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Rajasthan High Court - Jodhpur
M/S United Coal Carrier vs Rajasthan State Mines And Mineral ... on 30 March, 2026
[2026:RJ-JD:13125-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Writ Petition No. 15655/2024
M/s United Coal Carrier, Main Road, Po Jharia-82811, District
Dhanbad, Jharkhand Through Authorized Representative Namely
Arvind Singh Rathore S/o Shri Darshan Singh Rathore, Aged
About 28 Years, R/o 1-A, Maa Vaishnow Nagar, Yadav Farm, Jodi
Farm, Jaipur-302012, India.
----Petitioner
Versus
1. Rajasthan State Mines And Mineral Limited, 4, Meera
Marg, Udaipur-313004 Through Chairman.
2. Managing Director, Rajasthan State Mine And Minerals
Limited Having Its Office At 4, Meera Marg, Udaipur,
Rajasthan.
3. Head Constable, Rajasthan State Mine And Minerals
Limited Having Its Office At 4, Meera Marg, Udaipur,
Rajasthan.
----Respondents
For Petitioner(s) : Mr. Sudhir Gupta, Sr. Advocate
assisted by Ms. Shweta Chauhan and
Mr. Tarang Gupta
Mr. Sachin Acharya, Sr. Advocate
assisted by Mr. Gautam Bhadadra Mr.
Vipul Dharnia
For Respondent(s) : Mr. M.S. Singhvi, Sr. Advocate
assisted by Mr. Falgun Buch
Mr. Vikas Balia, Sr. Advocate assisted
by Mr. Prateek Gattani
Mr. Rajesh Joshi, Sr. Advocate
assisted by Mr. Dinesh Godara
Mr. Ramavatar Sikhwal and Mr. Arpit
Samaria for Mr. N.S. Rathore, AAG
Mr. Gopal Krishna Chhangani
Ms. Simran Mehta
Mr. Vishal Singh
Mr. Harsh Shekhawat
Mr. Vinay Jain
Mr. Darshan Jain
Mr. Sunil Purohit
HON'BLE MR. JUSTICE ARUN MONGA
HON'BLE MR. JUSTICE SUNIL BENIWAL
Reportable
Order
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Conclusion of Arguments &
Reserved on : 16/03/2026
Pronounced on : 30/03/2026
(Per Sunil Beniwal, J.)
1. The present writ petition has been filed aggrieved by the
order/communication dated 24.12.2023 (Annexure-38) issued by
Rajasthan State Mines and Minerals Ltd. ('RSMML'), whereby the
tender contract relating to "Loading of limestone gitti of various
sizes into tippers/dumpers from crusher hopper(s) and/or different
stacks lying at the company's Sanu mines, District Jaisalmer, its
transportation from the mines to the railway siding at Sanu
Railway Station, and its unloading, stacking, watch & ward, and
mechanized loading of limestone gitti into railway wagons using
front-end loaders etc.", which had been awarded to the petitioner,
was terminated. Further, the petitioner's security deposit was
forfeited and the petitioner was blacklisted for a period of three
years.
2. The brief facts of the case are that RSMML issued a Notice
Inviting Tender ('NIT') dated 23.03.2023 (Annexure-3) for the
aforesaid work. The petitioner participated in the tender process
and was declared the L-1 bidder. A Letter of Acceptance was
issued in favour of the petitioner on 17.07.2023 and an addendum
was issued on 20.07.2023 (Annexure-6 colly). In the said Letter of
Acceptance, it was stated that the work would be executed
through petitioner's M/s Jai Tanot Mata Mining and Transportation
Co-operative Society, therefore, an agreement dated 16.08.2023
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(Annexure-8) was executed between the said Co-operative Society
and RSMML with respect to the tender work.
2.1 The tender in question was challenged by M/s PMP Infratech
Pvt. Ltd., one of the unsuccessful bidders, by filing S.B. Civil Writ
Petition No. 8853/2023. The said writ petition came to be
dismissed on 13.07.2023 (Annexure-9). A special appeal, being
D.B. Special Appeal Writ No. 666/2023, preferred against the said
order, was also dismissed. Although the order was never formally
passed, the order passed orally in the special appeal was
subsequently challenged before the Apex Court, and vide order
dated 10.11.2023 (Annexure-10), the matter was remitted back
to this Court on the administrative side as the detailed order had
not been uploaded on the website.
2.3 In the meanwhile, the petitioner took steps to initiate the
work. However, due to hindrances and obstructions caused by the
Jaisalmer Truck and Dumper Association, the work could not be
commenced. The petitioner sought assistance from RSMML and
also lodged criminal complaints against the said Association. Since
no effective progress was made, the petitioner was constrained to
approach this Court by filing S.B. Civil Writ Petition No.
14178/2023, which was disposed of vide order dated 27.09.2023
with a direction to decide the petitioner's representation and to
ensure that the lawful transportation fleet of the petitioner was
not harmed due to unlawful competition or illegal pressure from
any person.
2.4 Since no satisfactory action was taken thereafter, the
petitioner filed a contempt petition being S.B. Writ Contempt No.
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1248/2023. The said contempt petition came to be dismissed on
21.01.2026 after recording the submission of the
respondent/State that the order dated 27.09.2023 had been duly
complied with and that a temporary police outpost had been
established at Village Sonu to maintain law and order. It was also
submitted that the deployed police constables would be
responsible for ensuring complete security arrangements and
maintaining law and order in and around the industrial units
situated in the vicinity of Village Sonu.
2.5 Since the requisite amount of work, as stipulated under the
contract conditions, could not be carried out, the petitioner was
issued various communications (Annexure-36 colly) directing it to
meet the prescribed criteria of work production, failing which
action would be initiated against it in terms of the contract. The
petitioner responded to all such communications (Annexure-37
colly), highlighting that the prevailing law and order situation was
hampering the execution of the work.
2.6 On 21.12.2023 (Annexure-29), the petitioner was advised to
attend the office of the Sanu Limestone Mines, Jaisalmer on
23.12.2023 to discuss the course of action for dispatching the
required quantity of limestone gitti to the Railway Siding at Sonu
in view of the prevailing law and order issues at Sanu Limestone
Mines, and to submit its written statement in this regard.
2.7 Thereafter, vide the impugned order/communication dated
24.12.2023 (Annexure-38), the petitioner's contract was
terminated under Clause 4.86 of the contract. The security deposit
amount was also ordered to be forfeited, which included the
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additional performance security of Rs. 5.27 crores in the form of a
bank guarantee, bid security of Rs. 411.84 lakhs in the form of a
bank guarantee, and the remaining security deposit amount to be
recovered from the amount payable to the petitioner or otherwise
from the petitioner. Further, the petitioner was banned/blacklisted
from participating in future tenders of the company for a period of
three years from the date of issuance of the communication, i.e.,
24.12.2023.
2.8 Hence, the present writ petition.
3. Learned Senior counsel, Mr. Sudhir Gupta, contended that
the contract was terminated primarily on two grounds: first, the
petitioner commenced the work with a delay of 53 days, i.e., on
07.10.2023; and second, after commencement, the petitioner
failed to execute transportation and loading in accordance with the
quantities stipulated under the tender schedule.
3.1 With regard to the first reason i.e. the delay in
commencement of work, it was submitted that the delay was not
deliberate. Rather, it was occasioned by a force majeure situation,
created due to obstruction by the truck union / association, which
prevented the petitioner from commencing the work. It was
contended that, in terms of Clause 4.65 of the NIT governing force
majeure, the petitioner cannot be held to be in default.
3.2 Qua the deficit in the work executed by the petitioner after
commencement, learned Senior counsel submitted that the work
could only be initiated in certain parts of the site and was carried
out under restricted conditions. The operations were limited to
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daytime and required police assistance, as the obstructions caused
by the truck union / association continued to subsist.
3.3 To substantiate the above submissions reliance was placed
on note-sheet drawn by concerned officers whereby it was
acknowledged that force majeure situation was prevailing on
account of which the petitioner could not initiate the work and
execute the expected work in terms of the tender conditions.
