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2020 DIGILAW 412 (GAU)

Victor And Company v. Indian Oil Corpn

2020-03-19

PRASANTA KUMAR DEKA

body2020
JUDGMENT P.K.Deka, J. - Heard Mr. S. P. Roy, the learned counsel for the petitioners. Also heard Mr. S. N. Sarma, the learned Senior Counsel assisted by Mr. A. Kalita, the learned Standing Counsel for the Indian Oil Corporation Limited (I.O.C. Ltd.) and other respondents under the said Corporation wxyz (Assam Oil Division). zyxw 2. The petitioners were issued the work order No. 24809462 dated 12.07.2016 for construction of Assam Oil College of Nursing at Digboi Refinery Township, IOCL (AOD). The value of the work was Rs. 6,79,43,427.41/-. The said work order dated 12.07.2016 was terminated vide Termination Notice dated 06.11.2019 issued by the respondent No. 2. The said termination letter was issued as the Contractual Date of Delivery (CDD) for the work was over on 11.01.2018 after which time was extended upto 15.07.2018 as per the request of the petitioners for completion of all the activities in entirety but the petitioners failed to achieve except 60% of the overall contract work. The content of the termination notice dated 06.11.2019 is reproduced herein below:- wxyz "Ref: DR/CVLT/30/19/95 Dated: 06.11.2019 zyxw wxyz In view of poor performance, show-cause notices have also been served to you vide our letter Ref. No. DR/CLVT/20/119 dated: 30.07.2018 and Ref. No.:DR/CVLT/20/18/175 dated: 15.12.2018 to which your reply vide letter Ref. No. VICTOR/IOCL/69 dated: 02.01.2019, wherein you''ve cited the reasons for delay of the jobs are not tenable as per contractual stipulations and hence not acceptable to IOCL which has been duly communicated to you vide our letter reference No DR/CVLT/2019/190 dated: 09.01.2019. zyxw wxyz The verdict of Hon''ble High Court, Guwahati in this context is enumerated below: Quote: zyxw wxyz "After hearing the learned counsel for the parties and on due consideration, Court is of the view that since show-cause notice has been issued to petitioner No. 1, petitioners should respond to the same by submitting their reply which would be submitted within 15 days from today. If reply is found to be satisfactory, respondents may not proceed further but if the reply is found to be not satisfactory, then a personal hearing should be given to the petitioners. Whatever decision is taken, the same should be in form of a speaking order and duly communicated to the petitioners." zyxw wxyz :un-quote. If reply is found to be satisfactory, respondents may not proceed further but if the reply is found to be not satisfactory, then a personal hearing should be given to the petitioners. Whatever decision is taken, the same should be in form of a speaking order and duly communicated to the petitioners." zyxw wxyz :un-quote. zyxw wxyz Honoring the verdict of Hon''ble High Court, Guwahati, a final chance was given to you to complete the jobs for Construction of AOCN buildings in totality. But you have once again failed to keep your commitments. zyxw wxyz Further, you took permission from IOCL for expediting the job by engagement of local subcontractor, which yielded good result initially but due to failure on you part to make payment to your sub-contractor again resulted in complete stoppage of works at site w.e.f. 14.08.2019." zyxw 3. But you have once again failed to keep your commitments. zyxw wxyz Further, you took permission from IOCL for expediting the job by engagement of local subcontractor, which yielded good result initially but due to failure on you part to make payment to your sub-contractor again resulted in complete stoppage of works at site w.e.f. 14.08.2019." zyxw 3. This writ petition is filed thereby raising various allegations against the respondents seeking for the relief reproduced herein below: wxyz "It is, therefore, prayed that Your Lordships would be graciously pleased to admit this application, call for the records and issue a Rule calling upon the respondents to show cause as to why the termination notice dated 06.11.2019 (Annexure No. 56) issued by the Chief General Manager (Technical), IOCL, Assam Oil Division (Respondent No. 2) should not be set aside and quashed; and as to why the 8 th RA Bill amounting to Rs 24,45,983 plus withholding of Rs 12,78,737 as well as security deposit of Rs 26,85,582 and material worth Rs 10,00,000 amounting to Rs 74,103,02.00 should not be released by the Respondents and upon perusal of the cause or causes shown, if any, Your Lordships would be graciously pleased to make the Rule absolute; zyxw wxyz -AND- zyxw wxyz Pending disposal of the application, Your Lordships would be graciously pleased to stay the operation of the termination Notice dated 06.11.2019 (Annexure No. 56) issued by the Chief General Manager (Technical), IOCL, Assam Oil Division (Respondent No.2) and further restrain the Respondents from awarding the Work Order for Civil work for construction of Assam Oil College of Nursing at Digboi Refinery Township, IOCL (AOD) to any third party till the bills, withheld amount and security deposit of the petitioners are released and/or Your Lordships may be pleased to pass any other order(s) as Your Lordships may deem fit and proper under the facts and circumstances of the case; zyxw