Gayatri Projects Ltd. v. National Highways And Infrastructure Development Corporation Of India Limited
2021-04-29
S.HUKATO SWU
body2021
DigiLaw.ai
JUDGMENT : By this writ petition, the petitioner has set the Court in motion for issuance of writ in the nature of mandamus or any other appropriate writ order or direction of the like nature for enforcement of the petitioner’s right guaranteed under Part-III of the Constitution of India particularly, Article 14. 2. Learned senior counsel for the petitioner, Mr. C.T. Jamir, Anand Kumar and Angad Metha appears. For the respondent No.1, Mr. D.K. Banerjee, learned senior counsel assisted by Mr. Moa Jamir appears. 3. Facts leading to filing of the present writ petition is that the petitioner came into contractual agreement on 22-04-2016 with the respondent No.1 for the work of four laning of existing Dimapur-Kohima Road from design Km 152.490 to Km 166. 700 (existing Km 156.000 to 172.900) excluding Dimapur and Kohima bypass in the State of Nagaland under SARDP-NE an engineering procurement and construction (EPC contract) for a contractual price of Rs. 340 crores. The petitioner was performing the contractual work as per agreement and it is stated that 70% of the contractual work had been completed. However, on 09-04-2021, the respondent No.1 issued notice of intention to terminate the contractual agreement citing non progress of work by the petitioner. Thereafter, on 27-01-2021, the respondent No.1 issued notice inviting Bid bearing letter NO.Bid/Package NHIDCL/Nagaland/DK3/BW/2021. Thereafter, notice inviting tender dated 31-03-2021 bearing letter NO.NHIDCL/RO-Kohima/Procurement/M&R/DK-III/2021-22/01. It is the case of the petitioner that the dismal performance of the petitioner is attributable to the non performance of the contractual agreement by the respondent and also due to varied reasons beyond the control of the petitioner. The following grounds for which the work could not be executed on time and which is not solely attributable to the petitioner; Ground A. Agreement works are delayed due to respondent’s failure to hand over right of way within the specific time in the agreement. The agreement specifically stipulated that on the appointed date the first respondent was to hand over not less than 90% of the ROW and the balance land shall be handed over not less than 90 days from the appointed date. Ground B. Because the appointed date was wrongly declared on 08-08-2016 whereas, the respondents failed to hand over 90% of ROW within 30-01-2019 which fact is evident from the encumbrances list prepared jointly by the parties. As per the said list, the encumbrances are 1552 metres.
Ground B. Because the appointed date was wrongly declared on 08-08-2016 whereas, the respondents failed to hand over 90% of ROW within 30-01-2019 which fact is evident from the encumbrances list prepared jointly by the parties. As per the said list, the encumbrances are 1552 metres. It is thus clear more than 10% of ROW is not available even on 30-01-2019 Ground C. After the resumption of contractual work by the petitioner, it is known to one and all that lockdown was imposed on 25-03-2020 which continued uptill October, 2020. It is to be mentioned that all the workers both professional and machine operators and laborers are from outside the State. When the lockdown was imposed, the works could not be expeditiously executed and thus caused the delay in not keeping the contractual agreement on time frame basis. Ground D: There has been intermittent blockade of road by the order of the Division Bench for allowing the blasting of critical areas specifically Pakala Pahar which caused hardship for transportation of materials to the work site. This has also attributed to the delay in the progress of the work. The above are some of the reasons why the progress of the road as desired could not be performed expeditiously by the petitioner. From the reasons stated, it is evident that all the above factors which have contributed to the delay of completion of the work is not attributable to the petitioner. First two reasons being attributable to the respondents themselves who could not hand over the ROW as per the agreement between the petitioner and the respondent till 2019. Corona is natural phenomena which is not attributable to the petitioner and the intermittent blockade for blasting which caused hindrances to supply of materials to the spot is also not attributable to the petitioner. Hence, there might have been delay however, the delay was not caused due to non performance of contractual agreement by the petitioner alone. 4. The petitioner argues that first and the fore most thing to be kept in mind is the interest of the public in general who are commuters of the present road. The respondent No.1 has always projected their intention of terminating the contractual agreement and allot the work to a new candidate. The respondent No.1 for redeeming the remaining 30% of the work imposed condition that the petitioner should deposit a sum of Rs.
