Gujarat High Court
Gammon India Ltd - Through Vice ... vs Surat Municipal Corporation on 11 March, 2015
Author: Ravi R.Tripathi
Bench: Ravi R.Tripathi
C/SCA/4374/2015 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 4374 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE RAVI R.TRIPATHI
and
HONOURABLE MR.JUSTICE R.D.KOTHARI
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1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India or any order
made thereunder ?
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GAMMON INDIA LTD - THROUGH VICE PRESIDENT AND HEAD WORK
SURVEY AND POA HOLDER....Petitioner(s)
Versus
SURAT MUNICIPAL CORPORATION....Respondent(s)
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Appearance:
MR MIHIR THAKORE, SENIOR ADVOCATE with MR YN OZA, SENIOR
ADVOCATE assisted by MR APURVA R KAPADIA, ADVOCATE for the
Petitioner(s) No. 1
MR PRASHANT G DESAI, SENIOR ADVOCATE assisted by MR KAUSHAL D
PANDYA, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE RAVI R.TRIPATHI
and
Page 1 of 30
C/SCA/4374/2015 JUDGMENT
HONOURABLE MR.JUSTICE R.D.KOTHARI
Date : 11-12/03/2015
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE RAVI R.TRIPATHI) By order dated 10.03.2015, the Hon'ble the Acting Chief Justice has ordered this matter to be placed before this Bench (presided by Hon'ble Mr.Justice Ravi R.Tripathi).
2. Heard learned Senior Advocate Mr.Mihir J.Thakore with learned Senior Advocate Mr.Y.N.Oza with learned Advocate Mr.Apurva R.Kapadia for the petitioner and learned Senior Advocate Mr.Prashant G.Desai with learned Advocate Mr.Kaushal D.Pandya for the respondent- Surat Municipal Corporation.
12.03.2015
3. The present petition is filed by Gammon India Ltd. through its Vice President and Head, Work Survey (Power of Attorney Holder) praying that:-
"7) (A) Your Lordships may be pleased to issue writ of mandamus or writ of certiorari of any other appropriate writ by quashing and setting aside the order passed by the respondent dated 04/03/2015 for not revalidating the contract and further be Page 2 of 30 C/SCA/4374/2015 JUDGMENT pleased to quash and set aside the order passed by respondent dated 05/03/2015 for black listing the petitioner and after perusing the same be pleased to hold and declare that the action of the respondent in black listing the petitioner from work is bad, illegal and completely unjust.
(C) Your Lordships may be pleased to direct
the respondent to refund the bank guarantee
No.0564ILG016210 of an amount of
Rs.2,87,50,000/- of Punjab National Bank,
Varli, Mumbai which has already been encashed on 07/03/2015."
4. Learned Senior Advocate Mr.Thakore for the petitioner invited attention of the Court to the order impugned in this petition, a copy of which is produced at Annexure-B, page No.25. The relevant part of the order reads as under:-
"After thorough discussion, Shri J.L.Ashar showed willingness to accept with some reservation subject to GIL's Board approving the same. This counter resulted in complete breakdown of any further effort to revalidate the contract.
Therefore, the Standing Committee is left with no other option than to pass a resolution for not to revalidate the said contract, to get the remaining work completed at the risk and cost of Gammon India Ltd., to record joint measurement for settlement of account with Page 3 of 30 C/SCA/4374/2015 JUDGMENT Gammon India Ltd. and to file a claim on Gammon India Ltd. to the tune of Rs.100 Crore against non completion of the project and hardships caused therein.
Thus it is regretted, in the circumstances and the facts stated above, the contract could not be revalidated and SMC holds you responsible and liable for your non performance and necessary action to protect the interest of the Corporation shall be taken.
In view of this discussion, you may depute your authorized team for joint measurements and to take inventories to secure evidence of work done and resources at site for settlement of account."
