Andhra Pradesh High Court - Amravati

Jsc Golla Engineering Private Limited, vs Oil And Natural Gas Corporation Limited on 6 June, 2024

 APHC010245742024

                      IN THE HIGH COURT OF ANDHRA PRADESH
                                    AT AMARAVATI                        [3459]
                             (Special Original Jurisdiction)

                      THURSDAY,THE SIXTH DAY OF JUNE
                      TWO THOUSAND AND TWENTY FOUR

                                   PRESENT

           THE HONOURABLE SMT JUSTICE SUMATHI JAGADAM

                         WRIT PETITION NO: 12243/2024


Between:s
JscGolla Engineering Private Limited,                           ...PETITIONER

                                          AND

Oil And Natural Gas Corporation Limited and Others         ...RESPONDENT(S)

Counsel for the Petitioner:
1. M/S INDUS LAW FIRM
Counsel for the Respondent(S):
1.
 The Court made the following:


ORDER:

Heard Sri V.R.N. Prashanth, learned counsel for the petitioner, and

Sri Avinash Desai, learned Senior Counsel for the respondents, appeared

through video conference.

2. It is the case of the petitioner that respondent No.1 has issued a tender

notification bearing No.DLH/OES/MM/GDU/RJY&CAV/X11VC21007/

2021/Group-A in 2022. Respondent No.1 issued two letters of intent on

05.07.2022 bearing file No.DLH/OES/MM/GDU/RJY&CAV/

X11VC21007/2021/Group-A and file No.DLH/OES/MM/GDU/RJY&CAV/

JS,J

X11VC21007/2021/Group-B for two different contracts. The scheduled

completion period for the Group A contract shall be 22 months. The 07-year

O&M portion of the contract shall start after the Group A works are completed.

The Group-A contract is for 22 months, which expires on 05.05.2024. The

petitioner asked for extension of time, and respondent No.1, vide File

No.DLH/OES/MM/GDU/RJY&CAV/X11VC21007/2021/Group-A, dated

29.04.2024, have extended time from 05.05.2024 to 04.08.2024, reserving

their rights to levy liquidated damages for the delay in completion of work. The

petitioner has completed about 60% of the work at the time of extension. On

23.05.2024, the petitioner received a letter from respondent No.1 seeking

clarification about with the relevant documents and directed the petitioner to

submit the same within four working days, i.e., 27.05.2024. On 27.05.2024,

the petitioner sought further two weeks time till 10.06.2024. In response to the

said request, respondent No.1 vide DLH/OES/MM/GDU/RJY&CAV/

X11VC21007/2021/Group-A, dated 28.05.2024, gave one additional day,

i.e., 29.05.2024 to provide clarification. Responding to the letter dated

28.05.2024, issued by respondent No.1, the petitioner forwarded the

information/clarification to respondent No.1 and requested more time to file

the copy of FC-GPR, i.e., up to 10.06.2024. On 01.06.2024, the respondent

rejected the request to submit a copy of FC-GPR. Suddenly, on 03.06.2024,

the petitioner was served with termination orders under the provisions of

para-No.1 of Section 3 of Integrity Pact and Clause 8.3.4 of GCC of the

contract.

JS,J

3. The petitioner contends that the petitioner has complied with Sl.No.1 to

4 of clause 13 of the termination order and requested time to submit the

document, which the respondent rejected. Clause 12 of the letter of

termination dated 03.06.2024 reads as follows:

"12. Accordingly, Company is of the view that without having required financial background and experience, Contractor would not be able to complete the Contract with scheduled completion date and even otherwise, it would not be in the interest of Company to get the remaining work done by the Contractor whose integrity is in doubt and therefore no fruitful purpose would be served in granting another 30 days notice period as provided in Clause 8.3.4 for remedial measures."

4. It is the further contention of the petitioner that the respondents have

not issued any show cause notice directly issued termination orders to the

petitioner, though the contract period is subsisting up to 04.08.2024. Even at

the time of extending the contract period, respondent No.1 reserved their right

to levy liquidated damages for delay in completion of work after the expiry of

the contract period. It is the further contention of the petitioner that Clause 8.3

of Contract Agreement deals with termination and Clause 8.3.4 of Contract

Agreement speaks about termination of contract on the grounds of non-

performance/unsatisfactory performance. Clause 8.3.4 of the Contract

Agreement is usefully extracted hereunder:

"If the ONGC considers that the performance of the CONTRACTOR is unsatisfactory or, not upto the expected standard, the ONGC shall notify the CONTRACTOR in writing and specify in detail the cause of such dissatisfaction. The ONGC shall have the option to terminate this Agreement by giving 30 days notice in writing to the CONTRACTOR, if, CONTRACTOR fails to comply with the requisitions contained in the said written notice issued by the ONGC."

JS,J

5. The petitioner's further contention is that the obligation is on the part of

the respondents to give 30 days' notice in writing to the contractor. Still, the

respondent, without following the procedure under the contract agreement,

straight away terminated the contract of the petitioner, saying that no fruitful

purpose would be served in granting another 30 days' notice period as

provided under Clause 8.3.4 for remedial measures and prayed for

suspension of the impugned proceedings.

6. On the other hand, Sri Avinash Desai, learned Senior Counsel

appearing for the respondents, submits that Clause 1.3 of the contract

agreement refers laws/arbitration and Clause 1.3.1 refers to applicable laws,

which indicates that all the questions, disputes or differences arising under,

out of or in connection with this contract, shall be settled in accordance with

laws of India (both procedural and substantive) from time to time in force and

to the exclusive jurisdiction of the Courts in Delhi in India, subject to the

provisions of Clause 1.3.2 and the writ petition is not maintainable under

Article 226 of the Constitution of India.

