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ORISSA HIGH COURT: CUTTACK
B.R.SARANGI, SAVITRI RATHO, JJ.
S.B.M. Nirmaan Construction Pvt. Ltd. - Petitioner
Versus
State of Orissa and others - Opp. Parties
W.P.(C) No. 3748 of 2020
Decided On : 29-03-2022
For the Appellant :M/s. Bibhu Prasad Das, A. Mohanty, C. Pattnaik, S. Samal, G. Mohanty and S. Nayak, Advocates.
For the Opp. Parties :Mr. P.P. Mohanty, Additional Govt. Advocate
The state is legally obligated to honor contractual commitments, and arbitrary denial of agreed-upon bonuses for early work completion is impermissible.
Headnote:(A) Constitution of India - Articles 14 and 226 - OPWD Code Vol-I - Clause 120(2.4.1) - Incentive for early completion - Rejection of payment claim of petitioner for bonus despite early completion is invalid as per established practices and provisions, resulting in arbitrary denial. The petitioner completed work 131 days early but was denied payment due to alleged incomplete work, labelled an afterthought by the Court. (Paras 1, 2.4, 10, 19, 36)
(B) Promissory Estoppel - The State is bound by its promises in a contract; failure to act upon recognized claims amounts to breach and justifies judicial intervention. (Paras 19, 36)
Facts of the case:
The petitioner executed a construction project ahead of schedule under agreement No. 1782 P1, but its claim for bonus was rejected based on unfounded allegations of incomplete work, despite prior acknowledgments of timely completion.
Findings of Court:
The denial of payment was arbitrary; the claim for bonus of 10% amounting to Rs.1,33,76,755 was upheld as per the agreement and codal provisions, ordered to be disbursed within two months.
Issues: The central issue was the legitimacy of the denial of bonus for early completion based on alleged incomplete work.
Ratio Decidendi: The court reinforced that the state must honor its commitments to contractual agreements and cannot retract recognized entitlements without valid grounds.
Result: Writ petition allowed, payment directed.
| Table of Content |
|---|
| 1. facts relating to tender process and entitlement for incentive. (Para 2) |
| 2. petitioner's arguments for entitlement to incentive. (Para 3 , 4 , 5) |
| 3. court's observation on representation submission and expected timelines. (Para 6 , 7) |
| 4. legal principles on promissory estoppel and entitlement for bonus. (Para 10 , 11 , 19) |
| 5. final order directing payment of bonus to the petitioner. (Para 36 , 37) |
JUDGMENT :
DR. B.R. SARANGI, J.
The petitioner, which is a private limited company registered under the Companies Act, 1956 and carrying on business of construction in the State, has filed this writ petition seeking to quash the order dated 26.09.2019 under Annexure-16, whereby the claim of the petitioner-company for payment of bonus/incentive for early completion of the work, in compliance of the direction of this Court contained in order dated 20.10.2016 passed in W.P.(C) No. 17986 of 2016, has been rejected on the ground of absence of completion of the technical activities. The petitioner-company has further prayed for direction to opposite party no.1 to grant such consequential relief of bonus/incentive for early completion of the work, in terms of the OPWD Code read with the terms and conditions of the agreement executed between the parties, within a stipulated period.
2. The facts of the case, in brief, are that a Notice Inviting Tender (NIT) was published in local daily on 11.06.2014 inviting bids for the work “Widening & strengthening of existing single lane carriageway to 2- lane from Km.159/200 to 167/200 of Kuchinda-Bamara road (SH-24) under SHDP for the year 2014-15”. Pursuant to such NIT, the petitioner-company participated in the tender process and ultimately having been qualified, the tender was allotted in its favour. As a consequence thereof, an agreement was executed between the Executive Engineer, Sambalpur (R&B) Division, Sambalpur and the petitioner-company, vide agreement No. 1782 P1 of 2014-15, for an estimated cost of Rs.14,01,81,224.00 and agreement value of Rs.13,86,25,212.00. As per the terms of the agreement, the work was to be commenced from 09.01.2015 and completed on 08.01.2016.
2.1 The tender call notice for the work in question at clause 120 stipulates about the progress of the work and re-scheduling programme, extension of completion date, compensation for delay, bonus for early completion etc. Therefore, as per the conditions stipulated in the Technical Bid Documents/ Detailed Tender Call Notice, the tenderer is entitled to get bonus/incentive, if the work is completed within the stipulated period, and the amount of bonus/incentive is to be calculated taking into consideration the period within which the work is completed.
2.2 The petitioner-company started the work, in accordance with the terms and conditions of the agreement, with effect from 09.01.2015 and completed the same on 30.07.2015, though the same was scheduled to be completed by 08.01.2016. Thereby, the petitioner- company completed the work ahead of 131 days. Thus, the petitioner-company is entitled to get bonus/incentive in terms of sub-clause 2.4.1 of clause 120 of the agreement. The petitioner-company, through its Managing Director, intimated about the completion of the work to the Executive Engineer, (R&B) Division, Sambalpur-opposite party no.2, vide his letter dated 30.07.2015, that the assigned work has been completed more than five months ahead of the stipulated date of completion and, therefore, requested to finalize the work bill, including the bonus/incentive, at the earliest as per sub-clause 2.4.1 of clause 120 of the agreement. The Assistant Executive Engineer, (R&B) Sub-Division, Kuchinda on the very same day, i.e. on 30.07.2015 intimated opposite party no.2 that the work in question has been completed in all respect by the petitioner- company, by 30.07.2015, i.e. prior to the scheduled date of 08.01.2016. The Executive Engineer, (R&B) Division, Sambalpur-opposite party no.2, also while acknowledging the completi