Reference was made to the Department's note-sheets dated
09.11.2023, 16.11.2023, 26.12.2023, and 03.01.2024; the letters
sent by the Department to the Superintendent of Police and the
Collector on 14.08.2023, 05.09.2023, 22.09.2023, 23.09.2023,
02.10.2023, 23.10.2023, 09.11.2023, 06.12.2023, and
21.12.2023; and the criminal complaints so also FIRs lodged on
various occasions, particularly on 08.11.2023, 10.11.2023, and
13.12.2023.
3.4 It was further contended that the petitioner was not the only
contractor to face such law and order issues; rather, similar
difficulties had been encountered by previous contractors as well,
who had approached this Court seeking police assistance to
remove obstructions caused by the truck union/association. On an
earlier occasion, another contractor had filed S.B. Civil Writ
Petition No. 6556/2019 (M/s LR Mining and Transportation
Cooperative Society Ltd. vs. State of Rajasthan & Ors.) seeking
similar relief in respect of the same work, which was disposed of
by this Court on 10.05.2019.
Learned counsel also pointed out to the order dated
14.08.2020 passed in S.B. Civil Writ Petition No. 7055/2020 (PMP
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Infratech Pvt. Ltd. vs. State of Rajasthan & Ors.), wherein PMP
Infratech had also faced a comparable situation and sought relief
before this Court, though the writ petition was subsequently
withdrawn. Nonetheless, the existence of such law and order
issues stands substantiated.
3.5 While challenging the punishment inflicted in the nature of
forfeiture of security deposit so also blacklisting of the petitioner
alongwith termination of contract, learned Senior counsel
submitted that on earlier occasions qua the same tender work,
when tender was awarded to PMP Infratech, similar circumstances
had arisen, leading to delay in commencement of work so also
shortfall in execution of work. While relying upon note-sheet of
the tender awarded to PMP Infratech, more particularly Note No.
62 and 63, learned counsel submitted that in that case, the
RSMML treated it as force majeure situation and waived off the
penalty imposed. The said notes reproduced below for ready
reference:
"XXX XXX XXX
In this regards, it is submitted that the work of "Loading of
Limestone into trucks/ dumpers from company sanu limestone mines
and its transportation from mines to railway siding at Sanu railway
station was awarded to M/s PMP Infratech pvt ltd. (M/s PM Infra &
Transportation Society Ltd). As per the provision of tender the
society has to commence the work within 30 days from the date of
issuance of DLOA i.e. 08.07.2020. But due to hindrance created by
local transport unions the work could not be commenced by the
society, later with the help and support of local administration &
police, the commencement of work was started under police
protection w.e.f. 16.08.2020 (refer para N/ 9-N/17 for reference). The
narrated situations were beyond the control of society, therefore the
compensation for delay in commencement is not attributable to
society.
It is pertinent to mention here that in last tender for the same work
(Cont-15/18-19) in the similar situations and circumstance the
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compensation was waived by the competent authority on the basis of
the opinion of Sr. Advocate of high Court, wherein it was opined that
"commencement of work was made possible only due to joint efforts
of society, district administration and RSMML and concluded that it
will not be lawful to impose penalty on the contractor"(refer N/149
& onwards of the copy of note placed at R/54. In the instant case the
situations are similar & the commencement was made possible unde
police protection only, in view of this the request of SBU as per N/57
may be consider for competent approval for waive off compensation
on account of delay in commencement of work due to un-avoidable
reasons beyond the control of society.
XXX XXX XXX
Sd/- 12.01.2021
(Gaurav Shrivastava)
M (Cont)"
Considering the above, imposing harsh penalty, inter alia,
blacklisting of the petitioner is not warranted.
3.6 It was further submitted that the impugned
order/communication has been passed in violation of the principles
of natural justice. The reply submitted by the petitioner in
response to the notice dated 15.12.2023 was neither duly
considered nor was any opportunity of personal hearing afforded
prior to passing the impugned order.
3.7 Lastly, learned Senior counsel submitted that the petitioner's
contract is about to expire and is at its fag end, therefore, no
purpose would be served by halting the petitioner's work. Further,
the respondent, RSMML, has issued a certificate dated 14.01.2026
in favour of the petitioner with respect to the tender work in
question for the period from 01.07.2024 to 30.09.2025, wherein it
has been stated that the assigned targets have been duly
achieved and the petitioner's performance is satisfactory. The said
certificate also establishes the fact that once the law and order
situation had been settled, the petitioner carried out the work
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fulfilling the requisite target. Therefore, considering the same, the
termination of the contract of the petitioner was not warranted
along with imposition of penalty of blacklisting and forfeiture of
the security deposit.
3.8 Learned Senior counsel, in support of his submissions, placed
reliance on the following judgments :
(i)- Blue Dreamz Advertising Private Limited & Anr. Vs. Kolkata
Municipal Corporation & Ors. : (2024) 15 SCC 264.
(ii)- M/s Techno Prints Vs. Chhattisgarh Textbook Corporation &
Anr. : 2025 INSC 236.
(iii)- Subodh Kumar Rathour Vs. Chief Executive Officer : 2024
SCC Online SC 1682.
(iv)- UMC Technologies Pvt. Ltd.. Vs. Food Corporation of India :
(2021) 2 SCC 551.
(v)- Isolators and Isolators Vs. Madhya Pradesh Madhya Kshetra
Vidyut Vitran Co. Ltd. : (2023) 8 SCC 607.
(vi) Om Gurusai Construction Co. Vs. V.N. Reddy & Ors. : 2023
SCC Online SC 1051.
(vii)- M.P. Power Management Company Ltd. Vs. Sky Power
Southeast Solar India Pvt. Ltd. : (2023) 2 SCC 703.
4. Learned counsel, Mr. Vinay Jain, appearing for RSMML
submitted that the petitioner was afforded several opportunities to
carry out the work in accordance with the terms and conditions of
the tender. However, the petitioner failed to do so. Therefore,
considering the loss of revenue to the State, the impugned
order/communication terminating the contract awarded to the
petitioner was issued.
4.1 As per Clause 3.1 (vii) of the NIT, the petitioner was deemed
to have knowledge of the nature of the work and the surrounding
circumstances. Therefore, the alleged law and order situation
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could not be said to be beyond the control of the petitioner. The
said clause reads as under :
"vii. The tenderer shall be deemed to have examined the tender
document, to have obtained his own information in all matters
whatsoever that might affect the carrying out of the works at the
schedules rates and to have satisfied himself to the sufficiency of his
tender. Any error in description or quantity or omission in the
Contract Document shall not vitiate the contract or release the
Contractor from executing the work comprised in the contract
according to specifications at the scheduled rates. The tenderer is
deemed to know the scope, nature and magnitude of the works and
requirement of materials, equipment, tools and labour involved,
wage structures, conditions of service of Company's staff/workmen
doing similar and same type of work etc and as to what all works he
has to complete in accordance with the contract documents
irrespective of any defect, omissions or errors that may be found in
the contract documents. The Contractor shall be deemed to have
visited site and surroundings, to have satisfied himself to the
working conditions at the site, availability of water, electric power,
labour etc, transportation facilities, probable sites for labour
accommodation and store go-downs etc and all other factors
involved in the execution of works."
4.2 The petitioner has placed on record various communications
exchanged between the parties regarding the non-execution of the
work in accordance with the terms of the contract, as well as the
opportunities granted to the petitioner to carry out production as
per the contract. Therefore, firstly, it cannot be contended that the
principles of natural justice were violated, as more than sufficient
opportunity was granted to the petitioner to perform the work,
and secondly, the action taken was strictly in accordance with the
terms of the contract and hence cannot be termed arbitrary.
4.3 Further, at the time when the impugned order /
communication was issued, approximately five months had
elapsed since the execution of the agreement between the parties.
