Andhra Pradesh High Court - Amravati
Rakesh Kumar Jain Railway Contractors vs The Senior Divisional Engineer West on 9 May, 2025
APHC010009242025
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3331]
(Special Original Jurisdiction)
FRIDAY, THE NINTH DAY OF MAY
TWO THOUSAND AND TWENTY FIVE
PRESENT
THE HONOURABLE SRI JUSTICE SUBBA REDDY SATTI
WRIT PETITION NO: 645/2025
Between:
Rakesh Kumar Jain Railway Contractors ...PETITIONER
AND
The Senior Divisional Engineer West and Others ...RESPONDENT(S)
Counsel for the Petitioner:
1. SANKU DURGA RAMACHANDRA RAO
Counsel for the Respondent(S):
1.
The Court made the following:
ORDER
The above Writ Petition is filed impugning the termination notice vide Letter No.ECoR/WAT/Civil/2024/0073/RD-0013, dated 16.12.2024, as illegal and arbitrary and consequently allow the petitioner to complete the contract work under the Agreement No.ECoR/WAT/Civil/2024/0073.
2. A Tender No.eT-West-WAT-29-2023 for „Through Sleeper Renewal (Primary)‟ with wide base PSC sleepers for a length of 36.864 Page 2 of 11 Km between Malligura to Kirandul stations under the jurisdiction of Divisional Engineer (West)/WAT on KK-II line of Waltair Division was floated, and the petitioner submitted bid ID 15907674 dated 26.10.2023. The petitioner became the L1 bidder for the work of 62,180 Sleepers renewal (Primary) with wide base PSC sleepers for 36.864 Km. A Letter of Acceptance dated 10.02.2024 was issued with a condition to complete the work in 12 months.
3. Since the petitioner failed to adhere to the time/work schedule, notices/reminders were issued to the petitioner, and 48 48-hour notice was issued on 12.12.2024 to commence and continue the work, and thereafter termination notice (Ex.P1) was issued. Aggrieved by the same, the above writ petition is filed.
4. Heard Sri Posani Venkateswarlu, learned senior counsel representing Sri S.D.Ramachandra Rao, learned counsel for the petitioner and Sri Challa Dhanunjaya, learned Additional Deputy Solicitor General of India, for respondents.
5. Sri Posani Venkateswarlu, learned senior counsel, would submit that the petitioner was entrusted with the work of erection of PSC sleepers, however, the petitioner was asked to do a different type of work. Since the nature of the work was changed from the tender, the petitioner could not complete the work. He would submit that a fresh tender notification dated 20.12.2024 was issued fixing 8 months. Had the authority provided 8 months to the petitioner, he would have completed the work. He would finally submit that the termination of the contract is illegal and arbitrary, and the 2nd respondent, being the public authority, cannot act contrary to the conditions.
Page 3 of 116. Per contra, Sri Challa Dhanunjaya, learned Additional Deputy Solicitor General of India for respondents, would submit that the contract awarded to the petitioner is for erection of PSC sleepers for a length of 36.864 Km. The petitioner was provided 17,665 sleepers and he could insert only 5,424, and the remaining 12,241 are left out. He would submit that despite the notices/reminders, the petitioner could not complete the work, and the work entrusted to the petitioner is time-bound work. The petitioner, having completed 1/3rd the work, cannot be allowed to contend the change in the work. He would also submit that a fresh tender was called for the completion of work, prescribing 8 months. Bids were received, due to the interim order dated 09.01.2025, the process has been stalled and eventually, prayed to dismiss the writ petition.
7. Now, the point for consideration is:
Whether, the termination of the agreement is illegal and arbitrary?
8. As narrated supra, the petitioner participated in the bid, in pursuance of Tender No.eT-West-WAT-29-2023 for installation of „Through Sleeper Renewal (Primary) with wide base PSC sleepers‟ for a length of 36.864 Km and became L1 bidder. A Letter of Acceptance dated 10.02.2024 was issued, wherein it was mentioned that the entire work shall be completed within 12 months from the date of its issuance. The petitioner commenced the work, however, the work has not progressed as per the schedule. The petitioner claimed 4 bills on 23.07.2024, 10.09.2024, 29.10.2024 and 27.11.2024 for the work done and an amount of Rs.1,05,74,490/- has been paid to the petitioner for the work done as per the averments in the counter affidavit.
Page 4 of 119. A 7-day notice dated 16.10.2024 was issued to the petitioner because of nil progress in the work. Thereafter, the notices dated 18.06.2024 and 30.07.2024 were issued, indicating poor progress in work. Again, 7-day notices dated 02.09.2024, 20.09.2024 and 17.10.2024 were issued to the petitioner. A reminder dated 24.10.2024 was issued; thereafter, a 7-day notice dated 18.11.2024 and a reminder notice dated 22.11.2024 were issued to the petitioner. Finally, a notice dated 12.12.2024 giving 48 hours was issued to the petitioner. Since the petitioner failed to commence the work despite 48-hour notice, a termination notice dated 16.12.2024 was issued to the petitioner.