4.1 Learned Senior Advocate for the petitioner also invited attention of the Court to communication dated 05.03.2015, whereby the petitioner is black listed for a period of five years with effect from the date of communication. The relevant part of the communication reads as under:-
"However, in view of Gammon India Ltd. having attempted to fabricate untenable causes blaming the Corporation for failure actually attempted to defraud the corporation of huge amount as evidenced from the fact that GIL first raised demand of future prolongation cost to Rs.45 crores which without whisper of argument was voluntarily reduced to Rs.29 crores. This is clear and blatant evidence of a firm of this Page 4 of 30 C/SCA/4374/2015 JUDGMENT stature attempting fraudulent behaviour instead of following the principal (sic-principle) of "Due Diligence" and proper "Business Ethics".
Moreover, after repeatedly coaxing you for coming forward with reasonable offer to revalidate the contract, SMC offered an opportunity to finally work out a supplementary agreement for finalisation of the subject related to revalidation of above contract. At the meeting convened by the Standing Committee of Surat Municipal Corporation on dtd.04/03/2015, you were represented by (1) Shri J.L.Ashar (VP, & Head, WSS, Gammon India Ltd.) (2) Shri V.N.Heggade (Board of Member, Gammon India Ltd.) (3) Shri E.Chidambaram (General Manager (P), Gammon India Ltd.) At the outset, Shri J.L.Ashar confirmed that he was constituted Power of Attorney holder for and on behalf of "GIL" with no limitations nor any reservation as far as all matters touching the subject are concerned.
The Standing Committee clearly indicated its willingness to give one more opportunity to have the contract revalidated since 30/04/2013 for a reasonable period to facilitate completion. To this intent, SMC proposed a supplementary agreement offering reasonable terms for completion. Shri J.L.Ashar admitted Page 5 of 30 C/SCA/4374/2015 JUDGMENT that they had a written counter proposal for SMC's acceptance, already forwarded. After thorough discussion, Shri J.L.Ashar showed willingness to accept with some reservation subject to GIL's Board approving the same. This counter resulted in complete breakdown of any further effort to revalidate the contract.
Therefore, the Standing Committee is left with no other option than to pass a resolution for not to revalidate the said contract, to get the remaining work completed at the risk and cost of Gammon India Ltd., to record joint measurement for settlement of account with Gammon India Ltd. and to file a claim on Gammon India Ltd. to the tune of Rs.100 Crore against non completion of the project and hardships caused therein.
In view of this conduct the Surat Municipal Corporation is of the opinion that the firm viz. M/s Gammon India Ltd. should be debarred from being qualified to quote for any construction contract with the Surat Municipal Corporation and THEREFORE THE CONTRACTOR M/S GAMMON INDIA LTD. IS DEEMED BLACK LISTED AND IS HEREBY BLACK LISTED FOR A PERIOD OF FIVE YEARS WITH EFFECT FROM THE DATE OF THIS LETTER. The above action has been taken after affording number of opportunities, hearings, and discussions on various occasions to you to correct and streamline omissions and commissions on your part. The action is in Page 6 of 30 C/SCA/4374/2015 JUDGMENT complete conformity with rules of natural justice and incapacity of administrative power of the Corporation.
M/s Gammon India Ltd. should take note that this action of Surat Municipal Corporation shall not prejudice just and proper settlement of the contract above named.
Contractor, M/s Gammon India Ltd. is directed to attend office of Executive Engineer for closure formalities of the contract." 4.2 Learned Senior Advocate for the petitioner then invited attention of the Court to the basic facts which are set out in the memo of petition which led to the present litigation.
4.3 In para-2 of the petition, the petitioner has set out occurrences in a bird view starting from 07.09.2010 to the passing of the order impugned dated 04.03.2015 and 05.03.2015.
4.4 In para-3 of the petition, the facts are set out more in detail. The same are found in para-3.2 to 3.6.
4.5 Learned Senior Advocate for the petitioner invited attention of the Court to the four different aspects of the matter, viz. (1) liquidated damages, (2) payment, (3) escalation and (4) review of past Page 7 of 30 C/SCA/4374/2015 JUDGMENT performance. The grounds of challenge are set out in para-3.10-(a) to (i). Para-7) is prayer clause. 4.6 Learned Senior Advocate for the petitioner invited attention of the Court to the relevant documents. To name a few, Annexure-F, which is communication from petitioner Gammon India Ltd. to the Municipal Commissioner, Surat Municipal Corporation, Annexure-G, minutes of the meeting of Techno-Legal Committee, Cable Stayed Bridge, Surat Municipal Corporation, Annexure-H, Supplementary Contract Agreement to Contract Agreement 598 dated 22nd March 2011 between Surat Municipal Corporation and Gammon India Limited, Mumbai (suggested by SMC), Annexure-I, Supplementary Contract Agreement to Contract Agreement 598 dated 22nd March 2011 between Surat Municipal Corporation and Gammon India Limited, Mumbai (suggested by the petitioner).
