1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (C) No. 3987 of 2016 ------- 1.Senbo Engineering Ltd., a company incorporated under the provisions of the Companies Act, 1956, having registered office at 87, Lenin Sarani, P.O & P.S. Lenin Sarani, District: Kolkata-700013, West Bengal through one of it's directors namely Sri Saktimay Chakraborty, son of Late Hiranmay Chakraborty, resident of 43/3/2, Baishnabghata Road, P.O Naktala & P.S. Netaji Nagar District Kolkata, West Bengal. 2.Sri Saktimay Chakraborty, son of Late Hiranmay Chakraborty, resident of 43/3/2, Baishnabghata Road, P.O Naktala & P.S. Netaji Nagar, District Kolkata, West Bengal.... … … Petitioners Vs. 1.The Union of India, through the Secretary, Ministry of Railways, Government of India, Rail Bhawan, P.O & P.S. Parliament Street, District: New Delhi-110001. 2.The Dy. Chief Engineer (Con)-III, East Central Railway, Canary Hill Road, Dipugarah Colony, Near Old DAV School, P.O & P.S Hazaribagh, District Hazaribagh, Jharkhand.
3. The General Manager, Eastern Central Railway, having his office at Zonal Office Road, P.O & P.S Hajipur, District Hajipur, District Hajipur, Bihar 844102, India. 4.The Deputy Chief Engineer/C/South, East Central Railway, Mahendrughat, P.O & P.S. Mahendrughat, Town and District Patna- 800004, Bihar 5.The Chief Administrative Officer/C/South, East Central Railway/MHX, Mahendrughat (1st floor), P.O & P.S. Mahendrughat, Town and District Patna-800004, Bihar 6.Bank of Maharashtra, a banking body corporate incorporated under the Banking Companies (Acquisition and Transfer of undertakings) Act, 1970 and carrying on business inter alia from N.S. Road Branch, 3-N.S. Road, P.O GPO & P.S. N.S. Road, District: Kolkata-700001, West Bengal through its Branch Manager. … ... Respondents ------ CORAM: HON’BLE MR. JUSTICE PRAMATH PATNAIK ------ For the Petitioners : Ms. Indrajit Sinha, Arpan Mishra, Amitabh Prasad, Advocates. For the Respondents-Railway : Mr. Gautam Rakesh, Advocate ------ C.A.V. on 02.09.2016 Pronounced on 07/09/2016 Per Pramath Patnaik, J.: The captioned writ application has been filed praying, inter alia, for quashing the contract termination notice issued by respondent no. 2 dated 11.07.2016 and further direction upon the 2 respondent no. 2 to grant extension of time for completion of the contract in relation to Tender No. 99 of 2013-14.
2. Bereft of unnecessary details, the facts as delineated in the writ application, is that the NIT for construction of seven major bridges was floated, in which, the petitioner being the successful bidder was given letter of acceptance dated 03.06.2014 for executing the work, at the total cost of Rs. 82,80,54,283.78, within two years from the date of issuance of letter of acceptance. It is stated that on 31.10.2014 a formal contract agreement was entered into between the petitioner no. 1 and respondent-railways, however, that is backed by the General Conditions of Contract (in short 'GCC') of Railway Authorities. In terms of the letter of acceptance, the petitioners furnished two Performance Bank Guarantee amounting to Rs. 4,14,02,720/-valid up-to 28.02.2018 and Rs. 4,15,00,000.00 valid up-to 31.08.2017. It is stated the petitioners vide letter dated 15.09.2014 had called upon respondent no. 2 to issue approved drawing for construction of bridges as more than three months had elapsed and delay in issuing the approved drawings would ultimately cause delay in execution of the final project. It has further been averred that the petitioners further issued reminder letters dated 24.09.2014 and 25.11.2014 for issuing approved drawing for construction of bridges. It has further been averred that as per terms and conditions of the contract, the petitioners have not been paid the Mobilization Advance, which is 10 % of the contract value, 5 % at the time of signing of the contract and 5 % for mobilization of the site-establishment. However, the petitioners out of their own funds 3 have deployed men, materials, machines etc at the work site and paid Rs. 24,82,77,769/- towards them. It has further been averred that in course of execution of work, the petitioners have faced many difficulties such as on 07.11.2014 about 70 % of the boundary of the laboratory wall was destructed by miscreants, excavation work was prevented by the local villagers, for which, the petitioners sought necessary co-operation from local police as well as from respondent-railway. It has further been averred that the petitioners from time to time requested the respondents- authorities to resolve the major causes for hindrances of work in site such as land acquisition problems, local bandhs etc but no heed was given by the respondents-authorities. However, finally after lapse of 20 months from the date of issuance of letter of acceptance, the petitioners received the approved drawing of the 7 