1 IN THE HIGH COURT OF JHARKHAND AT RANCHI L.P.A. No. 390 of 2014 WITH L.P.A. No. 421 of 2014 In L.P.A. No.390 of 2014 Central Coalfields Limited, a Government of India Company, having its Office at Darbhanga House, P.O. Ranchi University, P.S. Kotwali, District Ranchi, through its General Manager (Admn.), Shri Birendra Trivedi, son of late H.N. Trivedi, resident of 2-D, Koila Bihar, Vardhman Compound, P.O. & P.S. Lalpur, District Ranchi. … … Appellant -versus- 1. Chanani Transport, a partnership firm through one of its partners, namely, Daya Nand Modi, son of Lok Nath Modi, resident of Shivaji Road, Ramgarh Cantt, P.O. & P.S. Ramgarh, District Ramgarh (Jharkhand). … … Respondent 2. Director (Technical), M/s. Central Coalfields Limited, Darbhanga House, P.O. Ranchi University, P.S. Kotwali, District Ranchi (Jharkhand).
3. General Manager (R), Rajrappa Project of M/s. Central Coalfields Limited, P.O. & P.S. Ramgarh, District Ramgarh (Jharkhand).
4. Staff Officer (Mining), Rajrappa Project of M/s. Central Coalfields Limited, P.O. & P.S. Ramgarh, District Ramgarh (Jharkhand). … … Proforma Respondents In L.P.A. No.421 of 2014 Chanani Transport, a Partnership Firm through one of its Partners, namely, Daya Nand Modi, son of Lok Nath Modi, resident of Shivaji Road, Ramgarh Cantt, P.O. & P.S. Ramgarh, District Ramgarh. … … Appellant -versus- 1. M/s. Central Coalfields Limited, a subsidiary of Coal India Limited, a Government of India Undertaking, having its registered Office at Darbhanga House, Ranchi, P.O. Ranchi, P.S. Kotwali, District Ranchi through its Chairman-cum-Managing Director.
2. Director (Technical), M/s. Central Coalfields Limited, Darbhanga House, Ranchi, P.O. Ranchi, P.S. Kotwali, District Ranchi.
3. General Manager (R), Rajrappa Project of M/s. Central Coalfields Limited, P.O. & P.S.Ramgarh, District Ramgarh.
4. Staff Officer (Mining), Rajrappa Project of M/s. Central Coalfields Limited; P.O. & P.S. Ramgarh, District Ramgarh. … … Respondents ---- CORAM: HON’BLE MR. JUSTICE VIRENDER SINGH, CHIEF JUSTICE HON’BLE MR. JUSTICE APARESH KUMAR SINGH2For the Appellant (CCL): Mr. Jagdeep Dhankar, Sr. Advocate Mr. A.K. Das, Advocate For the Respondent No.1: Mr. Sanjeev Sahay, Advocate (Chanani Transport) Mr. Abhishek Agrawal, Advocate Reserved on 18.02.2015 Pronounced on 10.04.2015 Per Virender Singh, C.J.
& Aparesh Kumar Singh,J We have taken up both the appeals on hand, viz. L.P.A. No.390 of 2014 filed by M/s. CCL, Ranchi (hereinafter to be referred to as CCL) and L.P.A. No.421 of 2014 filed by Chanani Transport, Ramgarh (hereinafter to be referred to as Chanani Transport) as both are aggrieved of the judgment handed down by learned Single Judge, dated 9th of September, 2014 in W.P.(C) No.6098 of 2013 filed by Chanani Transport inasmuch as all other issues except one have been decided against Chanani Transport whereas the aforesaid one issue has been decided against CCL. Both the appeals are at admission stage and with the consent of the learned counsel for both the sides we had taken up them on Board for their final consideration and reserved for orders on 18 th of February, 2015.
2. Certain facts need to be mentioned here to appreciate the controversy arisen between the parties.
3. On 23rd of November, 2009, Notice Inviting Tender (NIT) was issued by CCL for working of HEMM for removal of overburden from Quarry of Section I of Rajrappa Open Cast Project for which Chanani Transport was awarded the contract on 21.06.2010, which was for a period of 8 years and the total value of the contract was Rs.14181.48 lakh. Chanani Transport deposited the performance security by way of Bank Guarantee dated 12.08.2010, which was equivalent to 5% of the annualized value of the work. Subsequently, an agreement was executed between CCL and Chanani Transport on 12.08.2010 3 of which the General Terms and Conditions and Integrity Pact also forms a part. In terms of the agreement, it was the responsibility of the contractor to make his/their own arrangement for all materials, tools, staff and labourers required under the contractor, which shall include cost of lead, lift, loading, unloading, railway, freight, recruiting expenses and any other charges for the completion of the work to the entire satisfaction of the Company. According to CCL, it was the responsibility of Chanani Transport to procure diesel for running of machineries. Indian Oil Corporation had instructed its dealer not to make any bulk supply to any party as the bulk purchasers were required to purchase the oil (diesel) directly from the Indian Oil Corporation and in this regard a letter was issued by Indian Oil Corporation to one Modi Fuels dated 8 th of March 2013, in turn, a communication was send to Chanani Transport regretting their request to supply bulk diesel to it. Chanani Transport, then started insisting CCL for making arrangement for diesel in which regard certain letters are available on record.
4. Case of CCL is that although under the contract CCL was not under any obligation to supply diesel or any material, still in the interest of execution of the work, CCL agreed to supply diesel to Chanani Transport with a condition that Chanani Transport would have to pay departmental charges, which would include fair expenses of transportation of diesel from the depot of Oil Companies to the site including handling charges etc. Certain letters in this regard are also available on record and both the sides otherwise do not dispute factual aspect. However, Chanani Transport started claiming escalation on the rate of diesel, i.e., Rs.69.21 from April 2013 and this became the bone of contention when CCL responded that there was no rise in the price of diesel, rather CCL was charging the departmental charges, which was the cost 4 incurred for procuring the diesel at the site, which included handling charges also. Escalation was permissible when there is rise in the price of diesel and the expenses being asked for are those expenses, which the contractor had to incur, if he purchased the diesel from oil depot directly and transports the same at the site. Chanani Transport, thereafter, abandoned the execution of work with effect from April 2013, which, according to CCL, has resulted into huge losses to it.
5. In the meantime, Chanani Transport knocked at the door of Civil Judge, Senior Division, Hazaribagh by filing a Money Suit No.05 of 2012, claiming damages alleged to have been sustained by it for alleged breach of contract on the part of CCL, in which CCL put in appearance and also filed a Written Statement and a counter claim also claiming damages for the loss suffered by CCL due to deliberate breach of contract on the part of Chanani Transport.
