Patna High Court
Phular Construction Company Pvt. Ltd vs The State Of Bihar & Ors on 25 March, 2015
Author: Mihir Kumar Jha
Bench: Mihir Kumar Jha
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.12566 of 2014
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Phular Construction Company Pvt. Ltd. through its Managing Director, Umesh
Prasad Singh at P.O.- Khabra, Adarsh Nagar, P.S.- Sadar, District- Muzaffarpur.
.... .... Petitioner
Versus
1. The State of Bihar through Principal Secretary, Water Resources Department
Government of Bihar, Patna.
2. The Principal Secretary, Water Resources Department Government of Bihar,
Patna.
3. The Engineer -in- Chief ( Middle) Water Resouces Department Government of
Bihar, Patna.
4. The Chief Engineer, Water Resources Department, Bhagalpur.
5. The Superintendent Engineer, Irrigation Circle, Khadakpur, Munger.
6. The Executive Engineer, Irrigation Division No. 1, Laxmipur, Jamui.
.... .... Respondents
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Appearance :
For the Petitioner/s : Mr. Vikas Kumar, Adv.
For the Respondent/s : Mr. Naseem Yahya, GP13
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CORAM: HONOURABLE MR. JUSTICE MIHIR KUMAR JHA
ORAL JUDGMENT
Date: 25-03-2015
Heard learned counsel for the parties.
2. The prayer of the petitioner in this writ application reads
as follows:
"i. To issue an appropriate writ/order/direction for quashing
the order as contained in memo no. 2868 dated 27.6.2014
issued by respondent Engineer-in-Chief (Middle) Water
Resources Department, Govt. of Bihar whereby and
whereunder in exercise of power under Clause 3.3 and 4.8 of
the standard Bid Document (SBD) the respondents have
debarred the petitioner company from participating in future
tender."
3. Mr. Vikas Kumar, learned counsel appearing on behalf of
the petitioner, in support of the aforementioned prayer has basically
Patna High Court CWJC No.12566 of 2014 2
raised only two issues. Firstly, according to him, the impugned order
has been passed without compliance of principles of natural justice,
inasmuch as the alleged show cause notice referred to in the impugned
order was never served on the petitioner. Secondly, according to him,
under the terms of the Agreement for the contract in question there
was no penal consequence of the nature to which now the petitioner
has been subjected by the impugned order. Learned counsel in this
regard has relied on the judgment of this Court in the case of M/s
NCC Ltd. v. the State of Bihar & ors., reported in 2013(1) PLJR 952.
4. Per contra, learned counsel for the State while supporting
the impugned order has firstly raised the issue of maintainability of
the writ application on the ground that the agreement in question
containing arbitration clause cannot allow the petitioner to raise the
issue in hand arising out of a non-statutory contract under Article 226
of the Constitution of India. He has also submitted that the plea of
violation of the principles of natural justice is vague, inasmuch as the
petitioner was given an opportunity by way of show cause notice but
if he did not choose to reply to the same, it cannot at least allege of the
impugned order being in violation of the principles of natural justice.
Learned counsel for the State has also submitted that the impression
of the petitioner that the impugned order was beyond the stipulation
made in the terms and conditions of the agreement is also factually
Patna High Court CWJC No.12566 of 2014 3
incorrect and even legally impermissible, inasmuch as if a contractor
is allotted a work and does not complete the same within the
stipulated period, the Department is not required to give him further
work till completion of the work in question. Learned counsel for the
State has also sought to distinguish the judgment of this Court in the
case of M/s NCC Ltd. (supra) on facts.
5. The relevant facts giving rise to this writ application lie in
a narrow compass. The petitioner, a Class I contractor of Water
Resources Department, was awarded a tender for execution of
renovation of Anjan Reservior Scheme in the District of Jamui having
the total score of the work to Rs.9,62,58,022/-. After acceptance of the
tender of the petitioner the Letter of Acceptance was communicated to
it on 8.3.2010 whereby and whereunder the petitioner had agreed to
complete the work in a period of one and half years i.e. on or before
14.09.2011in view of the date of agreement being 15.03.2010. When for one reason or another the work was not completed by the petitioner within the aforementioned time frame despite repeated reminders issued by the competent authority, the Engineer-in-Chief by a show cause notice dated 29.8.2013 had asked the petitioner to show cause as to why it should not be declared defaulter and prohibited from participating in any fresh tender of the department till the completion of the work allotted to the petitioner. To that extent it Patna High Court CWJC No.12566 of 2014 4 would be relevant to quote the show cause notice dated 29.8.2013, as contained in Annexure „K‟ to the counter affidavit which reads as follows:
^^fcgkj ljdkj ty lalk/ku foHkkxA i=kad&AA@fofo/k&02&04@2013 4723@iVuk] fnukad 29-08-13 lsok esa] Qqykj daLVzD'ku daiuh izk0 fy0 funs'kd&mes'k izlkn flag xzke&[kcM+k] eqgYyk&vknZ'kuxj&3] [kcM+k] ftyk&eqtIQjiqj] fiu&843146- fo"k;& Qqykj daUlVz'ku daiuh izk0 fy0 eqtIQjiqj dks MhQkYVj djus ds iwoZ Li"Vhdj.kA egk'k;] mi;qZDr fo"k;d ds laca/k esa dguk gS fd flapkbZ izeaMy la[;k&A] y{ehiqj teqbZ ds ifj{ks=k/khu ukckMZ lEiksf"kr vatku tyk'k; flapkbZ ;kstuk ds iquZLFkkiu dk;Z esa ,djkjukek ds vuqlkj dk;Z izkjaHk djus dh frfFk 15-03-2010 rFkk dk;Z lekIr djus dh frfFk 14-09-11 fu/kkZfjr FkkA fu/kkZfjr le; lhek ds ckn Hkh fnukad 14-04-13 rd ek= 70% gh dk;Z lEikfnr fd;k x;k gSa mDr vof/k esa le; le; ij {ks=h; inkf/kdfj;ksa }kjk funsf'kr Hkh fd;k x;k FkkA foHkkx }kjk lle; dk;Z lekIr djkus gsrq foRrh; o"kZ 2012&2013 esa 42-00 yk[k vkoaVu Hkh fd;k x;k Fkk ysfdu vkids f'kfFkyrk ds dkj.k 28-84 yk[k :i;s izR;kfiZr djuk iM+kA vr% mi;qZDr ds laca/k esa iUnzg fnuksa ds vUnj esa viuk Li"Vhdj.k fn;k tk; fd D;ksa ugh a,djkjukfer vof/k fnukad 14-09-11 rd 80% ls de dk;Z fd, tkus ds dkj.k D;ksa ugha ,l0ch0Mh0 ds dafMdk&4-8 ds rgr mhQkYVj ?kksf"kr djrs gq, dk;Ziw.kZ gksus rd vxyh fufonk esa Hkkx ysus gsrq cafpr fd;k tk;A fuf'pr le; lhek rd Li"Vhdj.k ugha izkIr gksus ij foHkkx ,d i{kh; fu.kZ; ysus ds fy, Lora= gksxkA g0@& A/khjsUnz dqekjA vfHk;ark izeq[k Ae/;A 26@8@13** Patna High Court CWJC No.12566 of 2014 5
6. According to the respondents, the petitioner did not file a show cause reply and the impugned order dated 27.6.2014 had been passed which again for the sake of clarity and convenience is quoted hereinbelow:
^^fcgkj ljdkj ty lalk/ku foHkkxA lafpdk la[;k&11@fofo/k&02&04@2013& iVuk] fnukad& dk;kZy; vkns'k flafpkbZ izeaMy la[;k&1 y{ehiqj ¼teqbZ½ ds ifj{ks=k/khu ukckMZ lEiksf"kr vkatu tyk'k; flapkbZ ;kstuk ds iquLFkkZiu dk;Z djus gsrq laosnd Qqykj daLVzD'ku daiuh izk0 fy0] vkns'kZ uxj [kcM+k eqtIQiqj ¼fuca/ku la[;k 23@2009 izFke Js.kh½ ls ,djkjukek fd;k x;k FkkA ,djkjukek ds vuqlkj dk;Z izkjaHk djus ds frfFk 15-03-2010 rFkk dk;Z lekIr djus dh frfFk 14-09-2011 fu/kkZfjr FkkA eq[; vfHk;ark] ty lalk/ku foHkkx Hkkxyiqj ds i=kad 2158 fnukad 29-06-13 }kjk izfrosfnr fd;k x;k fd fu/kkZfjr le; lhek ds ckn Hkh fnukad 14-04-13 rd laosnd }kjk ek= 70 izfr'kr gh dk;z lEikfnr fd;k x;kA mDr vof/k esa le;≤ ij {ks=h; inkf/kdkfj;ksa }kjk funsf'kr Hkh fd;k x;k FkkA foHkkx }kjk lle; dk;Z lekIr djkus gsrq foRrh; o"kZ 2012&2013 ea 42- 00 yk[k vkoaVu Hkh fd;k x;k Fkk ysfdu laosnd ds f'kfFkyrk ds dkj.k 28-84 yk[k :0 izR;kfiZr djuk iM+kA mijkasDr of.kZr rF;ksa ds vkyksd esa laosnd ls foHkkxh; i=kad 4723 fnukad 29-08-13 }kjk Li"Vhdj.k iwNk x;kA laosnd ls Li"Vhdj.k dk tcko izkIr ugha gksus ds dkj.k leh{kkijkar ,l0ch0Mh0 dah dafMdk&3- 3 ,oa 4-8 ds izko/kkuks ds rgr laosnd Qqykj daLVzD'ku daiuh izk0 fy0] vknZ'kuxj] [kcM+k eqtIQjiqj dks Debar ?kksf"kr djrs gq, mDr dk;Z iw.kZ gksus rd vxyh fufonkvksa esa Hkkx ysus ls oafpr fd;k tkrk gSA g0@& ¼jkeiqdkj jatu½ vfHk;ark izea[k ¼e/;½ Kkikad 2868 iVuk] fnukad 2706-14** Patna High Court CWJC No.12566 of 2014 6
7. In the backdrop of the aforementioned facts the first and foremost question would be as to whether the writ application in relation to a non-statutory contract containing arbitration clause in the agreement would be maintainable under Article 226 of the Constitution of India. Let it be noted that the question of maintainability of the writ application in presence of arbitration clause was not decided in the case of M/s NCC Ltd. (supra) though the question of maintainability of the writ application was gone into in a different context which would also be taken note of by me in this judgment.
