Jharkhand High Court
Emri Green Health Services (Formerly ... vs State Of Jharkhand on 3 October, 2024
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 4831 of 2024
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1. EMRI Green Health Services (formerly known as GVK EMRI) having its registered office at Devar Yamzal Medchal Road, P.O.-Kompally, P.S.-Pet Basheerabad, District- Secunderabad-500078 (Telangana); through its authorised signatory Sri Bikram Chakraborty, aged about 43 years, son of Sri Nirmal Kumar Chakraborty, resident of 45/4/3, Vivekanand Sarani, Haltu, S.O.-Haltu, P.O.-Haltu, P.S.-Survey Park, District-Kolkata (West Bengal);
2. Bikram Chakraborty, aged about 43 years, son of Sri Nirmal Kumar Chakraborty, authorised signatory, EMRI Green Health Services, resident of 45/4/3, Vivekanand Sarani, Haltu, S.O.-Haltu, P.O.-Haltu, P.S.-Survey Park, District- Kolkata (West Bengal).
..........Petitioners Versus
1. State of Jharkhand, through the Secretary, Department of Health, Medical Education & Family Welfare, Government of Jharkhand, Ground Floor, Nepal House, P.O. & P.S.-Doranda, District-Ranchi;
2. Secretary, Department of Health, Medical Education & Family Welfare, Government of Jharkhand, Ground Floor, Nepal House, P.O. & P.S.-Doranda, District- Ranchi;
3. Jharkhand Rural Health Mission Society, through its Mission Director, Department of Health, Medical Education & Family Welfare, Government of Jharkhand, GVI Campus, Namkum, P.O. & P.S.- Namkum, District-Ranchi;
4. Mission Director, Jharkhand Rural Health Mission Society, Department of Health, Medical Education & Family Welfare, Government of Jharkhand, GVI Campus, Namkum, P.O. & P.S.-Namkum, District- Ranchi.
... ... ... Respondents
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CORAM: HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD HON'BLE MR. JUSTICE ARUN KUMAR RAI
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-1- W.P. (C) No. 4831 of 2024 For the Petitioner : Mr. Ashok Parija, Sr. Advocate [Through Virtual Mode] Ms. Nandini Gore, Adv Mr. Pandey Neeraj Rai, Adv Ms. Sonia Nigam, Adv Mr. Rohit Ranjan Sinha, Adv Ms. Swati Bhardwaj, Adv.
For the State : Mr. Rajiv Ranjan, Advocate General Mr. Piyush Chitresh, AC to AG
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CAV on 24/09/2024 Pronounced on 03/10/2024 Per Sujit Narayan Prasad, J:
Prayer:
1. The instant writ petition has been filed, under Article 226 of the Constitution of India, for the following reliefs:
A. commanding upon the Respondents to honor its obligations/Conditions Precedents under Clause 4.1.2 of the Service Agreement dated 18.8.2023 (Annexure-4) by providing complete handover of the full fleet of ambulances to the Petitioner No.1 marking the Commencement Date and further, extend the Service Agreement dated 18.8.2023 (Annexure-4) for a further period of one (1) year in favour of the Petitioner No.1 as per Clause 5 of the Service Agreement;
B. directing the Respondents to cancel/withhold the Letter No.9/RCH-288/2024-2008(RCH) dated 13.8.2024 (Annexure-21) issued by Respondent- -2- W.P. (C) No. 4831 of 2024 Jharkhand Rural Health Mission Society to the Petitioner for floating new tender, being arbitrary and issued without assigning any reasons; C. quashing/canceling, with all consequences, the e- tender Notice No.NHM/Nam/04/2024 dated 14.8.2024 (Annexure-24) published by the State of Jharkhand i.e. Respondent-Jharkhand Rural Health Mission Society on 16.8.2024, through Jharkhand Rural Health Mission Society, Namkum, Ranchi i.e. Respondent No.3, for Implementation, Operation & Maintenance of "Emergency Medical Ambulance Services ("EMAS")" in the State of Jharkhand as arbitrary, non-transparent and writ large with malafides inasmuch as it gives unfettered power to the Respondents to not extend the Service Agreement dated 18.8.2023 with the Petitioner No.1 without any justification and/or following procedure established by law. Brief facts of the case:
2. The brief facts of the case, as per the pleadings available on record, read as under:
3. The respondent-Department of Health, Medical Education and Family Welfare through the respondent-
Jharkhand Rural Health Mission Society invited proposal -3- W.P. (C) No. 4831 of 2024 vide its Request for Proposal (RFP) through e-tender Notice dated 03.05.2023, which was published by the State of Jharkhand on its website on 06.05.2023 through Jharkhand Rural Health Mission Society, Namkum, Ranchi wherein bid for Implementation, Operation & Maintenance of "Emergency Medical Ambulance services ["EMAS"] in the State of Jharkhand were called for.
