Himachal Pradesh High Court
M/S J. K. Exim Pvt. Ltd vs Director Of Women & Child Development on 13 August, 2019
Author: Sureshwar Thakur
Bench: Sureshwar Thakur
IN THE HIGH COURT OF HIMACHAL PRADESH
SHIMLA
Arb. Case No. 3 of 2017 a/w Arb.
.
Case No.9 of 2017
Reserved on : 24.7.2019
Date of decision: 13.8.2019
1. Arb. Case No. 3 of 2017
M/s J. K. Exim Pvt. Ltd. ....Petitioner
versus
Director of Women & Child Development, H.P. & another
r ....Respondents.
2. Arb. Case No. 9 of 2017
H.P. State Civil supplies Corporation .....Petitioner
Versus
M/s J. K. Exim Pvt. Ltd & another ....Respondents.
Coram:
The Hon'ble Mr. Justice Sureshwar Thakur, Judge.
Whether approved for reporting?1 Yes.
For the petitioner: Mr. Suneet Goel, Advocate, for the
petitioner in Arb. Case No. 3 of
2017 and for respondent No.1 in
Arb. Case No.9 of 2017.
For the respondents: Mr. Hemant Vaid Addl. A.G. with Mr.
Y.S. Thakur & Mr. Vikrant Chandel
Dy. A.Gs. for respondent No.1 in
Arb. Case No. 3 of 2017 and for
1
Whether reporters of the local papers may be allowed to see the judgment?
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-2-
respondent No.2 in Arb. Case No. 9
of 2017.
Mr. Mandeep Chandel, Advocate, for
the petitioner in Arb. Case No.9 of
.
2017 and for respondent No.2 in
Arb. Case No. 3 of 2017.
Sureshwar Thakur, J.
Since Arbitration Case No. 3 of 2017, and, Arbitration Case No. 9 of 2017, arise, from a common award, rendered, by the learned Arbitrator, thereupon both, are, amenable for, a, common verdict, being rendered thereon.
2. Through, Arbitration Case No. 3 of 2017, the contractor, casts, a challenge, upon, the validity, of, only partial affirmative findings, standing recorded, upon, issues No. 1, and, 2, hence under, the impugned award, of, 20.10.2016, (i) whereas, rather the completest affirmative findings were enjoined, to, be rendered thereon, for hence ensuring parity interse therewith, and, visavis, issue No.3, whereon rather findings fully supportive qua the claimant, stand pronounced, by the learned Arbitrator. Furthermore, a challenge is also cast, visavis, rejection, of, claim No.4, appertaining, to loss of profit, on account of termination of supply order, (ii) given the afore rejection also conflicting with, the, findings returned, upon, issue No.3, whereas, both were ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -3- interlinkable, and, hence in tandem, rather visavis, both apt findings, were enjoined to be returned, given, both being in segregable, (iii) and, on the other hand, the recipient of, the, .
supply order i.e. H. P. State Civil Supplies Corporation, has, through Arbitration Case No.9 of 2017, hence, contested the fastening, of, the apposite liabilities, upon, it, along with the fastening thereof, upon, proforma respondent No.2, purportedly, on, the principle of joint, and, vicarious liability,
(ii) whereas, the afore principle neither being attracted nor hence the afore conjoint liability being amenable, for, fastening upon it, visavis, the, claim(s) allowed, by the learned Arbitrator. Furthermore, through, the afore arbitration case, cast, before this Court, by the recipient(s), of, apposite supply(ies), it is also contended, that the learned Arbitrator, relegating into, the realm of obfuscation, (ii) the order rendered by this Court, on 26.3.2013, upon, CWP No. 782 of 2013, (iii) whereat, this Court, had, permitted the making, of, supply(ies), after, completion of 45 days, and, only, when prior thereto, the apt leave of the Court, was, sought, (iv) whereas, the afore leave being not asked, and, yet the supply(ies) being also made, hence the, allowing of the contractors' claim, visavis, supply(ies) made, without the leave, of, the Court, being asked, ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -4- nor granted, rather being interferable. The vigor, of, the afore submissions, made, before this Court by the recipient, of, the supply(ies), H.P. State Civil Supplies Corporation, is, effaced.
.
(v) given even though, this Court, had, on 26.3.2013, upon, CWP No. 782 of 2013, hence, made the hereinafter extracted pronouncement: "As prayed for, on behalf of the parties, list on 9 th April, 2013, before the learned Single Judge. However, any supply after completion of 45 days will only be made after seeking prior permission of this Court."
