Chanasma Taluka Sarvoday Mazoor ... vs The Union Of India Through ...
2023 Latest Caselaw 4511 Guj

     C/SCA/8584/2020                            JUDGMENT DATED: 15/06/2023




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD


               R/SPECIAL CIVIL APPLICATION NO. 8584 of 2020


FOR APPROVAL AND SIGNATURE:


HONOURABLE THE ACTING CHIEF JUSTICE MR. JUSTICE A.J.DESAI

and

HONOURABLE MR. JUSTICE BIREN VAISHNAV

==========================================================

1     Whether Reporters of Local Papers may be allowed
      to see the judgment ?

2     To be referred to the Reporter or not ?

3     Whether their Lordships wish to see the fair copy
      of the judgment ?

4     Whether this case involves a substantial question
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

==========================================================
       CHANASMA TALUKA SARVODAY MAZOOR KAMDAR SAHAKARI
               MANDALI LTD. THROUGH ITS SECRETARY
                              Versus
      THE UNION OF INDIA THROUGH MINISTRY OF PETROLEUM AND
                           NATURAL GAS
==========================================================
Appearance:
MR ANUJ H DAVE(8333) for the Petitioner(s) No. 1
MS AISHWARIYA REDDY, ADVOCATE FOR GUPTA LAW
ASSOCIATES(9818) for the Respondent(s) No. 2
RULE SERVED for the Respondent(s) No. 1
==========================================================

    CORAM:HONOURABLE THE ACTING CHIEF JUSTICE MR.
          JUSTICE A.J.DESAI
          and
          HONOURABLE MR. JUSTICE BIREN VAISHNAV


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      C/SCA/8584/2020                         JUDGMENT DATED: 15/06/2023




                         Date : 15/06/2023

                         ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV)

1. By way of this petition, under Article 226 of the

Constitution of India, the petitioner has prayed for

quashing and setting aside the termination letter dated

25.03.2020 by which the petitioner's contract for grass

cutting and bush cutting at various well sites and

approach roads in ONGC Mehsana Asset was terminated.

The petitioner has also prayed for quashing and setting

aside the letter dated 13.05.2020 by which as a sequel to

the termination of the contract agreement, the petitioner

is put on a holiday for a period of two years from the date

of the order.

2. Facts in brief are as under:

2.1 The petitioner is a society registered under the

Gujarat Co-operative Societies Act, 1961. The respondent

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

ONGC on 20.02.2019 issued a notice inviting tender for

hiring of services for grass cutting and bush cutting at

various well sites at approach roads and installations and

approach roads in ONGC Mehsana Asset. In the bidding

process, the petitioner was declared as a successful

bidder. Accordingly, a notification awarding the contract

for the aforesaid services was issued to the petitioner.

The duration of the contract was for a period of three

years from the date of commencement of services.

2.2 On compliance of the conditions of notice of

awarding the contract, a contract agreement was entered

into between the petitioner and the ONGC on 25.09.2019.

It is the case of the petitioner that after the execution of

the contract, the petitioner started diligently working on

the project assigned to it in accordance with the contract

agreement.

2.3 On 17.01.2020, the respondent ONGC issued a letter

to the petitioner informing it that as per the intimation

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

from the user section of the six work orders placed for

the contract, despite the scheduled completion date

having passed, the work completion status as on

08.01.2020 was 'not completed'. The petitioner was

advised to comply with the communications in

accordance with the terms of the contract within ten days

from the issue of the said letter.

2.4 The petitioner on that very date i.e. 17.01.2020

responded setting out that it had infact completed the

works and in three of the projects, work completion

certificates were not received. In response to the letter,

on 06.02.2020, the respondent corporation in accordance

with clause 9 and 18.4 of the general conditions of the

contract, issued a notice informing the petitioner that

despite multiple communications, the petitioner has failed

to comply with the terms of the contract and the work on

the six installations has not been completed till date.

2.5 The petitioner was therefore asked to show cause as

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

to why the contract be not terminated. The petitioner

responded by letters dated 16.02.2020 and 26.02.2020

disputing the stand of the respondent. By the impugned

communications under challenge, not only has the

contract of the petitioner been terminated but the

petitioner has been put on holiday for two years as far as

the contract with ONGC is concerned.

