Disposed

Devi Engineering and Construction Pvt. Ltd. v. Oil and Natural Gas Corporation Ltd. and 3 Ors. (B)

Gauhati HC4 Apr 2018WP(C)/1023/2018

Case brief

AI extract

What is this about?

Petition challenging termination of data acquisition contract. Court decreed writ petition on terms allowing contract resumption subject to extended mobilisation period and payment of liquidated damages for delay. Contract terminates automatically if terms not met.

What did the court decide?

Writ petition disposed on terms permitting contract execution with 60-day mobilisation period and obligation to pay liquidated damages.

Devi Engineering and Construction Pvt. Ltd… — Contract and Commercial Disputes | Gauhati HC (2018)

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Page No.# 1/4

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GAHC010033992018

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : WP(C) 1023/2018

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1:DEVI ENGINEERING AND CONSTRUCTION PVT. LTD. PLOT NO. 20, FLAT NO. G1, IVY GRAND, GROUND FLOOR, NARASANNA NAGAR, SURYARAO PETA, KAKINADA, ANDHRA PRADESH, REP. BY ITS VICE PRESIDENT MR. ROMEN BORA,

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VERSUS

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1:OIL AND NATURAL GAS CORPORATION LTD. AND 3 ORS. (B) REP. BY ITS CHAIRMAN AND MANAGING DIRECTOR PANDIT DEEN DAYAL UPADHYAYA URJA BHAVAN 5, NELSON MANDELA MARG, VASANT KUNJ, NEW DELHI

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2:DIRECTOR (EXPLORATION) PANDIT DEEN DAYAL UPADHYAYA URJA BHAVAN 5 NELSON MANDELA MARG VASANT KUNJ NEW DELHI

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3:THE DY. GENERAL MANAGER (MM) OIL AND NATURAL GAS CORPORATION LTD. ARAKAN BASIN 2ND FLOOR DHANSIRI BHAVAN CHINAMARA COMPLEX JORHAT DIST. JORHAT

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4:THE BASIN MANAGER OIL AND NATURAL GAS CORPORATION LTD. ARAKAN BASIN 2ND FLOOR DHANSIRI BHAVAN CHINAMARA COMPLEX JORHAT DIST. JORHA

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Advocate for the Petitioner : MR. R P KAKOTI

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Advocate for the Respondent : MR T DAS (FOR CAVEATOR)

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:: BEFORE ::

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HON’BLE MR. JUSTICE PRASANTA KUMAR DEKA

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-O R D E R-

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04.04.2018

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Heard Mr. RP Kakoti, learned Senior Counsel assisted by Mr. N Karlapacem, learned counsel for the petitioner and Mr. T Das, learned Advocate appearing for the Oil and Natural Gas Commission (ONGCL). 2. The present petitioner being aggrieved upon termination of the contract work in Contract No. JRT/MM/CONT/2D DATA ACQN/19/16-17/16030/9010025330 vide letter dated 13.02.2018 and served on the petitioner company on 15.02.2018 even though request for extension of the contract on 15.02.2018 was there. The petitioner was awarded the work order for acquisition of 2D Seismic Data through outsourcing in South Boramura and Dolai Syncline Area, Tripura of the Assam and Assam Arakan (A&AA) Basin. A Performance Bank Guarantee of Rs. 2,88,65,000/- having its validity upto 03.09.2018 was also deposited by the petitioner company. The contract period spans for 8 months which includes a mobilisation period of 90 days. It also includes a holiday period of 4 months w.e.f. 01.07.2017 to 31.10.2017 due to unfavourable weather conditions. After receiving of the notification of award (NoA) on 02.03.2017, a contract was entered into on 24.04.2017. Purchase order for procurement of Geophysical equipments was placed on French and Italian companies after paying a substantial amount for such procurement. Vide letter dated 22.09.2017, the respondent ONGCL sought for the mobilisation and acquisition plan from the petitioner company. From the letter dated 22.09.2017 it is apparent that the contract was under the extended period which was in force. Against the said query, the petitioner company vide its reply dated 22.09.2017 informed the ONGCL that all the statutory licenses were acquired and civil works commenced at West Dulama village of Gomati district and the requisite land for Storage of Explosive Magazine was also completed. ONGCL vide letter dated 22.01.2018 expressed its displeasure with the progress of the project and vide reply of the petitioner company dated 13.02.2018

