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2018 DIGILAW 459 (CAL)

Mohindra Tubes Pvt. Ltd. v. State of West Bengal

2018-07-02

ARIJIT BANERJEE, JYOTIRMAY BHATTACHARYA

body2018
JUDGMENT : Arijit Banerjee, J. 1. The Gorkhaland Territorial Administration (in short ‘GTA’) issued a Notice Inviting Tender (in short ‘NIT’) dated 20 September, 2013 inviting offers for supply of pipes, specials and joining material to the Public Health Engineering Department (in short ‘PHE’), GTA, Darjeeling for execution of Drinking Water Supply Schemes for different schools and PWS schemes within the GTA area. The total estimated cost of 47 schemes in Darjeeling, Kurseong and Kalimpong divisions was Rs. 53.81 crores. The petitioner company’s bid was found to be the lowest and the same was communicated to it by the PHE department of GTA by a letter dated 20 December, 2013. It was mentioned in the said letter that supply of the said materials shall be made as per the orders issued from the office of the PHE department of GTA from time to time against the sanctioned works. It was also mentioned that the approved rates will remain valid from the date of the said letter till 20 December, 2015. The petitioner company was called upon to execute formal agreement with the PHE department of GTA within seven days. Such a formal agreement was executed on 24 December, 2013. 2. It is not in dispute that the last work order was issued by the respondent authorities on 26 March, 2014. The last supply was made by the petitioner on 12 May, 2016 as would appear from copies of road challans filed in Court by the petitioner company. 3. The petitioners filed WP No. 7136 (W) of 2018 before the learned Single Judge contending that without issuing further work orders pertaining to the remaining work under the aforesaid tender the respondent authorities have issued fresh tender notices relating to supply of materials which were included in the earlier tender. The petitioners prayed for an order restraining the respondents from giving effect to the fresh NITs all dated 16 May, 2018. 4. The Learned Single Judge dismissed the writ petition observing that normally a Writ Court would not interfere in contractual disputes and the authorities have not acted in an arbitrary or unreasonable manner by inviting fresh tenders. Being aggrieved, the writ petitioners are before us by way of the present appeal. 5. Mr. Bikash Ranjan Bhattacharya, learned Sr. Counsel appearing for the appellants submitted that the contract between the parties was for supply of the pipes etc. Being aggrieved, the writ petitioners are before us by way of the present appeal. 5. Mr. Bikash Ranjan Bhattacharya, learned Sr. Counsel appearing for the appellants submitted that the contract between the parties was for supply of the pipes etc. by the appellant no.1 for completion of the 47 schemes (12 in Darjeeling, 10 in Kurseong and 25 in Kalimpong). Out of the estimated Rs. 53 crores worth of supply, work order had been placed on the appellant no. 1 by the respondent authorities for about Rs. 24 crores worth of materials. The authorities are bound to place work orders for the balance Rs. 28 crores worth of materials for completion of the aforesaid schemes on the appellant no. 1 and cannot indirectly terminate the contract with the appellant no. 1 by issuing fresh NIT in respect of the balance materials. 6. Learned Sr. Counsel referred to a letter dated 26 November, 2015 written by the appellant no. 1 to the Executive Director, PHE Department, GTA, wherein it was stated inter alia as follows:- “Therefore, you are requested please arrange to issue the balance 50% quantity materials supply orders at the earliest so that materials can be supplied immediately. We would also like to mention here that the new supply orders payment can also be made on availability of fund with the department. Further we would also undertake to supply & delivery of G.I. Pipes and fittings on the same terms and condition as laid down in the NIT No. 01/PHE up to 31st December, 2017. Hope you will find all above in order and requesting your good self to please arrange to place the balance quantities order at the earliest and obliged.” 7. Mr. Bhattacharya also referred to an internal memo of the respondents dated 31 January, 2014 signed by the Executive Director, PHE Department, GTA recording, inter alia, that ‘In the meantime we may issue supply order of 50% materials G.I. Pipes & Specials for execution of the schemes instantly as per the indent submitted by the Executive Engineer of the PHE Department, GTA. Supply orders to M/s. Mohindra Tubes Pvt. Ltd. inbox tender rates were accepted are put up for kind approval’. It was submitted that the competent authority approved the rates of the appellant no. 1 and cannot now back out of the contract without lawfully terminating it. 8. Appearing for the GTA, Mr. Supply orders to M/s. Mohindra Tubes Pvt. Ltd. inbox tender rates were accepted are put up for kind approval’. It was submitted that the competent authority approved the rates of the appellant no. 1 and cannot now back out of the contract without lawfully terminating it. 8. Appearing for the GTA, Mr. Ashok Banerjee, learned Sr. Counsel, submitted that the financial bids of the tenderers in connection with the current tender have been opened. The appellant no. 1 did not participate in the tender process. He produced a comparative statement of the rates quoted by the appellant no. 1 in connection with the earlier tender and the rates quoted by the lowest tender (L1) in connection with the current tender. He pointed out that the rates of L1 are much less than the rates quoted by the appellant no. 1. Hence, it would save huge amounts of public money if orders were issued to L1. This will be in public interest which must prevail over private interest. 