Simplex Infrastructures Limited v. Oil India Limited
2025-08-12
DEVASHIS BARUAHA
body2025
DigiLaw.ai
JUDGMENT : DEVASHIS BARUAHA, J. Heard Mr. S. Choudhury, the learned Senior Counsel assisted by Mr. T. Bose, the learned counsel appearing on behalf of the petitioner. Mr. D. Saikia, the learned Senior Counsel assisted by Mr. P. Nayak, the learned counsel appears on behalf of the respondents. 2. The petitioner herein has approached this Court challenging the termination of the contract bearing No. 6119345/ CDG3526P24/DRLG/24 vide the termination notice dated 09.06.2025 as well as the subsequent communication dated 18.06.2025, whereby the petitioner has been asked to vacate the drilling site with immediate effect. MATERIAL FACTS ON THE BASIS OF PLEADING 3. The case of the petitioner herein is that an E-Tender bearing No. CDG3526P24 dated 23.05.2023 was floated inviting competent and experienced contractors for Charter Hire of 5 (five) numbers of 2000 HP (minimum) drilling rigs package. The petitioner participated in the said tender process and a Letter of Award (for short, “the L.O.A.”) dated 12.03.2024 was issued in favour of the petitioner for Charter Hire of 1 (one) number of 2000 HP (minimum) drilling rig package at a total estimated contract value of Rs. 222,52,44,000/- for a duration of 4 (four) years. The petitioner was also directed to furnish a performance security for an amount of Rs. 4,96,71,000/- in the form of Bank Guarantee. The petitioner accepted the L.O.A. and furnished the cash security for a sum of Rs. 4,96,71,000/-. 4. Clause 2.0 of the L.O.A. dated 12.03.2024, stipulated that the contract shall be effective from the date of issuance of the L.O.A. Clause 3.0 of the L.O.A. relates to mobilization. The said clause has relevance to the present proceedings and as such, the said clause is reproduced herein under. “ 3.0 MOBILIZATION : Mobilization of the Rig should be completed within 120 days from the date of issue of Mobilization Notice. However, if the Rig is in operation with OIL, the rig shall be deployed within 60 (sixty) days from date of de-hiring from the ongoing contract or 120 days from the date of issue of Letter of Award (L.O.A.), whichever is later.” 5. From a perusal of the above quoted clause, it would reveal that the mobilization of the rig should be completed within 120 days from the date of issue of Mobilization Notice.
From a perusal of the above quoted clause, it would reveal that the mobilization of the rig should be completed within 120 days from the date of issue of Mobilization Notice. It was also mentioned that if the rig was in operation with Oil India Ltd. (OIL), the rig shall be deployed within 60 days from the date of de-hiring from the ongoing contract or 120 days from the date of issuance of the L.O.A., whichever is later. 6. It is an admitted case of both the parties that for 403 days from the date of issuance of the L.O.A., the petitioner did not mobilize the rig. On 05.05.2025, a final notice was issued by the respondent No. 2 stating inter alia that the mobilization against the contract have not yet been completed by the petitioner even after 403 days from the date of issuance of the mobilization notice i.e. a lapse of more than 280 days from the scheduled mobilization completion date i.e. 26.07.2024. It was further mentioned that if the petitioner would not mobilize the rig in question within 20.05.2025, the contract would automatically stand terminated w.e.f. 21.05.2025 without serving any further notice and other punitive actions as mentioned in Paragraph No. 6.0 of the notice dated 05.05.2025 would be taken against the petitioner. The notice further stipulated that if immediate corrective measures were taken within 20.05.2025, the petitioner would be allowed to continue with the execution of the contract, but liquidated damages would be imposed against the delay in mobilization as per the contract terms. 7. It is also the admitted case of both the parties that the petitioner could not mobilize within 20.05.2025, but on the said date, the petitioner requested to extend the period to 26.05.2025. The respondent Company granted extension up to 26.05.2025 vide a communication dated 20.05.2025 that if the petitioner could not mobilize in all respects within 26.05.2025, the contract would stand terminated w.e.f. 27.05.2025 without any further notice as mentioned in the notice dated 05.05.2025. 8. The petitioner's case is that on or before 26.05.2025, the petitioner mobilized its rig. However, on 26.05.2025, the petitioner was issued a communication seeking certain clarification. The clarification sought from the petitioner pertained to three rig equipments, i.e. (1) Rig Engines bearing Serial Nos. 16349, 16329 and 16324. (2) Mud Pump bearing Serial No. RS 14-013. (3) Compressors bearing Serial Nos. 37214030412, 37214090761 and 15014.
