Kerala High Court
M/S Nath Infrastructures vs Union Of India on 8 July, 2025
Author: T.R.Ravi
Bench: T.R.Ravi
W.P(C)Nos. 8260
& 11720 of 2023
2025:KER:49496
-1-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE T.R.RAVI
TUESDAY, THE 8TH DAY OF JULY 2025 / 17TH ASHADHA, 1947
WP(C) NO. 8260 OF 2023
PETITIONER:
M/S NATH INFRASTRUCTURES
REPRESENTED BY ITS MANAGING PARTNER
MR. V. RAJEENDRANATH, 28/309A1, NATH THONDAYAD,
KOTTOOLI, CHEVARAMBALAM,
KOZHIKODE DISTRICT., PIN - 673017
BY ADVS.
SRI.ADITHYA RAJEEV
SMT.S.PARVATHI
RESPONDENTS:
1 UNION OF INDIA
REPRESENTED BY ITS SECRETARY, MINISTRY OF HOME
AFFAIRS, GOVERNMENT OF INDIA, NORTH BLOCK,
CENTRAL SECRETARIAT, NEW DELHI,
PIN - 110001
2 STATE OF KERALA
REPRESENTED BY ITS SECRETARY, PUBLIC WORKS
DEPARTMENT, GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM DISTRICT, PIN - 695101.
3 THE REGIONAL OFFICER
MINISTRY OF ROAD TRANSPORT AND HIGHWAYS,
W.P(C)Nos. 8260
& 11720 of 2023
2025:KER:49496
-2-
KERALA REGION, PUBLIC OFFICE BUILDING, MUSEUM
P.O., THIRUVANANTHAPURAM DISTRICT. PIN - 695033.
4 THE CHIEF ENGINEER
PUBLIC WORKS DEPARTMENT (NATIONAL HIGHWAY),
MUSEUM P.O, THIRUVANANTHAPURAM DISTRICT., PIN -
695033
5 THE SUPERINTENDING ENGINEER
PUBLIC WORKS DEPARTMENT, NATIONAL HIGH WAY NORTH
CIRCLE, OFFICE OF THE SUPERINTENDING ENGINEER,
KOZHIKODE DISTRICT., PIN - 673001
6 THE EXECUTIVE ENGINEER
PUBLIC WORKS DEPARTMENT, NATIONAL HIGHWAY
DIVISION, OFFICE OF THE EXECUTIVE ENGINEER,
KOZHIKODE DISTRICT., PIN - 673001
7 THE ASSISTANT EXECUTIVE ENGINEER
PUBLIC WORKS DEPARTMENT, NATIONAL HIGHWAY SUB
DIVISION, KODUVALLY, KOZHIKODE DISTRICT., PIN -
673573
8 THE ASSISTANT ENGINEER
PUBLIC WORKS DEPARTMENT, NATIONAL HIGHWAY
SECTION, KODUVALLY, KOZHIKODE DISTRICT., PIN -
673573
BY SPL.GOVT.PLEADER SRI K.G.MANOJ KUMAR
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 10.04.2025, ALONG WITH WP(C).11720/2023, THE
COURT ON 08.07.2025 DELIVERED THE FOLLOWING:
W.P(C)Nos. 8260
& 11720 of 2023
2025:KER:49496
-3-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE T.R.RAVI
TUESDAY, THE 8TH DAY OF JULY 2025 / 17TH ASHADHA, 1947
WP(C) NO. 11720 OF 2023
PETITIONER:
M/S NATH INFRASTRUCTURES
AGED 64 YEARS
REPRESENTED BY ITS MANAGING PARTNER MR. V.
RAJEENDRANATH, 28/309A1, NATH THONDAYAD,
KOTTOOLI, CHEVARAMBALAM, KOZHIKODE DISTRICT., PIN
- 673017
BY ADVS.
SRI.ADITHYA RAJEEV
SMT.S.PARVATHI
RESPONDENTS:
1 UNION OF INDIA
REPRESENTED BY ITS SECRETARY, MINISTRY OF HOME
AFFAIRS, GOVERNMENT OF INDIA, NORTH BLOCK,
CENTRAL SECRETARIAT, NEW DELHI, PIN - 110001
2 THE REGIONAL OFFICER
MINISTRY OF ROAD TRANSPORT AND HIGHWAYS, KERALA
REGION, PUBLIC OFFICE BUILDING, MUSEUM P.O,
THIRUVANANTHAPURAM DISTRICT., PIN - 695033
3 STATE OF KERALA
REPRESENTED BY ITS SECRETARY, PUBLIC WORKS
DEPARTMENT, GOVERNMENT SECRETARIAT,
W.P(C)Nos. 8260
& 11720 of 2023
2025:KER:49496
-4-
THIRUVANANTHAPURAM DISTRICT., PIN - 695101
4 THE CHIEF ENGINEER
PUBLIC WORKS DEPARTMENT (NATIONAL HIGHWAY),
MUSEUM P.O, THIRUVANANTHAPURAM DISTRICT., PIN -
695033
5 THE SUPERINTENDING ENGINEER
PUBLIC WORKS DEPARTMENT, NATIONAL HIGH WAY NORTH
CIRCLE, OFFICE OF THE SUPERINTENDING ENGINEER,
KOZHIKODE DISTRICT., PIN - 673001
6 THE EXECUTIVE ENGINEER
PUBLIC WORKS DEPARTMENT, NATIONAL HIGHWAY
DIVISION, OFFICE OF THE EXECUTIVE ENGINEER,
KOZHIKODE DISTRICT., PIN - 673001
7 THE ASSISTANT EXECUTIVE ENGINEER
PUBLIC WORKS DEPARTMENT, NATIONAL HIGHWAY SUB
DIVISION, KODUVALLY, KOZHIKODE DISTRICT., PIN -
673573
8 THE ASSISTANT ENGINEER
PUBLIC WORKS DEPARTMENT, NATIONAL HIGHWAY
SECTION, KODUVALLY, KOZHIKODE DISTRICT., PIN -
673573
BY ADV
SHRI.T.C.KRISHNA, SENIOR PANEL COUNSEL
SHRI K.V.MANOJ KUMAR, SPECIAL GOVT.PLEADER
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 10.04.2025, ALONG WITH WP(C).8260/2023,
THE COURT ON 08.07.2025, DELIVERED THE FOLLOWING:
W.P(C)Nos. 8260
& 11720 of 2023
2025:KER:49496
-5-
T.R.RAVI, J.
==========================
W.P(C)No. 8260 OF 2023
&
WP(C) No.11720 OF 2023
==========================
Dated this the 8th day of July, 2025
JUDGMENT
The petitioner in both these writ petitions is a partnership firm engaged in road construction. The firm undertakes projects for the Kerala Infrastructure Investment Fund Board (KIIFB), the National Highway Authority, and the Public Works Department. The Petitioner has satisfactorily completed several work contracts, including the Kuttipuram-Puthuponnani National Highway and National Highway 15/000 to 57/000 in Wayanad. The prayers in these writ petitions are intrinsically connected, and the writ petitions are being heard and disposed of together. The references to the exhibits and the status of the parties are W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -6- as per W.P.(C)No.11720 of 2023, which is treated as the main case.
