Thatiparthi Mohan Reddy Security ... vs Directorate General Of ...
2021 Latest Caselaw 561 AP

             HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO

                          W.P.No.21703 of 2020

ORDER:

The petitioner is a proprietary firm of a retired defence officer, who

is running the security services under the aegis of the Directorate General

of Resettlement. The said Directorate General of Resettlement issued

guidelines for functioning of Directorate General of Resettlement

empanelled ex-servicemen for providing security services to the public

sector units under Office Memorandum No.28(3)/2012-D(Res-I) dated

09.07.2012, which was subsequently amended on 16.01.2013.

2. The petitioner-agency was a successful bidder in the tender

issued by the 2nd respondent on 12.12.2019 for supply of ex-servicemen

for security services for the period 01.02.2020 to 31.01.2022. A purchase

order vide PO No.19000040-OP-12620/SN, dated 12.02.2020 was issued

by the 3rd respondent to that effect and a formal agreement dated

14.03.2020 was drawn up and signed.

3. In the course of the contract, the 4th respondent released wages to

the petitioner-agency for the months of March and April, 2020 which were

in turn disbursed to the security guards employed by the petitioner-

agency. On 19.06.2020, the 4th respondent issued a notice to the

petitioner calling upon the petitioner to disburse wages for the month

May, 2020 on or before 22.06.2020. The petitioner issued a reply on

11.08.2020 bringing it to the notice of the 4th respondent that as the

petitioner was sponsored by the 1st respondent- Directorate General of

Resettlement, it was incumbent on the 4th respondent to release the

wages to the petitioner-agency to enable the petitioner to disburse wages

to the security personnel employed by the petitioner. Thereafter, there 2 RRR,J W.P.No.21703 of 2020

was correspondence between the petitioner and the 4th respondent on the

question whether the petitioner was entitled to receive wages and then

disburse the same to its employees, or whether the petitioner has to pay

the wages first and seek reimbursement from the 4th respondent. This

correspondence resulted in a show cause notice being issued by the 4th

respondent and an explanation being offered by the petitioner, which

culminated in order of termination dated 16.11.2020 terminating the

purchase order dated 12.02.2020 issued to the petitioner.

4. Aggrieved by the said order of termination, the petitioner has

approached this Court contending that the said order of termination is

arbitrary and in violation of the guidelines issued by the Directorate

General of Resettlement and more specifically guideline No.16 (c) of the

Office Memorandum.

5. The respondent corporation filed its counter stating that the

refusal of the petitioner to disburse wages and thereafter seek

reimbursement from the 4th respondent was in violation of the tender

conditions as well as the written contract executed between the parties.

The respondent-corporation also took the stand that the disputes raised

by the petitioner are the disputes arising in a contract and the same

cannot be raised in a writ petition under Article 226 of the Constitution of

India. The respondent corporation also took the stand that Clause 14.1 of

the agreement between the parties provided for arbitration in the event of

any dispute arising between the parties on account of contract. It is the

submission of the respondent-corporation that on account of this clause

there is an adequate alternative remedy available to the petitioner and as

such the writ petition would not be maintainable before this Court.

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                                                            W.P.No.21703 of 2020

6. On the question of maintainability of the writ petition, Sri Bala

Gopal, learned counsel for the respondent-corporation relied upon various

judgments, viz., -

1. Judgment dated 21.06.2019 in SLP (Civil) Nos.13802 - 138 05 of

2019 the Silppi Constructions Contractors v. Union of India and

Anr.

2. Judgment dated 14.-05.2015 in Civil Appeal No.6929 of 2012 Joshi

Technologies International Inc. V. Union of India & Ors.

3. Judgment dated 04.07.2006 in Appeal (Civil) No.4330 of 2000 A.P.

Foods v. S. Samuel & Ors.

4. State of Kerala & Ors., v. M.K. Jose1

to the effect that a writ petition would not be maintainable on a disputed

questions of fact and where alternative remedies are available.

7. Smt. T.V. Sridevi, learned counsel for the petitioner-agency

relied upon ABL International Ltd., & Anr., v. Export Credit Guarantee

Corporation of India Limited & Ors.2 for the proposition that a writ petition

under Article 226 of Constitution of India is maintainable even in matters

of disputes arising out of a contract and even in cases where there are

disputed questions of fact.

8. In the present case there is no dispute of fact in as much as

the facts are admitted and accepted by both sides. The only question is

on the issue which of the respective stands taken by the parties is correct.

    (2015) 9 SCC 433

    (2004) 3 SCC 553
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                                                             W.P.No.21703 of 2020

9. The contention of Sri Bala Gopal is that there is a provision

for arbitration and the petitioner himself had sought reference of the

dispute to arbitration in his letter dated 11.08.2020.