8. First of all there is no dispute that the agreement of the petitioner running into 235 pages as produced by the petitioner on a direction of this Court by a supplementary affidavit did contain an arbitration clause which reads as follows:
"25. Settlement of Dispute & Arbitration Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, design, drawings and instructions here-in-
before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim right matter or thing whatsoever in any way arising out of or relating to contract, designs, drawings, specifications, estimates, instructions, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the Patna High Court CWJC No.12566 of 2014 7 work or after the cancellation, termination, completion or abandonment thereof shall be dealt with as mentioned hereinafter.
i) If the contractor considered any work demanded of him to be outside the requirements of the contract, or dispute any drawings, record or decision given in writing by the Engineer-in-Charge on any matter in connection with or arising out of the contract or carrying out of the contract or carrying out of the work, to be unacceptable, he shall promptly within 7 days request the Superintending Engineer in writing for written instruction or decision. Thereupon, the Superintending Engineer shall given his written instructions or decision within a period of fifteen days from the receipt of the contractor‟s letter.
If the Superintending Engineer fails to give his instructions or decision in writing within the aforesaid period or if the contractor is dissatisfied with the instructions or decision of the Superintending Engineer, the contractor may, within 15 days of the receipt of Superintending Engineer‟s decision, appeal to the Chief Engineer who shall afford an opportunity to the contractor to be heard, if the latter so desires, and to offer evidence in support of his appeal. The Chief Engineer shall give his decision within 30 days of receipt of contractor‟s appeal. If the contractor is dissatisfied with this decision, the contractor shall within a period of 30 days from receipt of the decision, give notice to the Chief Engineer for appointment of arbitrator failing which the said decision shall be final binding and conclusive and not referable to adjudication by the arbitrator.
ii) Except where the decision has become final, binding and Patna High Court CWJC No.12566 of 2014 8 conclusive in terms of Sub para (i) above disputes or difference shall be referred for adjudication through arbitrator appointed by Engineer-in-Chief or the administrative head of the said P.W.D. If the arbitrator so appointed is unable or unwilling to act or resign his appointment or vacates his office due to any reason whatsoever another sole arbitrator shall be appointed in the manner aforesaid. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor.
It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed in respect of each such dispute along with the notice for appointment of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal.
It is also a term of this contract that no person other than a person appointed by such Engineer-in-Chief or the administrative head of the department as aforesaid should act as arbitrator and if for any reason that is snot possible, the matter shall not be referred to arbitrator at all. It is also a term of this contract that if the contractor does not make any demand for appointment of arbitrator in respect of any claim in writing as aforesaid within 45 days of receiving the intimation from the Engineer-in-Charge that the final bill is ready for payment, the claim of the contractor shall be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in respect of these claims.
The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (26 Patna High Court CWJC No.12566 of 2014 9 of 1996) or any statutory modifications or re-enactment thereof and the rules made there under and for the time being in force shall apply to the arbitration proceeding under this clause.
It is also a term of the contract that if any fees are payable to the arbitrator these shall be paid equally by both the parties. It is also a term of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties calling them to submit their statement of claims and counter statement of claims. The venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The cost of the reference and of the award (including the fees, if any, of the arbitrator) shall be in the discretion of the arbitrator who may direct to any by whom and in what manner such costs or any part thereof shall be paid and fix or settle the amount of costs to be so paid.
All arbitration shall be held at Patna and at no other place."
(underlining for emphasis)
9. In presence of the aforementioned arbitration clause there would be no difficulty in holding that even the dispute arising out of non-completion of the work allotted to the petitioner leading to its being temporarily forbidden from participating in any future tender again would be a dispute arising out of the same agreement and therefore, the remedy for the petitioner would be by invoking Patna High Court CWJC No.12566 of 2014 10 arbitration clause and getting the matter decided in an arbitration proceeding. Law in this regard is well settled by the Apex Court in the case of State of U.P. v. Bridge & Roof Co. (India) Ltd., reported in (1996)6 SCC 22, wherein it was held as follows:
"21. ... Further the contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration. The arbitrators can decide both questions of fact as well as question of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extraordinary jurisdiction of the High Court under Article 226. The existence of an effective alternative remedy- in this case, provided in the contract itself- is a good ground for the court to decline to exercise its extraordinary jurisdiction under Article 226."
10. This Court would not like to multiply any number of authority on this issue because it is no longer res integra that in presence of arbitration clause the writ petition normally will not be maintainable save and except in rare of the rarest cases where the dispute arising out of penal action/ order is de hors the terms of the contract as was also held by a Full Bench of this Court in the case of Pancham Singh v. the State of Bihar & ors., reported in 1991(1) PLJR
352. In Pancham Singh‟s case (supra) the Full Bench had in fact also explained the earlier Division Bench Judgment of this Court in the Patna High Court CWJC No.12566 of 2014 11 case of M/s Radha Krishna Agrawal & ors. v. State of Bihar & ors., reported in AIR 1977 Patna 65 which was also affirmed by the Apex Court in the case of M/s Radhakrishna Agarwal & ors. v. State of Bihar & ors., reported in AIR 1977 SC 1496. The Full Bench of this Court in case of Pancham Singh (supra) had laid down the law in this regard in the following terms:
23. The judgments of the Supreme Court referred to above have repeatedly impressed that every action of the executive Government must be informed with reason which is part of the rule of law and its bare minimal requirement.
In the present case the work order and the agreement in favour of the petitioner has been cancelled without assigning any reason, on a ground which did not exist on the date the impugned order was issued. The step for the cancellation of the contract is said to have been taken with an object to save the public exchequer. But rule of law as interpreted by courts required the State Government to inform the petitioner that the drawing, design and the estimated cost were likely to be changed on the basis of fresh dates to be received. As such, it has to be held that action of the State does not satisfy the test of reasonableness and fair play. In my view, apart from three categories mentioned by the Supreme Court in the judgment of Radhakrishna Agarwal (supra), under the changed circumstances, there should be a fourth category of cases:-
"Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual but such contract has been cancelled on a ground, de hors any Patna High Court CWJC No.12566 of 2014 12 of the terms of the contract, and which is per se violative of Article 14 of the Constitution."
Even in such cases applications under Article 226 of the Constitution are maintainable."
11. That would bring me to firstly decide as to whether the present writ application arising out of a non-statutory contract in the first place would by itself be maintainable under Article 226 of the Constitution of India? It is not in doubt that this issue relating to non- statutory contract was conclusive decided by the Division Bench of this Court in the case of M/s Radha Krishna Agrawal (supra) wherein it was held as follows:
"18. ... ... ... Now the question is as to whether the allegation regarding the breach of the terms of the agreement, either by the petitioner or by the respondent State can be examined by this Court in exercise of its writ jurisdiction. According to the learned counsel appearing for the petitioners the impugned actions are in exercise of executive powers by the State under Article 298 of the Constitution which are amenable to the jurisdiction of this Court. Whether under the writ jurisdiction such dispute can be agitated and decided has been the subject matter of controversy. Such disputes can be put under three groups for the purpose of answering the question:
(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases wherein assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement Patna High Court CWJC No.12566 of 2014 13 is short of a contract within the meaning of Article 299 of the Constitution; (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the State; and
(iii) Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State.
19. So far as the cases under categories (i) and (ii) are concerned, it is almost settled that the person aggrieved can invoke the writ jurisdiction of this Court. In Union of India v. M/s Anglo Afghan Agencies (AIR 1968 SC 718), Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council, (AIR 1971 SC 1021) and Robertson v. Minister of Pensions, ((1949)1 KB 227), it was pointed out that public bodies are as much bound as private individuals to carry out representations of facts and promises made by them relying on which other persons have altered their position to their prejudice and in such cases even if the contract has not been embodied in the form prescribed, it can be enforced by a writ in appropriate cases in equity. Similarly in K.N. Guruswamy v. State of Mysore, (AIR 1954 SC 592), D.F.O. South Kheri v. Ram Sanhi Singh, (AIR 1973 SC 295) and Shree Krishna Gynoday Sugar Ltd. v. State of Bihar (AIR 1975 Pat. 123), Patna High Court CWJC No.12566 of 2014 14 it has been held that, even if the right to relief arose not of an alleged breach of contract, but the action of the authority which was being challenged was of a public authority vested with statutory power, this Court, in exercise of its writ jurisdiction, can grant relief to the aggrieved person. On the other hand, in case falling under category (iii), where there is no question of exercise of any statutory power and the rights of the parties flow from mere terms of the contract entered into by the authorities of the State, a party to such agreement should not be allowed to invoke the writ jurisdiction of this Court for the purpose of finding out as to whether there has been a breach of contract on the part of the State or on the part of such person. It is apparent that in such cases there cannot be adjudication without evidence on the point. There is no question of infraction of any rules or statutes. Courts have always called upon such petitioners to seek their remedy in the Civil Court. In this connection reference can be made to a Bench decision of this Court in B.K.Sinha v. State of Bihar (AIR 1974 Pat 230), where Untwalia, C.J. (as he then was) after making a reference to the Supreme Court in Umakant Saran v. State of Bihar (AIR 1973 SC 964); and Lekhraj Sathram Das v.