4.7 Learned Senior Advocate for the petitioner also invited attention of the Court to other documents which are annexed with the petition.
5. The petition is contested by SMC. Learned Senior Advocate Mr.Desai with learned Advocate Mr.Pandya vehemently submitted that the present petition is thoroughly misconceived inasmuch as, what is prayed for is direction against SMC for revalidating the contract Page 8 of 30 C/SCA/4374/2015 JUDGMENT after quashing and setting aside communication dated 04.03.2015 and also for quashing and setting aside communication dated 05.03.2015, whereby the petitioner company is black listed. Learned Senior Advocate for SMC submitted that if the submissions made by the learned Senior Advocate for the petitioner are analyzed, it comes to that this Court in its extraordinary jurisdiction under Article 226 of the Constitution of India shall issue a direction to SMC to revalidate the contract which was signed on 22.03.2011 and the period was 30 months and on expiry of that period, it has come to an end. Learned Senior Advocate for SMC submitted that true it is that a Techno-Legal Committee was appointed and it did make certain recommendations to SMC, which in turn were communicated to the petitioner-GIL, but then for the reasons which are set out in the documents which are annexed to the petition, the petitioner-GIL did not accept supplementary agreement which was prepared and made a counter suggestion by furnishing its own supplementary agreement, making substantial changes. Learned Senior Advocate for SMC submitted that this will amount to, 'the principal is directed to accept advice of the Committee appointed by the principal and then to revalidate the contract in favour of the petitioner', which is unheard of. Learned Senior Advocate for SMC submitted that it is a settled law that in the matters of Page 9 of 30 C/SCA/4374/2015 JUDGMENT contract, more particularly when the contract period is already over, there is no question of Court issuing a direction (writ of mandamus) to one of the parties to enter into contract again because this will be against any known parameters of business world. Assuming for the sake of argument that the Techno-Legal Committee advised its principal in the subject matter of the contract, that advice cannot be said to be binding on the principal and in any case, it will not be in fitness of things for this Court to issue a direction to the principal to accept and act on the advice of the committee appointed by it. Learned Senior Advocate for SMC did furnish 'list of dates' which sets out chronological events which took place in the matter. Learned Senior Advocate Mr.Thakore and Mr.Oza have not objected to this list of dates and therefore, the same is reproduced for ready perusal:-
BRIEF DETAIL Project Name : Construction of cable stayed bridge and its approaches on Tapi river joining Athwalines- Adajan in Surat.
Sr. Date Events No. 1 July 2010 Tender Notice Published 2 August Tender Received 2010 3 04.09.2010 Proposal for the work, before Page 10 of 30 C/SCA/4374/2015 JUDGMENT standing committee 4 04.09.2010 Standing committee has sanctioned the tender of bidder Gammon India Ltd. Mumbai vide std. com. resolution no.1713/2010, dtd. 04/09/2010 5 07.09.2010 Date of issuance of work order to GIL 6 15.09.2010 GIL has submitted the security deposit in form of B.G. 7 21.09.2010 Drawings for load test were issued 8 26.10.2010 Date of issuance of Final work order to GIL 9 04.11.2010 Drawings of cable stay type
superstructure duly proof checked by IIT were issued 10 22.03.2011 Contract Agreement signed 11 May 2012 2nd time revised drawings of cable stay part super structure duly proof checked by IIT were issued 12 September 3rd time revised drawings of cable 2013 stay part super structure duly proof checked by IIT were issued (confirmed as good for construction in June 2013) Note: These all above revisions in the drawings were made only on basis of Gammon's specific request, in the interest of work progress to suit the contractor's methodology.