2. The 5th respondent, who had been entrusted with the development, maintenance, and management of National Highway 766 including the section from km 25/1000 to km 45/1000, by the 1st respondent, invited proposals from eligible bidders for "strengthening and geometric improvements from km 25/1000 to km 45/1000 of NH 766 (old NH 212) in Kozhikode District in the State of Kerala on Engineering, Procurement, Construction ("EPC") mode." The petitioner was the successful bidder. An Engineering, Procurement, and Construction Agreement was executed on 07.08.2020. The site was handed over on 18.09.2020, on which day the work was to commence. The time for completion of the work was twelve months from the date of commencing the work and was to end on 17.9.2021. The petitioner had also executed a Bank guarantee as per the terms of the contract.
W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -7-
3. According to the petitioner, at the time of handing over the site, there were thirty trees, eighty electric posts, ten telephone poles, and one bus shelter at the site. The heavy rains during the years 2020 and 2021, and the statewide lockdown from 08.05.2021 to 30.06.2021 due to the outbreak of the COVID-19 pandemic, affected the procurement of materials and skilled labourers. The site was also earmarked as a Containment Zone on various occasions, and several labourers had also tested positive for the COVID-19 virus during that period. Even after the lockdown period, the work was carried out strictly adhering to the COVID-19 protocols, and all the above factors, according to the petitioner, resulted in slow progress of the project. The petitioner also submits that the structural works in different stretches were delayed due to the non-shifting of utilities and the failure to remove trees from the site. On 24.08.2021, the petitioner applied for an extension of time to complete the work. The request was forwarded by the 5 th respondent to the Ministry of Road Transport & Highways (MoRTH), recommending the grant of time extension, by imposing a penalty on the petitioner. W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -8- On 25.10.2021, the Executive Engineer wrote to the petitioner, directing them to submit a proposal for extension of time. This was followed by a letter from the Superintending Engineer asking them to submit a proposal for extension of time, without delay. The petitioner applied on 24.12.2021, seeking extension of time till 30.06.2022. On 4.2.2022, the Executive Engineer wrote to the Superintending Engineer, requesting that the time for completion of the work by the petitioner be extended up to 30.6.2022.
4. The Ministry of Road Transport & Highways (MoRTH) issued a Circular dated 11.04.2022, considering the COVID-19 pandemic, extending relief to contractors/developers of the road sector, for the period from 03.06.2022 to 31.10.2022. Taking note of the above circular, the 2 nd respondent returned the proposal for extension of time to the 5 th respondent, directing him to review and resubmit the proposal, avoiding the recommendation for imposing a penalty. The petitioner submitted a revised application before the 5th respondent on 20.5.2022, for the extension of time up to 31.10.2022. The W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -9- application was received by the 5th respondent through the 6th respondent, with a recommendation to extend the time to complete the work, up to 31.10.2022, without charging any penalty. The petitioner submits that, based on the assurances from respondents 5 to 8 that the time for completion of the work would be extended, the petitioner had carried out ancillary works as per the Ext.P1 agreement. It is stated that, from 06.12.2021 to 24.03.2022, the petitioner had carried out the works of scarifying, Granular Sub Base (GSB), Wet Mix Macadam (WMM), Dense Bituminous Macadam (DBM), Interlocking tiles, drainage constructions, Irish drains, and culverts. According to the petitioner, they stopped executing the work on 14.7.2022 since they could not submit the bills for the work executed after 17.9.2021, as their application for extension of time had not yet been approved.
5. The petitioner points out that an amount of Rs.26,92,948/- was retained by the 5th respondent from the amounts payable on the first, second, and third part bills, and a sum of Rs.45,50,369/- was withheld from the above-said bills, W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -10- citing the failure to meet the milestones within the stipulated time. The petitioner contends that the failure to meet the milestones was not deliberate and had been explained in detail in the application for the extension of time submitted by the petitioner. According to the petitioner, the respondents 5 to 8 had assured that the withheld amounts would be released upon the grant of extension of time.
6. The 5th respondent sent Ext.P6 communication dated 02.08.2022 to the 4th respondent, recommending extension of time up to 31.10.2022 without penalty, given the circular dated 11.04.2022 issued by the Ministry. Ext.P6 states that the progress of the work was reviewed by the District Infrastructure Co-ordination Committee, convened by the District Collector on 13.06.2022, in the presence of the Hon'ble Minister for Public Works and Tourism. The Committee, after considering the progress of the work, recommended termination of the contract with the petitioner at the risk and cost of the petitioner. It is stated that a final termination notice was issued to the petitioner on 20.06.2022. According to the petitioner, no such notice had W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -11- been served on them. Ext.P6 also says that the petitioner had appeared before the 5th respondent on 15.07.2022 in the presence of the Executive Engineer, explained the reasons for non-completion of work, and assured to complete the work by 31.10.2022. Since there was a delay in obtaining consent from MoRTH for termination and rearrangement, the 5th respondent requested an extension of time for the petitioner to complete the work. On 1.9.2022, the Executive Engineer directed the petitioner to commence the balance work. On 16.9.2022, the petitioner submitted a revised programme chart and commenced concrete drain works.
7. On 23.9.2022, the Chief Engineer, MORTH (South Zone), convened a meeting to review the progress of the work and suggested extending the time to a viable duration, if the proposed time up to 30.10.2022 is not practically sufficient for completion of the project. On 24.9.2022, the petitioner submitted a request for extension of time till 31.12.2022. On 27.9.2022, the Executive Engineer wrote to the 5 th respondent requesting extension of time till 30.10.2022 without a fine and W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -12- from 30.10.2022 to 31.12.2022 with a fine. The 5th respondent thereafter sent Ext.P7 letter dated 28.9.2022 to the 4 th respondent, with an additional proposal for extension from 30.10.2022 to 31.12.2022 by imposing a fine as per the Rules. Ext.P7 refers to the meeting dated 23.9.2022.
8. According to the petitioner, based on the directions of respondents 5 to 8, they carried out drainage construction works from September to October 2022 and, after completing the work, submitted the Running Account Bill in respect of the work amounting to Rs.7,76,361/-, to the 8th respondent, requesting to audit the Running Account Bill and finalise the same.
9. When the respondents failed to release the payments due on the 4th and 5th part Bills and to pass orders on the application for extension of time, the petitioner issued Ext.P9 notice dated 18.10.2022 to the 5 th respondent informing him that, unless extension of time is granted within 30 days of the notice, the notice shall be treated as the final termination notice issued under Clauses 23.2(i) (a), (f), and (g) of the contract. W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -13-
10. On 29.10.2022, the 6th respondent sent Ext.P10 reply to Ext.P9 notice, stating that the authority has not committed any material default in complying with any of the provisions of the agreement, and that the authority as well as the 6 th respondent had issued several notices to the petitioner directing them to complete the balance work without delay. It is stated that since the Interim Payment Certificate No.4 submitted on 15.07.2022 includes payment for works executed after the period stated in the agreement, a supplementary agreement needs to be executed for the period not covered by the existing agreement. It was claimed that there was no violation of Clause 23.2(i) (a), (f), and (g) as alleged. In continuation of Ext.P9 notice, the petitioner sent Ext.P11 notice dated 10.11.2022 to the 5th respondent, informing that the contract in respect of the work was terminated on 8.11.2022, for the default on the part of the authority. The petitioner also narrated the details of the default in Ext.P11.