3. However, for the reasons, to be assigned hereinafter, (a) even, upon, the requisite leave remaining, un strived, nor standing granted, (b) yet, would, not, erode the jurisdiction, of, the learned Arbitrator, to, upon entering, upon, the reference, hence his determining, from, the, evidence, adduced, by the rival contestants, rather before him, hence, the, apt tenacities appertaining, to, concurrent therewith claims. The vigor of the afore inference, is also, fortified, (b) from, the trite factum, qua, in the afore writ petition, the claimantcontractor, hence, casting a challenge, upon, the validity of the termination, of, the contract, entered interse ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -5- him, and, the department concerned, (c) and, when the Principal Division Bench of this Court, on 6.8.2013, had, upon, accepting the preliminary objections, reared by the learned .
Advocate General, visavis, the maintainability, of, the writ petition, upon anvil, qua despite its being covered, by, the apposite arbitration clause, hence existing in the contract drawn, interse, the contesting parties, hence declined the espoused relief, borne in, CWP No. 4501, of, 2013, visavis, the claimantcontractor, (d) wherethrough, reiteratedly he had strived, to, cast a challenge, visavis, the illegal termination of the contract, entered into, interse, him, and the department concerned, of, the State, of, H.P. The effect thereof is qua, given the afore order previously pronounced, on, 26.3.2013, upon, CWP No. 782 of 2013, rather merging into, the, final order pronounced, upon, CWP No. 4501 of 2013, and, thereafter, with the learned Arbitrator entering, upon, the reference, (iv) hence he was fully, and, omnibusly empowered, to determine, the, sway, and, the clout, and, the domain(s) of the dispute, engaging the parties, at contest, inclusive, of, (v) whether the termination of the contract being illegal or legal, and, concomitantly whether the strivings, made, by the claimantcontractor, against, the department, of the ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -6- Government concerned, and anvilled, upon, the illegal termination, of the contract, hence being amenable for, acceptance or rejection, and, besides obviously, qua the .
claimantcontractor, being entitled, to, monetary compensation.
4. Be that as it may, the afore determination, rests, the vigor of the afore espousal made before this Court, by the counsel appearing, in Arbitration Case No.9 of 2017, (i) nonetheless, this Court is enjoined to determine, and, fathom the worth, of, the reasoning assigned, by the learned Arbitrator, qua, the apposite termination hence being unilateral, and, arbitrary, (ii) given the records unfolding qua preceding therewith, no imperative compliance, being meted, visavis, the principle(s), of, audialteremparetem, and, also qua adherence, being not meted, visavis, conditions No. 21, and, 22 borne, in Annexure C3, conditions whereof are extracted hereinafter: "21. The delivery of PSE Kits must be completed within 45 days from the date of issue of supply order by the managing director, H.P. state Civil Supplies Corporation Ltd, Kasumpati, Shimla9. The articles to be supplied should strictly conform ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -7- to the description, specifications, quality and workmanship as per samples given by the supplier.
22. If the supplier fails to complete the delivery of .
the supplies on or before the date of completion as given in supply order, the supplier will be charged with a penalty @ 1% (of the cost of delayed supplies) per week. Provided that if the delay is more than 3 weeks, the department will be at liberty to cancel the remaining order and procure the balance supply from the open marked and the extra cost incurred due to the same shall be the borne by the supplier. Provided further, the amount of such damages may be recovered/adjusted or set off against any sum payable to the supplier arising under this or any other contract or the security deposit made under this contract."
(i) upon making reading thereof, in conjunction, with, the afore statutory formula hence prevailing thereat, the, conclusion, that, hence ensues, is qua, with the apposite provisions rather enshrining qua the apposite delay, being extendable, if, not exceeding beyond three weeks, and, the afore, extendable period, is, made computable, after the expiry, of, the initial period, of 45 days, commencing, visavis, the date, of, issuance, of, supply order, (ii) thereupon the contracting parties, not hold, any contemplation, visavis, hence ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -8- compliance(s), for, the relevant purpose, being imperatively made, within 45 days, from, the date of issuance of supply order, by the agency concerned, rather hence, even beyond, .
