Dismissed

P & C Projects Pvt. Ltd. v. State of Kerala

Kerala HC13 Oct 2021WA/905/2021

Case brief

AI extract

What is this about?

Contractor challenged the termination of a construction contract by a special purpose vehicle for slow progress and quality issues, alleging breach of natural justice because the funding agency's field observation report was not furnished. The High Court upheld the termination under clause 3 of the general conditions of contract, holding the natural justice plea baseless and the termination neithe

What the court decided

AI extract

P & C Projects Pvt. Ltd. Vs State of Kerala — Public Procurement and Tenders | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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WEDNESDAY, THE 13^TH DAY OF OCTOBER 2021 / 21ST ASWINA, 1943

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WA NO. 905 OF 2021

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AGAINST THE JUDGMENT IN WP(C) 2200/2021 OF HIGH COURT OF KERALA,

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ERNAKULAM

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APPELLANT/PETITIONER:

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P & C PROJECTS PVT. LTD.

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P AND C TOWERS, 2ND FLOOR 140, PERUNDURAI ROAD, ERODE638011, REPRESENTED BY ITS GENERAL MANAGER & AUTHORIZED SIGNATORY T.VISWANATHAN

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BY ADV MILLU DANDAPANI

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RESPONDENTS/RESPONDENTS:

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1 STATE OF KERALA

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REPRESENTED BY THE PRINCIPAL SECRETARY, DEPARTMENT OF HEALTH AND FAMILY WELFARE,216, 3RD FLOOR, NORTH SANDWICH BLOCK, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001

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2 KERALA STATE INFRASTRUCTURE INVESTMENT FUND BOARD (KIIFB),

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2ND FLOOR, FELICITY SQUARE, MG ROAD, STATUE, THIRUVANANTHAPURAM-695 001, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER, SHRI.K.M.ABRAHAM

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3 M/S.INKEL LIMITED, DOOR NO.7/473 ZA- 5 & 6, AJIYAL COMPLEX, POST OFFICE ROAD, KAKKANAD, COCHIN-682 030, REPRESENTED BY ITS MANAGING DIRECTOR, SHRI.A.MOHAN LAL

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BY ADVS.

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SRI.TEK CHAND, SENIOR GOVERNMENT PLEADER SRI.ARUN.V.G.

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SRI.P.U.SHAILAJAN

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 13.10.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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JUDGMENT

Dated this the 13^th day of October, 2021

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SHAJI P.CHALY, J.

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Writ petitioner has filed the appeal challenging the judgment of the learned Single Judge in W.P.(C) No.2200 of 2021 dated 26.4.2021, whereby the learned Single Judge dismissed the writ petition and declined to quash Exhibit P13 letter of termination of the civil contract awarded by the 3^rd respondent to the appellant viz., M/s. INKEL Limited, Cochin, dated 18.01.2021, a Special Purpose Vehicle, (SPV) constituted in a public – private partnership initiative, assigning the reason, poor performance, and quality issues at site, during the inspection carried out by Kerala State Infrastructure Investment Fund Board (KIIFB), Thiruvananthapuram – the 2^nd respondent, (funding agency), with effect from 31.01.2021. Accordingly, the appellant was requested to demobilise the site by 31.01.2021 and make immediate arrangements for taking joint measurements of the works completed.

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The basic contention advanced by the appellant in the writ petition was that termination of Exhibit-P3 agreement and Exhibit-P5 supplementary agreement entered into by the writ petitioner with M/s. INKEL for construction of a project of the State of Kerala are arbitrary and illegal. According to the appellant, Exhibit-P8 show cause notice issued by the 3^rd respondent dated 28.12.2020 was replied by the appellant narrating the entire facts and circumstances, and its innocence, as per Exhibit-P9 communication dated 14.1.2021. However, the 3^rd respondent has not taken into account any of the submissions made by the appellant. Therefore, Exhibit-P13 letter of termination cannot be sustained under law, being arbitrary and violative of the principles of natural justice. It is the case of the appellant that, though Exhibit-P10 request was made before the 3^rd respondent to constitute a dispute redressal committee by invoking clause (25) of Exhibit-P4 general conditions of contract in order to redress the grievances of the appellant as per the terms of the contract, the 3^rd respondent without considering the same, terminated the contract. It is also pointed out that as per Exhibits-P11 and P12 representations, appellant attempted to amicably resolve the grievances of the appellant, which has

