Gauhati High Court
M/S Gannon Dunkerly And Co. Ltd vs The Union Of India And 4 Ors on 2 June, 2022
Page No.# 1/9
GAHC010107572022
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/3689/2022
M/S GANNON DUNKERLY AND CO. LTD.
864, TOPSIA ROAD (SOUTH),
HAUTE STREET , (7 TH FLOOR)
KOLKATA, 700046, WEST BENGAL
REP. BY ITS AUTHORIZED SIGNATORY/ DEPUTY GENERAL MANAGER HR
AND ADMIN, ASHIS KUMAR PAL
S/O- PRANBALLAV PAL OF GANNON DUNKERLY AND CO. LTD, 864,
TOPSIA ROAD (SOUTH),
HAUTE STREET , (7TH FLOOR)
KOLKATA, 700046, WEST - BENGAL
VERSUS
THE UNION OF INDIA AND 4 ORS.
REPRESENTED BY THE SECRETARY TO THE GOVT. OF INDIA, MINISTRY
OF ROAD TRANSPORT AND HIGHWAYS,
GOVT. OF INDIA, 3RD FLOOR, PTI BUILDING AND PARLIAMENT STREET ,
NEW DELHI-110001
2:THE MANAGING DIRECTOR
NATIONAL HIGHWAYS AND INFRASTRUCTURE DEVELOPMENT
CORPORATION LIMITED (NHIDCL)
3RD FLOOR
PTI BUILDING AND PARLIAMENT STREET
NEW DELHI-110001
3:THE EXECUTIVE DIRECTOR(P)
NATIONAL HIGHWAYS AND INFRASTRUCTURE DEVELOPMENT
CORPORATION LIMITED (NHIDCL)
REGIONAL OFFICE
AMBARI
GUWAHATI
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ASSAM
4:THE GENERAL MANAGER (P)
NATIONAL HIGHWAYS AND INFRASTRUCTURE DEVELOPMENT
CORPORATION LIMITED (NHIDCL)
PMU
JORHAT
ASSAM
5:THE TEAM LEADER
VOYANTS SOLUTIONS PVT. LTD
SITE OFFICE- WARD NO-2
NEAR DISTRICT SOCIAL WELFARE OFFICE
SIVASAGAR DHAL ALI
PO AND P.S- SIVASAGAR
DIST- SIVASAGAR
ASSAM
PIN-78564
Advocate for the Petitioner : MR. S K DEORI
Advocate for the Respondent : ASSTT.S.G.I.
BEFORE HON'BLE MR. JUSTICE MANASH RANJAN PATHAK 02/06/2022 Heard Mr. D. Mazumdar, learned Senior counsel, assisted by Mr. S. K. Deuri, learned counsel for the petitioner. Also heard Ms. L. Devi, learned CGC for the respondent No. 1 and Mr. U K Nair, learned Senior counsel, assisted by Mr. R. K. Talukdar, learned counsel for the respondents in the NHIDCL.
Pursuant to an NIT issued by the respondent National Highways and Infrastructure Development Corporation Limited (NHIDCL), the petitioner on 14.09.2015 submitted its bid for the civil work of "Four Laning of Demow (Km 534.800) to End of Moran Bypass (Km 561.700) of National Highway No. 37 in the State of Assam under SARDP-NE (Special Accelerated Road Development Programme in North East), Phase-A on EPC Mode" (Engineering, Procurement and Construction Mode). Accepting its bid of Rs. 294.17 Crores for the said civil work, the respondent Page No.# 3/9 NHIDCL by its communication dated 14.01.2016 declared the petitioner as the selected bidder, informing it that the "Construction Period" for the said project is 910 days from the 'Appointed Date'. It is to be stated herein that the length of the said project work was for 26.9 Kms. only.
After the said Letter of Acceptance (LoA) dated 14.01.2016 and on completion of all the formalities, the petitioner and the respondents in the NHIDCL entered into an agreement on 09.02.2016 for the said work specifying the project duration as 36 months, where the Appointed Date was 12.02.2017 (Annexure-4).
By letter No. NHIDCL/Assam/NH-37/Dem-Mor/144888/1617 dated 30.05.2022, the respondent NHIDCL issued "Termination of the contract in accordance with Clause 23.1.2 of Contract Agreement-Reg" to the petitioner as it failed to complete the said project till the issuance of the said communication in spite of granting sufficient extension (Annexure-16).
