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2011 DIGILAW 50 (JHR)

A. K. S. Construction v. State of Jharkhand

2011-01-21

R.K.MERATHIA

body2011
JUDGMENT R.K. Merathia, J. 1. Mr. Indrajit Sinha, learned Counsel appearing for the Petitioner, submitted that the agreement for work in question was issued on 23.10.2009 with stipulation to complete the work by June, 2010 . Admittedly there was a typographical mistake with regard to specification of the sheet piling, which was corrected only on 19.1.2010. He further submitted that by letter dated 5.5.2010, Petitioner was asked to go slow in the work till the change in the design proposed, is approved by the higher authority. He submitted that there were other reasons also for slow progress of the work, which are attributable to the actions/inactions of the Respondents, and the Petitioner cannot be held responsible for the same. In these circumstances, he submitted that the cancellation of the agreement and re-tendering is too harsh a measure, taken against the Petitioner and at best Respondents could foreclose the contract. He relied on -Karnataka State Forest Industries Corporation v. Indian Rocks, (2009) 1 SCC 150 and -Haryana Financial Corporation v. Rajesh Gupta. (2010) 1 SCC 655 2. On the other hand, Miss Neha Prashant, learned Counsel for the State, submitted that it is true that there was some typographical mistake but the parties knew the correct specification. However, it was corrected on 19.1.2010. She further submitted that while asking the Petitioner to go slow with the work pending approval of the changed design, Petitioner was also directed to continue with other common works. Referring to the correspondences, she submitted that instead of continuing, Petitioner stopped such work and therefore it was ultimately asked to show cause and then after considering the cause shown by the Petitioner, agreement has been rightly terminated. She further submitted that the Respondents have been acting in terms of the contract. 3. It is true that initially there was typographical mistake but it appears from the correspondences that the parties knew what was the correct specification. However, it was corrected on 19.1.2010. It further appears that though Petitioner was asked to proceed with the work slowly in relation to the modified design till it is approved but it was directed to continue with the common work, by letter dated 5.5.2010. However, it was corrected on 19.1.2010. It further appears that though Petitioner was asked to proceed with the work slowly in relation to the modified design till it is approved but it was directed to continue with the common work, by letter dated 5.5.2010. It further appears that on 5.6.2010, a letter was written to the Petitioner that the work was to be completed by 22.6.2010 but it appeared from the progress that it will not be completed by that time and therefore Petitioner was asked to expedite the completion of work. Petitioner replied to the said letter giving some explanations. A reminder was sent to the Petitioner on 16.6.2010. On 23.6.2010, a letter was issued to the Petitioner that instead of expediting the completion of work, Petitioner has stopped the work. Petitioner was asked to explain the reasons. Again on 24.6.2010, a similar letter was issued informing the Petitioner that if the work is not completed, necessary action would be taken as per the agreement. By letter dated 9.7.2010, Petitioner again gave some explanations. Petitioner was again asked to explain why action be not taken against it and ultimately by letter dated 21.7.2010, a notice was issued to the Petitioner to show cause as to why the contract be not cancelled as neither it completed the work in time, nor prayed for its extension or offered any fresh time schedule inspite of the earlier communications. Petitioner filed its show cause on 27.7.2010. Then by letter dated 10.9.2010, impugned in this writ petition, a decision was communicated to the Petitioner that it's agreement has been cancelled and Petitioner was asked to appear for final measurement. Petitioner was also communicated that a decision has been taken for blacklisting. 4. Thus, it appears that there are allegations , explanations and counter allegations between the parties. On the one hand, according to the Petitioner, the Respondents are responsible for the delay and not completion of work, whereas according to the Respondents, Petitioner is at fault and therefore action has been taken as per the agreement. In these circumstances, the judgments relied by Mr Indrajit Sinha are of no help to the Petitioner, in the facts and circumstances of this case. What action should have been taken by the Respondents, under the contract i.e. termination or foreclosure, cannot be examined in this writ petition. In these circumstances, the judgments relied by Mr Indrajit Sinha are of no help to the Petitioner, in the facts and circumstances of this case. What action should have been taken by the Respondents, under the contract i.e. termination or foreclosure, cannot be examined in this writ petition. It cannot be said that the action of the Respondents is arbitrary or mala fide. Moreover, the disputes between the parties arise out of the non statutory contract. The scope of judicial review under writ jurisdiction is very limited. In the case reported in (Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517), it was observed as follows: 22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succor to thousands and millions and may increase the project cost manifold. Such interferences, either interim or final, may hold up public works for years, or delay relief and succor to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions: (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition or penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealership and franchises) stand on a different footing as they may require a higher degree of fairness in action. 5. So far as the communication with regard to blacklisting is concerned, it was submitted on behalf of the Petitioner that such decision was taken without giving opportunity of hearing to the Petitioner. On this, learned Counsel for the State submitted that no such decision has been taken. Therefore, this Court need not go into the grievance of the Petitioner that a decision has been taken for blacklisting without giving opportunity of hearing. In the result, this writ petition is dismissed. Interim orders stand vacated. However, no costs. However, if a suit is instituted by the Petitioner, this order passed under writ jurisdiction will not prejudice the respective cases of the parties. Petition dismissed.