However, on 26.05.2025, the petitioner was issued a communication seeking certain clarification. The clarification sought from the petitioner pertained to three rig equipments, i.e. (1) Rig Engines bearing Serial Nos. 16349, 16329 and 16324. (2) Mud Pump bearing Serial No. RS 14-013. (3) Compressors bearing Serial Nos. 37214030412, 37214090761 and 15014. 9. It was mentioned in the communication dated 26.05.2025 that the abovementioned equipments as per the TPI report dated 24.07.2023 was physically inspected by the TPI agency at Loc. MFF-1, Batuya, Charaideo. However, it came to light that the said equipments were actually operating under Contract No. 6117405 at Dima Hasao during that particular period. The petitioner was therefore asked to clarify, as to why, the TPI report submitted against Tender No. CDG3526P24 did not align with the actual/practical status of the rig equipment at the time of submission of the bid and appears to be factually incorrect. The petitioner was granted time to submit the explanation by 02.06.2025. 10. The petitioner submitted its explanation vide the communication dated 01.06.2025 wherein it was mentioned that the 3 (three) equipments mentioned in the communication dated 26.05.2025 were deployed out of the idle Oil Rig at Batuya Moran on or about 17.03.2023 under due intimation to the Oil India Limited. It was further mentioned that this was done as the existing items at Dima Hasao were in need of urgent repairs and had to be immediately replaced. It was further mentioned in the said communication dated 01.06.2025 that the TPI report dated 24.07.2023 also indicated the said aspect of the matter. It was also mentioned that the 3 (three) equipments only constituted 8% in value and in any event, the 3 (three) items forming the part of the drilling rig package at Batuya Moran have since been mobilized at DJS- Namrup within the extended time of 26.05.2025. 11. The justification so submitted by the petitioner vide the reply dated 01.06.2025 was not accepted and resultantly vide the impugned communication dated 09.06.2025 was issued whereby the contract in question was terminated by invoking Clause 41.0 of the General Conditions of the Contract (for short, “the GCC”) on the alleged ground that the petitioner had committed material breach of the contract and demonstrated a clear intent to mislead the respondent Company. 12. The petitioner approached the respondent Company by submitting a representation on 12.06.2025. However, the same did not receive a favorable response.
12. The petitioner approached the respondent Company by submitting a representation on 12.06.2025. However, the same did not receive a favorable response. It is also seen that on 18.06.2025 pursuant to the impugned termination notice dated 09.06.2025, the petitioner was asked to vacate the drilling site. It is under such circumstances, the present writ petition was filed. 13. The record further reveals that this Court vide an order dated 25.06.2025 issued notice. However, there was no interim order passed. 14. An affidavit-in-opposition was filed by the respondent Nos. 1, 2 and 3 on 31.07.2025. In the said affidavit-in-opposition, a preliminary objection was taken as regards the maintainability of the writ petition on the ground of the existence of an Arbitration Clause i.e. Clause 42 of the GCC. Without prejudice to the preliminary objection which was taken on the maintainability of the writ petition, on merits, it was contended that the petitioner had misled the respondent Company at the time of submission of the bid inasmuch as the equipments, the reference to which have been made in the communication dated 26.05.2025, were not available with the petitioner at that relevant point of time and in that regard, further stated that the petitioner under no circumstances would have provided those equipments taking into account the undertaking given by the petitioner before the Executive Director (FB), Oil India Limited vide the communication dated 03.05.2023. It was further mentioned in the said affidavit-in-opposition that the contract work which the petitioner was carrying out at Dima Hasao ended only on 18.05.2025. Therefore, under no circumstances, the petitioner could have mobilized its rig for the completion of the contract at Dima Hasao and the reason, the petitioner was delaying the mobilization of its Rig. It was further mentioned that on the basis of misleading information and the documents so furnished by the petitioner, which the respondent Company had accepted the same to be true and genuine, the Respondent Company had awarded the contract to the petitioner. It was only later when it came to light when the inspection report so submitted by the TPI agency was noticed and the same did not align with the actual or practical status of the rig equipment at the time of submission of the bid, under such circumstances, the respondent Company was therefore justified in terminating the contract in terms with Clause 41 of the GCC. 15.
