Jharkhand High Court
M/S. Kaveri Divya Resorts Private ... vs The State Of Jharkhand on 4 August, 2023
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 372 of 2021
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M/s. Kaveri Divya Resorts Private Limited, Office at Hotel Capital
Residency, Station Road, PO GPO, PS Hindpiri, District Ranchi
(Jharkhand) through its Director Sri Ashwani Kumar Bhatia son of
Ved Prakash Bhatia, residing at Nirmal Villa, Pee Pee Compound,
Opp. Maharana Apartment, PO GPO PS Chutia, District Ranchi.
... Petitioner
Versus
1. The State of Jharkhand.
2. Secretary, Department of Tourism, Government of Jharkhand,
2nd Floor, FFP Building, Dhurwa, Ranchi.
3. Jharkhand Tourism Development Corporation Limited, through
its Managing Director, Office at 5, Mahatma Gandhi Road,
Main Road, Ranchi.
4. Managing Director, Jharkhand Tourism Development
Corporation Limited, Office at 5, Mahatma Gandhi Road, Main
Road, Ranchi.
... Respondents
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CORAM : SRI SANJAYA KUMAR MISHRA, C.J.
SRI ANANDA SEN, J.
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For the Petitioner : Mr. Amit Kumar Das, Advocate
For the Respondents : Mr. Sumeet Gadodia, Advocate
Mr. Ashutosh Anand, AAG
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11/ 04.08.2023 Upon hearing the learned counsel for the parties, this Court
passed the following, (Per Ananda Sen, J.)
ORDER
1. In this writ petition, filed under Article 226 of the Constitution of
India, petitioner has prayed to quash the letter No. 799/2020 dated 08.12.2020
issued by the Managing Director, Jharkhand Tourism Development
Corporation Ltd., Ranchi, whereby the petitioner was intimated that the Project
Implementation Plan submitted by it was not accepted being unreasonable
and thus, terminated the agreement, which was entered on 18.03.2020.
2. The Jharkhand Tourism Development Corporation Ltd.
(hereinafter referred to as JTDCL) floated a notice inviting tender for
development of tourism properties in Jharkhand on Rennovate, Operate,
Maintain and Transfer basis (ROMT basis). Three properties were subject
matters of the said tender, i.e., Tourist Complex, Maithon, Dhanbad; Tourist
Complex, Urwan, Koderma; and Kanke Dam Park, Ranchi. Petitioner
participated in the bidding and was declared successful for the tourism
property "Kanke Dam Park, Ranchi". On 31.10.2019, a letter of award (LoA)
was issued in favour of the petitioner. The petitioner accepted the said LoA
and agreed with the terms and conditions prescribed. The petitioner deposited
Rs.24,00,000/- (Rupees Twenty Four Lakh) towards Performance Guarantee
and entered into an agreement. The petitioner submitted its Project Proposal /
Project Implementation Plan with details. Petitioner was informed that in the
Project Plan as there was some proposal to construct some permanent
structure, the petitioner was directed to submit a revised Project
Implementation Plan as the petitioner was prohibited from making any
permanent construction. The petitioner, accordingly, submitted a revised
Project Implementation Plan in which, according to the petitioner, all the
objections were duly met and had been taken care of. The petitioner,
thereafter, received the impugned letter dated 08.12.2020, whereby it was
informed that since in the Project Implementation Plan, there is a planning to
go with permanent structural plan, as the development of the Project
Implementation Plan is not acceptable and the proposal, according to the
respondents, was unreasonable, which is beyond the mandate of the Request
for Proposal (RFP) and Project Development and Management Agreement
(PDMA), his agreement was terminated. Aggrieved by the said order,
petitioner has approached this Court.
3. Learned counsel appearing for the petitioner contended that as
per the Project Report, there is no fresh permanent structure, which the
petitioner intended to construct, thus, the impugned order shows non-
application of mind. He further submits that there is a provision of giving
opportunity of hearing to the petitioner as per the agreement before passing
the impugned order of cancellation of contract, but the respondents have done
away with the said provision, which resulted in violation of the principles of
natural justice. The respondents should have afforded an opportunity to the
petitioner to place their case before the respondent authority, which could
have easily resolved the dispute, but the respondents, for the reasons best
known to them, without issuing any show cause notice, as per the agreement,
have terminated the agreement.
4. The respondents have appeared and filed their counter affidavit
and supplementary counter affidavit.
