Orissa High Court
M/S. Shah Inc. vs Paradeep Port Trust And Others on 11 February, 2015
Equivalent citations: AIR 2015 (NOC) 491 (ORI.)
Author: A.K.Rath
Bench: Amitava Roy, A.K.Rath
HIGH COURT OF ORISSA: CUTTACK.
W.P(C) No.23284 of 2011
In the matter of an application under Articles 226 and 227 of the Constitution of India.
M/s. SHAH INC. ....... Petitioner
Versus
Paradeep Port Trust & others ....... Opp. Parties
For petitioner : Mr. Ashok Ku. Mohanty, Sr. Adv.
For opp. parties : Mr.S.K. Padhi, Sr. Adv.
(O.Ps.1 to 3)
: Mr. B.K.Sharma, Adv.
(O.P. 5)
P R E S E N T:
THE HON'BLE CHIEF JUSTICE MR. AMITAVA ROY
AND
THE HON'BLE DR. JUSTICE A.K.RATH
Date of hearing: 20.01.2015 Date of Judgment: 11.02.2015
____________________________________________________________________
Dr. A.K. Rath, J.In this writ application, the petitioner has prayed, inter alia, to quash the letter dated 20.8.2011 issued by the Deputy Manager, Metal & Scrap Trading Corporation Limited (hereinafter referred to as "the MSTC Ltd.") requesting it to make payment on or before 27.8.2011 with 2% penalty and the letter dated 3.9.2011 issued by the MSTC Ltd. forfeiting the pre-bid EMD as per clause no.11 of special terms and conditions of the special e-auction and cancelling the sale acceptance letter, vide Annexures 7 and 9, respectively.
2. Bereft of unnecessary details, the case of the petitioner is that it is a proprietary concern. The opposite parties floated a tender for sale of sludge, debris and dredge materials approximately 35,000 metric tons from the custom bonded area inside the Port prohibited area of Paradip Port Trust (hereinafter referred to as "the PPT"). The opening and closing date and time for the e-auction was fixed at 2 11.00 hours and 15.00 hours on 29.7.2011. The seller of the goods is PPT. It is indicated in the e-auction notice that the successful bidder would file the bill of entry with the Customs Authorities in two phases before lifting of the materials and obtain custom clearance on payment of applicable custom duty. After removal of the cargo, the parties should file bill of entry for the balance quantity from the other plots. Pursuant to the e-auction notice, the petitioner, eligible in all respects, participated in the e-auction. It deposited an amount of Rs.10 lakhs towards EMD. On 28.7.2011, it sent a letter, vide Annexure-1, proposing amendment in the general terms and conditions and special terms and conditions. The same are quoted hereunder;
"1. Clause No.4.2 Payment terms to be extended "within six months"
2. Period of Contract in Clause Number 7.1 "The contract period should be minimum six months"
3. Delivery; clause No.11.1 "The material should be delivered by PPT/MSTC direct from seller's plot through buyer's rake/trucks. All arrangement shall be made by PPT/MSTC for lifting of the cargo through buyer's rake/truck. All expenses to that effect shall be borne by the buyer."
4. Clause No.11.2 All arrangements shall be made by the seller and cost to that effect shall be borne by the buyer.
5. Force Measure : Clause No.13.1 "The delay in performance due to the cause beyond the control as mentioned in the clause in that case the contract period shall be extended by PPT/MSTC."
3. The opposite parties accepted the letter dated 28.7.2011 and allowed it to participate in the e-auction held on 29.7.2011. In the e-auction, it was the highest bidder with a rate of Rs.1201/- Per M.T. Though the opposite parties did not issue a letter to it rejecting the terms and conditions, vide Annexure-1, but allowed it to participate in the e-auction by providing password and digital key. It sent a letter on 5.8.2011, vide Annexure-3 series, to the opposite party no.5 stating therein that after getting the tender paper, it came to its knowledge that the delivery period was fixed to be 90 calendar days from the date of issuance of release order, failing which, the ground rent for a maximum of two weeks would be collected from the buyer at the rate fixed. In clause No.14, it is indicated that "90 calendar days" means 24 hours per day. Further, it is contained in clause no.15 of the STC that if the delivery is not 3 completed within the stipulated time, buyer can not have any claim over the goods. At the same time it is stipulated in clause No.20.3 that loading/lifting should be done during the working hours and lifting is permitted only 3 days in a week, i.e., Monday, Wednesday and Thursday. If the goods are to be lifted within 90 calendar days, the buyer would get only 12 days for lifting of the cargo. In clause no.16, it is mentioned that lifting/removal of the materials would be allowed during normal working hours through Gate No.3 only in specific working days. These conditions are unworkable. It is further stated that on 18.8.2011, vide Annexure-4, the Deputy Manager of the MSTC Limited issued a letter to it clarifying that the materials should be released during the office hours i.e. 10 AM to 5 PM. Since it agreed to deposit the ground rent for the extended period of 3 months, the lifting period was extended with ground rent @ 1% per week on the left out quantity till the entire quantity was completely lifted or the extended period of 3 months whichever was earlier. On 19.8.2011, it sent a letter to the opposite parties stating therein that it did not receive any specific reply with regard to the letters sent earlier. While the matter stood thus, the opposite parties issued a letter to levy penalty at the rate of 2% from 27.8.2011. It is further stated that it is ready to deposit all the customs duty, sales tax dues and other statutory dues as applicable. Since the passage of goods through gate No.3 is meant only for payment of custom duty, the opposite parties ought to obviate the condition of gate No.3. During pendency of the writ petition, the opposite parties issued a letter dated 26.8.2011, vide Annexure-8, indicating therein that any letter containing conditions cannot be accepted. The last date for remittance of balance amount was given by 13.8.2011 and the last date with 2% penalty expired on 27.8.2011. The balance payment and the payment beyond 27th August was not acceptable. In case of non-receipt of payment within the stipulated time, the amount paid by it towards pre-bid EMD will stand forfeited automatically as per Clause No.11 of the special terms and conditions of the e-auction. Due to non deposit of the amount within the stipulated time, the opposite parties issued a letter on 3.9.2011 forfeiting the pre-bid EMD amount of Rs.10 lakhs, vide Annexure-9.
