Madhya Pradesh High Court
E To E Transportation Infrastructure ... vs Ircon International Limited on 24 August, 2022
Author: Sheel Nagu
Bench: Sheel Nagu
(1)
IN THE HIGH COURT OF JUDICATURE FOR MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SHEEL NAGU
&
HON'BLE SHRI JUSTICE VIRENDER SINGH
WRIT PETITION No.14086 of 2022
Between:-
E TO E TRANSPORTATION
INFRASTRUCTURE PRIVATE LIMITED
THROUGH ITS AUTHORIZED
REPRESENTATIVE MR. ANURAG
CHOUDHARY HAVING ITS REGISTERED
ADDRESS AT- AMRUTHA VARSHINI, 325,
THIRD A CROSS SECTOR A YELAHANKA,
NEWTOWN BANGALORE- 560064
(KARNATAKA)
.....PETITIONER
(BY SHRI NAMAN NAGRATH, SENIOR ADVOCATE WITH
SHRI YAGYAVALK SHUKLA AND SHRI NANKI ARORA)
AND
IRCON INTERNATIONAL LIMITED
THROUGH ITS CHAIRMAN HAVING
CORPORATE OFFICE AT- KATNI-
SINGRAULI RAIL DOUBLING PROJECT
FIRST FLOOR, ABOVE MARUTI SUZUKI
(2)
SHOWROOM, NEAR JHINJHARI POLICE
STATION NH-7, JABALPUR ROAD, KATNI-
483501 (MADHYA PRADESH)
....RESPONDENT
(BY SHRI N.S. RUPRAH, ADVOCATE )
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Reserved on : 02.08.2022
Passed on : 24.08.2022
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Per : Justice Sheel Nagu :
ORDER
This petition has been filed under Article 226 of the Constitution by a Private Limited Company registered as MSME involved in providing rail engineering expertise to Rail Infrastructure Project praying for following relief:-
"I. Allow and admit the present Writ Petition filed by the Petitioner.
II. Issue an appropriate Writ or pass an Order or Direction setting aside the Impugned Letters dated 6 June 2022 and 14 June 2022 issued by the Respondent for being arbitrary, unilateral, illegal, mala fide and violative of Articles 14, 19(1)(g) and 21 of the Constitution of India.(3)
III. Pass an appropriate Writ or direction restraining the Respondent from taking any other coercive action against the Petitioner including disentitling the Petitioner from participating in future tenders.
IV. In the alternative, pass an appropriate direction to the Respondent to mutually foreclose the Contract.
V. Pass such other and further order/orders as may be deemed fit and proper in the facts and circumstances of the present case."
2. Learned senior counsel, Shri Naman Nagrath alongwith Shri Yagyawalk Shukla and Shri Nanki Arora, learned counsel for the petitioner and Shri N.S. Rupra, learned counsel for respondent, are heard on the question of admission so also on final disposal.
3. The challenge herein is essentially to the rescission of contract originally awarded to petitioner for the period from 01.03.2019 to January, 2020 for the following work:-
"Track linking for BG track (manually) including Supply of all P-Way fittings & materials from RDSO approved firms, Linking track at level crossings bridges and Linking Points & X-ing, packing of track as well as Points and X-ing, Carting, loading and unloading 52 kg/60 kg Rails and PSC ordinary and special sleepers, spreading of PSC ordinary and special sleepers and (4) allied all other miscellaneous works in between Mahediya (Exclluding) - Singrauli (Including) and Deoragram (Excluding) - Sursaraighat Jhara (Including) of Kanti-Singrauli Rail Doubling Project (WCR)".
3.1 Annexure P/1 dated 06.06.2022, a termination notice and Annexure P/1C dated 14.06.2022 declining the prayer for reversal of termination are challenged in this petition. Challenge is further led to debarring of petitioner from participating in the tender process for executing the balance work in question and forfeiture of Security Deposit and Performance Guarantee.
4. The undisputed facts of the case are that after expiry of original tenure of 10 months' period of contract (01.03.2019 to January, 2020), the respondent granted four extensions to petitioner for completion of contract by invoking Clause 17A/Clause 17A(ii), details of which are given below:-
Extension Date Upto Under Clause First 20.01.2020 11.07.2020 17-A Second 02.09.2020 26.02.2021 17-A Third 15.05.2021 26.08.2021 17A(ii) Fourth 29.11.2021 23.05.2022 17A(ii) 4.1 It is further undisputed that the aforesaid extensions were granted by the
respondent based on various request letters of petitioner. (5) 4.2 It is also undisputed that all the aforesaid extensions granted by respondent were without imposing any penalty or damages in response to explanation submitted by petitioner for delay in completion of work. 4.3 It is also not disputed that in all the request letters of petitioner seeking extension of time to complete the balance work, the reason of immobilization of additional resources required, was essentially assigned.
