GVV Constructions Pvt. Ltd v. Union of India, Rep. by its Secretary, New Delhi
2025-12-16
P.SAM KOSHY, SUDDALA CHALAPATHI RAO
body2025
DigiLaw.ai
JUDGMENT : P. SAM KOSHY, J. 1. The instant Writ Appeal has been filed by the appellant under Clause 15 of Letters Patent Act assailing the order dated 18.10.2022 in Writ Petition No.27246 of 2022 passed by a learned Single Judge of this Court (for short ‘the impugned order’) , and aggrieved only by the operative portion of the order passed by the learned Single Judge insofar as upholding the notice of termination of contract issued by respondent No.3, dated 10.06.2022. 2. Heard Mr.A. Venkatesh, learned Senior Counsel representing M/s.Pillix Law Firm, for the appellant and Mr.B. Narasimha Sharma, learned Additional Solicitor General of India, appearing on behalf of Mr. Bhujanga Rao, learned Deputy Solicitor General of India, for the respondents. 3. The brief facts necessary for adjudication of the instant appeal are that the appellant herein had preferred a writ petition before this Court, viz., Writ Petition No.27246 of 2022, seeking for the following relief: “ 19. It is therefore prayed that this Hon’ble Court may be pleased to issue any appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the 3rd respondent herein in issuing termination notice Vide No.W.Con.148/A/4271/GNT-GTL/EWR-II (Vol.II), date 10.06.2022, contrary to the procedure laid down under the Indian Railways Standard General Conditions of Contract, is highly illegal, arbitrary, unconstitutional and in violation of Articles 14 and 300A of the Constitution of India, and also in gross violation of the principles of natural justice; and consequently direct the 3rd respondent to follow Clause 17 of the Indian Standard General Conditions Contract and set aside the termination Notice Vide No.W.Con.148/A/4271/GNT-GTL/EWR- II(Vol.II), date 10.06.2022, and pass such other order or orders may deem fit and proper in the circumstances of the case.” 4. A plain reading of the aforesaid prayer makes it amply clear that the above writ petition was filed only assailing the termination notice dated 10.06.2022 issued by respondent No.3. There was no other relief as such sought for by the appellant in the said writ petition. 5. Learned counsel for the appellant contended that grievance of the appellant in the course of adjudication of the writ petition is that, the learned Single Judge after appreciating the contentions put forth on either side, reached to the conclusion that the contentions put forth on either side are highly disputed questions of fact.
5. Learned counsel for the appellant contended that grievance of the appellant in the course of adjudication of the writ petition is that, the learned Single Judge after appreciating the contentions put forth on either side, reached to the conclusion that the contentions put forth on either side are highly disputed questions of fact. Another finding of fact given by the learned Single Judge was that there being an arbitration clause entered into between the appellant and the respondents, the disputes are one which needs to be decided by invoking arbitration proceedings. Likewise, it was also the contention of the learned counsel for the appellant that the learned Single Judge after appreciating the pleadings given by either side also reached to the conclusion that these are disputes which cannot be adjudicated upon by exercising writ jurisdiction, which in other words mean that the Writ Court in the course of deciding the matter would find it difficult to decide the nature of dispute raised in the writ petition, while exercising writ jurisdiction under Article 226 of the Constitution of India. It was lastly contended by the learned counsel for the appellant that, having reached to the conclusion of the factual matrix of there being highly disputed questions of fact, the learned Single Judge ought not to have held that there were no irregularities on the part of respondent No.3 in terminating the contract vide order dated 10.06.2022. 6. According to learned Senior Counsel for the appellant, having held that the order of termination does not suffer from irregularity, calling for an interference to the order of termination amounts to fait accompli for the appellant inasmuch as the arbitrator before whom the appellant had already approached also would not be in a position to fairly decide the claim of appellant nor would the arbitrator be in a position even to test the veracity of the order of termination of contract; therefore, the entire exercise that the appellant is undertaking by way of arbitration would be inconsequential and detrimental to the interest of appellant and therefore sought for interference to the impugned order only to the extent of finding given by the learned Single Judge so far as upholding the order of termination is concerned. 7. Per contra, Mr.B. Narasimha Sharma, learned Additional Solicitor General of India, appearing on behalf of Mr.
