1. Heard the parties.
2. The State has filed a supplementary affidavit in regard to the two issues raised as noticed by this court in the order dated 4.9.2006 The first issue raised was why the State will not be liable to pay interest on earnest money the refund of which is inordinately delayed. To this Sri Lalit Kishore, Senior Advocate and A.A.G 3. submits that earnest money was deposited by way of securities which were renewed from time to time and as such when returned it was returned with due profits thereon.
3. Mr. Mauli, learned counsel appearing for the petitioner submits that a reference to Clause ‘KHA’ as appended to the agreement would show that 5% of the security was in shape of N.S.C etc. and the remaining 5% was to be deducted from the bills payable to the petitioner. This clause clearly shows that to make up the total earnest money deposited there was cash component and security component, The claim of the petitioner is restricted to the cash component which it is stated at the Bar is Rs. 13,25,233/-. With regard to the balance the petitioner it is agreed will not be entitled to any interest. It is stated that there was a further deduction in respect of earnest money of about Rs. 2.5 lacs under this contract itself. The question is whether the petitioner would be entitled to interest thereon. Learned A.A.G submits that the agreement stipulates that the earnest money would not carry interest. In my view he is correct provided the earnest money was refunded within reasonable time. Here it is not disputed that even though the work was completed in May, 1992 entitling the petitioner to refund of the earnest money it was not so done. It was refunded to the petitioner only in 2002 i.e after an inordinate delay of ten years. If the State is allowed to invoke the condition of no interest being payable on earnest money it would give an arbitrary advantage to the State who would then sit over earnest money indefinitely as they would not be liable to pay interest thus causing undue loss to the other party and unjust enrichment to State. Had the State refunded the same within a reasonable time of the contract being concluded no interest would be payable but having retained it for over ten years without reasonable cause the State is liable to compensate the petitioner.
4. I accordingly, direct the Executive Engineer who is the competent authority under the agreement to examine the amount of earnest money which was held by the State in cash in respect of the petitioner's work and fix the date on which it was refunded. The State then would be liable to pay interest at the rate of 12% for the delayed refund of the petitioner's money. The same shall be calculated from one year after the last work done by the petitioner. It is directed that the same be paid within one month from today.
5. So far as second grievance as noticed in order dated 4.9.2006 with regard to payment of labour escalation cost, with reference to Clause 5 of the agreement it is submitted that it was the Executive Engineer alone who was competent to determine the liability in this regard. Even thereafter, Superintending Engineer, Chief Engineer all considered the matter in detail and clearly coming to the finding that the delay was not because of the petitioner but because of the departmental problems as such held, that the petitioner was entitled to the labour escalation cost. It is on those recommendations that the petitioner was paid the said amount of about Rs. 9.53 lacs.
6. Learned A.A.G has drawn my attention to Clause ‘GA’ at the end of the agreement and submits that the last line therein i.e
“SHRAM DAR MEN ANUSUCHIT DAR Kl BRIDHI TAB HI MANYA HOGI JABKI RAJYA SARKAR DWARA BRIDHI Kl JAYE”
With reference to the aforesaid, it is said that the admissibility of the labour escalation depended on decision of the Government. The reference to “State Government” in this clause is clearly with reference to the notification of increase in minimum wages payable to labourers. A reference to the entire Clause would show that the labour escalation cost has to be calculated not on the basis of contractor's own calculation but on labour escalation by way of change in minimum wages notified by the State Government. Thus, it would be seen with reference to Clause 5 of the agreement and Clause ‘GA’ as appended towards the end of the agreement that apparently it is the Executive Engineer who has to decide about entitlement of labour escalation clause and that had to be paid on basis of rate notified by the Government. Apparently all this was done right upto the level of Chief Engineer who also clearly opined that the petitioner was entitled to this cost and had been rightly paid the same. Thereafter, it is the Engineer-in-Chief who by his communi cation dated 9.6.2001 directs that labour escalation is not to be paid and therefore as a consequence thereof Rs. 9.53 lacs which had already been paid was sought to be recovered. It is not disputed that before the last order was passed by the Engineer-in-Chief petitioner was not given an oppor-tunity of hearing.
7. I, accordingly, set aside the said order and direct that the petitioner may be directed to raise objection against refusal to pay labour escalation cost before the Engineer-in-Chief. On Engineer-in-Chief (North) disclosing the reasons for its rejection the petitioner shall be entitled to raise the question of jurisdiction of the Engineer-in-Chief in this matter as well as all other relevant facts. The Engineer-in-Chief would hear the petitioner or his duly authorised representative if they so desire and then pass a reasoned order in this regard in respect of the claim of the petitioner and any other similar claim under the agreement. Such an exercise may be completed within two months from today. In case the petitioner is still aggrieved by the order of the Engineer-in-Chief (North) the petitioner must seek his remedy as advised.
8. Sri Lalit Kishore, A.A.G then submitted that as this Court has ordered that the earnest money should be refunded in full with interest for the delayed refund. Similarly, if labour escalation cost as already paid to the petitioner is found not payable then the same should be directed to be refunded by the petitioner alongwith interest, on parity of reasoning.
9. Having considered this submission I am of the view that the situation not being same there cannot be parity of reasoning. In so far as earnest money is concerned, it war wrongly withheld by the Government without any reasonable cause for a period of over ten years and therefore they are liable to compensate the petitioner, but so far as labour escalation is concerned, the petitioner had a right to demand the same. He made a demand. The authorities examined the same and right upto the Chief Engineer they agreed to his demand and agreed to pay the same. It was only subsequently after almost ten years of its payment that the Engineer-in-Chief (North) held otherwise. Therefore it cannot be said that the petitioner arbitrarily withheld that amount. However, there is no parity of reasoning. I, therefore, hold that if the labour escalation amount is ultimately held not payable then the petitioner may be liable to refund the same but will not be liable to pay any interest thereon. Thus, in view of the aforesaid, the writ application is disposed of with the above direction and observation.
10. Let a copy of this order be given to the State Counsel for communication to the Officer concerned.