Despite such lapse of time, the petitioner had not shown any
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improvement in performance, which ultimately led to the issuance
of the impugned order.
5. Learned Senior counsel, Mr. Vikas Balia, appearing for PMP
Infratech, who was impleaded as a party vide order dated
26.11.2024 solely to address legal issues, submitted that the
contract between the parties, i.e., the petitioner and RSMML, is
inherently determinable in nature. The petitioner, if aggrieved, has
an appropriate remedy under the Specific Relief Act, 1963;
therefore, the present writ petition is not maintainable.
5.1 It was further contended that the present writ petition raises
disputed questions of fact which cannot be adjudicated while
exercising writ jurisdiction. Furthermore, the writ petition has
been filed at a belated stage, i.e., after S.B. Civil Writ Petition No.
200/2024 filed by PMP Infratech had been allowed on 19.07.2024,
whereby the order dated 26.12.2023, staying the operation of
impugned order/communication 24.12.2023, was set aside.
5.2 Learned Senior counsel further submitted that the petitioner
has erroneously invoked the force majeure clause. The force
majeure conditions are governed by Clause 4.65 of the NIT, which
enumerates specific contingencies such as statutory directions,
civil commotion, fire, epidemics, war, acts of God, and formal
governmental actions in the nature of law, order, proclamation, or
ordinance. The said clause does not include retaliation or
resistance by a truck union/association, nor does it encompass a
general law and order situation. A plain reading of the clause
makes it clear that a general law and order issue is not covered
within its ambit. Furthermore, none of the specified contingencies
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existed at the site. The petitioner was not prevented from
reconciling with the truck union/association to ensure smooth
execution of the work. Accordingly, the requirements of the force
majeure clause are not satisfied, and the petitioner cannot seek to
invalidate the termination of the contract on this ground.
5.3 Learned Senior counsel also pointed out that PMP had
previously been awarded a tender for the same work and had
faced a similar issue of resistance from the truck union /
association, which was resolved within eight days. In contrast, the
petitioner took several months to address the issue, clearly
indicating lack of experience and inefficiency. It was emphasized
that the petitioner did not possess relevant experience in
transportation of industrial minerals, which was essential for the
contract, and instead had experience only in transportation of fuel
minerals.
5.4 It was further argued that the petitioner has selectively
relied upon internal note-sheet recording observations in its
favour, while deliberately ignoring communications issued by the
Head Office at Udaipur, which clearly highlighted that sales were
adversely affected due to the petitioner's inaction. Furthermore,
the petitioner was fully aware of the prevailing conditions at the
site but failed to make adequate arrangements and did not
possess the requisite fleet for transportation. Even otherwise, if
the petitioner had indeed faced extreme resistance, transportation
would have come to a complete standstill. However,
transportation, though significantly below the expected level, was
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not entirely halted. This demonstrates that the work was not
impossible to perform.
5.5 Lastly, it was submitted that RSMML extended full support to
the petitioner for a period of five months in order to facilitate
commencement of work and achievement of targets. However,
when the desired results were not achieved, the contract was
terminated. The petitioner cannot now rely on such support as a
ground to contend that the situation was beyond its control.
5.6 Learned Senior counsel, in support of his submissions, placed
reliance on the following judgments:
(i)- Subodh Kumar Singh Rathour Vs. Chief Executive Officer &
Ors. : (2024) 15 SCC 461.
(ii)- M.P. Power Management Company Ltd., Jabalpur Vs. Sky
Power Southeast Solar India Pvt. Ltd. & Ors. : (2023) 2 SCC
703.
(iii)- State of Kerala & Ors. Vs. M.K. Jose : (2015) 9 SCC 433.
(iv)- Orrisa Agro Industries Corpn. Ltd. & Ors. Vs. Bharati
Industries & Ors. : (2005) 12 SCC 725.
(v)- State of M.P. & Ors. Vs. M.V. Vyavsaya & Co. : (1997) 1 SCC
156.
6. Learned Senior Counsel, Mr. Singhvi, appearing on behalf of
PMP Infratech, submitted that RSMML suffered financial losses on
account of the delay caused by the petitioner in commencing the
work, as well as due to its failure to execute the work in
accordance with the stipulated targets set out in the terms and
conditions of the contract. He referred to the contents of the writ
petition, being S.B. Civil Writ Petition No. 200/2024 (PMP Infratech
Pvt. Ltd. vs. RSMML & Ors.), to submit that, from the date of
execution of the agreement, i.e., 16.08.2023, till the filing of the
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said writ petition, RSMML suffered a loss of Rs. 107.73 crores,
Indian Railways suffered a loss of Rs. 538.65 crores, the
Government of Rajasthan suffered a loss of Rs. 21.36 crores, and
the Government of India suffered a loss of Rs. 44.88 crores.
7. While countering the aforesaid submission, learned Senior
Counsel, Mr. Acharya, appearing for the petitioner, placed reliance
on the reply received to an RTI application filed by the petitioner.
In the said application, a query was raised seeking the exact
quantum of financial losses allegedly suffered by RSMML, the
Railways, and SAIL on account of the failure of M/s United Coal
Carriers and its associated society firm, M/s Jai Tanot Mata Mining
and Transportation Co-operative Society, to execute the work in
accordance with the LOI/tender conditions.
7.1 In reply, vide communication dated 12.02.2024, it was
stated that the exact figures of financial loss to the company had
not yet been finalised. In light of this response, learned Senior
Counsel contended that the submission regarding the alleged
losses is unsubstantiated, as the relevant data itself remains
undetermined.
8. We have heard learned counsel for the parties and have
perused the material available on record.
A. UNDISPUTED FACTS :
9. Before delving into the merits of the writ petition, it would be
apposite to lay out the undisputed facts of the case, which are as
under:
(i) An NIT was issued on 23.03.2023 for "Loading of limestone
gitti of various sizes into tippers/dumpers from crusher hopper(s)
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and/or different stacks lying at the company's Sanu mines, District
Jaisalmer, its transportation from the mines to the railway siding
at Sanu Railway Station, and its unloading, stacking, watch and
ward, and mechanized loading of limestone gitti into railway
wagons using front-end loaders, etc."
(ii) On 30.06.2023, the petitioner was declared the L-1 bidder,
having quoted the lowest price.
(iii) The tender in question was challenged by M/s PMP Infratech;
however, S.B. Civil Writ Petition No. 8853/2023 was dismissed on
13.07.2023.
(iv) A Letter of Acceptance was issued in favour of the petitioner
on 17.07.2023, followed by an addendum dated 20.07.2023.
(v) An agreement was executed between the petitioner and
RSMML on 16.08.2023.
(vi) The petitioner was required to commence work within 30
days from 17.07.2023; however, it failed to do so.
(vii) The petitioner filed S.B. Civil Writ Petition No. 14178/2023,
which was disposed of vide order dated 27.09.2023 with a
direction to decide the petitioner's representation and to ensure
that the petitioner's lawful transportation fleet was not harmed
due to unlawful competition or illegal pressure from any person.
(viii) The petitioner thereafter filed S.B. Writ Contempt No.
1248/2023 alleging non-compliance of the order dated
27.09.2023, which came to be dismissed on 21.01.2026 after
recording the submission of the respondent/State that the said
order had been duly complied with and that a temporary police
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outpost had been established at Village Sonu to maintain law and
order.
B. MAINTAINABILITY OF WRIT PETITION :
10. This Court is mindful of the well-established legal principle
that judicial intervention in technical domains, especially in
matters relating to tenders, should be exercised sparingly.
Nonetheless, the judgments rendered by Hon'ble the Supreme
Court do not place an absolute bar on such intervention. They
recognise specific exceptions where the exercise of writ
jurisdiction is justified. Accordingly, where a case falls within those
recognised exceptions, this Court is empowered to intervene.
Further, if elements of arbitrariness or malafide conduct are
evident, the Court cannot disregard them merely on the ground
that the decision pertains to a technical or administrative sphere.
