Madras High Court
M/S.Ece Industries vs The Chairman on 3 June, 2024
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
W.P.No.6811 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 25.04.2024
Pronounced on 03.06.2024
CORAM :
THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN
W.P.No.6811 of 2022
M/s.ECE Industries,
Represented by its President,
Hanuman Mal Mot
Ashok Marg, Sanath Nagar,
Hyderabad – 500 018 ...Petitioner
-Vs-
1.The Chairman,
Tamil Nadu Generation and Distribution
Corporation Limited,
th
6 Floor, TANTRANSCO Building,
144, Anna Salai,
Chennai – 600 002
2.The Chief Engineer,
Materials Management,
4th Floor, Western Wing,
N.P.K.R.R.Maligai,
No.144, Anna Salai,
Chennai – 600 002 ...Respondents
1/14
https://www.mhc.tn.gov.in/judis
W.P.No.6811 of 2022
Prayer : Writ Petition filed under Article 226 of the Constitution of India for
issuance of a Writ of Mandamus directing the respondents to pay a sum of
Rs.7,96,35,831/- being the value of 33 transformers supplied, erected and
commissioned in several parts of Tamil Nadu and to return the two Bank
Guarantees both dated 01.06.2020 bearing Nos.555GPGE201530001 and
555GPGE201530002 for a sum of Rs.10,03,590.00 and Rs.2,06,98,742.00
respectively and to declare the contract dated 20.03.2020 for supply of
remaining 57 transformers as terminated.
For petitioner : Mr.V.Ramesh
for Mr.T.Thiyagarajan
For respondents : Mr.J.Ravindran
Additional Advocate General
assisted by Mr.D.R.Arunkumar
Standing Counsel
ORDER
This writ petition has been filed for direction to direct the
respondents to pay a sum of Rs.7,96,35,831/- being the value of 33
Transformers supplied and erected and commissioned in several parts of
Tamilnadu and also return the bank guarantees dated 01.06.2020 to the tune
of Rs.10,03,590/- and Rs.2,06,98,742/- respectively and also brought to
declare the contract dated 20.03.2020 for the supply of remaining 56
transformer.
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2. The petitioner participated in the tender quoted by the
respondents for the supply of erection of 8MVA, 33/11 KV outdoor power
transformers in various parts of Tamilnadu. The 2nd respondent accepted
the petitioner for supply and erection of 90 transformers by its
communication dated 20.03.2020. Accordingly, letter of acceptance and
purchase order issued for which the petitioner had executed two bank
guarantees for security dated 01.06.2020. The respondents by its
communication dated 01.09.2020 stated about delivery schedule for 90
outdoor transformers. Accordingly, supply of 13 transformers has to be
completed on or before 20.12.2020. The last batch of 17 transformers have
to be supplied on or before 20.07.2021. Accordingly, the petitioner had
supplied and had erected 8 transformers during the month of October, 2020
and 10 transformers had supplied during the month of November 2020 and
7 transformers during the month of December 2020, one transformer was
supplied during the month of January 2021. Transformers supplied
between 09.09.2021 to 03.11.2021 were also erected and commissioned by
the petitioner. The delay in supplying these transformers on account of non
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issuance of discharge instructions by the respondents after their inspection.
Insofar as erection of 33 transformers are concerned, the respondents have
to pay a sum of Rs.7,96,35,831/-. Though the petitioner made request for
the payment on several occasions, the respondents failed to make any
payment.
3. The learned counsel for the petitioner would submit that as per
terms and conditions, the respondents have to pay 95% of the price of the
transformer including GST and 5% on satisfactory commissioning of the
respective transformers. As per clause 6.3.1 the respondents cannot take
their own time for several months to make payment. Therefore, the
respondents also liable to pay interest inspite of several requests, the
respondents neither releasing any payment nor considering the price
variations for issuance of delivery schedule for remaining 57 transformers.
Therefore it would amounts to frustration of contract and leading to the
termination of the contract by the conduct of the respondents. Even as per
the communication sent by the 2nd respondent dated 30.12.2020, the intents
will be issued at lease 60 days in advance, indicating the date of delivery.