44. Pursuant to issuance of notice, a counter affidavit has been filed by the opposite parties 1 to 3. The sum and substance of the case of the opposite parties 1 to 3 is that in order to dispose of approximately 35000 MT of accumulated sludge, debris and dredge materials lying in different locations inside the Port areas, MSTC Ltd. a Government of India undertaking, was asked to conduct e-auction of the said materials. The e-auction notice contained the detailed information regarding mode of payment, delivery period and other general conditions. Pursuant to the e-auction notice, the petitioner along with other bidders participated in the same. The price quoted by the petitioner being highest, the sale order was issued to it by MSTC Ltd. with a condition to deposit the cost of materials for lifting of these materials by 13.8.2011. It was mentioned in the sale order that in case of failure of deposit of the cost of materials, the security deposit/pre-bid EMD deposited by it would be forfeited. The petitioner failed to deposit an amount of Rs.3,96,44,062/- towards balance material value and Rs.38,347/- towards survey charges by the date fixed, i.e. 13.8.2011. Thereafter, the opposite party no.5 sent several reminders vide letters dated 18.8.2011, 20.8.2011 and 26.8.2011 respectively. Since it failed to deposit the amount towards the balance material value, the opposite party no.5 issued letter dated 3.9.2011 cancelling the sale acceptance letter issued in favour of the petitioner. In the letter dated 3.9.2011, instructions were issued to the opposite party no.3 to forfeit the pre-bid EMD amount of Rs.10 lakhs and approach M/s. Konark Suppliers & Construction Co. who had given the second best offer of Rs.1200/- per MT, but subsequently agreed to pay Rs.1209/- per MT. It is further stated that as per the e-auction terms and conditions, the bidders, who had deposited the pre-bid amount, could only participate in the e-auction process. There was no scope for any pre-condition from any of the bidders before participating in the e-auction. But then, no such letter from it had been received by PPT. The e-auction process was done in the internet system on online basis for which, no tender papers were issued. The petitioner was allowed to participate in the e-auction, as it had submitted the requisite pre-bid EMD of Rs.10 lakhs before e-auction process. It is further stated 5 that in Clause 14 of the special terms and conditions, it was indicated that the materials had to be removed within 90 calendar days. In Clause 16, the lifting days and time had been specifically indicated as Monday, Wednesday and Thursday during normal working hours. However, after participating in the bid and getting the sale order, it took a plea that the specified time period was not sufficient. The claim of the petitioner that it was getting only 12 days for lifting of the materials is incorrect as because they were allowed to lift three days in a week, i.e. 12 days in a month and 36 days in 90 days. It is further stated that as per the request of the petitioner vide letter dated 5.8.2011, the lifting period was extended to 180 days with ground rent, which is quite reasonable and workable. So far as lifting of the materials by truck/rack from the stock point, the same is the tender condition and rack loading has been allowed by PPT from the warehouse siding, which is outside bonded area. Although its' request was accepted and communicated to it vide letter No.MSTC(V)/PPT/11-12/EA/2987 dated 18.8.2011, it delayed the process. In the e- tender condition, it was clearly mentioned in clause no.16 that the purchaser had to make its own arrangement for lifting the materials, but it made a demand that the lifting of materials was to be arranged by the seller, which was not acceptable. It is further stated that the opposite parties are willing to provide necessary facilities to it outside the custom bonded area, since allowing siding facility to it inside the Port may result in theft/pilferage of cargo. If a siding is utilized for delivery of cargo, it may create contamination. Since all Port sidings are utilized for dispatch/delivery of imported cargo, the Port cannot afford any contamination of valuable cargo with sludge and debris. It is further stated that the condition of passage of cargo through Gate No.3 was provided in the e-TCN with a view to permit delivery of cargo by truck after weighment. Gate Nos.3 and 4 are import gates while Gate Nos.1 and 2 are export gates as declared by the Custom Authority. Gate No.3 is nearer to Port weighbridge where the cargo is intended to be weighed before delivery for which there is a provision for passage of cargo through Gate No.3. It is further stated that it did not comply with the conditions of the sale order to deposit the balance amount 6 within the scheduled date, MSTC Ltd. was compelled to cancel the sale order and forfeit the security deposit of the petitioner as per Clause No.11 of the special terms and conditions.
