Patna High Court - Orders
Ms. Jessop & Co. Ltd vs The State Of Bihar & Ors on 9 July, 2013
Author: Kishore Kumar Mandal
Bench: Kishore Kumar Mandal
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.3052 of 2013
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1. Ms. Jessop & Co. Ltd A Company Incorporated Under The Indian
Companies Act Having Its Head Office At 8, Mangal Pandey Road Dum
Dum Kolkata- 700028 And Registered Office At 21 & 22 Jessor Road,
Dum Dum, Kolkata- 700028 Through Its Director- In- Charge Sri Ashok
Agarwal S/O Late Babu Lal Agrawal Resident Of 21 & 22 Jessore Road,
Dum Dum, Kolkata- 700028
.... .... Petitioner/s
Versus
1. The State Of Bihar, Through The Principal Secretary- Cum-
Commissioner, Department Of Water Resources, Bihar, Patna.
2. The Chief Engineer (Mechanical), Department Of Water Resouces Bihar,
Patna.
3. The Executive Engineer (Mechanical), Irrigation Mechanical Division,
Dihti, Dehri On- Sone, District- Rohtas.
.... .... Respondent/s
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CORAM: HONOURABLE MR. JUSTICE KISHORE KUMAR
MANDAL
ORAL ORDER
8 09-07-2013The petitioner is limited company registered under the Companies Act, 1956 and is engaged in execution of contract job. On 25.01.2012, the respondents issued notice inviting tender for mechanical and electrical renovation of 87 Nos. of Barrage Gates, Hoist, Gantry Crane, Stop Log Gates, rehabilitation of Electrical Components complete with Automation ( SCADA) system with Paining of Hydro-Mechanical equipment situated at Indrapuri in the District of Rohtas. The tender paper/bid filed by the petitioner was approved by the respondents in the technical and financial bid. Having been declared as L-1, the petitioner was called in for negotiation and was selected for award of the said Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 2 /11 work at the accepted rate the total value whereof was Rs. 29,98,68,935.00/-. Letter of acceptance (LOA) was issued on 16.4.12 followed by the work order on 4-6-12. The work was to be completed within a span of 18 months from the date of issuance of the work order. The agreement ( Annexure-2) signed between the petitioner and the respondent authorities contained general and special conditions of contract. Soon thereafter the petitioner entered into an agreement with one M/s Abhishek Engineering to get mechanical portion of the work done through the said agency ( sub contractor) and a purchase order was issued on 28.4.12. It is the case of the petitioner that work had commenced in right earnest and the petitioner achieved substantial progress thereat. The respondents exerted pressure to expedite the work. Part of the work executed by the petitioner was inspected by the Superintending Engineer (Mechanical) whereafter directions were issued to set right the electrical default /defects in the work. It is to be noticed that the work was required to be executed as soon as possible considering the onset of kharif season. Soon thereafter allegations leveled by the petitioner about non co-operation by the respondent authorities and the counter allegation by the respondent authorities regarding failure on the part of the petitioner to live up to their commitments ignited. By different Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 3 /11 communications (Annexures 7, 7/A, 7/B, and 7/C) the respondents impressed upon the petitioner to speed up the work. In between these claims and counter claims the petitioner continued to execute the work but at a slow pace. One of the contention of the petitioner is that materials required to be supplied by the respondents were not supplied in time and the respondents also defaulted in providing Barrage Gates in the lifted position for carrying out necessary rectification. The petitioner continued to impress upon the respondents that there was perceived lack of commitment on the part of the respondents in offering required assistance in completion of the work assigned to the petitioner company. Similarly, the respondents also continued to impress upon the petitioner to expedite the work failing which rescission/ cancellation of the agreement in terms of the relevant clause(s) of the agreement shall be made for failure on the part of the petitioner company to live up to the commitment . In course of site inspection by the respondent - Chief Engineer ( Mechanical) and Chief Engineer ( Civil) it came to the notice of the authorities that the work was sub let by the petitioner to the M/S Abhishek Engineering. The workmen, supervisors, materials, machinery, tools available at the site were found belonging to M/S Abhishek Engineering. The petitioner was accordingly put on notice by a Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 4 /11 letter dated 29.08.2012 (Annexure-10) alleging therein that mechanical part of the contract was sublet by the petitioner in gross breach of the agreement terms/conditions (clause 21 ) and the petitioner was found lagging far behind the work schedule which would call for termination of the agreement and to proceed against him in accordance with law. The petitioner replied to the said notice by a communication dated 4.9.12 (Annexure-23). In the wake of such notice the petitioner terminated its agreement with M/S Abhishek Engineering. The respondent by communication dated 9.11.12 (Annexure-13) rescinded the agreement and the work order awarded to the petitioner