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not been considered by the State, as well as KIIFB, which is the funding

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agency for carrying out the contract in question.

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The contentions advanced by the appellant in the writ petition was

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based on the above discussed facts and circumstances and making the paramount contention that the whole action was violative of the principles of natural justice for the reason; that the respondents have completely ignored the terms and conditions of the contract and issued Exhibit P13 termination; that since specific terms and conditions were entered into by and between the parties, the respondents ought to have adhered to Exhibits P3 agreement and P5 supplementary agreement and having not followed

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the same, the action of termination is violative of the provisions of the Indian Contract Act and therefore, Exhibit P13 is liable to be quashed ; that Exhibit P10 request made by the appellant to M/s.INKEL Limited way back on 6.1.2021 was pending consideration before M/s.INKEL Limited, the SPV, and despite the same and having not passed the orders for the request to constitute a Dispute Redressal Committee, the action of the 3^rd respondent in terminating the contract was bad and illegal; that Exhibits P11 and P12 representations were submitted before the State, as well as the funding

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agency viz., KIIFB, and therefore they were duty bound to consider the representations submitted by the appellant and was bound to give necessary directions to M/s.INKEL Limited, however, no action was taken by the 1^st and 2^nd respondents ; that though the appellant has replied to Exhibit P8 show cause notice dated 26-12-2020 elaborating the facts and circumstances, no opportunity of hearing was provided to the appellant before issuing Exhibit P13 termination letter and therefore, the appellant has lost the valuable right to present its case, which is directly violative of the principles of natural justice and therefore, Exhibit P13 is bad. Again it was contended that Exhibit P9 reply submitted by the appellant makes it clear that it has taken all efforts to complete the construction works within the time frame provided, however delay has occurred due to force majeure events such as floods in Kerala during the years 2018 and 2019, and COVID19 pandemic, which is still persisting. According to the appellant, none of the vital and required aspects were considered before the extreme action of termination taken by M/s.INKEl Ltd. It was only in the afore background facts and circumstances, appellant contended before the writ court that; there is violation of the fundamental rights; there is violation of the

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principles of natural justice; and the orders of proceedings are duly without jurisdiction being contrary to the provisions of the Indian Contract Act, and the terms and conditions of the agreement executed by and between the parties.

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Apart from the above fundamental contentions, the other contentions raised by the appellant before the writ court was that the 3^rd respondent i.e., M/s. INKEL Limited, had lot of issues with the 1^st and 2^nd respondents viz., the State and the KIIFB - Funding Agency, in regard to the execution of the project, which in turn was detrimental to the project in many ways, and that it was consequent to the dissatisfaction expressed by the officials of the 1^st and 2^nd respondents regarding the conduct and working of the 3^rd respondent, which in fact stood in the way of the appellant successfully executing the work and failing to complete the project in time.

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In the writ petition, apart from seeking to quash Exhibit P13 termination letter, appellant had alternatively sought for constituting a dispute redressal committee as per clause 25 of Exhibit P4, and to keep Exhibit P13 letter in abeyance, till Exhibit P10 request of the appellant was

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considered in a time bound manner; had also sought for disbursal of the pending payment by the 3^rd respondent and also for consideration of Exhibits P11 and P12 representations in a time bound manner by the State and the funding agency.