Frequent meeting with SMC officer & high level authority to expedite the slow progress from contractor 13 08.01.2014 Meeting with Standing Committee Chairman & Commissioner 14 06.11.2014 Meeting with Mayor, Standing Committee Chairman & Commissioner 15 06.11.2014 GIL has submitted the written report vide their letter 16 14.11.2014 Meeting with Mayor, Standing Page 11 of 30 C/SCA/4374/2015 JUDGMENT Committee Chairman & Commissioner 17 14.11.2014 GIL has submitted the written report vide letter that having project completion schedule of Aug - 2016 & time & cost over run of Rs. 45 crore.
18 20.11.2014 Proposal put up before standing committee for various action against Gammon India Ltd.
19 20.11.2014 Standing Committee has decided to
form a Techno legal committee to
submit their report for further
course of action vide standing
committe resolution No.1971/2014,
dtd. 20/11/2014
20 26.11.2014 Accordance to resolution no.
1971/2014, dtd. 20/11/2014, a notice was issued to contractor to remain present before standing committee for hearing on 28/11/2014 vide SMC office letter 26/11/2014 21 27.11.2014 Contractor showed their inconviniency during 28/11/2014 & asked to remain present on 05/12/2014 vide GIL' letter dt. 27/11/2014 22 28.11.2014 Vide standing committe resolution No.2034/2014, dtd. 28/11/2014, it is decided to inform GIL for their hearing before std. committee 23 01.12.2014 Vide SMC's letter, GIL again called & informed to remain present on 05/12/2014 before std. Committee, vide letter dt. 01/12/2014 24 Representatives from Gammon India 05.12.2014 Ltd. were remained present before std. committee and represented their view & submitted the report to committe vide their letter dtd.
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C/SCA/4374/2015 JUDGMENT
05/12/2014
25 05.12.2014 Vide GIL's letter, dtd. 05/12/2014,
contractor has submiited revised
barchart and prolongation cost of 29 crore instead of 45 crore given in the letter dt. 14/11/2014.
26 20.12.2014 First Technolegal committee meeting
27 09.01.2015 Accordance to GIL request vide their
letter 05/12/2014, the
representatives were called and
remained present before Technolegal
committe & heared to them on dt.
09/01/2015
28 19.01.2015 Contractor has confirmed to execute
the mutually agreed new supplymentry agreement vide their letter dt.
19.01.2015
29 22.01.2015 Technolegal committe submitted their
report
To revalidate the contract with
Gammon India Ltd., it was suggested by the Technolegal committee to execute the supplementry agreement. 30 11.02.2015 Draft supplementry agreement is prepared by Technolegal expert was sent to contractor.
31 16.02.2015 Contractor has submitted their corrected draft agreement 32 24.02.2015 Opinion taken for contractor's draft agreement from Technolegal expert 33 26.02.2015 Proposal put before standing committee in reference to Technolegal committee report 34 26.02.2015 Vide standing committe resolution no.
515/2015, dt. 26/02/2015, it is
directed to issue the show cause
notice to the GIL
35 02.03.2015 A show cause notice was issued to
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C/SCA/4374/2015 JUDGMENT
Gammon India Ltd. to remain present before standing committee on 04/03/2015 vide SMC's letter dtd.
02/03/2015 36 04.03.2015 The representatives were remained present before standing committee meeting held on 04/03/2015 & heared by the committe & GIL is not agreed completely with SMC's draft agreement & asked for a week time for their board approval 37 04.03.2015 Standing committee vide resolution dtd. 04/03/2015, it is decided not to revalidate the contract which is completed on 30/04/2013 & blacklisted the contractor for 5(Five) years 38 04.03.2015 Contractor GIL informed for the non revalidation of contract vide SMC letter dtd 04-03-2015 39 05.03.2015 Contractor GIL informed for blacklisting action vide SMC letter dtd. 05/03/2015 40 05.03.2015 Contractor wrote a letter and showed their willingness to sign the supplementry agreement as draft by SMC without any change 5.1 Learned Senior Advocate for SMC submitted that there is ample evidence which will convince this Court that it was the petitioner who was responsible for delay in execution of the subject matter (construction of bridge) in the prescribed time limit, but as it is a 'pure question fact', he requested that the matter be Page 14 of 30 C/SCA/4374/2015 JUDGMENT left to the parties to undertake before appropriate forum to get their disputes adjudicated.