3. Mr. Anuj Dave, learned advocate for the petitioner

would invite the court's attention to clause 9 of the

conditions of the contract and would submit that the

clause required the corporation to put to the petitioner's

notice any defect or deficiencies and give the petitioner a

time frame of ten days to remedy the same and only

thereafter the contract could have been terminated after

a 30 days' written notice which has not been done in this

case.

3.1 Mr. Dave, learned advocate for the petitioner would

invite the court's attention to the letter dated 17.01.2020

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

and submit that of the six installation projects as far as

NK-III, NS-ETP work completion certificates were not

issued. For the remaining four, in two cases such

certificates were attached whereas it was pointed out for

other two that certificates could be submitted after

completion of projects within a short span. He would

therefore submit that because of non-availability of

completion certificates from the respondent, the

petitioner could not be blamed for over shooting of the

scheduled time frame of completing the projects.

3.2 Inviting the court's attention to the letter dated

26.02.2020, Mr. Dave, learned advocate for the

petitioner would submit that in some cases there was a

delay in completion work as the commencement of the

work was rescheduled based on the ONGC's requirement

of work and in certain cases when the petitioner's

labourers went on to the well sites, it was noticed that the

area of allotment is increased from the area originally

mentioned in the work order. For instance, in NK-GGS-2

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

(23 wells), the area as per the work order was 18,584 sq.

mtrs but the actual completed area was 1,03,783 sq mtrs.

Obviously, therefore, the stand of the corporation that the

work was incomplete was unjustified.

3.3 Mr. Anuj Dave, learned advocate for the petitioner

would further submit that if the period in question is

noticed it was during the lockdown period where

sufficient workforce was not available and therefore the

petitioner could not have been faulted for completion of

work.

3.4 In support of his submission that the termination of

the contract was in compliance of clause 9 of the General

Conditions of the contract, Mr. Dave relied on a decision

of the Hon'ble Apex Court in the case of MP Power

Management Company Limited, Jabalpur vs. Sky

Power Southeast Solar India Private Limited and

Others [(2023) 2 SCC 703]. Relying on para 108 of the

decision, he would submit that clause 9 of the Article in

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

contract before the Apex Court was identical to the one in

the case on hand where the Hon'ble Apex Court had

interfered with the termination as there was no default

notice in accordance with the said clause as in the

present case.

5. Ms. Aishwariya Reddy, learned advocate appearing

for Gupta Law Associates, learned advocate for the

respondent ONGC per contra would submit that since the

petition pertains to contractual obligation between

parties, this court should refrain from assuming

jurisdiction under Article 226 of the Constitution of India.

The petitioner has an effective alternative remedy of

invoking conciliation proceedings before Outside Expert

Committee in accordance with clause 27.3 of the

contract.

5.1 On merits, Ms. Reddy would submit that the

petitioner was informed about the methodology of

executing the contract because especially time was the

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

essence as well sites needed to be cleared off the grass

and tall bushes as such growth was highly inflammable

and could result in accidents on the well sites. The

petitioner was time and again informed regarding the

importance of timely completion of work orders issued by

the corporation.

5.2 Ms. Reddy would draw the court's attention to the

communications addressed to the petitioner on

25.09.2019 and 10.10.2019 constantly emphasizing on

the fact that the work of grass cutting at the installations

should be completed within the time frame. On

06.11.2019, the petitioner was addressed an e-mail in

detail pointing out that the petitioner had overshot the

work schedule and had not completed the work. Even by

letters dated 29.11.2019, 05.12.2019, 08.12.2019,

10.12.2019, the petitioner was issued several reminders

and the petitioner failed to take corrective measures. The

response of the petitioner on 25.12.2019 was not a

satisfactory explanation as to why the work was not

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

completed. In fact on 27.12.2019, of the 14 installations

assigned to the petitioner, even 50% of the work was not

completed. It was in light of this that the petitioner was

issued a notice on 17.01.2020. She would submit on

reading the notice dated 17.01.2020, it is evident that it

was in fact a default notice in accordance with clause 9 of

the contract. Having failed to carry out the work on

06.02.2020, the corporation was left with no option to

issue a notice of 30 days in accordance with clause 9 and

18.4 of the contract asking the petitioner to show cause

as to why the contract be not terminated. Post the

period, by a communication dated 25.03.2020, the

contract was terminated and thereafter by the other

impugned communication the petitioner was put on a

holiday.

