M/S Celkon Impex Private Limited vs. The State Of Ap - Andhra Pradesh High Court, 31 March 2022

HON'BLE SRI JUSTICE U. DURGA PRASAD RAO

Writ Petition No.12623 of 2021

ORDER:

The petitioners implore for a writ of mandamus declaring the action of the respondents in not disbursing contractual amount for 779 Advanced Digital Class Rooms (for short, ‘ADCRs’) delivered admittedly before 02.07.2019 vide proceedings in Rc.No.6796/APSSA/MIS/A8/2018 dated 11.05.2021 under tender notification No.6796/APSSA/MIS/A8/2018/2 issued by the 2nd respondent as illegal and for a consequential direction to the 2nd respondent to clear payment due to the petitioners.

The petitioners’ case succinctly is thus:

(a) The petitioners 1 & 2 are the companies involved in the business of manufacture and supply of electronic equipment, Educational Software, Content generation and teacher training for educational services.

(b) The Sarva Shiksha Abhiyan (Government of A.P) / 2nd respondent with a view to digitize and modernize the classroom facilities in the State of A.P. issued tender notice No.6796/APSSA/MIS/A8/2018/2 on 21.02.2019 inviting bids for integration, supply and maintenance of ADCRs. The petitioners constituted into a Consortium and participated in the bidding process and became a successful bidder for a tender price of Rs.123,83,50,000/-. The work order vide Rc.No.6796/ APSSA/ MIS/ A8/2018-2 dated 08.03.2019 was issued to the petitioners specifying certain terms and conditions, one of which is that delivery shall be made within 90

days from the date of receipt of purchase order and distribution list. The items should be supplied to the respective schools and offices within 90 days from the date of the purchase order. The SSA concerned has a right to reject the articles not received within the stipulated period. In case of delay in supplies, penalty of 2% is applicable on order value. It is stated that though the work order has given on 09.03.2019, the distribution list was provided through e-mails between 15.05.2019 and 05.06.2019. (c) While so, the petitioners entered into an Agreement dated 09.03.2019 with 2nd respondent for the supply of ADCRs. As per the intimation of delivery locations, final delivery has to be made within 90 days from 15.05.2019 which ends by 15.08.2019. The petitioners accordingly complied with the terms of the work order and supplied 2000 ADCRs at various government schools across the State of A.P. much before 15.08.2019. The deliveries were made prior to 02.07.2019 and the ADCRs were commissioned and installed in various Model Primary Schools and the petitioners submitted the bills. On 04.07.2019, the 2nd respondent addressed a letter to the petitioners directing them to stop supply of ADCRs until further orders. However, all the deliveries were accepted by 2nd respondent at the respective delivery locations despite issuance of the letter dated 04.07.2019 and equipment was installed at respective schools. 1431 installations were completed and necessary training was imparted to the concerned teachers by the petitioners. In that view, it was highly arbitrary on the part of 2nd respondent to ask the petitioners to take back the installed equipment. The petitioners addressed a letter dated 08.07.2019 to 2nd

respondent bringing the said fact to its notice and with a request to release the payment. As per the Agreement dated 09.03.2019, 90% of the payment has to be made on delivery of equipment at the relevant schools. By 02.07.2019, the petitioners completed supply of 2000 units. However, the respondents have not released the amount. Subsequently the petitioners made several representations, but of no avail. In the meanwhile, the GST authorities issued summons for the alleged incorrect availment of Input Tax Credit and non-payment of GST value. Referring the same, the petitioners addressed a letter dated 17.11.2020 requesting the respondents to release the payment. Subsequently the 2nd respondent issued a letter in Rc.No.6796/APSSA/MIS/A8/2018 dated 17.11.2020 stating that a letter was addressed to the Ministry of Human Resources Department seeking permission to shift the ADCRs from Primary School to PAB approved Secondary Schools and orders were awaited and on receiving the orders, amount would be paid for supply of 2000 units. However, no payment was made thereafter. (d) Aggrieved by the inaction of the respondents, the petitioners filed WP.No.8705/2021, wherein this Court passed interim order dated 26.04.2021 directing the respondents to dispose of the representations dated 08.12.2020 and 29.01.2021 in accordance with law as an interim measure. Pursuant to the said direction, the 2nd respondent passed the impugned order in Rc.No.6796/APSSA/MIS/A8/2018 dated 11.05.2021 falsely stating therein that the petitioners have not supplied the products within time and that there was an inordinate delay and that the budget was not allocated.

