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2024 DIGILAW 32 (MP)

Gannon Dunkerley Co. Ltd. v. M. P. Road Development Corporation Ltd.

2024-01-08

RAVI MALIMATH, VISHAL MISHRA

body2024
ORDER 1. Heard on I.A. No. 13792 of 2023 : an application under Order 1 rule 10 of the CPC seeking intervention in the writ petition on the ground that he is a sub-contractor. 2. There is no locus of the sub-contractor to intervene into the writ petition on the ground that whatever dispute or claims he is raising is against the petitioner and not the answering respondents. It is an interse settlement between the petitioner and the intervenor. Therefore, the intervenor is having no locus to intervene in this writ petition itself. 3. Therefore I.A. No.13792 of 2023, being not maintainable as the intervenor is having no locus to participate in the proceedings, is rejected. 4. This petition has been filed seeking following reliefs -- "(i) Hon'ble Court may be pleased to quash and set aside the order of recovery dated 24.1.2023 (Annexure P/1) passed by the respondent No.2. (ii) Hon'ble Court further be pleased to quash the recovery of sum of Rs.85.42 crores imposed on the petitioner unilaterally and the respondents be restrained from ef ecting any recoveries from the petitioner through coercive means unless the dispute between the parties is finally adjudicated by an independent authority/arbitrator. (iii) Hon'ble Court be pleased to restrain the respondents from effecting any recovery from the petitioner in pursuance to the impugned order dated 24.1.2023 (Annexure P/1) from the bank guarantee BG No.09020005619 dated 16.3.2019 for Rs.7,54,92,483/- lying with the respondents or through any coercive means against the petitioner unless the dispute between the parties is finally adjudicated by an independent authority/arbitrator. (iv) Any other suitable relief deemed fit in the facts and circumstances of the case may also kindly be granted together with the cost of this petition. " 5. It is the case of the petitioner that petitioner is a registered Public Ltd. Company constituted under the Companies Act, 1956. The work of rehabilitation and upgradation of Barela to Mandla section of NH-12-A from the existing kilometer 22/8 to 89/6 on Engineering, Procurement, Construct (EPC) basis in accordance with the terms and conditions setforth in the contract NIT was issued by respondent No.1 wherein the petitioner submitted the bid. The petitioner's bid was accepted and a letter of acceptance dated 27.7.2015 was issued. In terms of the LOA, a contract was also executed between the parties. The petitioner's bid was accepted and a letter of acceptance dated 27.7.2015 was issued. In terms of the LOA, a contract was also executed between the parties. Cost of the work was Rs.251.64 crores and the time period for completion was 18 months. That vide letter dated 24.1.2023, it was informed that the petitioner failed to perform contractual obligations despite sufficient opportunities being granted and have committed material breach and default of the provisions of the contract agreement and accordingly the contract agreement stood terminated and a recovery is directed to be made from the petitioner. The same is put to challenge by filing a writ petition on the ground that there is a procedure for in house dispute resolution mechanism and the petitioner had invoked the same. As the same is pending consideration without deciding the dispute raised by the petitioner, no orders for recovery could have been passed. Placing reliance upon the judgments passed by the Hon'ble Supreme Court in the case of Tulsi Narayan Garg v. M.P. Road Development Authority : 2019 SCC Online SC 1158 the petitioner has filed the present petition. 6. Initially, this Court granted interim relief to the petitioner on 1.2.2023. Thereafter, on an application I.A. No.2537 of 2023 seeking a direction to the respondents to remove the seal of the premises of the petitioner and to permit the petitioner to remove the articles of his ownership as well as that of his subcontractors, an order dated 20.3.2023 was passed. The Court has rejected the application. But, on a concession given by the Advocate General that as there are certain perishable items, the respondents may look into the same and may release the same on terms and conditions. Another order dated 8.5.2023 was passed considering various documents filed by the petitioner along with I.A. No.6240 of 2023 and I.A. No.6289 of 2023 wherein it was observed that release of the article will be done after calculating the market value as on the date of possession and this exercise is to be completed after giving opportunity to the petitioner to participate in the valuation process. 7. Today, the matter has been listed for consideration on I.A. No.18709 of 2023, which is an application for seeking appropriate direction. 7. Today, the matter has been listed for consideration on I.A. No.18709 of 2023, which is an application for seeking appropriate direction. The respondents are seeking a direction that liberty be granted to remove/re-locate the plant and machinery of the petitioner as the same has not been removed despite directions given by this Court as the petitioner has not deposited the bank guarantee in terms of order dated 8.5.2023. The learned Advocate General has pointed out that in house mechanism which was invoked by the petitioner has been answered and an order has been passed by the authorities. The learned Advocate General has also brought to the notice of this Court a letter dated 28.12.2023 which is a letter written by the petitioner-company to the Divisional Manager, MPRDC Ltd. pointing out the fact that "we are not in a financial position to furnish the bank guarantee". It is contended that the petitioner himself has not complied with the directions issued in the Court on 8.5.2023. 8. Now in terms of relevant clause in the agreement, the petitioner has to invoke Clause 26.3 which deals with arbitration. Counsel appearing for the petitioner could not dispute the fact that in the in house mechanism invoked by the petitioner a final order has been passed. He fairly submits that he will be invoking the Clause 26.3 which deals with arbitration. But as far as the order dated 8.5.2023 is concerned the same stands not complied with by the respondent/authorities as the petitioner has or not permitted to participate in the valuation process. 9. The fact remains that these are contract matters. The scope of interference in the contract matters is very limited. It is an admitted position that the contract of the petitioner has been terminated. The recovery order was issued. The in house mechanism invoked by the petitioner has been answered by the authorities. Now the only remedy available to the petitioner is to invoke the provisions of Clause 26.3 and to invoke the arbitration. 10. The Hon'ble Supreme Court in the case of Tata Motors Limited v. Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and others : 2023 SCC OnLine SC 671has held as under :-- "48. This Court being the guardian of fundamental rights is dutybound to interfere when there is arbitrariness, irrationality, mala fides and bias. 10. The Hon'ble Supreme Court in the case of Tata Motors Limited v. Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and others : 2023 SCC OnLine SC 671has held as under :-- "48. This Court being the guardian of fundamental rights is dutybound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that Courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior Courts but this discretionary power must be exercised with a great deal of restraint and caution. The Courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the Courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The Courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the Courts must give “fair play in the joints” to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer. (See: Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489 )." 11. Thus, considering the fact that this is a contract matter wherein the contract agreement has been terminated and as provided in the agreement Clause 26.3 deals with the dispute resolution mechanism, the petitioner may invoke the same. In a petition under Article 226 of the Constitution of India against the termination of contract and subsequent recovery, no relief can be extended to the petitioner. 12. The petition sans merit and is accordingly dismissed. Petitioner is always at liberty to invoke clause 26.3 of the agreement.