5.3 Ms. Reddy would also invite the court's attention to

the contention in the reply where relying on clause 19 of

the scope of work she would submit that it was

categorically provided that the total area of grass cutting

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

in a year shall be 18,00,000 m/2 whereas the total area of

work assigned to the petitioner was 9,76,520 m/2. She

would further submit that it is evident from the table

annexed to the reply that in fact the petitioner had not

completed the work and there is no material for the

petitioner to show that the work was infact completed.

6. Having considered the submissions made by the

learned advocates for the respective parties, what is

evident is that an agreement was entered into between

the petitioner and the respondent corporation for grass

cutting and bush cutting at various well sites in ONGC

Mehsana Asset. It is the case of the petitioner that the

termination of the contract and the consequential black

listing was in violation of the terms of the contract

especially clause 9 thereof. Clause 9 of the contract

reads as under:

"9.0 PERFORMANCE The CONTRACTOR shall undertake to perform all services under this CONTRACT with all- reasonable skill, diligence and care in accordance with sound industry practice to the

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

satisfaction of the CORPORATION and accept full responsibility for the satisfactory quality of such services as performed by them. Any defect, deficiencies noticed in the CONTRACTOR's service will be promptly remedied by the CONTRACTOR within 10 days upon the receipt of written notice from the CORPORATION to improve their performance failing which the CORPORATION may terminate the CONTRACT by giving the CONTRACTOR 30 (thirty) days written notice."

6.1 Six work orders were issued to the petitioner at

various well sites and the date of the work orders and the

scheduled completion date were brought to the notice of

the petitioner by the letter of 17.01.2020. Reading of the

letter indicates that it was the case of the corporation

that since the petitioner had not completed the work

within the time limit so stipulated the petitioner was

categorically put to notice to comply with the requisitions

contained in the communications referred to in the letter

and update the status within ten days of the issue of the

letter.

6.2 In the communication so addressed, reference has

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

been made to various letters of the corporation dated

29.11.2019, 05.12.2019, 08.12.2019, 10.12.2019 and

26.12.2019. These communications referred to in the

default notice are on record. Reading these

communications annexed to the reply indicate that the

petitioner was informed that it has not finished the work

at several installations till date and there were several

installations where the work had yet not started. The

communication further indicates that the petitioner had

not deployed sufficient number of teams for grass cutting

and therefore the undue delay in execution and

completion of work at installations is hampering the

safety of the workers and the installations. The petitioner

was requested to take corrective measures. One of the

letters also indicates that as a result of the slow progress,

the corporation had encountered three fire incidents and

despite reminders the petitioner had done nothing.

6.3 Reading of the affidavit-in-reply would further

indicate that though alleged by the petitioner that though

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

work completion certificates were not issued inspite of

work having been completed, the tabular statement

indicates that the work was in fact not completed within

the time frame and that even the contention of the

petitioner that the work area had increased beyond what

was stipulated in the work order is misconceived.

7. Reading the communication dated 06.02.2020,

which again reiterates the earlier communications

indicates that the petitioner was given a 30 days' notice

prior to the termination of the contract by the impugned

communication dated 25.03.2020 as the response of the

petitioner was found unsatisfactory. This too therefore

was also in compliance with clause 9 of the conditions of

the contract and therefore the contention of learned

advocate for the petitioner that the orders impugned are

in violation of clause 9 of the conditions of the contract

also cannot be accepted.

8. Perusal of the affidavit-in-reply indicates that the

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

respondent corporation through a tabular statement has

set out the factual position that infact the work which was

assigned to the petitioner could not be carried out in the

time schedule that it was expected to be done. The

contention of the petitioner that work was in fact

completed for which no work certificates were issued is

not based on any material and even otherwise it being a

disputed question of fact is best left untouched.

9. Even otherwise it is well settled by several decisions

of the Hon'ble Apex Court that when the power of judicial

review is invoked in matters relating to tender or

awarding of contracts, if the decision relating to such

contracts is bonafide, the courts will not in exercise of

powers of judicial review interfere even if a procedural

aberration or error in assessment is made out. In the

case on hand, the petitioner has failed to even make out

any procedural defect in his challenge to the order of

termination of contract and of black listing.

C/SCA/8584/2020 JUDGMENT DATED: 15/06/2023

10. In view of the above, finding no merit in the petition,

the same is dismissed. Rule is discharged.

(A.J.DESAI, ACJ)

(BIREN VAISHNAV, J) DIVYA