T. K. Engineering Consortium Pvt. Ltd. v. Union of India
2019-09-09
H.S.THANGKHIEW
body2019
DigiLaw.ai
JUDGMENT : H.S. Thangkhiew, J. 1. The petitioner has filed the instant writ petition challenging the termination letter dated 17.01.2019 issued by the General Manager (Airports), RITES Ltd. whereby the Contract Agreement No. RITES/AP/ICP/DAWKI/2016/10150 dated 30.09.2016 for the work of "Development of Integrated Check Post at Dawki (Meghalaya) along Indo-Bangladesh Border" is sought to be terminated by the respondents. 2. The brief facts of the case are that the petitioner was awarded the work of "Development of Integrated Check Post at Dawki (Meghalaya) along Indo-Bangladesh Border" vide Contract Agreement No. RITES/AP/ICP/DAWKI/2016/10150 dated 30.09.2016. The duration of the project was 2 years and the site was handed over to the petitioner contractor on 18.11.2016. It is the case of the petitioner that the cause of delay are attributable to respondents, inasmuch as, part of the project site where the main check gate and where the major part of the construction is to be carried out, was not handed over to the petitioner. The other contention of the petitioner is that there were changes in revised architectural drawings and designs of the integrated check post, lay out plan and also that there was delayed clearances from Forest Department and Mining Departments, apart from the obstruction to construction due to some land disputes of the local people. In spite of the hurdles, the petitioner contends that more than 52-53% of the work as stipulated in the contract has been completed. It is the further case of the petitioner that the respondents are trying to allot the remaining work to other contractors in a non-transparent manner, at the risk and cost of the petitioner and even the bank guarantee of Rs. 3,31,34,743/- (Rupees Three Crore Thirty One Lakh Thirty Four Thousand Seven Hundred Forty Three) only, has already been encashed and the petitioner served with impugned cancellation order dated 17.01.2019. 3.
3,31,34,743/- (Rupees Three Crore Thirty One Lakh Thirty Four Thousand Seven Hundred Forty Three) only, has already been encashed and the petitioner served with impugned cancellation order dated 17.01.2019. 3. The respondents No. 3 to 6 had filed an affidavit dated 11.02.2019 questioning the maintainability of the writ petition on the following counts: (a) That there is an arbitration clause in the agreement, (b) That as per Clause 46.17 of the contract agreement, the Courts in the City as specified in Schedule 'F' alone shall have the jurisdiction, and on account of the jurisdiction ouster clause, only the Courts in New Delhi would have jurisdiction; and (c) That the present writ petition involves complex disputed questions of fact and the same cannot be decided in a writ proceeding. 4. This Court has however looking into the urgency and nature of the matter and on being prima facie satisfied had ruled by order dated 02.04.2019 that the writ was maintainable and as such this matter has come to be finally heard on merits. 5. However, a most pertinent fact that is noted at this juncture, is that the contractual period by the efflux of time including even the extended period, that had been allowed to the writ petitioner, that is till 28.05.2019, has since lapsed. This being the situation as it pertains, together with the fact that there has been no further extension of the contract, the scope of deliberation and consideration of the instant case, will essentially be limited to the point as to whether the term of contract can be held to have expired and the effect it will have on the competing rights and claims of the parties. 6. Heard Mr. S.S. Dey, learned Senior Counsel assisted by Ms. T. Yangkyi, learned counsel for the petitioner, on the main question of the time period for execution of the work. In this regard written arguments has been filed in support of his contentions, that the period of 24 months as referred in the Work Order dated 30.09.2016 is to be counted with effect from the Date of Start which he submits is the date of handing over site, and not 15 days from date of the Letter of Acceptance.