wxyz -AND- zyxw wxyz For the act of kindness, the petitioners as in duty bound shall pray for ever." zyxw 4. The respondents No. 1 to 4 raised preliminary objection regarding the maintainability of this writ petition on the ground that the contract was awarded to the petitioners vide work order dated 12.07.2016 and thereafter an agreement was executed between the respondent Company and the petitioners. One of the conditions in the contract was the arbitration clause i.e. Clause 9.0.0.0. The respondents No. 1 to 4 raised preliminary objection regarding the maintainability of this writ petition on the ground that the contract was awarded to the petitioners vide work order dated 12.07.2016 and thereafter an agreement was executed between the respondent Company and the petitioners. One of the conditions in the contract was the arbitration clause i.e. Clause 9.0.0.0. of the General Conditions of Contract (Arbitration). Accordingly, if the petitioners are aggrieved by any action of the answering respondent Company, petitioners should have approached before the authority for appointment of an arbitrator but without doing so they directly approached this court. The petitioners having disproved the action contemplated by the respondent Company as projected in the writ petition, had given rise to a dispute between the parties which is within four corners of the contract agreement specifying the dispute resolution forum and as such the petitioners are bound to take shelter under Clause 9.1.0.0 of the General Conditions of Contract (GCC) more specifically for a reference to arbitration and/or alternative dispute resolution process. 5. In response to the said preliminary objection, the petitioners filed an affidavit-in-reply, raised the objection that Clause 9.0.1.1 of the General Conditions of Contract is in respect of a notified claim and no final bill was submitted by the petitioners till date and Clause 9.0.1.0. dealt only with the notified claim which is not applicable in the present case. Arbitration is not an efficacious remedy as the action of the respondents are malafide. The preliminary objection of the respondents are not tenable in view of the mandatory provision under Section 8(2) of the Arbitration and Conciliation Act, 1996 ( hereinafter referred to as Act, 1996) inasmuch as no copy of the original contract or certified copy of the agreement along with the objection was filed by the respondents. 6. Mr. Sarma, the learned Senior Counsel submits that under Section 2(1) (e) of the Act, 1996, the term "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any court of small causes. The Gauhati High Court does not exercise its ordinary original civil jurisdiction and as such any, dispute forming the subject matter of the arbitration cannot be decided by this court. For the said reason Section 8 of the Act, 1996 has no applicability in writ proceeding moreso when this Hon''ble Court has no ordinary civil jurisdiction. From the writ petition itself on plain reading of the averments made it goes to show that the petitioners are not satisfied with the action initiated by the respondent company and the consequent termination order giving rise to the dispute which very well falls under Clause 9.0.1.0 of the General Condition of Contract (GCC). The petitioners have raised disputed question of facts which requires evidence to be adduced by both the parties and as such this court exercising its jurisdiction under article 226 of the Constitution of India is not the proper court to decide the issue. In support of his contention Mr. Sarma, relies the various cases i.e. (1) Pandey & Co. Builders (P) Ltd. -Vs- State of Bihar and Another, (2007) 1 SCC 467 , (2) State of Bihar and Others -Vs- Jain Plastics and Chemicals Ltd, (2002) 1 SCC 216 , (3) State of U.P. And Others -Vs Bridge & Roof Company (India) Ltd, (1996) 6 SCC 22 , (4) State of M.P. and Others -Vs- M. V. Vyavsaya & Co, (1997) 1 SCC 156 and (5) Saleha Begum -Vs- State of Assam & Ors, (2006) 1 GauLT 86 . Accordingly, it is the contention of the learned Senior Counsel that this writ petition is not maintainable and liable to be dismissed. 7. Mr. Roy countered the submission of Mr. Sarma on the ground that the preliminary objection cannot be treated as an application under Section 8 of the Act, 1996 which speaks of a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement requiring the application to be accompanied by the original arbitration agreement or a duly certified copy thereof. But no such agreement original or certified copy accompanies the preliminary objection. Referring Clause 9.0.1.0 it is submitted by Mr. But no such agreement original or certified copy accompanies the preliminary objection. Referring Clause 9.0.1.0 it is submitted by Mr. Roy that the question of invoking arbitration clause does not arise inasmsuch as the petitioner is yet to submit any notified claim and as such if the dispute arose out of such notified claim of the contractor then, the petitioner under the said clause may opt for arbitration only if the petitioner did not opt for the alternative dispute resolution machinery as stipulated in Clause 9.1.1.0 under the G.C.C. Referring Clause 6.6.1.0 Mr. Roy submits that as per the said provision if the petitioner is entitled to any extra