Telangana High Court
M/S Teja Constructions vs The Union Of India And 3 Others on 19 June, 2023
Author: K. Lakshman
Bench: K. Lakshman
HON'BLE SRI JUSTICE K. LAKSHMAN
WRIT PETITION No.30847 OF 2022
ORDER:
Heard Mr.K. Saikrishna Mohan Rao, learned counsel for the petitioner and Mrs. L. Pranathi Reddy, learned Senior Standing Counsel appearing on behalf of the respondents.
2. This writ petition is filed to issue a writ of certiorari calling for the records relating to the Notice No.GNT/W.148/WA-III/TN- 1368, dated 11.10.2021 issued by respondent No.4 and to set aside the same as illegal, and for a consequential direction to the respondents to release the legal amounts illegally withheld by the respondents recovered against Personal Bank Guarantee, Security Deposit respectively over and above the amount prescribed against the Circulars dated 20.11.2020 and 27.11.2020 issued by the government of India.
3. Facts:
i) Respondent No.2 had issued a Tender Notification for Subways in lieu of Level Crossing Nos.31, 32, 36 and 37 in between Guntur - Nadikudi Section and Level Crossing No.96 in Nadikudi -
Macherla Section to a total extent of 5 Level Crossing (LCs). The 2 KL,J W.P. No.30847 of 2022 said Tender No.1899 was opened on 05.05.2017 for an overall value of Rs.10,27,85,246/-. The petitioner concern stood as successful bidder. Therefore, an agreement dated 26.02.2018 was entered into between the petitioner and Sub-Divisional Engineer of respondent on the specific terms and conditions. A Letter of Acceptance (LOA) dated 24.08.2017 was also issued to the petitioner.
ii) Though the said Tender was issued for the aforesaid five LCs, L.C. Nos.32 and 37 out of the five LCs were cancelled and deleted on the ground that the diversion roads were decided to be closed by the District Collector, Guntur. The petitioner and the respondents have not entered into common revised contract for the actual quantities to be executed.
iii) As per the LOA, the petitioner shall complete the aforesaid work within a period of six (06) months from the date of issuance of the said LOA.
iv) According to the petitioner, on receipt of the LOA, it has furnished Performance of Bank Guarantee for a sum of Rs.51,39,262/- and Security Deposit of Rs.45,29,972/- after adjusting EMD ofRs.6,09,290/-. According to the petitioner, it has completed 97% of the work and 3% of the work is due. Delay in completion of the work 3 KL,J W.P. No.30847 of 2022 is due to COVID-19 pandemic situation. It had completed the entire drainage arrangements as provided by the respondents. Due to faulty design and nature of soil, water is not being percolated into earth and, therefore, water got stagnated. Thereafter, the respondents have proposed and directed the petitioner to undertake certain additional works for better drainage facilities to keep the under pass water stagnation free with an improvised design after vacating the entire contract establishment from the site and re-establish the site by re- mobilizing the resources for a minor value work for no fault of it which is unviable. The petitioner has informed the said fact vide its letter dated 08.05.2022 to the respondents. The respondents have not released the excess amount collected by it towards performance of Bank Guarantee and Security Deposit. It has committed breach of contract by not releasing the amount under Clause - 46A of the General Conditions of Contract (GCC) to a tune of Rs.24,67,754/-. The respondents failed to release the GST Neutralization amount to the extent of Rs.4,73,90,286/- even after lapse of five years after introduction of the GST Act. The respondents have terminated the contract vide termination order dated 11.10.2021 without following due procedure laid down under law and also without consideration the 4 KL,J W.P. No.30847 of 2022 explanation dated 07.10.2021 to the seven (07) days Notice dated 27.09.2021 and 48 Hours' Notice dated 07.10.2021. Therefore, the action of the respondents in terminating the contract is arbitrary and illegal.