6. True it is that this Court is not here to pronounce as to who was at fault for non-performance of the contract and this can be done only when both the sides are given full opportunity to lead their evidence, which will be subject to the cross-examination by the other party. Hence, this Court does not intend to go into that question which is a pure question fact and which cannot be gone into by this Court while exercising the jurisdiction vested under Article 226 of the Constitution of India. But, the fact remains that the contract was signed on 22.03.2011, life of that contract was 30 months and it has come to an end much prior to the events which took place on a later stage and which lead to issuance of the two communications dated 04.03.2015 and 05.03.2015 against which the present petition is filed and the reliefs are sought for.
7. Learned Senior Advocate for SMC invited attention of the Court to the list of events, facts of the case set out in the memo of petition, relevant documents thereto and certain authorities-decisions of the Hon'ble the Apex Court as well as this Court in support of his submission that the present petition is Page 15 of 30 C/SCA/4374/2015 JUDGMENT not worth entertaining by this Court and is liable to be rejected.
7.1 Learned Senior Advocate for SMC invited attention of the Court to the decision of the Hon'ble the Apex Court which was relied upon by learned Senior Advocate Mr.Thakore for the petitioner in the matter of Gorkha Security Services Vs. Government (NCT of Delhi) & Ors., reported in (2014) 9 SCC 105 : AIR 2014 SC 3371 and could successfully demonstrate that the same will not be applicable to the facts of the present case.
8. Learned Senior Advocate Mr.Thakore for the petitioner relied upon paras-31, 32 and 33 of the said judgment while attacking action of blacklisting by SMC by order dated 05.03.2015. For ready perusal, paras-31, 32 and 33 are reproduced hereunder:-
31. When it comes to the action of blacklisting which is termed as 'Civil Death' it would be difficult to accept the proposition that without even putting the noticee to such a contemplated action and giving him a chance to show cause as to why such an action be not taken, final order can be passed blacklisting such a person only on the premise that this is one of the actions so stated in the provisions of NIT.
The "Prejudice" Argument Page 16 of 30 C/SCA/4374/2015 JUDGMENT
32. It was sought to be argued by Mr. Maninder Singh, learned ASG appearing for the respondent, that even if it is accepted that show cause notice should have contained the proposed action of blacklisting, no prejudice was caused to the appellant in as much as all necessary details mentioning defaults/ prejudices committed by the appellant were given in the show cause notice and the appellant had even given its reply thereto. According to him, even if the action of blacklisting was not proposed in the show cause notice, reply of the appellant would have remained the same. On this premise, the learned ASG has argued that there is no prejudice caused to the appellant by non mentioning of the proposed action of blacklisting. He argued that unless the appellant was able to show that non mentioning of blacklisting as the proposed penalty has caused prejudice and has resulted in miscarriage of justice, the impugned action cannot be nullified. For this proposition he referred to the judgment of this Court in Haryana Financial Corporation and Anr. v. Kailash Chandra Ahuja; (2008) 9 SCC 31.
"21. From the ratio laid down in B. Karunakar1 it is explicitly clear that the doctrine of natural justice requires supply of a copy of the inquiry officer's report to the delinquent if such inquiry officer is other than the disciplinary authority. It is also clear that non-supply of report of the inquiry officer Page 17 of 30 C/SCA/4374/2015 JUDGMENT is in the breach of natural justice. But it is equally clear that failure to supply a report of the inquiry officer to the delinquent employee would not [pic]ipso facto result in the proceedings being declared null and void and the order of punishment non est and ineffective. It is for the delinquent employee to plead and prove that non- supply of such report had caused prejudice and resulted in miscarriage of justice. If he is unable to satisfy the court on that point, the order of punishment cannot automatically be set aside.
31. At the same time, however, effect of violation of the rule of audi alteram partem has to be considered. Even if hearing is not afforded to the person who is sought to be affected or penalised, can it not be argued that "notice would have served no purpose" or "hearing could not have made difference" or "the person could not have offered any defence whatsoever". In this connection, it is interesting to note that under the English law, it was [pic]held few years before that non-compliance with principles of natural justice would make the order null and void and no further inquiry was necessary.
