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2017 DIGILAW 863 (ORI)

JKM-ARSS v. Mahanadi Coalfields Limited

2017-08-11

A.K.RATH

body2017
JUDGMENT : Dr. A.K. Rath, J. 1. This petition challenges the order dated 19.7.2016 passed by the learned 2nd Addl. District Judge, Sambalpur in FAO No.3/4 of 2016. By the said order, learned appellate court dismissed the appeal and confirmed the order dated 29.1.2016 passed by the learned Civil Judge (Senior Division), Sambalpur in I.A No.42 of 2015, whereby and where under learned trial court dismissed the application under Order 39 Rule 1 and 2 CPC filed by the plaintiff. 2. The petitioner as plaintiff instituted C.S. No.399 of 2015 in the court of the learned Civil Judge (Senior Division), Sambalpur for a declaration that the cancellation of award of work to the plaintiff vide letter of acceptance dated 26.08.2014 by the defendant no.2 vide letter dated 16.10.2015 is declared illegal and void impleading the opposite parties as defendants. The plaintiff filed an application under Order 39 Rule 1 and 2 CPC to restrain the opposite parties-defendants from giving cumulative effect to the order of cancellation dated 16.10.2015 issued by the defendant no.2 or to secure the interest of the petitioner qua the project of public importance. 3. The case of the petitioner is that opposite parties floated an e-tender notice on 24.1.2014 for “Construction of Concrete Pavement in the Coal Transportation Roads of IB Coalfields’ of Mahanadi Coalfields Limited”. The estimated cost of the tender work as per the Notice Inviting Tender (NIT) was Rs. 265,06,95,669,95/- p. The last date for submission of the bid was 24.3.2014. The petitioner submitted its bid and deposited earnest money of Rs.58/- lakhs in the form of an irrevocable bank guarantee. The tender was an item rate tender. The petitioner submitted its offer at Rs. 266,23,32,349.79/- p. which was 0.44% the estimated cost of Rs. 265,06,95,669,95/- p. The petitioner was L-1. The opposite parties vide letter dated 26.8.2014 issued a letter of acceptance of tender calling upon the petitioner to fulfil the conditions stated in the NIT with a condition that in the event the petitioner fails to comply with the conditions, necessary action in accordance with the tender condition shall be taken. The petitioner was asked to furnish performance security deposit of Rs.13,64,07,256/- being 5% of the value of the work. The petitioner was asked to furnish performance security deposit of Rs.13,64,07,256/- being 5% of the value of the work. The opposite parties also directed the petitioner to furnish an additional performance security of Rs.41,37,62,085.87/- p. on the ground that the rate quoted by it in respect of some of the items are abnormally low. It is further stated that the decision of the opposite parties to furnish additional performance security is arbitrary, irrational and contrary to clauses 2.3, 2.4 and 2.5 of the general items and conditions of the NIT. 4. Pursuant to issuance of summons, opposite parties entered appearance in I.A No.42 of 2015 and filed objection. It is stated that no resolution was passed by the company in favour of the Director or Principal Officer to represent it. The specific case of the opposite parties is that letter of acceptance dated 26.8.2014 was issued subject to compliance of certain terms and conditions. The petitioner was required to furnish additional performance security to the tune of Rs.41,37,62,085.87/- p. over and above the performance security of Rs.13,64,07,256/-. In the event the petitioner failed to furnish additional performance security within the stipulated time, the award shall be cancelled. The petition was dismissed. Unsuccessful petitioner challenged the order before the learned 2nd Addl. District Judge, Sambalpur in FAO No.3/4 of 2016. Learned appellate court has assigned the following reasons and dismissed the appeal. “9.The learned Civil Judge, Sr. Divn., Sambalpur while considering the aforesaid plea taken by both the parties has arrived to an opinion that the appellant/petitioner quoted item rates per individual work which comes to Rs.266,23,32,249.78/- excluding service tax. The awarded value was of Rs.272,81,45,103/- including service tax which was over 16% but below the departmental justified undated cost of Rs.324,81,63,514.26/- as on 18.3.2014. As per sub-clause (iv) clause 2.5 the petitioner was required to deposit with the Company the differential security amount on ALR. It is not out of place to mention here that as per clause 2.4 had the differential amount deposited by the petitioner it would have been entitled for refund of the same after successful examination of individual ALR items of work. Sufficient opportunity was given to the petitioner even beyond statutory period (28 days) yet the petitioner failed to comply the direction. In that view of the matter the petitioner has no prima facie case. Sufficient opportunity was given to the petitioner even beyond statutory period (28 days) yet the petitioner failed to comply the direction. In that view of the matter the petitioner has no prima facie case. In the meantime the awarded in favour of the petitioner has been cancelled and the O.Ps have invoked the bank guarantee. There is no reason to restrain the O.P from giving effect to the order of cancellation dt. 16.10.2015 particularly when no inconvenience will be caused to the petitioner if the O.Ps are not restrained to do so. If the O.Ps are restrained to give effect to the cancellation and the petitioner did not comply the direction issued in the letter dt.26.8.2014 much inconvenience will be caused to the O.Ps in carrying out the construction work which is highly essential as a matter of public policy. At best the petitioner will sustain loss if the O.Ps are not restrained to the effect cancellation but such loss can be compensated in terms of money value.” 