4. The petitioner no. 1 participated in bid process and after going through the tender process, he was declared successful. Accordingly, the respondent-Department of Health, Medical Education and Family Welfare through the respondent-Jharkhand Rural Health Mission Society issued Letter of Award dated 01.07.2023 in favour of the petitioner no. 1, after declaring it as the successful bidder in respect of e-tender dated 03.05.2023 to operate 543 Ambulances in different districts of Jharkhand. Pursuant thereto, a Service Agreement dated 18.08.2023 was executed between the respondent-Jharkhand Rural Health Mission Society and Petitioner no. 1 to operate and manage 108 EMAS in the State of Jharkhand.
5. It has been submitted that after entering into service agreement, the petitioners vide letter dated 12.09.2023 submitted the handover/takeover Inspection Report with gap analysis and requested for financial approval for the -4- W.P. (C) No. 4831 of 2024 EMAS, whereby it was intimated to the respondent no. 3- Jharkhand Rural Health Mission Society that it had only received only 278 ambulances out of 337 ambulances as on date. In response thereto, the respondent no. 3- Jharkhand Rural Health Mission Society replied to the petitioners‟ vide letter dated 10.10.2023 that respondent no. 3 has directed the previous service provider to hand over 337ambulances within 5 days i.e., by 15.10.2023.
6. It has further been submitted that in the meeting dated 7.11.2023 of the State Level Steering Committee, which was constituted to supervise the EMAS, admitted that the respondent no. 3 delayed in handing over of new and old ambulances and therefore, decided to issue the moratoriums to the petitioner no. 1 (i)a period of 90 days from 18.08.2023 to 05.10.2023 and further (ii).a period of 90 days starting from 05.10.2023. Therefore, it is admittance on the part of respondent no. 3 that there was delay in handing over of new and old ambulances to the petitioners.
7. It has further been submitted that the respondent no. 3 asked the petitioner no. 1 to reply alleging non- fulfillment of obligations by petitioner no. 1 under the Service Agreement vide letter dated 24.04.2024, which the petitioner no. 1 replied vide letter dated 30.04.2024 -5- W.P. (C) No. 4831 of 2024 clarifying that the delay in implementation of the service agreement is attributable solely to the delay in handover of all 543 ambulances by respondent no. 3.
8. It has been contended that petitioner no. 1 wrote letter dated 04.07.2024 and 29.07.2024 stating therein that since the respondent no. 3 did not hand over 543 ambulances, which was a condition precedent for a period of one year to be commence from the agreed date, as termination of the agreement did not arise and further requested for extension of the contract for a further period of one year.
9. It has further been stated that as per service agreement, the one-year period would come from the date of complete hand over of 543 operational ambulances but the same was not handed over but in the meantime, the petitioner was communicated with letter dated 13.08.2024, whereby it was informed that the authorities are starting the process to find a new service provided and until the same is found, the petitioner no. 1 shall continue with the contract. Pursuant thereto, on 16.08.2024, the respondents published e-tender notice dated 14.08.2024 for bid for Implementation, Operation & Maintenance of "Emergency Medical Ambulance services ["EMAS"].
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10. Being aggrieved thereof, the petitioners have approached this Court invoking the writ jurisdiction of this Court conferred under Article 226 of the Constitution of India, by filing the instant writ petition. Submission on behalf of petitioners
11. Mr. Ashok Parija, learned senior counsel appearing for the petitioners has submitted that the decision so taken by the authority to go for the fresh tender is highly arbitrary and illegal since the petitioners have already made communications to the authorities concerned for extension of the period of tender since all 543 ambulances were not handed over to the petitioners.
12. It has been contended that the period of one year will only be commenced after handing over of all 543 ambulances, as per the interpretation of date of initiation of the commencement of work as defined under Clause 1.1 (xx) of the Service Agreement dated 18.08.2023, whereby and whereunder the „commencement‟ date has been defined that the „commencement date‟ shall mean on which parties have completed their respective Conditions Precedents and obligations or such condition(s) have been waived by the concerned parties.
13. It has been submitted that it is evident from the affidavit filed on behalf of the State, that altogether 543 -7- W.P. (C) No. 4831 of 2024 ambulances (existing and new) were to be handed over as per the condition stipulated under Clause 3.12.1, as per timeline in Schedule 2, but all the 543 ambulances have not been handed over rather only part thereof have been handed over and 59 ambulances have been shown to be put for repairing work. Therefore, argument has been advanced that by taking note of the commencement date, which would be as per the meaning giving under clause 1.1 (xx) of the Service Agreement that the commencement date would be the date on which parties have completed their respective Conditions Precedents and obligations or such condition(s) have been waived by the concerned parties. But the respondents-authorities, without taking into consideration the aforesaid fact, has taken a decision to go for the fresh tender which is nothing but in violation of terms and conditions of the contract.
