Chandra Constructions v. Garrison Engineer (Project) Military Engineer Services Dehradun
2022-04-12
SHARAD KUMAR SHARMA
body2022
DigiLaw.ai
JUDGMENT : Sharad Kumar Sharma, J. These are the two writ petitions, which have been preferred by the petitioner/ contractor. 2. In WPMS No.2175 of 2020, the petitioner has preferred this Writ Petition, where he has questioned the tender notice, which was published on 17th November 2020, which was, issued by the respondent No.2 i.e. Chief Engineer, Bareilly Road, Military Engineering Services, on various factual counts, which has been pleaded by the petitioner in the Writ Petitions. 3. Partially the facts of both these Writ Petitions as mentioned above would be common. So far it relates to the status of the petitioner, which the petitioner legally enjoys as a proprietorship firm, claiming to be engaged in the construction work with the Military Engineering Services. It is an admitted case where the work contract was granted to the petitioner by the respondents by an order dated 2nd March 2017, for the completion of the work providing of security wall to the RIMC, Dehradun. As per the tender notice, and the invitation of the contract, the total value of the contract was assessed to be Rs.95,35,599.89/-. According to the covenants of the contract, and the work order issued on 2nd March 2017, the commencement of the work, was to be started with effect from 14th March 2017 and the work was to be completed by 8th December 2017. 4. At this stage, this Court is slightly constraint to make any observations with regards to the stipulations and effect of the terms of the contract whether the time would play any effect, as an essence to the contract or not, because for the reason known to the petitioner, the concluded contract has not been placed on record, with the writ petition. 5. In that eventuality, this Court will be constrained to consider and record its findings based on the facts, which are pleaded and reflected from the documents, as already placed on record. Admittedly as per the terms and conditions of the contract, and the general condition of the contract was executed in favour of the petitioner, which was by way of IAFW 2249, governing the project, for which the petitioner was given work order on 2nd March 2017. 6.
Admittedly as per the terms and conditions of the contract, and the general condition of the contract was executed in favour of the petitioner, which was by way of IAFW 2249, governing the project, for which the petitioner was given work order on 2nd March 2017. 6. The petitioner has factually contended that, since the site in question was not handed over by the respondents to the petitioner within time, in order to enable him to commence the work, and complete the same as per the stipulations of the work order of 2nd March 2017, despite of the repeated requests, and on account of non supplying of the drawing of the construction, to be done, which the petitioner has prayed for to be provided by making the request to the Garrison Engineer (Project), Military Engineering Service, Dehradun. A sketch was provided to the petitioner showing the location of the security wall, which was made available to the petitioner, the petitioner contends that it was only when the sketch was provided to them by the Garrison Engineer, vide its correspondence of 24th February 2018, the petitioner was made aware about the nature of the work, which the petitioner was supposed to complete as per the work order of 2nd March 2017. 7. The petitioner submits, that as per the work order of 2nd March 2017, the petitioner contends that he continued with the construction work under the contract, despite of the various adverse situations, which had arisen due to various inter se events, which has been narrated in the writ petitions, the work could not be progressed as per the terms of the work order dated 2nd March 2017. 8. There are other various grounds, which has been taken by the petitioner, that due to the adverse weather conditions; due to “Rashtriya Bhartiya Sainya College Rashtiya Indian Military College”, where ongoing work services of the security wall was installed on account of the said activity of Indian Military Mela. The revised location plan is said to have been later on submitted with the petitioner with the highlighted part of the work which was supposed to be performed by the petitioner. 9.