11. The petitioner thereafter issued notice dated 22.11.2022 seeking to initiate appropriate steps as per Clauses W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -14- 23.4 and 23.5 of the agreement to assess the value of works completed and release the amounts due to them on the bills submitted on 15.07.2022. In reply, the 5 th respondent sent Ext.P13 notice dated 03.12.2022, contending that the petitioner delayed the completion of the work and was in default, and the termination of the contract by the petitioner is invalid. The petitioner replied by Ext.P14, reiterating that the agreement is terminated and demanding initiation of appropriate steps to assess the value of work completed and release the amounts due to them.
12. W.P(C) No. 8260 of 2023 was filed thereafter, praying for directions to the respondents to release the amounts due towards the 4th and Part Bill submitted by the petitioner; to audit and finalise the 5th and Part Bill submitted by the petitioner and to release the amounts so determined, to release the bank guarantees executed by the petitioner towards Ext-P1 agreement and to release the amounts retained and withheld on the first, second, third and part bills, within a time frame. The writ petition came up for admission on 10.03.2023, and this Court W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -15- directed the Counsel for the respondents to get instructions and posted the case to 27.03.2023. On 15.03.2023, the 5 th respondent issued Ext.P16 notice to the petitioner, stating that it has been decided to terminate the contract at the risk and cost of the contractor by invoking Clause 23.1 of the Agreement. The notice states that the petitioner is obliged to shift the utilities at the site and that the same cannot be claimed as a reason for the delay in completing the work. Clause 10.3 of the Agreement is also relied on to state that the petitioner had failed to achieve milestones I, II, and III and did not attain necessary progress in the work, as per the schedules submitted on 24.08.2021, 24.12.2021, 20.05.2022, and 24.09.2022. The petitioner received the notice on 20.03.2023. The petitioner sent Ext.P17 reply to Ext.P16 notice, refuting the allegations in the notice, pointing out that the agreement already stands terminated at their instance, and requiring the 5 th respondent to withdraw the notice dated 15.3.2023.
13. The bank guarantee for an amount of Rs.1,28,60,000/- executed by the petitioner was valid up to 31.10.2022, and the W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -16- date of expiry of the claim was on 31.10.2023. The amount was hence retained by the Bank. On 30.03.2023, the 5 th respondent issued Ext.P19 order, intimating that the contract had been terminated and directing the petitioner to vacate the site within 15 days and hand over all related documents and records to the Authority, reserving the Authority's right to recover any losses/damages and expenses for maintenance of the existing project. The petitioner contends that the Ext.P19 order was issued by the 5th respondent without affording an opportunity of hearing to the petitioner and without adverting to the factual and legal contentions raised by the petitioner in Ext.P17 reply, and is mala fide, arbitrary, and unreasonable. It is contended that the termination of a contract, which already stands terminated at the instance of the petitioner, and that too, during the pendency of the writ petition filed by the petitioner, evidences the mala fides in the actions of the respondents. Apprehending that the 5 th respondent will take steps to encash the bank guarantees furnished at the time of execution of the contract, the petitioner W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -17- has filed W.P.(C)No.11720 of 2023, praying to quash Exts.P16 and P19 notices.
14. The 5th respondent has filed a counter affidavit contending that the writ petition is not maintainable as serious factual disputes are involved in this case. It is stated that in the Kozhikode district, and that too in the vicinity of the subject work, the petitioner has a poor track record, and that the following works were terminated:
"i. KIIFB 2016-17. Improvements to Thamarassery- Varattiakkal road in Kozhikode district: Terminated by the Project Director, PMU-KRFB on 08.04.2022. Agreed PAC is Rs. 36 Crores. Work started on 12.02.2018 with time of completion 11.08.2019 and the contractor did not complete work till March 2022.
ii. KIIFB 2016-17. Kaithappoyil Kodenchery Augusthiamuzhi road in Kozhikode district. Terminated by the Project Director, PMU-KRFB iii. CRIF 2018-19. Improvements to North Karassery- Karamoola- Thekkumkutty- Maranchatty- Koombara- Kakkadampoyil road in Kozhikode district: Terminated by Superintending Engineer, National Highway North Circle on W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -18- 08.11.2022. Original time of completion is 09.04.2020. The contractor did not complete work till October 2022.
iv. Improvements to Engapuzha Omassery road between Km. 0/000 to 6/100 in Kozhikode district: Terminated by Superintending Engineer, PWD Roads North Circle on 17.05.2022. Agreed PAC for the work is Rs.6,96,64,170/-."
15. It is stated that the site was handed over to the petitioner on 19.07.2019, with the time of completion up to 18.04.2020, that the time of completion was extended 3 times up to 31.12.2021, and that the contract was terminated at the risk and cost of the contractor due to poor performance on their part. It is contended that the petitioner, who completed only 20% of the work within the original period of 12 months and has a poor record, cannot claim that he would have completed the project if extension of time had been granted to him. It is pointed out that even with the work claimed to have been carried out without getting an extension of time, the progress was only from 20% to 26%. It is hence contended that the petitioner cannot terminate the agreement since they were in default even during the original period of execution of the W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -19- project. It is submitted that Clause 23.2 can operate only in cases where there is a default on the part of the Authority, and since there was no such default during the original tenure of the work from 18.9.2020 to 17.09.2021 or thereafter, the petitioner could not have legally invoked Clause 23.2. It is contended that a declaration regarding breach is not a matter capable of being adjudicated in a writ petition under Article 226 of the Constitution of India.
16. Heard Sri Adithya Rajeev on behalf of the petitioner, Sri T.C.Krishna, Senior Panel Counsel for the 1 st respondent and Sri.K.V.Manoj Kumar, Special Government Pleader on behalf of respondents 2 to 8.
CONSIDERATION:
17. The preliminary question that the respondents raised was that the writ petition for a declaration regarding breach of the contract is not maintainable. It is submitted that such matters, that involve questions of fact, cannot be agitated under Article 226 of the Constitution of India. Reliance is placed on the W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -20- judgment dated 20.05.2020 and 05.08.2024, respectively, of the Division Benches of this Court in W.A.No.609 of 2020 [Shamon P.S. v. The Station House Officer & Ors.] and ISRO and Ors. v. Roopam Engineers and Contractors Pvt. Ltd., W.A. No. 1262 of 2023, the judgment dated 23.02.2021 of a learned Single Judge of this Court in W.P.(C)No.13396 of 2020 [Marymatha Infrastructure Pvt. Ltd. v. State of Kerala & Anr.], the judgments of the Hon'ble Supreme Court in Empire Jute Company Ltd. & Ors. v. Jute Corporation of India Ltd. & Anr. [(2007) 14 SCC 680], Rukmanibai Gupta v. Collector, Jabalpur & Ors. [(1980) 4 SCC 556] and Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd. & Anr. [(2022) 1 SCC 75].