N.M.Shah, (AIR 1966 SC 334) observed:
"Here in the very nature of the contract in question the petitioner had no right to claim its specific performance. The Statute did not impose any legal duty on the authorities concerned that if they thought that the petitioner should not be allowed to complete the work even assuming they thought so wrongly- they could not stop the work ........... A Patna High Court CWJC No.12566 of 2014 15 writ of mandamus cannot issue to compel the authorities to remedy a breach of contract pure and simple."
In the same case at page 231 it was further observed:-
"I am, therefore, definitely of the view that until and unless in the breach is involved violation of certain legal and public duties or violation of statutory duties to the remedy of which the petitioner is entitled by issuance of a writ of mandamus, mere breach of contract cannot be remedied by this Court in exercise of its powers under Article 226 of the Constitution."
(Underlining for emphasis)
12. The aforesaid view of the Division Bench of this Court in the case of M/s Radha Krishna Agrawal (supra) was approved in toto by the Apex Court in the case of M/s Radhakrishna Agarwal (supra) wherein the Apex Court had held as follows:
"11. In the cases before us the contracts do not contain any statutory terms or obligations and no statutory power of obligation which could attract the application of Article 14 of the Constitution is involved here. Even in cases where the question is of choice or consideration of competing claims before an entry into the field of contract facts have to be investigated and found before the question ,of a violation of Article 14 could arise. If those facts are disputed and require assessment of evidence the correctness of which can, only be tested satisfactorily by taking detailed evidence, involving examination and cross-Patna High Court CWJC No.12566 of 2014 16
examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. Such proceedings are summary proceedings reserved for extraordinary cases where the exceptional and what are described as, perhaps not quite accurately, "prerogative" powers of the Court are invoked. We are certain that the cases before us are not such in which powers under Article 226 of the Constitution could be invoked.
12. The Patna High Court had, very rightly divided the types of cases 'in which breaches of alleged obligation by the State units agents can be set up into three types. These were stated as follows :-
"(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where an assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of article 299 of the Constitution;
(ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the pan of State; and
(iii) Where the contract entered into between the State, and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State."
13. It rightly held that the cases such as Union of India v. M/s. Anglo Afghan Agencies, AIR 1968 SC 718 and Patna High Court CWJC No.12566 of 2014 17 Century Spinning & Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council, AIR 1971 SC 1021; and Robertson v. Minister of Pensions, (1949) 1 KB 227 belong to the first category where it could be held that public bodies or the State are as much bound as private individual are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities. The High Court thought that in such cases the obligation could sometimes be appropriately enforced on a Writ Petition even though the obligation was equitable only. We do not propose to express an opinion here on the question whether such an obligation could be enforced in proceedings under Article 226 of the Constitution now. It. is enough to observe that the cases before us do not belong to this category.
14. The Patna High Court also distinguished cases which belong to the second category, such as K.N. Guruswami v. The State of Mysore, AIR 1954 SC 592; D.F.O. South Kheri v. Ram Sanehi Singh; AIR 1973 SC 205 and M/s. Shree Krishna Gyanoday Sugar Ltd. v. The State of Bihar, AIR 1975 PAT 123, where the breach complained of was of a statutory obligation. It correctly pointed out that the cases before us do not belong to this class either.
15. It then, very rightly, held that the cases now before us should be placed in the third category where questions of pure alleged breaches of contract are involved. It held, upon the strength of Umakant Saran v. The State of Bihar, AIR 1973 SC 964 and Lekhrai Sathram Das v. N.M. Shah, Patna High Court CWJC No.12566 of 2014 18 AIR 1966 SC 334 and B.K. Sinha v. State of Bihar, AIR 1974 PAT 230 that no writ order can issue under Article 226 of the Constitution in such cases "to compel the authorities to remedy are a breach of contract pure and simple".
(Underlining for emphasis)
13. In view of authoritative pronouncement of this Court and the Apex Court, as discussed above, there would be no difficulty in holding that in the present case also the agreement in question being not referable to any Statute and being plainly within the executive power of the State in terms of Article 299 of the Constitution of India is out and out a non-statutory contract and the terms and conditions of the contract cannot be enforced in writ jurisdiction and the parties have to be left to take recourse under ordinary law or remedies provided in the agreement by way of referring the dispute to arbitration.
14. The reliance placed by the learned counsel for the petitioner on the judgment of the learned Single Judge in the case of M/s NCC Ltd . (supra) with reference to paragraph no.23 as with regard to maintainability of the writ application is primarily misconceived for two reasons. Firstly, the learned Single Judge in the case of M/s NCC Ltd. (supra) while referring to a judgment of the Apex Court in the case of M/s Popcorn Entertainment & anor. V. City Patna High Court CWJC No.12566 of 2014 19 Industrial Development Corporation & anor., reported in (2007)9 SCC 593, had not even taken into account the judgment of the Apex Court in the case of M/s Radhakrishna Agarwal (supra). As a matter of fact from reading of the judgment of M/s Popcorn Entertainment (supra) it would be very clear that the City Industrial Development Corporation (CIDC) had awarded the contract in question to M/s Popcorn Entertainment in exercise of a statutory power governed by the regulations framed while allotting the plot in question for developing it in to a multiplex cinema complex. Thus, the case of M/s Popcorn Entertainment (supra) would even otherwise be covered by the ratio laid down in the case of M/s Radhakrishna Agarwal (supra) where under three categories, a writ application arising out of a statutory contract has been held to be maintainable. This vital aspect having been not noticed by the learned Single Judge in the case of M/s NCC Ltd. (supra) would not be a binding precedent for me and has to be in fact held to be per incurium.
15. Having thus held that the present dispute arises out of a non-statutory contract and thus, in terms of the judgment of the Division Bench as also affirmed by the Apex Court in the case of M/s Radhakrishna Agarwal (supra) a writ petition under Article 226 of the Constitution of India will not be maintainable it was quite easy for me to leave the parties to the remedy of arbitration or remedy of ordinary Patna High Court CWJC No.12566 of 2014 20 civil law but then I am also bound to answer the question of plea of violation of principles of natural justice.
16. The case of the petitioner in this regard is that though the impugned order refers to a show cause notice dated 29.8.2013 but it did not receive such a show cause notice. On the other hand, the respondents have not only denied this averment of the petitioner but have also produced the copy of the show cause notice vide Annexure „K‟ to the counter affidavit. Let it be noted that after service of the counter affidavit there is no denial to the averments made in the counter affidavit and this Court, therefore, will have no difficulty in holding that the show cause notice sent to the petitioner by the Engineer-in-Chief on the declared address in the agreement on which all the notices were given to the petitioner was served and if the petitioner itself did not choose to answer the said show cause notice it cannot at least complain by raising the plea of violation of principles of natural justice.
17. This in fact becomes itself a disputed question of fact which cannot be gone into by this Court in a writ petition under Article 226 of the Constitution of India relating to a contract matter. Even this aspect of the matter as with regard to a writ petition being not maintainable involving disputed question of fact arising out of a contract matter was decided by the Apex Court in the case of State of Patna High Court CWJC No.12566 of 2014 21 Bihar v. Jain Plastics and Chemicals Ltd., reported in (2002) 1 SCC 216, wherein it was held as follows:
"7. In our view, it is apparent that the order passed by the High Court is, on the face of it, illegal and erroneous. It is true that many matters could be decided after referring to the contentions raised in the affidavits and counter-affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road permits by the appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a court exercising prerogative of issuing writs."
18. Let it be noted that this is not only the disputed question of fact as to whether the petitioner was given a show cause notice or not and in fact whatever pleadings have been made by the petitioner in defence of its action of not completing the work by themselves would be sufficient for this Court to hold that there are number of other disputes which can be only resolved by way of remedy provided in the agreement i.e. arbitration.
19. The petitioner claims that it could not complete the work Patna High Court CWJC No.12566 of 2014 22 on account of nexalite activities. The petitioner has referred to filing of an F.I.R. being Worat P.S.Case No. 30/2010 dated 2.6.2010. The petitioner claims that he had informed the respondent authorities that on account of nexalite activities he was not able to complete the work in time. It is further case of the petitioner that it had also filed a representation that if the department did not give adequate security and make site free from nexalite activities it would not be possible for it to complete the work in the stipulate period. The petitioner, therefore, relies on a communication made by it on 2.1.2011 and the letter of the Executive Engineer dated 25.11.2011 to establish that it was obstructed on account of inaction on the part of the respondents in giving him site free from encumbrances including nexalite activities. This has been sought to be categorically denied by the respondents in their counter affidavit in paragraph no. 16 of the counter affidavit which reads as follows:-
"16. That the statement regarding handing over the work site from Naxal persons is an excuse to defend the accountability for slow and un-proportional progress of the work leading to inordinate delay in completion."