major bridges on 13.02.2016. It is submitted that due to non- cooperation on the part of the respondent-railways and due to the railways not acting strictly in terms of their obligations, the petitioners were prevented from completing the work within the time frame, the petitioners vide letter dated 23.05.2016, requested the respondents-railways for extension of time for completion of 7 major bridges by invoking Clause 17 (A) (ii) and 17A(iii) of the GCC and requested to extend the contract upto 02.12.2017 on the same terms and conditions. It has been submitted that since the middle of the year 2014 till June 2016, there was no response from the respondents-authorities nor any attempt was made by the respondents-authorities to controvert or deal with the contentions put forth by the petitioners. However, a 4 communication dated 01.06.2016 was issued by the respondents- Railway proposing a meeting to be held on 16.06.2016 to discuss the issues relating to progress of the work, which ultimately led to issuance of letter dated 11.07.2016 by respondent no. 2, which is a purported contract termination notice for terminating the contract of Tender No. 99, which is impugned in this writ application.
3. Heard Mr. Indrajit Sinha, learned counsel for the petitioner and Mr. Gautam Rakesh, learned counsel for the respondent- Railway.
4. Mr. Indrajit Sinha, learned counsel for the petitioners, on the issue of maintainability of writ petition, referring to the decision rendered in the case of ABL International Ltd & Anr Vs. Export Credit Guarantee Corpn. Of India Ltd & Ors as reported in (2004) 3 SCC553 submitted that if the action of the respondents is found arbitrary, the jurisdiction of the writ Court is not ousted, hence, the writ petition is maintainable. On merit of the case, learned counsel for the petitioner besides the averments made in the writ application submitted that it is the respondents- authorities, who have not settled the issue of land acquisition with local villagers resulting in destruction of constructed site and causing irreparable loss to the petitioners and the respondents have submitted the approved arrangement drawing much after issuance of letter of acceptance, caused delay in commencing the project. It has been submitted that it is the respondents, who have suppressed their own lapses and without giving any extension of time to complete the work in question cancelled the contract and 5 further are making attempt to invoke the bank guarantees to inflict financial injury upon the petitioners.
5. Controverting the averments made in the writ application, learned counsel for the respondent-railway submitted that Tender No. 99 was awarded to petitioner no. 1 for completion of work in question within 24 months from the date of issuance of letter of acceptance. It has been submitted that despite handing over of all the drawings much before the expiry of DOC i.e. 02.06.2016, no work has been started in 03 bridges till termination of contract and in remaining 04 bridges work started after much chasing from railways but the progress was extremely slow due to unavailability of sufficient men, material and machinery and the petitioners even after repeated reminders and meetings did not expedite the work. It has further been submitted that the project of Tori-Shivpur railway line, the contract-work in question, is of national importance for coal evacuation of State of Jharkhand. But on scrutinizing the work progress and performance of the petitioner, it was inevitable on the part of the respondents to terminate the contract work. It has further been submitted that the delay of project is not only wasting the public money but also diminishing the hope of the people. Learned counsel for the respondent-railway further submitted that so far encashment of Bank Guarantee is concerned, it is laid down in the agreement itself and accepted by the petitioners, thus, the action for encashing the Bank Guarantee is in consonance with the agreement and does not suffer from any infirmity and illegality and the Railway is liable to claim damages over and above encashment of Bank Guarantee and forfeiting of 6 Security Deposit and Performance Guarantees as per condition of contract.
6. Learned counsel for the respondents-Railway, on the issue of maintainability of the writ petition, submitted that the instant writ petition is premature and the petitioner instead of availing the other alternative remedy of approaching the arbitrator as per Section 8 of the Arbitration & Reconciliation Act, 1996 read with Section 63 and 64 of the GCC had directly approached this Court invoking extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. The petitioners have raised the disputed question of facts, which cannot be adjudicated by this Court. Hence, the writ petition is liable to be dismissed in limine.