14. The argument has been advanced that by making reference of clause 5.1 which contains a provision under Clause 5.1.1 wherein it has been stated that subject to the terms and conditions contained hereinafter, this Contract unless otherwise terminated in accordance with the provisions of Article 15 herein, shall remain valid and in force for an initial period of 1 (one) year, which period shall be reckoned from the commencement date (the -8- W.P. (C) No. 4831 of 2024 "Contract Period") and can be extended for a period of 1 (one) year at a time up to maximum of 5 (five) years, subject to satisfactory performance of obligations by the Service Provider. The ground therefore has been taken even under clause 5.1.1 the terms of the contract, the reference of the commencement date has been made and as per the commencement date as defined under 1.1 (xx) mean that the parties have completed their respective conditions precedents.
15. Here, the terms and conditions which was to be completed in between the parties was 543 ambulances for which the work order has been issued as per clause 3.12.1 but even accepting the plea of the State that 543 ambulances have not been handed over then also it is evident that the terms and conditions of the contract has not been complied with. Hence, by taking the commencement date as referred under clause 5.1.1 the period is to be extended for a further of one year and maximum for the period of five years but the State in complete defiance of the said condition is now proceeding to go for the fresh tender and as such the action of the State is to be deprecated by passing appropriate order.
16. It has further been contended that various representations have been filed before the authorities for -9- W.P. (C) No. 4831 of 2024 extension of the period since all 543 ambulances have not been handed over as per the terms and conditions of the contract but no decision has be taken.
17. The ground has also been taken by making reference of minutes of meeting wherein the State itself has admitted that due to delay in handing over the old and new ambulances in fully operational condition the moratorium be given for 90 days from the date of signing of agreement which is nothing but a clear-cut admission on the part of the State that due to delay caused in handing over the ambulances the moratorium period is to be given.
18. Argument has also been advanced by referring to the impugned order wherein no reason has been assigned as to why the State has taken decision to go for the fresh tender even though the condition as stipulated in the terms and conditions of the contract has not been fulfilled.
19. The ground has been taken that the impugned order since is without having any reason and as such the same is in violation to the principles of natural justice as also in absence of the reason the said order cannot be improved by filing affidavit in view of the ratio laid down by Hon‟ble Apex Court in the case of Mohindhr Singh Gill and Anr. - 10 - W.P. (C) No. 4831 of 2024 vs. Chief Election Commissioner, New Delhi and Ors. [(1978)1 SCC 405]
20. The learned senior counsel for the petitioners has relied upon the following judgments in order to impress upon the Court that in a case where the arbitrary action is being taken in the contractual matter, the High Court under Article 226 of the Constitution of India is well to interfere with.
(a) State of Uttar Pradesh Vs. Sudhir Kumar Singh & Ors. (2021) 19 SCC 706
(b) Mahabir Auto Stores and others Vs. Indian Oil Corporation and Ors. (1990) 3 SCC 752 Submission on behalf of State:
21. Learned Advocate General appearing for the State has taken the following ground in making opposition to the submission made on behalf of petitioners.
(i) Argument has been advanced by making reference of the terms and conditions of the contract wherein as per the State, the agreement has been decided to be valid for a period of 12 months from the date of signing of the same, which would be evident from the terms and conditions of the contract.
(ii) Reference of Clause 4.2 has been made, which speaks about damages for delay by the service provider. It - 11 - W.P. (C) No. 4831 of 2024 has been argued by putting reliance upon conditions stipulated under Clause 4.2 of the Service Agreement that in case there is delay in handing over by the service provider then instead of seeking relief for renewal of the contract period the damages can well be sought for by making an application for the aforesaid.
(iii) The reference of arbitration clause has also been made as available wherein it has been provided that in case of any dispute with respect to interpretation difference or objection whatsoever arising in connection or arises out of the agreement or the meaning of part thereof or on the rights, duties or liabilities of any party the same shall be referred to the authority or the State level screening committee for decision.
(iv) It has been contended that if the petitioners are having any grievance in the nature of dispute, they can well raise the dispute by invoking the arbitration clause as stipulated under Clause 17.
(v) The learned Advocate General by making reference of counter affidavits wherein it has been stated that it is incorrect on the part of the petitioner that the date of commencement of period of contract will only be initiated when 543 ambulances will be handed over, rather, the ambulances have been handed over, which would be - 12 - W.P. (C) No. 4831 of 2024 evident from the bills submitted by the petitioners, as appended in the supplementary counter affidavit filed on 23.09.2024, which impliedly suggests that the terms and conditions of the contract as per the agreement has already been acted upon and from the date when it has been acted upon the validity of the agreement will be for a period of one year which will end on 17th August, 2024 since the agreement was signed on 18th August, 2023.
