Madras High Court
The Deputy General Manager (Mm) vs Midas Communication ... on 14 December, 2022
W.A(MD)No.650 of 2010
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 14.12.2022
CORAM:
THE HONOURABLE DR.JUSTICE G.JAYACHANDRAN
AND
THE HON'BLE MR JUSTICE SUNDER MOHAN
W.A(MD)No.650 of 2010
1.The Deputy General Manager (MM)
Bharath Sanchar Nigam Ltd., (BSNL)
Office of Chief General Manager,
Tamil Nadu Circle, Development Wing,
No.60, Ethiraj Salai,
Chennai-600 008.
2.Office of the General Manager,
(NWP-BB) BSNL Corporate Office,
No.12, Bharat Sanchat Bhavan,
Janpath, New Delhi-110 001.
3.EDWAS Project review Committee,
Office of Principal General Manager,
(Development)
No.60, Ethiraj Salai,
Chennai-600 008.
4.The Divisional Engineer,
Circle Telecom Depot,
Thiruppalli,
Madurai-625 014. ... Appellants
.Vs.
1/13
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W.A(MD)No.650 of 2010
MIDAS Communication Technologies (P) Ltd.,
Represented by its Company Secretary,
Mr.Suresh Krishnamurthy,
No.3/440, East Coast Road,
Neelankarai,
Chennai-600 041. ... Respondent
PRAYER: Writ Appeal filed under Clause 15 of Letters Patent Act, to set aside
the order passed in W.P(MD)No.9045 of 2010, dated 31.08.2010 and to allow the
above writ appeal.
For Appellants : Mr.M.S.Velusamy
For Respondent : Mrs.Lakshmi Gopinathan
JUDGMENT
DR.G.JAYACHANDRAN,J.
AND
SUNDER MOHAN,J.
Midas Communication Technology, who is the respondent in this appeal,
being aggrieved by the foreclosure order passed by the BSNL, has approached
this Court seeking mandamus to direct the BSNL to issue acceptance certificate to
the writ petitioner and receive the materials readily available with the petitioner
as per the specification of the BSNL.
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W.A(MD)No.650 of 2010
2. The brief facts of the case are that:-
BSNL invited tender for supply of Digital Wireless Access System with
Broadband Internet Access based on the generic requirements as specified by the
TELECOM Engineering Centre named as Enhanced Digital Wireless Access
System ( hereinafter referred to as 'EDWAS').
(ii) Midas Technology was the successful bidder when the bid was opened
on 07.02.2007. Accordingly, tender was awarded to Midas Technoloy and the
Advance Purchase Order (APO) was issued on 05.10.2007. Some of the
important terms of the contract as found in the Advance Purchase Order is that the
project has to be completed within 150 days and if there is any dispute between
the parties, they have to approach the Arbitrator as per the terms of the contract.
While so, the project could not be completed within 150 days. Time and again
extension was granted by the BSNL at the request of the MIDAS. At one point of
time, officials of BSNL found that there is an inordinate delay in completing the
projects. Out of 57 sites, still in 23 sites work has not been completed, supply of
instruments were not done and therefore, the laudable project of Broadband to the
Rural India is getting delay.
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W.A(MD)No.650 of 2010
(iii) In the said circumstances, on 16.04.2009 the Deputy General Manager
(MM) Office of PGM (D) TN Circle, Chennai communicated to MIDAS that at
their request, time to deliver all equipment was extended twice i.e., first one was
upto 31.05.2008 and the second was upto 31.12.2008. However, MIDAS has
failed to supply the equipment even within the extended delivery period of 9
months and therefore, further extension of delivery period is not justifiable.
Therefore, BSNL has proposed to short-close the purchase order at the risk of
MIDAS and the bank guarantee will be forfeiture as per Clause 12.5 of the
Purchase Order. It is appropriate to extract Clause 12.5 of the Purchase Order
which reads as follows:-
“12.5. If the supplies are not completed in the extended delivery
period, the Purchase Order shall ordinarily be short-closed and both
the Performance securities shall be forfeited.”