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informed the ONGCL that the survey work would start by 23.02.2018 and the actual Data Acquisition would start by 28.02.2018. By way of the said letter dated 13.02.2018, 3 months extension was also requested and it was specifically mentioned that the petitioner company undertook to honour all the terms and conditions of the contract. However, instead of levying and recovering liquidated damages, ONGCL terminated the contract as per Clause 18.5 of the General Conditions of Contract by its letter dated 13.02.2018. Being aggrieved by the said action of the ONGCL and on the apprehension that the Performance Bank Guarantee may be invoked, the petitioner has preferred this writ petition by alleging that such action on the part of the ONGCL in terminating the contract as illegal.

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Notice of motion was issued and Mr. T Das, learned counsel representing the ONGCL was directed to obtain instruction as to whether the representation submitted by the petitioner company after the termination was considered and if so, whether the petitioner company was permitted to execute the work keeping the larger interest of the institution in mind. In response to the said direction, the respondent ONGCL has filed its affidavit-in-opposition and as against the direction of this court the ONGCL proposed and informed that it is willing to permit the execution of the contract by the petitioner company on the following terms and conditions:-

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“ In compliance with the aforesaid order of the Hon’ble High Court, ONGC has considered the representation dated 15.02.2018 of DECPL and is willing to permit the execution of the contract on the following conditions:

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i. DECPL must complete mobilisation within a period of 30 days from the date of the Order of the Hon’ble Guwahati High Court.

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ii. DECPL must complete the entire job within a period of 90 days from the date of completion of mobilisation.

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iii. DECPL shall pay Liquidated Damages to ONGC as per Clause 19 of Annexure II and Clause 14.1 and 14.2 of Annexure III of the Contract for the delay already caused in mobilisation and execution of the Contract.”

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In response to the stand of the ONGCL and on a specific query to Mr. Kakoti, learned Senior Counsel appearing on behalf of the petitioner, it is informed that mobilisation period as stipulated in the proposal within a period of 30 days would somehow be inconvenient on the part of the petitioner company as the instruments required to be imported from French and Italy requires clearance of the Ministry of

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Petroleum, Government of India and for that purpose, necessary assistance by way of recommendatory letters etc. are to be issued by ONGCL. The said process would require a minimum period of 15 days and Mr. Kakoti submits that if the mobilisation period, instead of 30 days is raised to 60 days then the petitioner company is acceptable to the terms as stipulated by ONGCL. Mr. Das on his part fairly submits that as per the terms of the contract, ONGCL is required to assist the petitioner company in obtaining the requisite clearance from the Ministry of Petroleum, Government of India on the basis of which the requisite instruments purportedly to be imported, could be released from the Customs and take delivery by the contractor. Mr. Das submits that the requisite period for mobilisation as submitted by the learned Senior Counsel for the petitioner i.e. 60 days from the date of issuance of the recommendatory letter by ONGCL can be accepted.

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In view of the submissions of the learned counsels, the petitioner company i.e. -

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i. DECPL must complete mobilisation within a period of 60 days from the date of issuance of the recommendatory letters by the ONGCL,

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ii. DECPL must complete the entire job within a period of 90 days from the date of completion of mobilisation.

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In the event DECPL fails to complete the mobilisation or execution of Data Acquisition within the above specified time period, the contract shall stand automatically terminated without issuing any notice by the ONGCL and the Performance Bank Guarantee shall stand forfeited. Accordingly, with the observations and terms and conditions mentioned hereinabove which are agreed to by the parties to this writ petition, this writ petition stands disposed of.

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JUDGE

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Comparing Assistant

Devi Engineering and Construction Pvt. Ltd. v. Oil and Natural Gas Corporation Ltd. and 3 Ors. (B)

Case brief

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Devi Engineering and Construction Pvt. Ltd. v. Oil and Natural Gas Corporation Ltd. and 3 Ors. (B)

Case brief

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