6. CCL, thereafter, informed Chanani Transport, vide letter dated 11 th of April, 2013 that CCL was ready to supply diesel at the rate of Rs.69.20 paise per litre, however, the compensation for price variation was fixed at Rs.50.30 per litre from 16th of February, 2013. In terms of Clause 37.3 of STC, Chanani Transport claiming itself to be entitled for escalation at the rate of 69.21 per litre vide letter dated 15th of April, 2013 sought confirmation of the provision for the escalation, however, vide letter dated 17 th of April, 2013, CCL directed Chanani Transport to resume work for removal of overburden, failing which the contract would be terminated and damages would be recovered from Chanani Transport besides invoking the Bank Guarantee. Challenging the letter dated 14 th of April, 2013, the petitioner approached the Writ Court vide W.P.(C) No.2920 of 2013, which was permitted to be withdrawn with a liberty to file suit and/or to invoke arbitration clause. It needs to be mentioned here that when Chanani Transport filed aforesaid writ petition, it did not disclose the fact of filing the civil suit at 5 Hazaribagh and got the permission of withdrawal of the writ petition. It is, thereafter, that Chanani Transport, vide letter dated 4 th of September, 2013 requested CCL to refer the matter for arbitration to external independent monitor. However, vide letter dated 25 th September, 2013 CCL declined to entertain the request for referring the matter to external independent monitor for adjudication and ultimately, vide letter dated 16 th of October, 2013, the contract was terminated. In the meantime, Chanani Transport filed W.P.(C) No.6098 of 2013 seeking direction upon CCL to consider the grievances raised in the aforesaid letter and refer the matter to external independent monitor for monitoring the execution of the contract in terms of the Integrity Pact appended to General Terms and Conditions governing the transport and loading contract. During the pendency of the instant writ petition, the contract awarded to Chanani Transport was terminated by CCL on 16 th of October, 2013, which development constrained Chanani Transport to seek permission of the Writ Court for incorporating the prayer challenging the termination of the contract vide letter dated 16th of October, 2013, which permission was granted by the Court. It is during the pendency of the writ petition, subsequent letters dated 15.01.2014 and 02/03.06.2014 came to be passed whereby security deposit of Chanani Transport in relation to other contracts were sought to be forfeited/ withheld, which constrained Chanani Transport to lay formal application challenging the said order also. The learned Writ Court allowed the writ petitioner to file amended writ petition incorporating challenges to the order dated 16.10.2013 whereby contract was terminated,and also orders dated 15.01.2014 and 02/03.06.2014. The main objection taken by CCL before the Writ Court was with regard to maintainability of the writ petition on the ground that the dispute had arisen out of contract, which involved several disputed question of facts for which Chanani Transport had already approached the Civil 6 Court by filing Money Suit No.05 of 2012. It was further the case of CCL that Chanani Transport had abandoned the work and the contract was already terminated, therefore, the dispute could not be referred to an External Independent Monitor and that on the request of Chanani Transport only a Committee was constituted, which reported that an amount of Rs.7,96,476.05 has to be recovered on account of land rent, electricity consumption etc. Therefore, in terms of Clause 6.2 of General Terms and Conditions of contract, the contractor was liable to pay penalty up to 10% of the contract value and the contract value in the present case was Rs.14181.48 lakh and the amount forfeited was Rs.3,40,66,632.46 only and, therefore, for realizing the penalty, two Bank Guarantees amounting to Rs.1,17,13,950.00 and Rs.1,10,86,950.00 have been encashed in terms of Clause 9(g) of Section 3 of General Terms and Conditions. It was further the stand of CCL that under Clause 9.1 of Special Terms and Conditions of agreement, the contractor was required to arrange all materials, source, spares, bills, tackles etc. at his own cost, thus, it was the responsibility of Chanani Transport to arrange diesel for executing the work, therefore, the additional cost of diesel, which was realized for claiming additional charges, could not be basis for claiming escalation and at the request of Chanani Transport only, CCL had agreed to supply diesel for which handling charges were to be paid by Chanani Transport only. Therefore, the formulae of escalation was not applicable for handing charges as it could not be construed as increase in the price of diesel per litre, rather it was the cost involved for providing diesel at the site, therefore, Chanani Transport was bound by the terms and conditions of the contract.
7. So far as request of Chanani Transport for appointment an External Independent Monitor for which a direction was sought, initially in the main writ petition, which subsequently was amended on account of certain fresh 7 developments, the findings returned by the learned Writ Court is that Chanani Transport could not demonstrate that an External Independent Monitor was required to be appointed for resolution of disputes between the parties. Thus, the prayer seeking direction upon CCL to consider the grievance, as raised in letter dated 4th of September, 2013 was declined.
8. The next issue was with regard to appointment of Arbitrator and Chanani Transport had sought withdrawal of its earlier writ petition W.P.(C) No. 2920 of 2013 with a liberty in this regard. The learned Writ Court, on this aspect, referred to Cause 12 of the contract, providing “Settlement of Disputes” wherein it is specifically mentioned that if the differences persist, the settlement of the dispute shall be dealt with as per guidelines issued by Ministry of Finance, Government of India, in this regard and in case of parties, other than Government Agencies, redressal of dispute may be sought in Court of Law. Since Chanani Transport had sought reference of matter to an arbitrator for settlement of dispute vide its letter dated 4 th September, 2013, which request was declined by CCL on the ground that there was no provision for appointment of arbitrator, the learned Writ Court declined to issue any direction in this regard. In short, this issue was also decided against Chanani Transport.
9. With regard to other issue, whether the action of CCL in terminating the contract and imposing penalty upon Chanani Transport and invoking the Bank Guarantee was a justifiable action or that in terms of Clause 37.0 CCL was liable to compensate Chanani Transport for increase in the price of diesel, Learned Writ Court, after entering into the pleas taken by both the sides, ultimately, observed that any finding given on this aspect would prejudice the case of the parties in the Civil Court, therefore, refrained from deciding the issue whether Chanani Transport was entitled for payment of price variation on account of alleged increase in diesel price or not, as this issue involving 8 disputed question of facts would be properly examined by the Civil Court only. With regard to the order dated 16 th October, 2013, whereby the contract has been terminated, the finding returned by the Writ Court is that whether the so called breach committed by Chanani Transport, as is the case of CCL, has occasioned due to supervening circumstances as pleaded by Chanani Transport on account of ban imposed by Indian Oil Corporation vide its letter dated 08.03.2013 and warranted termination of contract or not was again an issue before the Civil Court. It therefore, declined to interfere with the challenge thrown to the order of termination of contract dated 16.10.2013 by Chanani Transport.
10. So far as penalty imposed by CCL for breach of terms of contract, the finding returned by the learned Writ Court is that may be CCL had submitted a counter claim in Money Suit No.05 of 2012, it was not precluded from recovering the amount from Chanani Transport on account of penalty/damages. A sum of Rs.8,84,056.52 was sought to be recovered on account of penalty against less execution of agreed quantity of coal and OB and similarly, electricity consumption charges amounting to Rs.50,225.20 and an amount of Rs.14,68,71,781.25 on account of land rent. For recovering all these charges mentioned in letter dated 15.01.2014, CCL was not required to approach Civil Court for determination of money due and payable to it. Thus, this issue is also decided in favour of CCL and against Chanani Transport.
