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2020 DIGILAW 659 (GAU)

Devi Engineering And Construction Pvt Ltd. , Lotus Expendito Road No 1, Banjara Hills, Hyderabad v. Oil India Ltd.

2020-09-04

ACHINTYA MALLA BUJOR BARUA

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JUDGMENT Achintya Malla Bujor Barua, J. - Heard Mr. BD Das, learned senior counsel for the petitioner. Also heard Mr. SN Sarma, learned senior counsel for the respondent Oil India Ltd (for short, OIL). 2. Having participated in the tender process, the petitioner was awarded a contract No.6113426/CDG1116P20/FB/19 for ''Acquisition of 200 LKM 2-D and 100 SQKM 3D seismic data in West Mechaki (AA-ONHP-2017/12) & 125 SQKM 3-D seismic data in Namrup Borhat (AA-ONHP2017/20)'', which falls within the States of Arunachal Pradesh and Assam. The total estimated contract cost is Rs.110,60,32,240/- inclusive of all taxes and dues including GST but excluding the basic custom duty. 3. As per the letter of award dated 04.10.2019, the duration of the contract is provided to be 14 operating months reckoning from the date of commencement of the operation. The petitioner makes a submission that the 14 operating months would mean that the work is required to be completed within January 2022. 4. Further the letter of award dated 04.10.2019 provides that the mobilization period for man and material would be 90 days from the date of issuance of the letter of award. A provision was also put in place that in view of the urgency in the requirement of services, the contractor was requested to complete the mobilization at the earliest. A reading of the letter of award would give an indication that there is an urgency on the part of the respondent company to have the work completed at the earliest and Mr. SN Sarma, learned senior counsel appearing for the respondent company states that the completion of the work is related to some other requirement of law that the whole of the work of which the work involved in the letter of award is a part, would have to be completed within the year 2022. 5. From the said point of view, we cannot be oblivious of the fact that this contract is urgent in nature for public interest. The petitioner is aggrieved by the letter of termination dated 14.08.2020 issued by the respondent company. 5. From the said point of view, we cannot be oblivious of the fact that this contract is urgent in nature for public interest. The petitioner is aggrieved by the letter of termination dated 14.08.2020 issued by the respondent company. Clause 2.0 of the letter of termination provides that the contractor has failed to perform as per the contract terms and even after giving commitment and repeated follow-up, contractor has failed to mobilize the man and materials within the prescribed period in terms of Clause 2.2 of GCC of the Contract and the failure to do so amounts to nonperformance/unsatisfactory performance. The respondent company also relies upon the clause of termination entered between the parities which is extracted as below: wxyz "Termination for Unsatisfactory Performance: If the company considers that, the performance of the contractor is unsatisfactory, or not upto the expected standard, the company shall notify the Contractor in writing and specify in details the cause of the dissatisfaction. The Company shall have the option to terminate the Contract by giving 15 days notice in writing to the Contractor, if Contractor fails to comply with the requisitions contained in the said written notice issued by the Company." zyxw 6. The termination clause clearly provides that if the performance of the contractor is unsatisfactory or not upto the expected standard, the company shall give a notice to terminate the contractor within 15 days in writing. Accordingly, by the notice of termination dated 14.08.2020, the petitioner contractor was given a period of 15 days to complete the mobilization. 7. Being aggrieved by the letter of termination dated 14.08.2020, this writ petition has been preferred. 8. Mr. BD Das, learned senior counsel for the petitioner contends that the materials which are relevant for executing the contract has been mobilized by the petitioner contractor from the Republic of China as well as from the Republic of France and they are at present lying in the port at Kolkata. But because of the prevailing Covid19 pandemic situation, the petitioner is unable to transport the mobilized materials to the place of work in Assam-Arunachal Pradesh border. But because of the prevailing Covid19 pandemic situation, the petitioner is unable to transport the mobilized materials to the place of work in Assam-Arunachal Pradesh border. In the circumstance, reference is made to the office memorandum dated 19.02.2020 of the Government of India, Ministry of Finance Deparmtent of Expenditure Procurement Policy Division which provides that if there is a disruption of supply due to the spread of Covid19 virus in China and in other countries, it will be covered by the Force Majeure Clause (FMC). In the Manual for Procurement of Goods 2017 it has been provided below: wxyz "A Force Majeure (FM) means extraordinary events or circumstance beyond human control such as an event described as an act of God (like a natural calamity) or events such as a war, strike, riots, crimes (but not including negligence or wrong-doing, predictable/seasonal rain and any other events specifically excluded in the clause). An FM clause in the contract frees both parties from contractual ability or obligation when prevented by such events from fulfilling their obligations under the contract. An FM clause does not excuse a party''s non-performance entirely, but only suspends it for the duration of the FM. The firm has to give notice of FM as soon as it occurs and it cannot be claimed ex-post facto. There may be a FM situation affecting the purchase organization only. In such a situation, the purchase organization is to communicate with the supplier along similar lines as above for further necessary action. If the performance in whole or in part or any obligation under this contract is prevented or delayed by any reason of FM for a period exceeding 90(Ninety) days, either party may at its option terminate the contract without any financial repercussion on either side." zyxw 9. By referring to the office memorandum dated 19.02.2020, Mr. BD Das, learned senior counsel contends that the inability of the petitioner contractor to transport the mobilized materials from the port at Kolkata to the place of work in the Assam-Arunachal Pradesh border is due to the prevailing Covid19 pandemic situation where restrictions were there on road movement, allowing the petitioner contractor to invoke the FMC as per the office memorandum dated 19.02.2020. 