Such statements, in the light of agreement entered into by the parties, are not tenable. The petitioners have duly supplied and installed the ADCRs and they deserve the amount. In the said letter, the 2nd respondent stated that a Committee was constituted which noted that the pricing of the ADCRs was exorbitant. The said statement is also incorrect. In the above letter, the 2nd respondent has admitted that by 02.07.2019, the petitioners have supplied 779 ADCRs. It was also noted in para 26 of the impugned order that 1217 ADCRs have been installed and out of them 1032 were only working. Thus, the 2nd respondent has admitted that 779 ADCRs were supplied before 02.07.2019. As such the respondents are liable to pay contractual amount for the supply of admitted number of 779 ADCRs.

Hence, the present writ petition seeking a direction to the respondents to pay the contractual amount for the supply of admitted number of 779 ADCRs.

The respondents filed counter opposed the writ petition contending thus:

(a) Sarva Shiksha Abhiyan programme was implemented throughout the country by the Central and State Governments contributing the funds in the ration of 60:40 with a view to modernize the classroom facilities in schools. The 2nd respondent issued tender notice No.6796/APSSA /MIS/A8/ 2018/2 inviting bids for supply and maintenance of 2000 nos. of ADCRs. The value of tender is Rs.82,71,70,000/- inclusive of transit insurance transport to the final destination and installation at individual schools in 5

2000 locations and for performance of the contract for a period of one year and the unit cost is Rs.4,13,585/-. The tender evaluation committee was constituted for the purpose of procurement.

(b) In response to the above tender notice, three firms viz., (1) Celkon Impex Private Limited (writ petitioner) (2) RMN Infrastructure Limited and (3) Iconma Professional Services and Solutions have participated. The petitioner stood as L1 with a quoted price of Rs.6,19,175/-. His tender was approved on 29.03.2019. The State Project Director (SPD) issued work order vide Rc.No.6796/APSSA/MIS/A8/2018-2 dated 09.03.2019 with a request to complete the work as per the specifications of the tender document. At the time of giving work order, the quoted amount for unit cost was Rs.6,19,175/- and thus total amount for 2000 ACDRs comes to Rs.1,23,83,50,000/-. Accordingly, an agreement was entered into on 09.03.2019. (c) As per the terms and conditions of the work order, delivery should be made within 90 days from the date of receipt of purchase order and distribution list. The concerned officer of SSA has right to reject the articles which were not received within the stipulated period. Further, clause 3 of the Agreement specifies the scope of work. Clause 3.2 specified the conditions for the purchase and implementation of the project.

Clause 3.2(iii) – Risk Purchase

In the event of supplier’s failure to execute the contract to the satisfaction of the purchaser, the APSSA reserves the right to: (a) Reject any part of the contract executed and withhold payment for such portion of the contract till such time the defects are rectified to the satisfaction of the purchaser.

(b) Terminate the contract by giving 2 weeks notice in writing without assigning any reason and get the contract executed by another agency at the risk and cost of the supplier.

(d) Similarly clause 5 specifies about the payment terms and liquidated damages etc. The petitioners submitted two representations dated 08.12.2020 and 29.01.2021 for payment of bills for installed ADCRs. When the same was under process, the petitioners filed W.P.No.8705/2021 seeking direction for disbursing the amounts in relation to the work undertaken by the petitioners for supply and installation of ADCRs. At the time of admission of writ petition, this Court passed an interim order on 26.04.2021 directing the respondents to dispose of the representations of the petitioners in accordance with law.