Aggrieved with said action of the respondent NHIDCL, the petitioner has preferred this writ petition stating that the impugned "Termination of the contract" dated 30.05.2022 is in violation of the principles of natural justice, without issuing any show cause and in violation of the provisions of Clause 23.1.2 specified in their agreement dated 09.02.2016.
In this regard, petitioner has placed Clause 23.1.2 of their agreement dated 09.02.2016 (Annexure-4).
Petitioner also relied upon the judgment of the Hon'ble Supreme Court in the case of Radha Krishan Industries Vs. State of Himachal Pradesh and Others , reported in 2021 (6) SCC 771, wherein the Hon'ble Apex Court have held that -the power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but also for the exceptions to the rule of alternate remedy arise, where there has been a violation of the principles of natural justice.
Mr. Mazumdar, learned Senior counsel submitted that even in the case in hand no prior notice was issued to the petitioner before the impugned termination of contract dated 30.05.2022 though in terms of Clause 23.1.2 of the Contract Agreement dated 09.02.2016 executed between the employer NHIDCL and the contractor, the petitioner is entitled for a prior notice before said termination of the contract.
Page No.# 4/9 Petitioner submitted that with regard to the said work, the respondents in the NHIDCL earlier on 14.08.2021 issued "Notice for intention to terminate the Contract" to the petitioner under Clause 23.1.2 of the Contract Agreement dated 09.02.2016, to which the petitioner submitted its reply on 28.08.2021, where the respondent NHIDCL did not act upon and rather allowed the petitioner to go ahead with the said work.
It is also stated that the respondents in the NHIDCL on 14.03.2022 issued a Notice to the petitioner to declare it as "Non-Performer" as it failed to complete the work allotted to it. Against the same, petitioner has preferred a writ petition before this Court being WP(C) No. 2969/2022, which is presently pending for adjudication.
Petitioner further stated that on 08.04.2022, respondent NHIDCL again issued a notice to the petitioner for poor progress of the said work directing it to mobilize sufficient manpower and machinery at site and exhibit sufficient improvement in the execution of work within seven days stating that failure on its part to do the said work, action for termination of the contract would be initiated as per the provisions of the Contract Agreement (Annexure-11).
Petitioner also placed before the Court that with regard to the ongoing Highways Projects in the State of Assam, a Review Meeting with the Union Minister of the Road Transport and Highways, including the project involved in the case, was held on 12.04.2022, wherein the petitioner as well as the authorities in the NHIDCL placed their respective contention in respect of the said project before the said Minister.
Pertaining to the Minutes of the said Review Meeting, the authorities in the NHIDCL in its Head Quarter at New Delhi by its letter No. NHIDCL/Review-Minister/2022/01/208794/1607 dated 25.05.2022 issued an Office Memorandum informing all concerned for information and further needful action including the authorities of the NHIDCL in the State of Assam at Guwahati, who in turn vide No. RO/MOM/HQ/0149/9125 dated 25.05.2022 circulated the said Office Memorandum dated 25.05.2022 communicating the same by e-mail in the respective 'IDs' of all concerned, including the petitioner, for compliance and necessary action (Annexure-14).
From the said Office Memorandum dated 25.05.2022 with regard to the Review Meeting with the concerned Departmental Minister of the Union of India on 12.04.2022, it can be seen that the respondent NHIDCL directed the petitioner to take needful action in compliance to the Page No.# 5/9 instructions recorded in the minutes and to submit the action taken report latest by 26.05.2022 in respect of Agenda No. 3.4 that pertains to four laning of Demow to end of Moran Bypass.
From the said Clause 3.4 of the minutes of the Review Meeting with the concerned Departmental Minister, it is placed before the Court that though the progress achieved by the contractor (petitioner) was very poor during the last six months, the physical progress report have been achieved after the de-scoping of the stretch of about 3.5 Kms for construction of proposed ELF (Equivalent Linear Feet) where the concerned Departmental Minister directed the contractor (the petitioner herein) to expedite and complete the work by June, 2022.