5. Mr. A.K. Parija, learned Senior Advocate for the petitioner submitted that the orders of the courts below are patently erroneous and perverse. Opposite parties have demanded additional performance security of around Rs.41/- crores from the petitioner on the ground that rates of certain items claimed by the petitioner are abnormally low. When the petitioner protested against the arbitrary demand, the opposite parties cancelled the letter of award for non-furnishing the additional performance security. The demand of additional performance security was per se illegal and contrary to the terms of the e-Tender notice. The updated estimated cost was introduced behind the back of the petitioner. There was no scope for the petitioner to be aware of revised rates prior to the submission of the bid. The same was done without affording opportunity of hearing to the petitioner. The petitioner had quoted the price, which was 0.44% above the original estimated cost. Thus the bid was not seriously unbalanced warranting demand of additional performance security. Demand of additional performance security by resorting to clause 2.4 is against the terms of e-Tender notice. The said demand is contrary to clause 2.5 of the e-Tender notice. The petitioner had quoted the price, which was 0.44% above the original estimated cost. Thus the bid was not seriously unbalanced warranting demand of additional performance security. Demand of additional performance security by resorting to clause 2.4 is against the terms of e-Tender notice. The said demand is contrary to clause 2.5 of the e-Tender notice. Referring to clause 2.3 of the e-Tender notice, he submitted that if the bid of the successful bidder is seriously unbalanced in relation to the estimated cost of work, the opposite party may require the successful bidder to produce detailed price analysis of any or all items to demonstrate the internal consistency of the prices with the construction method and the schedule proposed. Only after evaluating the same, the opposite party may require the successful bidder to give additional performance security with a view to protect itself against financial loss. He further contended that the petitioner is willing to execute the work at the quoted rate of Rs.266,23,32,249.78/- p. as against the revised estimated cost of Rs.324,81,63,514.26/- p. He further contended that the finding of the courts below that the petitioner can be compensated in money is not correct. Clause 10.5 of the e-Tender notice which deals with foreclosure of contract restricts any claim of compensation. Thus the petitioner cannot be compensated with money. He further contended that the petitioner has a prima facie case, the balance of convenience tilts in favour of the petitioner and moreover the petitioner will suffer irreparable loss and injury in the event the injunction is not granted. To buttress his submission, he relied on the decisions of the apex Court in the case of South Delhi Municipal Corporation v. Ravinder Kumar and another, (2015) 15 SCC 545 , Babu Lal and others v. Vijay Solvex Limited and others, (2014) 16 SCC 680 , Best Sellers Retail (India) Pvt. Ltd. V. Aditya Birla Nuvo Limited, (2012) 6 SCC 792 , Tayabbhai M. Bagasarwalla & another v. Hind Rubber Industries Pvt. Ltd., (1997) 3 SCC 443 , Shalini Shyam Shetty & another v. Rajendra Shankar Patil, (2010) 8 SCC 329 and Muni Lal v. Oriental Fire & General Insurance Co. Ltd. & another (1996) 1 SCC 90 . 6. Per contra Mr. Ltd. & another (1996) 1 SCC 90 . 6. Per contra Mr. S.D Das, learned Senior Advocate for the opposite parties, submitted that the letter of acceptance of tender means letter giving intimation to the tenderer that his tender has been accepted in accordance with the provisions contained in that letter. Referring to the clauses of the e-Tender notice, he submitted that the letter of acceptance was issued to the petitioner on 26.8.2014 subject to compliance of certain conditions. The petitioner did not deposit the performance security and additional performance security in respect of abnormally low rate items. Since no agreement was executed between the petitioner and the opposite parties, the suit is not maintainable. He further contended that challenging the tender condition, the petitioner filed WP(C) No.307 of 2015 before this Court. Subsequently the same was withdrawn. Thereafter he instituted the suit. After the letter of acceptance was cancelled, the plaint was amended. The petitioner has not made out any prima facie case. The balance of convenience does not tilt in favour of the petitioner. The petitioner will not suffer irreparable loss and injury in the event injunction is refused. There is no overwhelming public interest. The courts below dismissed the application for injunction. There is no perversity in the findings of the courts below. He relied on the decisions of the apex Court in the case of Radheshyam and another v. Chabinath and others, (2015) 5 SCC 423 and Suryadev Rai v. Ramachandra Rai and another, (2003) 6 SCC 675 . 