(e) As per the work order, the supply has to be completed by 06.06.2019. At the time of review of the distribution conducted on 02.07.2019, it came to the light that out of 2000 ADCRs, only 779 were supplied by the petitioners to the Districts which amounts to 38.95% of the work that too after 116 days. Keeping in view of the poor performance, a letter vide Lr.RC.No.6796/APSSA/MIS/A8/2018-2 dated 03.07.2019 was sent to the petitioners to stop the supply until further orders and simultaneously instructions were issued to all the Project Officers of SSA to stop the receipt of ADCRs from the petitioners and if already received, the same shall not be opened. In the Agreement, it was clearly specified that in case of delay in supply, penalty of 2% can be imposed.

(f) Following the G.O.Ms.No.4, IT & C Department (e-governance) dated 01.04.2010, the task of all IT related procurement for projects with 7

cost of Rs.5.00 Cr. or above shall be assigned to APTSL. The matter has been referred to ITE & C Department to constitute a Committee and submit the technical observations. Accordingly, the Committee submitted the report. The Committee opined that as per the invoice it was around Rs.4,79,090.50 ps and GEM price is Rs.3,94,019.99 ps when compared with the Government e-market price and there is a difference of Rs.85,070.51 ps.

(g) Since Samagra Shiksha is a Centrally sponsored scheme and the activities are carried out basing on the approval of the Project Approval Board of MHRD which approves the list of activities and procurement for every year and sanctions the budget and as procurement was not a committed expenditure or PAB approved procurement, letters dated 05.07.2020, 26.10.2020, 15.11.2020, 01.03.2021 and 08.04.2021 were addressed by the 2nd respondent to the Government of India seeking permission to utilize the spill over budget under ICT intervention for making payment to the supplied ADCRs.

(h) It is further submitted that as per the records, it was found that as on 07.06.2019, only 102 ADCRs were supplied and by 02.07.2019, 779 ADCRs were supplied. Accordingly, instructions were issued on 03.07.2019 to stop further supply. Though proceedings were issued, petitioners claimed in their letter dated 09.05.2020 that they supplied 667 ADCRs which cannot be considered as the respondents have already directed them not to supply after 03.07.2019. (i) As stated supra, since there was no sanction by PAB of 2018 or 2019, the 2nd respondent requested the Finance Department to allocate

budget for the supplied ADCRs. The petitioners failed to follow the agreement conditions and those ADCRs which were supplied during the agreement period only will be considered for payment and the ADCRs, which were supplied even after the direction of the respondents to stop further supply, will not be considered for payment. Thus, as per the agreement terms, the representations of petitioners were disposed vide Rc.No.6796/APSSA/MIS/A8/2018 dated 11.05.2021 that 779 ADCRs which were delivered before 02.07.2019 are eligible for payment. Challenging the said proceedings, petitioners filed the writ petition which is untenable. The petitioners have not followed the agreement conditions nor the instructions issued by the respondents but supplied on their own even though respondents clearly instructed to stop further supply and filed the writ petition. The petitioners violated the terms of the agreement at every step ignoring the letters addressed by the respondents and forcibly placed ADCRs at the school doorsteps and claimed that they have supplied the ADCRs within the contractual period which is false, illegal and arbitrary.

(j) As per clause 18 of the agreement, the disputes can be settled through the arbitration procedure. However, without taking steps for the same, the petitioners directly approached this Court and hence, they have no locus standi to file the writ petition. As stated supra, no allocation was made for the procurement in PAB 2018 or 2019 in pursuance to the letters addressed by the respondents to the Finance Department. Budget was released to a tune of Rs.31,83,61,000/- from the budget estimated provision 2021-2022 towards meeting the expenditure for ADCRs supplied till July

2019 subject to reimbursement of funds received under ICT component of Samagra Siksha for the Financial Year 2021-2022. Accordingly, the 2nd respondent vide Rc.No.6796/APSSA/MIS/A8/2018 dated 31.07.2021 and 19.08.2021 released the payment to the petitioners for supply of 314 ADCRs for an amount of Rs.13,70,39,000/- as phase-1 and Rs.12,71,73,900/- for 443 ADCRs as 2nd payment and the same is pending with the finance for clearance. Thus, as per agreement, for 757 ADCRs which were supplied, installed and working within the agreement period, the amount was released. Therefore, the writ petition is liable to be dismissed.

The petitioners filed reply and additional reply to the counter filed by the respondents and denied the contents in the counter.