(vi) Argument has been advanced so far as the ground taken on behalf of petitioners that the applications have been made for extension of the period of contract but the same cannot be said to be acceptable in view of the conditions as contained under Clause 5.1 wherein the reference of the terms of the contract has been given by which it is evident that extension can be given for another period of 12 months will be given only if application is be filed along with satisfactory performance recommendation.
(vii) Thereafter, the department will examine the submission and shall request clarification for completeness of submission in writing from Service Provider, if any. But the petitioner has not given any application for extension of time along with the satisfactory performance recommendation, as such - 13 - W.P. (C) No. 4831 of 2024 whatever application has been filed which is being referred herein, is not fit to be considered for extension of contract, in view of specific condition as stipulated under Clause 5.1 of the Service Agreement.
(viii) The argument has been advanced by making reference of documents as appended with affidavit dated 23.09.2024 wherein the bills have been raised initially for utilization of 466 ambulances which itself suggests that the petitioner has already utilized the 466 ambulances as also bills have been submitted therefore, it cannot be disputed that the agreement has not been acted upon.
(ix) It has been submitted that the petitioner has raised the bills from the month of August, 2023 onwards and for the month of August, 2023 total 466 Ambulances were deployed by the petitioner and accordingly bills have been raised pertaining to deployment of 466 Ambulances, as would be evident from Annexure A/1 to the supplementary counter affidavit dated 23.09.2024.
(x) It has further been submitted that the summary sheet of the hand over/take over of all he 337 Ambulances (existing) in favour of the petitioners stand complete, as such the entire fleet of 543 (206 new and 337 existing) Ambulances is under control of the petitioner as on date.
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(xi) Learned counsel for the respondents-State has further submitted that the request for extension of contract received from the petitioner since is not backed/supported by „satisfactory performance recommendation‟, as such the request for extension of contract in terms of clause 5.1.1 of the agreement has not been acceded to.
22. Learned State counsel based upon the aforesaid ground has submitted that the petitioner is having no legal vested right for seeking extension of the contract and as such it is a fit case where the writ petition is to be dismissed.
Analysis
23. We have heard learned counsel for the parties and gone across the pleadings made in the writ petition and counter affidavits filed on behalf of the respondents as also the documents available on record.
24. The core issue which requires consideration is as to whether the case of the petitioner was fit to be considered for extension of the period of contract.
25. The requirement for consideration of such issue is the decision of the State-authorities in taking decision to go for the new/fresh tender for the same purpose. - 15 - W.P. (C) No. 4831 of 2024
26. This Court, in order to answer the said issue, needs to refer herein some relevant the terms and conditions of the contract, which has got bearing for adjudication of the lis.
27. The bid documents itself stipulates that the same will be valid for a period of 12 months from the date of its signing. For ready reference, the relevant part of the bid document, as under Section 6: Terms and Conditions at clause 4 is referred herein:
"Section 6: Terms and Conditions
4.Modification of agreement ....
The Agreement shall be valid for a period of 12 months from the date of signing of the same. The agreement can be further extended annually up to 60 months on mutual consent....."
28. It is evident therefrom that for the purpose of modification of the agreement the period can be extended annually up to 60 months but on mutual consent.
29. The definition of commencement date has been defined under clause 1.1.(xx), which is being referred herein:
1.(xx)."Commencement date" shall mean on which parties have completed their respective Conditions Precedents and obligations or such condition(s) have been waived by the concerned parties."
30. It is evident from the meaning of commencement date, which shall mean on which parties have completed - 16 - W.P. (C) No. 4831 of 2024 their respective Conditions Precedents and obligations or such condition(s) have been waived by the concerned parties.
31. The reference of the clause 3.12 also needs to refer herein, which stipulates with respect to handing over of ambulances [existing and new]. A clause has been inserted as under Clause 3.12.1 wherein it has been stipulated that 543 Ambulances (existing and new) shall be handed over as pre timelines in Schedule 2. The authority will ensure and procure hand-back of Ambulances from existing operator, handover/takeover to new service provider. The handover, takeover and the inspection of the existing vehicles shall be done jointly by the Existing Service Provider. For ready reference, the same is quoted as under:
"3.12.1 The 543 Ambulances (existing and new) shall be handed over as pre timelines in Schedule 2. The authority will ensure and procure hand-back of Ambulances from existing operator, handover/takeover to new service provider. The handover, takeover and the inspection of the existing vehicles shall be done jointly by the Existing Service Provider Provider, and the Authority through its representatives and accordingly sign the Inspection Report. If the Vehicles are not found in the proper equipped condition, the Authority shall reimburse the amount required for servicing (repairing/rectification/replacement) of the Vehicles and/or its parts to the New Service Provider.- 17 - W.P. (C) No. 4831 of 2024
