The government cannot withhold payments to a contractor beyond actual loss, and arbitrary liquidated damages are unlawful when no loss is established.

JUDGMENT

The petitioner is a PWD contractor, who was entrusted with the work covered by Ext.P2, i.e.,improvement and widening of National Highway – KV Jetty road from Ch0/000 to 3/800, which is within the jurisdiction of the respondents 2 to 4. Earlier, as per Ext.P10 order passed by the 2^nd respondent, invoking Clause 2116.2.1 of PWD Manual, the work of the petitioner was terminated at the risks and cost of the petitioner, alleging that, the petitioner failed to complete the work within the stipulated time. It was alleged that the petitioner could complete only 35% of the work and despite the extension of time granted, the petitioner could not complete the work.

2. W.P.C.No.17372 of 2020 was filed by the petitioner and the said writ petition was disposed of by this Court as per Ext.P11 judgment, by which the matter was directed to be reconsidered by the Government. Thereafter, the Government passed Ext.P12 order, rejecting the contentions of the petitioner and upholding the termination of the contract at the risks and cost of the petitioner. Ext.P10 and P12 orders were challenged before this Court by filing W.P.C.No.19081 of 2021. During the pendency of the writ petition, an interim order was passed, staying coercive proceedings against the petitioner, but permitting the Department to go with the re-tender of the work. Accordingly, work was re-tendered and a new contractor was entrusted with the work.

3. The writ petition submitted by the petitioner was disposed of as per Ext.P13, wherein, this Court came to a finding that the delay in completing the work was not attributable to the petitioner and in the said judgment, this court had taken note of the admission made by the respondents in the statement filed in the said writ petition that, consequent to the re-tendering of the work, no loss was caused to the Government. Taking into consideration all the above in Ext.P13 judgment, direction was issued to the 2^nd respondent to re-consider the matter in the light of the observations and to find out whether the actual loss, if any, suffered. It was also directed that, the amount due to the petitioner towards the work undertaken by him shall be disbursed except any amount towards damages and loss, if any, caused to the Department.

4. Acting upon Ext.P13 judgment, the 2^nd respondent passed Ext.P15, wherein, he issued a direction to the 3^rd respondent to disburse the amount due to the petitioner for the work he had actually undertaken. However, when consequential order was passed by the 3^rd respondent, based on the same, as per Ext.P16, 6% of the amount was fixed as the liquidated damages and after adjusting the same, from the total amount receivable by the petitioner, that comes to Rs.29,78,900/-, the balance amount payable to the petitioner was determined as Rs.4,49,333/-. Accordingly, this amount was directed to be disbursed. Petitioner has approached this Court, being aggrieved by the same and the reliefs sought by the petitioner are as follows:

“i. To issue a writ of certiorari or other appropriate writ order or direction to quash Exhibit-P16 order dated 28-2-2024 issued by the Executive Engineer in so far as it has directed recovery of 6% of the value of the total amount of the work completed by the Petitioner and Exhibit- P17 order dated 24-5-2024 issued by the Executive Engineer PWD Roads and Bridges (third respondent) in so far as it directs 6% recovery from the total amount due to the Petitioner towards the value of the total work completed by the Petitioner; ii. To issue a writ of mandamus or other appropriate writ order or direction directing respondents 1and 2 to release to the Petitioner the total amount of the work completed by the Petitioner as stated in Exhibit-P15 order;

iii. To grant to the Petitioner such other and further reliefs that may be prayed for from time to time and