7. Learned counsel for the petitioner has relied upon the judgment

rendered by the Hon'ble Supreme Court in Gorkha Security Services Vs.

Government (NCT of Delhi)1. Para Nos.21, 22 and 31 of the said judgment

read thus:

"21. The central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of

(2014) 9 SCC 105

JS,J

show-cause notice is to make the notice understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/breaches complained of are not satisfactorily explained. When it comes to blacklisting, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action.

22. The High Court has simply stated that the purpose of show-cause notice is primarily to enable the noticee to meet the grounds on which the action is proposed against him. No doubt, the High Court is justified to this extent.

However, it is equally important to mention as to what would be the consequence if the noticee does not satisfactorily meet the grounds on which an action is proposed. To put it otherwise, we are of the opinion that in order to fulfil the requirements of principles of natural justice, a show-cause notice should meet the following two requirements viz:

(i) The material/grounds to be stated which according to the department necessitates an action;

(ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit.

We may hasten to add that even if it is not specifically mentioned in the show-cause notice but it can clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement.

31. When it comes to the action of blacklisting which is termed as "civil death" it would be difficult to accept the proposition that without even putting the noticee to such a contemplated action and giving him a chance to show cause as to why such an action be not taken, final order can be passed blacklisting such a person only on the premise that this is one of the actions so stated in the provisions of NIT."

JS,J

8. Learned counsel for the petitioner has also relied upon the judgment

rendered by the Hon'ble Supreme Court in Maharashtra Chess Association

Vs. Union of India and others2. Para Nos.10, 11 and 13 of the said judgment

are usefully extracted hereunder:

"10. Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject-matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others. Clause 21 does not oust the jurisdiction of all courts. Rather, the appellant and the second respondent have agreed to submit suits or legal actions to the courts at Chennai. So long as the courts at Chennai have proper jurisdiction over a dispute involving the appellant and the second respondent, Clause 21 is not in violation of the principle set out in ABC Laminart [ABC Laminart (P) Ltd. v. A.P. Agencies, (1989) 2 SCC 163] . However, the decision in ABC Laminart [ABC Laminart (P) Ltd. v. A.P. Agencies, (1989) 2 SCC 163] was made in the context of an original suit and the jurisdiction of an ordinary civil court. The present case is materially different. The appellant approached the Bombay High Court under Article 226. The second respondent seeks to rely on Clause 21 to oust the writ jurisdiction of the High Court of Bombay.

11. Article 226(1) of the Constitution confers on High Courts the power to issue writs, and consequently, the jurisdiction to entertain actions for the issuance of writs. [ "226. Power of High Courts to issue certain writs.--(1) Notwithstanding anything in Article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose."] The text of Article 226(1) provides that a High Court may issue writs for the enforcement of the fundamental rights in Part III of the Constitution, or "for any other purpose". A citizen may seek out the writ jurisdiction of the High Court not only in cases where her fundamental right may be infringed, but a much wider array of situations. Lord

(2020) 13 SCC 285

JS,J

Coke, commenting on the use of writs by courts in England stated:

"The Court of King's Bench hath not only the authority to correct errors in judicial proceedings, but other errors and misdemeanours [...] tending to the breach of peace, or oppression of the subjects, or raising of faction, controversy, debate or any other manner of misgovernment; so that no wrong or injury, public or private, can be done, but that this shall be reformed or punished by due course of law...." [James Bagg's case, (1572) 11 Co Rep 93b : 77 ER 1271]"

12. Echoing the sentiments of Lord Coke, this Court in U.P.State Sugar Corpn. Ltd. V. Kamal Swaroop Tondon reported in (2008) 2 SCC 41 : (2008) 1 SCC (L&S) 352, observed that "...... It is well settled that the jurisdiction of the High Court under Article 226 of the Constitution is equitable and discretionary. The power under that Article can be exercised by the High Court "to reach injustice wherever it is found."

13. The role of the High Court under the Constitution is crucial to ensuring the rule of law throughout its territorial jurisdiction. In order to achieve these transcendental goals, the powers of the High Court under its writ jurisdiction are necessarily broad. They are conferred in aid of justice. This Court has repeatedly held that no limitation can be placed on the powers of the High Court in exercise of its writ jurisdiction. In A.V. Venkateswaran v. RamchandSobhraj Wadhwani [A.V. Venkateswaran v. RamchandSobhraj Wadhwani, (1962) 1 SCR 753 : AIR 1961 SC 1506] a Constitution Bench of this Court held that the nature of power exercised by the High Court under its writ jurisdiction is inherently dependent on the threat to the rule of law arising in the case before it : (AIR p. 1510, para 10)

"10. ... We need only add that the broad lines of the general principles on which the court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus pre-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the court."

JS,J

The powers of the High Court in exercise of its writ jurisdiction cannot be circumscribed by strict legal principles so as to hobble the High Court in fulfilling its mandate to uphold the rule of law."

9. In view of the facts and circumstances of the case, the matter requires

further hearing. As the respondents have extended the period of the contract

on 29-04-2024 and the same is subsisting till 04.08.2024, and respondent

No.1, without issuing any show cause notice in terms of Clause 8.3.4 of the

contract agreement, which mandates 30 days' notice in writing to the

petitioner, has terminated the contract of the petitioner on the ground that no

fruitful purpose would be served in granting another 30 days' notice which is

nothing but violation of the principles of natural justice.

Therefore, the impugned letter of termination of the contract, dated

03.06.2024, shall be suspended for a period of four weeks from the date of the

termination order issued.

10. Post the matter after summer vacation.