The respondent No.1 has always projected their intention of terminating the contractual agreement and allot the work to a new candidate. The respondent No.1 for redeeming the remaining 30% of the work imposed condition that the petitioner should deposit a sum of Rs. 50 crores. The remaining work which could not be completed was estimated at about 100 crores. Therefore, the intention of the respondent No.1 was to impose unaffordable condition upon the petitioner so that the petitioner might be demoralized and give up the contractual work. It is also clear from the action of respondent No.1 that the primary concern of constructing the road is not what is weighing with respondent No.1. It is evident from the fact that as far back as 18-12-2020, the notice of intention to terminate the contract was issued. However, this was not acted upon. NIB was published on 27-01-2020. This was also not acted upon till 13-04-2021. The petitioner was thus continually led to believe that the agreement would be foreclosed. 5. It was also informed to the respondent No.1 that force majeure events led to delay of execution of the project work. Major landslide occurred between 2017 to 2019. Due the repeated occurrence of landslide/shrinkage excavation of earth work quantity increased beyond the originally assessed quantity and considerable time and resources were wasted. Adverse climatic condition and repeated landslide occurred which was brought to the notice of the authority. Respondent No.1 expressed its inability to pay for extra work done by the petitioner. In addition to this, major sliding at camp 157.40 occurred on 13-05-2017 and existing slab culvert collapsed and slab was dislocated and damaged and the road was blocked on 02-05-2018 in km 158 to 158.300 mud covered on the road from hill side from existing quarry. Again land slide occurred on 30-09-2019 at Km 162 700. With all these difficulties which were not anticipated while executing the work has caused the delay. 6. The petitioner submits that it will not be in the interest of public in general to delay the completion of the work by employing a new contractor which would cause undue delay in completion of the work.
With all these difficulties which were not anticipated while executing the work has caused the delay. 6. The petitioner submits that it will not be in the interest of public in general to delay the completion of the work by employing a new contractor which would cause undue delay in completion of the work. Awarding of work to new contractor would consume long time considering that the process involved in the contractual agreement would have to undergo the following process: (i) respondent No.1 shall record the final measurement of the work execution by the petitioner before awarding the completion of work to a new agency. The said work will take atleast 10 to 15 days. (ii) after opening the bid, the respondent No.1 shall offer at least 15 days time to execute the agreement (iii) the new contractor shall be given 10 days time from the date of the agreement to furnish the performance bank guarantee in compliance of Article 7. (iv) respondent No.1 and the new contractor shall take joint inspection of project work for the purpose of joint inventory for ROW and for eventually declaration of the appointed date. (v) aforementioned process will take about two months by the time monsoon will set in. (vi) respondent No.1 would offer 1 year to the new contractor from the appointed date which means the project completion will be not before June/July of 2022. 7. The petitioner after having elaborated the time to be wasted on work awarding to a new contractor for the remaining 30% of the work which would only be completed by June/July 2002. The petitioner has submitted revised work programme to this effect and the petitioner will also be in a position to complete the project by March, 2022 which will be completed before the new contractor is anticipated to complete the project. 8. There are substantial advantages for allowing the petitioner to continue with the work considering that the petitioner has all necessary plant and machineries such as crushers, excavator, a hot mixed plant and other heavy machinery required for road laying deployed at the project site. In addition to this, the petitioner has 47 tonnes of steels 324 mt of cement, 39 mt of bitumen, 385 mt of bridge materials, 11800 literes of HSD and over 200 workers at the project site. The petitioner has raw materials of about INR 8.5 crores as on 20-04-2021.
