Andhra Pradesh High Court - Amravati
Oil And Natural Gas Corporation Ltd., vs Deep Indus on 29 December, 2020
Author: J K Maheshwari
Bench: J K Maheshwari
HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
CHIEF JUSTICE J.K. MAHESHWARI
AND
JUSTICE LALITHA KANNEGANTI
WRIT APPEAL No.142 of 2020
(Taken up through video conferencing)
Oil & Natural Gas Corporation Ltd.,
Rajahmundry Asset and another
... Appellants.
Versus
M/s Deep Industries Ltd.
... Respondent.
Counsel for Appellant : Sri Kakara Venkata Rao
Counsel for Respondent : Sri Vivek Chandra Sekhar.S
ORAL JUDGMENT
Dt:29.12.2020 Per Lalitha Kanneganti, J This appeal under Clause 15 of Letters Patent is filed assailing the order passed by the learned Single Judge in W.P.No.28527 of 2017 dated 15.11.2019, whereby the learned Single Judge has allowed the writ petition.
2. For the sake of convenience, the parties in this appeal are referred to as they are arrayed in the writ petition.
3. The facts of the case, in a nutshell, are that the first respondent has published a notice inviting tenders for hiring Gas Dehydration System at its Rajahmundry Asset for a period of 3 years at 5 production Installations located in 5 different places. The petitioner entered into a Memorandum of Understanding / Agreement dated 27.01.2015 with Croft Productions Systems Inc (for brevity "CPS") a registered and certified Natural Gas and Oil 2 Equipments Leasing & Selling Company based in the United States of America, as its Technical Collaborator for successful execution of the contract, if awarded by the 1st respondent. The petitioner submitted a bid, for all five locations, along with documents, which indicate the requisite experience of the Technical Collaborator. The 1st respondent vide letter dated 13.3.2015 informed the petitioner that the petitioner is qualified as per the technical requirements, and is therefore, shortlisted for opening the price bid of the tender. In fact, the petitioner was the only bidder, who was technically qualified and participated in the bid. Thereafter on 13.03.2015 the petitioner was declared as lowest bidder. A meeting was conducted on 23.03.2015 and the petitioner agreed to reduce the quoted price to Rs.1.752 crores.
4. It is stated that the 1st respondent delayed in handing over sites to the petitioner for commencement of the work. Further, due to various other defaults attributable to the respondents and other force majeure clauses, the mobilisation of equipment was delayed and the same was intimated to the respondents from time to time and the respondents also granted extension of the last date of the mobilisation. The petitioner installed, commissioned and conducted a successful test run of the equipment. But to the utter dismay of petitioner, the respondents withheld an amount of Rs.42.00 crores payable to the petitioner as per the contract, stating that the amounts were retained towards liquidated damages and compensation/penalty towards delayed mobilisation and test run of the equipment.
5. It is stated that the 1st respondent floated another e-tender on 26.5.2015 with respect to four production installations in 3 Rajahmundry Asset (Phase-II) for a period of five years. The petitioner submitted a bid document and the petitioner was declared as lowest bidder. After successful performance of the contract for a period of 1½ years, the 1st respondent issued letter dated 27.2.2017 informing the petitioner that the respondents intend to negotiate the rates at which Phase-I contract was awarded. There were several communications with regard to price reduction. While so, on 31.7.2017 the 1st respondent issued a notice of termination to the petitioner on the ground that the petitioner did not provide a satisfactory reply to the show cause notice and terminated the contract with effect from 27.05.2018. The said termination was immediately followed by a notice of suspension and blacklisting dated 03.08.2017. The petitioner approached this Court by way of filing W.P.Nos.26400 and 26448 of 2017 challenging the termination notice and suspension / blacklisting notice and obtained order dated 08.08.2017, suspending the notice dated 03.08.2017.
6. The respondents preferred Writ Appeal No.1149 of 2017 challenging the interim orders passed by the Court in Writ Petition No.26448 of 2017 pertaining to Phase-II of the contract. The said writ appeal was disposed of, maintaining the interim suspension. The respondents conceded that no final decision of blacklisting was taken. The respondents were directed to put the petitioner on notice prior to such final decision. Thereafter on 17.08.2017 the respondents issued impugned communication dated 17.08.2017 to the petitioner stating that Phase-I contract was awarded to the petitioner on the understanding that its technical collaborator had requisite experience and that since the said technical collaborator 4 lacks experience, the petitioner was not entitled to contractually agreed rate of Rs.1.58 for Phase-I or Rs.0.78 for Phase-II. Therefore, by the impugned communication dated 17.08.2017, the respondents called upon the petitioner to remit an amount of Rs.66.95 crores excessively paid towards Phase-I contract. Assailing the same, the petitioner has approached this Court.
