CLAIM No.

3:

CLAIM AGAINST THE PENALTY IMPOSED BY THE RESPONDENT:

1.1.1 It is pertinent to mention that the period of the contract was for the term of one year
effective from 06.09.2018 to 05.09.2019. However, owing to the diligence and excellent
quality of service and performance rendered by the claimant, the respondent was pleased
to extend the contract by a further period of three months i.e. till 05.12.2019, on the same
terms and conditions.

1.1.2 It is stated that despite the claimant being in full compliance of the contract, rendering
excellent services and fulfilling its contractual obligations as required, the respondent
arbitrarily and without affording any opportunity or hearing to the claimant, illegally and
unlawfully withheld an amount of Rs. 16,15,000 ( Rupees sixteen lakhs fifteen thousand
only) from the bills and invoices of our client as per the details provided vide order dated
16.02.2021, on account of penalty for alleged shortfall of traffic marshals at NDLS.

1.1.3 In the abovementioned order levying penalty dated 16.02.2021 you imposed a penalty for
alleged infractions said to have been committed in the months of-
 March,, 2019
 April, 2019
 June, 2019
 September, 2019
 October, 2019
 November, 2019
 December, 2019
It is respectfully submitted that the attendance as marked by the respondent for the
months of March to December,2019 are incorrect and not borne from the record
maintained in the register.
1.1.4 Subsequently, the claimant on 22.08.2022 wrote to the respondent informing him that in
terms of Section E and clause 63 of the contract, since no deficiency was brought to the
notice of the claimant during the subsistence of the contract, no penalty could have been
imposed.
1.1.5 Thereafter, to the utter shock of the claimant, the respondent issued a letter in September
2022 in reply to the abovementioned letter claiming that the respondent had informed the
claimant on multiple occasions about the irregularities found during the currency of the
contract which were acknowledged by the claimant. The respondent further alleged that
the penalties on account of unauthorized absentees of the claimant’s traffic marshals were
levied as per terms of the contract which the claimant was duly informed about.
1.1.6 It is submitted that the necessity of invoking the clause 54 (Penalty for failure to deploy
adequate staff) has never arisen as per the respondent’s date and hence it can be safely
 concluded that the alleged shortfall being made out by the respondent to levy penalty was
never of any relevance because in the event it had been so, the respondent would have not
shied away from invoking the said clause.
1.1.7 It is respectfully submitted that the penalty imposed by the respondent is not only
contrary to the terms of the contract but contrary to the records maintained on the site.
Further, clause 63 of Special Conditions of Contract provides for maintaining a register
by CMI for monitoring the work by recording the deficiency, if any and so that those
deficiencies can be pointed out the contractor. However, in the present case, no specific
deficiency has been pointed out to the claimant nor any deficiency which has been
recorded remains unfulfilled till the date. Kindly note that these were the conditions
precedent to imposing the penalty, however the respondent have arbitrarily and without
any basic imposed penalty which ought to be revoked at the outset.
1.1.8 It is further pertinent to point out the discrepancies in the computation of penalty which is
contrary to the terms of the contract. Please note that in the foot note under Para 8 of the
Contract, the accepted rate of per traffic marshal is Rs. 673/- per day. This rate is the
basis of working out per day penalty. Further, the contract nowhere provides for
deduction of any other amount for absence of traffic marshal other that Rs.5000/- as
penalty, which means it includes per month base value wherein the value will remain
constant i.e. unaffected by the absence of any marshal as the aforementioned penalty will
take care of the same. In this regard, reference is invited to the respondent’s letter dated
16.02.2021 vide which they have conveyed the details of deduction made on account of
alleged delays/ penalty thereof. Kindly note that it is not clear how it has been worked out
and the same remains erroneous and contrary to the terms of the contract.
1.1.9 In addition to the above, the respondent has been guilty of severe delay in raising the
issue of alleged shortfalls. Please note that the levy of penalty at such a belated stage, and
that too after the lapse of more than one and a half years from the date of alleged default,
is not permitted under the Contract, which clearly envisages that the respondent is in
breach of the Contract. In this regard, the terms of the Tender may be taken note of,
which clearly stipulate that the contractor or his supervisor shall be given a chance to
rectify it immediately. In the present case, there has been severe delay on the part of
respondent to not only highlight alleged deficiencies, but even greater delay in levying
penalty for the same. Delay in highlighting the deficiency in a contract with a short term
duration of only one year leads to a situation where the contracting party is not provided
with an adequate opportunity to remedy the same. Therefore, levy of any penalty is not
only an afterthought but arbitrary and unfair and violates the strict letter and spirit of the
Contract/ Tender.