In this regard written arguments has been filed in support of his contentions, that the period of 24 months as referred in the Work Order dated 30.09.2016 is to be counted with effect from the Date of Start which he submits is the date of handing over site, and not 15 days from date of the Letter of Acceptance. The points as put forward in the written argument is reproduced herein below:- (a) That as per Work Order dated 30.09.2016 (Annexure-2 Page 25 of writ petition) "the time of 24 (Twenty Four) months allowed for execution of the work will be reckoned from the date of start as defined in Schedule 'F' or from the first day of the handing over of site, whichever is later.." (b) That further as per definition of 'Date of Commencement of the Work' (Section 7 Conditions of Contract at Page 50 of writ petition) "it will be the date arrived at after providing for the Mobilization period as stipulated in Schedule F or the first date of handing over of site whichever is later. Time allowed for execution of the work will be reckoned from the date of commencement of works". (c) That Schedule 'F' as referred to above is at Page 109 of the Contract Agreement filed separately. Clause 2 (xiii) stipulates Date of commencement of work as "15 days from the date of issue of LOA or the first date of handing over of site whichever is later." Clause 5.1 (a) stipulates Time allowed for execution of work as "24 months (Twenty Four Months)" and Date of start as "15 days from the date of issue of Letter of Acceptance or the first date of handing over of site whichever is later". (d) That Clause 1.5 under Section 1 of the Contract Agreement at Page 55 the Availability of Site is stipulated as "the complete land for ICP construction site shall be handed over to contractor in one go at the beginning of the project itself". The option given in the proforma for handing over of sites in parts has been consciously struck out. 7.
The option given in the proforma for handing over of sites in parts has been consciously struck out. 7. Learned counsel submits that, a conjoint reading of the aforesaid provisions of the bipartite Contract between the parties unambiguously provides that the period of 24 months' as referred to in the Work Order dated 30.09.2016 has to be counted and reckoned with effect from the Date of Start, which is the first date of handing over of site (not 15 days from the date of Letter of Acceptance as the Contract stipulates execution of work after handing over of the Site). He submits that the ambit of the term 'handing over of site' has to be read meaningfully in terms of Clause 1.5, meaning thereby, that 'handing over' will mean de facto completion of the process of handing over of the 'complete land for ICP construction site' to the contractor in one go at the beginning of the project itself. He submits once the 'complete land' as stipulated in Clause 1.5 has been totally handed over, then the first date of such process of handing over, will be reckoned to be the Date of Start for counting the period of 24 months. 8. The learned senior counsel then refers to the letter dated 30.05.2017 issued by the respondent No. 5, which had informed the petitioner that the issues with regard to the work beyond 40 meters of zero line, had been resolved, and the petitioner instructed to increase work mobilization accordingly. He submits that this letter signifies that the project site, which was to be handed over to the petitioner for construction included the 40 meters from the zero line was yet to be handed over, and as such, he submits that even on the date of the letter, the complete land for ICP construction site, had not been handed over. He further submits that as the process of handing over was not complete, no first date can positively be fixed to signify as 'Date of Start' so as to start counting of the 24 months period. 9. The learned Senior counsel also submits that the averments made at Para-7 of the affidavit-in-opposition were to be noted, inasmuch as, he contends that the respondents had themselves stated that there is no due date of handing over of site, mentioned in the agreement.
9. The learned Senior counsel also submits that the averments made at Para-7 of the affidavit-in-opposition were to be noted, inasmuch as, he contends that the respondents had themselves stated that there is no due date of handing over of site, mentioned in the agreement. The learned senior counsel further submits that, time being the essence of the contract, the provisions of the contract are to be rigidly applied. He submits that on a plain reading of the provisions thereof, it would reflect that the terms contained therein, are clear and unambiguous and cannot be interpreted differently. The learned senior counsel then reiterates the other points as raised, with regard to the late change of drawing, design, layout plan and also other factors which he contends have attributed to the undue delay of the project, which cannot be attributed to the writ petitioner. He lastly submits that the contract is subsisting in view of the submissions so placed, and also taking into consideration the delay caused by the respondents, the letter of termination is arbitrary and not maintainable. 10. Ms. A. Paul, learned ASG for the respondents opens her submissions by submitting that as the contract between the parties had expired on 28.05.2019, the instant writ petition has become infructuous. However, in reply to the submissions of the learned senior counsel for the petitioner, she submits that the Letter of Acceptance (LOA) for the subject contract, was issued to the petitioner on 30.09.2016 at a value of Rs. 66.27 crores. She then draws the attention of this Court to the Clause 2 (xiii) of Section 4, Schedule F of the Agreement at Page 109, which provides that the date for commencement of work shall be 15 days from the date of issue of LOA, or the 'first date of handing over of the site' whichever is later. 11. The learned ASG further submits that after issuance of the LOA on 30.09.2016, the writ petitioner failed to report to take over the site, and it was only on 18.11.2016, that the same could be done. She further submits that since the delay was caused by the contractor, the date of commencement therefore, will have to be taken to be from 15.10.2016, which is 15 days from issuance of LOA, as was agreed upon by both the parties.