10.1 The Apex Court in the case of Tata Cellular Vs. UOI;
(1994) 6 SCC 651 observed as under:
"93. The duty of the court is to confine itself to the question of
legality. Its concern should be:
1. Whether a decision-making authority exceeded its powers?
2. committed an error of law
3. committed a breach of the rules of natural justice
4. reached a decision which no reasonable tribunal would have
reached or
5. abused its powers.
94. Therefore, it is not for the court to determine whether a
particular policy or particular decision taken in the fulfillment
of that policy is fair. It is only concerned with the manner in
which those decisions have been taken. The extent of the duty
to act fairly will vary from case to case, shortly put, the
grounds upon which an administrative action is subject to
control by judicial review can be classified as under :
(i) Illegality: This means the decision-maker must understand
correctly the law that regulates his decision-making power and
must give effect to it.
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(ii) Irrationality, namely, Wednesbury unreasonableness,
(iii) Procedural impropriety.
XXX XXX XXX
The principles deducible from the above are:
(1) The modern trend points to judicial restraint in
administrative action.
(2) The Court does no sit as a court of appeal but merely
reviews the manner in which the decision was made.
(3) The Court does not have the expertise to correct the
administrative decision. If a review of the administrative
decision is permitted it will be substituting its own decision,
without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to
judicial scrutiny because the invitation to tender is in the realm
of contract.
Normally speaking, the decision to accept the tender or award
the contract is reached by process of negotiations through
several tiers. More often than not, such decisions are made
qualitatively by experts.
(5) The Government must have freedom of contract. In other
words, a fairplay in the joints is a necessary concomitant for
an administrative body functioning in an administrative sphere
or quasi-administrative sphere. However, the decision must not
only be tested by the application of Wednesbury principle of
reasonableness (including its other facts pointed out above) but
must be free arbitrariness not affected by bias or actuated by
mala fides.
(6) Quashing decisions may impose heavy administrative
burden on the administration and lead to increased and
unbudgeted expenditure."
10.2 In the case of Silppi Constructions Contractors Vs.
UOI; (2020) 16 SCC 489, the Apex Court after referring to
various earlier pronouncements, observed as under:
"19. This Court being the guardian of fundamental rights is
duty bound to interfere when there is arbitrariness,
irrationality, mala fides and bias. However, this Court in all the
aforesaid decisions has cautioned time and again that courts
should exercise a lot of restraint while exercising their powers
of judicial review in contractual or commercial matters. This
Court is normally loathe to interfere in contractual matters
unless a clear-cut case of arbitrariness or mala fides or bias or
irrationality is made out.
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One must remember that today many public sector
undertakings compete with the private industry. The contracts
entered into between private parties are not subject to scrutiny
under writ jurisdiction. No doubt, the bodies which are State
within the meaning of Article 12 of the Constitution are bound
to act fairly and are amenable to the writ jurisdiction of
superior courts but this discretionary power must be exercised
with a great deal of restraint and caution.
The Courts must realise their limitations and the havoc which
needless interference in commercial matters can cause. In
contracts involving technical issues the courts should be even
more reluctant because most of us in judges' robes do not have
the necessary expertise to adjudicate upon technical issues
beyond our domain. As laid down in the judgments cited above
the courts should not use a magnifying glass while scanning
the tenders and make every small mistake appear like a big
blunder. In fact, the courts must give "fair play in the joints" to
the government and public sector undertakings in matters of
contract. Courts must also not interfere where such
interference will cause unnecessary loss to the public
exchequer.
20. The essence of the law laid down in the judgments referred
to above is the exercise of restraint and caution; the need for
overwhelming public interest to justify judicial intervention in
matters of contract involving the state instrumentalities; the
courts should give way to the opinion of the experts unless the
decision is totally arbitrary or unreasonable; the court does
not sit like a court of appeal over the appropriate authority; the
court must realise that the authority floating the tender is the
best judge of its requirements and, therefore, the court's
interference should be minimal.
The authority which floats the contract or tender, and has
authored the tender documents is the best judge as to how the
documents have to be interpreted. If two interpretations are
possible then the interpretation of the author must be accepted.
The courts will only interfere to prevent arbitrariness,
irrationality, bias, mala fides or perversity. With this approach
in mind we shall deal with the present case."
10.3 In the case of M.P. Power Management (supra), the
Apex Court after discussing various pronouncements with regard
to interference under writ jurisdiction, observed as under:
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"82. We may cull out our conclusions in regard to the points,
which we have framed :
82.1 It is, undoubtedly, true that the writ jurisdiction is a public
law remedy. A matter, which lies entirely within a private realm
of affairs of public body, may not lend itself for being dealt
with under the writ jurisdiction of the Court.
82.2. The principle laid down in Bareilly Development
Authority (supra) that in the case of a non-statutory contract
the rights are governed only by the terms of the contract and
the decisions, which are purported to be followed, including
Radhakrishna Agarwal (supra), may not continue to hold good,
in the light of what has been laid down in ABL (supra) and as
followed in the recent judgment in Sudhir Kumar Singh
(supra).
82.3. The mere fact that relief is sought under a contract which
is not statutory, will not entitle the Respondent-State in a case
by itself to ward-off scrutiny of its action or inaction under the
contract, if the complaining party is able to establish that the
action/inaction is, per se, arbitrary.
82.4. An action will lie, undoubtedly, when the State purports
to award any largesse and, undoubtedly, this relates to the
stage prior to the contract being entered into [See R.D. Shetty
(supra)]. This scrutiny, no doubt, would be undertaken within
the nature of the judicial review, which has been declared in
the decision in Tata Cellular v. Union of India (1994) 6 SCC
651.
82.5. After the contract is entered into, there can be a variety of
circumstances, which may provide a cause of action to a party
to the contract with the State, to seek relief by filing a Writ
Petition.
82.6. Without intending to be exhaustive, it may include the
relief of seeking payment of amounts due to the aggrieved party
from the State. The State can, indeed, be called upon to honour
its obligations of making payment, unless it be that there is a
serious and genuine dispute raised relating to the liability of
the State to make the payment. Such dispute, ordinarily, would
include the contention that the aggrieved party has not fulfilled
its obligations and the Court finds that such a contention by the
State is not a mere ruse or a pretence.
82.7. The existence of an alternate remedy, is, undoubtedly, a
matter to be borne in mind in declining relief in a Writ Petition
in a contractual matter. Again, the question as to whether the
Writ Petitioner must be told off the gates, would depend upon
the nature of the claim and relief sought by the Petitioner, the
questions, which would have to be decided, and, most
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importantly, whether there are disputed questions of fact,
resolution of which is necessary, as an indispensable prelude to
the grant of the relief sought. Undoubtedly, while there is no
prohibition, in the Writ Court even deciding disputed questions
of fact, particularly when the dispute surrounds demystifying of
documents only, the Court may relegate the party to the remedy
by way of a civil suit.
82.8. The existence of a provision for arbitration, which is a
forum intended to quicken the pace of dispute resolution, is
viewed as a near bar to the entertainment of a Writ Petition
(See in this regard, the view of this Court even in ABL (supra)
explaining how it distinguished the decision of this Court in
State of U.P. and Ors. v. Bridge & Roof Co. (1996) 6 SCC 22,
by its observations in paragraph-14 in ABL (supra)].
82.9. The need to deal with disputed questions of fact, cannot
be made a smokescreen to guillotine a genuine claim raised
in a Writ Petition, when actually the resolution of a disputed
question of fact is unnecessary to grant relief to a writ
applicant.
82.10. The reach of Article 14 enables a Writ Court to deal
with arbitrary State action even after a contract is entered into
by the State. A wide variety of circumstances can generate
causes of action for invoking Article 14. The Court's approach
in dealing with the same, would be guided by, undoubtedly, the
overwhelming need to obviate arbitrary State action, in cases
where the Writ remedy provides an effective and fair means of
preventing miscarriage of justice arising from palpably
unreasonable action by the State.