The revised location plan is said to have been later on submitted with the petitioner with the highlighted part of the work which was supposed to be performed by the petitioner. 9. The respondent had undertaken the process of assessment of the work, which was being conducted by the petitioner under the terms of the contract dated 2nd March 2017, and since the work performance was not satisfactory, being performed, the contract No.CEB/DNN/16 of 2016-17, which was the subject matter under consideration, in the conference held of the Chief Engineer, Military Engineering Services, Bareilly Zone Bareilly Cantt., which was attended by the other military officials, as per the minutes of the said meeting, it was stated that though the contactor has expressed his willingness to carry out the work, but the contactor has simultaneously stated that he shall start the work and complete the same within two months, and it is based on the said understanding of 18th January 2020, a note was prepared by way of paragraph No.4, in the minutes of the meeting of 8th February 2022, where after the deliberation which was made by the Chief Engineer, Military Engineering Services, by way of the last opportunity, an extension was granted to the petitioner to complete the work within the extended period of two months, as would be apparent from the extension order Annexure No.6, (Page 39) to the Writ Petition No.1831 of 2020. 10. In fact, if the said clause of extension order is taken into consideration, on its simplicitor reading, it reflects that it was not an isolated extension, which was granted to the petitioner to complete the work, which was handed over to him way back on 2nd March 2017, and which remained incomplete till the last extension, which was granted in his favour on 9th February 2020. In fact, if the said extension, which was granted by the letter of 9th February 2020, is taken into consideration, the relevant paragraph No.4, of which is extracted hereunder:- 4. It is recognised that in view of the restrictions placed on the movement of goods, services and manpower on account of the lockdown situation prevailing overseas and in the country in terms of the guidelines issued by the MHA under the DM Act 2005 and the respective State and UT Governments, it may not be possible for the parties to the contract to fulfil contractual obligations.
In respect of Public-private Partnership (PPP) concession contracts, a period of the contract may have become unremunerative. Therefore, after fulfilling due procedure and wherever applicable, parties to the contract may invoke FMC for all construction/works contracts, goods and services contracts and PPP contracts with Government Agencies and in such event, date for completion of contractual obligations which had to be completed on or after 20th February 2020 shall stand extended for a period not less than three months and not more than six months without imposition of any cost or penalty on the contractor/concessionaire Concession period in PPP contracts ending on or after 20th February 2020 shall be extended by not less than three and not more than six months. The period of extension (between three and six months) may be decided based on the specific circumstances of the case and the period for which performance was affected by the force majeure events. 11. It simply reflects that there had been a prior extension of work also but still the same was not completed. The petitioner interprets that, the said extension granted by the letter of 9th February 2020, in his favour on the ground, that as per the directive issued by the Government of India on account of the subsequent prevalent covid-19 pandemic situation, and as per the directive, which were issued by the Ministry of Finance, Department of Expenditure, Procurement Policy Division on 13th May 2020, the petitioner had submitted, that in view of the stipulations which were contained in paragraph No. 4, of the said Office Memorandum of the Government of India, if that is taken into consideration, it provided an extension for completing the work under the contract for a period of two months from the date of the said Government Order dated 13th May 2020. 12. Particularly, he has made a reference, that after fulfilling all the procedures, wherever applicable to the parties to the contract, may be enforced for construction work and service contracts, under the “PP Mode” and complete the contractual obligations on or before 20th February 2020, which shall remain extended for a period of not less than three months and not more than six months without the imposition of any cost or penalty. 13.
13. In fact, the interpretation given to Clause 4, by the petitioner, is being answered to the contrary, by the learned counsel for the respondent by drawing the attention of this Court to Clause 5, where the said communication, which provides that the extension contemplated under Clause 4, would only be provided to those contractual obligations, which remained unfulfilled as on 19th February 2020. Meaning thereby, he submits that the extension given therein, as per Clause 4, will not be available to the petitioner in view of the embargo created under Clause 5, because the inaction on the part of the petitioner to complete the work stood established by the last extension granted to the petitioner on 19th February 2020, which was even much prior to the imposition of the policy decision of the Government, dated 13th May 2020, which contemplated an extension. 14. Hence, the fact of inaction on part of the petitioner to complete the work stood determined as against him by the last extension, which was granted on 19th February 2020. Hence, the shelter taken by the petitioner in the light of the directives issued by the Government of India on 13th May 2020, as per the opinion of this Court, would not be available to the petitioner because the inaction on his part was even much prior to the cut-off date provided under Clause 5, of the said Government Order. 15. It has been argued by the learned counsel for the respondent, that if the work project correspondence, and particularly, that of the extract of Clause 54, is taken into consideration, it provides the terms and circumstances under which, the right of cancellation of the contract was kept exclusively within the domain of the decision making process of the employer, as per the provisions contained under Clause 54, where in an event of default of the condition and of the terms of the contract, the Clause 54 could be invoked by the employer for the purposes of cancellation of the contract, which was invoked, herein, and the petitioner’s contract was ultimately cancelled by the order dated 9th June 2020, which had been made as a subject matter of challenge in Writ Petition No.1831 of 2020, with the simultaneous prayer for a writ of mandamus, for the extension of time period for the completion of the work by six months. 16.