4. Contentions of the respondents:
i) Whereas, the respondents have filed counter contending that despite granting time, the petitioner failed to complete the work within the agreed period and even after two (02) years of period. Therefore, the said contract order was terminated by the respondents by following due procedure laid down under GCC including issuance of 07 days notice and 48 hours' notice.
ii) As per the agreement conditions, the petitioner has to submit 5% Security Deposit i.e., Rs.31,42,268/- and 5% Performance Guarantee i.e.,Rs.31,42,268/- on the proportional value of Rs.6,28,45,352/- for construction of three subways at LC Nos.31, 36 and 96. The petitioner has completed 75.41% i.e., work value of Rs.4,73,90,286/- out of Rs.6,28,45,352/-, but not 95% of the work as claimed by the petitioner. The Performance Guarantee submitted by the petitioner was expired on 30.06.2021 itself and the petitioner 5 KL,J W.P. No.30847 of 2022 failed to submit fresh Performance Guarantee as per the conditions of the agreement.
iii) Referring to Clause 16 (4) of the GCC, the respondents would submit that if the Contractor fails to extend validity of the Performance of Guarantee, the Railway may claim the full amount of the Performance Guarantee. The time for completion of work gets extended, the Contractor shall get the validity of the Performance Guarantee extended to cover such extended time for completion of work plus 60 days, even if the petitioner has not completed the said work. Therefore, after following the procedure laid down under GCC, the respondents have terminated the work of the petitioner vide proceedings dated 11.10.2021. Vide letter dated 08.05.2022, the petitioner requested respondent No.1 to appoint an Arbitrator, who is not from the Railway existing Officers or Retired Officer but from retired High Court Judge or any other Officer, and the same is pending. Vide the aforesaid letter, the petitioner also requested the respondents to cancel termination notice dated 11.10.2021 and the same was not considered.
6
KL,J W.P. No.30847 of 2022
5. Analysis and finding of the Court:
i) The aforesaid rival submissions would reveal that respondent No.2 had issued the subject tender notification No.1899 calling for subways in lieu of Level Crossing Nos.31, 32, 36 and 37 in between Guntur - Nadikudi Section and Level Crossing No.96 in Nadikudi -
Macherla Section to a total extent of 5 Level Crossing (LCs). The said Tender was opened on 05.05.2017 for an overall value of Rs.10,27,85,246/-. The petitioner concern stood as successful bidder. Therefore, an agreement dated 26.02.2018 was entered into between the petitioner and Sub-Divisional Engineer of respondent on the specific terms and conditions. A Letter of Acceptance (LOA) dated 24.08.2017 was also issued to the said effect. Thereafter, two L.C. Nos.32 and 37 out of the five LCs were cancelled and deleted on the ground that the diversion roads were decided to be closed by the District Collector, Guntur. As per the LOA, the petitioner shall complete the work within six (06) months from the date of said LOA which the petitioner has not completed. According to the petitioner, it has completed 95% of the work, whereas, according to respondents, it has completed only 75.41% of the work even after two (02) years of time. The said six (06) months time was expired by 23.02.2018. 7
KL,J W.P. No.30847 of 2022
ii) As discussed above, the agreed period to complete the work was expired by 23.02.2018. There is an arbitration clause in the said agreement. The petitioner has already invoked the said arbitration clause and arbitration proceedings are pending. There are certain disputes which are mostly of factual in nature i.e., percentage of completion of work, Performance of Bank Guarantee and Security Deposit furnished by the petitioner and according to the petitioner, it has furnished excess amount and the respondents have to return the same. The said aspects cannot be considered by this Court in a writ petition filed under Article - 226 of the Constitution of India.
iii) It is relevant to note that one Mr. Vardhineni Venkateswara Rao had filed a writ petition vide W.P. No.24265 of 2021 before the High Court of Andhra Pradesh at Amaravathi challenging the termination notice dated 11.10.2021. In fact, the said contract was awarded in favour of M/s. Teja Constructions represented by its proprietor, Mr. T. Nagendra Prasad. The said Mr. Vardhineni Venkateswara Rao is no way concerned with the said contract. However, he withdrew the said writ petition with a liberty to file fresh writ petition. Considering the submissions made by the learned counsel for the petitioner therein, the High Court of Andhra Pradesh 8 KL,J W.P. No.30847 of 2022 dismissed the said writ petition as withdrawn vide order dated 13.07.2022, with leave.