(a) It is contended that as per the work order, the delivery has to be made within 90 days from the date of purchase order and distribution list. The items should be supplied to the respective schools and the offices within 90 days from the date of purchase order. Concerned officer has right to reject the articles not received within the stipulated period. In case of delay in supplies penalty of 2% is applicable on the order value. In the instant case though the purchase order was given to the petitioners on 08.03.2019, however the distribution lists were shared only on 25.05.2019. So mere issuing purchase order would not serve any purpose without supply of distribution list to the petitioners. For a period of 60 days after issuance of the purchase order, petitioners were unable to supply the items for want of distribution list.

(b) Respondents did not terminate the contract by giving any prior notice. On the other hand they simply issued proceedings dated 03.07.2019 to stop the supply until further orders which is outside the terms of the contract. The petitioners herein complied with the terms and conditions of the work order i.e., supply of ADCRs prior to 02.07.2019. The 90 days period has to be calculated starting from 25.05.2019. Therefore respondents do not have any right to claim Liquidated Damages (for short “LD) from the petitioners. With maximum LD of 10%, the petitioners have additional 5 weeks after the stipulated period of 90 days which works out till 22.08.2019 without LD and till 26.09.2019 with LD. The contention of the respondents that the work has to be completed by 06.06.2019 is unsustainable.

(c) The committee constituted by the respondents did not invite petitioners for discussion or negotiations. The price was arbitrarily reduced from Rs.5,21,570/- to Rs.4,36,500/-. Thus the supply of the required units was completed on 02.07.2019 whereas letter dated 04.07.2019 was issued by the respondents to stop the supply. No condition in the agreement empowers the respondents to order stop supply. (d) It is further contended that the respondents are precluded from reviewing the contract price for making payments as the tender evaluation committee approved the said price at the time of approving the bid of the petitioners. (e) It is contended that the respondent 2 along its counter affidavit filed proceedings dated 19.08.2021 with a calculation memo regarding the amount to be released to the petitioners. As per the said calculation memo,

penalty was levied for the alleged delay in supply of ADCRs. The respondents took the contract price quoted by the petitioners per unit @ Rs.4,13,585 (price excluding GST) and arrived total contract price at Rs.82,71,70,000/- (4,13,585 X 2000). Respondents calculated 2% penalty per week for the alleged late delivery of four weeks and arrived at the total penalty of 8% and levied on the entire contract price of Rs.82,71,70,000/-. Further, citing the Technical Committee’s price in the report of Rs.3,94,019/-, the respondents made payments at the reduced price per unit for the admitted ADCRs of 779 but levied penalty for the entire contract price of 2000 units. This is a deliberate disobedience of the Court’s order to make payment at contract price. Hence, the writ petition may be allowed.

Heard Sri D.V.Seetharama Murthy, Senior Counsel representing Sri N.Ashwani Kumar, learned counsel for petitioners, and learned Assistant Government Pleader for Education representing the respondents.

Both the learned counsel reiterated their pleadings in their respective arguments. Learned Senior Counsel Sri D. V. Seetharama Murthy would argue that in compliance of the terms of the agreement, the petitioners have supplied 2000 ADCRs to all the model primary schools in the State of Andhra Pradesh within the time and therefore they are entitled for the contractual amount. Even assuming for arguments sake, the petitioners are guilty of committing delay in supply of some ADCRs, however even as per the proceedings in Rc.No.6796/APSSA/MIS /A8/2018, dated 11.05.2021 of the State Project Director (SPD) the petitioners have distributed 779 ADCRs

as on 02.07.2019 i.e., even before the letter in Lr.Rc.No.6796/APSSA/ MIS/A8/2018-2, dated 03.07.2019 issued by the 2nd respondent instructing the petitioners to stop supply of units until further orders. In that view the respondents are bound to pay to the petitioner for 779 ADCRs at contractual rate. Without doing so, the respondents calculated the amount for 779 units on the reduced price arrived at by the technical committee for 779 units and applied 2% penalty for the entire 2000 ADCRs and deducted from the price of 779 units which is untenable. Learned Senior Counsel prayed to allow the writ petition and direct the respondents to pay for 779 ADCRs at contractual rate without any deductions.