16. Learned counsel for the petitioner submitted that as per the correspondence, which was made by the respondent themselves, it rather shows that the major part of the work stood completed, which indeed is a fact denied by the respondent counsel, based on the writ averments wherein they have submitted that according to the communication made by the petitioner with their employer, it was only 59 % of the work, as assigned to the petitioner under the work order of 2nd March 2017, which was completed and the major part of the work stood incomplete. 17. In that eventuality, where there is a default committed in completion of the work, and where time is the essence to the contract, particularly, when it pertained to the nature of the work, for the construction of the security wall, the petitioner’s contention with regards to 59% of the completion of work, which was a fact disputed, would always require an appreciation of the factual aspects as to how was the actual assessment of work done by the respondents, which was claimed by the petitioner to have been completed, which has been otherwise argued by the respondent Counsel, that as per the correspondence, which was placed on record, in fact, since the work was not satisfactory that is why the invocation of Clause 54 of the terms of the contract was attracted, for cancellation of the contract, which was a prerogative reserved with the employer for an action to be taken against the contractor, who has breached the terms of the contract. 18. Learned counsel for the petitioner has submitted that, in the writ averments if that are taken into consideration, wherein, he has interpreted the last extension of 9th February 2020, as to be an extension, which was otherwise was supposed to be continued till April 2020, in the light of the directives of the Government of India.
18. Learned counsel for the petitioner has submitted that, in the writ averments if that are taken into consideration, wherein, he has interpreted the last extension of 9th February 2020, as to be an extension, which was otherwise was supposed to be continued till April 2020, in the light of the directives of the Government of India. I am of the view that the said interpretation given by the petitioner cannot be stretched to an extent of irrationality for the reason being that, when the petitioner had not completed the work under a prior extended period as mentioned, he cannot take a recuse to the subsequent extension made by the Government Order, taking a plea that since the work period stood extended, and it could not be completed due to the enforcement of the guidelines of the Government of India, the same is not available to be argued by the learned counsel for the petitioner. 19. The learned counsel for the respondent submitted, that if the correspondence of the Government of India No.14-3/2020-DM-(IA), dated 15th April 2013, is taken into consideration, in fact the respondent had contended that while exercising their powers under section 10(2)(1) of the Disaster Management Act, 2005, and in the capacity of being the Chairman, National Executive Committee, whereby the directive were issued on 4th April 2020, and the imposition of the lockdown measures, in the capacity of the Chairman, National Executive Committee, the said implications enclosed with the consolidated revised guidelines, by the Government of India, will not be applicable in the case of the petitioner, for the reasons that had been already dealt with above. 20.
20. The learned counsel for the respondent had further submitted that if the aforesaid guidelines, which had been issued by the Government of India on 15th April, 2020, are taken into consideration, in fact the Government of India, it was for the purposes of extension of the time period for the activities, to be extended which were effected due to the imposition of the lockdown, if that is taken into consideration, it is submitted that in view of the Clause 16, of the said guidelines of the Government of India dated 15th April 2020, it carves out an exception, that the construction activities listed, therein, under Clause 16 of the guidelines, it will be continued to allow to operate irrespective of the restrictions imposed by the Government of India due to covid-19 situation, and the said exception under Clause 16, includes an exception of construction activities, as included in its sub-clause (1), which is extracted hereunder:- “16. Construction activities, listed as below, will be allowed to operate: i. Construction of roads, irrigation projects, buildings and all kinds of industrial projects, including MSMEs, in rural areas, i.e., outside the limits of municipal corporations and municipalities; and all kinds of projects in industrial estates. ii. Construction of renewable energy projects. iii. Continuation of works in construction projects, within the limits of municipal corporations and municipalities, where workers are available on site and no workers are required to be brought in from outside (in situ construction).” 21. To the stand taken by the respondents in the counter affidavit, about the implications of the stipulations of the Government of India, permitting to carry out the work activities by virtue of the exception carved out under Clause 16. In fact, there is no rejoinder affidavit, which had been filed by the petitioner in reply to the contrary, as to what would be the impact of Clause 16, so far it related to the completion of the work, which otherwise under the work order dated 2nd March 2017, was supposed to be completed by 8th December, 2017, which couldn’t be completed by the last extension, which was granted on 9th February 2020.