the, initial period of 45 days, prescribed in condition No. 21, hence the contractorclaimant, also holding a leverage, to, make the relevant supply(ies), but within three weeks' thereafter (iii) and, when hence hereat, the, supply order, was made, on 14.2.2013, and, in consonance, with, condition No. 21, the supplies were to be completed, within 45 days therefrom, hence on 31.3.2013, (iv) yet, when the proviso, borne in condition No. 22, unfolds qua even within three weeks, rather therefrom, he could make suppl(ies), and, upon, yet, apt default(s) evidently emerging rather, thereupon, the, procuring/agency of the State, being empowered hence to forthwith rescind, the, contract. Nowat, hence when the afore period of three weeks, countable, from 31.3.2013, expired on 31.1.2014, and, when upon occurrence, of, the apposite defaults, the department concerned, though was empowered to forthwith cancel, the contract, (v) yet, with the termination, occurring much belatedly therefrom, rather hence on 7.6.2013, hence renders, the rescission, of, the contract, to, infract the principles, of, natural justice, also hence the belated ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -9- termination, sparking a conclusion(vi) qua the enshrinings, embodied, in, condition No.22, being waived, and, abandoned and, also, the afore espousal rather working against the .
department concerned.
5. The afore reasoning has, immense merit, as, despite within, the, extended period, of, completion, of, supplies, as, contemplated, in condition No. 22, theirs' not occurring, nor occurring in contemporaneity, therewith, whereas, hence the respondent department concerned, was, empowered, to, in contemporaneity therewith, hence forthwith rescind, the contract, whereas, it not forthwith making cancellation, of, the contract, (i) thereupon the afore prolonged procrastination, on, the part of the agency concerned, of, the State, to, invoke either condition No. 21 or condition No. 22, (ii) bolsters, an inference, qua the agencies abandoning, and, waiving hence invocation, at their instance, of either condition No.21 or condition No. 22, and, rather their impliedly extending, the, afore period, of, contract visavis, the claimantcontractor, and thereupon also, the, rescission being, vitiated. Furthermore, since Annexure C7, comprises the statement, rendered by RW 5, Arvind Sharma, statement whereof, is extracted hereinafter: ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -10- "Stated that I am working as Company Secretary 9CS) in HP state civil supplies Corporation Ltd. SDA complex, Shimla since 2011. I tender in evidence .
my affidavit Exbt. RW5/A. I am fully conversant with the facts relating to the transaction in question. I authorized to appear as witness and make statement in these proceedings on behalf of respondent No.2civil supplies Corporation as resolution dated 29th June, 1988 exbt. RW5/B. I tender in evidence my affidavit Exbt. RW5/A. Letter Exbt. RW5/C dated 7.6.2013 was sent by respondent No.2 corporation to the claimant company. I have brought the original record relating to the tender process of two in one boards with stands which is subject matter of the present proceedings.
xxx xxx cross examination on behalf of claimant by Mr. Ajay Vaidya, Advocate.
Initially the bid submitted by another tenderer 9L1) being the lowest was accepted, but owing to its inability to supply the sample of two in one boards with stands, the claimant company being the next lowest tenderer (L2) was called for negotiations after which supply order was issued in its favour. After the supply order was issued in Feb. 2013, the claimant company started making supplies in March, 2013. it is correct that in between L1, M/s Rajesh Scientific Industries filed a writ petition in the Hon'ble High Court of Himachal Pradesh, in ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -11- which the Hon'ble Court had passed a conditional stay order. We had come to know about it on the same day and applied for the copy of order and .
received the same after 2/3 days. As the claimant company was duly represented by an Advocate when the stay order was passed by the Hon'ble Court, we were not supposed to inform about it. We had not taken any steps to get the stay order vacated from the Court. Communications regarding the supplies made by the claimant company not confirming to specification/approved samples were received by respondent No.2corporation from the Director, women and child Welfare, Shimla (respondent No.1), but I do not remember the exact dates/month(s) of receipt thereof. I am not aware as to whether any inspection committee was formed by respondent No.1department to ascertain whether the supplies being made by the claimant company were upto the specifications/approved samples. The supply order was canceled pursuant to the recommendation received from the Director Child and Women Himachal Pradesh as also for the reason that the supplies made by the claimant company were not upto the specification/approved samples. Though before cancellation of the supply order a discussion was held in the corporation whether a show cause notice was required to be issued to the claimant company, yet on perusal of the tender document, it was found that there was ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -12- no condition requiring giving of such notice after expiry of the delivery period. Officials notings about these discussions are Exbt. C7 (colly) (42 pages).
.
However, even despite these discussion show cause notice was not issued to the claimant company as it would have been only a futile exercise as the delivery period stipulated under the tender document was already over, without there being any request for extension from the claimant company.
Even otherwise the legal opinion submitted by the legal advisor of the corporation was not binding on the corporation. Volunteered that the claimant company had also not applied for prior approval of the court to continue supplies after delivery period of 45 days. It is correct that condition No. 22 of the tender document provides that supplies could be made within three weeks after the initial period of 45 days subject to "a penalty @1% (of the cost of delayed supplies) per week. Provided that if the delay is more than three weeks, the department will beat liberty to cancel the remain order and procure the balance item from the open item and the extra cost incurred due to the same shall be the liability of the supplier."