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The funding agency viz.,KIIFB has filed a very detailed counter affidavit with supporting documents refuting the allegations, contentions and demands raised by the appellant. It has also produced Exhibit R2(g) observation memo narrating the observations made by it in regard to the work carried out by the appellant, and the failure to achieve the milestones. In fact the funding agency has no contractual relationship with the appellant since the contract was executed by and between the appellant and M/s. INKEL Limited, a Special Purpose Vehicle. Therefore, it has virtually stated in the affidavit that whatever communication addressed by it to M/s. INKEL Limited was basically, directing M/s. INKEL Limited to take adequate steps to accelerate the work of the contractor, and complete the same without delay.

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It is also clear from the counter affidavit and the documents produced by the funding agency that several defects were observed in the

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work carried out by the appellant and therefore, directed to rectify the defects and submit a compliance report. The funding agency has also observed that overall progress of the work is far below than the required and thereupon, directed M/s. INKEL Limited to instruct the appellant to accelerate the pace of work utilising the summer season in order to adhere to the original schedule of work, which observation memo is dated 23.2.2019. Various other observations were made by KIIFB – the funding agency and consequential directions were issued to M/s. INKEL Limited, in order to complete the work by adhering to the time schedule agreed upon by and between the appellant and the 3^rd respondent.

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M/s. INKEL Limited had objected to the writ petition by filing a detailed counter affidavit basically contending that substantial amount of Rs.4.36 Crores were provided by it as mobilisation advance, and an amount of Rs.2,09,42,271/- was given as secured advance against the steel purchased by the appellant.

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The sum and substance of the contention advanced by the 3^rd respondent was that there was no dispute by and between the 3^rd respondent, the State, and the funding agency, as alleged in the writ

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petition. The significant contention made in the counter was that it was due to the poor progress of the work, Exhibit P8 show cause notice was issued to the appellant on 26.12.2020, wherein it was specifically stated that the show cause notice was issued as per clause 3(a) and 3(b) of the general conditions of contract. According to the 3^rd respondent, clause 3 is an independent clause and has no connection with other clauses in the general conditions of contract. The said aspect was pointed out by the 3^rd respondent to establish the point that the 3^rd respondent was at liberty to terminate the contract as per clause 3, if the contractor fails to complete the work or section of work with individual dates of completion or before the stipulated or extended dates and also on the opinion of M/s.INKEL Limited, the contractor would be unable to complete the work or doesn't complete the work within the period specified. It was also submitted that upon such termination the Earnest Money Deposit, Security Deposit and Performance Guarantee are all liable to be forfeited and further, the contractor is liable to pay damages to the respondent.

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Third respondent has also explained the manner in which the constructions were planned and scheduled, and as per the contract, four

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blocks had to be constructed viz., A, B, C and D. However, as on the date of the termination of the work, the appellant has completed only 35% of the entire work and on considering the works of blocks A and B, it would be 40%. Thus, according to the 3^rd respondent, the progress of the project was very poor, which was admitted by the appellant. That apart it was contended that in spite of clause 25 of the general conditions of contract for constitution of dispute redressal committee, the 3^rd respondent had the power to terminate the work by virtue of clause 3 of the general conditions of contract. It was also submitted that the issues raised by the appellant in Exhibit P10 request would not come under clause 25 of the general conditions of contract in order to refer the same to the Disputes Redressal Forum, apart from stating that the disputes, if any, has to be raised within 15 days of the same and none of the matters contained in Exhibit P10 request arose within 15 days as on the date of Exhibit P10 request. It was also pointed out that, taking into account the flood situations and COVID-19 pandemic, Exhibit P6 supplementary agreement was executed on 24.9.2020 extending the period of completion of work upto 28.2.2021 and thereby, increasing the period from 730 days to 949 days. Thus, according to the 3^rd

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respondent, action of the 3^rd respondent in issuing the show cause notice and the termination were in accordance with law taking into account the inferior quality of the work and the delayed performance by the appellant failing to achieve the target in accordance with the terms and conditions of the contract and the supplementary agreement.