32. The bearing in the clause 3.12.1 is that 543 ambulances, both are under existing and new one.
33. The conditions precedent has been referred under clause 4.1 under „Conditions Precedent‟, wherein clause 4.1.2 stipulates that the Authority shall be obliged to satisfy all of the Conditions Precedent set forth in this Clause 4.1.2 within a period of 45 (forty five) days from the date of signing of this Agreement. (a).The Authority shall ensure that the Service Provider is granted access to and handed over the existing Ambulances in accordance with Clause 3.12. (b). The Authority shall ensure the handover of the Existing Project Facilities in accordance with Clause 7.2
34. For ready reference, relevant part of clause 4.1.2 is quoted as under:
4.1 Conditions Precedent 4.1.1xxxXXX 4.1.2 The Authority shall be obliged to satisfy all of the Conditions Precedent set forth in this Clause 4.12 within a period of 45 (forty five) days from the date of signing of this Agreement.
(a) The Authority shall ensure that the Service Provider is granted access to and handed over the existing Ambulances in accordance with Clause 3.12:
(b) The Authority shall ensure the handover of the Existing Project Facilities in accordance with Clause 7.2
35. The clause 4.2 deals with the provision of damages for delay by the Service provider.
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36. The schedule 5.1 also needs to be refer herein, wherein at Clause 5.1.1 it has been stated that subject to the terms and conditions contained hereinafter, this Contract unless otherwise terminated in accordance with the provisions of Article 15 herein, shall remain valid and in force for an initial period of 1 (one) year, which period shall be reckoned from the commencement date (the "Contract Period") and can be extended for a period of 1 (one) year at a time up to maximum of 5 (live) years, subject to satisfactory performance of obligations by the Service Provider. For ready reference, the same is quoted as under:
5.1 Terms of the contract 5.1.1 Subject to the terms and conditions contained hereinafter, this Contract unless otherwise terminated in accordance with the provisions of Article 15 herein, shall remain valid and in force for an initial period of 1 (one) year, which period shall be reckoned from the commencement date (the "Contract Period") and can be extended for a period of 1 (one) year at a time up to maximum of 5 (live) years, subject to satisfactory performance of obligations by the Service ProviderBefore expiry of present contract period, at least one- month in advance from the due expiry date of contract, the Service Provider shall forward his submission with request to Authority / Department for extension of contract period for another period of 12 months along with satisfactory performance recommendations. Department shall examine the submission and shall request clarification for completeness of submission in writing from Service Provider, if any.- 19 - W.P. (C) No. 4831 of 2024
37. It is, thus, evident that the period of contract can be extended for further period of 12 months but if such application will be filed by the concerned party along with the satisfactory performance recommendation, which shall be examined by the department and shall request clarification for completeness of submission in writing from Service Provider, if any.
38. Clause 7.2 speaks with respect to 72 Existing Project Facilities, which also finds mention at clause 4.1.2 (b), wherein it has been stipulated the Authority, in accordance with the terms and conditions set forth herein, shall hand over the Existing Project Facilities to the Service Provider, for the duration of the Contract Period and, for the purposes permitted under this Contract, and for no other purpose whatsoever. For ready reference, the same is quoted as under:
7.2 Existing Project Facilities The Authority, in accordance with the terms and conditions set forth herein, shall hand over the Existing Project Facilities to the Service Provider, for the duration of the Contract Period and, for the purposes permitted under this Contract, and for no other purpose whatsoever.
39. Section 6 of the Terms & Conditions contains a Clause 12 wherein in case of dispute Arbitration has - 20 - W.P. (C) No. 4831 of 2024 been dealt with. For ready reference, the same is quoted as under:
12. Arbitration
a) If case of any dispute with regard to the interpretation, difference or objection whatsoever arises in connection with or arises out of the agreement, or the meaning of any part thereof, or on the rights, duties, or liabilities of any party, the same shall be referred to the Authority or State Level Steering Committee (EMAS) for decision.
b) If dispute or difference of any kind shall arise between the Authority and the Service provider in connection with or relating to the Service Level Agreement, the parties shall make every effort to resolve the same amicably by mutual consultations, mediation, and Conciliation. If the parties fail to resolve their dispute or difference by such mutual consultations within thirty days of commencement of consultations, then either the Authority or the firm/contractor may give notice to the other party of its intention to commence arbitration, as hereinafter provided. The applicable arbitration procedure will be as per the Arbitration and Conciliation Act, 1996 of India. In that event, the dispute or difference shall be referred to the sole arbitrator to be mutually appointed by the parties. If the arbitrator to whom the matter is initially referred is transferred or vacates his office or is unable to act for any reason, he/she shall be replaced by another person mutually appointed by the parties to act as Arbitrator.
d).Work under the Service Level Agreement shall, notwithstanding the existence of any such dispute or difference, continue during arbitration proceedings and no payment due or payable by the Authority or the Service provider shall be withheld on account of such proceedings unless such payments are the direct subject of the arbitration.