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Further, by communication dated 04.01.2022 the respondents had taken
same stand informing that the 2nd respondent would give 60 days time to
delivery the transformers. But till date, the respondents did not issue any
delivery schedule suggesting that they have not interested in continuing the
contract.
4. The learned Additional Advocate General appeared on behalf of
the respondents filed counter and submitted that the writ petition itself is not
maintainable. Since it involves disputed question of facts and it has to be
tried before the Civil Court any dispute over the purchase order and contract
order. The petitioner ought to have approach the civil Court for appropriate
relief. It is purely contractual dispute between the petitioner and the
respondents. Therefore, the writ petition is not maintainable. The prayer
sought for in this writ petition also not maintainable. Since the petitioner
asked for maintenance as well as declaration in a single writ petition. Both
the prayers cannot be maintainable. Though the petitioners had supplied
and commissioning 33 8MVA, 33/11 KV Power transformers out of 90
transformers, the balance 57 numbers of power transformers as per the
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purchase order as remains pending and it caused huge inconvenience and
loss to the respondents. Further, the petitioner was requested extent the
bank guarantee for which they did not comply the said request. Both the
bank guarantees were expired as on 30.04.2023 and 31.05.2023. He further
submitted that the respondents also issued show cause notice to the
petitioner to supply the balance 57 numbers of power transformer and fails
to supply, the purchase will be canceled as per clause 10.7 of the purchase
order. Further, there shall be a recovery as per Clause 7.5 and 10.04 of the
purchase order.
4.1. He further submitted that for supply of 33 numbers of power
transformers so far a sum of Rs.13,87,72,028/- has been released to the
petitioner and the balance amount of Rs.1,63,21,901/- will be released
within a reasonable time. Further, the amount of Rs.60,34,176.00/- to be
paid by the respondent on production of invoice bill.
5. Heard, the learned counsel appearing on either side.
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6. Admittedly, the petitioner declared successful bidder for supply
and erection of 8MVA 33/11 KV outdoor power transformers on the tender
quoted by the 2nd respondent. Accordingly, the petitioner and the
respondents had entered into contract order and purchase order dated
20.03.2020. As per the erection contract order, insofar as payment is
concerned 95% of the price of the transformer including GST and 5% on
satisfactory commissioning will be released directly to the supplier by the
funding institutions within a reasonable time from the date of satisfactory
commissioning. It will be paid after deducting the appropriate amount of
liquidated damages. The balance 5% of all inclusive price of erection
charges with GST will be released directly to the supplier by the funding
institutions after commissioning of the unit and closure of purchase order
after recovery of dues, if any. Insofar as security deposit is concerned the
supplier shall furnish 5% of order value of contract as security deposit as
bank guarantee in the form DD/Banker's cheque/irrevocable bank
guarantee. The security deposit cum performance guarantee shall be
furnished for 5% value of the material and shall be valid for 60 months.
Insofar as jurisdiction for legal proceedings is concerned no suit or any
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proceedings in regard to any matter arising in respect of contractor shall be
instituted in any court, save in this Court, City Civil Court or Small Causes
Court at Chennai no other Court shall have jurisdiction to entertain any suit
or proceedings. Admittedly, the petitioner so far erected 33 transformer and
commissioned after inspection. However, the respondents did not released
the payment as per the purchase order. Till the filing of writ petition, the
respondents were in due to the tune of Rs.7,96,35,831/-. While pending writ
petition, the respondents had released some payment and the respondents
agreeing that they are in due of Rs.1,63,21,901/- and sum of
Rs.60,34,176.00/-. It will be released within a reasonable time and also
after furnishing invoice bill. Having been admitted the liability by the
respondents to the tune of Rs.1,63,21,901/- and sum of Rs.60,34,176.00/-,
it cannot be contended that the petitioner failed to erect the remaining 57
numbers of transformers and the petitioner is liable to pay liquidated
damages for belated erection of transformers and non-erection of
transformers. The learned Additional Advocate General also vehemently
contended that the writ petition itself is not maintainable. Since it involves
disputed question of facts and it as to be tried before the Civil Court. In this
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regard it is the learned counsel for the petitioner relied upon the judgment of
Hon'ble Supreme Court of India in the case of ABL International Ltd., and
another vs Export Credit Guarantee Corporation of India Ltd., and
others reported in 2004 (3) SCC 553 and held that if the facts require, oral
evidence can be taken so where disputed questions of fact pertaining to the
interpretation/meaning of documents or parts thereof are involved, held the
courts can very well go into the same and decide the objections if facts
permit. Moreover, merely because one of the parties wants to dispute the
meaning of a document or part thereof would not make it a disputed fact.
