Allowed

M/S Shakti Developers Private Limited v. the Commissioner

Karnataka HC17 Jun 2022WP/3230/2020

Case brief

AI extract

What is this about?

The High Court of Karnataka quashed orders cancelling an agreement for skywalk development and forfeiting a bank guarantee. The court held the delay was due to state agency interference, not the petitioner, and directed the respondents to permit project completion.

What did the court decide?

Impugned orders quashed; petitioner permitted to install skywalk within four months; bank guarantee restored.

M/S Shakti Developers Private Limited Vs the… — Specific Performance | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 17^TH DAY OF JUNE, 2022

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BEFORE

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THE HON’BLE MR.JUSTICE R. NATARAJ

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W.P. NO.3230 OF 2020 (LB - BMP)

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BETWEEN:

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M/S. SHAKTI DEVELOPERS PRIVATE LIMITED., NO.35/16, 2^ND FLOOR, LANGFORD ROAD CROSS, BANGALORE – 560 025.

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...PETITIONER

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(BY SRI.K.N.PHANINDRA, SENIOR ADVOCATE A/W SRI.K.VIJAYA KUMAR, ADVOCATE)

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AND:

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THE COMMISSIONER BRUHAT BENGALURU MAHANAGARA PALIKE, HUDSON CIRCLE, K.R.ROAD, BENGALURU – 560 001.

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THE EXECUTIVE ENGINEER (SPL), SPECIAL DIVISION (RI) TEC SECTION, ROOM NO.9, ANNEX-3, N.R.SQUARE, BENGALURU MAHANAGARA PALIKE, BENGALURU – 560 002.

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THE BRANCH MANAGER, INDIAN OVERSEAS BANK, EAST END MAIN ROAD, NO.42/166, EAST END MAIN ROAD,

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9^TH BLOCK, JAYANAGAR, BANGALORE – 560 069.

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…RESPONDENTS

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(BY SRI.ARAVIND M NEGLUR, ADVOCATE FOR R1 AND R2; NOTICE TO R3 IS DISPENSED WITH VIDE ORDER DATED 15.03.2022)

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THIS W.P. IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER DATED 23.12.2019 PASSED BY THE COMPETENT AUTHORITY OF THE R-2 AND ORDER DATED 07.01.2020 ISSUED BY THE R-2 IS PRODUCED AS VIDE ANNEXURE - A AND B AND ETC.,

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THIS W.P. COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The petitioner has sought for a writ in the nature of certiorari to quash an order dated 23.12.2019 passed by the respondent No.2 and the order dated 07.01.2020 passed by the respondent No.2, by which, the entrustment of development of a skywalk was cancelled.

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The petitioner claims that respondent No.1 invited bids for installation of skywalk at Satellite Bus Stand, Bengaluru-Mysuru Road from Satellite Bus Stand to Ramani Timber Mark on Design, Build, Finance, Operate and Transfer basis for a period of 30 years, in terms of a

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tender notification dated 20.12.2016. The petitioner was the successful bidder whose bid of Rs.1,39,165/- was accepted on 29.06.2017 by the council of the respondent No.1. Later, an agreement was executed in favour of the petitioner authorizing him to operate the facility for a period of 30 years. The petitioner is stated to have furnished a bank guarantee for a sum of Rs.25,00,000/-, which is renewed from time to time which was to be released after completion of the skywalk as per the design submitted. The agreement provided that the installation of the skywalk will be completed within 270 days from the date of agreement. The respondent No.2 issued a work order on 24.08.2017 which stipulated a period of 9 months for completion. The petitioner submitted a detailed plan to the respondent No.2 for approval on 05.10.2017. The respondent No.2 approved the plan on 21.07.2018 after a lapse of 11 months, by which time, the petitioner had already incurred substantial sums of money towards structural design and drawing of the skywalk etc. The petitioner is stated to have availed the services of a Geo-