Per contra, learned Assistant Government Pleader for Education while admitting that 779 ADCRs were supplied by 02.07.2019 i.e., prior to the letter dated 03.07.2019 instructing the petitioners to stop further supply of ADCRs in view of delay in supplying of the units, argued that the petitioners are entitled to receive the amount for 779 units not on contractual rate but on the value arrived at by the technical committee and that too after applying the penalty of 2% per week.

The point for consideration is whether there are merits in the writ petition to allow ?

Point: I gave my anxious consideration to the pleadings and respective arguments of both the counsel. It should be noted that the determination of the writ petition pivots on the narrow compass of the admitted facts. The admitted facts are that pursuant to the notification

No.6796/APSSA/MIS/A8/2, dated 21.02.2019 of the respondents inviting tenders for supply of 2000 ADCRs, three companies have responded of which the petitioner’s company stood as L1 with quoted price of Rs.6,19,175/- per unit which includes supply, transport, installation of hardware, NCERT mapped content, teacher training, one year warranty and also annual maintenance for a period of 4 years. Both the parties have entered into agreement dated 09.03.2019 and work order dated 09.03.2019 was also issued by the respondents in favour of the petitioners for supply of 2000 ADCRs at the quoted unit cost of Rs.6,19,175/- (inclusive of taxes and transport). To this extent there is no demur and controversy.

10.

Now the whole controversy revolves around the fact that according to the petitioners, though work order was issued on 09.03.2019, however distribution list showing the locations of model primary schools where the delivery has to be effected was provided vide e-mails between 15.05.2019 and 05.06.2019 and therefore the condition mentioned in the work order that delivery should be made within 90 days from the date of receipt of purchase order and distribution list shall be given effect from 15.05.2019 only. In other words the 90 days stipulated for delivery will commence from 15.05.2019 but not from 09.03.2019 i.e., the date of work order. It is the contention of the petitioners that they supplied around 1985 ADCRs before 15.08.2019 i.e., within 90 days period. However, the respondents have unduly calculated the 90 days period from the date of work order i.e., 09.03.2019 and claimed that the delivery of 2000 ADCRs should be completed by 06.06.2019 and since the petitioners have not completed the 14

delivery, by that date, they are liable for penalty. It is also the case of the petitioners that contrary to the agreement, which stipulate the contractual price, respondents appointed a committee and the said committee without giving notice to the petitioners, has prescribed a low unit price which is unjust and illegal. Basing on the said report, the respondents issued notice to the petitioners on 03.07.2019 to stop further supply of the units alleging that petitioners committed delay and that by the date of the said letter the petitioners supplied only 779 units and therefore the petitioners are entitled for 779 units at the reduced price and also after deducting penalty, which is untenable.

11.

On the other hand, respondents’ claim is that from the date of work order the petitioners have to supply and install 2000 ADCRs within 90 days i.e., by 06.06.2019. However the petitioners committed gross delay in supplying units and therefore the respondents issued letter dated 03.07.2019 instructing the petitioners to stop further supply of units and by 02.07.2019 the petitioners supply only 779 units and therefore the petitioners are entitled for 779 units at the price arrived at by the Committee appointed by the respondents that too after effecting the penalty for the delay.

12.

It should be noted that this writ petition is filed by the petitioners for the payment of admitted supply of 779 ADCRs at contractual price and not for the payment of entire 2000 ADCRs. In that view, as already stated supra, the determination of this writ petition mainly pivots on admitted facts alone and not on controversial facts such as whether the petitioners committed

delay in supply of ADCRs and on that count whether the respondents are entitled to impose penalty and also whether the respondents are entitled to appoint a committee after entering into agreement with the petitioners and whether the said committee can suggest unit price lower than the one contracted by the parties. Such controversial aspects can be appreciated and resolved only when the petitioners make a claim for remaining ADCRs. Therefore, this writ petition is confined to the aspect whether the petitioners supplied 779 ADCRs before the letter Lr.Rc.No.6796/APSSA/MIS/ A8/2018-2, dated 03.07.2019 issued by the 2nd respondent instructing the petitioners to stop further supply of ADCRs until further orders and if so, whether the petitioners are entitled to the payment for 779 ADCRs at contractual rate.