11. In so far as communication dated 02/03.06.2014, whereby General Manager, Kuju Area has been asked to withhold the amount of Rs.10,77,48,167.54, the finding returned against CCL is that no reason has been given for withholding the said amount. It is held by the learned Writ Court that CCL has taken a plea that in the event of termination or suspension of contract, the security deposit and other dues for the contract in question or any 9 other work done by the contractor is liable to be forfeited and the restriction under the contract is that amount so forfeited shall not exceed 10% of the contract value. While referring to Clause 9(g) and 9.2 of general conditions of the contract, the learned Writ Court held that the amount of damages/penalty must be calculated/quantified before resorting to clause 9.2 of the Contract and the letter/communication dated 02/03.06.2014 does not indicate that after calculating the quantum of damages, the amount of Rs.10,77,48,167.54 has been withheld by CCL. Therefore, Chanani Transport could not be deprived of its right over the aforesaid amount, which has been withheld without following the procedure in law. It is, in this backdrop, the aforesaid letter dated 02/03.06.2014 has been found to be arbitrary and illegal and accordingly, quashed by the learned Writ Court.
12. CCL, primarily, is aggrieved of this finding only and has filed L.P.A. No. 390 of 2014 whereas Chanani Transport is aggrieved by the findings returned on the other issues and sought to seek all the reliefs as sought for in the writ petition [W.P.(C) No. 6098 of 2013]..
13. We have heard Mr. Jagdeep Dhankar, learned Senior Advocate assisted by Mr. A.K. Das, Advocate for the CCL and Mr. Sanjeev Sahay and Mr. Abhishek Agrawal appearing for Chanani Transport.
14. Mr. Jagdeep Dhankar, learned Senior Counsel appearing for the appellant- C.C.L at the outset while assailing the impugned judgment, so far as it relates to quashing of the letter no. 2/3.6.2014 and the findings of the learned Single Judge that the petitioner- Contractor would not be deprived of its right over the amount of Rs.10,77,48,167.54 without following the procedure of law, submitted that the learned Writ Court should not have entered into this issue at all after it had declined the other reliefs to the petitioner on the ground of pendency of civil suit between the parties. The present issue was not an 10 independent issue, and required entering into the adjudication of the terms and condition of the contract which should have been discreetly avoided by the learned Single Judge. The pendency of the civil suit over the subject matter where several disputed questions of fact were required to be determined effectively meant that the writ jurisdiction should not be exercised. It has been submitted that the learned Single Judge correctly declined the prayer made by the writ petitioner seeking direction for appointment of an External Independent Monitor and also for quashing of the termination of the contract on the ground of pendency of money suit. After termination of the contract there was no question of appointing an External Independent Monitor as the writ petitioner had not been able to demonstrate that the External Independent Monitor is required to be appointed for resolution of the dispute between the parties. Learned senior counsel also pointed out that since the parties are in litigation over the subject matter in Money suit No. 5 of 2012 , no purpose would be served by referring the matter for settlement of dispute in terms of Clause 12 of the Contract. Learned Court also consciously refrained from deciding the issue raised by the petitioner relating to the payment of price variation on account of alleged increase in diesel price as any finding on the issue would prejudice the case of the parties in Civil Courts as it involved disputed questions of fact. It is further submitted that whether the termination of the contract was occasioned by supervening circumstances as pleaded by the petitioner- contractor and warranted termination of the contract or not is again an issue before the Civil Court as rightly held by the learned Single Judge. It therefore restrained itself from interfering with the termination order. Having done so, the Writ Court was not correct in quashing the communication dated 2/3.6.2014 which was inextricably linked with the other issues in litigation between the parties before the Civil Court. 11 15. Learned counsel for the appellant- C.C.L raised the question over the conduct of the writ petitioner as it had deliberately made a submission at the time of withdrawal of W.P.C. 2920 of 2013 ( filed during the pendency of the money suit) for seeking liberty for filing either a suit and / or to invoke the arbitration clause. In the said writ petition, petitioner had challenged the communication dated 17.4.2013 whereby it was directed by the C.C.L to resume work, failing which, the contract would be terminated. The writ petitioner had suppressed the factum of filing of money suit before the Writ Court on the said occasion. Therefore, it was dis-entitled to seek discretionary and equitable relief under Article 226 of the Constitution of India as It had indulged in suppressio veri, suggestio falsi. On its submission the writ petition was dismissed with a liberty to file suit and / or to invoke the arbitration clause. The present writ petition therefore was an abuse of the process of Court. This fact was also brought by way of counter affidavit in the instant writ petition by the respondent – C.C.L, appellant herein.
16. Learned senior counsel while assailing the part of the judgment with which they are aggrieved, referred to the communication dated 2/3.6.2014 to submit that it was not even addressed to the writ petitioner but was an internal communication between the General Manager of Rajrappa Area and Kuju Area. He referred to clause 9(g) of the general condition of the contract and justified the impugned action of the appellant- C.C.L as the contractor being bound by the said terms was liable to forfeit the security deposit in the event of any default on his part and any other dues of this work or any other work of the Company also, subject to the condition that it would not exceed 10% of the contract value. The contract value was of Rs. 14181.48 Lakhs. The 10% of the said amount works out to be Rs. 14,18,14,800/- which was the pre-estimated liquidated damages that may be forfeited by the C.C.L under clause 9(g) of the 12 general condition of the contract. Since the C.C.L has forfeited Rs. 3,40,66,632.46 that it had in the present contract( as security deposit and retention money), the impugned communication was issued for recovery of balance amount of Rs.10,77,48,167.54. It is submitted that the two clause 9(g) and 9.2, operated in different areas i.e. Clause 9(g) indicates pre-estimated liquidated damage whereas Clause 9.2 concerns with unliquidated damages that calls for determination. Since the impugned action was under clause 9(g) and not under 9.2, the interpretation rendered by the Writ Court while quashing the impugned communication was untenable in law. Learned senior counsel has laid emphasis on the point that since clause 9(g) concerns predetermined liquidated damages, there was no requirement of any authority / court to determine the amount of damages as opined by the learned Single Judge. A clause similar to clause 9(g) has been upheld by the Hon'ble Supreme Court as a predetermined damage clause in the case of M/s H M Kamaluddin Ansari and Company Vrs. Union of India & ors. reported in (1983)4 SCC417 Elaborating on the interpretation of clause 9.2, it is submitted that it provides for determination of the amount to be recovered from contractor on cancellation of contract, for the expenditure incurred in completing the remaining work or in the event the remaining work is not completed the loss / damage suffered. In any case, the amount determined as per clause 9(g) or determination under clause 9.2 is liable to be recovered from any money due from the contractor or any account or under any other contract and in the event of any shortfall, the contractor shall be called upon to pay the same on demand.