10. Smt. T.V. Sridevi, learned counsel for the petitioner submits

that this request was rejected by the respondent-corporation by its notice

dated 10.09.2020 where the 4th respondent specifically took the stand

that invocation of the arbitration clause was not acceptable to the 4th

respondent. In these circumstances, the reliance on the arbitration clause

by the 4th respondent may not be appropriate. In any event, refusal of the

4th respondent to act in accordance with the Office Memorandum issued

by the Directorate General of Resettlement, takes the matter beyond a

mere contractual dispute, and as such, it would be appropriate for this

Court to interfere in the matter.

11. The case of the 4th respondent is that the tender terms,

which are essentially repeated in the agreement between the parties,

requires the petitioner to first pay the wages of the security guards

engaged by it, and thereafter, seek reimbursement of the said amounts

from the 4th respondent-corporation. As this was not followed by the

petitioner, there is a clear violation of the contractual terms entitling the

4th respondent to cancel and terminate the contract.

12. The provision of the contract dated 14.03.2020, is Clause 4

(i) & (ii), which reads as follows:

"4. Payment Plan:

(i) The contractor shall make the payment to its security personnel before 7th of every month and thereafter shall raise the bill on the Corporation along with coy of ESI & EPF and Tax challans which shall be cleared within 15 days of receipt by the corporation. During the 5 RRR,J W.P.No.21703 of 2020

period of validity of this agreement, the Corporation shall not be bound to pay any amount more than that stipulated in this agreement. No charges other than those mentioned in the schedule will be paid by the Corporation to the Contractor or any of the employee/officer of the latter.

(ii) In case the contractor does not produce any proof of payment of wages, PF, ESI by 15th of each month for every completed previous month, the bills for the respective month/months will be withheld by the Corporation and the amount so due, shall be adjusted from the pending bill/bills and the Security as deposited by the Contractor.

In case any additional financial burden arises on the contractor either out of revision in minimum wages/DGR wages, and /or due to any other labour enactments during validity of this agreement, the same will be reimbursed to the Contractor on his submitting documentary evidence to that effect."

13. Smt. T.V. Sridevi would submit that any contract between a

public sector organisation and a security servicemen by ex-defence

personnel would have to be in accordance with Clause 16.1 of the Office

Memorandum dated 09.07.2012, which reads as follows:

16. Wages:

             (a)    .................
             (b)    .................

             (c)    Principal employer will pay wages due to the

security agency by 1st of every month. Payment to security guard/supervisors will be done by ECS/Cheque on by the security agency by 7th of each month. In case the salary is not paid by ECS/cheque due to compelling reasons, DGR will be intimated accordingly.

14. As can be seen from the contents of these two documents, there is

a conflict between the said provisions. On one hand, the contract between

the petitioner and the 4th respondent casts the burden of initial payment 6 RRR,J W.P.No.21703 of 2020

of wages on the petitioner and on the other hand, the initial burden of

paying wages is on the 4th respondent.

15. In these circumstances, the question that would arise is,

which provision has to be treated as the overarching provision. At that

stage Smt. T.V. Sridevi relies upon Clause 18 of the Agreement dated

14.03.2020, which reads as follows:

"18. General:

(i) This Agreement constitutes the entire agreement and understanding of the parties, relating to the subject matter of this Agreement. The proprietor empanelled with DGR & the order receive against sponsorship issued by the DGR on PSU. As per the request form submitted by PSU, as such the PSU should invariable adhere to the guidelines of DGR as amended from time to time. It may also be noted that DGR guideline will supersede the terms conditions of the PSU if varied from the guidelines of DGR.

(ii) Any notice or correspondence required to be given under this Agreement shall be in writing and must be left at the address of the party to whom it is addressed (the "recipient") sent by registered post/speed post or by courier or by hand delivered to the address of the recipient, or sent by fax to the fax number of the recipient which is specified herein below or to the e-mail specified.

a. The Contractor, M/s. Thatiparthi Mohan Reddy Security Agency, Panagallu, Srikalahasti, Chittoor (AP) - 517640

b. The Corporation Hindustan Petroleum Corporation Limited, Visakh LPG Terminal, HP Petro Park, Opp: INS Dega, Port Connectivity Road, Visakhapatnam-530009 (A.P).

16. In these circumstances, it is the Office Memorandum, which

has to take precedence over the terms of the contract. Consequentially 7 RRR,J W.P.No.21703 of 2020

the 4th respondent cannot hold that the petitioner was in violation of the

provisions of the agreement and terminate the same. In the

circumstances, it would have to be held that the order of termination

dated 16.11.2020 is not valid and has to be set aside.

17. Accordingly, the writ petition is allowed. There shall be no

order as to costs. As a sequel, pending miscellaneous petitions, if any,

shall stand closed.

_________________________ R. RAGHUNANDAN RAO, J.

3rd February, 2021 Js.

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                                       W.P.No.21703 of 2020




      HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO




               W.P.No.21703 of 2020




                 3rd February, 2021
Js.