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e) Reference to arbitration shall be a condition precedent to any other action at law.
f).Venue of Arbitration: The venue of arbitration shall be at Ranchi, Jharkhand.
g)Language of Arbitration: The language of arbitration shall be English or Hindi."
40. Schedule 2 also needs to refer herein, which has been referred under Clause 3.12 wherein it has been stipulated that on the commencement date all the 543 Ambulances and other Project Facilities shall be over to the Service Provider from the Existing Service Provider. For ready reference, the Schedule 2 is quoted as under:
SCHEDULE 2-PROJECT PHASING ACTIVITIES Handover of existing Project Facilities
a) On the commencement date all the 543 Ambulances and other Project Facilities shall be over to the Service Provider from the Existing Service Provider.
(b) The Service Provider shall fully operationalize the CCC with minimum 30 seats as on the Commencement Date.
(c) The Service Provider shall ensure that there is no disruption in the services while taking over from the Existing Operator.
The Authority shall assist in taking over of the Project Facilities Any cisruption in the Services shall be treated as delay in commencement of Ambulance Services and Damages stated in Clause 1 (1) of Schedule 5 shall be levied on the Service Provider.
(d) The above timelines shall not be extended, except in case of Force Majeure Events. If any Force Majcure Events occurs and Service Provider requests the Authority for extension of time, giving reason for such request, the Authority may, at its sole discretion, agree to extend the timelines by a period for which effect of such Force Majeure Events subsists." - 22 - W.P. (C) No. 4831 of 2024
41. This Court, after having referred the various clauses of the agreement, is of the view that dispute redressal mechanism has also been provided by having an arbitration clause as under Clause 12 of Section 6: Terms & Conditioin, wherein reference of dispute has also been made. Meaning thereby if in case any dispute between the parties with respect to damages or any dispute of any nature whatsoever the same can be agitated by invoking the arbitration clause. Meaning thereby, in case of any dispute with regard to the interpretation, difference or objection whatsoever arises in connection with or arises out of the agreement, or the meaning of any part thereof, or on the rights, duties, or liabilities of any party, the same shall be referred to the Authority or State Level Steering Committee (EMAS) for decision.
42. Further, if dispute or difference arise between the Authority and the Service provider in connection with or relating to the Service Level Agreement, the parties shall make every effort to resolve the same amicably by mutual consultations, mediation, and Conciliation. If the parties fail to resolve their dispute or difference by such mutual consultations within thirty days of commencement of consultations, then either the Authority or the firm/contractor may give notice to the other party of its - 23 - W.P. (C) No. 4831 of 2024 intention to commence arbitration. The applicable arbitration procedure will be as per the Arbitration and Conciliation Act, 1996 of India. In that event, the dispute or difference shall be referred to the sole arbitrator to be mutually appointed by the parties.
43. Learned senior counsel for the petitioners has tried to impress upon the Court that the issue of invoking the arbitration clause will only be there if there is dispute but according to affidavit filed on behalf of State when it is admitted that 59 ambulances have not been supplied which itself suggests that the State has admitted of not handing over the ambulances in entirety to the extent of 543 which is essence of the terms of the contract as per reference of 543 ambulances as under 3.12.1 of the contract.
44. This Court, in order to appreciate the said argument as to whether 543 ambulances if only be handed over to back date the contract will be said to begin needs to refer herein the provision of condition stipulated under clause 3.12.1, definition of commencement date as also one another clause where the reference of 3.12.1 has been made as under 4.1.2 (a) so far it relates to handing over the ambulances are concerned.
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45. There is no dispute in the fact of the case that the date of commencement will be said to be the date when the obligation in between the parties will be complied with.
46. The reference of 543 ambulances have also been made that also cannot be disputed if the condition stipulated under clause 3.12.1 will be taken into consideration but if the clause 3.12.1 the reference of existing and new ambulances to the extent of 543 ambulances have been made.
47. This Court in the context of applicability of the clause 3.12.1 wherein existing and new both have been taken into consideration. While counting 543 ambulances is require also to consider the condition stipulated clause 4.1.2 (a) wherein it has been provided that existing ambulances is to be handed over in view of the condition stipulated under clause no. 3.12. As such this Court is of the view that the condition stipulated under clause no. 3.12 is not to be read in isolation rather it is to be read together with the condition stipulated under clause 4.1.2(a).
48. If both the conditions will be taken together then the reference of existing and new 543 ambulances will have to be with respect to the handing over of the existing - 25 - W.P. (C) No. 4831 of 2024 ambulances both condition under 4.1.2(a). If both the conditions is to be taken together due to specific reference of the condition stipulated under clause 3.12 and 4.1.2 hence, the reference which is being made on behalf of non-handing over the 59 ambulances whether is existing or new it is not available in the entire pleading.