82.11. Termination of contract can again arise in a wide
variety of situations. If for instance, a contract is terminated,
by a person, who is demonstrated, without any need for any
argument, to be the person, who is completely unauthorised to
cancel the contract, there may not be any necessity to drive the
party to the unnecessary ordeal of a prolix and avoidable
round of litigation. The intervention by the High Court, in such
a case, where there is no dispute to be resolved, would also be
conducive in public interest, apart from ensuring the
Fundamental Right of the Petitioner Under Article 14 of the
Constitution of India. When it comes to a challenge to the
termination of a contract by the State, which is a non-statutory
body, which is acting in purported exercise of the powers/rights
under such a contract, it would be over simplifying a complex
issue to lay down any inflexible Rule in favour of the Court
turning away the Petitioner to alternate Fora. Ordinarily, the
cases of termination of contract by the State, acting within its
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contractual domain, may not lend itself for appropriate redress
by the Writ Court. This is, undoubtedly, so if the Court is duty-
bound to arrive at findings, which involve untying knots, which
are presented by disputed questions of facts. Undoubtedly, in
view of ABL Limited (supra), if resolving the dispute, in a case
of repudiation of a contract, involves only appreciating the true
scope of documentary material in the light of pleadings, the
Court may still grant relief to an applicant. We must enter a
caveat. The Courts are today reeling under the weight of a
docket explosion, which is truly alarming. If a case involves a
large body of documents and the Court is called upon to enter
upon findings of facts and involves merely the construction of
the document, it may not be an unsound discretion to relegate
the party to the alternate remedy. This is not to deprive the
Court of its constitutional power as laid down in ABL (supra).
It all depends upon the facts of each case as to whether, having
regard to the scope of the dispute to be resolved, whether the
Court will still entertain the petition.
82.12. In a case the State is a party to the contract and a
breach of a contract is alleged against the State, a civil action
in the appropriate Forum is, undoubtedly, maintainable. But
this is not the end of the matter. Having regard to the position
of the State and its duty to act fairly and to eschew
arbitrariness in all its actions, resort to the constitutional
remedy on the cause of action, that the action is arbitrary, is
permissible (See in this regard Kumari Shrilekha Vidyarthi and
Ors. v. State of U.P. and Ors. (1991) 1 SCC 212)). However, it
must be made clear that every case involving breach of
contract by the State, cannot be dressed up and disguised as a
case of arbitrary State action. While the concept of an
arbitrary action or inaction cannot be cribbed or confined to
any immutable mantra, and must be laid bare, with reference
to the facts of each case, it cannot be a mere allegation of
breach of contract that would suffice. What must be involved
in the case must be action/inaction, which must be palpably
unreasonable or absolutely irrational and bereft of any
principle. An action, which is completely malafide, can
hardly be described as a fair action and may, depending on
the facts, amount to arbitrary action. The question must be
posed and answered by the Court and all we intend to lay down
is that there is a discretion available to the Court to grant relief
in appropriate cases.
82.13. A lodestar, which may illumine the path of the Court,
would be the dimension of public interest subserved by the
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Court interfering in the matter, rather than relegating the
matter to the alternate Forum.
82.14. Another relevant criteria is, if the Court has
entertained the matter, then, while it is not tabooed that the
Court should not relegate the party at a later stage,
ordinarily, it would be a germane consideration, which may
persuade the Court to complete what it had started, provided
it is otherwise a sound exercise of jurisdiction to decide the
matter on merits in the Writ Petition itself.
82.15. Violation of natural justice has been recognised as a
ground signifying the presence of a public law element and can
found a cause of action premised on breach of Article 14. [See
Sudhir Kumar Singh and Ors. (supra)]."
10.4 What can be discerned from the above observations is that,
while the Court may not sit in appeal over the merits or
correctness of a decision, it is certainly competent to examine the
manner in which such decision has been arrived at. Put differently,
the scope of judicial review extends to scrutinising the decision-
making process, including the conduct of the authority and the
basis on which the decision rests, to ensure compliance with the
applicable legal framework so also Principles of natural justice.
Where the process is tainted by illegality, irrationality, procedural
impropriety, arbitrariness, bias, or mala fide intent, the Court
would be justified in invoking its writ jurisdiction. Therefore,
although restraint is the norm in tender matters, it cannot be
employed as a cover to legitimise actions that are patently unjust,
unreasonable, or in violation of law.
10.5 Considering the above pronouncements, this Court is of the
opinion that in the facts and circumstances of the present case,
wherein the challenge is not only to the rationality of the decision
taken but also involves an alleged violation of the principles of
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natural justice, the matter warrants consideration in writ
jurisdiction. Moreover, the present writ petition has been pending
since 2024 and the petitioner's contract is at a fag end, therefore,
in the considered opinion of this Court, no useful purpose would
be served by relegating the parties to an alternative forum.
11. Learned Senior Counsel appearing on behalf of PMP Infratech
has objected to the maintainability of the present writ petition on
the ground that it involves disputed questions of facts.
11.1 True it is that disputed questions of fact cannot ordinarily be
adjudicated under writ jurisdiction, as held by the Apex Court in
Orissa Agro Industries (supra), M.V. Vyavsaya (supra), and
M.K. Jose (supra). However, an exception has been carved out by
the Apex Court in M.P. Power Management (supra), as
reproduced above, which provides that in cases involving actions
that are unreasonable or irrational, and depending on the facts of
each case, the discretionary writ jurisdiction may be exercised.
11.2 In the present case, upon consideration of the note-sheet
placed on record, and further taking into account the fact that on
earlier occasions indulgence had been granted by the Court while
directing the authorities to provide police assistance to address
the prevailing law and order situation, as well as the admission
made by the respondent - RSMML in the contempt proceedings
initiated by the present petitioner, by filing S.B. Writ Contempt
No.1248/2023, acknowledging the existence of such law and order
problems and the necessity of deploying police force to overcome
the same, this Court is not inclined to accept the contention
regarding maintainability. In view of these circumstances, this
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Court does not deems it appropriate to accept the objection that
the present writ petition is not maintainable on account of
disputed questions of facts as it is rather an admitted position that
the law and order situation was persisting at the site of work.
11.3 Furthermore, learned counsel appearing on behalf of PMP
Infratech has contended that the petitioner lacked the requisite
experience to deal with such unforeseen circumstances,
particularly the law and order issues, and that this deficiency
contributed to the petitioner's inability to effectively execute the
work. It has also been argued that similar law and order problems
had arisen earlier; however, PMP Infratech had successfully
resolved the same within a period of eight days. Furthermore, it
has been submitted that the petitioner did not possess the
requisite fleet strength for lifting and transporting minerals, which
resulted in failure to adhere to the schedule prescribed under the
tender conditions.
11.4 Though such arguments have been advanced on behalf of
PMP Infratech, they are neither supported by the stand taken by
RSMML in its reply, nor are they borne out from the reasons
recorded in the termination order. In the absence of any such
foundation in the pleadings or the impugned order, this Court finds
no justification to embark upon an independent inquiry into these
aspects for the purpose of adjudication. Also considering the fact
that PMP Infratech was impleaded in the present writ petition vide
order dated 26.11.2024 only to the extent to address this Court
on legal issues.
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C. DELAY IN COMMENCEMENT OF WORK :
12. The principal challenge in the present writ petition is to the
termination order dated 24.12.2023, whereby the contract
agreement executed for "Loading of limestone gitti of various sizes
into tippers/dumpers from crusher hopper(s) and/or different
stacks lying at the company's Sanu Mines, District Jaisalmer, its
transportation from the mines to the railway siding at Sanu
Railway Station, and its unloading, stacking, watch & ward, and
mechanized loading of limestone gitti into railway wagons using
front-end loaders, etc." came to be terminated.
12.1 It is to be noted that the contract agreement was
terminated primarily on two grounds: firstly, that there was a
delay of 53 days in commencement of the work; and secondly,
that the petitioner failed to execute the requisite quantity of
transportation and loading in accordance with the tender schedule.