20. The further plea of the respondents in this regard is that the right from the inception the progress of the work made by the petitioner was very slow. In this regard it has been explained in the counter affidavit, which also has not been controverted by the Patna High Court CWJC No.12566 of 2014 23 petitioner in any way by filing a rejoinder to the counter affidavit that the progress made by the petitioner by the month of November, 2010 was only 3.1% as against the target of 55%. The petitioner has also not denied the averments made in the counter affidavit that it was given three reminders by way of show cause notice in relation to the progress of work. These notices dated 7.4.2010, 6.5.2010 and 20.11.2010, as contained in Annexures „A‟, „B‟ and „C‟ to the counter affidavit, correctness whereof has not been questioned in any manner by filing any rejoinder affidavit, would itself go to show that the petitioner was never very serious after being allotted a prestigious and important work of public utility involving a huge sum of Rs. more than 9 crores.
21. Thus, if the petitioner wants to dispute all these facts, they cannot be gone into and decided in writ proceeding and the best place for getting this dispute to be adjudicated would be the forum of arbitration as agreed to by the petitioner with its open eye while entering into the agreement.
22. As a matter of fact what other materials have come on record would go to show that the petitioner was being constantly reminded to complete the work within the scheduled programme and this Court has nothing to doubt the correctness of three more notices given to the petitioner dated 24.8.2011, 28.11.2012 and 12.12.2012, as Patna High Court CWJC No.12566 of 2014 24 contained in Annexures „D‟, „E‟ and „F‟ to the counter affidavit, wherein again the petitioner was being repeatedly reminded by the controlling authority as well as higher authority that its pace of work was very slow and it must make its efforts to complete the work within the fixed time schedule. The notice dated 12.12.2012, as contained in Annexure „E‟, was also a clear reminder to the petitioner that its plea for delaying the work was not correct and during the course of site inspection by the Superintending Engineer on 1.12.2012 it was found that the work could be completed by the petitioner and therefore, the petitioner must complete the work by 31st of March, 2013 failing which appropriate action in terms of the agreement could be taken against him. The petitioner in fact has got no answer to it because it has not cared to reply about these notices as clearly mentioned in the counter affidavit and therefore, if at all it has a case that it could not complete the work because of nexalite activities even after expiry of a period of more than two years of stipulated period i.e. 14.9.2011, such a disputed question of fact capable of being only resolved on the basis of oral and documentary evidence led by the parties can be decided only in a civil suit or in arbitration proceeding but in no event under Article 226 of the Constitution of India.
23. The fact, which has been therefore brought by the respondents on record, would go to show that the work, which was Patna High Court CWJC No.12566 of 2014 25 completed by the petitioner by 14.9.2011, did not make sufficient progress even till the month of January, 2013 because the Chief Engineer in his notice dated 16.1.2013, as contained in Annexure „G‟, had also informed the petitioner that the total work done by the petitioner till that date was only 55% whereas the entire work was to be completed by 14.9.2011. As a matter of fact when the petitioner had virtually stopped working after April, 2013 another notice was issued to him on 20.5.2013, vide Annexure „H‟ to the counter affidavit, and even then no significant progress was made by the petitioner as with regard to completion of work and in that helpless situation the controlling authority at the level of the Superintending Engineer and the Chief Engineer in their recommendation to the Engineer-in-Chief vide their communications dated 25.5.2013 and 29.6.2013 had recommended to the Engineer-in-Chief to take appropriate action against the petitioner.
24. This became essential because the department had to surrender fund on account of laxity and negligence in completion of work of the petitioner. These facts also clearly asserted in paragraphs no. 8 and 9 of the counter affidavit have not been controverted by the petitioner by filing any rejoinder to the counter affidavit and therefore, there would be no difficulty in coming to the conclusion that these events had taken place in which the department was virtually being Patna High Court CWJC No.12566 of 2014 26 blackmailed by the petitioner by firstly taking a prestigious assignment of work involving more than Rs.9 crores way back in the year 2010 and had kept the same pending. Now every work which the Government allots by way of tender has a fixed time frame for two purposes. Firstly, the public purpose for which the work is to be completed must be done within the time frame so as to it becoming beneficial to the public at large to whom such work is being executed. Secondly, there is an element of rise of cost on account of delay. The contractors as a whole in this State have found a good ploy to firstly obtain the work on any rate and therefore, keep it pending so that they can seek extension of time on one ground or another and also keep the expenditure increase by way of price escalation and other modes. The present case in fact, therefore, would be a classic example as to how the petitioner had made the department as also the general public suffering on account of non-completion of work allotted to it.
25. Can in this situation the action taken by the respondents of declaring it defaulter and debarring it from future contract of the same department which had allotted the work in question to the petitioner be held arbitrary or unreasonable? In my view, certainly not. As would be evident the show cause notice was issued to the petitioner by the Engineer-in-Chief on 29.8.2013 i.e. almost after two years of the stipulated date of completion of the work under the Patna High Court CWJC No.12566 of 2014 27 agreement being 14.9.2011. The show cause notice clearly mentions that the petitioner till 14.3.2013 had completed only 70% of the work and as a result whereof the department had to surrender the fund of Rs.28.83 lacs. Not only that the petitioner did not file a show cause reply to the aforesaid show cause notice dated 29.8.2013 but even in the writ petition no effort has been made by the petitioner to explain that the facts mentioned in the show cause notice was in any way incorrect.
26. All that has been said by way of pleading in the writ petition is that there were naxalite activities, as a result whereof the petitioner could not complete the work. That however could be hardly an answer in the matter of completion of work. If the petitioner had found that the site was not free it could have straightway determined the contract as per the terms and conditions of the agreement in inception but the very fact that the petitioner has been able to complete 70% of work in a space of four years in place of 100% work to be completed in one and half year, there would be no difficulty in coming to the conclusion that the petitioner after obtaining the contract in fact is only trying to delay the work for its own gains and also for getting the other works by claiming experience of this work. Judging from this angle of public interest the Government and the Department had every reason to discourage such nefarious activity of Patna High Court CWJC No.12566 of 2014 28 the contractor and this Court would not find anything wrong in the impugned order.
27. The last limb of submission of Mr. Vikas Kumar, learned counsel for the petitioner, that under the contract and the stipulation made in the agreement though the department could have cancelled the contract of the petitioner and determined the agreement or could have taken any other action against the petitioner but it could not have declared the petitioner defaulter or could have debarred from taking work in future till completion of the work is also not palatable to me for more than one reason. Firstly, the award of contract was as per the terms and conditions of the agreement. Any contractor when it is awarded work it has to abide by those terms and conditions. That is how in the agreement the following documents were deemed to form part of and construed as part of the agreement, namely.
i. Letter of Acceptance
ii. Notice to proceed with the work
iii. Contractor‟s Bid
iv. Condition of Contract, General and Special
v. Contract Data
vi. Additional Condition
vii. Drawings
viii. Bill of Quantities and
Patna High Court CWJC No.12566 of 2014 29
ix. Any other documents listed in the Contract Data as
forming part of the contract.
28. Thus, when the petitioner was well informed that the completion of work in time was an integral part of an essence of contract and Clause 3.3 and 4.8 of the Special Bid Document which again was part of the contract had clearly left no scope for any delay on the part of the contractor, the petitioner cannot be heard to say that the departmental instruction dated 13.3.2009, as contained in Annexures „M series‟ to the counter affidavit, did not form part of STANDARD Bid Document, inasmuch as Clause 3.3 and 4.8 was explained therein in the following terms:
^^fcgkj ljdkj iFk fuekZ.k foHkkx vkns'k 1- ,slk ik;k tk jgk gS fd dbZ laosndksa }kjk vkoafVr dk;Z fu/kkZfjr dk;kZof/k esa dk;Z iw.kZ ugha dj yafcr j[kk tkrk gSa dbZ ekeyksa esa laosnd }kjk vkoafVr dk;Z djus esa vR;f/kd foyac fd;k tkrk gSA vFkok le; ds vuqikr esa fuekZ.k dh izxfr cgqr /kheh jgrh gSa dk;Z yafcr jgus@le;kuqlkj fuekZ.k ugha gksus ls tufgr dqizHkkfor gksrk gSa bl izdkj ds ekeyksa esa dkjokbZ djus gsrq Standard bidding document esa fuEu izko/kku gS%& lkekU; funsZ'k ds dafMdk 3-3%& Bidders shall not be under declaration of ineligibility for delay, failure or corrupt & fraudulent practices by any of the State Govt. or Central Govt. or Public undertaking or any Autonomous Body."
lkekU; funsZ'k ds daafMdk 4-8 esa fuEu izko/kku gS%& Patna High Court CWJC No.12566 of 2014 30 "Even though the bidders meet the above qualifying criteria, they are subject to be disqualified if they have record of poor performance such as abandoning the works, not properly completing the contract, inordinate delays in completion, litigation history, or financial failure etc."