In addition to this, the petitioner has 47 tonnes of steels 324 mt of cement, 39 mt of bitumen, 385 mt of bridge materials, 11800 literes of HSD and over 200 workers at the project site. The petitioner has raw materials of about INR 8.5 crores as on 20-04-2021. The machineries at site are approximately valued at INR 25 crores. To demolish all these machineries and demobilize all these materials would take at least 30 to 45 days. Unless the raw materials is utilized before the onset of the monsoon, most raw materials will fall waste. For reasons stated above, the petitioner argues that the petitioner would be in a better position to execute the remaining 30% work more efficiently than the new contractor considering the machineries and materials already on the ground. 9. The learned senior counsel Mr. C.T. Jamir also submits pre-emptive argument by submitting that this Court has jurisdiction under 226 for judicial review in contractual agreement. He has placed reliance upon the ruling of the Apex Court in the case of Unitech Limited and Others-vs-Telengana State Infrastructure Corporation (TSIIC) and Others in Civil Appeal No.317 of 2021 arising out of SLP (C) No. 17529 of 2019 (2021 SCC Online SC 99). The para 40 and 41 of the judgment are reproduced herein below:- “This exposition has been followed by this Court, and has been adopted by three-judge Bench decisions of this Court in State of UP v. Sudhir Kumar and Popatrao Vynkatrao Patil v. State of Maharashtra. The decision in ABL International, cautions that the plenary power under Article 226 must be used with circumspection when other remedies have been provided by the contract. But as a statement of principle, the jurisdiction under Article 226 is not excluded in contractual matters. Article 23.1 of the Development Agreement in the present case mandates the parties to resolve their disputes through an arbitration. However, the presence of an arbitration clause within a contract between a state instrumentality and a private party has not acted as an absolute bar to availing remedies under Article 226.11 If the state instrumentality violates its constitutional mandate under Article 14 to act fair ly and reasonably, relief under the plenary powers of the Article 226 of the Constitution would lie. This principle was recognized in ABL International: “28.
This principle was recognized in ABL International: “28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power.(See Whirlpool Corpn. v. Registrar of Trade Marks [(1998 ) 8 SCC 1].) And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction.” 41. Therefore, while exercising its jurisdiction under Article 226, the Court is entitled to enquire into whether the action of the State or its instrumentalities is arbitrary or unfair and in consequence, in violation of Article 14. The jurisdiction under Article 226 is a valuable constitutional safeguard against an arbitrary exercise of power or a misuse of authority. In determining as to whether the jurisdiction should be exercised in a contractual dispute, the Court must, undoubtedly eschew, disputed questions of fact which would depend upon an evidentiary determination requiring a trial. But equally, it is well-settled that the jurisdiction under Article 226 cannot be ousted only on the basis that the dispute pertains to the contractual arena. This is for the simple reason that the State and its instrumentalities are not exempt from the duty to act fairly merely because in their business dealings they have entered into the realm of contract. Similarly, the presence of an arbitration clause does oust the jurisdiction under Article 226 in all cases though, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked.
Similarly, the presence of an arbitration clause does oust the jurisdiction under Article 226 in all cases though, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked. The jurisdiction under Article 226 was rightly invoked by the Single Judge and the Division Bench of the Andhra Pradesh in this case, when the foundational representation of the contract has failed. TSIIC, a state instrumentality, has not just reneged on its contractual obligation, but hoarded the refund of the principal and interest on the consideration that was paid by Unitech over a decade ago. It does not dispute the entitlement of Unitech to the refund of its principal.” 10. He has contended that this Court has jurisdiction for exercising judicial review in the contractual matter and has prayed that the present petition may be allowed and pass appropriate orders by permitting the petitioner to continue to execute the works on the project highway. Allow the present petition and pass appropriate order restraining respondent No.1 from taking any action under the agreement which will have an adverse impact on the execution of the project works. Pass appropriate orders restraining respondent No.1 in acting in furtherance of NIB dated 27-01-2021 the NIT dated 31-03-2021 and the notice for intention to terminate dated 09-04-2021. Pending disposal of the present petition pass appropriate orders directing status quo to be maintained as regards the works and deployment of plant, machineries and man power deployed for the purpose of project highway. 11. Appearing for the respondent No.1, learned senior counsel, Mr. D.K. Banerjee assisted by Mr. Moa Jamir has raised objection to the present writ petition on the following grounds:- (1) The subject matter of the instant writ petition presented before this Court is an issue connected with PIL (Suo Moto) 2/2019. The Division Bench of this Court has by an order dated 24-03-2021 has specifically covered the subject matter in this writ petition. The relevant portion of the order is extracted herein below: “Pursuant to the order dated 17-03-2021 Mr. Sandeep Reddy, the Managing Director Gayatri Projects Limited (respondent No.9) is present before the Court and he submitted that the process for foreclosure as contemplated under the NIT is being initiated between the employer NHIDCL and the contractor. It is submitted by Mr.