The Letter of Acceptance was issued on 17.07.2023, and as per
the tender conditions, the petitioner was required to commence
the work within 30 days from the date of issuance of the same.
While explaining the delay in commencement, the petitioner
has placed reliance upon various note-sheets, the relevant
extracts of which are reproduced herein-below for ready
reference:
"XXX XXX XXX
4) As per the terms and conditions of tender document (Refer
Clause 5.4.10, 5.12.1 & 5.39) the cooperative society have to
commenced the work within a period of 30 days from the date of
issuance of DLOA i.e., up to 16.08.2023, with requisite number of
equipment's and machinery. While the cooperative society have
commenced the transportation work on dated 08.10.2023 with the
help of district administration under police custody in the
compliance of honorable High Court, Jodhpur judgment dated
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27.09.2023. The copy of the High Court, Jodhpur judgment &
intimation letter of the contractor are placed in the file at R/15 & R/
16 respectively.
5) A note has been moved to higher management with all relevant
references & record for consideration the late commencement of
work for the period from 16.08.2023 to 07.10.2023 under force
majeure clause of the tender document in light of third party (Local
Truck Union) hindrance in transportation work in the same line of
previous Transportation contracts which have faced similar
conditions. In previous contract late commencement penalty have
been waived off by the management. The copy of the file noting is
placed in the file at R/38 for reference.
6) The contractor, M/s United Coal Carrier awarded the contract
through open e-tender on dated 17.07.23. As soon as contract
awarded, the local truck union approached to district
administration for their demand regarding increase in
transportation rate and deployment of transportation
trucks/dumpers of their local truck union only, since then, the
negotiations between contractor and truck union have been started
and after prolong negotiations, it was failed. The local truck union
is sitting on strike, nearby mine site and showing strong resistance
for movement of contractor trucks.
7) Stoppage of work by third party i.e. Local Truck Union is the
responsible for hindrance in work and in such situation any
disturbance by third party in a lawful contract between two parties
either of party cannot make responsible to other party. In above
situation, force majeure conditions are prevailing completely up to
07.10.23. However partly situation is improved but due to time and
locations restrictions by the Police department and district
administration, the situations are still just like force majeure till the
permission by police for 24 hours free movement of transportation
work from all location of the mines without Police protection.
XXX XXX XXX
12) The schedule quarterly target was not given to the
cooperative society as the transportation work has been carried
out with time and locations restrictions by the Police department
and District Administration, Jaisalmer. The situations are still just
like force majeure till the permission for 24 hours free movement
of transportation vehicles of the contractor from all location of the
mines without Police protection.
XXX XXX XXX
Sd/- 09.11.2023
(Pramod Dabi)
Manager (Mining & EIC)
14) Unit Head (LSU), Jaisalmer
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May kindly peruse from Para 01/N to 13/N. The
commencement of work was delayed due to:
a. 15.08.2023: The previous contractor closed the work at
Railway siding.
b. 17.8.2023: Agitation and strike by Jaisalmer Truck & Dumper
Operator Association with demand that contractor will work by
truck unión fleet only with their demanded rate/negotiated rate with
contractor, terms and condition. Such demands of truck union are
not the terms & condition of tender and awarded contract.
c. 18.08.2023: RSMML completed stock Survey at Railway
Siding.
d. 20.08.2023: RSMML Handed over the railway siding after
survey of balance stock to the contractor.
e. 27.09.2023: High Court Jodhpur given Judgment and directed
to police department Jaisalmer to ensure that the lawful
transportation fleet of the contractor is not harmed due to unlawful
competition or illegal pressures from any person. A liberty is given
to respondent truck union to take up all their issues regarding their
rates /negotiations peacefully and lawfully with the contractor in
case so required.
f. 08.10.2023: Police department allowed to the contractor to
start transportation work under police security in day light hours
from limited locations. The time allowed by the police department
is equivalent to about one shift working. Despite said limited
allowed period and unexpected frequent disturbance by the union
during the working hours, as on date the contractor has
established the carrying capacity about 6700MT (6696 MT
transported on 5.11.2023). That means, if contractor allowed for
transportation 24 hours they will achieve required quantity argets
by RSMML by their own fleets as per tender and availability of
material or mines.
g. 07.11.2023: The union is still on agitation and strikes at
nearby place at mines and again forcefully stopped the work. The
letter dated 08.11.2023 (R/39) was handed over to police station
Ramgarh with copy to the Additional SP, Jaisalmer, briefed the issue
with request to restrict such type of activity by the truck union and
for resumption of work.
h. The such type of unilateral demand by the local truck union
become a practice whenever a new transportation contract awarded
by the RSMML. RSMML is sufferer of such net of local truck union
in past and present for Jong period.
15) In light of the above facts and beyond control situation, it is
recommended that the delay in work and shortfall in quantity cannot
be attributed to the Co-operative Society formed by the contractor
as per the terms and condition of the tender and DLOA. The
payment may be released as proposed at para 13/N by the EIC of
contract.
Sd/- 9.11.2023
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(D.S. Achaliya)
Unit Head, LSU, Jaisalmer
XXX XXX XXX
21) As per Tender Clause No.5.39, the Co-operative Society have
to commence the work within a period of 30 days from date of
issuance of DLOA i.e. up to 16.08.2023 vide Para 4/N EIC has
narrated that the Society was commenced the work on dated
08.10.2023 with the help of District Administration under Police
Custody. Further, vide Para 5/N to 7/N and vide Para 14/N, EIC
and Unit Incharge Jaisalmer has narrated that the period of
16.08.2023 to 07.10.2023 is considered under force majeure clause
of the tender document and delay in commencement of work is not
attributable on the part of the society. The tender was floated by
Contract Cell Udaipur, therefore, it is appropriate to obtain
direction from Contract Cell, CO in this regard.
22) Vide 12/N, EIC has narrated that after commencement of work
by society on dated 08.10.2023 the quarterly target was not given to
Co-operative Society which was further endorsed at Para 15/N. by
Unit Incharge, Jaisalmer that the short-fall in tendered quantity is
also not attributable on the part of society, therefore, in this regard
we may also obtain direction from Contract Cell, CO, Udaipur.
XXX XXX XXX
Sd/- 16.11.2023
(Dinesh Kachhawaha)
Manager (Cont.)
XXX XXX XXX
27) As per facts narrated in pre paras, the society commenced the
work on dated 08.10.2023 under police custody and presently
Society is executing the work in day time from only specific
locations of Sanu Limestone mines.
28) Due to this constraint i.e. only day time transportation, the
Society is transporting only avg. 3000 MT/day as against
requirement of about 12000 MT/day. The EIC-Transportation and
Unit In-charge (Jaisalmer) recommended for considering the above
period under force majeure condition and releasing the payment as
proposed at N/15.
XXX XXX XXX
Sd/- 17.11.2023
(P.R. Prajapat)
Group General Manager (Limestone)
XXX XXX XXX
36) It is also submitted that SBU-PC(IS) processed a file on RAJ-
KAJ for seeking competent approval for waiver of applicable
compensation for delay in commencement in the same contract
being force majeure situation (copy of note-sheet is placed at R/42
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for kind perusal). If deemed proper pending approval of competent
authority for same, the applicable compensation may be retained
and balance payment may be release to the society.
XXX XXX XXX
Sd/- 22.11.2023
(Gaurav Shrivastava)
(Mgr. Cont.)
XXX XXX XXX
77) The contractor M/s United Coal Carrier have regularly
reported such incidences and lodged FIR against the local truck
union. RSMML management have also taken the cognizance for all
such incidence for hindrance in transportation work by the local
truck union and reported the incidences to district administration
and police department and lodged FIR against the miscreants of
local truck union, but despite that situation is still remain the same
as in force majeure condition.