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Technical Team for investigation of soil strength to bear the weight of the skywalk. The petitioner is stated to have procured the vertical lifts and other paraphernalia for the installation of the skywalk. The petitioner has also obtained an insurance policy which was valid from 12.07.2018 to 11.11.2018. The petitioner claims that the ground breaking ceremony for the installation of the skywalk was held on 16.03.2018. When the work was under progress, the Divisional Control of KSRTC addressed a communication to the respondent No.1 raising objections against installing the skywalk and requested the respondent No.1 to install the skywalk at a different spot. The respondent No.2 addressed a letter dated 04.09.2018 to the Assistant Commissioner of Police Traffic, Bengaluru informing him that the work of installation of the skywalk within the time specified cannot be achieved in view of the white topping work of Mysuru Road. It also informed the Police Officer that the KSRTC had permitted the skywalk to be installed adjacent to a subway of BMTC entrance. This was followed by a 'No Objection Certificate' issued by the

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Commissioner of Police on 11.10.2018 in favour of the petitioner to start construction. On 25.09.2019, respondent No.2 issued a fresh work order in favour of the petitioner to put up the skywalk at the fresh spot identified and gave 4-5 months to complete the project. After the petitioner completed all the formalities and ventured to put up the skywalk, he realized that a major sewage water channel ran below the TT Room of KSRTC. In view of this, the officials of the KSRTC agreed to give space inside the bus terminal and parking area and requested to change the staircase positions from dog legs to straight legs towards the landing towards the KSRTC building. After final marking, the drawings were modified, which was informed to the Chief Engineer of the respondent No.1 in terms of the letter dated 28.11.2019. The petitioner claims that it had undertaken the work on a war footing with a mission to complete it within 70 days. However, the respondent No.2 did not approve the plan in respect of the compound

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wall to be constructed. When things stood thus, on 22.11.2019 and 21.12.2019, the KSRTC issued a 'No

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Objection Certificate' to the petitioner to shift the Police Chowki and Traffic Controller Room temporarily with a condition to rebuild the same after completion of skywalk work. When the installation of the work was under progress, the respondent No.2 issued an order dated 23.12.2019 that the Competent Authority had directed to cancel the agreement executed in favour of the petitioner and forfeited the bank guarantee furnished by the petitioner for not executing the work in time. Following this, an order dated 07.01.2020 was passed canceling the agreement and forfeiting the bank guarantee.

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Being aggrieved by the aforesaid, the

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petitioner is before this Court.

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Learned Senior Counsel appearing for the petitioner contended that once the agreement was entered into, a concluded contract resulted and the respondents could not have unilaterally terminated the contract. Learned Senior Counsel further submitted that the documents placed on record indicated that it was the

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respondent No.1 and other state agencies which placed obstacles in the way of executing the contract and therefore, the petitioner cannot be held responsible for the delay. He submitted that since the delay is attributable to the respondents, the contract entrusted to the petitioner cannot be terminated.

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On the other hand, learned counsel for the respondents submitted that the petitioner was required to execute the work within 4-5 months from 25.09.2019 but the petitioner did not take any effective steps in that regard and therefore, the respondents were within their right to rescind the contract as per the agreement. The learned counsel relied upon the judgment of the Hon'ble Apex Court in the case of TATA CELLULAR VS. UNION OF INDIA reported in (1994) 6 SCC 651 to contend that the Courts cannot judicially review commercial decisions taken by the respondents.

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Learned Senior Counsel for the petitioner on the other hand relied upon the judgment of the Hon'ble

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Apex Court in the case of ABL INTERNATIONAL LTD. AND ANOTHER VS. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. AND OTHERS. reported in (2004) 3 SCC 553 and contended that the Courts under Articles 226 of the Constitution of India are not handicapped to deal with the situation where a State acts beyond the scope of the contract.

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I have considered the contentions raised by the learned counsel for the parties.