18. In Shamon P.S (supra), the Division Bench was considering the question whether a writ petition can be filed challenging an award passed by the Arbitrator. The Special Government Pleader emphasised paragraphs 4 and 6 to 10 of the judgment. The Division Bench had considered in detail the W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -21- question regarding the maintainability of a writ petition under Article 226 of the Constitution of India in cases where an alternate remedy is available. After referring to the decisions, the Court concluded that the writ petition was not maintainable in the absence of a challenge to the award/order of the Arbitral Tribunal in a manner known to law. The Court was primarily concerned with the maintainability of a writ petition challenging an award passed by the Arbitrator when specific provisions are available under the Arbitration and Conciliation Act, 1996, for challenging the award. In Mary Matha Infrastructure (supra), the learned Single Judge of this Court was again considering a case where the general conditions of the contract contained a dispute resolution clause. Even though this Court found that the adjudicator to whom the matter was referred did not decide within the time prescribed in the contract, since serious allegations were raised between the parties regarding the procedure adopted by the Adjudicator, the same can be decided only after adducing evidence. It was in the above circumstances that this Court did not exercise the jurisdiction under Article 226 W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -22- on the facts and circumstances of the said case. In Empire Jute Company (supra), the Hon'ble Supreme Court was considering a case where there was an arbitration agreement existing between the parties and the dispute related to the liability to pay "carrying cost" under the terms of the contract in the event of default in taking delivery of goods. Reliance was placed on paragraphs 13 to 18 of the judgment. The Court noticed that the issue involved was the construction of the contract entered into between the parties. In paragraph 18 of the judgment, the Apex Court held that the power of judicial review vested in the superior courts undoubtedly has wide amplitude, and it should not be exercised when there is an arbitration clause. The Apex Court was considering a case where the Division Bench of the High Court had gone by the arbitration agreement regarding one part of the dispute, but proceeded to determine the other part itself. The Hon'ble Supreme Court held that the High Court should have refused to exercise its jurisdiction, leaving the parties to avail of their remedies under the agreement, and it should not have proceeded to determine a W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -23- part of the dispute itself. The Hon'ble Supreme Court found that, as there were disputed questions of fact and law, the parties should have been left to avail their remedy under the Arbitration Clause. In Rukmanibhai Gupta (supra), the Hon'ble Supreme Court was considering a case where an award of the Arbitrator was challenged under Article 226. The Hon'ble Supreme Court held that writ jurisdiction cannot be invoked to avoid contractual obligations, and the award ought to have been challenged under the provisions of the Arbitration Act, 1940. In Bhaven Construction (supra), the Hon'ble Supreme Court cautioned that interference under Articles 226 and 227 of the Constitution of India with an arbitral process is not permissible except in exceptionally rare circumstances and cannot be beyond the procedure established under the Arbitration and Conciliation Act, 1996. The Court further held that the power has to be exercised in exceptional circumstances, wherein one party is left remediless under the statute, or a clear bad faith shown by one of the parties.
W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -24-
19. The question is no longer res integra. In M.P. Power Management Company Limited, Jabalpur v. Sky Power Southeast Solar India Private Limited & Ors. [(2023) 2 SCC 703], the Hon'ble Supreme Court had elaborately considered the issue and held that the principle that in the case of a non-statutory contract, the rights would be governed only by the terms of the contract, does not continue to hold good. The Hon'ble Supreme Court held that the mere fact that the relief was sought under a contract which is not statutory will not entitle the State to avoid scrutiny of its action or inaction under the contract, if the party complaining of such action or inaction can establish that the same was per se arbitrary. The conclusions of the Hon'ble Supreme Court, stated in paragraph 82 are extracted below:
"82. We may cull out our conclusions in regard to the points, which we have framed:
82.1. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court.
W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -25- 82.2. The principle laid down in Bareilly Development Authority [Bareilly Development Authority v. Ajai Pal Singh, (1989) 2 SCC 116] that in the case of a non- statutory contract the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, including Radhakrishna Agarwal [Radhakrishna Agarwal v. State of Bihar, (1977) 3 SCC 457] , may not continue to hold good, in the light of what has been laid down in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] and as followed in the recent judgment in Sudhir Kumar Singh [State of U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706 : 2020 SCC OnLine SC 847] .
82.3. The mere fact that relief is sought under a contract which is not statutory, will not entitle the respondent State in a case by itself to ward off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is, per se, arbitrary. 82.4. An action will lie, undoubtedly, when the State purports to award any largesse and, undoubtedly, this relates to the stage prior to the contract being entered into (see Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] ). This scrutiny, no doubt, would be undertaken within the nature of the judicial review, W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -26- which has been declared in the decision in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] .
82.5. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a writ petition.
82.6. Without intending to be exhaustive, it may include the relief of seeking payment of amounts due to the aggrieved party from the State. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dispute raised relating to the liability of the State to make the payment. Such dispute, ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence. 82.7. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -27- prohibition, in the writ court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit.
82.8. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a writ petition [see in this regard, the view of this Court even in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] explaining how it distinguished the decision of this Court in State of U.P. v. Bridge & Roof Co. (India) Ltd. [State of U.P. v. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC 22] , by its observations in SCC para 14 in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] ]. 82.9. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a writ petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant.
82.10. The reach of Article 14 enables a writ court to deal with arbitrary State action even after a contract is entered into by the State. A wide variety of circumstances can generate causes of action for invoking Article 14. The Court's approach in dealing with the W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -28- same, would be guided by, undoubtedly, the overwhelming need to obviate arbitrary State action, in cases where the writ remedy provides an effective and fair means of preventing miscarriage of justice arising from palpably unreasonable action by the State. 82.11. Termination of contract can again arise in a wide variety of situations. If for instance, a contract is terminated, by a person, who is demonstrated, without any need for any argument, to be the person, who is completely unauthorised to cancel the contract, there may not be any necessity to drive the party to the unnecessary ordeal of a prolix and avoidable round of litigation. The intervention by the High Court, in such a case, where there is no dispute to be resolved, would also be conducive in public interest, apart from ensuring the fundamental right of the petitioner under Article 14 of the Constitution of India. When it comes to a challenge to the termination of a contract by the State, which is a non-statutory body, which is acting in purported exercise of the powers/rights under such a contract, it would be over simplifying a complex issue to lay down any inflexible rule in favour of the Court turning away the petitioner to alternate fora. Ordinarily, the cases of termination of contract by the State, acting within its contractual domain, may not lend itself for appropriate redress by the writ court. This is, undoubtedly, so if the Court is duty-bound to arrive at W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -29- findings, which involve untying knots, which are presented by disputed questions of facts. Undoubtedly, in view of ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] , if resolving the dispute, in a case of repudiation of a contract, involves only appreciating the true scope of documentary material in the light of pleadings, the Court may still grant relief to an applicant. We must enter a caveat. The Courts are today reeling under the weight of a docket explosion, which is truly alarming. If a case involves a large body of documents and the Court is called upon to enter upon findings of facts and involves merely the construction of the document, it may not be an unsound discretion to relegate the party to the alternate remedy. This is not to deprive the Court of its constitutional power as laid down in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] . It all depends upon the facts of each case as to whether, having regard to the scope of the dispute to be resolved, whether the Court will still entertain the petition.
