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2020 DIGILAW 274 (JHR)

State of Jharkhand through its Principal Secretary, Road Construction Department v. Ramesh Dutt Pathak

2020-02-11

APARESH KUMAR SINGH, KAILASH PRASAD DEO

body2020
JUDGMENT : Heard learned counsel for the appellant State and the writ petitioner/respondent herein. 2. Appellant State being aggrieved by the decision of the learned Writ Court dated 23.04.2014 passed in W.P.(C) No. 5883 of 2009 is in appeal. The orders of termination of two agreements i.e., (i) Memo no. 449 Chaibasa dated 13.07.2009 terminating the agreement no. 02 F2/2008-09 dated 07.08.2008 concerning repairing of surrounding of Shaheed Chowk at Khunti in K.M 37 of N.H.75, Ranchi –Chaibasa – Jaintgarh road and (ii) Letter bearing memo no. 83 dated 03.02.2010 terminating the agreement no. 01 F2/2008-09 date 02.08.2008 concerning the restoration of damaged portion in K.M. 16 to 115 of Ranchi-Chaibasa Section of N.H. 75(E) were under challenge in the writ petition by the contractor. By the impugned judgment dated 23.04.2014, learned Single Judge has held as under: “29. I have heard learned counsel for the parties and considered the facts and material on record. It is not in dispute that the petitioner after getting the work orders had started the works pursuant to the agreements. The respondents have also not disputed that the petitioner had mae representations regarding demand of levy, threat of violence and disturbance by the extremist outfit. The respondents have also not mentioned anywhere in the counter affidavit that any noice, informing the reasons and/or opportunity of representation was given to the petitioner before rescinding the agreements and forfeiting the security deposits and the earnest money. It has been emphatically contended by the petitioner that no prior notice or opportunity was given to the petitioner and the impugned orders were a surprise to him. The impugned orders, rescinding the agreements, without giving any notice or opportunity to the petitioner, are violative of principles of natural justice and offend the rights guaranteed under Articles 14 and 21 of the Constitution of India. 30. From the facts appearing on record, it is also evidence that the petitioner had not willfully neglected or delayed execution of the works, rather he was prevented from doing so under the aforesaid circumstances beyond his control. The petitioner had apprised the respondents about the said situation and requested for protection against the extremist outfit, but the respondents did not pay any heed. On the contrary they issued the impugned orders, rescinding the agreement dated 7th August, 2008 and 2nd August, 2008 and forfeiting the earnest money and security deposits of the petitioner. 31. The petitioner had apprised the respondents about the said situation and requested for protection against the extremist outfit, but the respondents did not pay any heed. On the contrary they issued the impugned orders, rescinding the agreement dated 7th August, 2008 and 2nd August, 2008 and forfeiting the earnest money and security deposits of the petitioner. 31. The impugned order dated 13th July, 2009 and 3rd February, 2010, being wholly arbitrary, unjust and violative of principles of natural justice, are vitiated and null and void and the same are, accordingly, quashed. The respondents are directed to refund the petitioner’s earnest money and security deposits or any other amount deposited by the petitioner in respect of Agreement Nos. 01 F-2/2008-09 and 02 F-2/2008- 09, treating the same closed at the end of the respondents, within four weeks from the date of receipt/production of a copy of this order”. 3. On behalf of the appellant State, Mr. Jai Prakash, learned Additional Advocate General has inter alia urged the following grounds: (i). that there is no dispute on payment of the admissible dues of the contractor; (ii). agreements were terminated as the contractor failed to execute the work in a time bound manner as per the schedule of the work; (iii). appellant undertook all steps to ensure compliance of the principles of natural justice before termination of the agreements; (iv). even if the orders of termination of agreements were quashed as being violative of principles of natural justice, the matter should have been remanded to the authorities concerned to pass an order afresh. Instead the learned Single Judge has even after quashing the order of termination, directed the refund of the petitioner’s earnest money and security deposit or any other amount deposited in respect of the two agreements treating the same as closed at the end of the respondent State. 4. As such, it is argued that the quashing of the termination orders are not proper in the eye of law. At the same time the consequential orders of return of the security deposit or earnest money or any other amount cannot be sustained in law or on facts since the learned Single Judge without adjudicating on the merits of the rival claims, has directed any amount concerning earnest money or security deposit to be refunded to the petitioner treating the agreements as closed. The consequential order passed by the learned Single Judge cannot co-exist if the order of termination has been held to be bad in law on the grounds of violative of principles of natural justice. 5. Be it recorded herein that on an earlier date after hearing learned counsel for the parties, they were asked to seek instruction whether the inter se claim on merits concerning the questions of fact could be referred to any other Alternate Dispute Resolution (ADR) forum. The arbitration clause no.23 was consciously struck off by the parties at the time of agreement. As such, the agreements did not contain any arbitration clause. The matter was adjourned for the parties to propose whether they are agreeable to resort to ADR mechanism for resolution/decision of the inter se disputed questions of fact arising under the two agreements. 6. Two affidavits have been filed, one by the State and the other in the form of undertaking by the writ petitioner/respondent herein, thereafter. The affidavit of the State filed on 07.02.2020 has proposed that appellants are ready to invoke any ADR forum. They have consented for reference of the matter for mediation/arbitration. They have also proposed the name of the authority i.e., the Engineer-in-Chief-cum-registering Authority, Road Construction Department, Jharkhand, Ranchi before whom the parties can be relegated to decide their inter se dispute, for conducting the mediation/arbitration. Letter No. 263 (s) dated 24.01.2020 of the Joint Secretary, Road Construction Department, Jharkhand, Ranchi has been annexed as annexure-A to their affidavit in support thereof. 7. The writ petitioner/respondent herein has filed an affidavit today stating in categorical terms that it is ready and willing to accept the offer of the appellant, subject to the condition that the matter may be remitted to the said mediation/arbitration treating the orders of termination dated 13.07.2009 and 03.02.2010 (Annexure-R-14 and R-26 to the counter affidavit) as having been quashed by the learned Single Judge and nonexistent as on date. The writ petitioner has also suggested that a time frame may be stipulated by this Court for amicable resolution of their dispute and the matter be kept pending. 