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A perusal of the letter dated 25.09.2019 addressed by the respondent No.2 clearly indicates that the respondent No.2 had shifted the location of the skywalk from what was agreed under the agreement dated 24.08.2017. The respondents had substituted the period of completion of the skywalk by 4-5 months from 25.09.2019. It is evident that even after 25.09.2019, the petitioner was confronted with issues that were raised by the KSRTC, which is evident from the letter dated 21.12.2019. Therefore, it is clear that the delay in

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establishment of the skywalk was not attributable to the petitioner but was solely attributable to the respondents and other state agencies. The respondents ought to have foreseen these issues before concluding to invite tender. The petitioner after having taken steps by furnishing a bank guarantee for a sum of Rs.25,00,000/- and investing money for procuring the vertical lifts etc. cannot be put to a disadvantage at the mere whim of the respondents. A perusal of Annexure-A dated 23.12.2019 indicates that there was no conscious decision taken by the respondents before terming that the petitioner was responsible for the delay in implementation of skywalk.

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The respondent No.2 has claimed that the time fixed for the completion of skywalk was 16.12.2019, which is belied by the letter dated 25.09.2019. Even otherwise, it is imperceivable for any person to put up a skywalk with so many State agencies revolting against the establishment of skywalk. It is relevant to note that the petitioner was responsible to put up the skywalk based on design, build,

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finance, operate and transfer basis for a period of 30 years. Therefore, the respondents were not affected commercially in any way and the delay in establishment of the skywalk would only eat into the profits of the petitioner. A perusal of Annexure-D which is an order passed by the respondent No.2 indicates that there was no commercial call taken by the respondents to terminate the contract. Hence, the reliance placed by the learned counsel for the respondent on the judgment in TATA CELLULAR (Supra). On the contrary, it was based on a direction issued by the Commissioner of the respondent No.1 to cancel the contract for non-implementation of the project within time. The respondents have blissfully ignored the problems faced by the petitioner in establishing the skywalk and have cancelled the contract at their mere whims and fancies. The State and its agencies are bound to conduct its activities in a non-arbitrary manner and taking into account the difficulties faced by the petitioner in implementation of the project. It is evident from the record that the petitioner was not at fault in not executing

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the contract within time and it was State agencies who were entirely responsible for delaying the project.

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In that view of the matter, the respondents are bound to permit the petitioner to execute the project within a time framed that may be fixed. Therefore, this writ petition is allowed . The impugned orders passed by the respondent No.2 dated 23.12.2019 and 07.01.2020 are hereby quashed. The respondent No.3 is directed to permit the petitioner to install the skywalk as per the letter dated 25.09.2019 (Annexure-T) within a period of four months from the date of receipt of the certified copy of this order. If the petitioner fails to implement the project within the stipulated time, the respondents are at liberty to take steps to terminate the contract without any further notice to the petitioner. The bank guarantee furnished by the petitioner shall stand restored and shall be released after the petitioner completes the installation of the skywalk in all respects. In order to expedite the installation, the following directions are issued:

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(i) That the petitioner shall install the skywalk at the location shown in the letter dated 04.09.2018 issued by the respondent.

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(ii) That the work of installation shall not be hampered/obstructed/objected by any agency of the State.

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(iii) That the jurisdictional Police shall take proper, effective and immediate steps to stop any nuisance/obstruction by any person whomsoever against the installation of the skywalk.

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(iv) The skywalk shall be installed as per the design furnished and approved by the respondent No.2. The petitioner shall ensure that the vertical lifts shall always be functional 24 X 7 X 365 days.

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(v) The respondent No.2 shall conduct periodical checks to assess the safety of the skywalk and the side bars and whether the vertical lifts are service regularly.

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Sd/JUDGE

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NR/-

M/S Shakti Developers Private Limited v. the Commissioner

Case brief

What is this about?

What did the court decide?

M/S Shakti Developers Private Limited v. the Commissioner

Case brief

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What did the court decide?

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