The time slot itself, by looking to the nature of the work which was to be performed under the contract, this Court is of the view that the factors which attributed to incapacitate the petitioner to complete the work of the construction of the retaining wall, which was required for the purposes of the defence structure, and the percentage of work done, which is a fact denied by the respondents and which is claimed by the petitioner otherwise that only a meager part of the work was left required to be completed, during the intervening period, when the subsequent notification was issued by the respondents on 17th November 2020, inviting fresh bids for completion of the remaining work for which the work order was issued in favour of the petitioner on 2nd March 2017. 22. The very fact that ever since the execution of the work order on 2nd March 2017, till the issuance of the fresh tender notice on 17th November 2020, that itself spells out the diligence with which the petitioner had performed his work under the terms of the concluded contract. Despite the extensions having been granted on 14th January 2019, as would be apparent from CA 8, page 62 to the counter affidavit, if despite of the several extension, the work was not completed, and particularly, in the light of the embargo of Clause 16 where the exemption has been granted to the work contracts from the covid-19 restrictions for carrying out the construction work. The petitioners’ argument which entails a consideration, as to what was the area of completed work, which was performed by the petitioner whether the proclamation made by the petitioner, that it was only a negligible part of work under contract, which was left incomplete, all are the factual aspects, which are required to be considered. 23.
The petitioners’ argument which entails a consideration, as to what was the area of completed work, which was performed by the petitioner whether the proclamation made by the petitioner, that it was only a negligible part of work under contract, which was left incomplete, all are the factual aspects, which are required to be considered. 23. Hence, it is being argued by the learned counsel for the respondent, in the light of the terms of the contract, and the part of pleading which is placed on record by the respondents counsel, and referred to in the pleadings of the counter affidavit, that the contract work executed subsequent to the execution of the work order on 2nd March 2017, since that itself contained in it, an arbitration clause, that whenever there arises a dispute pertaining to the terms and non-fulfillment of the terms and conditions of the contract executed, as a consequence of the execution of the work order of 2nd March 2017, the same is ought to be referred for an adjudication before the Arbitrator. 24. This argument of the learned counsel for the respondent has been tried to be denied by the petitioner, on the ground, that since there was no factual appreciation, which was required to be done, in that eventuality too, the agreed forum by the petitioner for the redressal of the dispute is required to be resorted to only, where it required an assessment of work performed, and where it required the impact assessment of extension of time period; where it required an assessment as to whether the time was an essence of the work of the contract or not, where it required to assess the incomplete work which was required to be completed by issuance of the subsequent notification, which is the subject matter of challenge in WPMS No.2175 of 2020, the total quantum of work performed by the petitioner qua to which the petitioner would be entitled for the payment of the money for the work performed. 25.