5. Learned counsel for the respondents, Mr. Sumeet Gadodia,
referring to the Counter Affidavit, submitted that the writ petition is not
maintainable as the petitioner is seeking to invoke the terms of non-statutory
contract. Further, there is an alternative efficacious dispute resolution clause,
in terms of Clause 12.2 of the contract, which the petitioner should have
invoked, rather than approaching this Court hurriedly. Mr. Gadodia contends
that on 13.10.2020, petitioner was informed that the revised Project
Implementation Plan, after incorporating the amendment, should be filed for
approval, which the petitioner failed to submit, thus, the impugned order was
passed. These submissions of the respondents is reflected from paragraph 9,
10 and 11 of the respondents' Affidavit dated 22.02.2023.
6. In reply to the submissions made by Mr. Sumeet Gadodia, on the
issue of alternative remedy, Mr. Amit Kumar Das, learned counsel for the
petitioner submits that though there is an arbitration clause, but the arbitration
clause will only be applied if the disputes are not resolved amicably, which is
evident from Clause 12.2(a) of the agreement. He submits that prior to that, it
was the obligation of the respondents in terms of Clause 9.2(b) of the
agreement to issue a notice setting out the defects and without notice,
respondent being a State within the meaning of Article 12 of the Constitution of
India, could not have terminated the agreement. Further, as per him, in terms
of Clause 9.2(a), if there is any default, there is a scope of issuing preliminary
notice, whereafter, the affected party has the opportunity to cure the
underlying default, i.e., proposal to rectify and only on non-submission of
proposal to rectify by the other party, the agreement can be terminated. As per
him, the dispute, if not amicably settled, can be referred to arbitration. In this
case, the said event of amicable settlement has not yet reached thus, invoking
the arbitration clause will be premature.
7. After hearing the parties, I find that the respondent had floated a
notice inviting tender for development of tourism properties in the State of
Jharkhand on renovate, operate, maintain and transfer basis. One of such
property was Kanke Dam Park, Ranchi. Admittedly, the petitioner was
awarded the work. Petitioner had to submit his Project Implementation Plan,
which it had furnished. The respondent did not accept the said implementation
plan as some clause of the same was not according to the terms specified in
the agreement. Respondents pointed out the shortcomings / discrepancies,
which are as follows: -
1. The Developer will not be permitted to undertake
permanent new construction.
2. The PIP does not have provision for adequate lighting and
ventilations devices, rain water harvesting, appropriate
security systems, including provision for fitting CCTV
systems, emergency evacuation plan, fire safety and
protection mechanism, first aid and emergency medical
assistance, waste management systems, cleaning systems
and drainage-sewerage plan.
3. The PIP does not have provision for Project completion
schedule/schedule for development of project facilities
including phase wise development and operation.
4. The PIP does not have provision for marketing and
promotion plan, clearly identifying potential markets,
marketing and promotional strategies, execution strategies
and time frames for the plan.
Further, the respondents had informed the petitioner that the
petitioner cannot make any permanent structure. The petitioner, thereafter
submitted a revised Project Implementation Plan vide letter dated 11.11.2020,
which the respondents rejected by the impugned order and consequentially
terminated the contract.
8. Admittedly, there is an agreement between the parties and
admittedly the respondent is State within the meaning of Article 12 of the
Constitution of India. The agreement has been brought on record. Clause 12
of the said agreement relates to dispute resolution. Clause 12.2 is the
arbitration clause, which provides that any dispute, which is not resolved
amicably, subject to Clause 12.1, shall be finally decided under the Arbitration
and Conciliation Act, 1996. Clause 12.1 is the amicable resolution clause. It
provides that all disputes and differences and controversies between the
parties should first be attempted to be resolved amicably in terms of Clause
12.1(b). Admittedly, this procedure has not been followed.
9. Further, Clause 9.2 deals with termination of the agreement due
to event of default. Clause 9.2.(a)(i) provides that upon occurrence of event of
default the affected party shall be entitled to terminate the agreement by
issuing a preliminary notice to the aggrieved party. As per Clause 9.2(a)(ii)
within 30 days of receipt of such preliminary notice, either party shall forward
to the affected party, its proposal to remedy/cure the event of default with a
proposal to rectify the same. Non-receipt of such proposal to rectify will attract
the termination of agreement by issuing termination notice. Clause 9.2.(a)(iii)
provides that if the proposal to rectify is forwarded by the other party within the
stipulated period, the other party shall within further period of 30 days try to
remedy cure the underlying event of default. If, however, the other party fails to
remedy / cure the underlying Event of Default within such period, the affected
party shall be entitled to terminate the agreement by issuing Termination
Notice.
Clause 9.2(b) provides that if the parties wants to terminate the
agreement, termination notice should set out the details of event of default. It
is necessary to quote Clause 9.2 (a) and (b) of the agreement, which reads as
under: -
9.2 Termination due to Event of Default
(a) Termination due to Parties Event of Default
(i) Without prejudice to any other right or remedy under this
Agreement, upon the occurrence of Event of Default, the
Affected Party shall be entitled to terminate this Agreement
by issuing a Preliminary Notice to other Party.