82.12. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to act fairly and to eschew arbitrariness in all its actions, W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -30- resort to the constitutional remedy on the cause of action, that the action is arbitrary, is permissible (see in this regard Shrilekha Vidyarthi v. State of U.P. [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212 : 1991 SCC (L&S) 742] ). However, it must be made clear that every case involving breach of contract by the State, cannot be dressed up and disguised as a case of arbitrary State action. While the concept of an arbitrary action or inaction cannot be cribbed or confined to any immutable mantra, and must be laid bare, with reference to the facts of each case, it cannot be a mere allegation of breach of contract that would suffice. What must be involved in the case must be action/inaction, which must be palpably unreasonable or absolutely irrational and bereft of any principle. An action, which is completely mala fide, can hardly be described as a fair action and may, depending on the facts, amount to arbitrary action. The question must be posed and answered by the Court and all we intend to lay down is that there is a discretion available to the Court to grant relief in appropriate cases. 82.13. A lodestar, which may illumine the path of the Court, would be the dimension of public interest subserved by the Court interfering in the matter, rather than relegating the matter to the alternate forum. 82.14. Another relevant criteria is, if the Court has entertained the matter, then, while it is not tabooed that the Court should not relegate the party at a later stage, W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -31- ordinarily, it would be a germane consideration, which may persuade the Court to complete what it had started, provided it is otherwise a sound exercise of jurisdiction to decide the matter on merits in the writ petition itself. 82.15. Violation of natural justice has been recognised as a ground signifying the presence of a public law element and can found a cause of action premised on breach of Article 14. (See Sudhir Kumar Singh [State of U.P. v. Sudhir Kumar Singh, (2021) 19 SCC 706 : 2020 SCC OnLine SC 847] )."
20. The judgment of the Hon'ble Supreme Court in M.P. Power Management Company Limited (supra) was considered by a Division Bench of this Court in Writ Appeal No.1262/2023. In paragraph 10, the Division Bench held thus:
"10. Firstly, we find ourselves unable to accept, as a general proposition, the argument of the learned counsel for the appellants that in every case where an entity that answers to the description of "State" under Article 12 of the Constitution of India enters into a non-statutory contractual relationship with a private person, the writ court would be denuded of its jurisdiction to interfere with a contractual dispute that arises between the parties. In M.P. Power Management Company Limited, Jabalpur v. Sky Power Southeast Solar India Private Limited and Others - [(2023) 2 SCC W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -32- 703], the Supreme Court, after a survey of all the precedents on the issue, found that the principle that in the case of a nonstatutory contract, the rights are governed only by the terms of the contract may not continue to hold good. It was observed that the mere fact that relief is sought under a contract which is not statutory, will not by itself, entitle the respondent State in a case to ward-off scrutiny of its action or inaction under the contract if the complaining party is able to establish that the action/inaction is, per se, arbitrary. If the actions of a State betray caprice or the mere exhibition of the whim of the authority, it would sufficiently bear the insignia of arbitrariness. Accordingly, if there is an absence of good faith and the State action is actuated with an oblique motive, it could be characterised as being arbitrary. Similarly, a total non- application of mind, without due regard to the rights of the parties and public interest, would be a clear indicator of arbitrary action. There would be a myriad circumstances where there may not be any necessity to drive a party to a litigation before the civil court especially when the contention by the State, that there are disputed questions of fact necessitating a recourse to the civil court, is found to be merely illusory. As reiterated by the Court, the need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a writ petition, when W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -33- the actual resolution of a disputed question of fact is unnecessary to grant the relief to a writ applicant."
21. It is well established that the existence of an alternative remedy is not an absolute bar to the invocation of writ jurisdiction. After holding so, in Union of India & Ors. v. Tantia Construction Pvt. Ltd [2011 KHC 4392], the Hon'ble Supreme Court held that injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution. It is hence open to this Court to invoke the jurisdiction under Article 226 of the Constitution of India and entertain a writ petition in cases relating to contracts, where the State is one of the contracting parties and is alleged to have committed a breach or in a case where the interpretation of one of the clauses of the agreement between the parties is involved [See also ABL International Ltd. V. Export Credit Guarantee Corporation of India Ltd. (2004) 3 SCC 553].
22. In the light of the legal position that has been discussed above, I shall consider the facts before the Court. W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -34- Clause 10.5 of Ext.P1 deals with the extension of the time for completion of the work. Clause 10.5 (i) says that the contractor shall be entitled to extension of time on the occurrence of a Force Majeure Event, or for reason of delay, impediment, or prevention caused by or attributable to the authority, the authority's personnel, or the authority's other contractors on the site, or for any other reason which entitles the contractor to extension of time as per the provisions of the agreement. Clause 10.5(iv) says that the Authority's Engineer shall, on receipt of the claim under the provisions of Clause 10.5 (ii), examine the claim expeditiously within the time frame specified herein. If the Authority's Engineer requires any clarification regarding the claim, he must seek the same within 15 (fifteen) days from receiving the claim. On receiving any communication from the Authority's Engineer requesting clarification, the Contractor must furnish the same within 10 (ten) days. Within 30 (thirty) days of receipt of such clarifications, the Authority's Engineer must inform the Contractor in writing the decision on the time extension. Proviso to Clause 10.5(iv) says that when W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -35- determining each extension of time under Clause 10.5, the authority's Engineer should review previous determinations and may increase, but shall not decrease, the total time extended.
23. Clause 23.2 of the Ext-P1 agreement contemplates termination of the agreement for default committed by the Authority. The dispute in this writ petition is centred around the above clause. Clause 23.2 of Ext.P1 is extracted below, for reference.
"23.2 . Termination for Authority Default.
(i) In the event that any of the defaults specified below shall have occurred, and the Authority fails to cure such default within a Cure Period of 90 (ninety) days or such longer period as has been expressly provided in this Agreement, the Authority shall be deemed to be in default of this Agreement (the "Authority Default") unless the default has occurred as a result of any breach of this Agreement by the Contractor or due to Force Majeure. The defaults referred to herein shall include:
(a) the Authority commits a material default in complying with any of the provisions of this Agreement and such default has a Material Adverse Effect on the Contractor;
W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -36-
(b) the Authority has failed to make payment of any amount due and payable to the Contractor within the period specified in this Agreement;
(c) the Authority has failed to provide, within a period of 180 (one hundred and eighty) days from the Appointed Date, the environmental clearances required for construction of the Project Highway;
(d) the Authority becomes bankrupt or insolvent, goes into liquidation, has a receiving or administration order made against him, compounds with its creditors, or carries on business under a receiver, trustee or manager for the benefit of its creditors, or if any act is done or event occurs which (under Applicable Laws) has a similar effect;
(e) the Authority repudiates this Agreement or otherwise takes any action that amounts to or manifests an irrevocable intention not to be bound by this Agreement;
(f) the Authority's Engineer fails to issue the relevant Interim Payment Certificate within 60 (sixty) days after receiving a statement and supporting documents; or
(g) the whole work is suspended by Authority beyond 120 (one hundred twenty) days for W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -37- any reason which is not attributed to the Contractor.
