Gujarat High Court
Pt Bara Daya Energi (Indonesia) vs State Of Gujarat on 25 July, 2022
Author: Ashutosh J. Shastri
Bench: Aravind Kumar, Ashutosh J. Shastri
C/SCA/13402/2022 ORDER DATED: 25/07/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 13402 of 2022
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PT BARA DAYA ENERGI (INDONESIA)
Versus
STATE OF GUJARAT
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Appearance:
MR DIGANT M POPAT(5385) for the Petitioner(s) No. 1
MR KM ANTANI, AGP for the Respondent(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE
ARAVIND KUMAR
and
HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI
Date : 25/07/2022
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI)
1. By way of this petition under Article 226 of the Constitution of India, petitioner has prayed for quashing of an order of termination dated 8.10.2021 and consequently, requested to permit the petitioner to supply coal in terms of the agreement dated 3.8.2021 and has further sought for a direction upon the respondent No.2 to refund the Performance Bank Guarantee of Rs.95.57 crore.
2. The background of facts which has given rise to filing of this petition is that respondent invited tender on 10.2.2021 for supply of 1.2 million metric ton per annum of Non-Coking Steam (Thermal) implied coal of GCV (AR) 5500Kcal/ Kg for a period of Page 1 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 one year extendable for further period of six months on FOR basis for delivery at Sikka Thermal Power Station (TPS). Pursuant to the same, bid was offered by the petitioner and being found lowest after negotiations and meetings with the officials of respondent No.2, the Bid was accepted on 29.4.2021 and Letter of Intent was issued accepting FOB price at 73.40 USD/Mt. In view of the terms and conditions agreed, bank guarantee came to be issued on 9.6.2021 by the petitioner bank in favour of the respondent No.2 and expiry date was 29.4.2022 for SD 131,62,249.90 (approximately Rs.95.57 crores) in accordance with the format attached with the agreement for an amount equivalent to 10% of one year contract value. Said performance guarantee shall continue to be enforceable for 60 days after the date of last consignment of the imported coal contracted to be purchased under the contract.
3. It is the case of the petitioner that on 30.6.2021, respondent No.2 informed the petitioner about schedule for first shipment of coal of 75,000 MT from 1.8.2021 to cut-off date 15.8.2021 and agreement was also executed on 3.8.2021 between the petitioner and respondent No.2 for supply of coal as per the tender condition. Petitioner acknowledged and accepted Page 2 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 the Purchase Order and revised schedule of the first shipment and by letter dated 6.7.2021 informed respondent No.2 about the name of Vessel, loading quantity of 50000 MT and ETA to load port 13/14th August 2021, name of the miner, i.e. Pt. Belayan Int. Coal, discharge port Bedi India. On 6.7.2021, respondent No.2 issued further delivery schedule for second consignment from 6.8.2021 to cut-off date 20.8.2021. On 13.7.2021, respondent No.2 further issued delivery schedule for third shipment of 75,000 MT from 13.8.2021 to cut-off date 27.8.2021.
4. On receipt of said intimation from respondent No2, on 16.7.2021, petitioner informed respondent No.2 that situation in Indonesia has become very worst on account of high spreading of pandemic Covid-19 and there was total lock-down and curfew imposed all over Indonesia by the Government and as such, on account of such strict lock-down, all productions, mining operations were affected, and even logistic operations were at standstill and as such, petitioner requested respondent No.2 to consider said unforeseen situation and amend the schedule of shipment.
5. It is further case of the petitioner that on 17.7.2021, Page 3 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 respondent No.2 declined the said request made by the petitioner and indicated that if supply of such material would not be on time, steps will be taken under the terms of contract, including levying penalties. To this, petitioner replied to the respondent No.2 on 23.7.2021 indicating and reiterating the aforesaid prevailing situation in Indonesia and requested for clearance of vessel and possible demurrage and consequential problems that would be faced and as such, reiterated the request of re-schedulement of supply. But, on 26.7.2021, respondent No.2 did not consider said request and insisted for very same delivery schedule for second and third shipment as indicated above, which again led the petitioner to make further request. On 29.7.2021, respondent No.2 informed the petitioner to depute officials who can take a decision to its office at Vadodara on 30.7.2021, for discussing all supply related issues, so much so that a video conference also came to be organized on 2.8.2021 between officials of the petitioner as well as that of respondent No.2.