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Learned Single Judge, after taking into account the rival submission made, has dismissed the writ petition basically holding that the 3^rd respondent has extended the period of completion of work as per the original agreement from 730 days to 949 days by executing the supplementary agreement, by which the appellant was duty bound to complete the project by 28.2.2021, but the appellant has not taken adequate steps to complete the work even by the said extended period. It was also observed that the appellant cannot be heard to contend that it was due to the flood occurring in the years 2018 & 2019, preventing the appellant from completing the work as per the agreement. It was also found by learned Single Judge that M/s.INKEL Limited cannot be blamed for making the payment of part bills raised by the appellant, since the appellant has failed to achieve the milestone agreed upon by the appellant and that

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the 3^rd respondent was liable to pay the part bill only on completion of the milestone, within the date prescribed for the same, and therefore, when the appellant has agreed for a particular term of contract in that regard, it cannot be said that the non-payment of the part bill was illegal.

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The learned Single Judge, has also considered the aspects raised by the appellant in the writ petition based on the violation of principles natural justice, also taking into account the contentions advanced at the time of hearing, though it was not taken as a specific ground in the writ petition, that the inspection report referred to in Exhibit P13 termination letter was not given to the appellant and it was not put to notice as stated in Exhibit P8 show cause notice. However, without going elaborately to the said aspect the learned Single Judge found that the contract was terminated by M/s. INKEL Limited for two reasons viz., slow progress of work and quality of work. It was also found that the inferior quality of work executed by the appellant is reflected in Annexure R2(d) letter of undertaking signed by the appellant dated 10.3.2020, whereby the appellant has undertaken to rectify the shifting and reinforcement works in many areas, where structural members have to be filled in order to have compressive strength and to

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rectify the columns, beams etc. as per recommendations and instructions after concreting and de-shuttering work of the slabs are undertaken in the respective areas. It was accordingly that the learned Single Judge found that the failure of the 3^rd respondent to point out the inspection report of the funding agency in Exhibit P8 show cause notice by itself cannot be said to have caused substantial prejudice to the appellant.

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It is clear from the judgment of the learned Single Judge that since the said aspect was raised by the appellant at the time of hearing the respondents did not get an opportunity to dispute the said contention advanced by producing appropriate documents along with the counter affidavit filed by them. It was thus taking into consideration the entire aspects advanced by the appellant, assimilating the rival submissions and taking note of the principles of law laid by the Hon'ble Apex Court in its various judgments, in regard to the intricacies of violation of the principles of natural justice, learned Single Judge has arrived at the conclusions.

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We have heard learned counsel for the appellant Sri. Millu Dandapani, learned Senior Government Pleader Sri.Tek Chand appeared for the State, Sri. Arun.V.G. for KIIFB, Sri. P.U. Shailajan for M/s. INKEL Limited

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and perused the pleadings and entire materials on record.

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Respective counsel have addressed their arguments on the basis

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of the points discussed above. Clause 3 of Exhibit P4 general conditions of contract is a significant provision, since it enables M/s. INKEL Limited to determine the contract, which read thus:

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“CLAUSE 3

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When Contract can be Determined

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Subject to other provisions contained in this clause, INKEL Ltd. may, without prejudice to its any other rights or remedy against the contractor in respect of any delay, inferior workmanship, any claims for damages and/or any other provisions of this contract or otherwise, and whether the date of completion has or has not elapsed, by notice in writing absolutely determine the contract in any of the following cases :

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(i) if the contractor having been given by INKEL Ltd. a notice in writing to rectify, reconstruct or replace any defective work or that the work is being performed in an inefficient or otherwise improper or unworkman-like manner shall omit to comply with the requirement of such notice for a period of seven days thereafter.

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(ii) If the contractor has, without reasonable cause, suspended the progress of the work or has failed to proceed with the work with due diligence and continues to do so after a notice in writing of seven days from INKEL Ltd.