5. In view of the recent decision of Apex Court in the case of UNITECH Limited & Ors. Vs. Telangana State Industrial Infrastructure Corporation (TSIIC) & Ors. passed in Civil Appeal No.317 of 2021 on 17.02.2021, this Court is not impressed by preliminary objection for want of territorial jurisdiction raised by the respondent in the face of large part of cause of action of passing of the impugned orders, execution of agreement in question and the venue of execution of work in question lying within the territorial jurisdiction of this Court, despite the parties having agreed under Clause 54.13 of Agreement as New Delhi to be the dispute resolution venue.
6. Learned senior counsel for petitioner in support of the aforesaid challenge submits that though agreement makes available in-house remedy for conciliation and arbitration; but looking to the undisputed facts attending the instant case which indisputably point towards mala fide exercise of power by (6) the respondent by turning a Nelson's eye towards genuine reasons of immobilization of resources etc. which were solely attributed to respondent. Thus, learned senior counsel for petitioner submits that the in-house remedy is not efficacious and instead the petitioner seeks refuge under the equity jurisdiction of this Court under Article 226 of the Constitution. It is further submitted by learned senior counsel that grant of extensions on four occasions by the respondent is a clear indication of respondent having accepted the explanation offered by petitioner for not having completed the work within stipulated period of time, which were not attributed to the petitioner. It is further submitted that debarring the petitioner from participating in tender process is without affording any opportunity of being heard. It is also argued that malice on the part of respondent is revealed from the fact that the bank guarantee was decided to be invoked on 02.06.2022 which was much prior to the notice for termination dated 06.06.2022 (Annexure P/1). Learned senior counsel for petitioner has relied upon the decisions of Apex Court in UNITECH Limited & Ors. Vs. Telangana State Industrial Infrastructure Corporation (TSIIC) & Ors. passed in Civil Appeal No.317 of 2021 on 17.02.2021, Maharashtra Chess Association Vs. Union of India and others, (2020) 13 SCC 285, Indus Mobile Distribution Private Limited Vs. (7) Datawind Innovations Private Limited and others, (2017) 7 SCC 678, P.R. Transport Agency Vs. Union of India, 2005 SCC OnLine All 880 and Renew Clean Energy Pvt. Ltd. Vs. M.P. Power Management Company Ltd., 2018 (1) M.P.L.J.
7. Per contra, learned counsel for the respondent, Shri N.S. Ruprah, submits that the work in question was originally agreed to be completed within a period of 10 months. However, the petitioner despite having afforded four extensions (the last one being 23.05.2022), could not complete the work. Shri Ruprah contends that work in question is of public importance and thus assumes urgency involving estimated cost of Rs.2102.727 lacs. Shri Ruprah denying the contention of petitioner that grant of various extensions amount to condonation of defaults of petitioner (if any), submits that respondent entered into repeated correspondence with petitioner complaining about the delay in work. Shri Ruprah drawing the attention of this Court to various notices dated 19.09.2020, 29.10.2020, 14.12.2021, 25.02.2022, 07.03.2022, 15.03.2022, 21.05.2022 and finally the impugned notice dated 06.06.2022, contends that bare reading of all these notices do not reveal that the respondent had condoned the defaults of petitioner while granting extensions. It is urged by Shri Ruprah that in order to prevent disruption in the work, which is of great (8) public importance, repeated extensions were granted in favour of petitioner to ensure completion of work. It is pointed out by Shri Ruprah that extensions cannot be treated as waiver of respondent's right to rescind the contract. Short reply of respondent further reveals that only 95% of work of supply of P-Way fittings, 81% of transport of P-Way materials, whereas only 47% of actual execution of work at the site has been completed. The reply further reveals that out of the original contract value of Rs.23.99 crore which was subsequently revised to Rs.28.78 crore, the petitioner has already been paid Rs.20.23 crore, but substantial amount of work is yet to be completed. The reply also reveals that only 5% of progress in the work has taken place in the last about one year. It is submitted by Shri Ruprah that maximum laxity has been extended in favour of petitioner by condoning the defaults by granting repeated extensions, but on account of the public interest and urgency of the work being jeopardized, the drastic step of rescission of contract had to be taken.
7.1 Shri Ruprah also objects to the maintainability of this petition on the ground of non availing of in-house remedy of conciliation/arbitration as per Clause 63 and 64 of the Standard Conditions of Contract. (9) 7.2 Shri Ruprah in support of his contentions has relied upon the decisions of Apex Court in Nirmal Software Services Private Limited Vs. Dr. Babasaheb Ambedkar Marathwada University and others, (2019) 7 SCC 356, Rajasthan State Electricity Board Vs. Universal Petrol Chemicals Limited, (2009) 3 SCC 107 and Empire Jute Company Limited and others Vs. Jute Corporation of India Limited and another, (2007) 14 SCC 680.