She further submits that since the delay was caused by the contractor, the date of commencement therefore, will have to be taken to be from 15.10.2016, which is 15 days from issuance of LOA, as was agreed upon by both the parties. She also submits that the culpability of the petitioner in the delay is illustrated by letter dated 27.09.2016, whereby the petitioner had requested the respondents for the postponement of issuance of the LOA, on the ground the it was not in a position to furnish the Performance Guarantee as per the contract agreement. 12. The learned ASG then refers to Annexure-21 at page 104 of the writ application, and submits that the writ petitioner never disputed that the date of commencement of the work was 15.10.2016, inasmuch as, the said document recording the same, has been countersigned by the authorized representative of the writ petitioner. She also submits that as per the LOA, the contract period for the work was 24 months from the date of commencement as defined in Schedule F of the contract agreement, and therefore, the contract would have terminated on 24.10.2018 after 24 months. However, she submits, as the writ petitioner had sought extension for another 264 days, the respondents by letter dated 27.06.2018 (Annexure 7 of the affidavit-in-opposition) had extended the time for completion of the work up to 28.05.2019, without any levy of liquidated damages in terms of Clause 5 of the agreement dated 30.09.2016. She further submits that thereafter the writ petitioner never sought further extension and as such, this being the situation, the contract did not subsist thereafter and stood automatically terminated. 13. With regard to the other contentions of the writ petitioner that the architectural drawings had been changed by the respondents on 16.01.2019 and termination issued on 17.01.2019, the learned ASG submits that the same was of no consequence or relevance, inasmuch as, it pertained to only one Guard Room and its attached toilet in the Entrance Gate No. 2 of the Integrated Check Post. She submits it was not as if the entire dimension and location of the project was changed. She further submits that the miniscule revision had no impact in the progress of the work, as the petitioner had done the work only up to the foundation, and that work on the super structure had not even been started by the petitioner. 14.
She further submits that the miniscule revision had no impact in the progress of the work, as the petitioner had done the work only up to the foundation, and that work on the super structure had not even been started by the petitioner. 14. The learned ASG then submits that another aspect that clearly portrays the laches of the contractor/writ petitioner insofar as timely execution of the work concerned, is borne out by the fact that though the total value of the contract is Rs.66.26 crores as on 14.01.2019, the writ petitioner had submitted a third running account bill for a sum of Rs.6,29,78,848.46 p (6.29 crores) which is only about 1/10th of the project cost. She further submits that such delay in such type of projects which is for the development of the Integrated Check Post at Dawki (Meghalaya) along the Indo-Bangladesh Border, which involves public interest, as well as security concerns, cannot be held up or relegated to a slow pace due to the petitioner. To conclude her submissions, the learned ASG submits that entering into any other dispute as raised by the writ petitioner, will be a futile exercise at this stage, more so when Clause 25 of the contract agreement provides for settlement of all disputes arrived at by the contractual agreement through arbitration. She further submits that the contract had since been expired and the writ petitioner having recourse to other remedy, the writ petition should be dismissed. 15. In support of her submissions, the learned ASG has relied on the following:- (i) WP(C) No. 127 of 2018 (Arunnachala Impex Pvt. Ltd. vs. Union of India & Ors.) Para 3 (ii) OMP 523 of 2008 (Lt. Col. (Retd.) K.S. Ahluwalia vs. Indraprastha Gas Ltd.) Para 3 & 4 (iii) (1994) 2 SCC 70 , Union of Territory of Pondicherry & Ors. vs. P.V. Suresh & Ors. Para 11 & 12 16. I have heard learned counsel for the parties and given my thoughtful consideration to the respective submissions and the materials on record. 17. The law of contract, is governed by the principle of autonomy of the parties. In this scenario, the conduct of the parties has more bearing in interpreting the terms of the contract.