(ii) Within 30 days of receipt of Preliminary Notice, the other
Party shall forward to the Affected Party its proposal to
remedy / cure the underlying Event of Default (the "Proposal
to Rectify"). In case of non-submission of the Proposal to
Rectify by the other Party within the period stipulated
therefor, the Affected Party shall be entitled to terminate this
Agreement by issuing Termination Notice.
(iii) If the Proposal to Rectify is forwarded by the other Party
to the Affected Party within the period stipulated therefor,
the other Party shall have further period of 30 days to
remedy / cure the underlying Event of Default. If, however
the other Party fails to remedy / cure the underlying Event of
Default within such further period allowed, the Affected
Party shall be entitled to terminate this Agreement by
issuing Termination Notice.
(b) Termination Notice
If a Party having become entitled to do so decides to
terminate this Agreement pursuant to Clause 9.2(a) it shall
issue Termination Notice setting out:
(i) in sufficient detail the underlying Event of Default;
(ii) the Termination Date which shall be a date occurring not
earlier than 60 days from the date of Termination Notice;
(iii) the estimated termination payment including the details
of computation thereof; and,
(iv) any other relevant information.
10. Thus, from the conjoint reading of Clause 9.2(a) and (b), it is clear
that prior to issuance of termination notice, a preliminary notice should be
issued by the affected party to the other party to rectify the defect. In this case,
admittedly, no preliminary notice was issued to the petitioner by the
respondents, asking them for a "proposal to rectify" the default, and for non-
compliance showing their intention to terminate the agreement.
11. Thus, we hold that without issuing a preliminary notice to the
petitioner and without asking the petitioner to deposit the proposal to rectify the
underlying event of default, the respondents could not have straightaway
terminated the agreement.
12. Further, we find that the provision of Clause 12.1 of the
Agreement, Amicable Resolution Mechanism, which provides for amicable
settlement of dispute between the parties was given a go bye. It is necessary
to quote Clause 12.1 of the Agreement, which reads as under:-
12.1 Amicable Resolution
(a) Save where expressly stated to the contrary in this
Agreement, any dispute, difference or controversy of
whatever nature between the Parties, howsoever arising
under, out of or in relation to this Agreement (the "Dispute")
shall in the first instance be attempted to be resolved
amicably in accordance with the procedure set forth in
Clause 12.1(b).
(b) Either Party may require such Dispute to be referred to
the Authority, and the Chief Executive Officer/Director/
Partner of the Developer for the time being, for amicable
settlement. Upon such reference, the two shall meet at the
earliest mutual convenience and in any event within 15 days
of such reference to discuss and attempt to amicably
resolve the Dispute. If the Dispute is not amicably settled
within 15 (fifteen) days of such meeting between the two,
either Party may refer the Dispute to arbitration in
accordance with the provisions of Clause 12.2.
13. As per the agreement, as held above, only after the provision of
12.1 is invoked and exhausted, the dispute could have been referred to
arbitration and not before that. Since Clause 12.1 was not invoked, the
respondents cannot take a plea that there being an arbitration clause, this writ
petition is not maintainable.
14. The Hon'ble Supreme Court in the case of State of M.P. versus
Centre for Environment Protection Research & Development, reported in
(2020) 9 SCC 781 at paragraph 54 thereof has held that when a statute
requires a thing to be done in a particular manner, it is to be done only in that
manner. Paragraph 54 of the said judgment reads as under: -
54. It is well settled that when a statute or statutory rules
prescribed a penalty for any act or omission, no other
penalty not contemplated in the statute or statutory rules
can be imposed. It is well settled that when statute requires
a thing to be done in a particular manner, it is to be done
only in that manner.
15. Though this is an agreement between the parties and it not a
statutory provision, but still the same principle can apply in this case also
where the agreement provides that some act has to be done in a particular
manner. We are of the view that both the parties should adhere to the said
provisions in the agreement and should act in the manner as provided for in
the agreement.
16. Considering what has been held above, we set aside the
impugned termination notice dated 08.12.2020 and relegate the matter to the
respondents to issue notice in terms of Clause 9.2(a) of the agreement within
45 days from today and thereafter proceed accordingly as per the provisions of
the agreement including invocation of Clause 12.1 if necessary.
17. With the aforesaid observations and directions, this writ petition
stands disposed of.
18. There shall be no orders as to costs. Urgent certified copies of this
order shall be issued as per the Rules.
(Sanjaya Kumar Mishra, C.J.)
(Ananda Sen, J.)
Kumar/Cp-02