15. The record further reveals that pursuant to the affidavit-in- opposition, an affidavit-in-reply was filed by the petitioner reiterating that the Contract No. 6117405 dated 20.04.2022 was completed on 04.09.2024 and thereupon, the Oil Drilling Rig Package HP 2000 was readily available for deployment. It was also mentioned that the respondent Company were aware that the machines which have been referred to in the communication dated 26.05.2025, were deployed on another site of Oil India Limited, and as such, the question of misleading or not providing due information did not arise. CONTENTIONS OF THE LEARNED COUNSELS FOR THE PARTIES 16. Mr. S. Choudhury, the learned Senior Counsel appearing on behalf of the petitioner submitted that the issues so involved in the instant writ petition do not require any factual adjudication on the basis of the admitted facts and as such, the question of relegating the petitioner to the process of Arbitration ought not to be made. The learned Senior Counsel submitted that the issue involved is, as to whether, the action on the part of the Respondent Authorities are illegal and arbitrary inasmuch as having permitted the petitioner to mobilize its resources by 26.05.2025, thereby condoning what had happened (subject to imposition of liquidated damages), should, the Respondent Authorities terminate the contract with the petitioner on the ground that some parts of the rig were not available at that relevant point of time, when the bids were submitted. 17. The learned Senior Counsel submitted that as the petitioner only engages in contracts pertaining to hire with the respondent Company alone. The respondent Company was well aware that the 3 (three) equipments so mentioned in the communication dated 26.05.2025 were used temporarily as replacement equipments for the purpose of running the rig operation at OIL’s site at Dima Hasao. However, in spite of having due knowledge and the same being even clear from the report so submitted by the TPI agency, the Respondent Authorities now for reasons best known, took steps to terminate the said contract in order to forfeit the performance security. The learned Senior Council further submitted that the respondent Company now again have invited the petitioner for the purpose of supply of the same equipment and as such, the intention of the Respondent Authorities do not appear to be fair and reasonable inasmuch as the apparent intention being only for the purpose of forfeiting the performance security. 18.
The learned Senior Council further submitted that the respondent Company now again have invited the petitioner for the purpose of supply of the same equipment and as such, the intention of the Respondent Authorities do not appear to be fair and reasonable inasmuch as the apparent intention being only for the purpose of forfeiting the performance security. 18. Per contra, Mr. D Saikia, the learned Senior Counsel appearing on behalf of the respondents submitted that the present case is not a case of condoning the lapses on the part of the petitioner, and thereby taking action against them. The learned Senior Counsel submitted that this is a case whereby the petitioner had submitted the tender documents and indicated that the rig could be mobilized within the period of 120 days from the date of the mobilization notice. However, the rig under no circumstances could have been mobilized within 120 days inasmuch as, the 3 (three) equipments so mentioned in the communication dated 26.05.2025 could not have been deployed at the contract site as an undertaking was given by the petitioner to the Oil India Limited that the said equipments shall be available for the entire period of the contract and the extension, if any. The learned Senior Counsel therefore submitted that the facts in the present case would show that even after the completion of the mobilization period of 120 days, the petitioner could not mobilize the rig till the expiry of more than 280 days from the last date of deployment as per the L.O.A., the reason being that the petitioner under no circumstances could have deployed as the equipments mentioned in the communication dated 26.05.2025 were still used in the operation of the Rig at the OIL’s site at Dima Hasao. It was submitted that had the petitioner did not submit the tender stating that it could deploy the Rig in question with 120 days, the petitioner would not have been awarded the contract at the first place. It was further submitted that on account of the misleading and incorrect information led by the petitioner to gain the contract, the contract was granted and therefore, the respondents were justified in exercising the powers conferred under Clause 41 of the GCC to terminate the petitioner’s contract. 19.
It was further submitted that on account of the misleading and incorrect information led by the petitioner to gain the contract, the contract was granted and therefore, the respondents were justified in exercising the powers conferred under Clause 41 of the GCC to terminate the petitioner’s contract. 19. The learned Senior Counsel further submitted that as per the instruction of the respondent Company, the contract with the petitioner at Dima Hasao was over only on 18.05.2025. The learned Senior Counsel submitted that though the petitioner in the affidavit-in- reply mentioned that the said contract at Dima Hasao completed in the month of September, 2024, but there is no documents produced thereof. The learned Senior Counsel for the respondents further submitted that as to when the petitioner completed the contract at Dima Hasao is not the question. The question is whether the petitioner mislead the respondents to gain the award of the contract. The learned Senior Counsel further drawing the attention of this Court to the photographs enclosed to the inspection report which is a part of the writ petition submitted that it shows that the photographs were of 2nd, 3rd and 4th July, 2023 at MFF-1 Batuya Moran, Assam and the 3 (three) equipments so mentioned in the communication dated 26.05.2025 were shown in those photographs. On the other hand, it is an admitted fact by the petitioner that the equipments mentioned in the communication dated 26.05.2025 were at the Dima Hasao site. The said information so provided amounts to misleading information and as such invocation of the powers under Clause 41 of the GCC was justified. 20. The learned Senior Counsel further submitted that in terms with Clause 41 of the GCC, the respondents are conferred with the authority to not only terminate the contract, but also blacklist the petitioner and forfeit the performance security. The learned Senior Counsel for the respondents further submitted that the materials on record would show that the petitioner herein had provided misleading information, which is apparent from the materials on record and as such, the question of interference by this Court under Article 226 of the Constitution of India does not arise. Even otherwise, if there is any dispute, the dispute can be resolved by way of arbitration, as the parties have duly agreed to abide by the arbitration clause. ANALYSIS AND DETERMINATION 21.