25. All these aspects entailed a determination of a factual controversy, which cannot be invoked by preferring a writ petition under Article 226 of the Constitution of India, and that too by the petitioner it cannot at a belated stage, when there arises a dispute about the diligence with which the petitioner had performed the work, and particularly, when it had ultimately culminated to the termination of the contract, under the terms of the Clause 54 of the agreed contractual obligations, it will fall to be for consideration before the Arbitrator. 26. In order to override the said plea taken by the respondents’ Counsel, that the agreed forum since was forming the part of the terms of the contract, where the petitioner could have redressed the grievances. The petitioner had made a reference to a judgment reported in 2011 (5) SCC 697 , “Union of India & others Vs. Tantia Construction Private Limited” and particularly he has made a reference to paragraph No.31, of the said judgment, which is extracted hereunder:- “31. In our view, the Respondent Company has satisfactorily explained their position regarding their offer being confined only to the balance work of the original Tender and not to the extended work. The delay occasioned in starting the work was not on account of any fault or lapses on the part of the Respondent Company, but on account of the fact that the project design of the work to be undertaken could not be completed and ultimately involved change in the design itself. The Respondent Company appears to have agreed to complete the varied work of Tender No. 76 of 06-07 which variation had been occasioned on account of the change in the design as against the entire work covering both the first and second Tenders. To proceed on the basis that the Respondent Company was willing to undertake the entire work at the old rates was an error of judgment and the termination of the contract in relation to Tender No. 76 of 06-07 on the basis of said supposition was unjustified and was rightly set aside by the learned Single Judge of the High Court, which order was affirmed by the Division Bench.” 27.
In fact, if observations made, therein, are taken into consideration, it was a judgment in exception and not a judgment in rem, for the reason being that in the said judgment the Hon’ble Apex Court, had arrived to a conclusion that, where under the backdrop of the pleadings raised in the writ petition, the contractor has been able to satisfy and to explain the position regarding their offer, being confined to the balance of work, and the work performed under the tender or under the extended period, and the contractor has been able to successfully satisfy the reasons for default or lapses on part of the incompletion of work, the Court has observed that the forum or an alternative remedy against the termination of the contract; by approaching before the Arbitrator; may not be an appropriate and efficacious forum. In fact, this case is in much contradiction to the factual aspects required consideration, as involved in the present case. 28. In the present case, as it has been already observed above, it is not disputed:- (1) That the contract is not itself on record. (2) The work was supposed to be completed till 8th December 2017. (3) The extension was earlier granted on 4th January 2019, and the work was still not completed. (4) The last extension was granted on 9th February 2020, and still the work was still not completed. (5) Due to the non completion of the work despite of the last extension, it has resulted into an invitation of the fresh tender to get the remaining work complete, which was otherwise supposed to be completed by the petitioner, under the terms of the contract, having not done so, and (6) Lastly, Particularly when the petitioner claims a completion of the 59% of the work, which is a fact disputed by the respondents. 29. The principles of the ratio laid down by the Hon’ble Apex Court, in the judgment of the Tantia Construction Private Limited (Supra), will not be applicable in the instant case, because it was dealing with the facts and circumstances of that particular case, as it has been dealt with in the opening paragraphs of the said judgment as contained in paragraph Nos.3, 4 and 5, pertaining to the stipulations of the contract for the construction of the Railway Over Bridge at Bareilly Road. 30.
30. In another judgment, on which the reliance has been placed by the learned counsel for the petitioner is that as reported in 2003 (2) SCC page 107, “Harbanslal Sahnia & another Vs. India Oil Corporation and others”, learned counsel for the petitioner had made a reference to paragraph No.7, of the said judgment, wherein, it has been observed that as far as the High Court's view is taken therein in the said case with regards to resorting to the recourses of the arbitration clause available to the petitioner. The Hon’ble Apex Court has dealt with the implications of the arbitration clause in the light of the principles of the Whirlpool Judgment, I am in a respectful disagreement with the ratio laid down, therein, by the said judgment, in order to be made applicable under the factual circumstances of the present case, and the reason for disagreeing with the said principle is that there is a distinction between an agreed remedy for the redressal of the dispute and in an alternative remedy. The alternative remedy its always a creation of the statute, though in an agreed remedy it is as a consequence of the consensus, under the terms settled between the parties, by way of the consensus arrived at between them. In that eventuality, the distinction, which was carved out by the Hon’ble Apex Court in paragraph No.7, of the said judgment was on the ratio, that where the arbitration clause was treated as to be an alternative remedy, which is extracted hereunder:- “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, 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 and is challenged [See Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Ors., MANU/SC/0664/1998 : AIR 1999 SC 22 . The present case attracts applicability of 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.” 31. I am of the view that since the arbitration clause is not an alternative remedy, once it is agreed forum for resolving a dispute, between the parties under the terms of the contract, the same would not be applicable and that too particularly for the reasons already discussed above, when it entails an appreciation of evidence and particularly the factual aspect of quantum of work which was performed by the petitioner under the settled terms of the contract. 32. The Hon’ble Apex Court in a recent judgment as rendered in Civil Appeal No.4981 of 2021, “Union of India & others Vs. M/s Puna Hinda”, particularly a reference is made to paragraph No.17 of the said judgment, which is extracted hereunder:- “17. Mr. Nataraj, learned ASG appearing for the appellants, pointed out that there are serious disputes about the facts in respect of authenticity of the Joint Final Report and the work done. Therefore, such disputed question of facts could not have been adjudicated by the Writ Court as disputed question of facts relating to recovery of money could not have been entertained thereunder. Reliance has been placed upon the judgment of this Court reported as Kerala State Electricity Board & Anr. v. Kurien E. Kalathil & Ors., (2000) 6 SCC 293 wherein it was held as under : 10. We find that there is a merit in the first contention of Mr Raval. Learned counsel has rightly questioned the maintainability of the writ petition.