iv) It is relevant to note that the petitioner is situated at Plot No.321, HMT Sathavahana Nagar, Kukatpally, Hyderabad, Telangana State, whereas, the General Manager of the South Central Railways is situated at Secunderabad. Except that, there is no cause of action within the territorial jurisdiction of this Court. The LOAs are in Guntur, Andhra Pradesh State; subject Tender was issued by respondent No.2 from Guntur, Andhra Pradesh State. Since the petitioner and the Senior Divisional Engineer of the respondents have entered into Contract in Guntur, there is no cause of cause of action, much less part of cause of action within the territorial jurisdiction of this Court and accordingly the present writ petition filed before this Court is not maintainable.
v) The Apex Court in Union of India (UOI) v. Adani Exports Ltd.1, it was held as follows:-
"17. It is seen from the above that in order to confer jurisdiction on a High Court to entertain a writ petition or a special civil application as in this case, the High Court must be satisfied from the entire facts pleaded in support of the cause of action that those facts do constitute a cause 1 . AIR 2002 SC 126 9 KL,J W.P. No.30847 of 2022 of action so as to empower to court to decide a dispute which has, at least in-part, arisen within its jurisdiction. It is clear for the above judgment that each and every fact pleaded by the respondents in their application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the court's territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the court concerned.
12.1. The Apex Court in N. Kumara Swamy vs. UCO Bank[MANU/AP/0590/2012], it was held as follows:-
"24. Considering the legal position as settled by the decisions aforesaid, it is already noticed that there are no pleadings on the part of the petitioner, as to how any part of cause of action arises within the territorial jurisdiction of this Court. On the contrary, taking the averments, as noted above, no part of cause of action arises within the territorial jurisdiction of this Court inasmuch as on the date of service of show cause notices, which were originally impugned at the time of filing of the writ petition and when the charge memos were sought to be served on the petitioner, he was working at head office at Kolkata. It is not only essential for the petitioner to show that a part of cause of action has arisen within the jurisdiction of this Court but he must also show that the said cause of action is an integral part having nexus to the substantial cause of action. The mere residence of the petitioner at Hyderabad after his retirement and merely 10 KL,J W.P. No.30847 of 2022 because the charges relate to the alleged omissions and commissions of the branch of the respondent bank at Hyderabad, in my view, has no nexus with the cause of action relating to initiation of disciplinary proceedings against the petitioner. In a given case, the charges may relate to any event happening in any branch in any part of India but the situs with respect to initiation of disciplinary proceedings cannot be said to have any integral nexus with the omissions and commissions at all/any of such branches. The show cause notices as well as the charge memos in the present case incidentally refer to omissions and commissions at Banjara Hills branch at Hyderabad, but even if it could have been at some other branch in Karnataka or Kerala, it would not be permissible, under Article 226(2) of the Constitution of India, for the petitioner to invoke the territorial jurisdiction of the High Court within who's territorial limits, such branch is situated. The preliminary objection raised by the learned senior counsel for the respondents has, therefore, to be held as well founded and sustainable and consequently, the writ petition is liable to be dismissed on this ground alone.