Even otherwise, if there is any dispute, the dispute can be resolved by way of arbitration, as the parties have duly agreed to abide by the arbitration clause. ANALYSIS AND DETERMINATION 21. The materials on record clearly show that the petitioner herein was awarded a contract of Charter Hire of 1 (one) 2000 HP (minimum) drilling rig and the L.O.A. was accordingly issued on 12.03.2024. In terms with the mobilization clause in the L.O.A., which has already been quoted herein above, the petitioner was required to deploy the same within 120 days from the date of issue of the L.O.A., or in other words, on or before 26.07.2024. Admittedly, the petitioner did not carry out the mobilization, which had resulted in issuance of a notice dated 05.05.2025, thereby asking the petitioner to mobilize on or before 20.05.2025 or else the contract in question would be terminated w.e.f. 21.05.2025. The petitioner thereupon was granted an extension up till 26.05.2025 on request being made by the petitioner. The materials on record further suggest that on or before 26.05.2025, the petitioner was able to mobilize the rig. However, on 26.05.2025, the petitioner was asked not to proceed further on the ground that the information so provided in the TPI report did not align with the actual and practical status of the equipments at the submission of the bid and appeared to be factually incorrect. 22. This Court further finds it pertinent to take note of the communication dated 03.05.2023, which is of relevance. The said communication is a communication issued by the petitioner to the respondent Company in respect to the contract being executed by the petitioner at Dima Hasao. From the said communication, it is seen that the 3 (three) equipments which have been mentioned in the communication dated 26.05.2025 were offered as replacement with an undertaking which being important to the present dispute is reproduced herein under: “We have provided the better conditioned, lower vintage period equipment in view of remote well site location. Also, we confirm that this equipment shall be available for the entire period of the contract and extension if any.” 23. From the said document and the undertaking so given by the petitioner, it is apparent that the petitioner herein could not have removed these equipments till the completion of the contract of drilling at Dima Hasao.
Also, we confirm that this equipment shall be available for the entire period of the contract and extension if any.” 23. From the said document and the undertaking so given by the petitioner, it is apparent that the petitioner herein could not have removed these equipments till the completion of the contract of drilling at Dima Hasao. The petitioner’s case as mentioned in the affidavit-in-reply is that the contract at Dima Hasao was completed in the month of September, 2024, which however has been denied by the respondent Company. To the information of the respondent Company, the contract with petitioner at Dima Hasao stood completed on 18.05.2025. The petitioner had not produced any document when the contract at Dima Hasao started or completed. No materials also have been produced, as to when, the equipments mentioned in the communication dated 26.05.2025 were released from the site of the respondent Company at Dima Hasao. 24. Be that as it may, it is very pertinent to observe that even assuming for argument sake that the petitioner had completed the work at Dima Hasao in the month of September, 2024, then also the petitioner could not have mobilized these 3 (three) equipments which were a part of the rig, for which, the L.O.A. was issued, till September 2024, which was well beyond the mobilization period. The materials on record further do not show that the petitioner while submitting its offer on 08.08.2023 indicated that the drilling rig which offered in pursuance to Notice Inviting E-Tender dated 23.05.2023 would not contain these 3 (three) equipments or these 3 (three) equipments availability was subject to completion of the contract at Dima Hasao. Rather, the petitioner while submitting its bid placed reliance upon the TPI report, which provided a self contradictory report in respect to inspection carried out of the drilling rig offered by the petitioner. This aspect of the matter would be apparent from a perusal of the photographs, which were a part of the report so submitted by the TPI nd rd th agency, taken on 2 , 3 , and 4 July, 2023. It was shown that the photographs were taken of the drilling rig which included the 3 (three) equipments referred to in the communication dated 26.05.2025 at Batuya Moran in the district of Charaideo, Assam.