vkns'k fn;k tkrk gS fd mijksDr izko/kku dks v{kj'k% ykxw fd;k tk;A oSls laosnd ftuds }kjk fdlh vkoafVr dk;Z esa le; iwjk gksus ds ckn Hkh ,djkjukesa ds 80% ls de dk;Z fd;k x;k gS] vFkok dk;Z vkoaVu ds mijkar dk;Z izkjaHk ugha fd;k x;k gS vFkok dk;Z NksM+ fn;k x;k gS] vFkok dk;Z esa vfr'k; foyac fd;k x;k gS mudksa mijksDr dafMdk ds vuqlkj nks"kh ?kksf"kr fd;k tk;xk ,oa muds }kjk yfEcr dk;ksZa dks iwjk gksus rd fdlh Hkh fufonk esa Hkkx ugha ysus fn;k tk;xk] Hkys gh laosnd vU; fufonk 'krksZa dks iwjk djrs gksA mijksDr dk;ZokbZ lacaf/kr dk;Zikyd vfHk;ark }kjk dh tk;sxhA fdlh laosnd dks mijksDr izko/kku ds rgr nks"kh ?kksf"kr djus ds iwoZ muls i`PNk iwNh tk;sxhA g0@& ¼vkj0ds0flag½ iz/kku lfpo Kkikad&iz06@n0fo0 fu;e 03@02@2004 2131 ¼s½ iVuk] fnukad 13-3-09** (underlining for emphasis)
29. Let it be noted that this decision of the State Government was sought to be implemented in all works department including Water Resources Department by a letter dated 28.04.2009 which reads as follows:-
^^fcgkj ljdkj iFk fuekZ.k foHkkx i=kad iz0 6@n-fi-&fu;e 03&02@2004 iVuk fnukad izs"kd] vkj0 ds0 flag Patna High Court CWJC No.12566 of 2014 31 iz/kku lfpo lsok esa] iz/kku lfpo] ty lalk/ku foHkkx] lfpo] Hkou fuekZ.k foHkkx lfpo xzkeh.k dk;Z foHkkxA fo"k;& laosndksa }kjk vkoafVr dk;Z ds fu"iknu esa foyEc fd;s tkus vFkok le; ds vuqikr esa dk;Z ugha djus vFkok dk;Z yafcr j[kus dh fLFkfr esa mUgas vxyh fufonk esa Hkkx ysus ls oafpr gksus ds laca/k esaA egk'k;] ns[kk tk jgk gS fd dk;Z vkoafVr gksus ds ckn dfri; laosndksa }kjk bls laikfnr djus esa vR;f/kd foyEc fd;k tkrk gS vFkok fu/kkZfjr le; ds vuqikr esa dk;Z dh izxfr /kheh j[kh tkrh gS vFkok dk;Z vof/k lekIr gksus ds ckn Hkh dk;Z dks yafcr j[kk tkrk gSA QyLo:i fu/kkZfjr le; esa ;kstukvksa dks iwjk ugha gkssus ds fLFkfr esa m|s';ksa dh iwfrZ ugha gks ikrh gSaA SBD ds lkekU; funs'k dh dafMdk&3-3 ,oa 4-8 esa fufgr izko/kku bl izdkj gS%& dafMdk & 3-3 "Bidders shall not be under declaration of ineligibility for delay, failure or corrupt and fraudulent practices by any of the State Governments or Central Government or Public Undertakings or any Autonomous Body"
dafMdk & 4-8 "Even though the bidders meet the above qualifying criteria, they are subject to be disqualified if they have record of poor performance such as abandoning the works, not properly completing the contract, inordinate delays in completion, litigation history, or financial failure etc."
SBD ds mijksDr izko/kkuksa ds vuq:i dkjZokbZ lqfuf'pr djus gsrq iFk fuekZ.k foHkkx us Kkikad 2131 (S) fnukad 13-03-09 }kjk vko';d funsZ'k lHkh v/khuLFk inkf/kdkfj;ksa dks fn;k gSA mi;qZDr izko/kku ds vuqlkj Patna High Court CWJC No.12566 of 2014 32 oSls laosnd ftuds }kjk le; iwjk gksus ds mijakr Hkh ,djkjukek ds 80% ¼izfr'kr½ ls de dk;Z fd;k x;k gS vFkok dk;Z vkoaVu ds mijar dk;Z izkjaHk gh ugha fd;k x;k gS vFkok dk;Z NksM+ fn;k x;k gS vFkok dk;Z esa vfr'k; foyac fd;k x;k gS mUgsa nks"kh ?kksf"kr dj muds }kjk yafcr dk;ksaZ ds iwjk gksus rd fdlh Hkh fufonk esa Hkkx ugha ysus fn;k tkuk gS Hkys gh laosnd vU; fufonk&'krksZa dks iwjk djrs gksA mijksDr vkns'k dh izfrfyfi ifjf'k"V ¼1½ ij layXu gSA mijksDr O;oLFkk ds QyLo:i laosndksa }kjk dk;Z ysdj yafcr j[kus dh izo`fr esa deh vk;sxhA ijUrq ftu laosndksa dks iFk fuekZ.k foHkkx ea dk;Z yafcr j[kus ds dkj.k vxzrj fdlh fufonk ls oafpr j[kus dk fu.kZ; fy;k tkrk gS mUgsa ljdkj ds vU; foHkkx ds }kjk fufonk esa Hkkx ysus fn;k tk;sxk rks mijksDr izko/kku fu"izHkkoh gks tk;sxkA SBD ds izko/kkuksa ds vuqlkj ;fn laosnd dk;Z esa foyac ds dkj.k vFkok dk;Z yafcr NksM+ nsus ds dkj.k ;fn jkT; ljdkj vFkok dsUnz ljdkj vFkok fdlh midze ds }kjk Hkfo"; esa fufonk esa Hkkx ysus ds fy, ineligible ?kksf"kr fd;s tkrs gS rks os fufonk nsus ds fy, qualified ugha ekus tk;saxsA SBD dk ;g izko/kku lHkh dk;Z foHkkxksa esa ykxw gSA blds vuq:i jkT; ljdkj ds fdlh foHkkx ds }kjk fdlh laoasnd dks fdlh dk;Z ds yafcr j[kus dh vof/k rd ineligible ?kksf"kr fd;k tkrk gS rks mijksDr laosnd jkT; ljdkj ds varxZr dgha Hkh fufonk rc rd Mkyus ds fy, qualified ugha gksxk tc rd fd og yafcr dk;Z iw.kZ ugha dj ysA d`i;k rnuqlkj dkjZokbZ lqfuf'pr dh tk;A iFk fuekZ.k foHkkx ds }kjk dk;Z yafcr j[kus ds dkj.k vFkok dk;Z esa vfr'k; foyac djus ds dkj.k ftu laosndksa dks dk;Z yafcr j[kus dh vof/k rd v;ksX; ?kksf"kr fd;k x;k gS mldh lwph vyx ls izpkfjr dh tk jgh gSA fo'oklHkktu g0@& ¼vkj0ds0flag½ iz?kku lfpo**
30. This Court has purposely quoted this order dated 13.3.2009 and 28.4.2009 for the purpose because this policy was Patna High Court CWJC No.12566 of 2014 33 already in existence prior to the petitioner entering into the agreement on 15.3.2010 and therefore, the explanation of Clause 3.3 and 4.8 of Standard Bidding Documents that the penal actions mentioned therein could also be taken will be deemed to be part of the contract. As a matter of fact the petitioner has not filed any reply to the counter affidavit denying existence of these departmental orders explaining the clause 3.3 and 4.8 of SBD and therefore, the learned counsel for the petitioner cannot straightway proceed to get the matter adjudicated in favour of the petitioner only by placing reliance on the judgment of the learned Single Judge in the case of M/s NCC Ltd. (supra), wherein even this order of the department forming part of the Special Bid Document though noticed was not considered in its true perspective. As a matter of fact the department had been constantly issuing its orders based on its policy decision dated 13.3.2009 as would be apparent from Annexures „M series‟ being the letter of the Principal Secretary of Water Resources Department dated 28.4.2009 reiterating the decision of the Government dated 13.3.2009.
31. The action of the respondents thus also cannot be said to be de hors the terms of the contract because on 25.11.2011 the procedure was also laid down for declaring a contractor, not completing the work within the stipulated period, a defaulter and prohibiting it to participate in future tender at least till completion of Patna High Court CWJC No.12566 of 2014 34 the work. To that extent it would be also relevant to extract the decision of the Water Resources Department dated 25.11.2011 which reads as follows:
^^i=kad&v0iz0¼e/;½&,l0ch0Mh0&08@2011&141@e/;
fcgkj ljdkj ty lalk/ku foHkkxA izs"kd] t; fd'kksj] la;qDr lfpo ¼vfHk;a=.k½ lsok esa] lHkh izeq[k vfHk;ark lHkh v/kh{k.k vfHk;ark lHkh dk;Zikyd vfHk;ara k ty llk/ku foHkkx] fcgkjA iVuk] fnukad 25-11-2011 fo"k;& ekud fufonk vfHkys[k ¼SBD) dh dafMdk 3-3 ,oa dafMdk 4-8 ds vuqikyu gsrq fu/kkZfjr izfdz;kA egk'k;] ekud fufonk vfHkys[k (SBD) dh dafMdk 3-3 ,oa dafMdk 4-8 esa fuEu izko/kku gS%& 3.3 Bidders shall not be under a declaration of ineligibility for delay, failure or corrupt and fraudulent practices by any of the State Govt. or Central Govt. of Public Undertaking or any Autonomous Body.