36. The recent trend, however, is of "prejudice". Even in those cases where procedural requirements have not been complied with, the action has not been held ipso facto illegal, unlawful or void unless it is shown that non-observance had prejudicially Page 18 of 30 C/SCA/4374/2015 JUDGMENT affected the applicant.
44. From the aforesaid decisions, it is clear that though supply of report of the inquiry officer is part and parcel of natural justice and must be furnished to the delinquent employee, failure to do so would not automatically result in quashing or setting aside of the order or the order being declared null and void. For that, the delinquent employee has to show "prejudice". Unless he is able to show that non-supply of report of the inquiry officer has resulted in prejudice or miscarriage of justice, an order of punishment cannot be held to be vitiated. And whether prejudice had been caused to the delinquent employee depends upon the facts and circumstances of each case and no rule of universal application can be laid down."
33. When we apply the ratio of the aforesaid judgment to the facts of the present case, it becomes difficult to accept the argument of the learned ASG. In the first instance, we may point out that no such case was set up by the respondents that by omitting to state the proposed action of blacklisting, the appellant in the show cause notice has not caused any prejudice to the appellant. Moreover, had the action of black listing being specifically proposed in the show cause notice, the appellant could have mentioned as to why such extreme penalty is not justified. It could have come out with extenuating circumstances defending such an Page 19 of 30 C/SCA/4374/2015 JUDGMENT action even if the defaults were there and the Department was not satisfied with the explanation qua the defaults. It could have even pleaded with the Department not to blacklist the appellant or do it for a lesser period in case the Department still wanted to black list the appellant. Therefore, it is not at all acceptable that non mentioning of proposed blacklisting in the show cause notice has not caused any prejudice to the appellant. This apart, the extreme nature of such a harsh penalty like blacklisting with severe consequences, would itself amount to causing prejudice to the appellant."
9. The Hon'ble the Apex Court was pleased to consider that action of blacklisting is civil death, one is required to put the party to notice against such a contemplated action and a chance is required to be given to such party to show cause as to why such action be not taken.
10. As against this, learned Senior Advocate for SMC submitted that in the impugned order itself, it is mentioned that, "........ The above action has been taken after affording number of opportunities, hearings and discussions on various occasions to you to correct and streamline omissions and commissions on your part. The action is in complete conformity with rules of natural justice and in capacity of administrative power of the Page 20 of 30 C/SCA/4374/2015 JUDGMENT Corporation....." Learned Senior Advocate for SMC invited attention of the Court to paras-26 and 27 of the aforesaid judgment, which read as under:-
"26. In the present case, it is obvious that action is taken as provided in sub clause 2(ii). Under this clause, as is clear from the reading thereof, the Department had a right to cancel the contract and withhold the agreement. That has been done. The Department has also a right to get the job which was to be carried out by the defaulting contractor, to be carried out from other contractor(s). In such an event, the Department also has a right to recover the difference from the defaulting contractor. This clause, no doubt, gives further right to the Department to blacklist the contractor for a period of 4 years and also forfeit his earnest money/ security deposit, if so required. It is thus apparent that this sub- clause provides for various actions which can be taken and penalties which can be imposed by the Department. In such a situation which action the Department proposes to take, need to be specifically stated in the show cause notice. It becomes all the more important when the action of black listing and/ or forfeiture of earnest money/ security deposit is to be taken, as the clause stipulates that such an action can be taken, if so warranted. The words "if so warranted", thus, assume great significance. It would show that it is not necessary for the Department to resort to Page 21 of 30 C/SCA/4374/2015 JUDGMENT penalty of black listing or forfeiture of earnest money/ security deposit in all cases, even if there is such a power. It is left to the Department to inflict any such penalty or not depending upon as to whether circumstances in a particular case warrant such a penalty. There has to be due application of mind by the authority competent to impose the penalty, on these aspects. Therefore, merely because of the reason that clause 27 empowers the Department to impose such a penalty, would not mean that this specific penalty can be imposed, without putting the defaulting contractor to notice to this effect.