78) Apart from that other operational issues like availability of
Server/Net for generating e-Rawana at Weighbridges, permissible
locations of loading by the police department in view of threating by
local truck union, permissible size of Limestone gitti for loading
(30-60, 30-50 mm) as per the directions of the management to cater
the customer demand, operating, maintenance & B/D hours of C &
S plants, no feed issues of C & S plants, C & S plants design for
placing of high capacity trailers beneath the hoppers, free flow
movement/round trip movement in a lot of 6-7 dumpers as
permissible by the police department, time of arrival and
availability of police personnel's for escorting/protection the
transportation vehicles, etc. affects the transportation work.
XXX XXX XXX
Sd/- 26.12.2023
(Pramod Dabi)
Manager(Mining) & EIC Transportation"
12.2 A perusal of these note-sheets, particularly the note-sheet
dated 09.11.2023, clearly indicates that the respondent
Department not only acknowledged the existence of a serious law
and order issue at the site from where the minerals were to be
lifted, but also recognized that the situation was a force majeure
condition. The note-sheet further reveals that it was specifically
recommended that no penal provisions be invoked and no penalty
be imposed upon the petitioner, as the circumstances leading to
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the delay were beyond the control of both the petitioner and the
department.
12.3 The existence of the law and order problem at the site
stands further substantiated by the following additional
circumstances:
(i) The earlier contractor, respondent - PMP Infratech Pvt. Ltd.,
who had been awarded the same work, had also faced an identical
law and order situation and was constrained to file a writ petition
before this Court, being S.B. Civil Writ Petition No. 7055/2020.
This Court, considering the gravity of the matter, issued notices
vide order dated 14.08.2020. A perusal of the said order further
indicates that even prior thereto, when the work was being
executed by another contractor, it was also constrained to
approach this Court by filing S.B. Civil Writ Petition No. 6556/2019
(M/s LR Mining and Transportation Cooperative Society Ltd. vs.
State of Rajasthan & Ors.) seeking similar relief in respect of the
same work, which was disposed of by this Court on 10.05.2019.
In continuation thereof, in the present case as well, the
petitioner was compelled to approach this Court seeking police
protection. Despite orders being passed directing the respondents
to provide necessary police assistance, and in the absence of
effective compliance, the petitioner was constrained to initiate
contempt proceedings by filing S.B. Civil Contempt Petition No.
1248/2023. The learned Single Judge, while disposing of the said
contempt petition vide order dated 21.01.2026, recorded the
statement made on behalf of the respondent Department that the
law and order issues previously faced by the petitioner had been
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resolved and in order to ensure smooth transportation of minerals
in future, a temporary police chowki had been established.
This sequence of events clearly demonstrates that the law
and order situation was not only real and persistent, but also
officially acknowledged and required judicial as well as
administrative intervention.
(ii) Further, the note-sheet, particularly Note No. 4 and 5, clearly
records that although the work was scheduled to commence from
16.08.2023, it could only commence with effect from 08.10.2023
due to the prevailing law and order situation. Further, in Note
No.15, it is specifically noted therein that such delay was beyond
the control of the concerned contractor/society, and consequently,
the delay in commencement could not be attributed to them.
12.4 The aforesaid material, therefore, unequivocally establishes
that the delay in commencement of work was occasioned by
circumstances beyond the control of the petitioner, duly
acknowledged by the respondent department itself, and was in the
nature of a force majeure situation.
D. DEFICIENT QUANTITY OF TRANSPORTATION :
13. The second ground, as mentioned in the termination order
dated 24.12.2023, is that the petitioner failed to execute the
requisite quantity of transportation and loading in accordance with
the tender schedule. It is pertinent to note that, as per the tender
conditions, the petitioner was required to commence the
transportation work within 30 days from the date of issuance of
the Letter of Acceptance, i.e., on or before 16.08.2023. However,
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the work could actually be commenced only on 08.10.2023, for
the reasons already discussed herein-above.
13.1 It is further to be noted that the petitioner was able to
commence the work with effect from 08.10.2023 only after
indulgence was granted by this Court vide order dated 27.09.2023
passed in S.B. Civil Writ Petition No.14178/2023. Additionally, the
note-sheet, particularly Note No. 7, clearly indicates that force
majeure conditions prevailed in full force up to 07.10.2023. It is
also recorded therein that although the situation had partially
improved thereafter, certain restrictions imposed by the police
department and the district administration, particularly with
regard to time and location, continued to operate, thereby
rendering the situation substantially akin to force majeure until
permission for 24-hour unrestricted movement for transportation
activities across all mining locations was granted without the need
for police protection.
13.2 These observations make it abundantly clear that even after
the deployment of police assistance, the existence of time-bound
and location-specific restrictions materially impeded the
petitioner's ability to carry out transportation operations
efficiently. Such constraints would necessarily have had a direct
bearing on the overall quantity of minerals that could be lifted and
transported. Consequently, the shortfall in execution, which forms
the second basis for termination of the contract, also appears to
be intrinsically linked to the prevailing law and order situation,
which was beyond the control of the petitioner.
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14. Learned counsel appearing on behalf of RSMML, while
supporting the termination order, has not been able to controvert
the submissions advanced on behalf of the petitioner, particularly
with respect to the existence and impact of the law and order
issues prevailing during the relevant period, both at the stage
when the petitioner was required to commence the work and
during the period when such conditions continued to subsist
beyond the control of both the petitioner and the Department. He
has, in fact, fairly stated that subsequent to the passing of the
interim order and up to the present date, the performance of the
petitioner has been found to be satisfactory.
E. FORCE MAJEURE :
15. The issue that remains for consideration is whether the law
and order situation, as pleaded by the petitioner, would fall within
the scope of the force majeure clause in the terms of the tender.
15.1 Before delving into the said issue, it would be apposite to
refer to Clause 4.65 of the NIT, which provides for force majeure
as incorporated in the terms of the tender:
"FORCE MAJEURE:
4.65. Neither the Co-operative Society nor the company shall
be considered to be in default in the performance of their respective
obligations under this Contract, such performance is prevented or
delayed because of the conditions constituting force Majeure
which shall include but not limited to notice/s from the Directorate
of Mines Safety Office other Statutory Authority, Civil Commotion,
Fire accidents, epidemics, War, acts of God or because of any law,
order, proclamation or ordinance of any Government or any
authority thereof or forced stoppage of mining, loading operations,
accumulation of stock of mineral, failure of railways to supply
wagons/ boxes at railway siding, non-availability of mineral at
mines/ railway siding and other places due to reasons like sand
dune/ storms/ other causes and for failure of transportation or for
any other cause beyond reasonable control of the party affected,
provided notice of such cause is given in writing by the party
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affected within 14 days of the happening of the event. In case it is
not possible to serve the said notice within the said period of 14
days then within the shortest possible period. Power cuts/ partial
power failure/interruption shall not be construed as force Majeure
for this purpose and the same shall not affect in any way the
performance of the Contract. As soon as the cause of force Majeure
has been removed, the party whose ability to perform its obligation
has been affected shall notify the other of such cessation. Should
one or both the parties be prevented from fulfilling their contractual
obligations by state of force Majeure lasting for a continuous period
of three months both the parties shall consult each other and decide
about the future course of action regarding the contract."
16. This Court is inclined to accept the argument advanced on
behalf of the petitioner that the circumstances prevailing at the
work site would fall within the ambit of the force majeure clause.
The reasons for the same are twofold. Firstly, Clause 4.65 is not
exhaustive and is merely illustrative in setting out the
circumstances under which the force majeure clause may be
invoked. It is true that strikes, agitations, or obstructions caused
by the truck union/association are not per se included in the said
clause, however, a holistic reading thereof reveals that any cause
beyond the reasonable control of a party would qualify as a force
majeure condition. Considering that such obstruction was not
faced by the petitioner alone, but had also arisen when previous
contractors were engaged for the same work, and further
considering that the work could only commence with the
assistance of the police authorities, it is evident that the situation
was beyond the control of both the petitioner and the RSMML
authorities.