The relevant portion of the order is extracted herein below: “Pursuant to the order dated 17-03-2021 Mr. Sandeep Reddy, the Managing Director Gayatri Projects Limited (respondent No.9) is present before the Court and he submitted that the process for foreclosure as contemplated under the NIT is being initiated between the employer NHIDCL and the contractor. It is submitted by Mr. Reddy that because of financial hardship and other issues his company is unable to complete the balance work. He however, does not deny the undertaking given by the company by way of the affidavit filed by Mr. S. Venkataswara Rao the Vice President of the Company. In terms of the affidavit in para 5, the signatory to the affidavit, the Vice President of the respondent No.9 had categorically undertaken to complete the four lane road works on or before 31st of March, 2020”. 12. Again the Division Bench of this Court ordered by the same date observed as follows “ insofar as the NHIDCL is concerned, it is submitted in Court that notice of intention to terminate for failure to complete its work is contemplated to be issued to respondent No.9. Accordingly, liberty is also granted to NHIDCL to take steps forthwith in order to execute the balance work in respect of Package -3 which could not be executed by respondent No.9. Steps in this regard be taken by NHIDCL be brought on record by way of an affidavit.” The above being the order of the Division Bench in the PIL, the learned senior counsel has argued that a Single Bench could not pass a contrary order. The NHIDCL having taken steps as granted by the Court having considered the non performance by the petitioner has initiated this step of intended termination of contract. 13. The justification of such steps by the respondent No.1 is discernible from the record filed by the L.N.Malviya Infra Projects Pvt.Ltd in Association with Agnitio Infrastructure Projects Pvt.Ltd by its letter dated 16-04-2021 under letter No.LNMIPPL-AIPPL/GPL/NG-DK/AE/311 which has clearly depicted the progress of work by the petitioner M/S Gayatri Projects Limited. The above progress report of the Supervising Engineers clearly shows that the petitioner has no interest at all to see that the project is completed within time. There is average progress of only 1% in a month.
The above progress report of the Supervising Engineers clearly shows that the petitioner has no interest at all to see that the project is completed within time. There is average progress of only 1% in a month. Under this pace of progress there is no hope that the petitioner would complete the work even during a period of 5 years. Several notices have been issued by the authority and the authority engineers for mobilization of manpower and machineries and materials to achieve progress in the work. However, the petitioner have not taken any steps. Therefore, the respondent No.1 was fully justified in intending to terminate the contractual agreement. The Authority’s Engineers letter is extracted for the sake of clarity:- “No.LNMIPPL-AIPPL/GPL/NG-DK/AE/311 Date:16th April’2021 To, Mr. M. Venkateswara Rao, Vice President M/S Gayatri Projects Ltd., Nagaland Sub: Consultancy Services for Authority’s Engineer for Supervision of “4 Laning of Dimapur-Kohima Road” from Design Km 152.490 to Km 166.700 (Existing Km 156.00 to Km 172.900) in the State of Nagaland under SARDP-NE on EPC basis (Package-III)-Reg: Issue of Cure Notice under Clause 23.1.1. of the Contract Agreement-Extremely Slow Progress of work. Ref. Our letter no. LNMIPPL-AIPPL/GPL/NG-DK/AE/306 dated 8th March,2021 Dear Sir, Whereas the work of Four –laning of NH-39 Dimapur-Kohima road from design Km 152.490 to Km 166.700 (Existing Km 156.000 to Km 172.900) on EPC Contract in the State of Nagaland (Package-III) was awarded to M/S Gayatri Projects Limited on 22.04.2016 by National Highways & Infrastructure Development Corporation Limited (NHIDCL; and 2. Whereas the Appointed Date for the Project was fixed as 08.08.2016; and 3. Whereas the fulfillment of its obligations, the Authority has handed over 100% of the total length of the Project Highway to the Contractor, and 4. Whereas, several notices have been issued by the Authority and the Authority’s Engineer for adequate mobilization of manpower. Machinery and material, and to achieve progress in work; and 5. Whereas, the Contractor has made grossly inadequate arrangements whatsoever for executing the work on the project; and, 6. Whereas, the Contractor has failed to achieve Milestone-III on 08/08/2019 and Scheduled Completion Date 07/02/2020(extended in 69th Executive Committee for 180 days; and, 7. Whereas, in Hilly region main working season is almost from October to April. But the Contractor’s Progress status shows from October’2020 to March’2021 is very less as given below: Sl.