and directed for final measurement of work done by the petitioner company. The petitioner represented the matter before the authority as well as the Hon'ble Minister in-charge of the said department. Having appreciated the explanation, the petitioner was allowed to continue the work. The petitioner continued with the work but failed to achieve adequate progress thereat. In the meanwhile the interim order passed by the Court in the Suit filed by M/S Abhishek Engineering against such termination of contract by the petitioner was set aside by the Kolkatta High Court which was brought to the notice of the respondents . A request was also made to get the work site vacated by M/S Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 5 /11 Abhishek Engineering. In these back ground the petitioner was again issued a notice to the show cause on 14.1.13 (Annexure-
20) alleging therein that the petitioner had breached the terms of contract in subletting the contract work assigned to it without any written order/permission of the respondent and had also failed to achieve the desired progress of work in terms of the schedule of work submitted by the petitioner. Said notice required the petitioner to file reply within 07 days on the two issues raised therein: one being sublet of the contract without permission which was breach of the conditions of the contract and, secondly the failure of the petitioner company to achieve the progress in terms of the schedule of work submitted by the petitioner. The respondents vide an order dated 28.1.13 (Annexure-22) rescinded the contract as the petitioner failed to abide by the terms and conditions laid down in the agreement. Reasons were disclosed therein. Aggrieved by the said rescission of contract the present writ petition has been filed.
Heard Mr. Shashi Anugrah Narain learned senior counsel in support of the application and Ms. Kumari Amrita, GP- 10 for the State.
Parties have exchanged pleadings.
Learned counsel for the petitioner submits that the Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 6 /11 slow progress of work occurred on account of lack of commitment on the part of the respondents in supplying the fittings etc. which were to be supplied by the respondents. The respondents also failed in providing the petitioner adequate/sufficient time for carrying out the work in the Gates. It has thus been submitted that the impugned action is bad in law. Referring to the second ground for termination of contract it has been submitted that the entire work assigned to the petitioner was not sublet by the petitioner to M/S Abhishek Engineering. Only the labour component of the work was allowed to be executed by M/S Abhishek Engineering. The petitioner had approached the higher authorities against the first show cause notice whereafter it was allowed to continue with the work. Having done so, the impugned action was wholly unwarranted. The petitioner has placed reliance on the work order issued to M/S Abhishek Engineering under the agreement reached by and between the petitioner and M/S Abhishek Engineering.
Per contra, the respondents have supported the impugned action. It has been submitted that delay occurred due to apathy shown by the petitioner towards due execution of the work as per the schedule of the work submitted by the petitioner. In spite of repeated directions issued by the Engineer-Incharge or Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 7 /11 at the site adequate progress was not achieved. It has also been submitted that in course of site inspection carried out by the respondents it was found that entire work assigned to the petitioner was sublet to M/S Abhishek Engineering. Referring to the impugned order dated 28.1.13, it has been submitted that adequate reasons have been assigned therein for termination of the contract. Learned counsel for the respondents has placed heavy reliance on paragraph nos. 9 and 10 of the counter affidavit which read thus:-
"9. That it is stated and submitted that the petitioner company violated the terms and conditions of the agreement. Firstly the petitioner company subleted the entire mechanical work to some other person/company on back to back basis in violation of clause 21 of the agreement. But during the course of inspection of the work it came to the knowledge of the respondents that Mechanical work of the contract was subleted to the M/S Abhishek Engineering, Medinipur, Haldia, West Bengal by the petitioner company vide a joint under taking dated 28.04.2012 (Annexure-4 of the writ application), and also issued purchase order of entire Mechanical work on a back to back basis for Rs. 1206.95 Lacs, whereas the Mechanical work was contracted by the petitioner company with the department for Rs. 1788.56 Lacs. Secondly progress of work was lagging far behind schedule. Thereafter the respondent no.2 the Chief Engineer (Mech.) vide his letter no. 2369 dated 29.08.2012 (Annexure-10 of the writ application) send a show cause notice to the petitioner company. The reply to the show Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 8 /11 cause was sent by the petitioner company vide letter no. -SP/EPC/IBP/3U 6731, dated 04.09.2012 was not found satisfactory by the respondent no.3 the Executive Engineer (Mech.), Irrigation Mechanical Division, Dehri, which was communicated to the petitioner by the respondent no.-3 vide his letter no.-888, dated 29.09.2012.
