Uttarakhand High Court
Link Enterprises vs State Of Uttarakhand And Others on 6 September, 2021
Author: Sharad Kumar Sharma
Bench: Sharad Kumar Sharma
HIGH COURT OF UTTARAKHAND AT NAINITAL
Writ Petition (M/S) No. 1857 of 2020
Link Enterprises .....Petitioner
Versus
State of Uttarakhand and others .... Respondents
Present :-
Mr. Arvind Kumar Sharma, Advocate for the petitioner.
Mr. T.S. Phartiyal, Deputy Advocate General for the State of Uttarakhand.
JUDGEMENT
Hon'ble Sharad Kumar Sharma, J.
A very peculiar circumstances has emerged for consideration in the present case and certain undisputed facts, which are apparent from the records itself are that the petitioner claims itself, to be a registered partnership firm, which had entered into an agreement/understanding with M/s RRC Constructions & Infrastructure India Pvt. Ltd., by virtue of an agreement, which was said to have been executed inter se, between them, on 22nd November, 2013, they had an undertaking of profit sharing at the agreed ratio @ 60% and 40%, as settled therein.
2. The respondent/employer had invited the bids, for the purposes of completion of a work project, in terms of the invitation of bid, the petitioner had participated in the bidding, and ultimately, the bid was finalized in favour of the petitioner by issuance of an award of work dated 7th November, 2013. However, later on, by the impugned action, which has been put to a challenge in the present Writ Petition, i.e. an order dated 14th September, 2020, it refers to an agreement/concluded contract of 28th December, 2013, which was said to have been entered into between the employer and the petitioner for the purposes of execution of the work, as given in para 1 of the impugned order dated 14th September, 2020. The impugned orders itself contemplates that though under Clause 7.1 of the agreement, which is extracted hereunder :-
2"7.1 The Contractor may subcontract with the approval of the Project Manager, but may not assign the Contract without the approval of the Employer in writing. Subcontracting shall not alter the Contractor's obligations."
The subletting was permitted, but there were certain riders, which were attached to it, that the sub-contracting, would be permissible only when there is a prior approval of the employer in writing. There is nothing brought on record so far to show that the employer has ever approved the act of sub-letting by the petitioner so as to bring it within the ambit of Clause 7.1 of the Agreement.
3. In order to appreciate the tenacity of the argument of the learned counsel for the petitioner, which he has argued from the perspective that since the contract itself was executed on 28th December, 2013, and the agreement was executed between the co- contractors on 22nd of November, 2013, which happens to be a date prior to the execution of the contract i.e. 28.12.2013, his argument is that Clause 7.1 would not be attracted, and hence, on this pretext itself, he submits that the impugned Office Memorandum of 14th September, 2020, would not be sustainable in the eyes of law.
4. In order to better appreciate the argument of the learned counsel for the petitioner, this Court has directed the petitioner to place on record, the terms of the contract, which was entered into between the parties, as it was referred in the impugned order and accordingly in compliance thereto a supplementary affidavit, has been filed. In the supplementary affidavit, which has to be compositively read for the purposes of the deciding the controversy, the implications of Clause 7.1, which permits a sub-contracting, with a condition of prior approval from the employer, it cannot be diluted on the basis of the argument extended by the learned counsel for the petitioner on the premise, that since there was an agreement already executed on 22nd November, 2013, prior to the execution of the contract itself on 3 28.12.2013, hence, Clause 7.1 would not be attracted in the present case is not acceptable by this Court.
5. The reason for not accepting the arguments being that the contract itself, which was executed by the employer on 28th December, 2013, in fact, it was an exclusive contract, with the petitioner and the co-contractor with whom the earlier agreement of 22.11.2013 was not one of the contracting parties, who had placed his stakes in the tendering process which was resorted to by the respondents and hence, the reason which has been given in the impugned order, that the work assigned under the terms of the contract, since was being discharged by the sub-contractor in violation of the Clause 7.1, the contract was rescinded by the impugned order and the petitioner was de-barred from participating in the future tendering process for a period of three years, thereafter, to the passing of impugned order 14.09.2020.