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(iii) If the contractor fails to complete the work or section of work with individual date of completion or before the stipulated or justified extended date, on or before such date of completion; and the INKEL Ltd. without any prejudice to any other right or remedy under any other provision in the contract has given further reasonable time in a notice given in writing in that behalf as either mutually agreed or in absence of such mutual agreement by his own assessment making such time essence of contract and in the opinion of INKEL Ltd, the contractor will be unable to complete the same or does not complete the same within the period specified.

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(iv) If the contractor persistently neglects to carry out his obligations under the contract and/or commits default in complying with any of the terms and conditions of the contract and does not remedy it or take effective steps to remedy it within 7 days after the receipt of notice in writing from INKEL Ltd.

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3(a) To determine the contract aforesaid so far as performance of work by the contractor is concerned (of which determination notice in writing to the contractor under the hand of INKEL Ltd. shall be conclusive evidence). Upon such determination, the Earnest Money Deposit, Security Deposit already recovered and Performance Guarantee under the contract shall be liable to be

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forfeited and shall be absolutely at the disposal of INKEL Ltd. 3(b) After giving notice to the contractor to measure up the work of the contractor and to take such whole, or the balance or part thereof, as shall be un-executed out of his hands and to give it to another contractor to complete the work. The contractor, whose contract is determined as above, shall not be allowed to participate in the tendering process for the balance work.

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In the event of above courses being adopted by INKEL Ltd., the contractor shall have no claim to compensation for any loss sustained by him by reasons of his having purchased or procured any materials or entered into any engagements or made any advances on account or with a view to the execution of the work or the performance of the contract. And in case action is taken under any provision aforesaid, the contractor shall not be entitled to recover or be paid any sum for any work thereof or actually performed under this contract unless and until INKEL Ltd. has certified in writing the performance of such work and the value payable in respect thereof and he shall only be entitled to be paid the value so certified.”

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Reading of the above said provision makes it clear that it is an independent provision from other terms and conditions of the general conditions of contract because, it clearly specifies that the 3^rd respondent,

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without prejudice to its any other rights or remedy against the contractor in respect of any delay, inferior workmanship, any claims for damages and/or any other provisions of the contract or otherwise, and whether the date of completion has or has not elapsed, by notice in writing absolutely determine the contract in any of the sub-clauses specified thereunder. Sub-clause (1) thereto makes it clear that if a notice is given in writing, to rectify, reconstruct or replace any defective work, or that the work is being performed in an inefficient manner, or otherwise improper or unworkmanlike manner shall omit to comply with the requirement of such notice for a period of seven days thereafter, or if the contractor has, without reasonable cause, suspended the progress of the work or has failed to proceed with the work with due diligence and continues to do so after the notice in writing of seven days from M/s. INKEL Ltd, it has the power to terminate the work. In fact Exhibit P8 show cause notice dated 26-12-2020 was issued under clause 3 of the agreement, whereby the appellant had to show cause, within 7 days to the satisfaction of M/s. INKEL Limited, as to why the action under clauses 3(a) & (b) of the above agreement shall not be taken against the appellant on account of the breach of contract on the part of the appellant

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on those counts.

It was made clear and cautioned in the notice that in case no cause is shown by the appellant within the stipulated period or cause shown is not to the satisfaction of M/s. INKEL Limited, actions as contemplated under the said provisions would be taken against the appellant without further notice to the appellant. It was also distinctly shown that the show cause notice was being issued by reason of slow progress of works and quality issues intimated to the appellant as per the correspondences listed in Annexure 1, apart from specifying that the work entrusted to the appellant dated 6^th August, 2018 will not be completed even within the extended date of completion. Even though appellant has issued Exhibit P9 reply dated 4.1.2021, it is clear that the appellant has justified the delay, on the basis of hindrances caused such as unexpected monsoon, Union - labour issue, non-availability of OPC, issues relating to piling work, suspension of work, payment related issue (RA bill payments), approvals not given in time, and most of all, the unexpected attack of the novel Coronavirus – 2019. Further, it is admitted that the time period was extended from 730 days to 949 days and thus, extending the work upto 28.02.2021 by additionally granting

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219 days.