v. Kurien E. Kalathil & Ors., (2000) 6 SCC 293 wherein it was held as under : 10. We find that there is a merit in the first contention of Mr Raval. Learned counsel has rightly questioned the maintainability of the writ petition. The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observation of the High Court that since the obligations imposed by the contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in coming to the conclusion that the contract in question was statutory in nature. 11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract.
Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies.” 33. In fact, the challenge which was given, therein, and the principles given pertaining to what will be the scope of the interference by the writ court under Article 226 of the Constitution of India, in the contractual matters, the Hon’ble Apex Court in paragraph No.17, had observed that, where there is a serious dispute pointed out by the rival parties, pertaining to the facts and in respect of authenticity of the work performed, and the final report of the work done, the quantum of work performed, and the quantum of amount of bill, which the contractor would be entitled to receive. When all these factual aspects are required to be adjudicated, then in view of the principles laid down in the judgment reported in 2000 (6) SCC 293 , “Kerala State Electricity Board & another Vs. Kurien E. Kalathil & Ors.”, where the Hon’ble Apex Court, while making the reference to paragraph Nos.10 and 11, of the said judgment has come to a conclusion that where factual appreciation is required to be made, writ remedy may not be the appropriate recourse which would be available to the petitioner for the redressal of the grievances by availing a public law remedy. 34. In yet another judgment, which has been rendered by the Hon’ble Apex Court in Civil Appeal Nos.4862-4863 of 2021, “UFLEX Ltd. Vs.
34. In yet another judgment, which has been rendered by the Hon’ble Apex Court in Civil Appeal Nos.4862-4863 of 2021, “UFLEX Ltd. Vs. Government of Tamil Nadu & others”, the Hon’ble Apex Court has observed, that in the contractual matters where the action and activities of the contracting parties are governed by the terms of the contract, the scope of its interpretation of the parameters of awarding of the contract, the commercial obligations emanating from contract, it will not be governed by the law of equity, which could be exercised by invoking the jurisdiction under Article 226 of the Constitution of India, and at the most in view of the observations made in paragraph Nos.2 and 3, of the said judgment, which is extracted hereunder:- “2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fide. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance. 3. We cannot lose sight of the fact that a tenderer or contractor with a grievance can always seek damages in a civil court and thus, “attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted.” 35. Where the principles of equity and natural justice, has been held to be the aspects which are alien to a contractual obligations, the writ remedy has been held out to be inapplicable and not an appropriate forum available to the petitioner, hence the appropriate recourse, which has been settled to be adopted by the petitioner would be by way of filing a suit for claiming civil damages for the losses, if at all, which has been caused to the employee under a contract due to any inaction or action caused on part of the employer.