6. This intricacy of the implications, regarding the violation of the terms of the contract, particularly, that as referred under Clause 7.1, which has been reflected in impugned order of 14th September, 2020, this Court is of the view that the contract, if it is made applicable as a whole, then the petitioner would be bound by the simultaneous agreement and all its terms too, which has been entered between him and the employer, as contained under Clauses 23 and 24, where for the redressal of his grievance, as against the impugned action taken against him, the petitioner has agreed for an adjucatory forum and hence, he ought to have first approached the adjudicator, to get the issue and dispute resolved, as to what implications would Clause 7.1 carry in the circumstances, which has already been dealt above. Not even that, the terms of the contract further provides that if, on the Adjudicator, being approached by any of the parties, if they are not satisfied by the decision of the Adjudicator, then Clause 24.3 even provides for an arbitration. The relevant clause 23 and 24 of the contract is extracted hereunder :-
4"23.1 Appointment of the Adjudicator - The Adjudicator shall be appointed jointly by the Employer and the Contractor, at the time of the Employer's issuance of the Letter of Acceptance. If, in the Letter of Acceptance, the Employer does not agree on the appointing of the Adjudicator, the Employer will request the Appointing Authority designated in the PCC, to appoint the Adjudicator within 14 days of receipt of such request.
23.2 Should the Adjudicator resign or die, or should the Employer and the Contractor agree that the Adjudicator is not functioning in accordance with the provisions of the Contract, a new Adjudicator shall be jointly appointed by the Employer and the Contractor. In case of disagreement between the Employer and the Contractor, within 30 days, the Adjudicator shall be designated by the Appointing Authority at the request of either party, within 14 days of receipt of such request.
24.1 Procedure for Disputes - If the Contractor believes that a decision taken by the Project Manager was either outside the authority given to the Project Manager by the Contract or that the decision was wrongly taken, the decision shall be referred to the Adjudicator within 14 days of the notification of the Project Manager's decision.
24.2. The Adjudicator shall give a decision in writing within 28 days of receipt of a notification of a dispute.
24.3 The Adjudicator shall be paid by the hour at the rate specified in the PCC, together with reimbursable expenses of the types specified in the PCC, and the cost shall be divided equally between the Employer and the Contractor, whatever decision is reached by the Adjudicator. Either party may refer a decision of the Adjudicator to an Arbitrator within 28 days of the Adjudicator's written decision. If neither part refers the dispute to arbitration within the above 28 days, the Adjudicator's decision shall be final and binding.
24.4. The arbitration shall be conducted in accordance with the arbitration procedures published by the institution named and in the place specified in the PCC. "
7. In view of the aforesaid agreed conditions given in the contract, which has a binding effect on the petitioner and in view of the finding, which has been recorded therein, with regard to the non compliance of Clause 7.1 in its letter and spirits, this Court is of the view that there has risen a dispute between the parties, which was arising out of the terms of the contract, which would be amenable to Clause 23 and 24 of the contract dated 28th December, 2013, and the Writ Petition would not be maintainable, as against the order of 14th 5 September, 2020, cancelling the contract of the petitioner and debarring him to participate in the future contract.
8. In that view of the matter, though whatsoever the finding, this Court has recorded above was necessary for the purposes of dealing with the arguments, which had extended by the learned counsel for the petitioner, but any of the observations made above, may not prejudice the mind of the Adjudicator and ultimately the Arbitrator too, in case, if the petitioner so chooses to approach the Adjudicator under Clause 23 or to the Arbitrator under Clause 24.
9. Subject to the above, the Writ Petition is dismissed holding it to be not maintainable, before this Court and hence, it is dismissed.
(Sharad Kumar Sharma, J.) 06.09.2021 Shiv