17. In support of the submission made by the appellant-C.C.L. that when determination of disputed questions of fact is required involving interpretation of contractual terms and condition, learned senior counsel has referred to the legal position as laid down in catena of judgments rendered by the Hon'ble Supreme 13 Court and other High Courts including this Court as per which, the Writ Court should refrain from exercising its discretionary jurisdiction, more so when the parties have already subjected themselves to the remedy before the Civil Court. He has placed reliance on several decisions of the Hon'ble Supreme Court passed in the case of Rajasthan State Industrial Development and Investment Corporation and another Vrs. Diamond & Gem Development Corporation Limited and another reported in (2013) 5 SCC470 in the case of Kerala State Electricity Board & Anr. Vrs. Kurien E. Kalathil & others reported in AIR2000SC2573 a Division Bench judgment of this Court rendered in the case of M/s Mineral Traders & Engineers, Jharia, Dhanbad Vrs. Central Coalfields Ltd. & others passed in L.P.A. No. 365 of 2013 dated 7.3.2014 and in the case of Keshava Nandan Prasad Vrs. State of Jharkhand & others passed in W.P.(PIL) No. 3690 of 2013 dated 6.3.2014. He has further advanced his submission that the impugned communication dated 2/3.6.2014 was an internal communication between the General Managers of C.C.L and no quasi judicial function was involved therein. Therefore, the observation of the learned Single Judge that the impugned communication did not contain any reason was totally out of context and the ratio laid down by the Hon'ble Supreme Court in the case of S.N. Mukherjee vs. Union of India [(1990) 4 SCC594 and M.L. Jaggi vs. Mahanagar Telephones Nigam Ltd. & others [(1996) 3 SCC119 relied upon by the learned Single Bench were inapplicable to the fact of the present case. The communication between the contracting parties cannot be brought at par with a quasi judicial order. Therefore, learned senior counsel for the appellant- C.C.L has prayed for setting aside the impugned judgment, so far as it relates to quashing of the letter dated 2/3.6.2014 whereby an amount of Rs. Rs.10,77,48,167.54/- was withheld by the respondent- C.C.L. 14 18. Mr. Sanjeev Sahay, learned counsel for the writ petitioner- appellant in the connected L.P.A. No. 421 of 2014 while taking us through the sequence of facts leading to the passing of the impugned judgment submitted that the present writ petition was preferred for appointment of an Independent Monitor as per the integrity pact for monitoring execution of the contract to stop rampant corruption prevailing in C.C.L. During pendency of the writ petition, C.C.L has indulged in termination of the contract through its letter dated 16.10.2013 and had invoked bank guarantee. The writ petitioner therefore also sought to challenge the order dated 15.1.2014 and 2/3.6.2014 where by the security deposits furnished by the petitioner and dues in relation to other contracts were sought to be appropriated / withheld. This subsequent development were allowed to be challenged in the writ petition. It had also sought for stay of fresh tender process and for refund of the amount as mentioned in the letter dated 15.1.2014 and 2/3.6.2014. The learned Single Judge has however declined the other reliefs prayed for except the prayer for quashing of the impugned communication dated 2/3.6.2014 where under an amount of Rs.10,77,48,167.54/- were being forfeited invoking clause 9(g) of the general condition of the contract. Learned counsel for the writ petitioner submitted that there was rampant corruption in C.C.L and as per the integrity pact reached between C.C.L and Transparency International, petitioner had made a request for appointment of an External Independent Monitor for monitoring the execution of the contract which however has been declined by the learned Single Judge finding that the writ petitioner could not demonstrate as to how he will resolve the dispute after the termination of the contract. It is submitted that on account of Indian Oil Corporation (I.O.C) stopping the supply of HSD to bulk consumer including the petitioner, petitioner was not able to procure diesel from the retail outlet and at the same time price of diesel had also increased. When a 15 request was made to the C.C.L, it arbitrarily suggested to supply HSD @ Rs.69.21 per liter while compensation was fixed @ Rs.50.33 per liter, effectively causing loss to the plaintiff of Rs. 19 approximately per liter. Writ petitioner was therefore left to either follow the corrupt practice or fall prey to the arbitrariness of the respondent - C.C.L as it could not purchase HSD from the retail outlet. The External Independent Monitor would have been able to eradicate such corruption. However, learned Writ Court not only refused to grant the said relief but also refused to refer the matter for settlement of dispute under clause 12 on account of the fact that a civil suit was pending between the parties. Learned Writ Court also refused to enter into the question relating to the claim for escalation on account of supervening circumstances created by C.C.L on the same ground of pendency of civil suit between the parties. The Writ Court as a matter of fact though quashed the impugned communication dated 2/3.6.2014 but no order was passed with respect to the invoking of the bank guarantee and refund of the amount under the bank guarantee. Writ petitioner was therefore constrained to challenge the said findings of the Writ Court which went against it.
19. Learned counsel for the writ petitioner- appellant has relied upon the judgment rendered in the case of Food Corporation of India Vrs. Seil Ltd. reported in (2008)3 SCC440 in the case of Whirlpool Corporation Vrs. Registrar of Trade Marks reported in 1998(8) SCC1 in the case of Union of India & others Vrs. Tantia Construction reported in (2011)5 SCC697in support of his contention that contractual dispute involving public law element are amenable to writ jurisdiction and presence of alternative remedy does not bar maintainability of the writ petition. On the second issue relating to the action of the C.C.L to appropriate money from other contracts as being illegal, learned counsel for the writ petitioner has relied upon judgments rendered by the 16 Hon'ble Supreme Court in the case of Union of India Vrs. Raman Iron Foundry reported in (1974)2 SCC231 in the case of Mohan Meakin Breweries Ltd. Vrs. Union of India and two others by Delhi High Court reported in AIR1975Delhi 24 and also the judgment relied upon by the appellant- C.C.L in the case of M/s H M Kamaluddin Ansari and Company Vrs. Union of India reported in (1983)4 SCC417. According to learned counsel for the writ petitioner, the C.C.L had no authority to appropriate amount of other pending bills and the case of Raman Iron Foundry was not fully overruled by the Hon'ble Supreme Court in the case of H.M.Kamaluddin Ansari & Company (supra), where it was held that the Government had no power to appropriate money from other contract. Learned counsel for the writ petitioner also assailed part of the impugned judgment where the learned Writ Court had refused to quash the order of termination. He submitted that the impugned termination was in violation of Principle of Natural Justice as no show cause had been given to it nor any reasons were indicated. In support of the aforesaid submission, he has relied upon the judgment rendered by this Court in the case of Modi Projects Ltd, Ranchi Vrs. State of Jharkhand & others reported in 2012(3)J.L.JR60 in the case of DTC Securities Ltd. Vrs. Jharkhand State Mineral Development Corporation & others reported in 2013(1) JBCJ269JHC).