12.2. the Apex Court in Navinchandra N. Majithia vs. State of Maharashtra [MANU/AP/0590/2012] , it was held as follows:-
"40. Even in the context of Article 226(2) of the Constitution this Court adopted the same interpretation to the expression "cause of action wholly or in part arises"
vide State of Rajasthan v. Swaika Properties MANU/SC/0304/1985 : [1985]3SCR598 . A three Judge Bench of this Court in Oil and Natural Gas Commission v.11
KL,J W.P. No.30847 of 2022 Utpal Kumar Basu and Anr. MANU/SC/0759/1994 : (1994)4SCC711 observed that it is well settled that the expression 'cause of action' means that bundle of facts which the petitioner must prove, if traversed to entitle him to a judgment in his favour. Having given such a wide interpretation to the expression Ahmadi, J. (as the learned Chief Justice then was) speaking for M.N. Venkatachalliah. CJ. and B.P. Jeevan Reddy. .J.. utilised the opportunity to caution the High Courts against transgressing into the jurisdiction of the-other High Courts merely on the ground of some insignificance event connected with the cause of action taking place within the territorial limits of the High Court to which the litigant approaches at his own choice or convenience. The following are such observations: If an impression gains ground that even in cases which fall outside the territorial jurisdiction of the Court, certain members of the Court would be willing to exercise jurisdiction on the plea that some event, however, trivial and unconnected with the cause of action had occurred within the jurisdiction of the said Court, litigants would seek to abuse the process by carrying the cause before such members giving rise to avoidable suspicion. That would "lower the dignity of the institution and put the entire system to ridicule. We are greatly pained to say so but if we do not strongly depreciable the growing tendency we will, we are afraid, be failing in our duty to the institution and the system of administration of justice. We do hope that we will not have another occasion to deal with such a situation.12
KL,J W.P. No.30847 of 2022 12.3. The Apex Court in Kusum Ingots and Alloys Ltd. vs. Union of India (UOI) [MANU/SC/0430/2004 - AIR 2004 SC 2321], it was held as follows:-
30. We must, however, remind ourselves that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum convenience. (See Bhagar Singh Bagga v. Dewan JagbirSawhany, AIR 1941 Cal; Mandal Jalan v.
Madanlal,; Bharat Coking Coal Limited v. Jharia Talkies & Cold Storage Pvt. Ltd.; S.S. Jain & Co. and Anr. v. Union of India and Ors. (1994) CHN 445; New Horizon Ltd. v. Union of India, MANU/DE/0014/1994 :
AIR1994Delhi126 )."
vi) In N. Anjamma v. South Central Railway2, the notification was for awarding of license for installation and operation of multipurpose stalls at four locations in three Stations for a period of five years over Vijayawada Division. Respondent No.2 therein is stationed at Vijayawada. Respondent No.1 has no role at all in the entire tender process. There is no cause of action, much less part of cause of action within the territorial jurisdiction of this Court.
Considering the said facts and also the law laid down by the Apex 2 . Order in W.P. No.29528 of 2022, decided on 28.09.2022 13 KL,J W.P. No.30847 of 2022 Court in the aforesaid judgments, this Court dismissed the writ petition on the ground that there is no part of cause of action within the territorial jurisdiction of this Court. A similar view was taken by this Court in Dumpala Madhusudhana Reddy v. State of Maharashtra3.
vii) Referring to the above said decisions and other decisions, this Court also in Smt. K. Padmaja v. Union of India4 held that since there is no cause of action, much less part of cause of action within the territorial jurisdiction of this Court, the writ petition is not maintainable and the same is liable to be dismissed. In view of the same, in the case on hand, except that the petitioner company is situated within the territorial jurisdiction of this Court, there is no cause of action, much less part of cause of action. Therefore, this writ petition is liable to be dismissed on the point of jurisdiction also.
viii) It is also contended by respondent Nos.2 to 4 that in view of the arbitration clause, the writ petition filed by the petitioner is not maintainable. The said contention of the respondents is unsustainable in view of the law laid down by the Hon'ble Supreme Court in State 3 . Order in W.P.No.6470 of 2022, decided on 09.02.2022 4 . W.P. No.5252 of 2023, decided on 23.03.2023 14 KL,J W.P. No.30847 of 2022 of U.P. v. Bridge & Roof Co. (India) Ltd.5 wherein the Apex Court held that the courts shall not entertain a writ petition when arbitration is available as dispute resolution mechanism. Further, the Court noted that any dispute involving interpretation of terms of contract cannot be entertained under Article 226. The relevant paragraphs are extracted below:
"16. Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, maybe, also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as provided by the contract or for the civil court, as the case may be. Whether any amount is due to the respondent from the appellant-Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition. The prayer in the writ petition, viz., to restrain the Government from deducting a particular amount from the writ petitioner's bill(s) was not a prayer which could be granted by the High Court under Article 226. Indeed, the High Court has not granted the said prayer.