7. In support of his case, learned counsel for the respondents- Railway referred to the decisions rendered in the case of Dwarikesh Sugar Industries Ltd Vs. Prem Heavy Engineering Works (P) Ltd & Anr as reported in (1997) 6 SCC450 in the case of Mahatma Gandhi Sahakra Sakkare Karkhane Vs. National Heavy Engg. Coop. Ltd. & Anr as reported in AIR2007SC2716 in the case of Vinitec Electronics Pvt. Ltd Vs. HCL Infosystems Ltd as reported in (2008) 1 SCC544 8. After bestowing my anxious consideration to the rivalized submissions of learned counsel for the parties and on perusal of the documents available on record, I find that there are allegations and counter allegations, which impinge on the disputed questions of fact, which cannot be adjudicated in this Court. Moreover, for settlement of disputes between the parties, there is specific Clause in the GCC itself. For better appreciation, it would be apposite to 7 refer the relevant Clause 63 and 64 of the GCC, which is quoted herein below:
“63. Matters Finally Determined By The Railway : All disputes and differences of any kind whatsoever arising out of or in connection with the contract, whether during the progress of the work or after its completion and whether before or after the determination of the contract, shall be referred by the contractor to the GM and the GM shall, within 120 days after receipt of the contractor’s representation, make and notify decisions on all matters referred to by the contractor in writing provided that matters for which provision has been made in Clauses 8, 18, 22(5), 39, 43(2), 45(a), 55, 55-A(5), 57, 57A, 61(1), 61(2) and 62(1) to (xiii) (B) of General Conditions of Contract or in any Clause of the Special Conditions of the Contract shall be deemed as ‘excepted matters’ (matters not arbitrable) and decisions of the Railway authority, thereon shall be final and binding on the contractor; provided further that ‘excepted matters’ shall stand specifically excluded from the purview of the Arbitration Clause. 64.(1) Demand For Arbitration:
64. (1)(i)- In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the “excepted matters” referred to in Clause 63 of these Conditions, the contractor, after 120 days but within 180 days of his presenting his final claim 8 on disputed matters shall demand in writing that the dispute or difference be referred to arbitration. XXX XXX XXX9 In view of the availability of alternative remedy to the petitioner, the present writ petition is not entertainable. View of this Court gets fortified in view of the decision rendered by Hon'ble Apex Court in the case of State of U.P & Ors Vs. Bridge & Roof Co. (India) Ltd. as reported in (1996) 6 SCC22 in particular paragraph 21, which is quoted herein below: “21.There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration (clause 67 of the contract). The arbitrators can decide both questions of fact as well as questions of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extraordinary jurisdiction of the High Court under Article 226. The existence of an effective alternative remedy — in this case, provided in the contract itself — is a good ground for the court to decline to exercise its extraordinary jurisdiction under Article 226. The said article was not meant to supplant the existing remedies at law but only to supplement them in certain wellrecognised situations. ….....................................................................................”
10. Since in the case at hand, the petitioner has raised factual dispute with respect to termination of contract and such factual dispute can be decided only after leading evidence, oral as well as documentary. In this regard, the Hon'ble Apex Court in the case of Rajasthan State Industrial Development & Investment Corpn. & Anr Vs. Diamond & Gem Development 9 Corporation Ltd. & Anr as reported in (2013) 5 SCC470at paragraph 21 has held as under: “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.”
11. So far as prayer of the petitioner for interim protection for invocation of bank guarantees is concerned, upon considering the fact that invocation of bank guarantee would cause serious loss and prejudice to the petitioner and would lead to serious complications in the matter, hence, to cut short the multiplicity of litigation, I am of the opinion that petitioner is entitled to get a interim protection for a limited period or till the Arbitral Tribunal/Arbitrator commences its proceeding or till an order to that effect is passed by the Arbitrator.
12. Viewed thus, without delving into the merit of the case, the writ petition stands disposed of with liberty to the petitioner to approach the Arbitral Tribunal/Arbitrator within a 10 period of three weeks from today invoking the relevant provisions, as mentioned in GCC. In view of the reasons stated herein above, it is ordered that the bank guarantee furnished by the petitioner shall not be invoked for four weeks after Arbitrator commences its proceeding or till an order is passed by the Arbitrator, whichever is earlier.
13. With the aforesaid observations and directions, the writ petition stands disposed of. (Pramath Patnaik, J.) Alankar/-