20. On the question relating to forfeiture of the amount of Rs.10.77 Crores by the impugned communication dated 2/3.6.2014 and also the invoking of bank guarantee of the petitioner, learned counsel for the writ petitioner submitted that law on liquidated damages is well settled. When a party alleges breach of contract and claims liquidated damage, it could only be a genuine, pre-estimate of reasonable compensation and not in the form of a penalty. Where the loss in terms of money can be determined, party claiming compensation must prove 17 loss suffered by him. If the party claiming breach is not able to prove the actual loss suffered arising from such breach, the Court cannot grant compensation beyond such reasonable pre-estimate. Such ingredients has to be proved before the Court of law. Therefore, the learned Single Judge was justified in quashing the impugned communication dated 2/3.6.2014. There was no determination of the pre- liquidated damage amount by any authority or Court. However, learned Writ Court failed to pass any order on the question of refund of the amount of bank guarantee already invoked by it, though there was no justification for the same on the part of the C.C.L. Learned counsel has submitted that the supervening circumstances had rendered the performance of the contract impossible on account of refusal of supply of HSD to the bulk consumer by the I.O.C and further imposition of very heavy rate by C.C.L for such supply without any justification. He has relied upon judgment rendered by the Hon'ble Supreme Court in the case of ONGC Vrs. Saw Pipes Ltd. reported in (2003) 5 SCC705and also in the case of M/s Kailash Nath Associates Vrs. Delhi Development Authority & another reported in 2015 SCC Online SC19in Civil Appeal No. 193 of 2015. Learned counsel for the writ petitioner submitted that the findings of the learned Writ Court, so far as it declined the aforesaid reliefs to the petitioner, are not proper in the eye of law and therefore, it needs to be disturbed.
21. Mr. Jagdeep Dhankar, learned senior counsel for the appellant- C.C.L in his reply has reiterated his submissions that the Writ Court should be discreet in exercising jurisdiction in such contractual matter where disputed questions of fact involving interpretation of terms and conditions of the contract are to be adjudicated, more so when the issue in controversy is pending before Civil Courts, as has already been found by the learned Single Judge. It is submitted that there is no element of doubt so far as the forfeiture of the amount of 18 Rs.10.77 Crores vide impugned communication dated 2/3.6.2014 is concerned under Clause 9(g) of the general conditions of the contract as it is very clear in its language. The law related to predetermined liquidated damages is well settled and there is no ambiguity that if the parties have consciously arrived at such an amount as genuine pre-estimate of damage, no determination is required to be made by any Court or authority for forfeiting the said amount. Therefore, part of the judgment which quashed the impugned communication dated 2/3.6.2014 is wholly bad in law when the learned Single Judge had consciously refused to exercise its jurisdiction on the issue relating to other claims arising out of the same contract between the parties on the ground of pendency of the civil suit between them.
22. We have heard learned counsel for the parties at length and perused the relevant records of the case. As the narration of chronology of facts discloses, the writ petitioner who was under a contract dated 12.08.2010 for working of HEMM for removal of over burden from quarry of CCL for a period of 8 years for a total value of Rs.14181.48 lakh was facing difficulty in procurement of diesel on account of decision of I.O.C not to supply HSD to the bulk consumers. The correspondence between the writ petitioner and C.C.L. on its claim for supply of HSD by C.C.L and the stand of the C.C.L to make such supply @ Rs.69.21 and on question of escalation become the bone of contention between the parties. The writ petitioner even before invoking the jurisdiction of the Writ Court, in the first round of litigation in W.P.C No. 2920 of 2013 challenging the communication dated 17.4.2013 where under it was directed by the C.C.L to resume work, had already invoked the jurisdiction of the Civil Judge, Sr. Division, Hazaribag in Money Suit No. 5 of 2012 instituted on 30.6.2012 for the following relief:-
“22. That the plaintiff is entitled to and pray for the following reliefs:
19. A. That it be declared that as per contract the plaintiffs are entitled to be compensated for the breach of the terms of the agreement dated 12.7.2010 entered into between the parties as also for default in providing amenities, facilities and securities in the execution. B. That by an appointment of Chartered Accountant or an accountant of the officers of the court the total amount recoverable on account of diesel escalation, wages from time to time lack of amenities, facilities, securities etc. till recovery and final decree be awarded and the same be realized and recovered from the defendants and be paid to the plaintiff. C. That the cost of the suit be awarded in favour of the plaintiff. D. That any other relief just and equitable the plaintiff is found entitled to.” The appellant- C.C.L herein had also appeared and contested the suit by filing written statement. However, while withdrawing W.P.C2920of 2013 before the learned Single Judge, the writ petitioner did not bring it to the notice of the learned Writ Court that it had already invoked the jurisdiction of the Civil Court . The writ petitioner was allowed to withdraw the writ petition vide order dated 23.8.2013 with a liberty to file suit and / or to invoke arbitration clause. Therefore there was suppression of material facts by the writ petitioner.
23. This fact was apparently brought on record by the respondent – C.C.L in their counter affidavit filed in the instant writ petition. The writ petitioner however preferred the present writ petition initially for a direction upon the respondent- C.C.L to consider the grievance raised in letter dated 4.9.2013 of the petitioner and to refer the matter to the External Independent Monitor for monitoring the execution of the contract in terms of the integrity pact. In the meantime the contract had been terminated on 16.10.2013 and after its termination C.C.L decided to recover the security deposit furnished by the writ petitioner by invoking clause 9(g) of the general conditions of the contract. This order was subsequently allowed to be challenged in the writ petition.
24. As a proposition of law well settled by the Apex Court, ordinarily the Writ Court does not interfere in contractual matter where disputed question of facts are involved and determination on terms and condition of the contract are to be made. The Hon’ble Supreme Court in the case of Rajasthan State Industrial Development and Investment Corporation and another Vrs. Diamond & Gem Development Corporation Limited and another reported in (2013) 5 SCC470has held as follows:
20. 19. There can be no dispute to the settled legal proposition that matters/ disputes relating to contract cannot be agitated nor terms of the contract can be enforced through writ jurisdiction under Article 226 of the Constitution. Thus, the writ court cannot be a forum to seek any relief based on terms and conditions incorporated in the agreement by the parties. [Vide Bareilly Development Authority v. Ajai Pal Singh and State of U.P. v. Bridge & Roof Co. (India) Ltd.] 20.In Kerala SEB V. Kurien E. Kalathil this Court held that a writ cannot lie to resolve a disputed question of fact, particularly to interpret the disputed terms of a contract observing as under: (SCC pp. 298-99, paras 10-11)
“10. … The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. … If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. … 11. … The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. … The contractor should have relegated to other remedies.”