7. Per contra, Mr.B. Narasimha Sharma, learned Additional Solicitor General of India, appearing on behalf of Mr. Bhujanga Rao, learned Deputy Solicitor General of India, for the respondents, contended that the learned Single Judge in the course of passing the impugned order had primarily taken note of the entire factual matrix of the case, more particularly, taking into consideration the repeated extension of time that was granted to the appellant for completion of the project. According to him, concerning the railway projects involving laying of railway tracks, time is essence of the contract and unless the contractor shows due diligence in the execution of the work, the entire system itself suffers from it and it adversely affects operation of the railways to a great extent. According to him, the portion of the order where the learned Single Judge had also referred to various clauses of terms and conditions entered into between the parties highlighting the fact that Clause No.61(1) specially contained certain exceptions and these exceptional matters were not arbitrable once the decision of the railway authority was held to be final and binding on the parties. 8. Learned Additional Solicitor General of India further submitted that the learned Single Judge having taken note of these factual matrix of the case, and reading it along with relevant clause of the contract where certain exceptions have been carried out and where matters that are not arbitrable, there is hardly any scope of interference left in the course of exercising writ appellate jurisdiction as the entire finding of the learned Single Judge is based upon factual details narrated in the preceding paragraphs; and therefore, prayed that there are no merits in the writ appeal and the same deserves to be dismissed. 9. Having heard the contentions put forth on either side and on a perusal of the records, what needs to be appreciated at this juncture is that the findings arrived at by the learned Single Judge after referring to the factual details of the entire contract and contract-related progress, the fact which is apparently visible from the list of dates provided by the parties is that a substantial part of the entire contract was carried out during the COVID pandemic period and extension of time was also granted during the peak COVID time.
It is everybody’s case work as to how things were progressing during the COVID period and the progress reaching to a standstill position for a short period of time and even when it commenced, it could not commence at its full speed, was obvious in the light of effect of COVID Pandemic. 10. Next, we now look into the findings given by the learned Single Judge at paragraph No.19 of the impugned order: “19. … … … The petitioner addressed letters to 4 th respondent as well as to 3rd respondent instead of concentrating on the progress of work and completing the same within the time stipulated and extended completion date. Whereas, the petitioner had addressed the aforesaid letters stating that respondents have not handed over the site and obstacles. Thus, there are several factual aspects which this Court cannot consider in a petition filed under Article 226 of the Constitution of India.” 11. Likewise, in paragraph No.20 of the impugned order, the learned Single Judge further held as under, viz., “20. … … … The aforesaid facts would reveal that there are complicated questions of fact which this Court cannot consider in a petition filed under Article 226 of the Constitution of India.” 12. Referring to the arbitration clause, the learned Single Judge went on to hold at paragraph No.22 that, after referring to the procedure prescribed under the contract if the Railways do not appoint an arbitrator, the appellant /contractor thereafter shall demand in writing that dispute or difference be referred to arbitration. It would be relevant at this juncture to refer to the findings recorded in paragraph Nos.22 to 25, which for ready reference are extracted hereunder: “22.
It would be relevant at this juncture to refer to the findings recorded in paragraph Nos.22 to 25, which for ready reference are extracted hereunder: “22. In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the “expected matters” referred to in Clause-63 of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters shall demand in writing that dispute or difference be referred to arbitration. 23. The demand for arbitration shall specify the matters which are in question, or subject of the dispute or difference as also the amount of claim item-wise. Only such dispute(s) or difference(s) in respect of which the demand has been made, together with counter claims or set off, given by the Railway, shall be referred to arbitration and other matters shall not be included in the reference. 24. Therefore, if the petitioner is having any grievance, it has to invoke the said arbitration clause. There is no dispute with regard to the legal position that though there is an arbitration clause, writ petition is maintainable. 25. As discussed supra, there are complicated questions of fact which this Court cannot decide and the same can be decided by the arbitrator in the arbitration proceedings.” 13. The learned Single Judge, further referring to the complicated questions of fact and the remedy of arbitration being available to the appellant, held at paragraph No.33 as follows, viz., “33. As discussed supra, serious / complicated questions of facts are there, which this Court cannot decide in a petition filed under Article 226 of the Constitution of India. There is an arbitration clause. The petitioner herein has already filed the aforesaid COS.No.40 of 2022 seeking the aforesaid reliefs.” 14. Next, we see the operative part of the order wherein the learned Single Judge held as under, viz., “35.