4.8 Even though the bidders meet the qualifying criteria, they are subject to be disqualified if they have-
¼d½ made misleading or false representation in the forms, statements and attachments submitted in proof of the qualification requirements; and/or ¼d½ have record of poor performance such as abandoning Patna High Court CWJC No.12566 of 2014 35 the works, not properly completing the contract, inordinate delays in completion, litigation history, or financial failures etc; and/or ¼d½ participated in the previous bidding for the same work and had quoted unreasonably high bid process and could not furnish rational justification to the employer. ;fn laosnd dh fufonk vU; lHkh vgZrkvksa ij ;ksX; gks rks Hkh bl dafMdk ds izko/kku ds iwjk ugha djus ij mudk rduhdh chzM jn~n fd;k tk ldrk gSA ,slk ns[kk tk jgk gS fd laosndksa }kjk dk;Z vkoaVu izkIr dj fu/kkZfjr y{; dh izxfr ugh dh tk jgh gS vkSj dk;Z ds laiknu esa vR;f/kd foyEo fd;k tkrk gSA fQj Hkh chM dSiklhVh ds vk/kkj ij laosnd dks vU; dk;Z vkoafVr gks tkrk gS vkSj blls ;kstukvksa dh izxfr izHkkfor gksrh gSA vr,o mDr rF;ksa ds vkyksd esa dafMdk 4-8 ¼[k½ ds laca/k esa funs'kkuqlkj fuEu izfdz;k fu/kkZfjr dh tkrh gS& 1- fufonk lwpuk esa ;g dafmdk tksM+k tk;sxk fd laosnd }kjk ,l0ch0Mh0 ds lsD'ku&1 dh dafMdk 4-8 ds izko/kku ds v/khu ;ksX; gksus dk izFke Js.kh eSftLVzsV ls fuxZr 'kiFk i= fufonk ds lkFk lefiZr fd;k tk;sxkA 2- oSls laons d ftugsa dk;Z] iwoZ ls vkoafVr gS] eSa fu/kkZfjr y{; ds vuq:i 80 izfr'kr ls de dh izxfr dh x;h gS] dks fofHkUu dk;Z ize.Myksa ls xq.k&nks"k ds vk/kkj ij Defaulter ?kksf"kr djus dh vuq'kalk izkIr dj lacaf/kr ekWfuVfjax vapyksa }kjk leh{kksijkUr foHkkxh; vuqeksnu izkIr dj Defaulter ¼vxyh fufonk esa Hkkx ysus ls oafpr½ ?kksf"kr djus laca/kh vkns'k fuca/ku ds izHkkjh vfHk;ark izeq[k ds Lrj ls fuxZr fd;k tk;sxkA Defaulter ?kksf"kr fd;s tkus ds i'pkr~ mUgsa vxyh fufonkvksa esa Hkkx ysus ls Debar fd;k tk;sxkA 3- ,l0ch0Mh0 dh dafMdk 3-3 ,oa dafMdk 4-8 ds vU; nks fcUnqvksa ;Fkk mijksDr ¼d½ ,oa ¼x½ ds laca/k esa Hkh Defaulter (vxyh fufonk esa Hkkx ysus ls oafpr½ ?kksf"kr djus gsrq dkjZokbZ mijksDr izfdz;kuqlkj dh tk;sxhA 4- Defaulter ¼vxyh fufonk esa Hkkx ysus ls oafpr½ dk vkns'k fuxZr Patna High Court CWJC No.12566 of 2014 36 gksus ds mijkUr oSls lHkh laosndksa dks vxyh fufonk esa Hkkx ysus ls jksd ykxw jgsxk tc rd foHkkx }kjk iqu% mUgsa Defaulter lwph esa foyksfir ugha fd;k tkrkA 5- bl vkns'k dh izfr] csolkbZV ij Mkyh tk; ,oa lHkh Defaulter laosndksa dh lwph lHkh dk;Z foHkkxksa dks Hkstrs gq;s foHkkxh; csclkbV ij fu;fer :i ls Mkyh tk;A g0@& ¼t; fd'kksj½ la;qDr lfpo ¼vfHk;a=.k½**
32. As would be noted the department was also not unreasonable in taking such a harsh steps for declaring a defaulter and had fixed completion of 80% of work being the prescribed standard for declaring defaulter and prohibiting such defaulter contractor for participating in future tender. Let it be noted that such declaration of defaulter and/or prohibiting the contractor from participating in the work is not of permanent in nature and is capable of being withdrawn on completion of work and showing reasonable cause for delaying the work.
33. The respondents in fact have also given the details of progress made by the petitioner in a tabulated form which goes to show that the claim of the petitioner of completion of 90% of work was far from truth and to that extent paragraph no.15 of the counter affidavit and the connected documents (Annexure „P‟) which have not been again controverted by the petitioner by filing any rejoinder to the counter affidavit would be a complete answer that the petitioner till Patna High Court CWJC No.12566 of 2014 37 31.5.2014 had completed only 77% of work and thus, the action taken by the respondents by passing the impugned order after issuance of show cause notice was wholly justified because the petitioner had not completed even 80% of work as per requirement in the department circular dated 25.11.2011. Paragraph no.15 of the counter affidavit and the connected document (Annexure „P‟) reads as follows:
"15.That in reply to para 3(iv) it is stated that the statement regarding completion of 90% of the total contract work is a gross misrepresentation of the fact that only 77% work has been completed so far."
^^vkatu tyk'k; ;kstuk ds iquLFkkZiu dk;Z dk fnukad 31-05-14 rd dk HkkSfrd izxfr izfrosnu 'kh"kZ&4701, Administrative approval by WRD Notification vide letter 943 dt. 21.07.2009 ,djkjukek la0&3SBD/2009-10 HkkSfrd& dz0 dk;Z dk uke ,djkjukek ds fnukad 31-05-14 vo'ks"k dk;Z vH;qfDr vH;qfDr la0 vuqlkj ek=k rd izxfr 1 2 3 4 5 6 7 1 feV~Vh dk;Z 262456-00 m3 184032-00 m3 78424-00 m3 dk;Z izxfr ij Work has not 2 ih0lh0lh0@vkj0 3086-00 m 3 2785-00 m3 301-00 m3 gSA been done in lh0lh0 dk;Z proper section 3 u;k 57 nos. 37 nos. 20 nos.
4 ejEefr 44 nos. 31 nos. 13 nos.
5 czhd odZ dk;Z 10648-00 m3 8582-00 m3 2066-00 m3 Overall 77%
g0@&
g0@& 3@6@14
3-06-14 dk;Zikyd vfHk;Urk
S.D.O.-2 flapkbZ izeaMy la[;k&1] y{ehiqj ¼teqbZ½**
Barhat
34. Having thus regard to the factual scenario of the present case this Court would not find that the ratio laid down by the learned Single Judge in the case of M/s NCC Ltd. (supra) can be made ipro facto applicable to the case of the petitioner. Here in the present case Patna High Court CWJC No.12566 of 2014 38 the show cause notice was issued whereas in the case of M/s NCC Ltd. (supra) the learned Single Judge has noted the submission in paragraph no.13 that the impugned order dated 18.10.2011 in the case of the petitioner NCC Ltd. was passed even without issuance of any show cause notice. Thus, whatever has been laid down as a law in the peculiar facts of M/s NCC Ltd. on account of non-issuance of show cause notice cannot be made applicable to the petitioner in whose case the show cause notice was issued and it is surprising that though the petitioner has received the impugned order on the same address as declared in the agreement as also all other communication it claims to have not received only the show cause notice which was again sent by the Engineer-in-Chief on the same declared address. This Court, therefore, cannot accept the plea of the impugned order being in violation of principles of natural justice.
35. At this stage it has to be kept in mind that the similar plea of violation of principles of natural justice was in a non-statutory contract was noticed and rejected by the Division bench of this Court in the case of Radha Krishna Agrawal (supra) wherein applicabilioty of the principles of natural justice in a purely contractual matter was negatived in the following words:-
"Learned counsel for the petitioners contended that even in cases of exercise of contractual right of termination of a lease principles of natural justice are attracted. I do Patna High Court CWJC No.12566 of 2014 39 not think that it is a correct legal proposition. No case was brought to our notice either of the Supreme Court or any of the High Courts in India which has taken the view that before exercising the right or option to terminate an agreement or lease in terms thereof contracting party must be given an opportunity to have his say in the matter. Even on principle I do not think that it is possible to accept the contention. Although it is true, as observed by Lord Denning, M, R. in Gaming Board for Great Britain ex parte Benaim (1971) 1 AE. RH 1148 that it is not possible to lay down rigid rules as to when the principles of natural justice are to apply", yet cases firmly establish that the circumstances in which or the occasion where the action under challenge has been taken, determines the applicability of the rules of natural justice. It has been held by A. N. Ray J. (as he then was) speaking for the Court in Daud Ahmad v. District Magistrate, Allahabad, (AIR 1972 SC 896 at p. 899).
"It is the nature of power and the circumstance and conditions under which it is exercised that will occasion the invocation of the principles of natural justice."