7. The respondents filed their counter mainly contending that when there is an arbitration agreement between the parties, the writ petitioner cannot approach the Court invoking the jurisdiction of the Court under Article 226 of the Constitution of India. It is also stated that they have received complaints against the writ petitioner during the tendering process of awarding Phase-I contract and again during the tendering process of Phase-II that its technical collaborator did not have experience stipulated in the tender conditions. As that goes to the very root of the matter and determines the eligibility of the petitioner, the 1st respondent has every right to direct the petitioner to prove its eligibility and the experience of its technical collaborator. However, due to urgency, the contract was awarded to the petitioner with the undertaking submitted by them.
8. It is stated in the counter that Article 36 of these contracts empowers the 1st respondent to terminate the contracts in question if it is subsequently found that any information submitted by the petitioner is not genuine. Even a vigilance enquiry was also conducted and it is found that the experience of the technical collaborator of the petitioner is not as per the requirement, as such they have issued a show cause notice on 28.04.2017 as to why the undertaking should not be revoked and the contract awarded 5 should not be terminated. A reply was given on 15.05.2017 without any proper explanation, as such on 31.07.2017 proceedings were issued terminating the contracts. Challenging the same, the petitioner approached this Court, wherein this Court by order dated 17.08.2017 directed the petitioner to remit an amount of Rs.66.95 crores, being the excess amount received by the petitioner.
9. Learned Single Judge has framed two issued for consideration, firstly, with regard to entertaining the writ petition when an alternative remedy of arbitration is available and secondly, whether the impugned order issued by the 1st respondent can be sustained.
10. Learned Single Judge referred to the judgments of the Apex Court in State of U.P. Vs. Bridge & Roof Co. (India) Ltd.1; State of Kerala Vs. M.K.Jose2; State of Bihar Vs. Jain Plastics and Chemicals Ltd.3; ABL International Ltd. Vs. Export Credit Guarantee Corporation of India Ltd.4; Noble Resources Ltd. Vs. State of Orissa5; Bal Krishna Agarwal (Dr) Vs. State of U.P.6; Harbanslal Sahnia Vs. Indian Oil Corporation Ltd.7; Union of India Vs. Tantia Construction (P) Ltd.8 and Mahanandi Coalfields Ltd. Vs. Dhansar Engg. Co. (P) Ltd.9 and held that in spite of there being an effective alternative remedy to the parties by way of arbitration, still the writ petition is maintainable. 1 (1996) 6 SCC 22 2 (2015) 9 SCC 433 3 (2002) 1 SCC 216 4 (2004) 3 SCC 553 5 (2006) 10 SCC 236 6 (1995) 1 SCC 614 7 (2003) 2 SCC 107 8 (2011) 5 SCC 697 9 (2016) 10 SCC 571 6
11. Insofar as the second aspect is concerned, learned Single Judge observed that when there are two parties to a contract or agreement, novation of contract is permitted only by the consent of both the parties and unilateral modification of the contract is not permitted by the Indian Contract Act.
12. Learned Single Judge observed that the two contracts of the respondents with the petitioner are two independent contracts. The terms of one contract cannot influence the change of terms of the other contract, which is already concluded between the parties. As the services of the petitioner were availed without any adverse remark, the petitioner has to be paid as per the terms of the 1st contract and accordingly, the learned Single Judge has set aside the impugned notice dated 17.08.2017.
13. Learned counsel for the respondents would submit that it is settled law that when an arbitration agreement is available and there is an alternative remedy, the writ petitioner ought to have availed the said remedy instead of approaching this Court and the learned Single Judge went wrong in entertaining the writ petition. Learned counsel would submit that the writ petitioner has given an unconditional undertaking and Integrity Pact, as such he is refrained from raising any dispute in any Forum on the actions taken by ONGC pursuant to the said undertaking and Integrity Pact. He further submits that the learned Single Judge has failed to take into consideration that the technical collaborator was not having requisite expertise, as such the order impugned is liable to be set aside.
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14. Learned counsel appearing on behalf of the writ petitioner has rendered his arguments supporting the findings given by the learned Single Judge and submitted that the order impugned can be sustained.
15. We have heard the learned counsel appearing on behalf of either side and also gone through the material placed on record.
16. A bare perusal of the order reveals that the learned Single Judge has thoroughly examined both the factual and legal aspects and has come to a just conclusion. Mere availability of an alternative remedy in the contract itself cannot be a ground to disentitle the petitioner from approaching this Court. Time and again, the Apex Court as well as this Court laid down the parameters in this regard. The learned Single Judge has extensively considered those decisions and rightly held that the writ petition is maintainable in the facts and circumstances of the case and further proceeded to decide on the merits of the matter.
17. In the facts and circumstances of the case, we feel that the learned Single Judge was justified in allowing the writ petition and we do not see any grounds to interfere in this intra-court appeal.
18. Accordingly, the writ appeal is dismissed. There shall be no order as to costs.
As a sequel, all the pending miscellaneous applications shall stand closed.
J.K. MAHESHWARI, CJ LALITHA KANNEGANTI, J
PVD
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CHIEF JUSTICE J.K. MAHESHWARI
AND
JUSTICE LALITHA KANNEGANTI
WRIT APPEAL No.142 of 2020
DATE: .12.2020
PVD