6. It has been asserted in the petition that on 5.8.2021, petitioner informed respondent No.2 about the name of vessel and estimated arrival at load port 15-20 August 2021 and ETA Page 4 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 discharge port 1st week of September. However, on 7.8.2021, respondent No.2 refused to accept change of vessel and again threatened to take penal action and reiterated that there would no change in the shipment schedule. Respondent No.2 by further communication dated 7.8.2021 informed the delivery schedule of 4th shipment of 75000 MTs from 7.9.2021 to cut-off date 21.9.2021. Petitioner as such informed on 12.8.2021 to respondent No.2 about first vessel, named MV BETEIGEUZE/ Certificate- Laycan- 15 to 20 August 2021- 75,000 Mts MOL 00 10% along with which 21 attachments were forwarded. Despite aforesaid situation, on the very same day, respondent No.2 threatened to terminate the contract on account of failure on the part of petitioner to execute the terms of the contract, which led to a further request by petitioner to respondent No.2 to make even interim arrangement by procuring imported coal from local market in India and to supply the same via rail racks from Kandla Port so as to meet with the emergent situation at Sikka TPS.
7. It is further case of the petitioner that on 29.8.2021, respondent No.2 again reiterated that petitioner had failed to comply with the terms of the contract, totally ignoring the request made for rescheduling the shipment schedule in view of Page 5 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 the unforeseen events, as stated above. Petitioner informed to respondent No.2 on 3.9.2021 about procurement and supply of imported coal from West Coast India Ports. But, then still, respondent No.2 reiterated the stand of initiating action of termination of contract vide communication dated 4.9.2021. Petitioner in such an eventuality has further repeated the request by informing about the situation prevailing in Indonesia and situation about heavy rain in Indonesia over last few days, which had resulted into adverse effect of Kalimantan coal producing region and as such, requested to revise the shipment schedule since emergency situation was declared in Indonesia upto 17.9.2021. But, respondent No.2, according to petitioner, has declined to consider the situation of force majeure pleaded by petitioner on account of aforesaid serious situation. On 2.10.2021, petitioner is also said to have suggested to 2 nd respondent to find out a practical solution for overcoming the stalemate which had occurred on account of the situation beyond the control and requested to agree to accept the supplies under the shipment to be made between 1- 5 th October 2021 at a price index prevailing as per September 2021 Index. It was also informed that loading is in progress and petitioner had Page 6 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 further assured the stand committed to honour the first two shipments at their respective index prices prevailing at the relevant point of time. But, then, without considering anything, on 4.10.2021, respondent No.2 issued a final notice directing the petitioner to show cause as to why contract should not be terminated and further informing the petitioner that respondent No.2 will be compelled to forfeit Security Deposit-cum- Performance Bank Guarantee of Rs.95.57 crores, if no explanation comes forward within three days. On 7.10.2021, petitioner again reiterated the circumstances which are prevalent, but then having realized that authority is not going to consider, petitioner was constrained to file an arbitration petition, under Section 9 of the Arbitration and Conciliation Act being Arbitration Petition No.178 of 2021 before this Court and notice was ordered to be issued and same is said to be pending. But, by that time on 8.10.2021, respondent No.2 had terminated the agreement and also forfeited the Security Deposit-cum- Performance Bank Guarantee, which has constrained petitioner to approach this Court by way of present petition under Article 226 of the Constitution of India for the reliefs prayed for in the petition, which read as under:-
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C/SCA/13402/2022 ORDER DATED: 25/07/2022
(a) This Hon'ble Court may be pleased to issue an appropriate writ, direction or order under Article 226 of the Constitution in the nature of Writ of Certiorarified Mandamus by Quashing the Order of Termination dated 08.10.2021 and permit the Petitioner to supply coal in terms of Agreement dated 03.08.2021 and further direct the Respondent No.2 to refund the Performance Bank Guarantee of Rs.95.57 Crores.
(b) pending the hearing and final disposal of this Petition, this Hon'ble Court may be pleased to direct the 2 nd Respondent to refund a sum of Rs.95.57 crores to the petitioner.
(c) that any other and further relief which is just and proper may kindly be granted by this Hon'ble Court."
8. Learned advocate Mr. Digant Popat, appearing for petitioner has contended that authority's action is not only unjust and arbitrary, but not on touchstone of Article 14 of the Constitution of India and further submitted that approach on the part of respondent is rather inhuman and without considering the plightful situation of the petitioner, 2 nd respondent authority has passed an order terminating the contract and forfeiting the Security Deposit-cum- Performance Bank Guarantee. This being the situation, the action on the part of authority deserves to be set aside.