It was shown that the photographs were taken of the drilling rig which included the 3 (three) equipments referred to in the communication dated 26.05.2025 at Batuya Moran in the district of Charaideo, Assam. On the other hand, in the said report, it was also mentioned that the drilling rig was physically verified and the test certificates reviewed at M/s Oil India/M/s Simplex Site, Assam. It appears from the submissions so made by the learned Senior Counsel for the petitioner that the petitioner on the basis of the said sentence in the TPI report wants to assert that the respondent Company was aware at the time of submission of the Bid which included the TPI report that the 3 (three) equipments mentioned in the communication dated 26.05.2025 were already in use at the Dima Hasao site of the Respondent Company. 25. It is also pertinent to observe at this stage that a perusal of the TPI report enclosed as a part of the Annexure-X series to the writ petition specifically mentions the “Inspection Location” to be at “M/s Simplex Infrastructure Ltd., MFF-1, Batuya Moran, Assam”. It further mentioned in Bold Letters that the “ Inspection carried out on dt. 2nd, 3rd and 4th July, 2023 as per M/s Oil India Ltd. Tender No. CDG3526P24 ”. The photographs enclosed to the report shows the photographs of all the equipments forming the drilling rig at M/s Simplex Infrastructure, MFF-1, Batuya Moran, Assam. The photographs of the 3 (three) equipments mentioned in the communication dated 26.05.2025 also suggests that the said photographs were taken at M/s Simplex Infrastructure, MFF-1, Batuya Moran, Assam. Be that as it may, the petitioner in the instant procedings seeks to take advantage of the sentence in the TPI report to the effect “ Items physically verified, and that certificates reviewed at M/s. Oil India/M/s. Simplex Site, Assam ”. 26. The question which arises is, as to whether, this Court in exercise of the powers of judicial review, on the basis of the materials placed, can opine that the materials on record suggest that the Respondent Authorities were informed that the 3 (three) equipments mentioned in the communication dated 26.05.2025 which formed the drilling rig for the contract in question were already in use at the Respondent Company site at Dima Hasao.
It is the opinion of this Court that within the narrow compass of the jurisdiction to be exercised in a proceedings under Article 226 of the Constitution of India i.e. to ascertain only on the legality of the decision making process, this Court cannot arrive at a conclusion that the decision making process to terminate the contract was unreasonable, unfair, irrational or was palpably erroneous. In the opinion of this Court, the decision of the respondents that the petitioner had mislead the Respondent Authorities to award the contract cannot be said to be an unreasonable or unfair decision. It is also the opinion of this Court that the materials on record rather suggest that the petitioner mislead the Respondent Authorities by not providing adequate information that the petitioner was not in a position to offer the entire drilling rig in view of the equipments mentioned in the communication dated 26.05.2025 were already in use in the contract site at Dima Hasao. The said opinion of this Court stand vindicated by the conduct of the petitioner also inasmuch as the petitioner could not mobilize the drilling rig till 26.05.2025. 27. This Court had also perused Clause 41 of the GCC which empowers the Respondent Authorities to take action of termination of contract if it comes to the notice that the bidder had furnished fraudulent documents or false information. Under such circumstances, it is the opinion of this Court that the impugned actions on the part of the respondents cannot be said to be without authority. 28. Consequently, the instant writ petition stands disposed of with the following observations and directions. (i) This Court, from the materials on record, do not find the present case to be a fit case for exercising the power of judicial review. (ii) This Court is aware that while exercising the powers of judicial review, the jurisdiction is limited to the extent of only deciding the legality of the decision making process. This Court is also aware that the jurisdiction in Arbitration proceedings is for more extensive and as the parties have agreed to resolve disputes by way of Arbitration, this Court grants liberty to the parties herein to invoke the Arbitration Clause i.e. Clause 42 of the GCC, if so advised.
This Court is also aware that the jurisdiction in Arbitration proceedings is for more extensive and as the parties have agreed to resolve disputes by way of Arbitration, this Court grants liberty to the parties herein to invoke the Arbitration Clause i.e. Clause 42 of the GCC, if so advised. (iii) It is observed that if the parties invoke the Arbitration Clause seeking resolution of the dispute, the observations so made in the instant judgment shall not affect or prejudice the parties. This decision herein shall only be limited to an adjudication under Article 226 of the Constitution of India. (iv) There shall be no order as to costs.