7. The scope of interference with the order passed by the learned trial court under Article 227 of the Constitution is limited. In Shalini Shyam Shetty (supra), the apex Court held as follows: “64. However, this Court unfortunately discerns that of late there is a growing trend amongst several High Courts to entertain writ petition in cases of pure property disputes. Disputes relating to partition suits, matters relating to execution of a decree, in cases of dispute between landlord and tenant and also in a case of money decree and in various other cases where disputed questions of property are involved, writ courts are entertaining such disputes. In some cases High Courts, in a routine manner, entertain petitions under Article 227 over such disputes and such petitions are treated as writ petitions. 65. In some cases High Courts, in a routine manner, entertain petitions under Article 227 over such disputes and such petitions are treated as writ petitions. 65. We would like to make it clear that in view of the law referred to above in cases of property rights and in disputes between private individuals writ court should not interfere unless there is any infraction of statute or it can be shown that a private individual is acting in collusion with a statutory authority. 66. We may also observe that in some High Courts there is a tendency of entertaining petitions under Article 227 of the Constitution by terming them as writ petitions. This is sought to be justified on an erroneous appreciation of the ratio in Surya Dev and in view of the recent amendment to Section 115 of the Civil Procedure Code by the Civil Procedure Code (Amendment) Act 1999. It is urged that as a result of the amendment, scope of Section 115 of CPC has been curtailed. In our view, even if the scope of Section 115 CPC is curtailed that has not resulted in expanding High Court's power of superintendence. It is too well known to be reiterated that in exercising its jurisdiction, High Court must follow the regime of law. 67. As a result of frequent interference by the Hon’ble High Court either under Article 226 or 227 of the Constitution with pending civil and at times criminal cases, the disposal of cases by the civil and criminal courts gets further impeded and thus causing serious problems in the administration of justice. This Court hopes and trusts that in exercising its power either under Article 226 or 227, the Hon’ble High Court will follow the time honoured principles discussed above. Those principles have been formulated by this Court for ends of justice and the High Courts as the highest courts of justice within their jurisdiction will adhere to them strictly. 8. In Radheshyam (supra) the apex Court quoted with approval of law laid down in Shalini Shyam Shetty (supra) and held that judicial orders of civil courts are not amenable to a writ of certiorari under Article 226. The scope of Article 227 is different from Article 226. 9. 8. In Radheshyam (supra) the apex Court quoted with approval of law laid down in Shalini Shyam Shetty (supra) and held that judicial orders of civil courts are not amenable to a writ of certiorari under Article 226. The scope of Article 227 is different from Article 226. 9. In Dalpat Kumar and another v. Prahlad Singh and others, AIR 1993 SC 276 , the apex Court held as follows:- “4…..Injunction is a judicial process by which a party is required to do or to refrain from doing any particular act. It is in the nature of preventive relief to a litigant to prevent future possible injury. In other words, the court in exercise of the power of granting ad interim injunction is to preserve the subject matter of the suit in the status quo for the time being. It is settled law that the grant of injunction is a discretionary relief. The exercise thereof is subject to the court satisfying that (1) there is a serious disputed question to be tried in the suit and that an act, on the facts before the court, there is probability of his being entitled to the relief asked for by the plaintiff/defendant; (2) the court's interference is necessary to protect the party from the species of injury. In other words, irreparable injury or damage would ensue before the legal right would be established at trial; and (3) that the comparative hardship or mischief or inconvenience which is likely to occur from withholding the injunction will be greater than that would be likely to arise from granting it. 5. Therefore, the burden is on the plaintiff by evidence aliunde by affidavit or otherwise that there is “a prima facie case” in his favour which needs adjudication at the trial. The existence of the prima facie right and infraction of the enjoyment of his property or the right is a condition for the grant of temporary injunction. Prima facie case is not to be confused with prima facie title which has to be established, on evidence at the trial. Only prima facie case is a substantial question raised, bona fide, which needs investigation and a decision on merits. Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. Prima facie case is not to be confused with prima facie title which has to be established, on evidence at the trial. Only prima facie case is a substantial question raised, bona fide, which needs investigation and a decision on merits. Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. The Court further has to satisfy that non-interference by the Court would result in “irreparable injury” to the party seeking relief and that there is no other remedy available to the party except one to grant injunction and he needs protection from the consequences of apprehended injury or dispossession. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely one that cannot be adequately compensated by way of damages. The third condition also is that “the balance of convenience” must be in favour of granting injunction. The Court while granting or refusing to grant injunction should exercise sound judicial discretion to find the amount of substantial mischief or injury which is likely to be caused to the parties, if the injunction is refused and compare it with that it is likely to be caused to the other side if the injunction is granted. If on weighing competing possibilities or probabilities of likelihood of injury and if the Court considers that pending the suit, the subject-matter should be maintained in status quo, an injunction would be issued. Thus the Court has to exercise its sound judicial discretion in granting or refusing the relief of ad interim injunction pending the suit. It was further held that- Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. The Court further has to satisfy that non-interference by the Court would result in “irreparable injury” to the party seeking relief and that there is no other remedy available to the party except one to grant injunction and he needs protection from the consequences of apprehended injury or dispossession. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely, one that cannot be adequately compensated by way of damages.” 10. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely, one that cannot be adequately compensated by way of damages.” 10. In Best Sellers Retail (India) Pvt. Ltd. (supra), the apex Court taking a cue from Dalpat Kumar (supra) held that yet, the settled principle of law is that even where prima facie case is in favour of the plaintiff, the Court will refuse temporary injunction if the injury suffered by the plaintiff on account of refusal of temporary injunction was not irreparable. 11. On the anvil of the decision cited supra, the instant case may be examined. Pursuant to e-Tender notice, the petitioner submitted bid. He was L-1. Letter of acceptance was issued on 26.08.2014 to the petitioner subject to fulfilment of certain conditions. In the letter of acceptance, opposite parties apart from asking the petitioner to furnish performance security of Rs.13,64,07,256/- which was 5% of the value of the work as per the tender conditions also demanded additional performance security of Rs.41,37,62,085.87/- p. as per clause 1(iii) of the letter on the ground that the rate offered by the petitioner was seriously unbalanced; so also abnormally low as against 64 items of work and abnormally high as against 4 item of works. The petitioner asserts that he quoted the rate which is 0.44% of the estimated value of work. The same cannot be termed as seriously unbalanced. No opportunity of hearing was provided to the petitioner as per the terms and conditions of the notice. Thus there is a serious disputed question to be tried in the suit. But then for non-deposit of additional performance security, the letter of acceptance was cancelled. No agreement was entered into between the parties. There was no concluded contract. The petitioner has no vested right to have the work awarded in its favour. The learned appellate court is right in holding that if the opposite parties are restrained to give effect to the cancellation and the petitioner did not comply the direction issued in the letter dt.26.8.2014 much inconvenience will be caused to the opposite parties in carrying out the construction work which is highly essential as a matter of public policy. Loss sustained by the petitioner can be compensated by money. 12. Loss sustained by the petitioner can be compensated by money. 12. In Ravinder Kumar (supra), the apex Court had the occasion to consider the scope of judicial review in the matter awarding contract. 13. In Babu Lal (supra), the apex Court held that while dealing with a matter relating to vacation of order of temporary injunction, it was not open for the High Court to give a finding on the main issue relating to maintainability of the suit. 14. The decision in the case of Tayabhai M. Bagasarwalla (supra) is distinguishable on facts. The apex Court had an occasion to deal with the case under Order 39 Rule 2-A CPC. As would be evident from para-1 of the report the question is whether a person who disobeys an interim injunction made by the Civil Court can be punished under Rule 2-A of Order 39 of the Code of Civil Procedure where it is ultimately found that the Civil Court had no jurisdiction to entertain and try the suit? 15. In Muni Lal (supra), the apex Court had an occasion to deal with the application under Order 6 Rule 17 CPC. The said decision is distinguishable on facts. 16. In Haryana Urban Development Authority and others v. Orchid Infrastructure Developers Private Limited, (2017) 4 SCC 243 , the apex Court held that the highest bidder has no vested right to have the auction concluded in his favour. In the absence of concluded contract, the suit for declaration that the rejection of bid was illegal and mandatory injunction is not maintainable. Since the suit is sub judice, this Court refrains itself from rendering any finding with regard to maintainability of the suit. 17. Public interest is a relevant factor to be taken into consideration in granting injunction. There is no public interest. The construction of road has come to a grinding halt. The price of construction material has gone up by efflux of time. Whether the petitioner can execute the work in old rate, the same is the exclusive domain of the opposite parties, who floated tender. The court cannot delve into the same. The same is also not germane for consideration in an application for injunction. There is no perversity or illegality in the orders passed by the courts below warranting interference of this Court under Article 227 of the Constitution. Accordingly, the petition is dismissed.