8. After hearing learned counsel for the rival parties at length, this Court is of the considered view that looking to the difference of opinion between the rival parties as to who is responsible for delay, and to what extent, disputed questions of fact are involved which can best be adjudicated and resolved by invoking in-house remedy of conciliation/arbitration as agreed to by the parties in the agreement (Clause 54 and its sub-clauses). 8.1. A bare perusal of letter dated 06.06.2022 (Annexure P/1) of IRCON International Limited reveals that there is a serious dispute between the rival parties in regard to various aspects including Track linking for BG track (manually) including Supply of all P-Way fittings & materials from RDSO approved firms, Linking track at level crossings bridges and Linking Points & X-ing, packing of track as well as Points and X-ing, Carting, loading and unloading 52 kg/60 kg Rails and PSC ordinary and special sleepers, spreading (10) of PSC ordinary and special sleepers and allied all other miscellaneous works in between Mahediya (Exclluding) - Singrauli (Including) and Deoragram (Excluding) - Sursaraighat Jhara (Including) of Kanti-Singrauli Rail Doubling Project (WCR). These questions cannot be decided without entering into the realm of disputed questions of fact which ought not to be gone into by exercising writ jurisdiction.
9. Thus, this Court extends liberty to the petitioner to avail remedy of conciliation/arbitration contained in Clause 54 and its sub-clauses in Agreement.
10. Coming to the issue of debarment, learned senior counsel for petitioner has submitted with great vehemence tempered with humility that debarment virtually amounts to blacklisting without affording any opportunity of being heard.
10.1 In regard to debarment, a close scrutiny of impugned termination notice dated 06.06.2022 (Annexure P/1) is quite revealing. Annexure P/1 reveals that petitioner is debarred from participating in the tender process which would be floated for executing the balance work left unfinished by the petitioner. The said termination notice therefore does not debar petitioner from participating in any other tender process which may be initiated by the respondent or any (11) other institution or person. The intention behind the debarment vide Annexure P/1 is to ensure that the petitioner remains out of the fray of those tenderers who are called upon to compete the work left unfinished by petitioner. The reason is not far to see. The respondent by the past experience of working with petitioner do not wish the balance work to be assigned to the petitioner again. This choice of excluding the petitioner from the array of contractors who may be invited to complete the remaining work cannot be denied to the respondent. Such an exclusion would be saved from being sacrificed at the alter of arbitrariness since it stands vindicated by classification which has reasonable nexus with the object sought to be achieved. 10.2 Since the debarment vide Annexure P/1 is not a classic case of blacklisting, the need to follow the principles of natural justice (audi alteram partem) gets obviated.
11. This Court is bolstered in its view by the decisions of Apex Court in State of U.P. Vs Bridge & Roof Co. (India) Ltd, (1996) 6 SCC 22 and Union of India and others Vs. Puna Hinda, (2021) 10 SCC 690, wherein interference under Article 226 of Constitution in contractual matters is held to be seldom made. The relevant extracts of the said judgments are reproduced herein below:-
(12)
Bridge & Roof Co. (India) Ltd (supra) "15. In our opinion, the very remedy adopted by the respondent is misconceived. It is not entitled to any relief in these proceedings, i.e., in the writ petition filed by it. The High Court appears to be right in not pronouncing upon any of the several contentions raised in the writ petition by both the parties and in merely reiterating the effect of the order of the Deputy Commissioner made under the proviso to Section 8-D(1).
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."
Puna Hinda (supra) "24. Therefore, the dispute could not be raised by way of a writ petition on the disputed questions of fact. Though, the jurisdiction of the High Court is wide but in respect of pure contractual matters in the field of private law, having no statutory flavour, are better adjudicated upon by the forum agreed to by the parties. The dispute as to whether the amount is payable or not and/or how much amount is payable are disputed questions of facts. There is no admission on the part of the appellants to infer that the amount stands crystallised.(13)
Therefore, in the absence of any acceptance of joint survey report by the competent authority, no right would accrue to the writ petitioner only because measurements cannot be undertaken after passage of time. Maybe, the resurvey cannot take place but the measurement books of the work executed from time to time would form a reasonable basis for assessing the amount due and payable to the writ petitioner, but such process could be undertaken only by the agreed forum i.e. arbitration and not by the writ court as it does not have the expertise in respect of measurements or construction of roads."
12. In the conspectus of above discussion, this Court has no manner of doubt that in view of involvement of disputed questions of fact, this Court declines to go into merits of the contentions raised by the petitioner in support of the challenge made to the order of rescission of contract and leaves it to petitioner to avail the in-house remedy of conciliation/arbitration under the Agreement.
13. Accordingly, the present petition stands dismissed with aforesaid liberty, sans cost.
(SHEEL NAGU) (VIRENDER SINGH)
JUDGE JUDGE
Sateesh
Digitally signed by SATEESH
KUMAR SEN
Date: 2022.08.25 11:47:25 +05'30'