***
21. There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing 5 . (1996) 6 SCC 22 15 KL,J W.P. No.30847 of 2022 inter alia for settlement of disputes by reference to arbitration (clause 67 of the contract). The arbitrators can decide both questions of fact as well as questions 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. The said article was not meant to supplant the existing remedies at law but only to supplement them in certain well-recognised situations. As pointed out above, the prayer for issuance of a writ of mandamus was wholly misconceived in this case since the respondent was not seeking to enforce any statutory right of theirs nor was it seeking to enforce any statutory obligation cast upon the appellants. Indeed, the very resort to Article 226 - whether for issuance of mandamus or any other writ, order or direction - was misconceived for the reasons mentioned supra."
ix) Referring to the above said decision and other decisions of the Apex Court, this Court in M/s. Supreme Laundry Services Joint Venture Pvt. Ltd. v. The Union of India6 held that when there is an alternative remedy in the form of arbitration, this Court cannot entertain the writ petition.
x) As discussed above, respondent Nos.2 to 4 have issued seven (07) days Notice and 48 Hours' Notice to the petitioner 6 . W.P. No.4906 of 2021, decided on 05.06.2023 16 KL,J W.P. No.30847 of 2022 informing about slow progress and the petitioner herein had submitted explanation dated 07.10.2021.
xi) In the counter filed by the respondents, it is specifically mentioned that LC No.31 at KM No.33/9 - 34/0 between Peddakurapadu - Sattenapalli Railway Stations in Guntur - Nadikudi Section was proposed for percolation pit as drainage according to the General arrangement Drawing. But, due to topographic conditions and raising the water level percolation pit is not suitable. Thus, the Engineer has decided to provide drain connecting to low lying area as drainage arrangement for the Railway Under Bridge (RUB) as per site condition. Accordingly, the Contractor has been advised to start drain work at LC No.31 but the Contractor has not completed drainage arrangement at RUB even after passing of two (02) years and without drainage arrangement, RUB will not be functioned. Hence, drainage arrangement is important for RUB which cannot be delayed further.
xii) It is also specifically contended by the respondents that the respondents have taken decision for construction of RUB at the aforesaid LCs to avoid accidents etc., and it is time bound programme. Therefore, they have specifically mentioned six (06) months time for completion of the aforesaid works. Despite granting ample 17 KL,J W.P. No.30847 of 2022 opportunity, the petitioner failed to complete the said works within the time stipulated and even after completion of two (02) years. Though there are specific allegations, the petitioner has not filed any reply or rejoinder controverting the allegations made by the respondents. It is relevant to note that the petitioner failed to make out any case including any procedural irregularity committed by respondent Nos.2 to 4 in issuing termination order dated 11.10.2021.
xiii) In view of the aforesaid discussion, according to this Court, the petitioner failed to make out any case to interfere with the said order dated 11.10.2021. Further, the petitioner herein has already invoked the arbitration clause and, therefore, the arbitration proceedings are on. Viewed from any angle, the present writ petition is devoid of merits and the same is liable to be dismissed.
6. Conclusion:
The writ petition is accordingly dismissed. However, liberty is granted to the petitioner and respondent Nos.2 to 4 to take all the contentions and grounds raised which they have raised in the present writ petition before the Arbitrator in arbitral proceedings. In the circumstances of the case, there shall be no order as to costs.18
KL,J W.P. No.30847 of 2022 As a sequel, the miscellaneous petitions, if any, pending in the writ petition shall stand closed.
_________________ K. LAKSHMAN, J 19th June, 2023 Mgr