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IN THE HIGH COURT OF JUDICATURE AT PATNA
CHAKRADHARI SHARAN SINGH, MADHURESH PRASAD, JJ.
Fulena Construction Pvt. Ltd. through its Director, Shashi Singh – Appellant
Versus
The State of Bihar – Respondent
Civil Writ Jurisdiction Case No.3840 of 2021
Decided on : 10-08-2022
Payment Dispute - Civil Contract - Arbitration and Conciliation Act, 1996 - Section 7, Article 212 - The court addressed the petitioner's claim for payment against the State Government of Bihar for work done under an agreement. The court found that the State Government admitted its liability to pay the petitioner, but delayed payment due to objections raised by the Comptroller and Auditor General of India (CAG). The court held that the matter did not require arbitration as there was no dispute, but rather an admission of liability by the State Government. The court also rejected the State's objection based on Article 212 of the Constitution, stating that it did not apply as the petitioner's claim was against the State Government for payment of dues arising from a contract. The court directed the State Government to ensure payment of the admitted amount to the petitioner within three months.
Fact of the Case:
The petitioner, a Private Limited Company registered as a Class-I Civil Contractor, sought payment of an admitted amount of Rs.7,76,88,398=00 from the State Government of Bihar for work done pursuant to an agreement. The State Government admitted its liability to pay but delayed payment due to objections raised by the CAG. The petitioner approached the court nearly 13 years after the amount became due.
Finding of the Court:
The court found that the State Government admitted its liability to pay the petitioner, but delayed payment due to objections raised by the CAG. The court rejected the State's objections based on delay, laches, and the arbitration clause, and directed the State Government to ensure payment of the admitted amount to the petitioner within three months.
Issues: The issues included the delay in the petitioner's approach to the court, the State's objections based on delay, laches, and the arbitration clause, and the pending consideration of the CAG report by the PAC of the Bihar Legislative Assembly.
Ratio Decidendi: The court held that the State Government's admission of liability to pay the petitioner, coupled with the delay in payment due to objections raised by the CAG, warranted the court's intervention. The court rejected the State's objections based on delay, laches, and the arbitration clause, and directed the State Government to ensure payment of the admitted amount to the petitioner within three months.
Final Decision: The court allowed the writ application and directed the Principal Secretary, Water Resources Department, Government of Bihar to ensure payment of the admitted amount to the petitioner within three months.
JUDGMENT :
CHAKRADHARI SHARAN SINGH, J.
The petitioner claims to be a Private Limited Company registered as a Class-I Civil Contractor under the State Government of Bihar. This writ application has been filed through its Director seeking a direction to the respondents to pay to it an admitted amount of a sum of Rs.7,76,88,398=00 for the work done by it pursuant to an agreement bearing No. 1S.T.B./2007-08.
2. It is the petitioner’s case that the claimed amount could not be paid by the respondents on the ground of non-allotment (paucity) of funds. In view of the petitioner’s definite claim in the writ petition that the amount is admitted and has not been paid because of non-availability of fund, this Court had passed following order in this case on 22.01.2022 :-
For the said purpose, list this case on 14.02.2021.”
3. In compliance of the said order dated 22.01.2022, a supplementary counter affidavit has been sworn by Mr. Sanjay Kumar Agrawal, the Principal Secretary, Water Resources Department, Government of Bihar. The averments made in the writ application regarding the petitioner’s claim of its entitlement of the amount has not been specifically denied; neither in the counter affidavit which was earlier filed in the present writ application nor in the supplementary counter affidavit sworn by the Principal Secretary of the Department filed under the orders of this Court dated 22.01.2022.
4. We have considered it appropriate to notice the facts of the case as disclosed in the supplementary counter affidavit sworn by the Principal Secretary of the Department to address the petitioner’s grievance as raised in the writ application, as in our opinion, these very facts not only support the petitioner’s claim rather they substantiate it.
5. The relevant facts as culled out from the supplementary counter affidavit are that the petitioner had entered into an agreement with the Executive Engineer, Flood Control Division, Naugachia vide the aforesaid agreement No. 1-S.T.B./2007-08 on 18.03.2008 for execution of “Anti Erosion works for protection of Khairpur, Raghopur, Akidatpur villages located in upstream of Vikramshila bridge from erosion of river Ganga”. The agreement value of the work was Rs. 18,77,94,163=00 that was to be completed by 31.05.2008. The work could not be completed before start of flood season as was stipulated in the agreement, rather it was completed by 07.07.2008. However, subsequently, the petitioner was granted extension of time vide departmental letter No. 2581 dated 29.09.2012. As regards payment to the petitioner against the work executed by it is concerned, it was paid a sum of Rs. 6.29 crores during the period of execution of the work through four running account bills but 5th and final bill amount for a sum of Rs. 7,76,88,398=00 could not be paid to the petitioner. Its claim was directed to be placed before a Liability Committee of the Department vide departmental letter No. 2640 dated 13.10.2011. The Liability Committee examined the claim of the petitioner in its meeting held on 18.10.2012 and recommended for sanction of payment of the said amount to the petitioner. In the meanwhile, a report of the Comptroller and Auditor General of India (CAG for short) for the year ending on 31.03.2010 was issued. The CAG, in Clause 2.2.3 of the report, pointed out that the entire expenditure of Rs. 10.27 crores done on execution of the said work was futile. The aforesaid amount included the amount of Rs. 6.29 crores paid to the petitioner and the amount of Rs. 3.98 crores spent by the Department on the purchas
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