Petitioner submitted that though on 14.08.2021, the respondent NHIDCL issued "Notice for intention to terminate the Contract" with regard to the said work, against which the petitioner submitted its reply on 28.08.2021, but the respondent NHIDCL did not act upon the said "Notice for intention to terminate the Contract" till issuance of the impugned termination dated 30.05.2022. It is submitted that as the respondent NHIDCL since 28.08.2021 did not take any action on the said Notice for intention to terminate the Contract and allowed the petitioner to carry out the work till 30.05.2022, it is presumed that said "Notice for intention to terminate the Contract" dated 14.08.2021 got exhausted and spent its force.
Mr. Nair, learned Sr. counsel for the respondents in the NHIDCL on the other hand submitted that due to its non-performance, the authorities in the NHIDCL issued 'Intention to Terminate Notice' to the petitioner on 14.08.2021 under Clause 23.1.2. of the EPC Contract Agreement highlighting all the defaults and defects of the said contractor where the petitioner on 28.08.2021 submitted its reply, requesting to withdraw the said 'Notice for Intention to Terminate', which on consideration by the NHIDCL found to be unsatisfactory, the reasons of which have been explained in the impugned 'Termination of the Contract' dated 30.05.2022.
Mr. Nair, also stated that after said 'Notice for Intention to Terminate' dated 14.08.2021, the authorities in the NHIDCL monitored the progress of the work made by the petitioner till the end of May 2022. It is stated by him that the petitioner was granted sufficient extension to complete the work since its Project Milestone-I and after the approved 'Extension of Time' for Project Milestone-III (60%) on 18.03.2019, the petitioner could complete it by 28.01.2021, and further, the 'Schedule date of Completion' of the work though was on 24.04.2021, the petitioner has not yet achieved the same, inspite of granting time.
Page No.# 6/9 Mr. Nair submitted that after verifying at the site and the rate of progress of work made by the petitioner, the authorities in the NHIDCL, including its technical team came to the conclusion that it is impossible for the petitioner to complete the tusk entrusted to it in terms of the agreement dated 09.02.2016.
Mr. Nair further stated that authorities in the NHIDCL observed that inspite of assurance given to the Departmental Minister and the authorities in the MoRTH (Ministry of Road Transport and Highways), the contractor concerned, i.e. the petitioner herein should have start the work in full swing but the progress of work on verification from the site was found to be of dismal state only. Therefore, as the petitioner found to have failed to complete the work in terms of the last approved extension of time and based on the recommendation of the authorities concerned of the NHIDCL impugned 'Termination of the Contract' was issued on 30.05.2022, where due 'Notice for Intention to Terminate' was already issued to it on 14.08.2021.
During the deliberation of the matter Mr. Nair placed several internal office reports as to how the petitioner progressed in its said work after the consultation with the departmental Minister in the Review Meeting held on 12.04.2022, assessment of NHIDCL's Engineer with respect to the performance of work done by the petitioner contractor concerned.
It is seen that in respect of the project work involved in the case, i.e., "Four Laning of Demow (Km 534.800) to End of Moran Bypass (Km 561.700) of NH No. 37 in the State of Assam under SARDP-NE, Phase A on EPC Mode" petitioner vide letter No. CE:GDCL:LETTER:2022- 23:PMG/ 04 dated 11.04.2022 wrote to the NHIDCL's Engineer M/s. Voyants Solutions Pvt. Ltd.
that it will complete the work in all respect by 30 th June 2022 and sought for its kind co-operation and all assistance to complete the project within the said committed time.
From the Office Memorandum dated 25.05.2022 regarding the Minute of Review Meeting taken by the Departmental Minister of Road Transport and Highways of ongoing NH Projects in the State of Assam held on 12.04.2022, it is seen from Agenda 3.4: that relates to Four laning of Demow to End of Moran Bypass that the Minister concerned directed the petitioner to expedite and complete the work by June 2022.
Considered the provisions of Clause 23.1.2 and 23.1.3 of said agreement dated 09.02.2016, which reads as follows:
Page No.# 7/9 23.1.2 Without prejudice to any other rights or remedies which the Authority may have under this Agreement, upon occurrence of a Contractor Default, the Authority shall be entitled to terminate this Agreement by issuing a Termination Notice to the Contract;
provided that before issuing the Termination Notice, the Authority shall by a notice inform the Contractor of its intention to issue such Termination Notice and grant 15 (fifteen) days to the Contractor to make a representation, and may after the expiry of such 15 (fifteen) days, whether or not it is in receipt of such representation, issue the Termination Notice.
