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IN THE HIGH COURT OF ORISSA AT CUTTACK
B.R.SARANGI, G.SATAPATHY, JJ.
M/s. SBM Nirman Construction Private Limited – Appellant
Versus
State of Odisha and Others – Respondents
W.P. (C) No. 31673 of 2021
Decided On : 10-11-2022
For the Appellants : P.C. Nayak, S.K. Rout, R.K. Rout
For the Respondent: P.P. Mohanty
Refusal to grant incentives based on contract value below threshold was arbitrary and unconstitutional, violating principles of equality.
Headnote:(A) Constitution of India, Articles 226 & 227 - Writ petition for quashing order denying incentives claimed by contractor - Incentives refused on grounds of contract value below Rs.3 crores - Court held refusal arbitrary, unreasonable and violative of Article 14 - Recommended by authorities yet disregarded without justification - Incentives granted for early completion of work. (Paras 1, 10, 11)
(B) Contract Law - Incentives for early completion - Conditions for eligibility must be assessed as per contract terms, not amended unilaterally post-execution. (Paras 6, 11)
Facts of the case:
Petitioner, a registered contractor, executed government road work valued originally at Rs.3.67 crores but revised to Rs.2.95 crores. Incentives were denied based on the revised amount being below Rs.3 crores, despite early completion of the work.
Findings of Court:
The petitioner entitled to incentives at 5% of the revised contract value due to early completion, with the denial by authorities deemed legally unsustainable.
Issues: Whether refusal of incentives based on revised contract value was lawful and in line with equality principles enshrined in Article 14 of the Constitution.
Ratio Decidendi: Court emphasized that the original contract terms defined eligibility for incentives, and a mere reduction in contract value post-completion cannot nullify entitlement to incentives.
Result: Writ petition allowed; incentives granted.
| Table of Content |
|---|
| 1. petitioner's claim for incentive refusal. (Para 1 , 2) |
| 2. opposition argument against incentives based on contract value. (Para 3 , 4) |
| 3. court's observations on dispute and contract conditions. (Para 5 , 6 , 10) |
| 4. principles of equality and entitlement to incentives. (Para 8 , 9 , 11) |
| 5. final decision to quash refusal of incentives. (Para 12) |
JUDGMENT :
G. SATAPATHY, J.
1. The petitioner by way of this writ petition under Articles 226 & 227 of the Constitution of India seeks for quashing of order passed on 14.07.2021 by opposite party No.1 under Annexure-7 refusing to grant incentives to the petitioner as illegal, arbitrary and unreasonable as well as violative of Article 14 of the Constitution of India and consequently, directing opposite party No.1 to approve incentives in favour of the petitioner in accordance with the recommendation made by the authority under Annexure-8 within a stipulated time along with interest @ 18% with effect from the date of completion of the work.
2. The facts under which the petitioner has filed this writ petition are that the petitioner is not only a private limited company registered under the Companies Act but also is a Super Class Contractor under the P.W.D. Contractor Registration Rules, 1967 and it has also executed number of works satisfactorily in different departments of Government of Odisha including the opposite parties. Pursuant to a notice inviting tender by the Superintending Engineer, Northern (R&B) Circle, Sambalpur-opposite party No.4 vide Detailed Tender Call Notice (D.T.C.N.) in e-Procurement Notice Bid Identification No. SENC(R and B)/21/2013-14 No. 3872 dated 19.10.2013 in respect of four numbers of works, the petitioner successfully bided and executed the work stated at serial No. 2 of the tender for S/R to Rampur-Govindapur road from 0/0 km. to 6/500 km. for 2013-14 in the district of Sambalpur with approximate value of work at Rs.396.04 lakhs with date of commencement of work from 17.12.2013 to stipulated date of completion on 16.09.2014 by signing the agreement on 17.12.2013 at an agreement value of Rs.3,67,92,061/-. In the course of execution of work, the Government revised the agreement value by deducting 19.70% as per OPWD Code to Rs.2,95,43.535/- which was approved on 16.09.2016 in terms of Clause 3.5.5.(v) and 6.3.17 of the OPWD Code but the said revision was not for the fault of the petitioner. Despite completion of work before the stipulated date and recommendation made by Executive Engineer, when the authority did not release the incentive the petitioner has approached this Court in W.P.(C) No. 5910 of 2020 which was disposed of on 18.02.2020 by this Court giving liberty to the petitioner to file a representation before opposite party No.1 and in such event, the opposite party No.1 shall consider and dispose of the same by a reasoned order within a period of thirty days of receipt of representation but as Opposite Party No.1 did not comply, the petitioner filed CONTC No.4636 of 2020, which is still pending though the representation was disposed of on 14.07.2021 refusing to allow incentives to the petitioner on the ground that the revised contract value of the road work is less than Rs.3 crores and as such, the petitioner does not qualify for incentives as per addendum to Note No.1 to Para-3.5.5.(v) of OPWD Code Volume-I but such refusal to pay incentives to the petitioner is illegal, arbitrary and unreasonable as well as violative of Article 14 of the Constitution of India. It is further stated by the petitioner that the authority has failed to consider the recommendation of the Chief Engineer in favour of the petitioner in terms of Clause-47 of D.T.C.N. vide letter No. 19947 on 19.05.2021 for payment of incentives for completing the work within 183 days as against the revised time to execute the work within 220 days which was proportionately calculated for the revised contract value at Rs.2,95,43,535/- and as such, the petitioner is entitled to 5% i