The writ petition filed by M/s Rajesh Scientific Industries was pending when the supply order in favour of the claimant company was cancelled. Only letters informing about the supplies being not upto the specifications/approved samples were ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -13- received by respondent No.2 corporation from respondent No.1department and no inspection report to the effect that the supplies were .
substandard was received. Letter dated 20.4.2013 addressed by the claimant company to the Managing Director, HP civil supplies Corporation, Shimla with copy to the Director women Welfare and Child Development Department Shimla was received in respondentcorporation on 30.4.2013.
However, no action was taken by the corporation pursuant to this letter".
(i) and, its reading making clear and categorical, unfoldings, qua before, the, cancellation of supply order, discussions being held, in, the corporation, qua, a show cause notice being required to be issued, to the claimant company, (ii) yet, a perusal of, the, tender document unveils qua the afore necessity, being not explicitly borne therein, nor hence when even after expiry, of the apt covenanted delivery period, there was, prima facie no necessity of any show cause notice being issued, upon, the contractor imperatively, hence preceding the termination of the contract, (ii) thereupon even, if, neither the tender document nor even, if, conditions No. 21 and 22, borne in the relevant contract, hence pronounce, the, necessity, of, issuance of, a, show cause notice, upon, the claimant ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -14- contractor, rather, preceding the apposite termination, (iii) yet, the afore reticence(s) therein would, not estop, the claimant contractor, to challenge, the afore termination, hence upon the .
afore anvil, qua, rather hence, the, rescinding, of, the contract, being unilateral, (iv) conspicuously, given the afore echoings also making emanations, visavis, the necessity, of, the department concerned, hence issuing, a show cause notice, upon him hence preceding, the, termination, of, contract.
Emphatically also when, the, supplies were also made, visa vis, department concerned rather subsequent, to, the completion, of, the period, as, contemplated, in, condition No.22. Consequently, the findings recorded by the learned Arbitrator, upon issue No. 2 are meritworthy, and, do not warrant any interference. The sequel of the afore, is qua when a reading, of, further echoings, made respectively, by, RW2, RW6, and, RW7 qua lack of constitution, of, the apposite inspection committee, for hence determining, whether, the supplies were defective or deficient, and, therefrom, the, rejection, of the, supply(ies), are, construable to be both not tenable, and, are also not meritworthy, reiteratedly hence when, the, afore, did not make, the afore requisite testifications, in their respectively recorded, statements, before ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -15- the learned Arbitrator, (i) thereupon, the rejection of the supply(ies) of the claimantcontractor, on, the pretext of theirs' deficient or theirs not conforming, visavis, the requisite .
standards, of, quality, is ingrained, with, a, vice of arbitrariness, (ii) conspicuously, for, wants, of, in consonance, with the relevant instructions, hence the constitution, of, the apt inspection committee remaining rather unconstituted nor it making an apt pronouncement qua the afore defect, being found, visavis, the goods supplied. The afore findings returned, upon, issue No.2, for the reasons hence assigned thereon, by the learned Arbitrator, and, also for the reasons aforestated, hence warrant no interference, (iii) thereupon the findings in contradiction therewith pronounced, upon, issue No.4, by the learned Arbitrator, while rejecting, the, claim, under, the head "material supplied being sub standard", hence, leading to termination, of, the contract rather infracting, the, solemmnity, of, the affirmative findings recorded earlier thereto, even upon, issue No.2. Consequently, the, partial hence affirmative findings returned, upon, issue 4, by the learned Arbitrator, for theirs being brought at par, with, connected therewith issue No. 2, rather are converted into full affirmative findings thereon, and, also thereon the requisite ::: Downloaded on - 29/09/2019 02:03:23 :::HCHP -16- contractual rates, of, interest as, accruable thereon, are, ordered, to, be levied thereon, and, the fastening of, the, apposite liability, upon it, along with, the, department .
concerned, of, the government, is not erroneous, and, thereupon Arbitration Case No. 9 of 2017, is, dismissed.
6. For the foregoing reasons, CARBC No. 3 of 2017, is, partly allowed, and, the award of 20.10.2016, rendered, by the learned Arbitrator, is, hence modified, in the afore manner. All pending applications also stand disposed of. Records be sent back forthwith.
(Sureshwar Thakur)
________ 2019 Judge
(kck)
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