive Engineer, Kakrapar Canal Division No. 2, Surat. On these facts, the petitioner seeks declaration that the action of the respondents in deducting the amount of Rs. 18,68,508.56 towards the amount due to be paid to different Irrigation Divisions on different accounts and deduction of Rs. 4,08,000.00 towards penalty for non-marking on cement bags from the bills submitted by the petitioner in relation to Tender Agreement No. D-3 of 1990-91 is illegal, arbitrary, unjust and violative of Art. 14 of the Constitution of India.

(2.) Mr. R. N. Patel, Executive Engineer has filed affidavit stating that the amount of Rs. 18,68,508.56 has been recovered from the petitioners towards the outstanding dues of other Irrigation Divisions on different accounts for levy cement as per the provisions and terms of the contract at Clause No. 26 of Form No. 'D' of the Tender Agreement. With respect to the recovery of Rs. 4,08,400.00, it is stated that the Government took the decision to take token penalty as a special case from all the cement companies who failed to observe the terms as per Government Memo dated 1-8-1994, i.e., marking of 'N and W.R.D." Government of Gujarat on each and every cement bag. It is admitted that Civil Suit has been filed to recover dues of Rs. 12,45,000.00 which has been registered as Special Civil Suit No. 351 of 1992 and the same is pending in the Court of Civil Judge (S.D.), Surat. Similarly, for the recovery of Rs. 5,206.05, suit has been filed which the recovery of Rs. 5,206.05, suit has been filed which has been registered as Special Civil Suit No. 464 of 1994 and the same is pending in the Court of Civil Judge (S.D.), Surat.

(3.) Thus, the question which arises for consideration in this Special Civil Application is as to whether the respondent No. 2 has any right or authority to deduct the amount in question from the petitioner's bill relating to agreement No. D-3 of 1990-91 adjusting the amount due of some other earlier contracts of 1983-84 and 1988 ?