Dismissed

Ms Oriental Structural Engineers Pvt. Ltd. through Surjeet Singh Sethi v. Ms Bharat Coking Coal Limited through Its Chairman Cum Managing Director

Jharkhand HC17 Jul 2018WPC/3142/2018

Case brief

AI extract

What is this about?

This writ petition challenged notices issued by Bharat Coking Coal Limited against a contractor for unsatisfactory execution of work. The High Court, citing Supreme Court precedent, held that the dispute was purely contractual with an arbitration clause and dismissed the writ, directing the parties to the contractual remedy.

What did the court decide?

Writ petition dismissed; liberty granted to petitioner to take recourse under Clause 14 of the Conditions of Contract.

Ms Oriental Structural Engineers Pvt. Ltd. through… — Company and Corporate | Jharkhand HC (2018)

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IN THE HIGH COURT OF JHARKHAND AT RANCHI

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W.P.(C) No. 3142 of 2018

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M/S Oriental Structural Engineers Pvt. Ltd., New Delhi, through its authorized signatory Surjeet Singh Sethi ….. Petitioner

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Versus

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M/S Bharat Coking Coal Limited, Dhanbad, through its Chairman-cumManaging Director

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The General Manager, M/S Bharat Coking Coal Limited, Govindpur Area, Sonardih, Dhanbad

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The Engineer-in-Charge, M/S Bharat Coking Coal Limited, Patch-B, ABGC, Govindpur Area, Sonardih, Dhanbad

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The Project Officer, M/S Bharat Coking Coal Limited, Amalgamated Block-IV, Govindpur Colliery, Sonardih, Dhanbad

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The Engineer-in-Charge, M/S Bharat Coking Coal Limited, Block Open Cast Project, Govindpur Area-III, Sonardih, Dhanbad ….. Respondents

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CORAM

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HON’BLE MR. JUSTICE RAJESH SHANKAR

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----For the Petitioner: M/s Biren Poddar, Sr. Adv., Deepak Kumar Sinha, Piyush Poddar, Anupam Anand For the Respondents: Mr. A. K. Mehta

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04/17.07.2018 The present writ petition has been filed for quashing the notice issued by

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the respondent No.3 under Clause 10 of the NIT as contained in Reference No. BCCL/AR-III/Hired/PO-ABGC/2018/451 dated 10.04.2018 (Anneuxre-7) whereby the petitioner has been informed that due to its unsatisfactory work, the respondents are entitled to execute the rest work departmentally or by deploying another agency. Further prayer has been made for quashing the notice issued under Clause 9.2(b) of the NIT as contained in Reference No. BCCL/AR-III/Hired/PO-ABGC/2018/605 dated 23.05.2018 (Anneuxre-8) for final measurement of the patch so as to get the unexecuted quantity of work completed either departmentally or through another contractor.

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The factual background of the case, as stated in the writ petition, is that the respondent-BCCL floated a tender being NIT No. BCCL/GM(CMC)/etender/F-HEMM-OS/2015/846 dated 17.06.2015 for the work of ‘Hiring of HEMM for removal of OB, extraction and transportation of coal from XI/XII, IX/X, VIIIB, VIIIA, V/VI/VII seams of OC Patch-‘B’ of amalgamated Block-IV Govindpur Colliery of Govindpur Area’ in which the tenderers including the petitioner participated and finally the petitioner was allotted the aforesaid work vide letter of acceptance dated 11.12.2015 and a work order No. BCCL/AR-III/GM/Hired

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HEMM ABGC/WO/2016/902-23 dated 31.05.2016 was issued to the petitioner under the signature of the respondent No.2. Thereafter, the agreement was also executed between the petitioner and the respondent-BCCL. The case of the petitioner is that it faced several difficulties during the execution of the awarded work which was intimated to the respondents, however, the respondents instead of resolving the problems, issued 15 days’ notice under Clause 10 of the NIT as contained in Reference No. BCCL/AR-III/Hired/PO-ABGC/2018/451 dated 10.04.2018 to the petitioner for executing the job departmentally or for deploying another agency through tender/limited tender process, either wholly or partly debiting the contractor with the cost involved in engaging another agency or with the cost of labour and price of materials, as the case may be. The respondent No.5 issued a further notice under Clause 9.2(b) of the NIT as contained in Reference No. BCCL/AR-III/Hired/PO-ABGC/2018/605 dated 23.05.2018 giving 7 days’ notice to the petitioner for final measurement of the patch so that the non-executed quantity can be taken up either departmentally or through another contractor. The petitioner vide letter dated 28.05.2018, explained the reasons of delay in execution of the work and requested the respondents to withdraw the notices dated 10.4.2018 and 23.05.2018. Thereafter, the petitioner offered the respondents for its withdraw from the contract in accordance with the conditions of the contract and for payment of one time compensation to it towards the loss suffered, however, nothing was done by the respondents in this regard. Hence, the present writ petition.

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The learned Sr. counsel for the petitioner submits that the respondents cannot take benefit of their own wrong. In fact, the respondents are fully responsible for the delay in execution of the work for which the petitioner cannot be penalized. The notice issued to the petitioner under Clause 9.2(b) of the General Terms and Conditions of the NIT is not applicable in the facts and circumstances of this case, rather the same is applicable in the case of cancellation or termination of the contract, as provided in Clause-9 of the NIT. However, admittedly in the present case, the respondents have not cancelled or

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terminated the contract of the petitioner as on date. The respondent No.3 has issued the notice under Clause 10 of the NIT which is also not tenable in view of the fact that the petitioner’s performance on the production is contingent and dependent on the respondents’ own performance and it would reveal from the facts of the case that the respondents have failed to carry out the blasting in the holes drilled by the petitioner and thereby resulting in reduced production and also the other critical issues such as DGMS restriction, control blasting, private land hindrance etc. being faced by the petitioner in course of execution of the contract for which the respondents are solely responsible.

