MS GIRDHARILAL Vs. UNION OFINDIA

JUDGEMENT

(1.) The petitioner was awarded a contract for construction of technical structure at Uttarlai in the year 1988 in pursuance of petitioner's tender dated 30th January, 1988, under the terms of the agreement. The petitioner was entitled to escalation in the agreed rates if the increase in the price/wages is more than 10 percent and the reimbursement is only to the extent an increase is beyond 10 percent. The petitioner claimed reimbursement of increased price of material and wages through his running bills. However, instead of granting escalation, amount to the extent of Rs. 884987.10 had been deducted form already cleared running bills. This result has been arrived at, according to learned counsel for the petitioner, by giving effect to the formula for calculating excalation contrary to the directives issued by the Head Office of the respondents wherein it was clarified that if the calculation as per the formula works cut to negative and result is in minus; the escalation is not covered under the formula for the purpose of reducing the agreed rates and making recovery. He contends that this deduction having been made without notice to the petitioner, is void, having been made in breach of principles of natural justice.

(2.) The fact that the deduction from running bills has been made by working but said formula without notice to the petitioner, is not disputed.

(3.) Learned counsel for the petitioner further points out in this regard that a Division Bench of this Court in Bharat Construction vs. State of Rajasthan and ors. (D.B. Special Appeal No. 330/93, decided on 17.8.1993, has taken the view that where such deductions are made without notice, action is bad, being arbitrary and un-reasonable and violative of the principles of equity guaranteed under Art. 14 of the Constitution and, the Court directed the respondents in the aforesaid case to afford the petitioner a post-decisional hearing and to act in accordance with the decision 1994 (3) Rohitash Singh V. District & Sessions Judge, Dungarpur & Ors.