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2017 DIGILAW 788 (JHR)

Baban Kumar Singh v. State of Jharkhand through its Secretary

2017-05-03

APARESH KUMAR SINGH

body2017
ORDER : 1. Heard counsel for the parties. 2. All these three writ petitions have common issues and also involve three separate agreements for different nature of works relating to construction of Eklabya Vidyalay at Village Kumarbhaja in the district of Pakur. By the impugned orders bearing memo no. 81, 82 and 83 dated 09.03.2017 (Annexure-6 in WPC 1848/2017) and Annexure-5 in WPC 1857/2017 & 1858/2017), the Project Director, Integrated Tribal Development Authority, Pakur (Respondent No. 3) has cancelled the agreements entered into with the respective petitioners. Petitioners besides assailing the impugned decision, have also sought direction upon the Respondents to allow them to continue the work under the agreements in question. 3. It is not in dispute that pursuant to e-tenders being Ref. No. RDSD/PAKUR/03/Re/2016-17/Gr 01 dated 16.04.2016 individual petitioners participated and having found them as lowest bidder, Agreements dated 20.10.2016 and 11.01.2017 in the respective writ petitions, were entered. Agreement in WPC No. 1848/2017 was for construction of hostel building, as per scope of work described therein. In respect of WPC No. 1857/2017, agreement was for construction of school building, while in WPC No. 1858/2017, it was for construction of staff quarters of Eklabya Vidyalaya at village Kumarbhaja as per scope of work described in the Agreement. 4. By the impugned decision, Respondents have chosen to annul the agreements inter-alia on the grounds that a decision has been taken by the Welfare Department, Government of Jharkhand through letter no. 615 dated 22.02.2017 to annul such agreements where construction activity has not commenced and to maintain administrative approval issued earlier where construction has already been started prior to 22.02.2017. 5. According to the Respondents, petitioners have not started construction activity under the agreements. Therefore agreements have been annulled. According to the Respondents, Government of Jharkhand vide Memo No. 615 dated 22.02.2017, has decided to grant administrative approval to Jharkhand State Building Construction Corporation for construction of different Eklavya Model Residential Schools including the instant sites where the work has not been started. Progress report with respect to the scheme was sent by the Project Director vide letter dated 03.03.2017. Since civil work was not started by the petitioner till 04.03.2017, they have decided to cancel the contract of the petitioner vide impugned orders. 6. Progress report with respect to the scheme was sent by the Project Director vide letter dated 03.03.2017. Since civil work was not started by the petitioner till 04.03.2017, they have decided to cancel the contract of the petitioner vide impugned orders. 6. Learned counsel for the State has made two fold submissions, (i) that the State has decided to entrust the task of construction of Hostel, School Building and Staff quarters of Eklavya Model Residential School to Jharkhand State Building Construction Corporation and (ii) since the petitioners had not commenced their work despite execution of agreements, as per the progress report submitted by the Project Director, agreement itself has been annulled in view of the decision taken on 22.02.2017 by the Respondent Department. Learned counsel for the State further submits that the work is to be completed within the time period stipulated under the respective agreements such as 24 month in WPC 1848/2017, 18 month in WPC 1857/2017 and 12 months in WPC 1858/2017. Since the progress of work did not satisfy the Respondents, they have chosen to terminate it. The work has now been re-tendered and is to be executed through Jharkhand State Building Construction Corporation. 7. The e-tender issued thereafter has been challenged by the individual petitioners through Interlocutory Application Nos. 3514/2017, 3515/2017 and 3516/2017. Learned counsel for the petitioners has assailed the impugned orders on the following grounds: (i) Vested right has accrued in favour of the petitioners which cannot be annulled retrospectively due to change in the policy decision; (ii) the impugned decision is not preceded by any show-cause notice. (iii) contentions on facts relating to commencement of the work have been denied by the petitioners stating that excavation and levelling of earth work, which is within the scope of individual agreements, have been commenced. Therefore, the impugned decision is bad in law. It is further submitted that the parties are bound by the terms and conditions of such a contract. In case of breach of reciprocal promise by either of the parties, petitioners or the Respondent state may have the recourse contemplated under the agreements, but after following the procedure prescribed. Therefore, the impugned decision is bad in law. It is further submitted that the parties are bound by the terms and conditions of such a contract. In case of breach of reciprocal promise by either of the parties, petitioners or the Respondent state may have the recourse contemplated under the agreements, but after following the procedure prescribed. Reliance has been placed on the judgment rendered by the Hon'ble Supreme Court in the case of MGB Gramin Bank Versus Chakrawarti Singh [ (2014) 13 SCC 583 , para-13 thereof in support of the submissions that vested right cannot be taken away without the consent of the person concerned. Such vested right can arise from contract, statute or by operation of law. Reliance has also been placed upon the judgment rendered by the Hon'ble Supreme Court in the case of ITC Limitd Versus State of Uttar Pradesh and others [ (2011) 7 SCC 493 , para-107 thereof. It is further submitted that there are no allegations of misrepresentation, undue influence or fraud or violation of any regulation or irregularity in the tender process. The State in such circumstances, specially in matters relating to public projects, should not resile from the duly concluded solemn agreement as it not only shake the confidence of public at large, but would also lead to uncertainty in law of their position. 