Jharkhand High Court
M/S Hari Om Traders vs State Of Jharkhand & Ors on 15 February, 2017
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W. P. (C) No.904 of 2012
M/s. Hari Om Traders, DistrictRanchi.... Petitioner
Versus
1. The State of Jharkhand
2. The Engineer in Chief, Rural Works Department,
Jharkhand, Ranchi
3. The Chief Engineer, Jharkhand State Rural
Road Development Authority, Ranchi
4. The Chief Engineer, Rural Engineering
Organization, DistrictRanchi
5. The Superintending Engineer, Rural Works
Circle, Chaibasa, DistrictSinghbhum West
6. The Executive Engineer, Rural Works
Department, DistrictSinghbhum East . ........... Respondents.
CORAM: HON'BLE MR. JUSTICE APARESH KUMAR SINGH
For the Petitioner : Mr. Manoj Tandon, Advocate
For the Respondents : J. C to A.G
12/15.2.2017Heard learned counsel for the petitioner and RespondentState.
Petitioner was awarded work under Agreement no. 8/200809 under PMGSY Package No. JH0603, PhaseVth, in the district of East Singhbhum for execution of work relating to (i) Kadamdih to Marchagora5.388 Km.;
(ii) Simuldanga to Betakocha1.450 Km. For Agreement Value Rs. 1,68,55,687/ . Construction cost was Rs. 153,16,013.00 while Maintenance cost was Rs. 15,39,674.00. Agreement is dated 10th January, 2009. Work was to commence from 10th January, 2009 itself to be completed by 9th January, 2010. A similar nature of work was also awarded to the petitioner under Agreement no. 06/200809 under PMGSY package no. JH0605, PhaseVth, in the same district for construction of road (i) Jadugora Musabani road to Swaspur2.028 Km. (2) Govindpur Jadugora road to Tilamura2.680 Km., for Agreement Value Rs. 1,26.90,863.00. The construction cost was Rs. 1,16,67,130.00 while Maintenance cost was Rs. 10, 23,733.00. Agreement is dated 16th May, 2008. Agreement was to commence from the same date and to be completed by 15th May, 2009. Both these agreements have been rescinded by the impugned order dated 15th May, 2010 bearing Memo nos. 974 and 975 issued by respondent no. 6, Executive Engineer, Rural Works Department, DistrictSinghbhum East invoking the terms and conditions of Clause 52.2, Sectionsc, f, h and k 2. as respects Agreement no. 08/200809 and Clause52.2, Sectionsa, e and f as regards agreement no. 06/200809 (Annexures5 to writ petition and B & C to counter affidavit respectively) Dispute Redressal Mechanism is provided under Clause 24 of the agreement (brought on record by supplementary affidavit dated 29th September, 2016) which however has been clarified not to be an arbitration Clause as per Clause 25.1. The Dispute Redressal System do provide a mechanism whereunder firstly it is to be referred to competent authority and thereafter before Standing Empowered Committee if the amount appealed against the decision of the competent authority is in excess of rupees one lakh. Clause 52 of the agreement which contains the Termination Clause is quoted hereunder:
52. Termination 52.1 The Employer may terminate the Contract if the Contractor causes a fundamental breach of the Contract. 52.2 Fundamental breaches of Contract shall include but shall not be limited to, the following
a) the Contractor stops work for 28 days when no stoppage of work is shown on the current Programme and the stoppage has not been authorized by the Engineer;
b) the Contractor is declared as bankrupt or goes into liquidation other than for approved reconstruction or amalgamation;
c) the Engineer gives Notice that failure to correct a particular Defect is a fundamental breach of Contract and the Contractor fails to correct it within a reasonable period of time determined by the Engineer;
d) the Contractor does not maintain a Security, which is required
e) the Contractor has delayed the completion of the Works by the number of days for which the maximum amount of liquidated damages can be paid, as defined in clause 44.1
f) the Contractor fails to provide insurance cover as required under clause 13;
g) if the Contractor, in the judgment of the Employer, has engaged in the corrupt or fraudulent practice in competing for or in executing the Contract. For the purpose of this clause, "corrupt practice" means the offering, giving, receiving, or soliciting of any thing of value to influence the action of a public official in the procurement process or in Contract execution.
