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Meghalaya High Court · body

2019 DIGILAW 98 (MEG)

T. K. Engineering Consortium Pvt. Ltd. v. Union of India

2019-04-02

H.S.THANGKHIEW

body2019
JUDGMENT : 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. This Court vide order dated 25.01.2019 while issuing notice of motion has as an interim measure directed that "pending project work shall not be allotted to any other party". 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 to be handed over to the petitioner contractor by 18.11.2016. It is the case of the petitioner that the causes of delay are attributable to respondents, inasmuch as, part of the project site where the main check gate and major part of the construction is to be carried out, has not been handed over to the petitioner as yet. The second 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 has admittedly completed more than 52-53% of the work as stipulated in the contract. 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 the cancellation order dated 17.01.2019. 3. The respondents No. 3 to 6 have filed an affidavit dated 11.02.2019 questioning the maintainability of the writ petition. 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 the cancellation order dated 17.01.2019. 3. The respondents No. 3 to 6 have filed an affidavit dated 11.02.2019 questioning the maintainability of the writ petition. Maintainability of the writ petition is challenged on the following counts: (a) That there is an arbitration clause in the agreement providing for settlement of all aspects of disputes arising out of the contract agreement and, therefore, there being an alternative remedy by way of arbitration, the present writ petition is not maintainable; (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 to entertain any application or other proceedings in respect of anything arising under this agreement and any award or awards made by the arbitrator where Arbitration and Conciliation Act, 1996 is applicable shall be filed in the concerned court in the aforesaid city only. Schedule "F" mentions New Delhi city. As such, on account of the jurisdiction ouster clause, only the Courts in New Delhi has the jurisdiction and this Court lacks territorial 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. The first ground raised by the respondent is that, since there is an arbitration clause in the agreement providing for settlement of all aspects of disputes arising out of the contract agreement, there is an alternative efficacious remedy by way of arbitration. Mr. Sen places heavy reliance on the decisions quoted herein below to advance his contentions with regard to contractual disputes, vis a vis, writ jurisdiction and also on the scope of judicial review with regard to contractual and commercial obligations. Reliance is placed on Rajasthan State Industrial Development and Investment Corporation Ltd v. Diamond and Gem Development Corporation Ltd, (2013) 5 SCC 470 , K.K. Saksena v. International Commission on Irrigation and Drainage, (2015) 4 SCC 670 , Joshi Technologies International Inc. v. Union of India, (2015) 7 SCC 728 and State of UP v. Bridge and Roof Company (India) Ltd., (1996) 6 SCC 22 . 5. The other limb of submission advanced by the learned counsel for the respondents No. 3 to 6 is with regard to territorial jurisdiction. v. Union of India, (2015) 7 SCC 728 and State of UP v. Bridge and Roof Company (India) Ltd., (1996) 6 SCC 22 . 5. The other limb of submission advanced by the learned counsel for the respondents No. 3 to 6 is with regard to territorial jurisdiction. The learned counsel reiterates that clause 46.17 of the contract agreement stipulates that disputes shall be subject to jurisdiction of Courts at New Delhi. Further, he submits that even if writ jurisdiction is attracted, the cause of action squarely arises in New Delhi, inasmuch as, the agreement was signed and the cancellation order was issued from the offices of the respondents No. 3 to 6 at New Delhi. He finally submits that in the clause the word "only" is mentioned and as such there is no room for doubt as to which court will have jurisdiction. 6. Mr. S.S. Dey, the learned Senior Counsel for the petitioner has confined his arguments to territorial jurisdiction and availability of alternative remedy. He submits that the decisions placed by the learned counsel for the respondents No. 3 to 6 concern ordinary civil courts and are not matters under Article 226. He submits that Article 226 being a subject of a Constitutional Court, its jurisdiction cannot be ousted by any contract, agreement or any other instrument. He further submits that the project is being executed in Dawki, East Khasi Hills district, Meghalaya and that the change in the architectural designs were given to the petitioner in Dawki and that only the impugned cancellation order had been issued from the Delhi office of the respondents No. 3 to 6. 