8. Considered the submissions of the counsel for the parties and relevant material facts noted herein-above. The canvass of background facts undisputedly show that the concluded agreements have been annulled by the Respondents based on a policy decision to execute such nature of work through the Jharkhand State Building Construction Corporation. It cannot be gainsaid that on execution of an agreement, a vested right accrues in favour of both the parties to the agreement. There are no allegations of irregularity in the tender process for award of the work. There are no allegations of violation of any statutory rules, regulation or circular which were applicable at the time agreements were executed. The Respondent State is also one of the parties to such an agreement. There are no grounds that the agreement was entered with the petitioners on any mistake of fact. Even otherwise, mistake of fact by one of the parties, does not render the agreement void or voidable. The Respondent State is also one of the parties to such an agreement. There are no grounds that the agreement was entered with the petitioners on any mistake of fact. Even otherwise, mistake of fact by one of the parties, does not render the agreement void or voidable. In case, Respondents found breach of promise on the part of the petitioners in carrying out the work, as per the terms and conditions of the agreement, they may proceed against the petitioners, as per the contingencies stipulated under the agreement. It also cannot be gainsaid that in matters relating to termination of such concluded agreements for any alleged breach of promises, a minimum requirement of notice is to be followed in consonance with the principles of natural justice. The State Respondent also do follow the same procedure before terminating the concluded agreements with any such parties. That policy decision could not be made the basis to annul the concluded agreement in retrospective manner. 9. As observed herein-above, the Respondent State did have and does have the liberty to proceed against any such party to an agreement for breach of its promise but only after compliance of principles of natural justice. That requirement of notice or show-cause has also not been followed in the present cases even if the Respondent contend that the petitioners did not commence the work after execution of agreements. Petitioners have denied this assertion on facts on which this Court does not intend to make any comment in the present proceedings. It would be apposite to quote the opinion of the Hon'ble Supreme Court as laid down in the case of ITC Limited (Supra) at paragraph-107 of the Report: “107. The position is, however, different in public law. Breach of statutory provisions, procedural irregularities, arbitrariness and mala fides on the part of the Authority (transferor) will furnish grounds to cancel or annul the transfer. But before a completed transfer is interfered on the ground of violation of the regulations, it will be necessary to consider two questions. The first question is whether the transferee had any role to play (fraud, misrepresentation, undue influence, etc.) in such violation of the regulations, in which event cancellation of the transfer is inevitable. 107.1. But before a completed transfer is interfered on the ground of violation of the regulations, it will be necessary to consider two questions. The first question is whether the transferee had any role to play (fraud, misrepresentation, undue influence, etc.) in such violation of the regulations, in which event cancellation of the transfer is inevitable. 107.1. If the transferee had acted bona fide and was blameless, it may be possible to save the transfer but that again would depend upon the answer to the further question as to whether public interest has suffered or will suffer as a consequence of the violation of the regulations: (i) If public interest has neither suffered, nor is likely to suffer, on account of the violation, then the transfer may be allowed to stand as then the violation will be a mere technical procedural irregularity without adverse effects. (ii) On the other hand, if the violation of the regulations leaves or is likely to leave an everlasting adverse effect or impact on public interest (as for example when it results in environmental degradation or results in a loss which is not reimbursable), public interest should prevail and the transfer should be rescinded or cancelled. (iii) But where the consequence of the violation is merely a short-recovery of the consideration, the transfer may be saved by giving the transferee an opportunity to make good the shortfall in consideration. 107.2. The aforesaid exercise may seem to be cumbersome, but is absolutely necessary to protect the sanctity of contracts and transfers. If the Government or its instrumentalities are seen to be frequently resiling from duly concluded solemn transfers, the confidence of the public and international community in the functioning of the Government will be shaken. To save the credibility of the Government and its instrumentalities, an effort should always be made to save the concluded transactions/transfers wherever possible, provided (i) that it will not prejudice the public interest, or cause loss to public exchequer or lead to public mischief, and (ii) that the transferee is blameless and had no part to play in the violation of the regulation. 107.3. If the concluded transfer cannot be saved and has to be cancelled, the innocent and blameless transferee should be reimbursed all the payments made by him and all expenditure incurred by him in regard to the transfer with appropriate interest. 107.3. If the concluded transfer cannot be saved and has to be cancelled, the innocent and blameless transferee should be reimbursed all the payments made by him and all expenditure incurred by him in regard to the transfer with appropriate interest. If some other relief can be granted on grounds of equity without harming public interest and public exchequer, grant of such equitable relief should also be considered.” 10. It follows from the aforesaid opinion that the State and its instrumentality should not be seen to frequently resile from duly concluded solemn transfers or agreement, but endeavour should be made to protect the sanctity of such contracts and transfers. The guidelines which should govern such decision, as enumerated in the quoted paragraph above, also show that Government or its instrumentalities should make an effort to save the concluded transactions/transfers wherever possible, provided (i) it will not prejudice the public interest or cause loss to public exchequer or lead to public mischief, (ii) that the transferee is blameless and had no part to play in the violation of the regulation. 11. In the facts of the instant case as is apparent also, there is no blame on the petitioners, so far as the execution of the agreements is concerned, neither do the agreements in question suffer on any grounds of irregularity or public mischief. Therefore, in view of the discussions made herein-above and the reasons recorded, the impugned decision dated 09.03.2017 contained at Annexure-6 and 5 in the respective writ petitions, cannot be upheld in the eye of law and on facts in exercise of powers of Judicial review of this Court. Accordingly, they are quashed. Consequently, the work in question shall also not be re-tendered as contemplated under the fresh tenders impugned through the respective interlocutory applications in the present matters. Writ petitions are accordingly allowed in the aforesaid terms. I.As are also disposed of.