13.

In that context, when the material papers filed by the petitioners and respondents are perused, no doubt work order vide Rc.No.6796/APSSA /MIS/A8/2018-2, was issued by the respondents to the petitioners for supply of 2000 ADCRs at unit cost of Rs.6,19,175/- (inclusive of taxes and transport) on 09.03.2019. In the said work order the delivery term is mentioned as 90 days from the date of receipt of purchase order and distribution list. The distribution list is not appended to the work order in the material papers filed by the both parties. Therefore, the submission of the petitioners that distribution list was not issued along with the work order has to be believed.

14.

It is the case of the petitioners that the distribution list was sent to them by way of e-mails between 15.05.2019 and 05.06.2019 and therefore the 90 days period has to be calculated from 15.05.2019 which ends by 15.08.2019. Be that it may, the petitioners’ claim is that even as per the letter dated 03.07.2019 sent by the respondents, admittedly petitioners supplied 779 ADCRs for which they deserve amount at contractual rate. In this context, a perusal of the proceedings in Rc.No.6796/APSSA/MIS /A8/2018, dated 11.05.2021 of the State Project Director/ 2nd respondent shows that during the review of the distribution it was found that as on 02.07.2019, 779 ADCRs were supplied by the petitioners to the Districts out of 2000 ADCRs. This fact was reiterated in the para-16 of the counter affidavit also. Thus the respondents have admitted that 779 ADCRs were supply prior to the letter dated 03.07.2019 issued by the 2nd respondent instructing the petitioners to stop further supply of ADCRs. Therefore, for the admitted supply of 779 ADCRs the respondents are liable to pay the amount.

15.

Then the next aspect is, at what rate the respondents are liable to pay for 779 ADCRs. The petitioners’ claim is that since there is no delay on their part, as they have time till 15.08.2019 and even before that date, they delivered 1985 Units, and hence they are entitled payment at contractual rate. On the other hand, the respondents would contend that the petitioners ought to have supplied units before 06.06.2019 and since they failed to supply all the 2000 units before that date penalty has to be imposed and 17

further, the petitioners are entitled at the rate prescribed by the technical committee but not at contractual rate.

16.

I am unable to accept the contention of the respondents. It is already noted that along with the work order dated 09.03.2019 respondents have not given the delivery/distribution lists and they were provided only between 15.05.2019 and 05.06.2019. Therefore, arguably, the petitioners can supply units within three months from 15.05.2019 and so far as 779 units are concerned, they have admittedly delivered those units by 02.07.2019. Therefore, petitioners are entitled payment for 779 units at contractual rate but not on reduced rate suggested by the committee and that without applying penalty. It should be made clear that this observation is without prejudice to the respective contentions of the parties and in case, in future, the petitioners make a claim for remaining ADCRs by taking up legal proceedings, respondents are at liberty to vindicate their stand that the petitioners are entitled at the rate suggested by the committee appointed by the respondents but not at the contractual rate and that petitioners committed delay and therefore the respondents can impose penalty. Such facts can be pleaded and proved by the respondents, in which case basing on the order in such legal proceedings, the amount now paid can be adjusted.

17.

So far as the contention of the respondents that in view of availability of arbitration clause the writ petition is not maintainable is concerned, I find no force in it because the claim is now confined to only the supply of admitted number of ADCRs.

18.

Accordingly, in the light of above observations, this Writ Petition is allowed and the respondents are directed to pay to the petitioners for 779 Advanced Digital Class Rooms (ADCRs) at the contractual rate per unit within six (6) weeks from the date of this order, failing which they shall pay interest @ 12% p.a. from the date of filing of the writ petition till the date of realization. The respondents are entitled to give credit of any amount if paid to the petitioners pending the writ petition. No costs. As a sequel, interlocutory applications pending, if any, shall stand closed. _________________________ U.DURGA PRASAD RAO, J 01.04.2022 krk

HON’BLE SRI JUSTICE U.DURGA PRASAD RAO

WRIT PETITION No.12623 of 2021

01st April, 2022

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