10. It is pertinent to mention here that the petitioner submitted an explanation dated 26.04.2024 (Ex.P4) to the notice dated 16.04.2024 (first notice). In the said explanation, it was stated as follows:
"It is hereby informed that work has already been commenced two months earlier, and renewal of more than 4300 sleepers have been completed and still the work is in progress. But due to Assembly Election & Parliamenet election, which came consecutively, labours were not available for the work and could not speed-up as desired.
We hereby assure you that we shall re-start the work within a day or two, till then we request you to kindly bear with us, and withdraw the 7-days notice issued by you, for which we shall be highly obliged."
11. In all the 7-day notices issued by the respondent authorities, it has been mentioned about failure to start the work or inadequate progress in the work. In general correspondence, it was brought to the petitioner‟s notice about the inadequate progress in the completion of the work. Either in the 7-day notices or in general correspondence, the authorities have made it clear that if the petitioner fails to show progress, the Page 5 of 11 authorities will invoke Clause 62 of Standard General Conditions of Contract i.e. to terminate the contract and complete the balance work without the petitioner‟s participation. Except for one notice, i.e. the first notice, the petitioner did not respond to any other notices, be it a 7-day notice or the general correspondence.
12. The contention of learned senior counsel for the petitioner that, due to a change in the nature of work, the petitioner could not complete the work has no merit. In fact, at no point in time, such a plea been raised by the petitioner. For the first time, in the writ affidavit, such a plea was averred. The only reply (Ex.P4) issued by the petitioner to a 7-day notice about non-availability of labour due to the general elections. For the first time in the writ affidavit, the petitioner pleaded about the alleged change in work. Thus, the plea for a change of work is only an afterthought.
13. A perusal of 48-hour notice dated 12.12.2024 (Ex.P2), issued to the petitioner would bespeak that 7-day notices dated 17.10.2024 and 18.11.2024 have been issued to the petitioner as per Clause 62 of the Standard General Conditions of Contract; that the petitioner failed to restart the work and submit time bound contract and hence, 48-hour notice was issued in terms of 62 of the Standard General Conditions of Contract to make good of progress of work, failing which on the expiry of notice, the contract will be rescinded and the security deposit will be forfeited and the performance guarantee will be encashed. Even for a 48- hour notice, the petitioner, for the reasons best known, did not respond.
14. Thereafter, the termination notice dated 16.12.2024 (Ex.P1) was issued. After the termination notice, the petitioner responded and submitted an explanation on 20.12.2024 (Ex.P3) stating that work is in Page 6 of 11 progress and the labourers are very much handling the work and requested to withdraw the termination notice dated 16.12.2024.
15. The 2nd respondent authority issued a notice dated 20.12.2024 calling upon the petitioner to attend the site within 3 days to take the final measurements of the above work executed to make the final bill. Thus, except for giving a reply initially on 26.04.2024 and after termination on 20.12.2024, there was no communication from the petitioner's end to any of the notices or general correspondence made by the respondents regarding the work.
16. As mentioned supra, the contract is a time-bound one to be completed within 12 months. The petitioner became the L1 bidder for the work of 62,180 Sleepers renewal (Primary) with wide base PSC sleepers for 36.864 Km. The sleepers supplied to the petitioner are 17,665, and the petitioner could only install 5,424. The petitioner claimed 4 bills on 23.07.2024, 10.09.2024, 29.10.2024 and 27.11.2024 for the work done and an amount of Rs.1,05,74,490/- has been paid to the petitioner.
17. As per Clause 43.1 of the Standard General Conditions of Contract, the contractor shall prepare and furnish to the Engineer, once in every quarter, commencing from the month following the month of issue of Letter of Acceptance, an account giving full and detailed particulars of all claims for any additional expenses to which the Contractor may consider himself entitled to and of all extra or additional works ordered by the Engineer which he has executed during the preceding quarter and no claim for payment for such work will be considered which has not been included in such particulars. The petitioner did not issue a reply invoking Clause 43.1 at any time before termination.
Page 7 of 1118. The scope of judicial review vis-à-vis the termination of a contract considered by the Hon‟ble Apex Court in State of U.P. & Others v. Bridge & Roof Company (India) Ltd.1. The Hon‟ble Apex Court, while dealing with a judgment of a Division Bench of the Allahabad High Court, wherein the dispute relates to certain payments in respect of a works contract, which the respondent-Company claims is due to it, and whereas the appellant contends that it is entitled to retain it, the Hon‟ble Supreme Court opined that the contract between the parties therein is the contract in the realm of private law, not a statutory contract and it is governed by the provisions of the Contract Act or, may be, also by certain provisions of the Sale of Goods Act,. The Hon‟ble Apex Court held that "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 it is a matter either for arbitration as provided by the contract or for the civil court or as the case may be." The Hon‟ble Supreme Court at Para No.21 held thus:
"21. There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing 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-recognized situations. As pointed out above, the prayer for 1 (1996) 6 SCC 22 Page 8 of 11 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."