In fact, it is so obvious from Exhibit-P9 reply that the appellant is

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virtually admitting that there was considerable delay in execution of work, however, it has occurred due to various factors beyond its control and therefore, it cannot be blamed for the delay in execution of the work. Anyhow it is stated thereunder that the appellant would complete the work and has desired to complete the work within the anticipated time to the utmost satisfaction of M/s. INKEL Limited. Apart from the same, Exhibit P10 request made by the appellant dated 6.1.2021 still shows that appellant is lagging in completing the work but attributes the cause to various factors including force majeure, non-approval of drawings in timely manner, extra work expenses incurred for COVID-19 test, withheld payments, unbilled amounts etc. It is also clear from Exhibits P11 & P12 letter dated 8.1.2021 addressed to the Principal Secretary, Health and Family Welfare Department, Government of Kerala, and the Chief Executive Officer of Kerala State Infrastructure Investment Fund Board (KIIFB) - 1^st and 2^nd respondents herein, that there is delay on the part of the appellant in completing the work. It is also clear that the contract period was extended by 219 days

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even though appellant contends that the extension was made unilaterally without taking note of the unexpected floods occurring during the years 2018 & 2019, and the lock down and other restrictions caused due to COVID-19 pandemic.

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On the other hand, learned counsel appearing for M/s.INKEL Limited submitted that in spite of earnest efforts made by it and sufficient opportunities provided, appellant could not take appropriate action so as to complete the work even during the extended period. Our attention was also drawn to the reply affidavit filed by the appellant to the counter affidavit of M/s. INKEL Limited and pointed out that the appellant has admitted that only 34% work has been completed and it is not logically possible to complete the balance 66% of the work in 7 months amid prevailing COVID

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-19 restrictions.

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It is also stated in the said affidavit filed by the appellant that as per Exhibit P3 contract for completing 10% of work, the time allotted to the contractor is 2.4 months and therefore, in order to complete the balance 66% of the work, the time required would be roughly 16 months and if 11 months' period is given to the appellant the project would be to completed

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to the satisfaction of all concerned.

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Learned counsel for the 3^rd respondent has also invited our attention to Exhibit P23 communication dated 7.11.2020 issued by M/s.INKEL Limited, whereby the appellant was requested to attend to the points highlighted therein and to satisfactorily reply with an action taken report/date of completion of points raised, within three days of the letter. The case of the appellant in the appeal is that the said communication was issued on the basis of the field observation points raised by M/s.KIIFB during the site inspection held on 6.11.2020 and the said report was not given to the appellant enabling the appellant to understand the observations made by KIIFB. In fact in Exhibit P23 letter, the field observation report of KIIFB dated 6.11.2020 is extracted. Therefore, it cannot be said that the appellant was not served with the field observation report of KIIFB and is therefore violative of the principles of natural justice. The field observation report reads thus:

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Apparently, the appellant has produced a rectification report along with Exhibit P23, from where it is clear that the appellant could not complete the work and the project was being carried on by the appellant, by taking corrective measures, as if to appear that the said rectification report is a report submitted before Exhibit P13 termination of contract. As we have pointed out above, Exhibit-P13 termination letter is dated 18.01.2021. Even though the rectification report attached to Exhibit P23 communication of M/s. INKEL Limited dated 7-11-2020 issued to the appellant is dated 'nil', the note contained in the rectification report makes it clear that it is a rectification report submitted after the termination of contract on 18.01.2021, since the note contains the date “31^st January, 2021, 1^st February, 2021, and 5^th February, 2021”. The note is relevant and important to consider the case advanced by the appellant and it reads as under:

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“Note: In addition to the rectification of KIIFB observations, we have done adequate rectification in a reasonable way wherever it was required. Also it may please be noted that, even after the termination notice was implemented on 31^st January 2021, we retained a full fledged gang of masons

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and helpers to maintain the site for repairing the defects. Unfortunately, the local Union people stopped these activities on 01st Feb 2021. However we managed to convince the local workers and thus curing and repairing of defects were in progress till 05^th Feb 2021. Again on 6^th Feb morning the union workers stopped these activities demanding employment for them also. This matter was immediately communicated to INKEL,but no action could be seen from INKEL's end to resolve the issue. Anyhow we are internally finding the defects and attending it from 01^st Feb to till now. The labour engagement details for rectification works of February month are attached with this.”

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To put it straight, we were given the impression that the rectification report was a report submitted by the appellant as was sought for in Exhibit P23 communication dated 7.11.2020. But it is quite visible, clear and explicit, that the rectification report appended along with Exhibit P23 letter is definitely submitted after the termination of the contract, evident from the note extracted above. In fact, since the appellant has raised such a contention, we directed M/s. INKEL Limited to find out as to whether the rectification report appended along with Exhibit P23 was submitted by the appellant along with any covering letter. Accordingly,

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M/s.INKEL Limited has produced Annexure R3(a) communication issued by the appellant dated 11.11.2020 referring to a field observation report dated 6.11.2020. So also produced a communication issued by M/s.INKEL Limited dated 11.11.2020 to the appellant, whereby it is stated that no action was taken by the appellant on the points contained in the field observation report of KIIFB even though assurances were made. It is also clear from the said letter that the appellant has not produced any documentary evidence or photographs to substantiate the rectification report submitted by the appellant. Even though the appellant was vehemently contending that the action of M/s.INKEL Limited is absolutely violative of the principles of natural justice consequent to the non-furnishing of the copy of the detailed observation report of KIIFB dated 6.11.2020, the additional documents produced by M/s. INKEL Limited as directed by this Court, make it clear that the contentions advanced on that basis can never be sustained under law and facts, especially due to the fact that in the letter dated 11.11.2020, appellant has stated that the report is given on the basis of the field observation point raised by M/s. KIIFB during the site inspection held on 6.11.2020.

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We have evaluated the arguments advanced by the rival parties and we are of the view, it is clear from the documents produced by the rival parties, that the time period provided to the appellant as per the original agreement was extended by granting 219 more days to complete the work on various counts including the adverse climatic situations existed during 2019 and 2020, which was to expire on 28.2.2021. However, the funding agency visited the site and made a field observation report pointing out that appellant was severely lagging in carrying out the construction and therefore, unless and until it is rectified at the earliest, the appellant would not be in a position to complete the work even during the extended period. On the basis of the field observation report dated 6.11.2020, the 3^rd respondent intimated the appellant also by pointing out the observations made in the field observation report, and even though reply was made to the same, which is produced along with the additional documents in the appeal by the 3^rd respondent, the same was not supported by any substantial evidence to show that any works were undertaken materially by the appellant so as to ensure that the work is completed within the extended period, which is a rectification report different from the report

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produced by the appellant along with Ext P23 letter issued by the 3rd respondent. The rectification report submitted by the appellant and attached along with Exhibit P23 also shows that the appellant has not demobilised from the field and was still continuing with work allegedly so as to make it appear that the work is completed, which clearly indicates that it is issued after the termination of contract.

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In our considered opinion, though the appellant had contended that the field observation report of KIIFB was not provided to the appellant by M/s. INKEL Limited and thereby, the principles of natural justice was violated, it is clearly deducible from the correspondences made by the appellant itself, produced by M/s. INKEL Limited in the appeal, as per our directions, that the said contention raised is baseless and against the documents of the appellant itself. Above all, such a contention was never raised and pleaded by the appellant in the writ petition, though argued at the time of hearing.