49. The petitioner since is trying to make out a case for breach of the terms and conditions and as such it is the bounden duty of the petitioners to come out with the specific plea that the existing ambulances have also not been supplied.
50. The affidavit, which has been filed on behalf of State wherein it has been state that 337 ambulances have already been handed over which is being said to be existing one in addition thereto, 206 ambulances, which have been said to be new the total comes to 543 ambulances.
51. The number of existing and new ambulances to the extent of 337 and 206 respectively has not been disputed.
52. Out of 543 ambulances, as would appear from the affidavit filed by the State that 59 ambulances have not been handed over reason has been shown that they are under repairing work.
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53. The question, which is being raised on behalf of the petitioners that all 543 ambulances will be handed over from the date the agreement will be said to be acted upon, this Court is of the view that such argument is not fit to be accepted reason being that when the petitioners have already signed the agreement and as per the clause as under General Terms & conditions wherein the agreement period will commence from the date of agreement which will be for a period 12 months meaning thereby the agreement will be set at motion when it will be signed. Further it is also not the case that none of the ambulances have been handed over to the petitioners rather, the petitioners have also entered in exercise of handing over of the ambulances from the erstwhile service provider.
54. It cannot also be the case of the petitioner that none of the ambulances have been supplied rather the ambulances have been supplied, the service has been provided by the petitioner in the capacity of service provider and to that effect bills have been submitted of 466 ambulances, as would appear from Annexure A/1 to the supplementary counter affidavit, which itself goes to suggest the petitioners on the first instance has submitted 466 ambulances out of 543 ambulances - 27 - W.P. (C) No. 4831 of 2024 existing and new. Existing ambulances since have been supplied and service has also been set at motion and hence, it is not available for the petitioners to take the ground that unless all the 543 ambulances will be supplied the date of agreement will be said to be commenced otherwise the consequence would be that suppose one of the ambulances has gone garage for repairing work, out of 543 ambulances and after substantial delay if the ambulance will be given after getting repaired over then the agreement will commence the same cannot be said to be acceptable further for the reason that the same can be taken by way of another example that if in such circumstance 542 ambulances have been operated but one ambulance has not been handed over due to some mechanical reason and it is handed over after 3-4 months, then the period of agreement will be said to commence from the date when the rest one ambulance will be handed over to the petitioners giving apart 542 ambulances. Such acceptance will be improper and as such the same cannot be accepted.
55. The things, which is to be considered, is based upon the terms & conditions of the contract wherein the petitioners have accepted the terms & conditions and if - 28 - W.P. (C) No. 4831 of 2024 terms & conditions as stipulated under clause 3.12 will be read together 4.1.2(a) then it cannot be said that the period of agreement will begin when the entire ambulance will be handed over in favour of the petitioner.
56. Learned senior counsel for the petitioners has submitted that the issue of non-handing over of ambulances have been ventilated by various representations for the purpose of extending the period thereof but this Court is of the view that merely by making an application for extension is not sufficient rather the clause for extension is there wherein it has been stipulated that period of agreement can be extended for another period of 12 months subject to application to be accompanied with the satisfactory performance recommendation.
57. This Court has examined the pleading as also the documents appended thereto wherefrom it is evident that there is no satisfactory performance recommendation and as such authority has not given any consideration with respect to the extension of the said period as is being claimed by the petitioner that no decision has been taken.
58. The law is well settled that any decision can be taken by the authority in contractual matter depending upon the terms and conditions of the contract. - 29 - W.P. (C) No. 4831 of 2024
59. The matter would have been different if such application would have been filed on the basis of satisfactory performance recommendation and even thereafter the decision has not been taken then the matter can be said to be understandable.
60. So far as the satisfactory performance recommendation is concerned, the State has come out with the stand in the affidavit filed on 23.09.2024 that the service of the writ petitioner as a service provider cannot be said to be satisfactory for which certain instances has been given based upon the enquiry conducted by the State in order to come to the independent decision as would appear from the statement made in the supplementary counter affidavit.
61. Therefore, this Court is of the view that so far as the issue of satisfactory performance recommendation is concerned, the stand which has been taken in the supplementary counter affidavit dated 23.09.2024 there is no rebuttal reply as such this Court has to accept what has been pleaded in the counter affidavit.
62. We have considered the judgments upon which reliance has been placed by the learned counsel for the petitioner and found therefrom that ratio has been laid down that regarding the power which has to be exercised - 30 - W.P. (C) No. 4831 of 2024 by the High Court under Article 226 of the Constitution of India in tender matter.
63. We are not disputing the aforesaid ratio since it is the law settled that in case of arbitrary or decision has been taken based upon the irrationality, the High Court can exercise the power conferred under Article 226 of the Constitution of India, in addition to the aforesaid judgments the reference of these judgments have also been made.
