M/S Hydro Air Tectonics (Pcd) Ltd vs M/S National Buildings ...
2011 Latest Caselaw 3865 Del

            *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                         Date of decision: 10th August, 2011
+                        W.P.(C) 5724/2011

          M/S HYDRO AIR TECTONICS (PCD) LTD         ..... Petitioner
                       Through: Mr. Pawan Bahl, Mr. Kamlakshi
                                Singh & Mr. Saundarya Singh, Adv.

                                     Versus

         M/S NATIONAL BUILDINGS CONSTRUCTION
         CORPORATION LTD. AND ANR.               .... Respondents
                      Through: Mr. Himanshu Bajaj, Adv. for R-3.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.       Whether reporters of Local papers may             Yes
         be allowed to see the judgment?

2.       To be referred to the reporter or not?            Yes

3.       Whether the judgment should be reported           Yes
         in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The petition impugns the communication dated 27th July, 2011 of

the respondent no.1 National Buildings Construction Corporation Ltd.

(NBCC), in pursuance to the show cause notice issued to the petitioner,

rescinding the contract given to the petitioner for construction of Medical

College/Retrofitting work of existing ESIC Hospital at Parel, Mumbai

(Maharashtra).

2. There was admitted delay in execution of the work which led to the

issuance of the show cause notice. The contention of the counsel for the

petitioner however is that the delay is not attributable to the petitioner but

owing to the impediments in execution of the work, the works being

required to be carried out in an existing/operating/running hospital.

3. It has been enquired from the counsel for the petitioner as to how

writ jurisdiction can be invoked in such a purely contractual matter.

4. The counsel for the petitioner relies upon Kisan Sahkari Chini Mills

Ltd. v. Vardan Linkers (2008) 12 SCC 500 which also lays down that the

writ jurisdiction ought not to be exercised in contractual matters unless

there is a public law element; it is contended that the letter dated 27th July,

2011 merely states that the reply of the petitioner to the show cause notice

had not been found satisfactory and does not give any reasons as to why

the same was not found satisfactory; that thus the writ petition would be

maintainable. Reliance in this regard is also placed on Kranti Associates

Pvt. Ltd. v. Masood Ahmed Khan (2010) 9 SCC 496 & Oryx Fisheries

Pvt. Ltd. v. Union of India (2010) 13 SCC 427 where the duty to give

reasons has been emphasized. Though the counsel for the petitioner has

also relied upon the order dated 21st May, 2010 of this Court in W.P.(C)

3447/2010 titled Vichitra Constructions Pvt. Ltd. v. Delhi Jal Board but

the same is found to be a consent order and thus cannot be cited as a

precedent.

5. The duty to give reasons has to be seen in the context. The Supreme

Court in Maharashtra State Board of Secondary & Higher Secondary

Education v. K.S. Gandhi (1991) 2 SCC 716 held that omission to record

reasons is not necessarily illegal or violative of natural justice and depends

upon the nature of enquiry and the effect of the decision on the rights of

the person and attendant circumstances. As has often been said, the

principles of natural justice cannot be applied in a vacuum without

reference to the relevant facts and circumstances. In fact doubts have been

expressed whether duty to give reasons is a part of the principles of natural

justice.

6. The respondent no.1 NBCC in the matter of rescinding of the

contract was not exercising any judicial or quasi judicial function. A power

to deal with a contractual matter and a power of the statutory authority to

exercise its statutory power in determining the rights and liabilities of the

parties are distinct and different. Whereas reasons are required to be

assigned in a case where civil or evil consequences may ensue, the same

may not be necessary where it is contractual in nature (see Ramchandra

Murarilal Bhattad v. State of Maharashtra (2007) 2 SCC 588). The

Courts in contractual matters have insisted on giving of reasons only where

the action impugned is apparently contrary to logic i.e. say where the

highest bid is not accepted. This Court in Integrated Techno Systems Pvt.