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In that view of the matter, it cannot be said that termination of the contract is violative of the principles of natural justice, for non supply of the report of KIIFB. Even though various other contentions are raised, with

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respect to the terms and conditions of the contract and general conditions of contract, we are of the considered opinion that the 3^rd respondent is vested with ample powers to follow the procedure contemplated in clause 3 of the general conditions of contract to terminate the contract on the grounds contained thereunder and agreed upon by the parties. It is also clear from the show cause notice that in contemplation of clause 3, appellant was given the opportunity to take steps to rectify the defects and proceed with the work, but the appellant has not taken any steps so as to complete the work and it is also clear from the records and the pleadings put forth by the appellant that the appellant was able to complete only 34% work altogether and 40% of blocks A & B.

¶144

So also, even though the appellant has a contention that KIIFB has observed that substantial work of blocks A&B was carried out by the appellant, and therefore, as suggested by KIIFB, the appellant ought to have been permitted to continue with the construction of A&B blocks, in our considered view, cannot be sustained, in view of the fact that the appellant was unable to complete the work within the extended time period agreed upon by the parties, and therefore, it was open to the 3^rd

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respondent, by virtue of the the terms and conditions, and the general conditions of the contract, to terminate the contract, which cannot be assailed by the appellant having undertaken to abide by such conditions which are valid in law.

¶148

In that view of the matter and since the subject issue is absolutely in respect of a contractual agreement, with the terms and conditions agreed upon by and between the parties, we do not think the appellant has made out a case of arbitrariness and illegality, liable to be interfered in a writ proceedings, especially in view of the observance of the obligations under the agreement by the 3^rd respondent, before the termination of the contract. Moreover, the learned Single Judge has taken into account the entire contentions put forth by the appellant, and in fact, considered the point raised by the appellant with respect to the violation of principles of natural justice, though it was not taken as a specific ground, on account of the allegation that the report of the KIIFB dated 6.11.2020 was not served on the appellant, however on a different reason on the basis of clause 3 of the general conditions of contract.

¶149

Even though learned counsel for the appellant has invited our

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attention to various judgments of the Hon'ble Apex Court in regard to the issue of violation of principles of natural justice to be followed in contractual matters also, we are of the view that the contention raised by the appellant on the basis of non-supply of field report of KIIFB dated 6.11.2020, is found to be incorrect and on that basis, the appellant is not entitled to make out any case of violation of principles of natural justice. According to us, the appellant was also not entitled to get any reliefs on the basis of Exhibit P10 request made before the 3^rd respondent and Exhibits P11 and P12 representations before the 1^st and 2^nd respondents in view of the power exercised by M/s. INKEL Limited – the 3^rd respondent on the basis of clause 3 of the general conditions of contract discussed above, which is a power detached from other terms and conditions of the contract, and in the event of any eventuality arising therefrom the 3rd respondent was entitled to invoke the same as agreed upon by the parties. We are also of the view that a contract entered into by the parties to do a particular act together was a partnering agreement creating a mutual relationship for the benefit and advantage of one of the parties and if the contractor fails miserably to discharge the obligations undertaken, definitely the confidence of the

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dominant partner would be lost and thereby it was entitled to act in accordance with the contract.

¶156

Needless to say, the appellant has failed to make out any case of jurisdictional error or other legal infirmities in the judgment of the learned Single Judge, justifiable to be interfered with in an intra court appeal.

¶157

Appeal fails, accordingly it is dismissed.

¶158

Sd/- S. MANIKUMAR,

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CHIEF JUSTICE.

¶160

smv

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Sd/- SHAJI P. CHALY, JUDGE.

P & C Projects Pvt. Ltd. v. State of Kerala

Case brief

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What the court decided

P & C Projects Pvt. Ltd. v. State of Kerala

Case brief

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