High Court can intervene under Article 226 if the state or its instrumentality
acts in an arbitrary manner even in a matter of contract, instrumentality of
State discharging public function/duty. It is clear that when an
instrumentality of the State acts contrary to public good and public interest,
unfairly, unjustly and unreasonably, in its contractual, constitutional or
statutory obligations, it really acts contrary to the constitutional guarantee
found in Article 14 of the Constitution. Therefore, once the State or an
instrumentality of the state is a party, it has an obligation in law to act fairly,
justly and reasonably to a contract which is the requirement of Article 14 of
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the Constitution.
7. Admittedly, the petitioner erected 37 numbers of transformers
and the respondents are in due of Rs.Rs.1,63,21,901/-. Therefore, the
respondents are liable to pay the dues for the erection of transformer by the
petitioner and as such writ petition is very much maintainable under Article
226 of Constitution of India. In fact, jurisdiction as per the purchase order is
also clear that this Court got jurisdiction to entertain this writ petition. Thus
alternative remedies is available, the court should on account of exercising
jurisdiction under article 226 of Constitution of India and delegate the
parties to settle the remedy.
8. The learned Additional Advocate General also relied upon the
judgement of Hon'ble Division Bench of this Court in W.A.No.1389 of 2021
in the case of M/s.Himachal Aluminum and Conductors vs The Chairman
and Managing Director, TANGEDCO, and others dated 08.06.2023 and
held that In a writ petition, the Court, under Article 226 of the Constitution,
would not go into the disputed questions of fact. The disputed questions of
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facts exist. It cannot be properly decided in the writ petition or in the writ
appeal.
9. However, the said order is not applicable to the case on hand
for the simple reason that the respondents admitted their liability to the
petitioner for the erection of 37 transformers and they are to give huge
amount and delayed in payment to the petitioner in due course. Further, on
perusal of documents relied upon by the petitioner there was no delay on the
part of the petitioner for erecting the transformers. That apart, for erection
of 33 numbers of transformers were concerned though the petitioner always
ready to erect remaining numbers of transformers, the respondents failed to
issue any intent to supply of power transformers. Insofar as the bank
guarantees are concerned though it got expired by way of interim order
passed by this Court, the respondents were restrained from invoking the
bank guarantees and as such the bank guarantees were not extended for
further period. Further, the respondents also failed to pay the amount which
were raised by the petitioner in time and there is a balance due for the
erection of 33 transformers. Therefore, now the contract dated 20.03.2020
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become inoperative since time fixed in the contract has been lapsed long
back.
10. In view of the above, the respondents are directed to pay the
balance amount of Rs.1,63,21,901/- for erection of 33 numbers of power
transformers within a period of four weeks from the date of receipt of copy
of this order. Insofar as Rs.60,34,176.00/- is concerned the respondents
shall pay the said sum after furnishing of invoice bill by the petitioner within
a period of four weeks from the date of furnishing invoice bill.
11. With the above direction, this writ petition is disposed of. No
costs.
03.06.2024
Index : Yes/No
Speaking/Non-Speaking order
Neutral Citation : Yes/No
gvn
https://www.mhc.tn.gov.in/judis
To
1.The Chairman,
Tamil Nadu Generation and Distribution
Corporation Limited,
th
6 Floor, TANTRANSCO Building,
144, Anna Salai,
Chennai – 600 002
2.The Chief Engineer,
Materials Management,
4th Floor, Western Wing,
N.P.K.R.R.Maligai,
No.144, Anna Salai,
Chennai – 600 002
https://www.mhc.tn.gov.in/judis
G.K.ILANTHIRAIYAN,J.
gvn
03.06.2024
https://www.mhc.tn.gov.in/judis