(iv) After receiving this communication with unambiguous term has
intimated MIDAS that any reply to the proposed short-closure of the Purchase
Order should be made within 01.05.2009 and if no reply is received, then the
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W.A(MD)No.650 of 2010
Purchase Order dated 12.12.2007 will be short-closed following the
consequences of forfeiture of Bank Guarantee. MIDAS, in response to the above
notice, vide reply dated 24.04.2009 has stated that it has put all its efforts and
energy to commence the execution of the said order. But due to the inherent
delays in the process, they were not able to complete the project within the time
specified under the contract and even after giving extension of time twice. The
delay in validation and survey process will attribute unexpected delay in
commencing the supply of equipment. A lengthy of explanation with reasoning
running to 5 pages been offered by MIDAS and sought for further extension of
time to complete EDWAS project.
(v) In the said circumstances, the said explanation was not convincing to
BSNL, the impugned order was passed for short-closure of the tender contract.
3. The learned Single Judge was considered the matter at length, has found
that the delay in completing the contract is wholly attributed to the attitude of the
BSNL and not attributable to MIDAS. Regarding the Arbitration Clause, the
learned Single Judge has held that when there is injustice to one of the parties to
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W.A(MD)No.650 of 2010
the contract then there is no legal impediment for the High Court to exercise its
power under Article 226 of the Constitution of India. For the said purpose, the
learned Single Judge has relied upon the judgment of the Hon'ble Supreme Court
in ABL International Limited vs. Export Credit Guarantee Corporation of
India Limited and others reported in (2004) 3 SCC 553. The learned Single
Judge has concluded that BSNL has to issue acceptance certificate to MIDAS to
enable the MIDAS to supply the materials as per the Purchase Order bearing
No.PO/EDWAS/2007-08-01, dated 12.12.2007.
4. The said judgment of the learned Single Judge is challenged on the
following grounds:-
(i) The learned Single Judge erred in entertaining the writ petition despite
specific clause and agreement by the contracting parties to refer the dispute for
arbitration.
(ii) The learned Single Judge erred in considering the disputed facts
regarding the delay in supply and performing the part of contract and the reason
attributed to fix the liability on BSNL are un-found and contrary to the records.
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W.A(MD)No.650 of 2010
5. The learned counsel appearing for the appellants/BSNL would submit
that the writ petitioner taking advantage of the constitution of the Validation
Committee, after issuance of short-closure order by misinterpreting the
circumstances under which the committee was constituted. In fact, after passing
show cause notice, on 16.04.2009 and on receiving the explanation, the impugned
short-closure order was passed on 20.05.2009. Thereafter, an appeal was
preferred to the authorities to reconsider the short-closure order. A fair
opportunity was given to consider whether the short-closure order can be
sustained or not. BSNL appointed the Validation Committee and looked into the
matter in a holistic manner, unbiased and arrived at a conclusion that there is no
reason to review the short-closure order and recommended the action already
taken by Chief General Manager for the short-closure with the forfeiture of
Performance of Bank Guarantee is in order. This order was passed after obtaining
the approval from the Chief General Manager. Therefore, there is no malafide on
the part of the BSNL.
6. Learned counsel appearing for the respondent/MIDAS would submit that
even otherwise forfeiture of the Bank Guarantee to the tune of Rs.2,37,21,650/- is
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W.A(MD)No.650 of 2010
contrary to the terms of the contract and having made ready the equipment worth
more than 30 crores, the respondent/writ petitioner cannot be deprived of its
lawful entitlement to complete the contract.
7. This Court, on considering the rival submissions and the materials
placed by the appellants and the respondent and the observations made by the
learned Single Judge in the impugned order, finds that the March of Law
regarding invoking the extraordinary remedy of writ petition under Article 226 or
under Article 32 of the Constitution of India in contractual matters have seen a
change after judgment of ABL International Limited vs. Export Credit
Guarantee Corporation of India Limited and others reported in (2004) 3 SCC
8. In Joshi Technologies International Inc. vs. Union of India reported in
2015(7) SCC 728, wherein, the Hon'ble Supreme Court has observed as follows:-
“55. Law in this aspect has developed through a catena of
judgments of this Court and from the reading of these judgments it
would follow that in pure contractual matters the extraordinary
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W.A(MD)No.650 of 2010
remedy of writ under Article 226 of Article 32 of the Constitution
cannot be invoked. However, in a limited sphere such remedies are
available only when the non-Government contracting party is able to
demonstrate that it is a public law remedy which such party seeks to
invoke, in contradistinction to the private law remedy simpliciter
under the contract. Some of the case law to bring home this cardinal
principle is taken note of hereinafter.