21. It is evident from the above that generally the Court should not exercise its writ jurisdiction to enforce the contractual obligation. The primary purpose of a writ of mandamus is to protect and establish rights and to impose a corresponding imperative duty existing in law. It is designed to promote justice (ex debito justitiae). The grant or refusal of the writ is at the discretion of the court. The writ cannot be granted unless it is established that there is an existing legal right of the applicant, or an existing duty of the respondent. Thus, the writ does not lie to create or to establish a legal right, but to enforce one that is already established. While dealing with a writ petition, the court must exercise discretion, taking into consideration a wide variety of circumstances, inter alia, the facts of the case, the exigency that warrants such exercise of discretion, the consequences of grant or refusal of the writ, and the nature and extent of injury that is likely to ensue by such grant or refusal.
25. In the instant case in relation to the alleged breach arising out of the same contract, the writ petitioner has invoked the jurisdiction of Civil Court, Hazaribag in Money Suit No. 5 of 2012 claiming compensation for breach of the terms of the agreement. C.C.L has also preferred a counter claim for indemnifying itself of the loss suffered due to deliberate action / omission on the part of the plaintiff / writ petitioner in the performance of the contract to the tune of Rs. 9114.34 lakhs along with interest. In the wake of the litigation pending before the Civil Court on the very allegation of breach of agreement by both the writ petitioner- contractor and the C.C.L, in our opinion the Writ Court was right in refusing to enter into any question relating to determination of the issue whether the contractor was entitled for price variation on account of alleged 21 increase in diesel price or not. The Writ Court was also justified in refusing to render any finding on the order of termination of the contract between the parties as it could also have a bearing on the outcome of the pending suit in civil court where the parties have alleged breach of terms of the contract against each other. The question relating to the legality and correctness of the termination of the contract could also properly be gone into by the Civil Court concerned where the suit was pending. The issue raised before the Writ Court on that score was not divorced of the essential substratum of the dispute pending adjudication before the learned Civil Judge, Hazaribag.
26. We therefore did not find any infirmity so far as findings of the learned writ court on these prayers are concerned. We may also hasten to add here that when the contract between the parties itself had been terminated on 16.10.2013, the plea raised in the instant writ petition initially for independent monitoring of the execution of the contract by external independent monitor had been in effect rendered infructuous. There could not be monitoring of the execution of the contract any more after it had been terminated by C.C.L. On that score also the findings of the learned Single Judge does not appear to suffer from any error in law or on fact.
27. However, we do find that the learned Writ Court at para 17 of the judgment has come to finding that the C.C.L was not required to approach the Civil Court for determination of the money due and payable to it on account of electricity consumption , land rent etc as they are matters of record. On that score the writ court negatived the plea of the writ petitioner that C.C.L be precluded from recovery of the amount due as penalty of damages for such breach of terms of contract. However, on the question of withholding of the amount of Rs.10.77 Crores and odd by the impugned communication dated 2/3.6.2014 issued by the General Manager, Kuju area, learned writ court on consideration of the clause 9(g) and 9.2 seems to have come to a conclusion that respondent – C.C.L had not quantified the amount of penalty nor brought on record any communication to the writ petitioner whereby it had been intimated the amount of damages to be recovered from it. The learned writ court therefore found the action of the respondent - CCL as being unsupported by reasons and therefore, arbitrary and illegal. The Appellant – C.C.L on its part 22 has come forward with the explanation that amount so recovered was in fact 10% of the total contract value of Rs. 14181.48 lakh which is 14,18,14,800/-. This according to it is the pre-estimated damage recoverable under Clause 9(g) of the General Condition of the Contract. Since the CCL had forfeited Rs.3,40,66,632.46 as security deposit and retention money of the present contract, impugned communication had been issued for recovery of the balance amount of Rs. 10,77,48,67.53/-. as per the provision of clause 9(g) from dues of other works of the writ petitioner. Both the parties have addressed this court on the aforesaid issue relying upon the judgment rendered by the Hon’ble Supreme Court in the case of M/s Kamaluddin Ansari and Companyy Vrs. Union of India & others(supra) where the judgment rendered in the case of Union of India and Rama Iron Foundry (Supra) has also been considered. Learned counsel for writ petitioner has also relied upon the judgment rendered by the Apex Court in the case of M/s Kailash Nath Associates(supra) in support of his submission.
28. The instant issue in our opinion needs to be looked at from more than one perspective. In the first place, we fail to understand as to why the instant dispute relating to withholding / forfeiture of an amount of Rs. 10.77 Crores and odd by C.C.L could not be raised before the Civil Court where admittedly the writ petitioner himself has gone seeking compensation for the alleged breach of terms and conditions for the same agreement, where C.C.L had also appeared and submitted its counter claim. We have affirmed the findings of the learned Writ Court in so far as it refused to get into the claim of the writ petitioner for payment of compensation for price variation on account of alleged increase in diesel price, as disputed questions of fact involved therein could only be examined by the Civil Courts. We are also in agreement with the view of the learned Single Judge that the agreement stipulates that C.C.L is entitled to terminate the contract for breach of its terms, and whether the so called breach committed by the petitioner was due to supervening circumstances as pleaded by him on account of ban imposed by I.O.C vide letter dated 8.3.2013 was an issue before the Civil Court. Therefore no interference could be made in the order of termination of contract dated 16.10.2013. Therefore, if the petitioner- contractor had a valid reason to be aggrieved by the impugned letter dated 23 2/3.6.2014, the same issue being so inextricably linked with the dispute relating to the breach of agreement and termination of contract involving disputed questions of fact upon construction of terms and conditions of agreement itself, the same could be raised and adjudicated before the learned Civil Court where the money suit is pending.
29. Since both the parties have relied upon the judgment rendered by the Hon'ble Supreme Court in the case of M/s H M Kamaluddin Ansari and Company Vrs. Union of India (supra), it requires to be seen whether such a relief could be granted in writ jurisdiction if the facts on issue are not disputable.