"Fraudulent Practice" means a misrepresentation of facts in order to influence a procurement process or the execution of a contract to the detriment of the Employer and includes collusive practice among Bidders (prior to or after bid submission) designed to establish bid process at artificial noncompetitive levels and to deprive the Employer of the benefits of free and open competition;3
h) if the Contractor has not completed at least thirty percent of the value of construction Work required to be completed after half of the completion period has elapsed;
i) if the Contractor fails to set up a field laboratory with the prescribed equipment, within the period specified in the Contract Data and
j) any other fundamental breaches as specified in the Contract Data;
k) if the Contractor fails to deploy machinery and equipment or personnel as specified in the Contract Data at the appropriate time.
Termination entails consequences which are enumerated at Clause53 and other clauses thereof.
Petitioner has also assailed the eProcurement Notice i.e., Notice Inviting Tender issued by respondent no. 3 by paper publication in a Daily Newspaper dated 5th February, 2012. By interim order dated 10th July, 2012, respondents were restrained from proceeding in the matter. No fresh allotment of work has been made, therefore, in favour of anyone during the pendency of the writ petition.
Essentially, challenge to impugned action is based upon the grounds of violation of principles of natural justice. Petitioner contends that no notice or opportunity of hearing was given before termination of the contract. Counsel for the petitioner has relied upon a judgment rendered in the case of Modi Projects Ltd., Ranchi & Ors. Vs. State of Jharkhand & Ors. reported in 2012(3) JLJR 60 in support of his contention. Statements made at para15 of the writ petition to that effect have been answered by the respondent at para 26 of their counter affidavit referring to several letters no. 1663 dated 27th October, 2008; 1842 dated 14th October, 2009, 129 dated 2nd April, 2009, 239 dated 2nd September, 2009; 147 dated 28th January, 2010, 326 dated 25th February, 2010 enclosed as AnnexureF series. Perusal of letters at AnnexureF series however, shows that the petitioner has been repeatedly reminded of abnormally slow progress of work and failure to complete the work within the stipulated time. In fact, one letter dated 14.10.2009 bearing no. 1842 issued by the Respondent No. 6 conveys that on account of abnormally 4 slow progress of work and failure to complete the work within the stipulated time, the said Agreement has been terminated under instruction of Higher Authorities as per Clauses52.1, 52.2 (a), (e) and (f) of General Conditions of the contract. This relates to the Agreement No. 06/200809. The impugned letter at Annexure5, however, convey that pursuant to the direction of Chief Engineer, Jharkhand State Rural Road Development Authority contained in letter no. 1449 dated 08.04.2010, as per the work programme submitted by the petitioner, construction of the road was to be completed by 15.05.2010. Since the work was not found to be completed by 15.05.2010, Agreement has been terminated invoking the various Clauses under Clause 52.2. It therefore appears that after initial termination of the Agreement of the petitioner, as per AnnexureF, petitioner was given some more time to complete the work till 15.05.2010. Thereafter, termination has been effected. However, the documents at AnnexureF series do not show that any notice to the petitioner to show cause as to why the Agreement be not terminated for failure to comply with the terms and conditions of the Agreement and Instructions issued by the Respondent Engineers, has been issued before passing the order of termination. Petitioner and the Respondent both are at crossroads on the allegations relating to noncompletion of the work within the time schedule. The execution of the work obviously involves performance of reciprocal promises by the parties. That however is a question dependent upon the facts, which may be disputed between the parties and on interpretation of terms and conditions of the Agreement. Therefore, in this proceeding, no determination or observation can be made in that regard.
However, decision to terminate the Agreement with the petitioner, does not appear to have been preceded by appropriate showcause notice, though it would entail serious adverse consequences. Therefore the impugned order cannot be sustained in the eye of law on the grounds of violation of principles of natural justice.
5
Accordingly, the impugned order dated 15th May, 2010 is quashed. Respondents shall take a fresh decision in the matter after due notice and showcause to the petitioner containing specific charges and also enclosing supporting documents, if any, thereto so that petitioner may have an opportunity to respond before any fresh decision is taken. Since the impugned decision has been quashed only on the grounds of violation of principles of natural justice by remanding the matter to the Respondent, Agreement as such does not stand revived for the present till a fresh decision is taken by the respondent, in accordance with law. It goes without saying that parties would face consequences based upon the decision to be taken by the respondent in accordance with law.
Accordingly, the writ petition is allowed in the aforesaid manner. Consequently, I.A. No. 1595 of 2015 stands disposed of.
(Aparesh Kumar Singh,J) jk