10. That the actual progress of the work as found prior to 06.11.12 was 6% instead of 40% as per schedule of the work provided by the petitioner before issuance of the letter of Acceptance. Thus in the larger public interest as well as on the ground of breach of agreement, the respondent Chief Engineer directed the respondent Executive Engineer ( Mech.) vide letter no. 3006 dated 06.11.12 (Annexure-12 of the writ application) to rescind the contract under the provision of agreement and ultimately the contract was rescinded by the respondent Executive Engineer vide his letter no.-63 dated 28.01.2013 ( Annexure- 22 of the writ application) after providing adequate opportunities as only 0.5% work was found completed against 59.56% as per schedule of work upto 04.01.2013."
The respondents have also disputed the stand of the petitioner that on being represented before the higher authority the time for execution of work was extended. No order in this regard was passed and communicated to the petitioner. Even if it is admitted that negotiations were made between the parties it would appear from the materials on record that only 0.5% of the work was completed as against 59. 56% of work required to be competed within the said date as per the work schedule submitted Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 9 /11 by the petitioner. Invoking the relevant provision of the agreement the petitioner was put on notice to submit its cause against the proposed action. As per the pleadings on record, it would appear that the petitioner defaulted in submitting his reply within the stipulated time. In these setting of facts, the respondents were persuaded to rescind the contract on 28.1.13 in public interest followed by final measurement on 4.2.13 of the work executed by the petitioner at the site. The respondents have already issued fresh notice inviting quotations through e- procurement for the balance work and the process is under way. It has, thus, been submitted that the petitioner acted in complete breach of the terms and conditions of contract by subletting major portion/entire portion of the work and also grossly defaulted in achieving progress of the work assigned to it in spite of repeated warnings/directions issued in this regard by the respondents. Learned counsel submits that the petitioner has a remedy of invocation of the arbitration clause of the agreement for resolution of the dispute in accordance with law.
It is luminescent from the records that the contract work assigned to the petitioner required urgent execution thereof. 18 months time was contemplated in the agreement for completion of the said work. Soon after the agreement the petitioner entered Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 10 /11 into an agreement with M/S Abhishek Engineering whereby the work assigned to the petitioner appears to have been sublet. It is the categorical case of the respondents that in course of site inspection it was found that all the tools, plant stationed at the site including the personnel engaged in work belonged to M/S Abhishek Engineering. The dismal progress in the work as per the work schedule submitted by the petitioner is somewhat admitted. Subletting of work is clearly forbidden under the contract. The petitioner entered into an agreement with M/S Abhishek Engineering in respect of the said work and subsequently terminated the agreement is also not in dispute. The petitioner attributes the reasons for such slow progress of work to the respondents whereas the respondents attribute them to the petitioner. However it is admitted position that breach of said condition would be good and valid ground for termination of the contract besides slow progress of work in spite of warnings/directions issued by the respondents. This Court, in these circumstances, is of the considered view that it would not be appropriate to invoke writ jurisdiction to grant the application. The agreement itself provides an arbitration clause where such issues/disputes can adequately/effectively be raised, demonstrated and resolved. The petitioner may also approach the contractors Patna High Court CWJC No.3052 of 2013 (8) dt.09-07-2013 Page 11 /11 dispute arbitration Tribunal for resolution of the said dispute.
Regard being had to the above, this Court is not persuaded to grant the relief by invocation of its extraordinary and discretionary writ jurisdiction .
The application is dismissed.
No order as to costs.
(Kishore Kumar Mandal, J) Shyam/-