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Per contra, the learned counsel for the respondents submits that the action taken by the respondent No.3 is in conformity with the relevant clauses of the conditions of contract. In the present case, an alternative mode of settlement has been provided through means of arbitration and as such the present writ petition is not maintainable. The recourse of Clause 10.1 of the Conditions of Contract may be taken even in absence of cancellation or termination of the contract. The petitioner failed to execute the contract in conformity with the agreement and only when the respondents found that the work of the petitioner was unsatisfactory, the impugned notices were issued to it. The present matter is purely a contractual dispute and as such the writ petition filed by the petitioner may not be entertained.

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Heard the learned counsel for the parties and perused the relevant materials available on record. The thrust of the argument of the learned Sr. counsel for the petitioner is that during the execution of the work, the petitioner suffered several obstructions and hindrances, which were repeatedly reported to the respondents, but they did not take any action to remove the same, which resulted in delay in execution of the work for which the petitioner cannot be said to be responsible. In support of the said contention, the learned Sr. counsel for the petitioner has referred various factors causing delay in execution of the work, such as serving of notice under Section 22(A)2 of the Mines Act, 1952, the DGMS restrictions, control blasting, non-handling over the private land,

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habitation along the boundary of the work area leading to frequent public interference and stoppage of work resulting into lack of work space, keeping the resources idle and non-payment of work done etc. On the contrary, the case of the respondents is that even after all cooperation and support provided to the petitioner, the performance of the Patch-B of ABGC was not improving and the petitioner was lagging behind the scheduled target. Thus, both the parties have raised allegations and counter allegations against each other justifying their respective actions.

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The Hon’ble Supreme Court in the case of Joshi Technologies International Inc. Vs. Union of India , reported in (2015) 7 SCC 728 , has held as under:-

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“69. The position thus summarised in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, it can refuse to exercise. It also follows that under the following circumstances, “normally”, the Court would not exercise such a discretion:

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69.1. The Court may not examine the issue unless the action has some public law character attached to it.

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69.2. Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said mode of settlement, particularly when settlement of disputes is to be resorted to through the means of arbitration.

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69.3. If there are very serious disputed questions of fact which are of complex nature and require oral evidence for their determination.

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69.4. Money claims per se particularly arising out of contractual obligations are normally not to be entertained except in exceptional circumstances.

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70. Further, the legal position which emerges from various judgments of this Court dealing

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with different situations/aspects relating to contracts entered into by the State/public authority with private parties, can be summarised as under:

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70.1. At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness.

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70.2. State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practise some discrimination. 70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. In such cases the Court can direct the aggrieved party to resort to alternate remedy of civil suit, etc.

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70.4. Writ jurisdiction of the High Court under Article 226 of the Constitution was not intended to facilitate avoidance of obligation voluntarily incurred.

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70.5. Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business.

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70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages.

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70.7. Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if it can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural

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justice.

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70.8. If the contract between private party and the State/instrumentality and/or agency of the State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitution of India and invoking its extraordinary jurisdiction.

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70.9. The distinction between public law and private law element in the contract with the State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract, this Court has maintained the position that writ petition is not maintainable. The dichotomy between public law and private law rights and remedies would depend on the factual matrix of each case and the distinction between the public law remedies and private law field, cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions under Article 226 of the Constitution of India to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision-making process or that the decision is not arbitrary. 70.10. Mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirements of due consideration of a legitimate expectation forms part of the principle of nonarbitrariness.

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70.11. The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes.

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71.Keeping in mind the aforesaid principles and after considering the arguments of the respective parties, we are of the view that on the facts of the present case, it is not a fit case where the High Court should have exercised

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discretionary jurisdiction under Article 226 of the Constitution. First, the matter is in the realm of pure contract. It is not a case where any statutory contract is awarded.”

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It would thus flow from the aforesaid judgment that there is no absolute bar in entertaining a writ petition in a contractual matter where some disputed question of facts are involved. However, if the dispute involved in a matter is so complex which can only be determined through a long drawn adjudicatory process by making factual determination, the writ petition should not be entertained. Each and every case is to be dealt with on its own facts. It has further been held that if there is any alternative mode of settlement, the writ Court should refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said mode of settlement, particularly when settlement of disputes is to be resorted to through the means of arbitration. In the present case, the dispute raised by the parties requires factual determination through elaborate adjudicatory process. Moreover, Clause 14 of the Conditions of Contract also refers to the mechanism for settlement of disputes. So far as the challenge to the legality of the impugned notices is concerned, the said ground can also be agitated before the arbitrator.

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Under the aforesaid facts and circumstance, the present writ petition is not maintainable and the same is disposed of giving liberty to the petitioner to take recourse under Clause 14 of the Conditions of Contract, which shall be dealt with by the respondents in terms with the Conditions of Contract as well as the other applicable laws.

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(RAJESH SHANKAR, J)

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High Court of Jharkhand, Ranchi Dated 17.07.2018 Satish/A.F.R

Ms Oriental Structural Engineers Pvt. Ltd. through Surjeet Singh Sethi v. Ms Bharat Coking Coal Limited through Its Chairman Cum Managing Director

Case brief

What is this about?

What did the court decide?

Ms Oriental Structural Engineers Pvt. Ltd. through Surjeet Singh Sethi v. Ms Bharat Coking Coal Limited through Its Chairman Cum Managing Director

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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