9. Learned advocate Mr. Digant Popat appearing for petitioner has further submitted that circumstances which abruptly arose Page 8 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 were beyond the control of petitioner and as such, on account of force majeure as well, authority ought not to have initiated harsh step against petitioner. Authority was quite conscious about the fact that pandemic situation was prevailing across the world and Indonesia was badly affected not only on account of such pandemic Covid-19 situation but on account of heavy flood which had damaged substantially the region from where coal was available. That circumstance having not been considered, authority has acted quite unfair to the petitioner.
10. Learned advocate Mr. Digant Popat has further submitted that situation was so created by the authority which has necessitated the petitioner to approach the Court by way of Arbitration Petition under Section 9 of the Act, which was registered as Arbitration Petition No.178 of 2021, wherein at relevant point of time, said petition was pending, but then has candidly submitted that on 1.7.2022, said petition was withdrawn and accordingly disposed of and as such, has fairly submitted that this being the situation, action impugned in the petition may also be agitated before an appropriate forum, which is prescribed in the contract itself and as such, without much resistance, has left to the discretion of the Court since the petitioner is not Page 9 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 remediless.
11. Having heard learned advocate Mr. Digant Popat for the petitioner and having gone through material on record placed before, us, what is emerging is that on account of the circumstances prevailing, as indicated, petitioner has not been able to fulfill the terms of the contract. On account of such situation, series of correspondence took place between petitioner and respondent, some of which are attached to the petition compilation, and same is indicating that there appears to be a disputed question of fact and examination of said facts, explanation and circumstances deserve detailed adjudication, which in our considered opinion may not be undertaken in exercise of extraordinary jurisdiction and without evidence being available on record.
12. It is also quite visible from the averments made in the petition that undisputedly, for whatever reason, the terms of contract have not been able to be observed by petitioner and contract was for supply of Non-Coking Steam (Thermal) imported coal, which is of immense importance even for respondent authority to operate & it remained a mirage. These terms Page 10 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 deduced in writing have not been able to be observed by petitioner and repeated requests of such failure to adhere to the terms having not been considered by an appropriate authority, petitioner cannot agitate the same before this Court, especially when a specific redressal mechanism is provided in the terms of the contract itself. Prior to acceptance and thereafter also terms and conditions were specifically understood by petitioner and it has also declared that it was conscious about the specific terms in that regard and as such, when terms and conditions are apparently unambiguous, clear, require no interpretation, a breach thereof would entail consequences as provided in the contract itself and when that be so, judicial review of contractual terms is not possible to be undertaken in the decision making process undertaken by respondent No.2, especialy when such process is not tainted with malafides. It is not the case of petitioner as well, of there being any malafide act on the part of 2nd respondent in taking action against petitioner, except non- acceptance of force majeure contention put forth by petitioner for non-observance of time schedule and mere non-consideration of such request is not sufficient enough to quash the decision, which has been taken by tender inviting authority by looking into Page 11 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 several aspects about terms and sequence of works under contract and its importance. When tender inviting authority is taking a particular decision strictly in accordance with the terms of the contract, there is hardly any circumstance which may warrant this Court to exercise jurisdiction under Article 226 of the Constitution of India. Termination clause is very much visible in the tender document, reflecting on page 67 in the form of Clause 4.16 onwards and yet, another clause which is also clearly providing for redressal of grievance in case of any dispute or difference related to contract in question and as such, when this be a specific mechanism understood by petitioner, there is hardly any reason for petitioner to invoke extraordinary jurisdiction of this Court. Said clause 4.17 which provides for redressal of grievance by both parties reads:
4.17 ARBITRATION 4.17.1 Except as otherwise provided in the Contract, if any dispute or difference of any kind whatsoever (a "Dispute") shall arise between the Purchaser and the Seller in connection with, or arising out of, or relating to the Contract or the breach, termination or validity thereof, the Purchaser and the Seller shall attempt in good faith, for a period of thirty (30) days after the receipt by one party of a notice from the other Party of the existence of the Dispute, to settle such Dispute in the first instance by mutual discussions between the Parties Page 12 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 4.17.2 If the Dispute cannot be settled within thirty (30) days by mutual discussions as contemplated by Clause 4.17.1, either Party may by notice require the Dispute shall finally be settled by arbitration in terms of the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or reenactment thereof ("Arbitration and Conciliation Act") 4.17.3 The language of the arbitration shall be English, and the place of arbitration including for holding of any and every arbitration proceeding shall be Vadodara, Gujarat, India.