30. It is to be noted from perusal of the impugned communication dated 2/3.6.2014 that it is a communication between the General Manager, Rajrappa Area and General Manager of Kuju Area, C.C.L. relating to withholding of Rs. 10,77,48,167.54 towards balance dues against M/s Chanani Transport – writ petitioner. The content of the letter is quoted herein below for better appreciation:- Sub: Regarding withholding of Rs. 10,77,48,167.54 towards Balance Dues against M/s Chanani Transport “ We have processed a proposal for approval of the competent authority to recover the Balance Dues or Rs. 10,77,48,167.54 only from Kuju Area as the said contractor is presently working there. Meanwhile, you are requested to withhold the above amount till the approval of competent authority is received from CCL Headquarter, Ranchi. This is in continuation to this office letter GM®/AGM- SO(M)/Outsourcing/14/14/543 dated 06.03.2014” A bare perusal of the letter would indicate that while the correspondence between the officials of C.C.L is on the subject relating to withholding of the aforesaid amount, the language used in the letter speaks of a proposal of approval of a competent authority for recovery of the balance dues of Rs. 10.77 Crores and odd. The General Manager, Kuju Area has therefore been requested to withhold the aforesaid amount till the approval of the authority is received from the C.C.L headquarter. We are inclined to take this view upon perusal of the aforesaid communication that C.C.L intended to withhold the aforesaid amount from any dues of the petitioner- contractor for not only this work or any other work done under the Company till the approval for recovery is received from the competent authority. C.C.L has explained that the said 24 amount of Rs.10.77 Crores is the balance of the 10% of the contractual value of Rs. 14181.48 lakhs which it intended to withhold/ forfeit invoking clause 9(g) of the general conditions of the contract. As a matter of fact, the 10% of the contractual value comes to Rs.14,18,14,800/- and out of which C.C.L had already forfeited Rs. 3,40,66,632.46 from the security deposit of the petitioner by invoking the bank guarantee and the retention money of the contract. The explanation of the appellant - C.C.L is quite simple and pure mathematics and it is clear that the said amount is calculated on a simple formula as provided under Clause 9(g) of the general conditions of the contract. In the aforesaid backdrop Clause 9(g) and 9.2 is being quoted herein below as they are material to be noticed to decide the controversy. 9(g) “The work shall, throughout the stipulated period of contract, be carried out with all due diligence on the part of the contractor. In the event of termination or suspension of the contract, on account of default on the part of the contractor, as narrated hereinbefore, the security deposit and their dues of this work or any other work done under this company shall be forfeited and brought under the absolute disposal of the company provided, that the amount so forfeited shall not exceed 10% of the contract value. 9.2 “On cancellation of the contract or on termination of the contractor, the Engineer in charge shall have powers: a. to carry out the incomplete work by any means at the risk of the contractor. b. to determine the amount to be recovered from the contractor for completing the remaining work or in the event the remaining work is not to be completed the loss/ damage suffered, if any, by the company after giving credit for the value of the work executed by the contractor up to the time of cancellation less on account payments made till date and value of contractor's materials, plant, equipment, etc. taken possession of after cancellation. c. to recover the amount determined as above, if any, from any moneys due to the contractor or any account or under any other contract and in the event of any shortfall, the contractor shall be called upon to pay the same on demand. The need for determination of the amount of recovery of any extra cost/ expenditure or of any loss/damage suffered by the company shall not however arise in the case of termination of the contract of death/demise of the contractor as stated in 9.1(d).”
31. Upon perusal of the terms of the two clause, we are not in doubt that the forfeiture / withholding of the said amount under the impugned letter dated 2/3.6.2014 is covered under Clause 9(g) and not Clause 9.2.of the general conditions of the contract. Clause 9.2 stipulates the conditions where on cancellation of the contract, the Engineer in-charge shall carry out the 25 incomplete work at the risk of the contractor and determine the amount to be recovered from the contractor for completing the remaining work or in the event the remaining work is not be completed, the loss/damage suffered if any, by the company, after giving credit for the value of the work executed by the contractor up to the time of cancellation, less on account payments made till date and value of contractor's materials, plant, equipment, etc. taken possession of after cancellation. The said amount determined is to be recovered, if any, from any moneys due to the contractor or any account or under any other contract and in the event of any shortfall, the contractor shall be called upon to pay the same on demand. The writ petitioner has not been able to make out a case that the amount being withheld/ forfeited is on account of works executed by the C.C.L. after cancellation of the contract to be carried out in completing the work or in relation to any loss / damages suffered by the Company if the work could not be completed nor has CCL pleaded such a scenario. In such event, the forfeiture/ withholding of the aforesaid amount of Rs.10.77 Crores by the impugned letter out of a total amount of Rs. 14181.48 lakhs is supported by clause 9(g) of the general conditions of the contract. The Company has come forward with a case that the contract has been terminated on account of default on the part of the contractor which stipulates forfeiture of the security deposit and other dues from not only this work but from any other work up to the amount not exceeding 10% of the contract value.
32. In the aforesaid factual discussion, the ratio of the judgment rendered by the Hon'ble Supreme Court in the case of M/s H.M. Kamaluddin Ansari and Company Vrs. Union of India & others (supra) is to be understood and whether it applies to the present case. In the said case, the matter had come before the Hon'ble Supreme Court in two connected appeals from the judgment and order of Allahabad High Court, one of which arose out of the proceeding under Section 20 of the Arbitration Act and other under Section 33 of the Arbitration Act. A question had arisen relating to the interpretation of clause 18 of the general conditions of the contract contained in the standard form of the contract entered into by the parties and also relating to the ambit and scope of Section 41 of the Arbitration Act. Since the parties have relied upon the said judgment on the interpretation of clause 9(g) of the general conditions of the 26 present contract between the parties, it is appropriate to refer to clause 18 which was the subject matter of interpretation in the judgment of M/s H.M Kamaluddin Ansari & Company(supra) at para 3, the same is being quoted herein below:- Para 3, Clause 18:- Recovery of sums due.—Whenever any claim for the payment of a sum of money arises out of or under the contract against the contractor, the purchaser shall be entitled to recover such sum by appropriating in whole or in part, the security, if any, deposited by the contractor, and for the purpose aforesaid, shall be entitled to sell and/or realise securities forming the whole or part of any such security deposit. In the event of the security being insufficient, the balance and if no security has been taken from the contractor, the entire sum recoverable shall be recovered by appropriating any sum then due or which at any time thereafter may become due to the contractor under the contract or any other contract with the purchaser or the Government or any person contracting through the Secretary. If such sum even be not sufficient to cover the full amount recoverable, the contractor shall on demand pay to the purchaser the balance remaining due....”.