A judicial review under Article 226 of the Constitution of India, is ought to be resisted by the writ courts. 36. Similar view has been expressed by the Hon’ble Apex Court in paragraph No.6, of the said judgment, while extracting its principles from the judgment reported in 2019 volume 14 SCC page 81 “Caretel Infotech Ltd. Vs. Hindustan Petroleum Corporation Ltd.” The reference has been made to paragraph No.37, of the said judgment, wherein, it has been laid down, that the writ courts under Article 226 of the Constitution of India, may not unnecessarily scrutinize the tender and its effect on the public efficiency or the cartel of the obligations which are created by the terms of the contract, in the field of commercial activities, which may not be scrutinized by the writ courts as per the observations made in paragraph No.37, 38 and 39 of the said judgment, which are extracted hereunder:- “37. We consider it appropriate to make certain observations in the context of the nature of dispute which is before us. Normally parties would be governed by their contracts and the tender terms, and really no writ would be maintainable Under Article 226 of the Constitution of India. In view of Government and Public Sector Enterprises venturing into economic activities, this Court found it appropriate to build in certain checks and balances of fairness in procedure. It is this approach which has given rise to scrutiny of tenders in writ proceedings Under Article 226 of the Constitution of India. It, however, appears that the window has been opened too wide as almost every small or big tender is now sought to be challenged in writ proceedings almost as a matter of routine. This in turn, affects the efficacy of commercial activities of the public sectors, which may be in competition with the private sector. This could hardly have been the objective in mind. An unnecessary, close scrutiny of minute details, contrary to the view of the tendering authority, makes awarding of contracts by Government and Public Sectors a cumbersome exercise, with long drawn out litigation at the threshold. The private sector is competing often in the same field. Promptness and efficiency levels in private contracts, thus, often tend to make the tenders of the public sector a non-competitive exercise. This works to a great disadvantage to the Government and the Public Sector. 38.
The private sector is competing often in the same field. Promptness and efficiency levels in private contracts, thus, often tend to make the tenders of the public sector a non-competitive exercise. This works to a great disadvantage to the Government and the Public Sector. 38. In Afcons Infrastructure Limited v. Nagpur Metro Rail Corporation Limited and Anr., this Court has expounded further on this aspect, while observing that the decision making process in accepting or rejecting the bid should not be interfered with. Interference is permissible only if the decision making process is arbitrary or irrational to an extent that no responsible authority, acting reasonably and in accordance with law, could have reached such a decision. It has been cautioned that Constitutional Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute their view for that of the administrative authority. Mere disagreement with the decision making process would not suffice. 39. Another aspect emphasised is that the author of the document is the best person to understand and appreciate its requirements. In the facts of the present case, the view, on interpreting the tender documents, of Respondent No. 1 must prevail. Respondent No. 1 itself, appreciative of the wording of Clause 20 and the format, has taken a considered view. Respondent No. 3 cannot compel its own interpretation of the contract to be thrust on Respondent No. 1, or ask the Court to compel Respondent No. 1 to accept that interpretation. In fact, the Court went on to observe in the aforesaid judgment that it is possible that the author of the tender may give an interpretation that is not acceptable to the Constitutional Court, but that itself would not be a reason for interfering with the interpretation given. We reproduce the observations in this behalf as under: 15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions.
The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.” 37. In fact, the Hon’ble Apex Court in the said judgment has also observed that the writ court, is not to interfere in the decision making process of an authority of rejecting the tender due to the non fulfillment of the contractual obligations because it has been observed that as per the principles of the judgment as reported in 2016 (Volume 16) SCC, 818, “Afcons Infrastructure Limited Vs. Nagpur Metro Rail Corporation Limited and another”, particularly, the reference has been made to paragraph Nos.38 and 39, of the said judgment, where it has been provided that the author of the terms of the contract, which would be obviously inclusive of the employee, to whom the work has been offered, who would be the best person to understand and appreciate the requirement of the terms of the contract, which cannot be made as a subject matter of the scrutiny under the purview of writ jurisdiction under Article 226 of the Constitution of India. 38. In another recent judgment which has been rendered by the Hon’ble Apex Court in the matters of “M/s N.G. Projects Limited Vs. M/s Vinod Kumar Sain”, in Civil Appeal No.1846 of 2022”, the Hon’ble Apex Court was almost while dealing with the akin circumstances, where the employee and the employer were harping upon the terms of the contract and there it has been observed that it would be procedural impropriety to venture into the contractual obligations by invoking Article 226 of the Constitution of India, which required a scrutiny of the award of the contract, by the writ court, as if it is exercising an appellate jurisdiction, on an action taken for the termination of the contract, which may not fall to be within the procedural propriety of the writ courts under Article 226 of the Constitution of India. 39.