There is an arbitration clause. The petitioner herein has already filed the aforesaid COS.No.40 of 2022 seeking the aforesaid reliefs.” 14. Next, we see the operative part of the order wherein the learned Single Judge held as under, viz., “35. As discussed supra, since the petitioner herein had already invoked the arbitration clause by way of filing COS.No.40 of 2022, it can take all the aforesaid defences before the Arbitrator. In view of the same, according to this Court, there is no irregularity in terminating the contract by 3 rd respondent vide letter dated 10.06.2022. Thus, the petitioner failed to make out a case to interfere with the said termination order. Therefore, viewed from any angle, this writ petition is liable to be dismissed.” 15. A plain reading of the aforesaid paragraph by itself would go to show that the said paragraph can be divided into two parts, viz., (i) the first part deals with observation of the appellant / contractor having already invoked the arbitration proceedings by filing COS.No.40 of 2022. It was held that the appellant can take all the aforesaid defences before the arbitrator. This, in itself gives a clear indication that, what was intended by the learned Single Judge was that since the contract had an arbitration clause and the appellant having invoked the arbitration proceedings, the appellant would be at liberty to take all the defences before the arbitrator; and (ii) the second part deals with that part of the order where the learned Single Judge had upheld the order of termination of contract and further held that there is no scope of interference. 16. In the opinion of this Bench, not once or twice, but on numerous occasions the learned Single Judge has held that upon perusal of the records and upon scrutinizing the contentions put forth on either side, there is no dispute to the extent of the learned Single Judge himself on numerous occasions having affirmed and reiterated that the nature of claim and the dispute raised are both highly complicated questions of facts and they would have to be only adjudicated upon after recording of evidence; and that the appellant has a remedy under the arbitration law and that the appellant had also availed the remedy under the arbitration law.
Therefore, the findings given by the learned Single Judge and subsequently affirming the order of termination of contract is definitely without any reason and is in self-contradiction to the findings given in the earlier part of the order. Therefore, in the opinion of this Bench, this is in contradiction to the findings arrived at in the first part of paragraph No.35 of the impugned order. In the opinion of this Bench, when the appellant had been relegated to avail the remedy under arbitration law and also having affirmed the invocation of the arbitration clause, and likewise we are also impressed upon the arguments advanced by the learned counsel for the respondent wherein he says that once when the learned Single Judge has affirmed the order of termination of contract, there would hardly be any scope left to the arbitrator or for that matter in any other forum in entering into merits of the case to decide the matter in favour of the appellant. 17. Another aspect which strikes the conscience of this Bench is that even if the learned Single Judge had to dismiss the writ petition by holding that the termination of contract being strictly in accordance with terms of the contract, there ought to have been specific reasons reflected before affirming the order of termination. A plain reading of the entire order would go to show that though there is a reference of the factual details of the case, we are of the affirmed view that the latter part of the order, i.e. in paragraph No.35 of the impugned order, not being sustainable deserves to be and is accordingly set side, leaving it open to the appellant to raise all his claims before the arbitrator. Further, the arbitrator is at liberty to decide the claim of the appellant/contractor strictly in accordance with the terms of the contract agreed upon between the parties. It is made clear that the observations made by this Bench and also by the learned Single Judge should not come in the way of the Arbitrator in taking a decision in accordance with law. 18. For all the aforesaid reasons, the Writ Appeal stands allowed to the aforesaid extent. No costs. 19. Miscellaneous petitions, pending if any, shall stand closed.