I may also usefully refer to what was said by the Privy Council in Durayappan, v. Fernando (1967) 2 A. C. 337 at p. 349. Giving the opinion of the Board Lord Upjohn said "In their Lordships' opinion there are three matters which must always be borne in mind when considering whether the principle should be applied or not. These matters ars ..... Secondly, in what circumstances or upon what, occasion is the person daiming to be entitled to Patna High Court CWJC No.12566 of 2014 40 exercise the measure of control entitled to intervene." To put the same matter tersely borrowing the phrase of Lord Denning. "Every thing depends on the subject matter". In my view, unless the Court is of the opinion that the occasion or circumstances for the exercise of power is such, that it would be unfair or unjust to the party affected by action taken, to be visited by the consequences thereof, unless it had been given an opportunity to have his say in the matter, the principles of natural justice are not attracted. In my view the exercise of contractual right is not such an occasion. There is nothing unjust or unfair in a party terminating a contract, even without giving the other party an opportunity to have his say in the matter, on the basis of the express right conferred by the contract itself. The very nature and occasion of the exercise of right flowing as it does from the contract, is such as to exclude the applicability of the rules of natural justice. Further it is to be observed that when a right to terminate a lease, on the ground of the existence of conditions which give a right of termination, has been exercised, it is open to the party exercising the option to justify the action taken, if properly challenged, not only on the grounds which were under contemplation when the action was taken, but also on other grounds which are available in law to the contracting party in terms of the agreement. This is an additional reason as to why rules of natural justice cannot be held to be attracted in cases where a lease has been terminated in terms of the contract itself."
(Underlining for emphasis) Patna High Court CWJC No.12566 of 2014 41
36. The last of the submission of Mr. Vikas Kumar, learned counsel for the petitioner, that the department cannot itself take an action because it is a party to the agreement and the matter has to be referred to a neutral person for determining as to whether the petitioner had committed any breach of terms and conditions of the agreement has to be also noted for its being rejected. The reliance of the learned counsel for the petitioner to certain observations made in this regard in paragraph no.26 in the case of M/s NCC Ltd. (supra) seems to be wholly misplaced, inasmuch as the sweeping observation on the basis of a judgment of Apex Court in the case of M/s J.G.Engineers Private Ltd. v. Union of India & anor., reported in (2011)5 SCC 758, is too far wide and in fact not at all contextual. In the case of M/s J.G.Engineers Pvt. Ltd. (supra) the issue actually was with regard to correctness of an award of the arbitrator. The terms and conditions of the agreement were, therefore, pressed into action to examine as to whether the counter claim of the Union of India against the contractor M/s J.G.Engineer could be rejected by the arbitrator in view an unilateral decision of the authorities of the Union of India. Let it be noted that the arbitrator had held that the contractor had committed no delay and thus, was entitled to certain relief of payment of amount under the terms and conditions of the agreement as claimed by it in the arbitration proceeding but the High Court had reversed the Patna High Court CWJC No.12566 of 2014 42 decision of the arbitrator against which the contractor M/s J.G.Engineers had moved the Apex Court. It was in that context that certain observations were made with regard to unilateral decision taken by the department which were examined by the arbitrator and were found to be not correct. The said judgment of M/s J.G.Engineers Pvt. Ltd. (supra), therefore, is not an authority that in no case the department or the Government awarding contract can take its decision as also annul the contract on the ground of violation of terms and conditions of the contract and for each and every issue such decision has to be taken by a neutral person.
37. Such declaration made by this Court in the case of M/s N.C.C. (supra) would place the contractor on dictating terms because firstly it would default in completing work and then it would expect the department to refer the matter to a neutral person to adjudicate as to whether there was no fault on the part of the contractor. That, however, is not the ratio of the judgment of the case of M/s J.G.Engineer Pvt. Ltd. (supra) which in fact lays down the law only with regard to the grounds on which the award of the arbitrator can be interfered by the Court in exercise of power under section 34 of the Arbitration and Conciliation Act. Thus, whatever has been held by the learned Single Judge in the case of M/s NCC Ltd. (supra) on the basis of ratio laid down by the Apex Court in the case of M/s J.G.Engineers Patna High Court CWJC No.12566 of 2014 43 Pvt. Ltd. (supra) does not seem to be correct ennunciation of law.
38. The view of learned Single Judge in the case of M/s N.C.C. (supra) even other wise cannot be made applicable to the facts of the case of the petitioner because in the present case the power has been in the agreement vested to the department to take action against the defaulting contractor in case of breach of terms and conditions of the agreement as clearly spelt out in different clauses forming part of the contract. If the wide proposition laid down by the learned Single Judge in the case of M/s NCC Ltd. (supra) is accepted to be correct enunciation of law, this Court would find it difficult to allow any contractor to be subjected to determination or cancelling any contract though it may have agreed with its open eyes as the petitioner had while entering into the agreement. Clause 3 of the agreement of the clause of contract of petitioner in this regard reads as follows:
"CLAUSE 3 When Contract can be determined/Rescined Subject to the other provisions contained in this clause the Engineer-In-Charge may, without prejudice to his any other rights or remedy against the contractor in respect of any delay inferior workmanship, any claims for damages and/or any other provisions of this contract or otherwise, and whether the date of completion has or has not elapsed, by notice in writing absolutely determine the contract in any of the following cases :
i) It the contractor having been given by the Engineer-
in-Charge a notice in writing to rectify, reconstruct or Patna High Court CWJC No.12566 of 2014 44 replace any defective work or that the work is being performed in an inefficient or otherwise improper or unworkman like manner shall omit to comply with the requirement of such notice for a period of seven days thereafter.
ii) If the contractor being a company shall pass a resolution or the court shall make an order that the company shall be wind up or if a receiver or a manager on behalf of a creditor shall be appointed or if circumstances shall arise which entitle the court or the creditor to appoint a receiver or a manager or which entitle the court to make a winding up order.
iii) if the contractor has, without reasonable cause, suspended the progress of thework or has failed to proceed with the work with due diligence so that in the opinion of the Engineer-in-Charge (which shall be final and binding) he will be unable to secure completion of the work by the date of completion and continues to do so after a notice in writing of seven days from the Engineer-in-Charge.
iv) If the contractor fails to complete the work within the stipulated date or items of work with individual date of completion, if any stipulated, on or before such date(s) of completion and does not complete them within the period specified in a notice given in writing in that behalf by the Engineer-in-Charge.
v) If the contractor persistently neglects to carry out his obligations under the contract and/or commits default in complying with any of the terms and conditions of the contract and does not remedy it or take effective steps to remedy it within 7 days after a notice in writing is given to Patna High Court CWJC No.12566 of 2014 45 him in that behalf by the Engineer-in-Charge.
vi) If the contractor commits any acts mentioned in Clause 21 hereof:
vii) If the work is not started by the contractor within 1/8th of the stipulated time subject to the maximum of 45 days.
When the contractor has made himself liable for action under any of the cases aforesaid, the Engineer-in-Charge on behalf of the Governor of Bihar shall have powers :
a) To determine or rescind the contract as aforesaid (of which termination or rescission notice in writing to the contractor under the hand of Engineer-in-Charge shall be conclusive evidence). Upon such determination or rescission the Earnest Money Deposit, Security Deposit already recovered and Performance Guarantee under the contract shall be liable to be forfeited and shall be absolutely at the disposal of the Government.
b) After giving notice to the contractor to measure up the work of the contractor and to take such whole, or the balance or part thereof as shall be un-executed out of his hands and to give it to another contractor to complete the work. The contractor, whose contract is determined or rescinded as above, shall not be allowed to participate in the tendering process for the balance work.
In the event of above course(s) being adopted by the Engineer-in-Charge, the contractor shall have no claim to compensation for any loss sustained by him by reasons of his having purchased or procured any materials or entered into any engagements or made any advances on account or with a view to the execution of the work or the performance of the Patna High Court CWJC No.12566 of 2014 46 contract. And in case action is taken under any of the provision aforesaid the contractor shall not be entitled to recover or be paid any sum for any work thereof or actually performed under this contract unless and until the Engineer- in-Charge has certified in writing the performance of such work and the value payable in respect thereof and he shall only be entitled to be paid the value so certified.
39. Yet again in Clause 14 of the agreement stipulation was made for cancellation of contract in full or part on the certain eventuality which again for the sake of clarity and convenience is quoted hereinbelow:
"CLAUSE 14 Cancellation of Contract in full or part If the contractor :
i) at any time makes default in proceeding with the works or any part of the work with due diligence and continues to do so after a notice in writing of 7 days from the Engineer-in-Charge; or
ii) Commits default to comply with any of the terms and conditions of the contract and does not remedy it or take effective steps to remedy it within 7 days after a notice in writing is given to him in that behalf by the Engineer-in- Charge; or
iii) Fails to complete the works or items of work with individual dates of completion, on or before the date(s) of completion, and does not complete them within the period specified in a notice given in writing in that behalf by the Engineer-in-Charge; or
iv) Shall offer or give or agree to give to any person Patna High Court CWJC No.12566 of 2014 47 in Government service or to any other person on his behalf any gift or consideration of any kind as an inducement or reward for doing or forbearing to do or for having done or forborne to do any act in relation to the obtaining or execution of this or any other contract for Government; or
v) Shall enter into a contract with Government in connection with which commission has been paid or agreed to be paid by him or to his knowledge, unless the particulars of any such commission and the terms of payment thereof have been previously disclosed in writing to the Accepting Authority/Engineer-in-Charge; or
vi) Shall obtain a contract with Government as a result of wrong tendering or other non-bonafide methods of competitive tendering; or
vii) Being an individual, or if a firm, any partner thereof shall at any time be adjudged insolvent or have a receiving order or order for administration of his estate made against him or shall take any proceedings for liquidation or composition (other than a voluntary liquidation for the purpose of amalgamation or reconstruction) under any Insolvency Act for the time being in force the sequestration of his estate or if a trust deed be executed by him for benefit of his creditors; or
viii) Being a company, shall pass a resolution or the Court shall make an order for the winding up of the company, or a receiver or manager on behalf of the debenture holders or otherwise shall be appointed or circumstances shall arise which entitle the Court or debenture holders to appoint a receiver or manager; or
ix) Shall suffer an execution being levied on his Patna High Court CWJC No.12566 of 2014 48 goods and allow it to be continued for a period of 21 days; or
x) Assigns, transfers, sublets (engagement of labour on a piece-work basis or of labour with materials not to be incorporated in the work, shall not be deemed to be subletting) or otherwise parts with or attempts to assign, transfer sublet or otherwise parts with the entire works or any portion thereof without the prior written approval of the Competent Authority;
The Competent Authority may, without prejudice to any other right or remedy which shall have accrued or shall accrue hereafter to Government, by a notice in writing to cancel the contract as a whole or only such items of work in default from the Contract. The Engineer-in-Charge shall on such cancellation by the Competent Authority have powers to :
(a) Take possession of the site and any materials, constructional plant, implements stores, etc., thereon; and/or
(b) Carry out the incomplete work by any means at the risk and cost of the contractor.