Whereas, the Contractor has failed to achieve Milestone-III on 08/08/2019 and Scheduled Completion Date 07/02/2020(extended in 69th Executive Committee for 180 days; and, 7. Whereas, in Hilly region main working season is almost from October to April. But the Contractor’s Progress status shows from October’2020 to March’2021 is very less as given below: Sl. No. Description Upto Sept’20 Oct’20 Nov’20 Dec’20 Jan’2021 Feb’2021 Mar’2021 Total 1 Physical Progress 65.858% 0.99% 1.096% 1.534% 1.005% 0.270% 0.439% 71.192% 2 Financial Progress 62.294% 2.33% 2.20% 0.00% 2.29% 0.00% 0.970% 70.08% This shows Contractor has no intention to complete work and delaying project without any sufficient reasons. From 18.02.2021 onwards Main road work activity is abandoned and also seen that some staff, drivers, operators, workers had left the site. 8. Whereas, the Contractor is solely responsible for these breach of the Contract Agreement; and 9. Whereas, the Authority and Authority’s Engineer has extended all possible efforts to expedite the progress and timely completion of project, now has no other recourse, but to issue this Notice and directs the Contractor to strictly meet all the obligations as detailed in the Contract Agreement and rectify all the defaults in a sincere, systematic and time bound manner, within a Cure period of 07 days from the date of this NOTICE 10. This notice is being issued without prejudice to any other right or remedy available to the Authority and/or applicable law. Thanking you and assuring you of our best services at all times we remain. Yours Sincerely, For: LNMIPPL-AIPPL” 14. With respect to legal issues, there is arbitral agreement between the parties. It is purely dispute which is private in nature and can be addressed in the appropriate forum with respect to damages and other contractual losses which may be incurred by the parties. It is also submitted that there is no cause of action as only notice of intention to terminate has been issued and the petitioner has also replied to the indented notice which is contained in Annexure-31. It is at the discretion of the respondent No.1 whether to accept the reply of the petitioner dated 19-04-2021 under letter NO.Ref:JBL/TL/20-21/002. The respondent No.1 may accept or may not accept the reply. Therefore, the legal position is that the contract as of now has not been terminated and there is no cause of action. 15.