10. On the outset, it cannot be that the contention of the petitioner can be wholly rejected. 10. On the outset, it cannot be that the contention of the petitioner can be wholly rejected. On the other hand, the prevailing Covid19 pandemic situation also cannot be made to be a reason for nonperforming the contract work in true earnest. In any view of the matter, the FMC clause provided in the office memorandum dated 19.02.2020 requires the submission of notice of FMC if any such event had taken place. The petitioner states that they accordingly had given a notice dated 16.05.2020 with a request for invoking the FMC for implementing the project in the given contract work. 11. However, Mr. SN Sarma, learned senior counsel for the respondent OIL refers to a communication by which the aforesaid request of the petitioner to invoke the FMC stood rejected. 12. We have gone through the rejection and found that no such reason is given other than taking a stand that the mobilization should have been completed within a period of 90 days from the date of issuance of the letter of award. 13. In any view of the matter, without going into the technical aspect raised by the rival parties, what we are concerned is that the public interest would be better served if the work in question can be completed at the earliest and that would suffice the requirement of the respondent OIL. 14. We have taken note of that in the meantime, the restriction of road movement due to Covid19 pandemic situation are no longer in force and therefore, there can be no reason for the petitioner contractor not to transport the material concerned to the site of the work at Assam-Arunachal Pradesh border. 15. Without going into the merits of the rival claims as regards the termination of the contract, if the petitioner contractor is given an opportunity to move the materials to the work site in the AssamArunachal Pradesh border within a given limited period of time, we are of the view that the right and interest of the parties would be protected. In the circumstance, we asked Mr. BD Das, learned senior counsel for the petitioner to obtain the instruction from the petitioner contractor as to within how much time the material concerned can be transported and mobilized to the work site at AssamArunachal Pradesh border. It is stated that the petitioner would require about 25 days. In the circumstance, we asked Mr. BD Das, learned senior counsel for the petitioner to obtain the instruction from the petitioner contractor as to within how much time the material concerned can be transported and mobilized to the work site at AssamArunachal Pradesh border. It is stated that the petitioner would require about 25 days. We are of the view that instead of making it 25 days and taking into consideration that there is an urgency on the part of the respondent OIL, we require the petitioner to transport the concerned material from the port at Kolkata to the work site at Assam-Arunachal Pradesh border within a period of 15(fifteen) days. 16. If within the 15days period even after making an earnest effort the petitioner are short by a few days in making the materials reach the work site at Assam-Arunachal Pradesh border, the petitioner contractor may submit a representation to the respondent authorities stating in details all the efforts that they had put to get the materials transported and give an up-to-date report as to where the goods would be at the end of 15 days, so as to make it convincing to the respondent authorities to take a decision thereof as to the few days here and there would be required by the petitioner to complete the movement of the materials. If no effort is shown by the petitioner contractor, such consideration need not be given by the respondent OIL. 17. After making and bringing the materials at the work site at Assam-Arunachal Pradesh border, the petitioner contractor can start the work in the required manner forthwith without making any further delay and in performing the work, if any cooperation is required, the same be extended to the petitioner by the respondent OIL. 18. Another issue has been raised by Mr. BD Das, learned senior counsel for the petitioner that for the purpose of performing the work, the petitioner would also require an explosive licence and for the purpose of obtaining the same, cooperation is also required from the respondent OIL. The petitioner contractor to do the needful for making the appropriate application for grant of the explosive licence and in the process if any cooperation is required from the authorities under the OIL, such authorities shall cooperate with the petitioner contractor so that the license can be obtained at the earliest and the work can be performed. The petitioner contractor to do the needful for making the appropriate application for grant of the explosive licence and in the process if any cooperation is required from the authorities under the OIL, such authorities shall cooperate with the petitioner contractor so that the license can be obtained at the earliest and the work can be performed. 19. In view of the above, the respondent OIL is required not to give effect to the notice of termination dated 14.08.2020. But, however, if the petitioner fails to follow the requirement of this order in its proper earnest, the respondent OIL would be at liberty to take any appropriate action against the petitioner contractor as may be permissible under the law. 20. In terms of the above, this writ petition stands disposed of.