39. In fact, the Hon’ble Apex Court in the said judgment as rendered recently rendered on 21st March 2022, had observed that the writ Courts must realize their limitations, that by a judicial interferences in the contractual matters governed by the contractual obligations, which is admittedly executed between the parties. The court should not needlessly interfere in the commercial matters, which involves an appreciation of technical issue and the Judges exercising their powers under Article 226 of the Constitution of India, should express their reluctance to interfere in the matter, where the forum has been agreed between the parties for the redressal of their grievances, the judicial review of an administrative action is not intended merely on the pretext to prevent an arbitrariness or irrationality, to the judgment of the employer of contracts as per the principles dealt by the Hon’ble Apex Court in the matters of Galaxy Transport Agency as reported in 2020 SSC online SC page 1035. 40. This Court, at this stage, will not hesitate to observe that for the reasons best known to the petitioner, when the terms of the contract was settled and governed by the conditions of the contract itself. In all fairness, it was expected by the petitioner, that the settled and concluded contract should have been placed on record, in order to facilitate and enable the Court exercising, its inherent equitable jurisdiction under Article 226 of the Constitution of India, to ensure as to whether under the factual circumstances of the case, the writ petition, at all could be invoked under Article 226 of the Constitution of India, particularly when, in the light of the judgment of the Hon’ble Apex Court, as already dealt with above, hence the petitioner was bound by Clause 70 of the concluded contract, which was executed between the parties, which had provided an arbitration clause, which is extracted hereunder:- “70. Arbitration.– All disputes, between the parties to the Contract(other than those for which the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of an Engineer officer to be appointed by the authority mentioned in the tender documents.
Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Work or termination of determination of the Contract under Condition Nos. 55, 56 and 57 hereof. Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalized by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies. Provided always that commencement or continuance of any arbitration proceeding hereunder or otherwise shall not in any manner militate against the Government's right of recovery from the contractor as provided in Condition 67 hereof. If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place. The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties, asking them to submit to him their statement of the case and pleadings in defence. The Arbitrator may proceed with the arbitration, ex-parte, if either party, inspite of a notice from the Arbitrator fails to take part in the proceedings. The Arbitrator may, from time to time with the consent of the parties, enlarge, the time upto but not exceeding one year from the date of his entering on the reference, for making and publishing the award. The Arbitrator shall give his award within a period of six mouths from the date of his entering on the reference or within the extended time as the case may be on all matters referred to him and shall indicate his findings, along with sums awarded, separately on each individual item of dispute. The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion. The award of the Arbitrator shall be final and binding on both parties to the Contract” 41.
The venue of Arbitration shall be such place or places as may be fixed by the Arbitrator in his sole discretion. The award of the Arbitrator shall be final and binding on both parties to the Contract” 41. In view of the aforesaid reasons, since, this Court is of the considered view that for the reasons already assigned above, there are various vital facts, which are required to be appreciated based on appreciation of evidence, in order to arrive at a conclusion about the incapability of the petitioner to perform the work within the stipulated time provided under the contract or under the extended period. It would obviously entail a determination of the factual aspects, which could only be done by approaching the agreed forum by approaching the Arbitrator, and if not so then in that eventuality the factual tender conditions cannot appreciated under Article 226 of the Constitution of India. 42. The petitioner perhaps could alternatively have a recourse of approaching the civil court, for filing a suit for damages of the alleged loss, if any, it had been suffered by the employee because of any action or inaction on part of the employer. 43. For the reasons aforesaid, this Court is not inclined to interfere in the writ petition, the writ petition lacks merit and the same is accordingly dismissed.