payment or compensation in respect of the works over and above the amounts due in terms of the contract as specified in Clause 6.3.1.0, the petitioner shall give notice in writing of his claim to the Engineer-in-Charge and the Site Engineer within a period of 10 (ten) days. The petitioners did not submit any such notified claim in terms of the said Clause 6.6.1.0. Alternative remedy cannot be a bar for invoking the jurisdiction of High Court under Article 226 of the Constitution of India. In support of the said contention Mr. Roy relies the case law of Harbanslal Sahnia and Ors - Vs- Indian Oil Corpn. Ltd. and Ors, (2003) AIR SC 2120 . Accordingly when the writ petitioner seeks enforcement of any of the fundamental rights and questions whether there is failure of principle of natural justice or whether the orders or proceedings are wholly without jurisdiction of an Act are challenged alternative remedy cannot be a bar. In support of the said contention Mr. Roy relies the case law of Dalbir Singh Bisht -Vs- Union of India and Others, (2002) 1 GauLR 269 . 8. I have given due consideration to the submissions made by the learned counsel. There is no dispute that Clause 9.0.0.0 stipulates arbitration and alternative dispute resolution forum of the GCC which forms part of the contract agreement. Roy relies the case law of Dalbir Singh Bisht -Vs- Union of India and Others, (2002) 1 GauLR 269 . 8. I have given due consideration to the submissions made by the learned counsel. There is no dispute that Clause 9.0.0.0 stipulates arbitration and alternative dispute resolution forum of the GCC which forms part of the contract agreement. Clause 9.0.1.0 is reproduced hereinbelow: wxyz "9.0.1.0: Subject to the provisions of Clauses 6.7.1.0, 6.7.2.0 and 9.0.2.0 hereof, any dispute arising out of a Notified Claim of the CONTRACTOR included in the Final Bill of the CONTRACTOR in accordance with the provisions of Clause 6.6.3.0 hereof, if the CONTRACTOR has not opted for the Alternative Dispute Resolution Machinery referred to in Clause 9.1.1.0 hereof, and any dispute arising out of any Claim(s) of the OWNER against the CONTRACTOR shall be referred to the arbitration of a Sole Arbitrator selected in accordance with the provisions of Clause 9.0.1.1 hereof. It is specifically agreed that the OWNER may prefer its Claim(s) against the CONTRACTOR as counter-claim(s) if a Notified Claim of the Contractor has been referred to arbitration. The CONTRACTOR shall not, however, be entitled to raise as a set-off defence or counter-claim any claim which is not a Notified Claim included in the CONTRACTOR''s Final Bill in accordance with the provisions of Clause 6.6.3.0 hereof." zyxw 9. Section 8 of the Act, 1996 stipulates that (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made. In order to exercise these powers by this court it must have the power as stipulated under Clause 2(1)(e) of the Act, 1996. This High Court does not exercise the ordinary original civil jurisdiction and the question of deciding any suit in exercise of its ordinary original civil jurisdiction does not arise at all. In order to exercise these powers by this court it must have the power as stipulated under Clause 2(1)(e) of the Act, 1996. This High Court does not exercise the ordinary original civil jurisdiction and the question of deciding any suit in exercise of its ordinary original civil jurisdiction does not arise at all. In my considered opinion the judicial authority as stipulated in Section 8 of the Act, 1996 also refers to the judicial authority of the Courts under the Bengal, Agra & Assam Civil Courts Act, 1887 limited to the extent of original jurisdiction subject to the provision of Section 15 of Code of Civil Procedure, 1908 to all original suits for the time being cognizable by Civil Courts. So I donot find any force on the submission of Mr. Roy that the preliminary objection is not as per requirement of Section 8 of the Act, 1996 for the reasons aforesaid. 10. From the relief sought for in the writ petition it goes to show that the petitioner prayed for setting aside and quashing of the termination notice dated 06.11.2019. In order to establish the grounds for setting aside the termination notice, the petitioners stated facts which are required to be proved once the same is denied by the respondent company. For instance by referring some of the letters purportedly issued by the petitioners by way of which the left over work was handed over by the petitioner to a Firm M/S D. B. Construction as a sub-contractor of the petitioner it is stated in the writ petition that those were issued not out of the volition of the petitioners rather, the same were imposed at the instance of the respondent IOC Limited. This is one of the instances of the cause of action accrued to the petitioner in order to seek the relief for setting aside and quashing of the termination letter. The dispute and the cause of action if looked into as pleaded in the writ petition are well within the terms of the contract wherein the petitioners also promised to abide by the arbitration clause. The contract is purely a private contract wherein both the parties in this writ petition are privy to it. The dispute and the cause of action if looked into as pleaded in the writ petition are well