Para 11 & 12 16. I have heard learned counsel for the parties and given my thoughtful consideration to the respective submissions and the materials on record. 17. The law of contract, is governed by the principle of autonomy of the parties. In this scenario, the conduct of the parties has more bearing in interpreting the terms of the contract. This observation is made in view of the fact that the entire dispute which is to be adjudicated by this Court is now condensed to the fact, as to whether, there still subsists a contractual relationship between the petitioner and the respondents. The case as put up by the petitioner is that Clause 5.1 (a) provides that "time allowed for execution of work will be counted from the Date of Start which is to be reckoned from 15 days from the date of issue of the Letter of Acceptance or the first date of handing over of site whichever is later". Relying on this, the petitioner has argued that since the site was not fully handed over as per the stipulation of Clause 1.5, under the caption "availability of site" the date of start to reckon 24 months was not fixed, and therefore the contract would be said to be still subsisting. The other facets as can be seen from the contract is that at Clause 2(xiii) under the caption "date of commencement of work" speaks of the date to be reckoned 15 days from the date of issue of LOA or first date of handing over of site whichever is later. For ready reference the relevant Clauses of the contract agreement are reproduced herein below:- SECTION 1 1.5 Availability of Site The complete land for ICP construction site shall be handed over to contractor in one go at the beginning of the project itself. SECTION 4 PROFORMA OF SCHEDULES Schedule ‘F’ 2(xiii) Date of commencement of work 15 days from the date of issue of LOA or the first of handing over of site whichever is later 5.1 (a) Time allowed for execution of work 24 months (Twenty Four Months) from the date of start Date of Start 15 days from the date of issue of Letter of Acceptance or the first date of handing over of site whichever is later. 18.
18. On perusal of the conditions of the contract agreement as reproduced above, the same will go to show that the time allowed for execution of work was originally 24 months, and that the date of commencement of work was to be 15 days from the date of issue of LOA, or the first date of handing over of site whichever is later. The date of start, would mean the first date of handing over of site whichever is later. To interpret the above conditions of the agreement, the factual matrix and the relevant background circumstances, must be seen and appreciated, in context to the facts to which they pertain to. Interpretation of such contract agreements should be reasonable, keeping in mind good sense, that should result in a fair result. In this backdrop, firstly it is to be noted that it is not disputed that after issuance of LOA on 30.09.2016, the writ petitioner took over nearly a month and half i.e. till 18.11.2016 to take over the site. Secondly, the writ petitioner by letter dated 27.09.2016, had also requested the respondents for postponement of issuance of LOA as the petitioner was not in a position to deposit performance guarantee. Thirdly, as the 24 months were close to being over, extension was requested by the writ petitioner which was granted by the respondents till 28.05.2019. Lastly, the fact that only 1/10th of the project cost had been accounted for by the petitioner through the running bills also indicates the progress of the work. 19. The contract document in this regard should be read as a whole, taking into consideration the clauses governing the conditions and stipulations and cannot be read in isolation in order to arrive at a reasonable and harmonious interpretation. In the instant case, keeping in mind the objectives of the project and attendant facts, the conduct of the writ petitioner undoubtedly reflects the laches of the petitioner in discharging its liability as per the contract agreement. The materials as placed, also reveal that it cannot be said that the site was not handed over to prevent the commencement of work, which would not qualify as a "date of start'.
The materials as placed, also reveal that it cannot be said that the site was not handed over to prevent the commencement of work, which would not qualify as a "date of start'. The writ petitioner was not diligent in discharging his obligations judging by the quantum of work completed and therefore cannot take the plea that it was prevented in any manner from commencing the work due to the non handing over of the site. 20. Another pertinent fact that has also been highlighted by the respondents is that the date of commencement of work was 15.10.2016 i.e. 15 days after issuance of LOA and that the same had been accepted by the petitioner to be the date of commencement in view of the fact that the document dated 17.08.2017 recording the same had been countersigned by the authorized representative of the writ petitioner itself. 21. As discussed above, and taking into account the entire factual matrix, background circumstances and giving a reasonable interpretation to the clauses of the agreement, the inescapable conclusion will necessarily be that the date of commencement of work, as also acknowledged by the petitioner, is 15.10.2016. The contentions of the writ petitioner that the contract still subsists cannot therefore be accepted, more so, in view of the fact that extension had been granted by the respondents specifically upto 28.05.2019. The petitioner in fact, it can be said is also precluded from taking this plea, and if really aggrieved with the fixation of "date of start' or "date of commencement of work' should have raised the same at the time when request for extension was made and not at this stage. In view of these findings, the writ petition deserves no further consideration, and the fact that no contract is subsisting presently, is affirmed. The judgments placed by learned counsel for the respondents have been considered but as they are of limited application to the instant case, they have not been relied upon. 22. Accordingly, the instant writ petition stands dismissed. The writ petitioner will be at liberty to take recourse to other remedies as provided in the contractual agreement. 23. No order as to costs.