IN THE HIGH COURT OF DELHI AT NEW DELHI
Subramonium Prasad, J.
M/s Kanti Prashad Mittal - Appellant
Versus
Union of India Through Ministry of Road Transport And Highways & Ors. - Respondents
W.P.(C) 9575 of 2023 & CM Appls. 36639 of 2023, 54152 of 2023
Decided On : 16-02-2024
Corruption - Subcontracting - EPC Agreement - Clause 4.2 - IPC Offences - Performance Certificate - Completion Certificate - Authority Representative - CBI Inquiry
Fact of the Case:
The Petitioner subcontracted work beyond the permissible limit, leading to disputes and criminal complaints. The Respondent No.3 issued Performance Certificates to the subcontractor, which was challenged by the Petitioner.
Finding of the Court:
The completion certificate issued to the Petitioner was withdrawn, rendering the Performance Certificate to the subcontractor nullified. The Court found evidence of corruption and directed a CBI inquiry into the subcontracting issue.
Issues: Validity of Performance Certificate issuance, authority to approve subcontract, withdrawal of completion certificate, and allegations of corruption.
Ratio Decidendi: The Court can direct a CBI inquiry when there is sufficient material to come to a prima facie conclusion of corruption. The completion certificate withdrawal invalidated the Performance Certificate. The Court found evidence of corruption and directed a CBI inquiry.
Final Decision: The Writ Petition was dismissed, and a CBI inquiry was directed into the subcontracting issue.
JUDGMENT
1. Vide the present Writ Petition the Petitioner seeks to challenge the Order dated 15.06.2023, passed by the Respondent No.3 herein/Executive Engineer, PWD (NH Works), Chandmari, Guwahati, Assam. The Respondent No.3 by the said Order has justified the grant of Performance Certificates to the Respondent No.7.
2. The facts, in brief, leading to the present Writ Petition, are that a Request for Proposal No. NHC/BR/21/2018/Pt/18 dated 12.09.2019 was issued by the Respondent No.1 through the Public Works Department (Govt. of Assam) to carry out: a) strengthening of pavement from Km 61/00 to Km. 69/00 and; b) widening of 1.5 meter paved shoulder on either side and strengthening from Km. 103/00 to Km. 106/00 of NH-39 under Annual Plan for the year of 2018-19 under Golaghat NH Division in the State of Assam on EPC Mode. The Petitioner herein made his bid for the said project and a Letter of Award dated 25.10.2019 was issued to the Petitioner pursuant to which a Work Order was also issued. Consequently, the Petitioner and Respondent No.1 entered into an Engineering, Procurement and Construction Agreement on 27.11.2019. The work was to be completed by 25.12.2020. At this juncture, it is pertinent to mention that Clause 4.2 of the EPC Agreement provides that if any sub-contract or works or the aggregate of such sub-contracts with any Sub-contractor exceeds 5% of the Contract price, the Contractor shall communicate the name and particulars, including the relevant experience of the Sub-contractor, to the Authority prior to entering into any such sub-contract and the Authority shall examine the particulars of the Sub-contractor from the national security and public interest perspective and may require the Contractor, no later than 15 days from the date of receiving the communication from the Contractor, not to proceed with the sub-contract. Clause 4.2(i) provides that the Contractor, whether Joint Venture or sole, shall not sub-contract any Works in more than 49% of the Contract Price and shall carry out Works directly under its own supervision and through its own personnel and equipment in at least 51% of the Contract Price. Respondent No.3 was designated as the Authority Engineer and Authority Representative to act on behalf of the Government. On 01.12.2019 the Petitioner sent a letter to Respondent No.7 for sub-contracting of the work. The said letter reads as under:
"Ref: KPM/PIRPL/GOLAGHAT/001
Date: 01/12/2019
To
Prachi Infra and Roads Pvt. Ltd.
Ward No-04, Barpathar
Golaghat, Assam-785602
Reference: Strengthening of pavement from KM 61/00 to KM 69/00 and widening of 1.5 M paved shoulder on either side and strengthening from KM 103/00 to KM 106/00 of NH-39 under annual plan for the year of 2018-19 under Golaghat NH division in the State of Assam on EPC mode (Job No. 039/AS/2018-19/186) and agreement with The Chief Engineer, PWD (NH Works), Chandmari, Guwahati-3, Assam vide agreement No. 02/CE/NH(BR)/NCB 2019-20 dated 27-11-2019
Sub: Subcontract of Work on back to back basis As per discussion held for the above referenced work regarding the various general and payment terms and conditions in respect of your proposal to execute the work, we are pleased to offer you the work on sub-contact on back to back basis.
Terms & Conditions:
This understanding is arrived between M/s Kanti Prasad Mittal hereinafter known as First Party and M/s Prachi Infra & Roads Pvt. Ltd. hereinafter known as Second Party.
1. First Part shall act as main contractor and second part as its sub-contractor for the execution of work.
2. The scope of work shall be as defined in technical specifications, design, drawings, BOQ, instruction issued time to time and conditions as in the contract document.
3. The completion time limit shall be 12 months after start of work.
4. All men, material, machinery, tools & plants, infrastructure resource, etc. as required for timely completion of work to the required specifications shall be arrange by Second Part.
5. Second part shall bear a
The court established that claims for payment under a subcontract must be pursued through appropriate civil channels, particularly when they involve disputed facts and contractual obligations.
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