8. The writ petitioner has also suggested that a time frame may be stipulated by this Court for amicable resolution of their dispute and the matter be kept pending. 8. So far as the grounds of challenge made on behalf of the appellant State is concerned, learned counsel for the writ petitioner/respondent herein has the following arguments to make: (i) the order of the learned Single Judge quashing the impugned order of termination of agreements on the ground of violation of principles of natural justice are proper and valid in the eye of law. On this score, learned counsel for the respondent has sought to draw the attention of this court to the respective orders, in order to show that they do not reveal any application of mind or reasons. It also does not deal with any of the grounds urged by the writ petitioner for delay in execution of the agreement; (ii) learned counsel for the respondent submits that forfeiture of the earnest money and security deposit of the petitioner was rightly ordered to be refunded to him; (iii) learned counsel for the writ petitioner/respondent herein submits that the learned Writ Court has examined the contention of the writ petitioner on merits and rightly quashed the orders of termination; (iv) according to learned counsel for the writ petitioner, there are no dispute so far as the payment of admissible dues are concerned as regards the extent of the work executed. 9. As such, the order of the Writ Court is proper in the eye of law and needs no interference. Learned counsel for the writ petitioner is however is not in a position to dispel the legal position that once the order of termination of the agreements has been quashed by the learned Single Judge on the grounds of violation of principles of natural justice, the matter ought to have been remanded to the authority for taking a fresh decision. In such a case, any consequential order regarding retention or refund of earnest money or security deposit could not have been proper in the eye of law. Learned counsel for the writ petitioner however is firm on the stand taken in its latest affidavit filed today that any inter se dispute on merits concerning the retention of earnest money/security deposit or any other money by the department could be gone into by the ADR forum proposed by the appellant State. Learned counsel for the writ petitioner however is firm on the stand taken in its latest affidavit filed today that any inter se dispute on merits concerning the retention of earnest money/security deposit or any other money by the department could be gone into by the ADR forum proposed by the appellant State. 10. We have briefly culled out the rival cases and contentions of the parties on the legality and correctness of the impugned decision of the learned Writ Court. As is apparent from the operative portion of the impugned judgment extracted above, the learned Writ Court was persuaded to quash the order of termination of the two agreements on the grounds that it was passed without giving any notice or opportunity to the petitioner and were violative of principles of natural justice. In that event, the matter ought to have been remanded to the authorities to take a fresh decision after due compliance of the principles of natural justice. What were the compelling circumstances for the State to terminate the agreements or on the part of the writ petitioner to justify the delay in execution of the work concerns the merits of the decision involving questions of fact disputed between the parties. The Writ Court was not right in rendering an opinion thereupon in favour of the writ petition qua the State authorities. Once the order of termination of the agreements were quashed on the grounds of violation of principles of natural justice, the matter deserved to be remitted to the State authorities to take a fresh decision in accordance with law. Any consequential order to the effect that the agreements in questions bearing no. 1 F2/2008-09 dated 02.08.2008 and 2 F2/2008-09 dated 07.08.2008 be treated as closed at the end of the respondent State should not have been passed since it was for the parties to either consensually or by their unilateral action terminate or foreclose the agreements in question, on any grounds available to it, under the terms and conditions of the agreement. In that eventuality, a dispute arising therefrom should be amenable to the competent court of civil jurisdiction or any ADR forum agreed between the parties where questions of fact relating to breach of performance of reciprocal promises by the rival parties could be adjudicated upon or a resolved on the basis of mediation or conciliation. 11. In that eventuality, a dispute arising therefrom should be amenable to the competent court of civil jurisdiction or any ADR forum agreed between the parties where questions of fact relating to breach of performance of reciprocal promises by the rival parties could be adjudicated upon or a resolved on the basis of mediation or conciliation. 11. Having regard to the aforesaid reasons and the discussion made herein above, we are in agreement with the learned Single Judge that the orders of termination of the two agreement in question were violative of the principles of natural justice. 12. Accordingly, we uphold the decision of the learned Single Judge so far as the quashing of the orders of termination of two agreements are concerned. However, we are unable to persuade ourselves to agree with the consequential orders passed by the learned Single Judge in those circumstances. In the fitness of things, the matter ought to have been remanded to the authorities to take a decision afresh. Instead the learned Single Judge treated the agreement as closed from the side of the respondent and at the same time directed refund of the earnest money or security deposit or any other money deposited in respect of the two agreements. 13. Since the parties have agreed to subject themselves to the ADR forum comprising the Engineer-in-Chief –cum- registering Authority, Road Construction Department, Jharkhand, Ranchi, we relegate them to the said forum for resolution/arbitration of their inter se dispute. The forum of Engineer-in-chief–cum-registering Authority, Road Construction Department, Jharkhand, Ranchi would endeavour to resolve their dispute through conciliation/mediation failing which, through arbitration. He would endeavour to conclude the matter within a reasonable time frame, preferably 16 weeks from the date of receipt of copy of this order. Both the parties should cooperate in the proceedings and appear before the said authority on each date. Needless to say, the authority concerned would not be prejudiced by any observations made herein above or by the learned Single Judge in taking such decision. 14. Accordingly, the order of learned Single Judge, so far as it has quashed the order of termination of the two agreements is upheld. However, rest of the directions are set aside. The appeal is partly allowed. Pending I.A.s are closed.