(ii) Without prejudice to any other right or remedy which the Contractor may have under this Agreement, upon occurrence of an Authority Default, the Contractor shall be entitled to terminate this Agreement by issuing a Termination Notice to the Authority; provided that before issuing the Termination Notice, the Contractor shall by a notice inform the Authority of its intention to issue the Termination Notice and grant 15 (fifteen) days to the Authority to make a representation, and may after the expiry of such 15 (fifteen) days, whether or not it is in receipt of such representation, issue the Termination Notice.
If on the consideration of the Authority's representation or otherwise, the contractor does not issue the Termination Notice on such 15th (fifteenth) day and prefers to continue with the project, it is deemed that the cause of action of the Termination Notice has been condoned by the Contractor and he would be deemed to have waived any claim and forfeited any right to any other remedy on that count or in relation to such action or omission."
24. In the case at hand, an application for extension of time was initially submitted on 24.08.2021 before the expiry of the time to complete the work. The copy of the request has W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -38- been produced along with a memo filed by the Senior Government Pleader on 13.09.2024. The application clearly states the reasons for the delay, which include the delay due to COVID-19, the delay due to other works that were progressing on the same site, and the delay due to cyclone and heavy rain. On 23.11.2021, the 5th respondent directed the petitioner to apply for extension of time and informed that failure to do so would entail action under the agreement. It says that the Hon'ble Minister had directed to continue the work on 17.9.2021, but the same was not done. On 25.10.2021, the Executive Engineer wrote to the petitioner stating that the request for extension of time had not been submitted. This was followed by an application for extension of time dated 24.12.2021, which has been produced as document No.2 along with the memo filed by the Senior Government Pleader on 13.09.2024. The fact that applications were received is not disputed. The Executive Engineer wrote to the Superintending Engineer on 04.02.2022, requesting that the time be extended till 30.06.2022. The letter specifically states that the reasons raised by the petitioner are W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -39- genuine, but instead of 278 days, only 233 days can be considered as hindrances, and for the balance 45 days, extension may be granted after imposing a fine as per the Rules. Pursuant to the circular issued by the MoRTH on 11.04.2022, the respondents directed the petitioner to submit a fresh application for extension of time, and such an application was also submitted on 20.05.2022 by the petitioner. By Ext.P6 dated 2.8.2022, the 5th respondent had requested the 4th respondent to extend the time till 31.10.2022, without imposing a penalty. On 1.9.2022, the Executive Engineer wrote to the petitioner asking him to commence the balance work. On 23.9.2022, the Chief Engineer, MoRTH (South Zone) held a meeting to review the progress of the work and suggested that if the proposed time till 31.10.2022 was not practically sufficient, the extension of time could be to a viable duration. On 24.9.2022, the petitioner applied for extension of time till 31.12.2022. On 27.9.2022, the Executive Engineer wrote to the Superintending Engineer requesting to grant extension till 31.10.2022 without fine and thereafter till 31.12.2022 with fine. Ext.P7 request dated W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -40- 28.9.2022 was thereafter sent by the 5th respondent to the 4th respondent to grant extension till 31.10.2022 without imposition of fine, and thereafter till 31.12.2022 by imposing a fine. The respondents do not have a case that any specific order as required under Clause 10.5 was issued granting extension of time. It is admitted that work was being continued even during this period, anticipating the grant of an extension of time. It is in this background that the Ext.P11 notice issued by the petitioner to the 5th respondent terminating the agreement by invoking Clause 23.2 of the agreement must be viewed.
25. Clause 23.2(i)(a) specifically says "where the Authority has committed a material default in complying with any of the provisions of the Agreement and such default has a material adverse effect on the Contractor". Clause 23.2(i) (f) says "where Authority's Engineer fails to issue the relevant Interim Payment Certificate within 60 (sixty) days after receiving a statement and supporting documents" and Clause 23.2(i)(g) says "where the whole work is suspended by Authority beyond 120 (one hundred twenty) days for any reason which is not W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -41- attributed to the Contractor". The petitioner refers to these clauses to submit that these are instances of default by the authority, which can be sufficient reason for termination of the agreement by the Contractor. It is submitted that the authority has failed to issue any order on the application for extension of time and has extracted work from the Contractor, on a promise that the application will be considered favourably. There is no reason to doubt the said statement of the petitioner since letters issued by the Executive Engineer, Superintending Engineer, etc., clearly show that the applications submitted by the petitioner for extension of time were favourably considered and extension was recommended.
26. Though it is contended by the Senior Government Pleader that the letters referred to and relied upon are only official communication between the officers in the course of business, the same cannot be ignored by this Court. The communications are very much part of the file relating to the agreement between the parties and are contemporaneous documents which throw light on the actions taken on the W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -42- application submitted by the petitioner for extension of time. This Court is necessarily concerned with the decision-making process while exercising its jurisdiction under Article 226 of the Constitution of India, and the said process is discernible from the file. The receipt of Exts.P9 and P11 notices is admitted, as is evident from Ext.P10 reply issued by the Executive Engineer and Ext.P13 notice issued by the Superintending Engineer. The fact that work was being carried out even after 17.9.2021 is evident from the interim payment certificate which has been produced along with a memo filed by the Senior Government Pleader as Document No.8. The said document shows that it is issued against the bill dated 27.12.2022 and the bill period is from 15.7.2022 to 26.12.2022. It is overlooking all these facts that the Ext.P16 notice was issued by the 5 th respondent on 15.3.2023, which is five months after Ext.P9 and four months after Ext.P11 notice issued by the petitioner. Ext.P16 does not say anything about the request for time extension submitted by the petitioner, or the further proceedings initiated on the said application by the author of Ext.P16 himself. Ext.P16 does not W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -43- refer to the termination notice issued by the petitioner and the reply issued by the author of Ext.P16. Without reference to the entire facts, merely stating that milestones have not been achieved and sufficient progress has not been obtained for the work, the decision is taken to terminate the contract.
27. Ext.P16 says that a decision has been taken to terminate the contract, and the contractor may make a representation, if any. The very statement indicates that any representation made by the Contractor would be only an empty formality. This was followed by Ext.P19, which purports to be an order of termination. This letter also does not state anything about the termination of the contract by the petitioner and the failure to decide on the application for extension of time. Ext.P17 reply submitted by the petitioner to Ext.P16 notice has been referred to as reference No.6 in Ext.P19. However, none of the aspects pointed out in Ext.P17 have even been referred to in the order. It is worthwhile to note that, except for referring to a document at the beginning of the order, there is no consideration of the contents of the document in the order. It can thus be W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -44- seen that the respondents had, without complying with the procedure to be followed in determining the application for extension of time, admittedly extracted work from the contractor without extending the time for completion of the contract. The petitioner had acted under Clause 23.2 and terminated the agreement, and the attempt on the part of the respondent had been to neutralise the effect of the termination of the contract by the contractor by issuing an order of termination at their instance. While doing so, none of the factors that had preceded have also been adverted to. The petitioner is hence fully justified in approaching this Court challenging the arbitrary action of the respondents.