16.1 Secondly, the note-sheet, various letters communicated to
the Police and Collector so also the photographs of the site,
available on record reflect that the authorities themselves were
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treating the situation as one of force majeure. Therefore, it is, in
effect, an admitted position that the circumstances were beyond
the reasonable control of the petitioner, thereby justifying the plea
of force majeure.
16.2 Furthermore, the clause does not merely cover natural
calamities but also extends to other circumstances that may arise
and are beyond the control of the parties to the agreement.
16.3 So far as the requirement of issuance of notice is concerned,
the parties were fully aware of the situation prevailing at the site
and were in continuous communication with each other, therefore,
the invocation of the force majeure clause in the factual matrix of
the case did not come as a surprise. Rather, pertinently, the
authorities themselves had been treating the situation as one of
force majeure and thereafter proceeded to cancel the contract on
the very same grounds which had been so characterized.
17. Though respondent - RSMML, in its reply, has denied that the
law and order situation constitutes a valid ground for invoking the
force majeure clause, the same runs contrary to its own note-
sheets, which indicate that there was a serious law and order
problem. It is also inconsistent with the submission made during
the contempt proceedings that the issue has since been resolved
and that a police outpost has been established at the site.
18. In view of the above, since the force majeure clause would
be applicable to the parties, this Court is of the considered opinion
that the petitioner cannot be held liable for the delay in
commencing the work or for failing to achieve the requisite
targets. Consequently, the impugned termination order /
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communication issued on the basis of these two grounds cannot
be sustained.
18.1 So far as judgments passed in the case of Blue Dreamz
Advertising Private Limited (supra), M/S Techno Prints
(supra), UMC Technologies (supra), and Isolators (supra) are
concerned, since we have held that the termination of contract
itself to be on basis of reasons which are covered under force
majeure clause therefore, we do not deem it necessary to delve
into the aspect as to whether the decision to blacklist on the same
force majeure grounds is a rational one or not and whether the
same was taken following the principles of natural justice. In other
words, the root of the decision to blacklist, forfeit security deposit
so also termination of the contract as has been held to be
unsustainable by this Court, therefore, the question of weighing
the correctness of blacklisting so also forfeiture of security deposit
does not warrant adjudication.
F. CONCLUSION :
19. In the case of Subodh Kumar Singh Rathour (supra),
while discussing the sanctity of public-private-partnerships in
tender process, the Apex Court observed as under:
"123. Before we close this judgment, we must also address one
very important aspect as regards the importance of
maintaining the sanctity of tenders in public private
procurement processes.
124. Public tenders are a cornerstone of governmental
procurement processes, ensuring transparency, competition,
and fairness in the allocation of public resources. It emanates
from the Doctrine of Public Trust which lays down that all
natural resources and public use amenities & structures are
intended for the benefit and enjoyment of the public. The State
is not the absolute owner of such resources and rather owns it
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in trust and as such it cannot utilize these resources as it
pleases. As a trustee of the public resources, the State owes i) a
duty to ensure that community resources are put to fair and
proper use that enures to the benefit of the public as-well as ii)
an obligation to not indulge in any favouritism or
discrimination with these resources. The State with whatever
free play it has in its joints decides to award a contract, to hold
up the matter or to interfere with the same should be
accompanied by a careful consideration of the harm to public
interest.
125. Public tenders are designed to provide a level playing
field for all potential bidders, fostering an environment where
competition thrives, and the best value is obtained for public
funds. The integrity of this process ensures that public projects
and services are delivered efficiently and effectively, benefiting
society at large. The principles of transparency and fairness
embedded in public tender processes also help to prevent
corruption and misuse of public resources. In this regard we
may refer to the observations made by this Court in Nagar
Nigam v. Al. Farheem Meat Exporters Pvt. Ltd. reported in
(2006) 13 SCC 382, which reads as under :
16. The law is well settled that contracts by the State,
its corporations, instrumentalities and agencies must
be normally granted through public auction/public
tender by inviting tenders from eligible persons and
the notification of the public auction or inviting
tenders should be advertised in well-known dailies
having wide circulation in the locality with all
relevant details such as date, time and place of
auction, subject-matter of auction, technical
specifications, estimated cost, earnest money deposit,
etc. The award of government contracts through
public auction/public tender is to ensure
transparency in the public procurement, to maximise
economy and efficiency in government procurement,
to promote healthy competition among the tenderers,
to provide for fair and equitable treatment of all
tenderers, and to eliminate irregularities, interference
and corrupt practices by the authorities concerned.
This is required by Article 14 of the Constitution.
(Emphasis supplied)
126. The sanctity of public tenders lies in their role in
upholding the principles of equal opportunity and fairness.
Once a contract has come into existence through a valid
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tendering process, its termination must adhere strictly to the
terms of the contract, with the executive powers to be
exercised only in exceptional cases by the public authorities
and that too in loathe. The courts are duty bound to zealously
protect the sanctity of any tender that has been duly
conducted and concluded by ensuring that the larger public
interest of upholding bindingness of contracts are not
sidelined by a capricious or arbitrary exercise of power by the
State. It is the duty of the courts to interfere in contractual
matters that have fallen prey to an arbitrary action of the
authorities in the guise of technical faults, policy change or
public interest etc."
20. Considering the above observations, it is essential to note
that the authorities themselves were treating the situation as
being beyond control and unmanageable at the end of either
party, however, they subsequently proceeded to cancel the
contract on the basis of delay and shortfall caused by such an
uncontrollable situation. This contradictory approach of the State,
after awarding the tender to the successful bidder, cannot be
upheld, as it is clearly borne out from the record that the
petitioner was not at fault, rather, it was the extraneous
circumstances that adversely affected the execution of the work.
21. The totality of the circumstances in the present case clearly
indicates that the ground realities were not conducive for the
petitioner to execute the work in a free-flowing manner and
without hindrance.
22. In the above-discussed peculiar facts and circumstances of the
case, this Court has no hesitation in observing that the situation
was beyond the reasonable control of the petitioner, as
contemplated under the force majeure Clause No. 4.65 of the NIT.
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23. In view of the observations made above, the impugned
order/communication dated 24.12.2023 (Annexure-38) issued by
Rajasthan State Mines and Minerals Ltd. is quashed and set aside.
Accordingly, the writ petition is allowed.
24. Any pending applications stand disposed of.
(Per Arun Monga, J.)
1. While concurring with the judgment, ibid, so eruditely
authored by my learned brother, Sunil Beniwal, J., I deem it
apposite to append a brief epilogue. The official records,
contemporaneous correspondence with the authorities, and the
prevailing site conditions unmistakably demonstrate that the
situation was, in fact, treated as one of force majeure. De jure
also, it has been conclusively held that such circumstances indeed
fell squarely within the contractual definition of force majeure, in
light of the reasons and findings already recorded.
2. In that perspective, the petitioner cannot be fastened with
liability for any delay or failure in achieving contractual targets.
The very substratum of the termination thus being untenable, the
resultant cascading ripple effect i.e. the consequential actions
emanating therefrom, viz. blacklisting and forfeiture of the
security deposit, are also rendered equally unsustainable/unlawful
and it is accordingly so held, leading to quashing of the impugned
order in totality, as above. The blacklisting and forfeiture do not
merit independent adjudication/reasoning, as the very root cause
itself has already been declared legally infirm.
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3. It is also pertinent to note that, in response to a specific
query during the course of hearing, learned counsel for RSMML
fairly conceded that the petitioner's performance, post the force
majeure period, was entirely satisfactory and free from any
complaint. This fortifies the conclusion that the plea of force
majeure was no moonshine defence. It was neither contrived nor
illusory, but owing to the genuine circumstances beyond the
petitioner's control.
4. Moreover, now with only a brief remainder of the contractual
term subsisting (couple of months or so), after which fresh
tenders are to be invited, this contributory equitable factor also
persuades us to permit the petitioner to continue for the balance
duration of the contract.
(SUNIL BENIWAL),J (ARUN MONGA),J
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