5. Opposite parties 4 and 5 have also filed counter affidavit taking the similar stand to that of opposite parties 1 to 3.
6. We have heard Mr.Ashok Mohanty, learned Senior Advocate for the petitioner, Mr.S.K.Padhi, learned Senior Advocate for the opposite parties 1 to 3 and Mr.B.K.Sharma, learned Advocate for the opposite party no.5.
7. Mr.Mohanty, learned Senior Advocate appearing for the petitioner, submitted that since certain conditions of e-auction are unworkable, it submitted a letter on 28.7.2011 for modification of certain terms and conditions. Opposite parties accepted the said letter and allowed it to participate in the e-auction by giving digital key and password. Therefore, the counter offer made by it amounts to acceptance by the conduct of the opposite parties. Relying on paragraph-15 of the counter affidavit filed by the opposite parties 1 to 3, Mr. Mohanty submitted that it is ready and willing to remove the cargo within 30 days if rake loading is permitted round the clock to avoid railway demurrage beyond 5 P.M till morning 10 A.M. In support of his submissions, he cited the decisions of the Supreme Court in the cases of State of Madhya Pradesh and another v. Firm Gobardhan Dass Kailash Nath, AIR 1973 SC 1164, Ramji Dayawala and Sons (P) Ltd. v. Invest Import, AIR 1981 SC 2085, Harbanslal Sahnia and another v. Indian Oil Corpn. Ltd. and others, AIR 2003 SC 2120, Mrs. Sanjana M. Wig v. Hindustan Petro. Corporation. Ltd., AIR 2005 SC 3454, Bharat Petroleum Corporation Ltd. v. Great Eastern Shipping Co. Ltd. AIR 2008 SC 357 and Union of India and others v. Tantia Construction Private Limited (2011) 5 SCC 697.
8. Per contra Mr.Padhi, learned Senior Advocate appearing for the opposite parties 1 to 3, submitted that Clause 14.0 of the special terms and conditions of the special e-auction provides arbitration clause. Thus the writ application is not maintainable. Mr. Padhi further submitted that several 7 opportunities were provided to the petitioner to lift sludge, debris and dredge materials and deposit the balance amount. Since it failed to do so in spite of several reminders, rightly the sale acceptance letter was cancelled and pre bid-EMD was forfeited.
9. A specific stand has been taken by the opposite parties 1 to 3 in paragraph-15 of the counter affidavit that they are willing to provide necessary facilities to the petitioner outside the custom bonded area, since allowing siding facility to the petitioner inside the Port may result in theft/pilferage of cargo. Lifting of sludge and debris may create contamination, if a siding is utilized for delivery of cargo. All Port sidings are utilized for dispatch/delivery of imported cargo. Thus the Port cannot afford any contamination of valuable cargo with sludge and debris.
10. In view of the categorical admission of the opposite parties 1 to 3 that they are willing to provide necessary facilities to it outside the custom bonded area, we do not delve deep into the decisions cited by Mr.Mohanty, learned Senior Advocate, and rival submissions made at the Bar.
11. We are unable to accept the submission of Mr.Padhi, learned Senior Advocate that the instant writ application is not maintainable in view of Clause 14 of special terms and conditions of the special e-auction, which provides arbitration in the event there is a dispute. Suffice it to say that categorical admission made by the opposite parties pre-supposes that there is no dispute between the parties.
12. In view of the same, we dispose of the writ petition with a direction to the petitioner to deposit Rs.39644062.00 towards balance material value and Rs.38,347/- towards survey charges by way of D.D. in favour of FA & CAO, PPT and Rs.1390938.00 towards service charges by way of D.D. in favour of MSTC Ltd. @ 12% interest with effect from 30.7.2011, when the letter of acceptance was issued by the opposite parties 1 to 3, vide Annexure-2, within a period of fifteen days from today to lift sludge, debris and dredge materials. The opposite parties are directed to provide necessary facilities to the petitioner outside the custom bonded area to lift the materials within a month from the date of deposit of the aforesaid amount, 8 failing which, the opposite parties are at liberty to make alternative arrangements for disposal of the said materials. Failure on the part of the petitioner to comply the order, the special terms and conditions of e-auction will ensue. The aforesaid order is passed keeping in view the fact that the petitioner has not deposited the balance amount within the stipulated time.
13. In the wake of the aforesaid, the letter dated 20.8.2011 issued by the Deputy Manager, MSTC Limited, vide Annexure-7, and the letter dated 3.9.2011 issued by MSTC Ltd, vide Annexure-9, are hereby quashed.
The writ application is disposed of with the aforesaid observations made in the preceding paragraphs.
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DR. A.K.RATH, J.
AMITAVA ROY, C.J. : I agree.
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AMITAVA ROY, C.J Orissa High Court, Cuttack.
The 11th February, 2015/pks