23.1.3 After termination of this Agreement for Contractor Default, the Authority may complete the Works and/or arrange for any other entities to do so. The Authority and these entities may then use any Materials, Plant and equipments, Contractor's documents and other design documents made by or on behalf of the Contractors.
Road communication like National Highways with quality work, its construction, widening, increasing the numbers of lane are vital for the Nation including the North East part of the Country and public at large.
Any such extension of time for such civil work of public taken up by the Central Government or the State Government relates to huge escalation of cost and thereby involves public exchequer.
The present work of 'Four laning of Demow to End of Moran Bypass' of NH-37 in the State of the Assam under the specific scheme of the Central Government, namely, the Special Accelerated Road Development Programme in North East (SARDP-NE) at Phase-A on Engineering, Procurement and Construction (EPC) Mode is one of such. Though, in terms of the agreement dated 09.02.2016, the said work should have been completed and target should have been achieved within a period of 910 days from the appointed date, i.e., 12.02.2017, but the authorities in the NHIDCL had approved extension of time to the petitioner for completion of the work by 31.07.2021.
Since the petitioner could not complete the said work it sought for more time and by its letter dated 11.04.2022 sought time up to 30.06.2022 to complete the entire work as noted above. Moreover, on its own submission before the Departmental Union Minister in the Review Meeting held on 12.04.2022, the said Minister also directed the petitioner to expedite and complete the work by June 2022.
The Court is also aware of the fact that on termination of the Contract of the petitioner, the respondents in the NHIDCL have to issue fresh tender for the remaining work of said four laning Page No.# 8/9 of Demow to end of Moran Bypass of NH-37 and in that case by completing the said process said work will not be completed by 30.06.2022.
Considering the above and as per petitioner's own submission in its letter dated 11.04.2022 as well as direction of the concerned Departmental Minister, the respondent NHIDCL is directed not to act upon/to keep in abeyance the impugned "Termination of the contract" issued under No. NHIDCL/Assam/NH-37/Dem-Mor/144888/1617 dated 30.05.2022 (Annexure-16) till the next date fixed. Further, till then the respondents in the NHIDCL shall not en-cash/withdraw the bank guarantee of Rs. 38,24,21,000/- given by the petitioner with the NHIDCL during the time of allotment of the said work. It is also directed that the petitioner shall not withdraw the said bank guarantee.
List on 30.06.2022.
During the period up to 30.06.2022, as per petitioner's own request and direction of the departmental Minister, as noted above, the petitioner shall complete the work of said of 'Four laning of Demow to end of Moran Bypass' of NH-37 in the State of the Assam with quality work, under complete supervision of the authorities in the NHIDCL in terms of the terms and condition of the said agreement dated 09.02.2016.
However, it is made clear that if the petitioner fails to complete the said work by 30 th June 2022, i.e., the time which has been granted at its request, the respondents in the NHIDCL shall be able to take appropriate measure against the petitioner in terms of said agreement dated 09.02.2016.
At this stage, Mr.Nair, learned Sr. counsel for the respondents in the NHIDCL submitted that if petitioner fails to complete the work by 30.06.2022 then new contractor has to be selected for the remaining work by a process of issuing tender and the said process normally takes some time and as such, he submitted that the respondent NHIDCL should be allowed to initiate the process of Tender for the remaining work of said four laning of Demow to end of Moran Bypass of NH-37 in the State of Assam. However, this has been objected by Mr. D. Mazumdar, learned Sr. counsel for the petitioner stating that it would create third-party rights, which shall hamper the rights of the petitioner.
Page No.# 9/9 It is already noted above that delay of any such project under the Government relates high escalation of cost that leads to public exchequer.
Considering the submissions of the parties, the respondents in the NHIDCL is directed to initiate the process of tender in the anticipation of the remaining work of four laning of Demow to end of Moran Bypass of NH-37 in the State of Assam after 30.06.2022 specifying in the said tender that it will be subject to the outcome of the present writ petition. Further, in the event of issuance of any such tender for the said work before 30.06.2022, the respondents in the NHIDCL shall not finalise the same, without the leave of the Court.
List accordingly.
JUDGE Comparing Assistant