On cancellation of the contract in full or in part, the Engineer-in-Charge shall determine what amount, if any, is recoverable from the contractor for completion of the works or part of the works or in case the works or part of the works is not to be completed, the loss of damage suffered by Government. In determining the amount, credit shall be given to the contractor for the value of the work executed by him up to the time of cancellation, the value of Patna High Court CWJC No.12566 of 2014 49 contractor's materials taken over and incorporated in the work and use of plant and machinery belonging to the contractor.
Any excess expenditure incurred or to be incurred by Government in completing the works or part of the works or the excess loss or damages suffered or which may be suffered by Government as aforesaid after allowing such credit shall without prejudice to any other right or remedy available to Government in law be recovered from any moneys due to the contractor on any account, and if such moneys are not sufficient the contractor shall be called upon in writing and shall be liable to pay the same within 31 days.
If the contractor fails to pay the required sum within the aforesaid period of 30 days the Engineer-in-Charge shall have the right to sell any or all of the contractors unused materials, constructional plant, implements, temporary buildings, etc. and apply the proceeds of sale thereof towards the satisfaction of any sums due from the contractor under the contract and if thereafter there be any balance is outstanding from the contractor, it shall be recovered in accordance with the provisions of the contract.
Any sums in excess of the amounts due to Government and unsold materials, constructional plant, etc., shall be returned to the contractor, provided always that if cost or anticipated cost of completion by Government of the works or part of the works is less than the amount which the contractor would have been paid had he completed the works or part of the works, such benefit shall not accrue to the contractor." (Underlining for emphasis) Patna High Court CWJC No.12566 of 2014 50
40. The aforesaid underlined stipulations made in the agreement have been quoted in extenso only for the purpose to show that the competent authority of the department has been vested full power and authority to take action against the contractor and therefore, it will be very difficult for this Court to accept the submission of the petitioner that in no event any action can be taken against the contractor by the authorities of the department and such a decision, as to whether any default was committed by the contractor, has to be decided only by a neutral person. That again would be firstly going into the terms and conditions of the contract and that too a non- statutory contract which cannot be in view of law laid down by the Apex Court in the case of Radha Krishna Agrawal (supra) at least enforced by a writ petition under Article 226 of the Constitution of India. Secondly as per stipulation made in Clause 3 and 14 of the Agreement if the contractor makes a default or causes breach of terms and conditions it is the competent authority of the department who has been vested power to take appropriate action not only for determination of contract but also taking other penal measures.
41. As a matter of fact it is for this reason that if the contractor becomes aggrieved on account of any action taken by the competent authorities of the department within the terms and conditions of the contract that a provision for arbitration has been also Patna High Court CWJC No.12566 of 2014 51 made as has been already quoted above. The dispute in fact relating to the agreement in any form can arise only when the department will take a decision against the contractor and the remedy in such cases would be only the arbitration and nothing else.
42. The petitioner also cannot expect this writ Court to decide as to whether it had justified reasons either in not completing the work or seeking extension of time because even the issue of extension of time is not a matter of right and is covered by Clause 5 of the Clause of contract which reads as follows:
"CLAUSE 5 Time and Extension for Delay The time allowed for execution of the Works as specified in the Schedule 'F' or the extended time in accordance with these conditions shall be the essence of the Contract. The execution of the works shall commence from such time period as mentioned in letter of acceptance or from the date of handing over of the site whichever is later. If the Contractor commits default in commencing the execution of the work as aforesaid, Government shall without prejudice to any other right or remedy available in law, be at liberty to forfeit the security deposit absolutely.
5.1 As soon as possible after the contract is concluded the Contractor shall submit a Time & Progress Chart for each milestone and get it approved by the Department. The Chart shall be prepared in direct relation to the time stated in the Contract documents for completion of items of the work. It shall indicate the forecast of the dates of commencement and completion of various trades Patna High Court CWJC No.12566 of 2014 52 or sections of the work and may be amended as necessary by agreement between the Engineer-in-Charge and Contractor within the limitations of time imposed in the contract documents, and further to ensure good progress during the execution of the work, the contractor shall in all cases in which the time allowed for any work, exceeds one month (save for special jobs for which a separate Programme has been agreed upon) complete the work as per milestone given in schedule 'F'.
5.2 If the work(s) be delayed by.
i) force majeure, or
ii) Serious loss or damage by fire, or
iii) Civil commotion, local.
iv) delay on the part of other contractors or tradesmen engaged by Engineer-in-Charge in executing work not forming part of the Contract, or
v) non-availability of stores, which are the responsibility of Government to supply or
vii) non-availability or break down of tools and Plant to be supplied or supplied by Government or
vii) any other cause which, in the absolute discretion of the authority mentioned in Schedule 'F' is beyond the Contractor's control.
then upon the happening of any such event causing delay, the Contractor shall immediately give notice thereof in writing to the Engineer-in-Charge but shall nevertheless use constantly his best endeavors to prevent or make good the delay and shall do all that may be reasonably required to the satisfaction of the Engineer-in-Charge to proceed with the works.
Patna High Court CWJC No.12566 of 2014 53
5.3 Request for the rescheduling of Milestones and extension of time, to be eligible for consideration, shall be made by the contractor in writing within fourteen days of the happening of the hindering event causing delay on the prescribed form. The Contractor may also, if practicable, indicate in such a request the period for which extension is desired.
5.4 In any such case the authority mentioned in Schedule 'F' may give a fair and reasonable extension of time and reschedule the milestones for completion of work. Such extension shall be communicated to the Contractor by the Engineer-in-Charge in writing, within 3 months of the date of receipt of such request. Non application by the contractor for extension of time shall not be a bar for giving a fair and reasonable extension by the Engineer-in-Charge and this shall be binding on the contractor.
5.5 The basic centerlines, reference points and benchmarks will be fixed by the department. The contractor shall established at his own cost at suitable points, additional reference lines and bench marks as may be necessary and instructed by the engineer-in-charge. The contractor shall remain responsible for the sufficiency and accuracy of all the bench marks and reference lines."
(underlining for emphasis)
43. Thus, merely because the petitioner had filed an application for extension of time and the same was in any way under consideration would not mean that on non-completion of work even upto 80% in a period of four years from the date of award of the Patna High Court CWJC No.12566 of 2014 54 contract for which the completion period was from 15.3.2010 to 14.9.2011 no action could have been taken against the petitioner save and except to refer the matter to a neutral person to adjudicate as to whether the petitioner on account of non-completion of work had become defaulter. The ratio laid down by the Apex Court in the case of M/s J.G.Engineers Pvt. Ltd. (supra) in no view of the matter does go to this extent and in fact whatever observations have been made therein in relation to examining the correctness of an award in terms of section 34 of the Arbitration and Conciliation Act cannot have such a far consequence that the department having awarded the contract to a contractor within the specified terms and conditions of the agreement will become a slave and captive in the hand of the contractor and will also be compelled to keep on awarding fresh contract to a contractor irrespective of default made by him by way of non-completion of work.
44. In the considered opinion of this Court the department has been infact rather kind and has only stopped the petitioner temporarily from getting tender in future till completion of the work as would be evident from paragraph no.28 of the counter affidavit which reads as follows:
"28. That in reply to para 18 it is stated that the petitioner has been debarred from future tender till the work is completed. So the petitioner has the opportunity to make Patna High Court CWJC No.12566 of 2014 55 himself free from this debar by completing the work as early as possible."
45. Thus, for the reasons indicated above, this Court does not find any error in the impugned order. This application is, accordingly, dismissed.
46. Before parting with, this Court, however, must make it clear that in case the petitioner still seeks arbitration nothing said in this order shall be used to its detriment and the learned arbitrator shall decide the whole issue on the basis of evidence adduced before him without being prejudiced with the findings recorded in this judgment which had to be given for examining the submissions made by the learned counsel for the parties.
(Mihir Kumar Jha, J) Patna High Court Dated the 25th March 2015 A.F.R./surendra/-
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