4.17.4 The arbitration shall be conducted by a panel of 3 (three) arbitrators. The Purchaser shall appoint one arbitrator, and Seller shall collectively be entitled to appoint one arbitrator, within 30 (thirty) days after giving or receiving the demand for arbitration. The two arbitrators so selected by the Parties shall select the third arbitrator. If a Party does not appoint an arbitrator who has consented to participate within 30 days after the selection of the first arbitrator, the relevant appointment shall be made under Arbitration and Conciliation Act.
4.17.5 The arbitration award rendered shall be in writing and shall set forth in reasonable detail the facts of the Dispute and the reasons for the arbitrators' decision. 4.17.6 The award rendered in any arbitration commenced hereunder shall be final and binding on the Parties 4.17.7 Notwithstanding the above, during the pendency of any arbitration, the Parties shall continue to perform their respective obligations hereunder.
4.17.8 The provisions of this Clause 4.17 shall survive the termination of the Contract."
13. In addition to this, while preferring writ petition, averments Page 13 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 have been made in paragraph 32 of the application that every effort was made to resolve the dispute through amicable settlement as is provided under the agreement and conciliation having failed, arbitration petition under Section 9 came to be preferred in Arbitration Petition No.178 of 2021, where-under notice came to be issued and it is stated to be pending. But, recently, when petition was heard, it came to be withdrawn on 1.7.2022, which is also fairly confirmed by learned advocate appearing for petitioner and we see no reason to interfere with the decision of the 2nd respondent in the present petition, especially when same is centering around seriously disputed questions and when petitioner not being remediless since specific redressal forum is available by virtue of terms of the agreement.
14. In the circumstances, as aforesaid, we find that averments made in the petition contain seriously disputed questions of fact, which has also been candidly accepted by the learned counsel for petitioner, persuade us not to entertain the prayer. We are reminded of one of the decisions delivered by Hon'ble Apex Court in the recent time rendered in Civil Appeal No.2848 of 2021 decided on 20.7.2021 (in the case of Shubhas Jain v. Page 14 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022
C/SCA/13402/2022 ORDER DATED: 25/07/2022 Rajeshwari Shivam & Ors.), where-under it has been opined clearly that Article 226 of the Constitution of India does not adjudicate hotly disputed questions of fact. Relevant observations contained in paragraph 26 of said judgment we deem it proper to reproduce hereunder:-
"26. It is well settled that the High Court exercising its extraordinary jurisdiction under Article 226 of the Constitution of India, does not adjudicate hotly disputed questions of facts. It is not for the High Court to make a comparative assessment of conflicting technical reports and decide which one is acceptable."
15. Further, in the sphere of contractual dispute, it is consistently propounded by catena of decisions that Article 226 of the Constitution of India should not be resorted to, to examine such disputes and as such, Hon'ble Apex Court in the case of N.G. Projects Limited v. M/s. Vinod Kumar Jain & Ors. rendered in Civil Appeal No.1846 of 202 decided on 21.03.2022, has held and observed in paragraphs 23 and 26 as under:-
"23. In view of the above judgments of this Court, the Writ Court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary Page 15 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a mala fide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present- day Governments are expected to work.
26. A word of caution ought to be mentioned herein that any contract of public service should not be interfered with lightly and in any case, there should not be any interim order derailing the entire process of the services meant for larger public good. The grant of interim injunction by the learned Single Bench of the High Court has helped no-one except a contractor who lost a contract bid and has only caused loss to the State with no corresponding gain to anyone."
16. Yet again, in a very recent decision delivered by Hon'ble Apex Court in the case of National High Speed Rail Corporation Limited Vs. Montecarlo Limited and Another reported in (2022) 6 SCC 401, has also reiterated the very same authoritative principle and has observed that when such is the situation, judicial review normally not to be undertaken and as such, upon careful consideration of the aforesaid authoritative Page 16 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022 C/SCA/13402/2022 ORDER DATED: 25/07/2022 principles, as well as having considered the submissions made by learned counsel in the context of the averments which are made in the petition, we find no case is made out to exercise extraordinary jurisdiction and as such, petition being not entertained on aforesaid circumstances and we deem it proper to dispose the same.
17. However, while parting with the order, we observe that we have not expressed any opinion on merits as requested with regard to the grievance voiced out by the petitioner and it would be open for the petitioner to agitate the same before appropriate forum as may be advised. Accordingly, petition stands DISMISSED with no order as to costs.
Sd/-
(ARAVIND KUMAR,CJ) Sd/-
(ASHUTOSH J. SHASTRI, J) OMKAR Page 17 of 17 Downloaded on : Sat Dec 24 21:55:01 IST 2022