28. I shall now consider the arguments advanced by the Senior Government Pleader in support of the order of termination. It is contended that the notice whereby the petitioner had sought to terminate the contract by invoking Clause 23.2 of Ext.P1 was itself without any basis. It is submitted that Clause 23.2 only contemplates termination if there is a default on the side of the authority. The default must W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -45- be of the nature of a breach by the employer of the terms of the contract, and it must have a material adverse effect. It is submitted that the only case of the petitioner is that the respondents failed to pass orders on the application for extension of time. The counsel points out that the mere fact that extension of time was not granted cannot be taken as a default on the side of the authority. It is submitted that the petitioner has no right whatsoever to have the time extended and that there is no obligation on the part of the respondents to extend the time. It is hence argued that Exts.P9 and P11 cannot be sustained. It is further argued that since Exts.P9 and P11 cannot be sustained, there can be no fault attributed to the termination of the contract by the State. The counsel points out that the petitioner was directed on several occasions to continue the work. It is submitted that the work was not restarted, and extension of time was also not sought. It is further submitted that the delay was not attributable to the employer. It is also submitted that the existence of an arbitration clause would take away the right of the petitioner to maintain the writ petition. W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -46-
29. The Senior Government Pleader further submits that the question whether the Government is in breach cannot be decided in a writ petition under Article 226 of the Constitution of India and in a case where both sides have invoked their contractual rights to terminate the contract, the remedy available was to approach the Tribunal for arbitration and not a writ petition. It is pointed out that at the time of admission of the writ petition, this Court had not issued any interim orders, and the only order was regarding the invocation of the Bank Guarantee. The counsel pointed out that the request for extension under Clause 10.5(iv) has to be made before the Authority's Engineer. Authority's Engineer is defined in Article 18 of the contract. It is submitted that the duties and authority of the Authority's Engineer are specified in Clause 18.2. As per Clause 18.2(i)(a), the Authority's Engineer can pass orders on any time extension with the written approval of the Authority. Under Clause 18.2(ii), no decision or communication of the Authority's Engineer shall be effective or valid unless it is accompanied by an attested true copy of the approval of the W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -47- authority for and in respect of any matter specified. It is submitted that the extension of time is thus a matter that has to be dealt with in terms of the contract and cannot be treated as the right of the party and the mere absence of passing an order of extension cannot by itself be termed as a breach of contract or a default on the part of the authority. Clause 21.9 is referred to, to submit that a dispute relating to the existence of a Force Majeure Event is to be finally settled under the dispute resolution procedure. Clause 23.1 is relied on to justify the termination of the contract by the State.
30. It is submitted that the Contractor did not achieve the project milestone, that the Contractor abandoned or manifested intention to abandon the construction without prior written consent of the authority and the contractor failed to proceed with the work and thus there is a clear existence of the situations stated in Clause 23.1(i) (c)(d) and (e). It is submitted that under Clause 23(1)(ii), the authority is entitled to terminate the agreement. Regarding the right of the Contractor to terminate for Authority's default, it is submitted that the invocation of the W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -48- clause is warranted only when there is a default and the Authority fails to cure the default within a clear period of 90 days. It is submitted that under Clause 23.2(i)(a), what is required is the Authority committing a material default in complying with any of the provisions of the agreement, and such default has a material adverse effect on the contractor. It is submitted that material adverse effect has also been defined to mean "a material adverse effect of any act or event on the ability of either party to perform any of its obligations under, and in accordance with, the provisions of this agreement and which act or event causes a material financial burden or loss to either party". The counsel also referred to Clause 26.1 relating to dispute resolution. Clauses 26.1, 26.2, and 26.3 relate to dispute resolution, conciliation, and arbitration, respectively. It is submitted that since the termination by the Contractor is without the fundamental requirements as per the contract, and the contract already stands terminated at the instance of the respondents, none of the prayers in the writ petition can be granted.
W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -49-
31. Even if the State has a case that the termination order issued by the petitioner has no justification, that is not a justification for issuing a termination order five months after the notice of termination was received from the petitioner. The State had to challenge the exercise of rights by the contractor under Clause 23.2 in appropriate proceedings and cannot ignore the same. If power were to be conceded to the State, to ignore a notice of termination issued by a contractor under Clause 23.2, the said Clause would be rendered meaningless and otiose. Clause 23.2 is intended to ensure that both the State as well as the Contractor have a level playing field when it comes to the execution of the agreement, and mutual rights are recognised for each of the contracting parties when it comes to termination of the agreement. The facts would show that there was no justification for not passing orders on the application for extension of time, particularly since the authority had extracted work from the petitioner even after the expiry of the period of the contract, and the concerned Engineers had recommended extension of time, following the order of MoRTH. If the contract W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -50- was to be terminated for want of progress even during the original period of the contract, there was no reason even to accept an application for extension of time and to consider the same and recommend the extension. At any rate, no such order could have been passed without notice to the petitioner, particularly since the petitioner had already approached this Court by filing W.P.(C)No.8260/2023, and Exts.P16 and P19 were issued pending the said writ petition.
32. Even if it were to be said that the respondents are having the right to terminate the contract under Clause 23.1 of Ext.P1, de hors the exercise of right by the contractor under Clause 23.2 of Ext.P1, the question whether Exts.P16 and P19 would be otherwise in accordance with law, is also to be considered. Ext.P16 is issued solely based on the reason that the petitioner had failed to achieve the milestones, entitling the respondents to terminate the agreement as per Clause 10.3(ii). After referring to three milestones that were not achieved, Ext.P16 says;
W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -51- "The contractor violated the conditions of the EPC contract vide Agreement No.14/2020-21/SE/NH/KKD dated 7.8.2020. Hence, as per the directions vide references (5),(6), and Article 23.1 of the contract agreement, the authority has decided to terminate the contract with M/s Nath Infrastructures at the Risk and Cost of the contractor with immediate effect and granted the contractor 15 days time to make a representation if any."
If the contract stands terminated with immediate effect, one fails to understand the purpose of the contractor making a representation within 15 days. The contractor, however, made a representation on 20.3.2023, a copy of which is produced as Ext.P17. Thereafter, Ext.P19 was issued purporting to be the order of termination. Ext.P19 refers to 6 documents and references (5) and (6) are Exts.P16 and P17, respectively. However, even without any consideration of the contents of Exts.P16 and P17, Ext.P19 proceeds to terminate the contract with immediate effect and states the consequences of the termination. If Ext.P16 amounted to a termination of contract with immediate effect, there was no need to issue Ext.P19. If, on W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -52- the other hand, Ext.P16 was intended to be a notice of termination, Ext.P19 should have dealt with Ext.P17 representation submitted by the contractor in reply to Ext.P16. The only conclusion possible in such circumstances is that Exts.P16 and P19 are arbitrary and unreasonable and have been issued in violation of the principles of natural justice.
33. The petitioner is hence entitled to the reliefs. Exts.P16 and P19 in W.P.(C)No.11720 of 2023 are quashed. Since this Court had not ordered a stay of proceedings while admitting the writ petitions, it will not be proper for this Court to direct that the petitioner should be permitted to complete the work. However, the petitioner is entitled to payment for the work carried out on directions issued by the respondents. The respondents are hence directed to consider the request for payment for the work that has already been carried out and make the payment accordingly, at the earliest, at any rate within one month from the date of receipt of a certified copy of this judgment. The respondents shall also release the Bank Guarantees executed by the petitioner in relation to Ext.P1 W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -53- agreement. It is made clear that the above directions will not in any manner affect any subsequent contract entered into by the respondents for completion of the work. Since Exts.P16 and P19 produced in W.P.(C)No.11720 of 2023 have been quashed, the respondents are directed not proceed with any coercive action against the petitioner based on Exts.P16 and P19.