within the terms of the contract wherein the petitioners also promised to abide by the arbitration clause. The contract is purely a private contract wherein both the parties in this writ petition are privy to it. The petitioners also raised the issue that due to default on the part of the respondent company they had to lose almost 13 months of the time period stipulated in the contract for completion of the work. Accordingly by such factual matrix the petitioners wanted to disprove the reasons on the basis of which the impugned termination letter dated 06.11.2019 was issued. In the case of State of M.P. and Other -Vs- M. V. Vyavsaya & Co (Supra), the Apex Court held that the power of the High Court under Article 226 of the Constitution is not similar to appellate power. It is a supervisory power. While exercising this power, the court does not go into the merits of the decision taken by the authorities concerned but only ensures that the decision is arrived at in accordance with the procedure prescribed by law and in accordance with the principles of natural justice wherever applicable. Where there are disputed questions of fact, the High court does not normally go into or adjudicate upon the disputed questions of fact. A person who solemnly enters into a contract cannot be allowed to wriggle out of it by resorting to Article 226 of the Constitution. In the case of State of Bihar and others -Vs- Jain Plastics and Chemicals Ltd (Supra), the issue before the Apex Court was whether the High Court ought not to have exercised its jurisdiction under Article 226 of the Constitution of India for granting relief in case of alleged breach of contract. It held as follows: wxyz "7: In our view, it is apparent that the order passed by the High Court is, on the face of it, illegal and erroneous. It is true that many matters could be decided after referring to the contentions raised in the affidavits and counter-affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. It is true that many matters could be decided after referring to the contentions raised in the affidavits and counter-affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road permits by the appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a court exercising prerogative of issuing writs". zyxw 11. In the case of Harbanslal Sahnia and Ors. -Vs- Indian Oil Corpn. Ltd. and Ors, (2003) AIR SC 2120 , the Apex court held that the writ petition sought for enforcement of fundamental rights coupled with failure of principles of natural justice and where the order or proceedings are wholly without jurisdiction or vires of an Act and is challenged then inspite of availability of alternative remedy the High Court may still exercise the writ jurisdiction. But the present case in hand doesnot fall in any of the exceptions referred. In the case of Archcon and Others -Vs- Sewda Const. Co and Others, (2005) 1 GauLR 526 , this Hon''ble Court held that as the High Court is conferred the power under Article 226 along with the power of superintendence under Article 227, it has the absolute authority to extend its judicial majesty to the courts below if it is shown that grave injustice has been done to party. The present case in hand is not a case of grave injustice done to the petitioner on the basis of an order passed by court below so the said ratio is not applicable here. On the other hand, in the case of Dalbir Singh Bisht -Vs- Union of India and Others, (2002) 1 GauLR 269 , refers to non invocation of the appellant jurisdiction against an order passed in disciplinary proceeding which is also not the case in hand. Accordingly, the said decisions relied by Mr. Roy does not help him. 12. On the other hand, in the case of Dalbir Singh Bisht -Vs- Union of India and Others, (2002) 1 GauLR 269 , refers to non invocation of the appellant jurisdiction against an order passed in disciplinary proceeding which is also not the case in hand. Accordingly, the said decisions relied by Mr. Roy does not help him. 12. In the present case, on perusal of the averment made in the writ petition and from the termination letter it shows that as per the order passed by this Court in WP(C) No. 8717/2018 dated 15.12.2018 a final chance was given to the petitioners to complete the contractual job for construction and as observed by the respondents, the petitioners again failed to keep their commitment. As such in my considered opinion, there was no violation of the principle of natural justice nor there arose any violation of the fundamental rights of the petitioners. In my considered view the present writ petition cannot be decided until and unless evidence are adduced by the parties to this writ petition and also the cause of action for filing this writ petition is covered by the terms of the agreement the parties being privy to it and breach thereof. 13. The dispute as highlighted is due to the claim of the respondent IOC Ltd. that the petitioners failed to perform as per the contractual obligation which is well covered under the arbitration clause referred hereinabove. For the aforesaid reasons, I am of the considered view that this writ petition is not maintainable under the factual matrix stated in the writ petition and the same stands dismissed. Interim order stands vacated. No costs.