Allowed

M/s B.n. Enterprises v. The State Of Bihar and Ors.

Patna HC31 Jan 2013CWJC/377/2013

Case brief

AI extract

What is this about?

The High Court quashed a letter declaring the petitioner a defaulter on a government contract. Relying on the Apex Court's ruling in M/s J.G. Engineers, the Court held that State authorities cannot decide breach of contract liability when the contractor denies the allegation and imputes fault to the State. The writ was allowed, and the petitioner's debarment notice quashed.

What did the court decide?

The letter dated 6.12.2012 declaring the petitioner as a defaulter was quashed. The NIT No.03/2012-2013 was also quashed, and the respondents were directed to proceed with NIT No.01/2012-13.

M/s B.n. Enterprises Vs The State Of Bihar… — Contract and Commercial Disputes | Patna HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT PATNA

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Civil Writ Jurisdiction Case No.377 of 2013

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====================================================== 1. M/S B.N. Enterprises, Through Its Partner Cum Authorized Signatory Sri Bhola Nath Prasad Son Of Late Lakhi Chand Prasad Resident Of Village Nechuz, Jalalpur, P.S. Kuchaikote, District Gopalganj

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.... .... Petitioner/s Versus

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The State Of Bihar Through The Secretary Cum Commissioner, Rural Works Department, Government Of Bihar, Patna

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The Secretary, Water Resources Department, Government Of Bihar, Patna

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The Engineer In Chief, Rural Works Department, Government Of Bihar, Patna 4. The Chief Engineer - Iii, Patna, Rural Works Department, Government Of Bihar, Patna 5. The Executive Engineer, Flood Control Division, Gopalganj, Camp Gopalganj, District Gopalganj, Bihar

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.... .... Respondent/s

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====================================================== Appearance : For the Petitioner/s : Mr. Prabhat Ranjan For the Respondent/s : Mr. M.D. Dwivedi, S.C.23 Mr. Sanjay Kumar Singh, A.C. to S.C.23 ====================================================== CORAM: HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA ORAL ORDER

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5 31-01-2013 Heard learned counsel for the petitioner and learned counsel for the State.

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The petitioner has come to this Court for quashing the part of the letter dated 6.12.2012 which relates to him, issued by the respondent No.3, Engineer-in-Chief, Rural Works Department, by which in a list of 123 pages with respect to defaulting contractors, the petitioner has been declared defaulter.

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It is submitted by learned counsel for the petitioner that the petitioner has been shown as defaulter on the ground that

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Patna High Court CWJC No.377 of 2013 (5) dt.31-01-2013

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with respect to two of the contracts awarded to him as per the time schedule the petitioner had not completed the work to the extent of 80%, whereas according to the petitioner, one of the contracts was being carried out as per the time schedule and in the second work which is at serial No.444, the work was delayed on account of the closure of Rajendra Over Bridge for about six months.

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It is also the submission of learned counsel for the petitioner that the Department had never communicated to the petitioner regarding non-completion of the work as per the schedule and all of a sudden, the name of the petitioner has been entered in the 123 pages list.

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It is the contention of learned counsel for the petitioner that one of the reasons for delay was that since the matter related to the Pradhan Mantri Gram Sadak Yojna land was required to be obtained by the respondents from the villagers which required much persuasion and took a considerable time. It is, thus the submission of learned counsel that the delay, if any, should not be attributed to the petitioner and there was no fault or default on the part of the petitioner in the matter.

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Learned counsel for the petitioner further submits that the case of the petitioner is squarely covered by the decision of this Court in the order dated 10.1.2013 passed in C.W.J.C.

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Patna High Court CWJC No.377 of 2013 (5) dt.31-01-2013

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No.19809/2011 M/s. NCC Ltd. vs. State of Bihar and others and another analogous case. In the said decision, it was held as follows:-

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“From a perusal of the facts and circumstances enumerated above it is evident that in the present matter the petitioners have been declared defaulters in carrying out their contractual work by the authorities of the State which factual situation is denied by the petitioners who have on the other hand made allegations against the State authorities as being equally liable and at fault in the matter. The contention of learned counsel for the petitioners that in such circumstances the issue regarding default can only be decided by an impartial adjudicatory body has much force in view of the law laid down by the Apex Court in M/s. J.G. Engineers case (supra). The Apex Court has clearly held that the question whether the other party has committed a breach cannot be decided by the party which alleges the breach nor the contract can provide that one party to the contract can decide whether they committed the breach or the other party committed the breach, which question can only be decided by a judicial forum, i.e., a court or

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Patna High Court CWJC No.377 of 2013 (5) dt.31-01-2013

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an Arbitral Tribunal.

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The said proposition laid down by the Apex Court applies squarely in the present situation where the petitioners have been declared defaulters by alleging breach of contractual terms on their part and as being liable and at fault on account of the slow progress of the work as compared to what was required under the contract. This should be specially so since the petitioners not only do not admit such allegation of liability and fault on their part as made by the respondents but have on the contrary raised the plea of liability and fault on the part of the State authorities in the matter on various grounds. It is evident that the authorities of the State cannot be permitted to decide such matter which involves liability on the part of the State officials also. Thus, even if it is accepted that the authorities of the State have the power to debar a contractor from participating in future contract after they are declared defaulter on account of not making the targeted progress to the extent of 80% in the work, still the finding regarding the default cannot be made by the State authorities and that must come from a proper

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Patna High Court CWJC No.377 of 2013 (5) dt.31-01-2013

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adjudicatory forum, whether a court or arbitral tribunal. Only after such finding it can be open to the authorities of the State to declare a contractor as a defaulter and debar it from participating in future tenders. It is evident that the effect of such declaration as defaulter and debarment would have serious civil consequence on the party concerned and cannot be left to be decided by the party which has made allegation against whom also there is counter allegation by the contractor concerned.”

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Learned counsel for the State is unable to show how the case of the petitioner is not covered by the aforesaid decision of this Court.

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It is evident that the petitioner does not admit any delay in the completion of the work or his responsibility for the same and thus it was not open to the respondents to have debarred the petitioner from participating in the tender process in terms of the proposition laid down by this Court in the aforesaid M/s. N.C.C. Ltd. case (supra).

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The writ application is, accordingly allowed and the letter dated 6.12.2012 issued by the Engineer-in-Chief, Rural Works Department, Government of Bihar, in so far as it concerns

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Patna High Court CWJC No.377 of 2013 (5) dt.31-01-2013

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the petitioner, is quashed.

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By order dated 22.1.2013 this Court had stayed NIT No.03/2012-2013 dated 3.1.2013 until further orders. The said NIT No.03/2012-2013 dated 3.1.2013 is quashed and the respondents are directed to proceed with the earlier tender being NIT No.01/2012-13 with respect to serial No.6 in accordance with law.

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(Ramesh Kumar Datta, J)

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V.P.Sinha/-

M/s B.n. Enterprises v. The State Of Bihar and Ors.

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M/s B.n. Enterprises v. The State Of Bihar and Ors.

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