33. In the said case when the appellant had failed to supply the goods under the contract with Directorate General of Supplies and Disposals (DGS&D), the contract was cancelled and DGS &D had called upon the appellant to pay the amount which it had incurred on account of making risk purchases, failing which alternative arrangements were to be made for recovering the same. The appellant had moved petition under Section 33 of the Arbitration Act before the Court alleging that there was no concluded contract in existence between the parties containing any arbitration clause, while the Union of India took a stand that there was concluded contract between the parties which bound the appellant- Firm. The appellant sought injunction under Section 41 of the Second Schedule of the Arbitration Act and Order 39 Rules 1 and 2 read with Section 151 of the Code of Civil Procedure restraining the respondent- Union of India from appropriating, withholding or recovering the amount claimed from its other bills in any manner whatsoever. On the question whether the respondent- Union of India was entitled to withhold the amount from the contractual dues arising out of other contract applying clause 18 or not, the Hon'ble Supreme Court after considering the observation made in the case of Union of India Vrs. Raman Iron Foundry(supra) and also the judgment rendered by the full Bench of Delhi High Court in the case of Mohan Meakin Breweries Ltd. Vrs. Union of India (supra) held as follows:- Para 28:- Clause 18 of the standard form of contract earlier was slightly differently worded and it read “whenever under this contract 27 any sum of money is recoverable from and payable by the contractor”. But this formula was deliberately and advisedly altered when the present standard form was introduced and instead the words “whenever any claim for payment of a sum of money arises” were substituted and this chance in phraseology indicated that in order to attract the applicability of the present Clause 18, it was not necessary that there should be a sum of money due and payable by the contractor to the purchaser, but it was enough if there was a mere claim on the part of the purchaser for payment of a sum of money by the contractor irrespective of the fact whether such sum of money was presently due and payable or not. This Court, however, did not attach importance to this aspect of the matter by observing: (SCC p. 242, para
10) “We do not think it is legitimate to construe Clause 18 of the contract between the parties by reference to a corresponding clause which prevailed in an earlier Standard Form of Contract. This is not a statute enacted by the legislature where it can be said that if the legislature has departed from the language used by it in an earlier enactment, it would be a fair presumption to make that the alteration in the language was deliberate and it was intended to convey a different meaning. It is a clause in a contract which .we are construing and there, any reference to a similar or dissimilar clause in another contract would be irrelevant.” Para 29:- The Court itself while interpreting Clause 18 of the contract has observed: (SCC p. 240, para
8) “It is true that the words “any claim for the payment of a sum of money” occurring in the opening part of Clause 18 are words of great amplitude, wide enough to cover even a claim for damages, but it is a well settled rule of interpretation applicable alike to instruments as to statutes....” But while dealing with another aspect of clause 18 observed to the contrary that it should not be construed as a statute. It may, however, be pointed out that even after the change in the language of Clause 18 of the standard agreement the Union of India cannot be injuncted from withholding the amount under other bills of the contractor. But it can certainly be injuncted from recovering or appropriating it to the damages claimed. Para 31:-We are clearly of the view that an injunction order restraining the respondents from withholding the amount due under other pending bills to the contractor virtually amounts to a direction to pay the amount to the contractor appellant. Such an order was clearly beyond the purview of clause (b) of Section 41 of the Arbitration Act. The Union of India has no objection to the grant of an injunction restraining it from recovering or appropriating the amount lying with it in respect of other claims of the contractor towards its claim for damages. But certainly Clause 18 of the standard contract confers ample power upon the Union of India to withhold the amount and no injunction order could be passed restraining the Union of India from withholding the amount”.
34. As is obvious, the Hon'ble Supreme Court while interpreting as aforesaid clearly held that under clause 18 of the standard agreement, Union of India cannot be injuncted from withholding the amount from other bills of the contract. But it can certainly be injuncted from recovering or appropriating it to the damages claimed. It also clarified that in order to attract the applicability of the present clause 18, it was not necessary that there should be a sum of money 28 due and payable to the purchaser but it was enough if there was mere claim on the part of the purchaser for payment of a sum of money by the contractor irrespective of the fact whether such sum of money was presently due and payable or not.
35. The judgment relied upon by the writ petitioner rendered in the case of M/s Kailash Nath Associates Vrs. Delhi Development Authority & Another in Civil Appeal No 193 of 2015(supra) by the Apex Court related to the forfeiture of earnest money under the terms and conditions of the auction by D.D.A. against the appellant as he had failed to deposit the premium of the plot allotted in his favour at the time of auction. In the said context, the Hon'ble Supreme Court has held at para 43 which is quoted herein below:- “Para 43:-On a conspectus of the above authorities, the law on compensation for breach of contract under Section 74 can be stated to be as follows:
1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the Court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. Similarly, in cases where the amount fixed is in the nature of penalty, only reasonable compensation can be awarded not exceeding the penalty so stated. In both cases, the liquidated amount or penalty is the upper limit beyond which the Court cannot grant reasonable compensation.
2. Reasonable compensation will be fixed on well known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act.
3. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the Section.
4. The Section applies whether a person is a plaintiff or a defendant in a suit.
5. The sum spoken of may already be paid or be payable in future.
6. The expression “whether or not actual damage or loss is proved to have been caused thereby” means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre estimate of damage or loss, can be awarded.
7. Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached Section 74 would have no application”. 29 The instant case, however admittedly relates to alleged breach of terms and conditions of the contract which the parties had entered and were governed thereby. Therefore, we are of the view that the judgment rendered in the case of M/s Kailash Nath Associates (supra) does not apply on all score to the case of the parties before us, rather, as we have noticed the judgment rendered by the Apex Court in the case of M/s Kamaluddin Ansari & Company(supra) are applicable to the facts and circumstances of the case where similar conditions of the contract relating to withholding/ forfeiture of money due from the contract or other works was under consideration in case of termination of a contract on account of alleged breach by one of the parties.
36. In the factual matrix of the present case, as we have found from perusal of the impugned communication dated 2/3.6.2014 , C.C.L intended to withhold an amount of Rs. 10.77 Crores and odd from the petitioner till the approval of the proposal by the competent authority to recover the balance due. Considering the issue in the aforesaid light and on the interpretation of clause 9(g), this amount was part of 10% of the contract value, which was sought to be forfeited /withheld by the C.C.L from the petitioner through its security deposit and other dues not only of this work but of any other work on account of termination of the contract allegedly on the default on the part of the contractor. The impugned letter, therefore cannot be said to have been issued in purported exercise of power conferred under clause 9.2 of the general conditions of the contract as has been found by the learned Single Judge. Though, we are of the opinion that the instant issue could also have been relegated for adjudication before the learned Civil Court where the parties are in litigation on a claim arising out of breach of the contract, however in the background of the facts and laws discussed herein above, we are inclined to hold that the C.C.L could not be injuncted from withholding the amount from other bills of the contractor but it can certainly be injuncted from recovering it or appropriating it to the damages claimed, for the time being, till the claim of the parties arising out of the alleged breach of contract are adjudicated by the competent Civil Court. It is ordered accordingly.
37. Having arrived at the aforesaid considered opinion, we find that the learned Single Judge was not right in quashing the letter dated 2/3.6.2014 as 30 arbitrary and illegal being persuaded by the plea of the writ petitioner – contractor that such amount could not be withheld by resorting to clause 9.2 of the general conditions of the contract before it is calculated / quantified following the procedure of law.
38. Having held as above, the parties are now left to pursue their grievance in the pending civil suit before the learned Civil Court, Hazaribag in accordance with law. Needless to say that any observation made herein above or by the learned Single Judge would not prejudice the case of the parties on merits before the learned Civil Judge, Senior Division, Hazaribag.
39. Consequently, L.P.A. No. 421 of 2014 preferred by the writ petitioner- appellant is dismissed. L.P.A. No. 390 of 2014 preferred by the appellant- CCL is allowed, however in the manner indicated herein above. (Virender Singh, C.J.) (Aparesh Kumar Singh, J.) LAK/ A. Mohanty High Court of Jharkhand, Ranchi Dated, the 10th April, 2015