RAMA ENGINEERING CONSTRUCTIONS Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) The Writ Petition is filed challenging the. validity of the order issued by the Government under G.O.Ms.No. 118, Irrigation and CAD Department, dated 29-6-1998 and the consequential action in pursuance of the said G.O., and for consequential relief thereof.

(2.) The facts leading to the case are as follows: The petitioner is an Engineering Constructions Company having obtained special class contractor licence. It has been undertaking various projects/works including the World Bank funded works. The Government called for a tender for excavation of Srisailam Right Branch Canal (for brevity 'SRBC') from 116.00 Kms. To 141.00 Kms. Including construction of structures and lining under Package No. XIII. Accordingly, the tender placed by the petitioner was accepted and an agreement was concluded between the petitioner and the respondents on 8-5-1991 at a cost of Rs. 23.57 crores duly following the World Bank norms. According to the petitioner, the work was started on 2-7-1991 and it was to be completed by June, 1994. However, on account of additional work, time was extended and finally work was completed by 30-9-1995. The petitioner submits that during the excavation work, it was brought to the notice of the Department that quantity of F & F Rock was much more than what was indicated in the estimate. It is to be stated that in the estimate, it was mentioned as 119 cubic metre F & F Rock. It is the case of the petitioner that on account of initial inadequate improper investigation made by the Department, the enormous proportion of the F & F Rock was left out. On account of high proportion of F & F Rock, the quantity was assessed at 6,94,824 Cubic metre as against 119 cubic metre. The rate as agreed between the petitioner and the respondents was Rs. 126/- per cubic metre and it became final. The petitioner executed the F & F Rock excavation work for a major portion on the basis of Rs. 126/- per cubic metre. But, however, the Department initiated plans to reduce the rate which was finalized between the parties and a meeting has taken place in this regard on 11-6-1993 and the Superintending Engineer fixed the rate at Rs. 90/- per cubic metre. This was protested by the petitioner. However, the Government issued the impugned order under G.O.Rt.No. 118 dated 29-6-1998 directing the Chief Engineer to fix the rate at Rs. 90/- per cubic metre in respect of F & F Rock excavation. The said order of the Government is assailed in this Writ Petition.

(3.) It is also stated that the Chief Engineer having found that it became necessary to excavate large extent of F & F Rock has informed the Government to take decision in this regard by his letter dated 31-12-1994 to fix proper rate. As stated earlier, initially, F & F Rock was estimated at 119 cubic metre, but in actual execution it came to 6,94,824 cubic metre. The Chief Engineer also suggested for constitution of appropriate committee to assess the situation and settle the issues. Accordingly, the Government issued G.O.Ms.No. 134 Irrigation & CAD Department, dated 16-9-1995 decided to obtain the views of the Chief Technical Examiner regarding the rate of payment for F & F and H.R. Rock. Further, it was directed to constitute a Committee to resolve certain issues relating to the contract management with the Engineer-in-Chief as Chairman, Commissioner of Tenders, Chief Technical Examiner and Dy. Financial Advisor as Members of the Committee. The Committee was directed to go into the details of this case and make recommendations to the Government within 45 days for better management of the contracts especially those financed by the World Bank in order to protect the interest of the Government. However, the members of the Committee were changed in G.O.Rt.No. 708 dated 19-10-1995 and in place of the Chief Technical Examiner, one Mr. S. Viswapathi Sastry, Director, APERL was substituted and one more member viz., the Chief Engineer (P), Srisailam Project was added as Member-Convener of the Committee. The Committee thus constituted by the Government went into the details of the contract with reference to the rates to be paid to the Contractor in view of the situation, which arose during the excavation of Rocks. It referred to various provisions of the Agreement and finally recommended the payment at the rate as fixed in the Agreement in respect of F & F Rock and it has recommended certain other things in respect of their items for which we are not concerned. But, however, the Government without taking into consideration any of the recommendations of the Committee, basing on the letter dated 31-12-1994 and also the advice of the Additional Advocate General, issued the impugned order fixing Rs. 90/- per cubic metre for F & F Rock for the entire extra work done by the Contractor and directed to recover the amount, if any, over and above Rs. 90/- per cubic metre paid to the Contractor. It is submitted that the impugned G.O., is arbitrary and violative of principles of natural justice offending Article 14 of the Constitution of India. It is submitted that when once a rate was fixed between the petitioner and the respondents at Rs. 126/- per cubic metre and if any additional work was detected during the execution of the work, it should be paid at the agreed rate of Rs. 126/- per cubic metre and fixing Rs. 90/- per cubic metre is highly arbitrary and, therefore, the said action is amenable for judicial review under Article 226 of Constitution of India. It is also stated in the writ petition that the petitioner is not challenging the terms of the agreement entered into between the petitioner/contract or and the Government and they are not seeking any relief in pursuance of the contractual obligation between the parties. They are challenging the validity of the impugned G.O., which has affected their right. Therefore, it is stated in the affidavit filed in support of the Writ Petition that the challenge was only confined to validity of the impugned G.O., and consequential direction to recover the excess amount.