Dismissed

Sms Limited v. State of Rajasthan

Rajasthan HC16 Dec 2021SAW/550/2021

Case brief

AI extract

What is this about?

Appellant challenged termination of contract by State authorities for delay in setting up Block Level Water Testing Laboratories. High Court observed that while natural justice applies to State contracts, interference was inappropriate as termination was based on disputed facts of delay impacting project timelines. Appellant directed to approach civil court.

What did the court decide?

Appeal disposed of; Appellant directed to approach civil court for appropriate relief regarding contract termination.

Sms Limited Vs State of Rajasthan — Contract and Commercial Disputes | Rajasthan HC (2021)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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D.B. Special Appeal Writ No. 550/2021

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Sms Limited, Through Its Authorised Signatory Address Villa No. 732, Omaxe City, Ajmer Road, Jaipur- 302 026

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----Appellant

¶5

Versus

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State Of Rajasthan, Through The Additional Chief Secretary, Public Health Engineering Department (Phed), Secretariat, Jaipur (Raj.).

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Chief Engineer (Rural), Public Health Engineering Department (Phed), Secretariat, Jaipur (Raj.).

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Chief Chemist, Public Health Engineering Department (Phed), Secretariat, Jaipur (Raj.).

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Chairman And Chief Engineer (Special Project), Water Sanitation Support Organization State Water And Sanitation Mission Rajasthan Address Esti Building, Sansthan Path, Jhalana Doongri, Jaipur Rajasthan.

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Director, Water Sanitation Support Organization State Water And Sanitation Mission Rajasthan Address Esti Building, Sansthan Path, Jhalana Doongri, Jaipur Rajasthan.

¶11

----Respondents

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For Appellant(s) : Mr. R.N. Mathur, Senior Advocate assisted by Mr. Shovit Jhajharia and Mr. Ayush Sharma For Respondent(s) :

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HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MR. JUSTICE UMA SHANKER VYAS

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Judgment

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16/12/2021

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This appeal is filed by the original petitioner to challenge the judgment of learned Single Judge dated 03.05.2021.

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(2 of 3)

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[SAW-550/2021]

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Briefly stated the facts are that the petitioner-company was awarded a contract by the State authorities for setting up of Block Level Water Testing Laboratories. According to the official respondents there was substantial delay beyond the contractual period in setting up such laboratories. After internal correspondence and certain tentative decisions arrived at by the authorities of Water and Sanitation Support Organization (State Water and Sanitization Mission, Rajasthan). The Secretary Public Health and Engineering Department ordered termination of the contract of the petitioner and desired that further procedure may be carried out. This order the petitioner challenged before the learned Single Judge. One of the main grounds raised in the petition and argued before the learned Single Judge was that the impugned order was passed without affording opportunity of being heard to the petitioner. Since the order resulted in adverse civil consequences such decision had to be rendered after hearing the petitioner. Learned Single Judge dismissed the petition by impugned judgment inter alia holding that relations between the petitioner-contractor and the department being purely contractual in nature principles of natural justice have no rule to play. It was observed that scope of principles of natural justice and right of hearing in relation to a particular contract are not available to a contractor and the rights of the contractor only flow from the terms of the contract.

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We are prepared to proceed on the basis that these observations of the learned Single Judge are not accurate in law. The State agencies and authorities even in contractual relations are bound by the equality clause flowing from Article 14 of the Constitution. The decision of the Supreme Court in case of Ajay

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(3 of 3)

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[SAW-550/2021]

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Hasia and Ors. Vs. Khalid Mujib Sehravardi and Ors., reported in (1981) 1 SCC 722 is sufficient for reference. However in the facts of the present case we are not inclined to entertain the appeal and resultantly the writ petition for the following reasons:-

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(i) The record would suggest that the project was a timeline project and there was a considerable delay in execution of the project. Who was responsible for such delay would be highly disputed question of fact. When the authorities therefore have decided to terminate the contract and award the contract to a new agency, any interference at this stage would further delay in execution of an important project.

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(ii) The option for the petitioner therefore would be to file a civil suit and establish the factual basis and seek appropriate relief before the civil court. If the petitioner chooses to exercise such right, the question of limitation would be seen from the angle of the petitioner prosecuting bonafide its relief before another court. (iii) The observations of the learned Single Judge with respect to the petitioner’s right of hearing as well as touching the merits of the impugned decisions of the authority would not be taken into consideration while deciding any proceedings that may be instituted.

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With these observations appeal is disposed of.

¶27

(UMA SHANKER VYAS),J

¶28

(AKIL KURESHI),CJ

¶29

KAMLESH KUMAR’/N.GANHDI/1

Sms Limited v. State of Rajasthan

Case brief

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Sms Limited v. State of Rajasthan

Case brief

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