64. In Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138 the Hon‟ble Apex Court has observed that while exercising power of judicial review in respect of contracts, the court should concern itself primarily with the question, whether there has been any infirmity in the decision-making process. By way of judicial review, the court cannot examine details of terms of contract which have been entered into by public bodies or the State.
65. In the case of Jagdish Mandal Vrs. State of Orissa & Ors. [(2007) 14 SCC 517], it has been laid down by the Hon‟ble Apex Court that the power of judicial review in the contractual matters is permissible only if, (I) the process adopted or decision made is mala fide or intended to favour someone or the same is so arbitrary - 31 - W.P. (C) No. 4831 of 2024 and irrational that the court can say: „the decision is such that no responsible authority acting reasonably and in accordance with law could have reached.‟ (II) public interest is affected.
66. For ready reference, the relevant paragraph of the aforesaid judgment is being quoted as under:-
"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up - 32 - W.P. (C) No. 4831 of 2024 public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold."
67. In the case of Michigan Rubber (India) Ltd. v. State of Karnataka (2012) 8 SCC 216] the Hon‟ble Apex Court has observed that if the State or its instrumentalities acted reasonably, fairly and in public interest in awarding contract, interference by court would be very restrictive since no person could claim fundamental right to carry on business with the Government. Therefore, the courts would not normally interfere in policy decisions and in matters challenging award of contract by the State or public authorities.
68. Further, the Hon‟ble Apex Court in the case of Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. (2016) 16 SCC 818 has held that a mere disagreement with the decision-making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision.
69. The Hon‟ble Apex Court in the case of Silppi Constructions Contractors v. Union of India and Ors., - 33 - W.P. (C) No. 4831 of 2024 2019 SCC OnLine SC 1133 has categorically observed that the Court must realize that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender and has authored the tender documents is the best judge as to how the documents have to be interpreted, for ready reference, the relevant paragraph is being quoted as under:
"20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the State instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case."
70. After going through the judgments as referred hereinabove, it is evident that interference by the Court exercising the power under Article 226 of the Constitution - 34 - W.P. (C) No. 4831 of 2024 of India is only if the decision-making process of the authority suffers from propriety by hitting the principle laid down under Article 14 of the Constitution of India.
71. Learned senior counsel has also raised the issue of propriety of the decision taken by the authority which has been impugned on the ground there is no reason assigned therein. It has been contended that in absence of any reason the same cannot be allowed to be developed in the counter affidavit.
72. We have considered the impugned order and found therefrom that the same is only the communication to the petitioner after completion of 12 months for allowing the petitioner to carry out the contractual work till the tender is being finalized.
73. There is no dispute about the settled position of law that the reason is the soul of the order and further the reason cannot be allowed to be improved by way of an affidavit.
74. The same has been settled by Hon‟ble Apex Court in the case of Mohindhr Singh Gill and Anr. vs. Chief Election Commissioner, New Delhi and Ors (supra) .
75. We, on consideration of the aforesaid submission and the settled position of law and considering the content of the impugned order wherefrom it is evident - 35 - W.P. (C) No. 4831 of 2024 that the decision has already been taken on completion of period of one year i.e, the period of contract communicating the petitioner to carry out the contractual work as per the agreement till the new tender is finalized, are of the view that where is the reason so warranted since the petitioner is well conscious that the period of agreement is only 12 months and the same can be extended subject to consideration of satisfactory performance recommendation. But no such application for extension for further period of 12 months has been made along with the satisfactory performance recommendation. As such said order cannot be said to cause any prejudice to the petitioners in view of the fact that the terms and conditions was known to the petitioners regarding the validity of contract i.e., for 12 months and so far as issue of extension is concerned, therefore, the extension cannot be claimed as a matter of right rather it is totally on consideration of the authority depending upon certain conditions and herein the condition has been stipulated under clause 5.1.
76. This Court considering the aforesaid fact is of the view that the petitioners have failed to satisfy this Court with respect to decision said to be taken based upon the irrationality or discussions made hereinabove that the - 36 - W.P. (C) No. 4831 of 2024 decision of the authority cannot be said to suffer from vice of arbitrariness.
77. This Court, therefore, is of the view, based upon the law laid down by Hon‟ble Apex Court as referred herein above that power under Article 226 of the Constitution of India can only be exercised if the decision so taken is based upon the irrationality or it suffers from arbitrariness but we have not found any irrationality or the vice of arbitrariness by the respondents.
78. Therefore, this Court is of the view that it is not a case where the extra-ordinary power conferred to this Court under Article 226 of the Constitution of India can be exercised by passing positive direction.
79. Accordingly, the instant writ petition sans merit is dismissed.
80. Pending Interlocutory Application, if any, stand disposed of.
I Agree (Sujit Narayan Prasad, J.)
(Arun Kumar Rai, J.)
(Arun Kumar Rai, J.)
Alankar/-
A.F.R
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