It is at the discretion of the respondent No.1 whether to accept the reply of the petitioner dated 19-04-2021 under letter NO.Ref:JBL/TL/20-21/002. The respondent No.1 may accept or may not accept the reply. Therefore, the legal position is that the contract as of now has not been terminated and there is no cause of action. 15. On the issues raised by the petitioner that the work was delayed due to non handing of right of way during the stipulated time, it is answered by stating that the matter relates to only 1 ½ kms which could not effect the progress of the whole stretch contained under pakage-3 and the plea is unsustainable. With respect to the issue of covid and intermittent blockade faced by the petitioner, it is a situation which has been confronted by other contractors as well who are performing at a much better pace than the petitioner. Therefore, the plea of covid and intermittent blockades to privilege blasting in critical areas of the road is not an acceptable argument for delay of execution of the project. Learned senior counsel has also objected to the prayer of the petitioner for interim stay citing the provision of Section 20A of the Specific Relief Act, 1963 which provides that no injunction shall be granted by a court in a suit under this Act involving a contract relating to an infrastructure of project specified in schedule where granting injunction would cause impediment or delay in the progress or completion of such infrastructure project. Learned senior counsel Mr.Banerjee submits that though this is not a suit however it would remain a guiding principle in all contractual matters. For all the reasons stated, learned senior counsel Mr.Banerjee submits that the writ petition has no merit. 16. I have considered the submissions forwarded by the learned senior counsel Mr. C.T. Jamir and also the submissions of senior counsel Mr. Banerjee for the respondent No.1. this Court is of the view that the matter has the same issue connected with the PIL (Suo Moto 2/2019) wherein, the matter is monitored by the Division Bench of this Court. Any order in conflict with orders passed in the Division Bench in the PIL would therefore be legally inappropriate. Single Bench could not adjudicate upon the subject matter already covered in a Division Bench. There would be confusion.
Any order in conflict with orders passed in the Division Bench in the PIL would therefore be legally inappropriate. Single Bench could not adjudicate upon the subject matter already covered in a Division Bench. There would be confusion. I have also perused the records and it is apparent on the face of the records that there has been several notices issued by the authorities engineers to mobilize manpower machineries and material to achieve progress in work but the petitioner had made inadequate arrangement and failed to achieve the milestones for completion of the work on stipulated dates. The physical progress of the work depicted per month by the engineers is also dismal and as such, an agreement between the employer and the employee when no grounds of discrimination or unfair treatment can be imputed upon the respondent, there are no grounds to move this Court. It is admitted that the presence of an arbitration clause cannot oust jurisdiction of the Court under Article 226. However, the writ Court will not exercise its jurisdiction under Article 14 unless it can be shown that there is arbitrariness and unreasonableness and unfair treatment of the petitioner. In our case no such facts are observed. The petitioner was given sufficient notices and opportunity to take necessary steps for progress of the work which they failed to do so. Under the circumstances, there is no unfair treatment and no infringement of Article 14 is observed by this Court. 17. It may be observed here that even His Excellency the Governor on the administrative side is monitoring the project and has clearly expressed his displeasure of the progress in the work even after series of meetings and reminders. The petitioner have also clearly stated that they could not complete their contractual work due to lack of fund. Where is the arbitrariness or discrimination under such facts? This Court is also in agreement with the view of the learned senior counsel for the respondent No.1. Mr. Banerjee that there is no cause of action and the matter may be appropriately referred to the appropriate forum as there is arbitral agreement between the parties to address all the issues with respect to the contractual agreement between the parties before it can knock on the writ court for a remedy. 18.
Mr. Banerjee that there is no cause of action and the matter may be appropriately referred to the appropriate forum as there is arbitral agreement between the parties to address all the issues with respect to the contractual agreement between the parties before it can knock on the writ court for a remedy. 18. I have also perused the order dated 19-04-2021 referred to by the leaned senior counsel for the petitioner Mr. C.T. Jamir who submits that the order dated 24-03-2021 has been superseded. The petitioner has also filed an affidavit to that effect. The reading of the order dated 24-03-2021 does not effectually take away the operation of the order dated 19-04-2021. As rightly pointed out by the learned senior counsel for the respondent No.1 Mr. Banerjee, it is a mater which could be addressed in P.I.L (Suo Moto 2/2019) considering that the petitioner and respondents have both filed their respective affidavits in terms of the order dated 24-03-2021. For clarity, the relevant portion of the order dated 19-04-2021 is extracted below:- “We also have taken note of the affidavit filed by the respondent No.9 in terms of the direction issued by this Court by order dated 24/03/2021, which will be considered along with the latest affidavit that has been directed to be filed by the respondent no.6 on the next date. Accordingly, let this matter be listed again on 12/05/2021” 18. The above order suggests that the issue in the present writ petition is still under consideration before the Division Bench. The present petition therefore is premature as there is no cause of action. 19. Having discussed and observations made on the issues presented in this writ petition as above, there is no merit in this petition and is accordingly dismissed.