27. We are, therefore, of the opinion that it was incumbent on the part of the Department to state in the show cause notice that the competent authority intended to impose such a penalty of blacklisting, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same. However, we may also add that even if it is not mentioned specifically but from the reading of the show cause notice, it can be clearly inferred that such an action was proposed, that would fulfill this requirement. In the present case, however, reading of the show cause notice does not suggest that noticee could find out that such an action could also be taken. We say so for the reasons that are recorded hereinafter."
11. Learned Senior Advocate for the petitioner next Page 22 of 30 C/SCA/4374/2015 JUDGMENT relied upon a decision of this Court (Coram: Hon'ble the Acting Chief Justice Mr.Vijay Manohar Sahai & Hon'ble Mr.Justice R.P.Dholaria) in Special Civil Application No.15235 of 2014 dated 25.02.2015. Learned Senior Advocate for the petitioner invited attention of the Court to paras-2.1, 2.2, 10, 11 and 12 and submitted that the present petition is required to be allowed and the reliefs prayed for are required to be granted.
12. This was replied by learned Senior Advocate for SMC, who submitted that the said decision will not be applicable because in para-12 of the said decision, it is specifically mentioned that:-
"12. On going through the impugned order passed by the Standing Committee as extracted above, we fail to notice anything mentioned by the Standing Committee that the petitioner was given personal hearing......"
(emphasis supplied) 12.1 Learned Senior Advocate for SMC submitted that as pointed out hereinabove, in the impugned order itself, it is specifically mentioned that, it was only after giving full opportunity that the action was taken by SMC. Even at the cost of repetition, he invited attention of the Court to the following portion of the impugned order dated 05.03.2015:-
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C/SCA/4374/2015 JUDGMENT "..... The above action has been taken after affording number of opportunities, hearings, and discussions on various occasions to you to correct and streamline omissions and commissions on your part....."
13. Learned Senior Advocate for the petitioner vehemently contended that the petitioner was not at all guilty of delaying execution of the project and it was only on account of the reasons set out in the various communications 'SMC failed to provide designs, the project got delayed and for that, the Corporation cannot punish the petitioner'. Not only that, learned Senior Advocate for the petitioner submitted that the petitioner was fair in its conduct inasmuch as, having mentioned the tentative prolongation cost of Rs.45 crores, immediately on working up the details for the same, the petitioner reduced the same to Rs.29 crores and instead of appreciating the good and fair conduct on the part of the petitioner, SMC has thought it proper to punish the petitioner by saying that the first demand was arbitrary, which is reduced to Rs.29 crores without there being any whisper of argument.
14. Learned Senior Advocate for SMC invited attention of the Court to Clause-53 of the contract which pertains to 'Price Variation Clause'. Clause-7 of supplementary agreement pertains to 'Escalation', wherein Page 24 of 30 C/SCA/4374/2015 JUDGMENT after typed portion, i.e., "The balance payment for the work done since the date of this Supplementary Agreement shall be governed by the provision of original contract.....", the words "without ceiling limit" are added. Learned Senior Advocate for SMC Pointed out this to depict the conduct of the petitioner and submitted that it is in light of the conduct of the petitioner and in light of the facts of the case that SMC had no other alternative then to issue the two communications which are under challenge in this petition. 14.1 Learned Senior Advocate for SMC invited attention of the Court to Annexure-B (letter dated 04.03.2015), wherein after the 'subject' of the communication, there is a column for 'Reference', wherein letters of the petitioner company are referred to. Learned Senior Advocate for SMC pointed out this to show that hearing was given to the petitioner.