Ltd. v. NDMC MANU/DE/8339/2007 held that the Court in judicial

review proceedings under Article 226 is more concerned with the process

of decision making rather than the merits of the decision; the Court does

not don the hat of the decision maker and does not act as a super appellate

administrative body to examine the soundness of the action; the duty of the

Court is only to see whether the decision was arrived at after following a

fair procedure considering the relevant factors and ignoring the irrelevant

facts.

7. It is not in dispute that the respondent no.1 NBCC was under the

contract, for the reason of delay, entitled to rescind the contract. It is not in

dispute that the work was not completed within the time stipulated in the

agreement for completion of the work. The action of respondent no.1

NBCC is thus not apparently illogical. The question which arises is,

whether the respondent no.1 NBCC was required to deal with each and

every contention in the reply of the petitioner as in a judgment of the

Court. I am unable to hold so. The Engineers/Officers of respondent no.1

NBCC who deal with such matters have hands-on experience of the work.

Such Engineers/Officers of respondent no.1 NBCC are of the view that the

delay in execution of the work is attributable to the petitioner and that the

petitioner would be unable to complete the work within the time extended

by the ESIC also. This Court cannot in exercise of powers of judicial

review sit in appeal over the opinion so formed by such

Engineers/Officers. The principles of natural justice have been complied

with by issuance of a show cause notice.

8. The counsel for the petitioner has with reference to several

documents sought to contend that the decision of the respondent no.1

NBCC is arbitrary. Attention in this regard is invited to the satisfaction

recorded on 10th October, 2010 by the Medical Superintendent of the

Hospital of the work being undertaken, to a letter dated 14 th January, 2011

of the respondent no.1 NBCC to ESIC seeking extension of time for

completion of work, quoting the hindrances and to the pert charts also

referring to hindrances. However none of the said documents persuade me

to interfere with the decision. The Medical Superintendent of the Hospital

was not concerned with the reasons for delay and such procured documents

have no weightage. Similarly, what was written by the respondent no.1

NBCC while seeking extension of time from ESIC cannot be used against

the respondent no.1 NBCC. The respondent no.1 NBCC in writing the said

letter was interested in obtaining the extension to avoid claims and

damages which may have been made against it. Yet further, the pert charts

were relied upon by the petitioner in its reply to the show cause notice and

there is nothing to indicate that the same were not considered. Moreover,

this Court is not exercising appellate power.

9. There is another aspect of the matter. Even if it were to be held that

the action of the respondent no.1 NBCC is erroneous, the contract which

has been terminated was not specifically enforceable. If the petitioner, in

an appropriate proceedings, succeeds in establishing that the delay is not

attributable to it and the contract has been wrongfully rescinded, it will be

entitled to compensation/damages. On the contrary if this Court interferes

and which would necessarily entail restraining respondent no.1 NBCC

from awarding the work to anyone else (and which relief has been sought

by the petitioner), the same would inordinately delay the works aforesaid

and which are public works and on account of delay whereof the public at

large will suffer. For this reason also, it is not deemed appropriate to

entertain this challenge.

10. It is also felt that the adjudication as this Court is called upon to do

entails factual controversy, best left for decision in a suit or in arbitration

as the case may be.

11. The counsel for the petitioner has contended that a direction may be

given to respondent no.1 NBCC to reconsider the matter giving reasons.

However, the same would also entail, at least till then, restraining NBCC

from awarding the contract to another and which course, for reasons

aforesaid is not found appropriate.

12. The writ petition is therefore not maintainable and is dismissed with

liberty to the petitioner to take appropriate remedies in law. The

observations herein shall not come in the way of the petitioner, in

appropriate proceedings establishing its claim for compensation/damages.

No order as to costs.

Dasti.

CM No.11676/2011 (for exemption).

Allowed, subject to just exceptions.

RAJIV SAHAI ENDLAW (JUDGE) AUGST 10, 2011 PP