59. On the basis of these facts, this Court observed that the
aforesaid observations of the High Court relying upon Ramana
Dayaram Shetty case were not correct. Thus observed the Court that
“21. This finding in our view, is not correct in the
light of the facts and circumstances of this case because
in Ramana Dayaram Shetty case, there was no concluded
contract as in this case. Even conceding that the BDA
has the trappings of a State or would be comprehended in
“other authority” for the purpose of Article 12 of the
Constitution, while determining price of the houses/flats
constructed by it and the rate of monthly instalments to be
paid, the “authority” or its agent after entering into the
field of ordinary contract acts purely in its executive
capacity. Thereafter the relations are no longer governed
by the constitutional provisions but by the legally valid
contract which determines the rights and obligations of
the parties inter se. In this sphere, they can only claim
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W.A(MD)No.650 of 2010
rights conferred upon them by the contract in the absence
of any statutory obligations on the part of the authority
(I.e., BDA in this case) in the said contractual field.
22. There is a line of decisions where the contract
entered into between the State and the persons aggrieved
is non-statutory and purely contractual and the rights are
governed only by the terms of the contract, no writ or
order can be issued under Article 226 of the Constitution
of India so as to compel the authorities to remedy a
breach of contract pure and simple- Radhakrishna
Agarwal v. State of Bihar Premji Bhai Parmar v. DDA
and Divl. Forest Officer v. Bishwanath Tea Co., ltd.,
69. The position thus summarised in the aforesaid principles
has to be understood in the context of discussion that preceded which
we have pointed out above. As per this, no doubt, there is no absolute
bar to the maintainability of the writ petition even in contractual
matters or where there are disputed questions of fact or even when
monetary claim is raised. At the same time, discretion lies with the
High Court which under certain circumstances, it can refuse to
exercise. It also follows that under the following circumstances,
“normally”, the Court would not exercise such a discretion;
69.1. The Court may not examine the issue unless the action
has some public law character attached to it.
69.2 Whenever a particular mode of settlement of dispute is
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W.A(MD)No.650 of 2010
provided in the contract, the High Court would refuse to exercise its
discretion under Article 226 of the Constitution and relegate the party
to the said mode of settlement, particularly when settlement of
disputes is to be resorted to through the means of arbitration.
69.3. If there are very serious disputed questions of fact which
are of complex nature and require oral evidence for their
determination.
69.4. Money claims per se particularly arising out of
contractual obligations are normally not to be entertained except in
exceptional circumstances.”
9. This principles has been again reiterated by the Hon'ble Supreme Court
in the recent judgment of Union of India and others vs. Puna Hinda reported in
(2021) 10 SCC 690.
10. The four parameters reaffirmed by the judgment of Union of India and
others vs. Puna Hinda reported in (2021) 10 SCC 690, when telescoped to the
fact of the present case, this Court finds that though there is no absolute bar to the
maintainability of the writ petition even in contractual matters or there are
disputed questions of fact to invoke the extraordinary jurisdiction, the issue must
have some public law character attached to it.
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W.A(MD)No.650 of 2010
11. In this case, after throwing upon the telecommunication sector to
private players, there is no public law character involved and further, one of the
principles postulated by the High Court is that when the settlement through the
means of arbitration, the Court should refuse to exercise its discretion under
Article 226 and relegate the parties to resort the mode of settlement as agreed by
them under the terms of the contract. In this case, unfortunately, the learned
Single Judge has gone into several disputed facts and has arrived at a conclusion,
which ought to have been arrived at by the Civil Court after recording the
evidence done by the Arbitrator as per the terms of the contract.
12. For the said reasons, this Court finds that the order of the learned
Single Judge is apparently contrary to the law and the terms of the contract and
the order has been passed by exercising extraordinary jurisdiction, which does not
warrant. Hence, the appeal is allowed and the order of the learned Single Judge is
hereby set aside. No costs.
Index : Yes / No [G.J.,J.] [S.M.,J.]
Internet : Yes / No 14.12.2022
am
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W.A(MD)No.650 of 2010
DR.G.JAYACHANDRAN, J.
and
SUNDER MOHAN,J.
am
JUDGMENT MADE IN
W.A(MD)No.650 of 2010
14.12.2022
https://www.mhc.tn.gov.in/judis