The writ petitions are disposed of as above.
Sd/-
T.R. RAVI JUDGE dsn/pn W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -54- APPENDIX OF WP(C) 8260/2023 PETITIONER EXHIBITS Exhibit-P1 A TRUE COPY OF THE RELEVANT PAGES OF THE AGREEMENT EXECUTED BETWEEN THE PETITIONER AND THE 5TH RESPONDENT DATED NIL ALONG WITH LEGIBLE COPIES Exhibit-P2 A TRUE COPY OF THE MEMO OF WORK TENDERED, COUNTERSIGNED BY THE PETITIONER AND THE 5TH RESPONDENT Exhibit-P3 A TRUE COPY OF THE MEMORANDUM OF THE SITE INVENTORY DATED 18.09.2020 Exhibit-P4 A TRUE COPY OF THE RELEVANT PAGES OF THE APPLICATION FOR EXTENSION OF TIME DATED 24.09.2022 SUBMITTED BY THE PETITIONER BEFORE THE 5TH RESPONDENT Exhibit-P5 A TRUE COPY OF THE RELEVANT PAGES OF THE DIGITAL MEASUREMENT BOOK, RUNNING ACCOUNT 4TH AND PART BILL (ABSTRACT) Exhibit-P6 A TRUE COPY OF THE COMMUNICATION DATED 02.08.2022 ISSUED BY THE 5TH RESPONDENT TO THE 4TH RESPONDENT Exhibit-P7 A TRUE COPY OF THE COMMUNICATION DATED 28.09.2022 ISSUED BY THE 5TH RESPONDENT Exhibit-P8 A TRUE COPY OF THE NOTICE DATED 29-12-2022 SUBMITTED BY THE PETITIONER BEFORE THE 8TH RESPONDENT Exhibit-P9 A TRUE COPY OF THE NOTICE DATED 18.10.2022 SUBMITTED BY THE PETITIONER BEFORE THE 5TH RESPONDENT Exhibit-P10 A TRUE COPY OF THE REPLY DATED 29.10.2022 ISSUED BY THE 6TH RESPONDENT Exhibit-P11 A TRUE COPY OF THE NOTICE DATED 10.11.2022 W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -55- SUBMITTED BY THE PETITIONER BEFORE THE 5TH RESPONDENT ALONG WITH POSTAL RECEIPTS Exhibit-P12 A TRUE COPY OF THE NOTICE DATED 22.11.2022 ISSUED BY THE PETITIONER ALONG WITH POSTAL RECEIPTS Exhibit-P13 A TRUE COPY OF THE NOTICE DATED 03.12.2022 ISSUED BY THE 5TH RESPONDENT Exhibit-P14 A TRUE COPY OF THE REPLY DATED 19.12.2022 SUBMITTED BY THE PETITIONER BEFORE THE 5TH RESPONDENT ALONG WITH POSTAL RECEIPTS Exhibit-P15 A TRUE COPY OF THE NOTICE DATED 11.01.2023 ISSUED BY THE PETITIONER ALONG WITH POSTAL RECEIPTS W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -56- APPENDIX OF WP(C) 11720/2023 PETITIONER EXHIBITS Exhibit-P1 A TRUE COPY OF THE RELEVANT PAGES OF THE AGREEMENT EXECUTED BETWEEN THE PETITIONER AND THE 5TH RESPONDENT DATED NIL ALONG WITH LEGIBLE COPY Exhibit-P2 A TRUE COPY OF THE MEMO OF WORK TENDERED, COUNTERSIGNED BY THE PETITIONER AND THE 5TH RESPONDENT Exhibit-P3 A TRUE COPY OF THE MEMORANDUM OF THE SITE INVENTORY DATED 18.09.2020 Exhibit-P4 A TRUE COPY OF THE RELEVANT PAGES OF THE APPLICATION FOR EXTENSION OF TIME DATED 24.09.2022 SUBMITTED BY THE PETITIONER BEFORE THE 5TH RESPONDENT Exhibit-P5 A TRUE COPY OF THE RELEVANT PAGES OF THE DIGITAL MEASUREMENT BOOK, RUNNING ACCOUNT 4TH AND PART BILL (ABSTRACT) Exhibit-P6 A TRUE COPY OF THE COMMUNICATION DATED 02.08.2022 ISSUED BY THE 5TH RESPONDENT TO THE 4TH RESPONDENT Exhibit-P7 A TRUE COPY OF THE COMMUNICATION DATED 28.09.2022 ISSUED BY THE 5TH RESPONDENT Exhibit-P8 A TRUE COPY OF THE NOTICE DATED 29-12- 2022 SUBMITTED BY THE PETITIONER BEFORE THE 8TH RESPONDENT Exhibit-P9 A TRUE COPY OF THE NOTICE DATED 18.10.2022 SUBMITTED BY THE PETITIONER BEFORE THE 5TH RESPONDENT Exhibit-P10 A TRUE COPY OF THE REPLY DATED 29.10.2022 ISSUED BY THE 6TH RESPONDENT Exhibit-P11 A TRUE COPY OF THE NOTICE DATED W.P(C)Nos. 8260 & 11720 of 2023 2025:KER:49496 -57- 10.11.2022 SUBMITTED BY THE PETITIONER BEFORE THE 5TH RESPONDENT ALONG WITH POSTAL RECEIPTS Exhibit-P12 A TRUE COPY OF THE NOTICE DATED 22.11.2022 ISSUED BY THE PETITIONER ALONG WITH POSTAL RECEIPTS Exhibit-P13 A TRUE COPY OF THE NOTICE DATED 03.12.2022 ISSUED BY THE 5TH RESPONDENT Exhibit-P14 A TRUE COPY OF THE REPLY DATED 19.12.2022 SUBMITTED BY THE PETITIONER BEFORE THE 5TH RESPONDENT ALONG WITH POSTAL RECEIPTS Exhibit-P15 A TRUE COPY OF THE NOTICE DATED 11.01.2023 ISSUED BY THE PETITIONER ALONG WITH POSTAL RECEIPTS Exhibit16 A TRUE COPY OF THE NOTICE DATED 15-03- 2023 ISSUED BY THE 5TH RESPONDENT Exhibit-P17 A TRUE COPY OF THE REPLY SUBMITTED BY THE PETITIONER TO THE 5TH RESPONDENT ALONG WITH POSTAL RECEIPTS Exhibit-P18 A TRUE COPY OF THE RELEVANT PAGES OF THE PERFORMANCE SECURITY EXECUTED BY THE PETITIONER Exhibit-P19 A TRUE COPY OF THE ORDER DATED 30-03- 2023 ISSUED BY THE 5TH RESPONDENT RESPONDENT EXHIBITS EXHIBIT R5(A) TRUE COPY OF THE TERMINATION ORDER NO.D3-RW/NH-12014/57/2019/EPC DATED 30.03.2023