9. Appearing for the State, Mr. Samrat Sen, learned Sr. Counsel submitted that accepting the offer of L1 and placing work order on L1 would benefit public exchequer. He further referred to two notices sent by the appellants/on behalf of the appellants to the respondent authorities, dated 3 May, 2018 and 30 May, 2018. He submitted that even as late as 3 January, 2018 the only grievance of the appellants was non-payment of its entire dues on account of supplies made by it. In the other notice dated 30 May, 2018, the appellants have complained of breach of contract on the part of the respondents. Mr. Sen submitted that if such is the grievance of the appellants, their remedy is to file a civil suit claiming damages or they may also initiate arbitration under the provisions of the MSME Act, 2006 since the appellant no.1 claims that it comes under the purview of the said Act. The writ court is not the proper forum for claiming damages. The contract between the parties is terminable by nature. Such contract cannot be specifically enforced. Further, the last work order was admittedly issued on 26 March, 2014. Three years have gone by since then. The issue of limitation also arises. In so far as the willingness expressed by the appellant no. The contract between the parties is terminable by nature. Such contract cannot be specifically enforced. Further, the last work order was admittedly issued on 26 March, 2014. Three years have gone by since then. The issue of limitation also arises. In so far as the willingness expressed by the appellant no. 1 in its letter dated 26 November, 2015 is concerned, it merely amounted to an offer made by it to supply and deliver the materials on the same terms and conditions as laid down in the earlier NIT up to 31 December, 2017. The authorities never accepted such offer. Because the appellants knew that the contract with the GTA would automatically come to an end on 20 December, 2015, the appellants wrote the letter dated 26 November, 2015 hoping to persuade the authorities to extend the validity of the contract. There is no subsisting contract between the parties and no interference of this Court is called for. 10. In reply, Mr. Bhattacharya submitted that the rates quoted by the appellant no.1 in connection with the earlier NIT are higher than the rates quoted by L1 in connection with the present NIT because probably the materials forming the subject matters of the two tender notices are different. He submitted that the action on the part of the respondent authorities is arbitrary which warrants judicial intervention. 11. We have considered the rival contentions of the parties. 12. It is not in dispute that the appellant no.1 became the lowest bidder in connection with the earlier NIT. The appellant’s bid was accepted by the authorities by a letter dated 20 December, 2013. The letter contemplated execution of a formal agreement between the parties. Such agreement was in fact executed on 24 December, 2013. The agreement did not stipulate the period of time for which the same will be valid or be in force. This cannot mean that the parties intended that the agreement would be valid for an indefinite period of time. However, an indication of the validity period of the agreement is there in the letter dated 20 December, 2013 written by the respondent authorities wherein it is mentioned that the rates approved by the authorities will remain valid from the date of the said letter till 20 December, 2015. However, an indication of the validity period of the agreement is there in the letter dated 20 December, 2013 written by the respondent authorities wherein it is mentioned that the rates approved by the authorities will remain valid from the date of the said letter till 20 December, 2015. Thus, it would be reasonable to conclude that the agreement between the parties died a natural death upon expiry of 20 December, 2015. We are of the opinion that the appellants also understood the validity period of the agreement to be till 20 December, 2015. This understanding prompted the appellants to write the letter dated 26 November, 2015 i.e. about three weeks prior to 20 December, 2015, offering to supply and deliver the balance materials for the said schemes, on the same terms and conditions up to the end of December, 2017. Unless the appellants were conscious that the contract was coming to a natural end by efflux of time, there was no reason for them to write the letter dated 26 November, 2015. Hence, in our opinion, there is no subsisting contract between the appellant no. 1 and the respondents and no question of directing the respondents to place further work orders on the appellant no. 1 in pursuance of such contract can or does arise. 13. Looking at the dispute between the parties from another angle the contract between the parties was such that for non-performance of the same compensation would be an adequate relief. Further, the contract was in its nature terminable. As per Sec. 14 of the Specific Relief Act, 1963, such contracts are not specifically enforceable. If a party to the contract is aggrieved by the other party terminating the contract or acting in breach of the contract, the remedy of the party sounds in damages. The aggrieved party is not entitled to any restraint order or order of specific performance as against the other party. In our considered opinion if the appellant no. 1 has any legitimate grievance against the respondent authorities, its remedy is to ventilate the same in a properly constituted civil action before an appropriate forum. The writ court is not the proper forum for claiming damages for breach of contract or even specific performance of a contract. 