7. Mr. S.S. Dey relies on Article 226(2) and submits that a writ court is the most efficacious remedy available in these circumstances and that arbitration in the face of the prevalent circumstances would not provide equitable relief. He submits that the design had been changed as much as four times and the last change was communicated to the petitioner on 16.01.2019 and the cancellation order issued on 17.01.2019. He further submits that the action of the respondents is not only arbitrary but also in clear violation of the principles of natural justice. To fortify his submissions, Mr. Dey places reliance on Harbanslal Sahnia v. Indian Oil Corpn. Ltd., (2003) 2 SCC 107 . 8. Heard submissions of the learned counsels for the parties. He further submits that the action of the respondents is not only arbitrary but also in clear violation of the principles of natural justice. To fortify his submissions, Mr. Dey places reliance on Harbanslal Sahnia v. Indian Oil Corpn. Ltd., (2003) 2 SCC 107 . 8. Heard submissions of the learned counsels for the parties. I have given my thoughtful consideration to the facts of the case and have also examined the material on record. At this juncture, this Court is only examining the issue of maintainability of the writ petition as raised by the respondents No. 3 to 6 in their affidavit and their submissions as noted above. 9. The first issue, whether existence of an arbitration clause ousts remedy under Article 226, has been elaborately answered by the Honble Apex Court in Harbanslal Sahnia v. Indian Oil Corpn. Ltd., (2003) 2 SCC 107 . The relevant paragraph is quoted herein below: "7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the appellants and therefore the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. v. Registrar of Trade Marks [ (1998) 8 SCC 1 ].) The present case attracts applicability of the first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings." The facts in the instant case when placed against the three contingencies quoted above, will show that the first two contingencies are satisfied. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings." The facts in the instant case when placed against the three contingencies quoted above, will show that the first two contingencies are satisfied. It is not disputed by the parties that the revised structural and architectural drawings, had been supplied to the petitioner only on 16.01.2019, by email (Annexure 41) and the impugned cancellation order was issued the next day on 17.01.2019 itself (Annexure-42). The contract was terminated as per Clause 3(ii) of the General Clauses of Contract (GCC) for failure to complete the work as per the stipulated time in the contract. The conduct of the respondents on one hand by the issuance of revised drawings on 16.01.2019 and on the other hand, by cancelling the contract on 17.01.2019 itself, is no doubt arbitrary and against the principles of natural justice, which to my mind will make the dispute amenable to writ jurisdiction. Further the arbitrary cancellation, coupled with the statements and averments made in the writ petition whereby the petitioner has placed material to show that the cause of delay of the project is not attributable to the petitioner company but is the fault of the respondents makes out a stronger case for the invocation of Article 226. 10. The power of judicial review under Article 226 is one of the basic structures of the Constitution as held by the Honble Apex Court in L. Chandrakumar v. Union of India, (1997) 3 SCC 261 . As such, the exercise of the power cannot be curtailed even by any legislation, not to speak about curtailing it by an agreement. In the instant case, though the cancellation letter was issued in Delhi, as stressed by the learned Counsel for the respondents, part of the cause of action in fact, a major part of the cause of action arises within the State of Meghalaya within the jurisdiction of this Court. As such, in my considered opinion Clause 46.17 of the Contract Agreement cannot oust the jurisdiction of this Court under Article 226 of the Constitution. 11. As such, in my considered opinion Clause 46.17 of the Contract Agreement cannot oust the jurisdiction of this Court under Article 226 of the Constitution. 11. The issue as to whether the plea of disputed questions of fact, will prevent the writ Court from entertaining and exercising jurisdiction in this matter, is answered in the negative for the simple reason that the action of the respondents in cancelling the contract in the most arbitrary manner warrants immediate intervention and the remedies under the arbitration or civil suit will not be as efficacious in the present facts and circumstances of the case. 12. For the foregoing reasons, the challenge to maintainability of the writ petition fails. Case be processed for final hearing.