15. The arguments /submissions made by learned Senior Advocate for SMC were answered by learned Senior Advocate Mr.Y.N.Oza for the petitioner, who in substance reiterated the submissions made by learned Senior Advocate Mr.Thakore for the petitioner. Learned Senior Advocate emphasized and re-emphasized the fact that a High Power Committee was constituted with nomenclature of Techno-Legal Committee' and all eminent personalities Page 25 of 30 C/SCA/4374/2015 JUDGMENT were the members of that committee. The committee looked into the matter in great detail and after having looked into the facts of the case made certain recommendations. Learned Senior Advocate also submitted that having accepted those recommendations, the supplementary agreement (draft) was prepared and there was no reason for SMC to back out and not to accept the same only because the petitioner made certain suggestions to bring that draft supplementary agreement in line with the recommendations of the committee. Learned Senior Advocate for the petitioner submitted that SMC having agreed to the recommendations of the Techno-Legal Committee, having got the draft supplementary agreement prepared, there was no reason for it to issue communications dated 04.03.2015 and 05.03.2015, instead the draft supplementary agreement ought to have been signed and executed by the parties.
15.1 Learned Senior Advocate for the petitioner relied upon a decision of the Hon'ble the Apex Court in the matter of Mahabir Auto Stores & Ors. Vs. Indian Oil Corporation & Ors., reported in (1990) 3 SCC 752. Learned Senior Advocate for the petitioner invited attention of the Court to para-12, wherein the Hon'ble the Apex Court has observed as under:-
"12. It is well settled that every action of Page 26 of 30 C/SCA/4374/2015 JUDGMENT the State of an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution....."
15.2 Learned Senior Advocate for the petitioner submitted that in the present case, action of SMC of not getting supplementary agreement executed is nothing but an arbitrary action and therefore, the present writ petition is required to be entertained and reliefs as prayed for are required to be granted.
16. This Court is unable to agree with the submissions made by learned Senior advocate Mr.Oza for the petitioner because on perusal of papers produced on record and taking into consideration the overall facts of the case, this Court is of the opinion that the action of SMC cannot be branded 'arbitrary simplicitor'. The Court is also not able to accept the submissions of the learned Senior Advocate for the petitioner for the reason that it is a matter pertaining to contract between the parties, the period of contract is already over and there is no question of this Court issuing a direction to the SMC to revalidate the contract. This Court is also of the opinion that the 'advice' is always in the nature of 'advice' and it can never be said to be binding to the Page 27 of 30 C/SCA/4374/2015 JUDGMENT person who appointed the adviser (in the present case, Techno-Legal Committee). It is always for the 'principal' to accept the advice or not to accept the same. Once the principal decides not to accept the advice, the remedy with the petitioner is to file appropriate proceedings as per the legal advice available to it.
17. Learned Senior Advocate Mr.Oza for the petitioner next relied upon a decision of the Hon'ble the Apex Court in the matter of Kumari Shrilekha Vidyarthi & Ors. Vs. State of U.P. & Ors., reported in (1991) 1 SCC
212. Learned Senior Advocate for the petitioner invited attention of the Court to Head Note at Platitum-f at page-215, wherein the Hon'ble the Apex Court observed as under:-
"Constitution of India-Articles 14 and 298, 299
- State's contract with private party - State action is amenable to judicial review to determine violation of Article 14 irrespective of the scope of review in this sphere - State's constitutional obligation co-exists with contractual obligation - State acts for public food and in public interest and its public character is not changed merely because statutory or contractual rights are also available to the other party - State has to act justly, fairly and reasonably even in contractual field, more so when bargaining Page 28 of 30 C/SCA/4374/2015 JUDGMENT power is unequal in standard from contracts with the State - In State's contractual actions, public element is always present so as to attract Article 14 - Contract Act, 1872, Section 23.
17.1 Learned Senior Advocate for the petitioner also relied upon Head Note at Platitum-a at page-216, which reads as under:-
"Constitution of India - Articles 14 and 298, 299 - Police decision of State - Even in matters pertaining to State's contracts with private parties, the policy must satisfy the requirements of Article 14 - Fair play in action must be the basis of the policy."
18. The Court is conscious of the aforesaid observations of the Hon'ble the Apex Court, but is of the opinion that the same are not applicable to the facts of the present case inasmuch as, the Court has come to the conclusion that the action of SMC is not arbitrary, even remotely and therefore, there is no question of granting any relief to the petitioner as prayed for in the present petition.
19. In the result, the petition fails and the same is dismissed.
(RAVI R.TRIPATHI, J.)
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C/SCA/4374/2015 JUDGMENT
(R.D.KOTHARI, J.)
SHITOLE
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