14. We have also considered the comparative chart handed up to us by Mr. Banerjee. The writ court is not the proper forum for claiming damages for breach of contract or even specific performance of a contract. 14. We have also considered the comparative chart handed up to us by Mr. Banerjee. The chart is as follows:- COMPARETIVE STATEMENT DARJEELING DIVISION SI. No Description of items Unit Rate quoted by M/S Mohindra Tubes Pvt. Ltd. Rate quoted by L1 of present tender at Store At Store At work site 1 Supply of Gl pipes Non-Tata ISI (Medium) Quality—(a)100mm m 1390.63 1600 1295.75 2 (b) 80mm m 950.67 1080 904.18 3 (c) 50mm m 571.46 651 545.7 4 (d) 40mm m 405.18 458 388.8 5 (e) 25mm m 274.71 299 262.44 6 (f) 20mm m 177.49 199 178.98 7 (g) 15mm m 140 153 139.08 KURSEONG DIVISION SI. No Description of items Unit Rate quoted by M/S Mohindra Tubes Pvt. Ltd. Rate quoted by L1 of present tender at Store At Store At work site 1 Supply of Gl pipes Non-Tata ISI (Medium) Quality—(a)100mm m 950.67 1080 904.18 2 (b) 50mm m 571.46 651 545.7 3 (c) 40mm m 405.18 458 388.8 4 (d) 25mm m 274.71 299 262.44 5 (e) 20mm m 177.49 199 178.98 6 (f) 15mm m 140 153 139.08 DARJEELING DIVISION-II {KALIMPONG DIVISION} SI. No Description of items Unit Rate quoted by M/S Mohindra Tubes Pvt. Ltd. Rate quoted by L1 of present tender at Store At Store At work site 1 Supply of Gl pipes Non-Tata ISI (Medium) Quality—(a)150mm m 2165.48 2450 2018.25 2 (b) 100 mm m 1390.63 1600 1293.75 3 (c) 80 mm m 950.67 1080 904.18 4 (d) 50 mm m 571.46 651 545.7 5 (e) 40 mm m 405.18 458 388.8 6 (f) 25 mm m 274.71 299 262.44 7 (g) 20 mm m 177.49 199 178.98 8 (h) 15 mm m 140 153 139.08 TOTAL 12505 14170 11863 Executive engineer Darjeeling Division P.H.E. Deptt. G.T.A 15. It would appear from the chart that the rates quoted by L1 in connection with the current tender are significantly lower than the rates quoted by the appellant no. 1 in connection with the earlier tender. The current tender notice stipulates for F.O.R. delivery i.e. free on rail. In other words, the transportation costs of delivering the materials from store to work site is of the contractor making such supply. 1 in connection with the earlier tender. The current tender notice stipulates for F.O.R. delivery i.e. free on rail. In other words, the transportation costs of delivering the materials from store to work site is of the contractor making such supply. Keeping that in mind if we compare the rates quoted by the appellant no. 1 (at work site) and by the L1 to present tender (at store), we find a huge difference between the two rates. Thus a stupendous amount of public money will be saved by procuring the balance materials for the said public projects from L1 of the present tender. The only party which will be benefited by continuing to procure the materials from the appellant no. 1 is the appellants and nobody else. Public money will be saved. It is trite that private interest must always give way to public interest. 16. The hearing of this matter was completed on 19 June, 2018. On 20 June, 2018 the matter was mentioned on behalf of the appellants and prayer was made for listing the matter for making further submission. Accordingly, the matter was listed as ‘To Be Mentioned’ on 21 June, 2018. On that date learned Counsel for the appellants handed up to us a letter dated 20 June, 2018 written by the appellants to its learned Advocate wherein it is stated inter alia that the appellants, ‘to avoid any probable loss of public money, is ready and willing to accept the remaining 50% work under the earlier tender at the reduced rates that have been received by GTA in connection with the current tender process’. Learned Counsel submitted that in view of such stand of the appellants, the appellant no. 1 may be favoured with the work orders for the balance materials. We are not impressed with the submission. Nothing stopped the appellant no. 1 from participating in the current tender process. It could have done so without prejudice to its rights and contentions. Instead of doing so, the appellants initiated the present litigation in an attempt to compel the authorities to continue procuring the materials from them at the higher rates quoted by them. We have our doubts about the bona fides of the appellants. Further, the very fact that the appellant no. Instead of doing so, the appellants initiated the present litigation in an attempt to compel the authorities to continue procuring the materials from them at the higher rates quoted by them. We have our doubts about the bona fides of the appellants. Further, the very fact that the appellant no. 1 has expressed its willingness to supply the same materials at a much lower rate now ipso facto shows that the rates charged by the appellants earlier from the respondents were artificially inflated. By not participating in the current tender, the appellant no. 1 cannot now claim any benefit in connection therewith. 17. We find no infirmity in the order of the learned Single Judge. This appeal fails and is dismissed along with the application with costs assessed at Rs. 15,000/-. 18. Urgent certified photocopy of this judgment and order, if applied for, be given to the parties upon compliance of necessary formalities. Jyotirmay Bhattacharya, J. I agree.