19. In M.P.Power Management Company Limited Vs. Sky Power Southeast Solar India Private Limited2, the Hon‟ble Apex Court was while considering the decision of the High Court, wherein the writ petition challenging the order of termination of the power projects agreement was allowed qua the scope of judicial review of State action in a matter arising from non-statutory contract was not inclined to interfere with the decision of the High Court.
20. The Hon‟ble Supreme Court, while recording its conclusions at Para No.82.1 that the writ jurisdiction is a public law remedy and a matter which lies entirely within the realm of affairs of a public body, may not lend itself for being dealt with under the writ jurisdiction of the Court. At Para No.82.7, the Hon‟ble Supreme Court opined as follows:
"82.7. The existence of an alternate remedy, is undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensible prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the writ court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit."2
(2023) 2 SCC 703 Page 9 of 11
21. The Hon‟ble Supreme Court at Para No.82.10 observed that "the reach of Article 14 enables a writ court to deal with arbitrary State action even after a contract is entered into by the State and wide variety of circumstances can generate causes of action for invoking Article 14 and the Court‟s approach in dealing with the same, would be guided by, undoubtedly, the overwhelming need to obviate arbitrary State action, in cases where the writ remedy provides an effective and fair means of preventing miscarriage of justice arising from palpably unreasonable action by the State", at Para No.82.11, opined as thus:
"82.11............Ordinarily, the cases of termination of contract by the State, acting within its contractual domain, may not lend itself for appropriate redress by the writ court. This is, undoubtedly, so if the Court is duty-bound to arrive at findings, which involve untying knots, which are presented by disputed questions of fact. Undoubtedly, in view of ABL(ABL International Ltd., v. Export Credit Guarantee Corpn.of India Ltd., (2004) 3 SCC 553), if resolving the dispute, in a case of repudiation of a contract, involves only appreciating the true scope of documentary material in the light of pleadings, the Court may still grant relief to an applicant. We must enter a caveat. The Courts are today reeling under the weight of a docket explosion, which is truly alarming. If a case involves a large body of documents and the Court is called upon to enter upon findings of facts and involves merely the construction of the document, it may not be an unsound discretion to relegate the party to the alternate remedy. This is not to deprive the Court of its constitutional power as laid down in ABL. It all depends upon the facts of each case as to whether, having regard to the scope of the dispute to be resolved, whether the Court will still entertain the petition."
22. The Division Bench of this Court in W.A.No.168 of 2024 indeed considered an order of a learned single Judge dismissing writ petition concerning termination of contract confirmed the order of the learned Page 10 of 11 single Judge. In fact, the issue involved in the case at hand, the issue dealt with by the Division Bench in the aforementioned intra-Court appeal, is almost similar.
23. As discussed supra, in the case at hand, despite issuance of 7 days notices and general correspondence regarding inadequate progress in work, the petitioner failed to reply, except on one occasion, till the termination of contract. Any dispute in relation to tender having the value less than or equal to Rs.50 crores, the petitioner has to invoke the Clause 63 of Indian Railways Standard General Conditions of Contract. Clause 63 deals with Conciliation of Disputes. Clause 63 (ii), which is relevant is extracted below:
"(ii) All disputes and differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work or after completion and whether before or after the determination of the contract, shall be referred by the Contractor to the "Chief Engineer" or "Divisional Railway Manager" through "Notice of Dispute" provided that no such notice be served later than 30 days after the date of issue or Completion Certificate by the Engineer. Chief Engineer or Divisional Railway Manager shall, within 30 days after receipt of the Contractor‟s "Notice of Dispute", notify the name of conciliator(s) to the Contractor."
24. In fact, Clause 63 prescribes a detailed procedure at different levels. Clause 64 prescribes Arbitration. The petitioner, since the contract has been determination, should have invoked Clause 63 or 64 of the Indian Railways Standard General Conditions of Contract.
25. Given the self-imposed restraints coupled with, as the matter involves examination of disputed questions of fact, in the considered opinion of this Court, the exercise of jurisdiction under Article 226 of the Page 11 of 11 Constitution of India, more particularly because of the availability of a Clause in the Indian Railways Standard General Conditions of Contract, is unwarranted.
26. Accordingly, the Writ Petition is Dismissed. No order as to costs.
As a sequel, pending miscellaneous petitions, if any, shall stand closed.
__________________________ JUSTICE SUBBA REDDY SATTI PVD