M/S Linkwell Telesystems Pvt. Ltd vs State Of Sikkim And Ors
2021 Latest Caselaw 89 Sikkim

                                                                     COURT NO.1
                       HIGH COURT OF SIKKIM : GANGTOK
                            Record of Proceedings



                             WA No. 03/2021

M/S LINKWELL TELESYSTEMS PVT. LTD.                      APPELLANT (S)
                                   VERSUS
STATE OF SIKKIM & ORS.                                  RESPONDENT (S)

For Appellant          :      Mr. Sajal Sharma, Advocate.

For Respondents No.1 :        Mr. Sudesh Joshi, Addl. Advocate General.
&2                            Mr. Yadev Sharma, Government Advocate.
                              Mr.Sujan Sunwar, Asst. Government Advocate

For Respondent No.3    :      Mr. Sangay Gyurmay Bhutia, Advocate.


Date: 10/12/2021

CORAM:
    HON'BLE MR. JUSTICE BISWANATH SOMADDER, CHIEF JUSTICE
    HON'BLE MR. JUSTICE BHASKAR RAJ PRADHAN, JUDGE
                            ...

JUDGMENT: (per the Hon'ble, the Chief Justice)

Let a photocopy of the receipt issued by the bank indicating

payment of costs of Rs.5,000/- in terms of our order dated 03rd

December, 2021, be taken on record.

2. This appeal, preferred by the writ petitioner, arises in respect of

a judgment and order dated 09th June, 2021, passed by a learned

Single Judge in W.P.(C) No.23 of 2021 (M/s Linkwell Telesystems Pvt.

Ltd. vs. The State of Sikkim & Ors.). By the impugned judgment and

order, the learned Single Judge was pleased to dismiss the writ

petition for reasons stated therein.

3. Briefly stated, the facts of the case, culled out from the

impugned judgment and order, are as follows: -

"3.(i) Briefly, the case of the petitioner is that vide Agreement dated 04.05.2017, the Petitioner was awarded the Contract for the purpose of supply and maintenance of POS Devices, POS application, its installation, maintenance, integration with the TPDS Software and Automation of Fair Price Shops of the 1421 Fair Price Shops in Sikkim.

COURT NO.1 HIGH COURT OF SIKKIM : GANGTOK Record of Proceedings

(ii) As per Clause 2 of the said Agreement, the Petitioner was to adhere to the Request for Proposal (RFP) Guidelines and the Service Level Agreement also formed a part of the Agreement.

(iii) Clauses 2 and 8 of the Agreement were to be read together to determine the rights and liabilities of the parties.

(iv) Clause 7.9 of the RFP contained the Arbitration Agreement as defined under Section 7 of the Arbitration and Conciliation Act, 1996. The relevant portion of Clause of 7.9 of the RFP inter alia reads as under;

"7.9. Resolution of Disputes.

FCS&CA Department and the successful bidders shall make every effort to resolve amicably by direct informal negotiation, any disagreement or dispute, arising between them under or in connection with the contract.

Any dispute or difference whatsoever arising between the parties to this Contract out of or relating to the meaning, scope, operation or effect of this Contract or the validity of the breach thereof, which cannot be resolved, shall be referred to a sole Arbitrator to be appointed by mutual consent of both the parties herein. If the parties cannot agree on the appointment of the Arbitrator within a period of one month from the notification by one party to the other of existene of such dispute, then the Arbitrator shall be nominated by the Secretary, Law Department, Government of Sikkim ("Law secretary"). The provisions of the Arbitration and Conciliation Act, 1996 will be applicable and the award made thereunder shall be final and binding upon the parties hereto, subject to legal remedies available under the law. Such differences shall be deemed to be a submission to arbitration under the Indian Arbitration and Conciliation Act, 1996, or of any modifications, rules or re-enactments thereof. The arbitration proceedings will be held at Gangtok, Sikkim, India."

(v) The work was to be taken up by the Petitioner in a phased manner as per the terms and conditions specified in Order No.1804/FCS&CA, dated 29.03.2017. The Petitioner commenced the works accordingly.

(vi) By a Letter, dated 25.05.2020 (Annexure-12), addressed to the State-Respondent No.2 by the Petitioner, the Petitioner raised a Bill of Rs.3,65,01,842.00 (Rupees three crores, sixty five lakhs, one thousand, eight hundred and forty two) only, and requested the State- Respondent No.2 to release the pending payment within seven days to enable them to run the project, besides informing them that the

COURT NO.1 HIGH COURT OF SIKKIM : GANGTOK Record of Proceedings

Petitioner may not be able to manage operations beyond 01.06.2020 unless the payments were made over to them for the Bills raised.

(vii) From the month of June, 2020, the Petitioner stopped all works granted to them vide the Contract mentioned supra.

(viii) That, the State-Respondent No.2 issued Show Cause (Annexure-10) bearing No.753/F&CSD, dated 11.01.2021, reminding the Petitioner that the State-Respondent No.2 had released a sum of Rs.1,44,87,880.00 (Rupees one crore, forty four lakhs, eighty seven thousand, eight hundred and eighty) only, in March, 2017, in favour of the Petitioner as mobilization advance.

(ix) The Show Cause also stated that from the month of June, 2020, without informing the State-Respondents No.1 and 2, the Petitioner stopped providing their services resulting in a complete halt in the Public Distribution System through EPOS Machine at Fair Price Shops. That, further the unilateral suspension of services is ultra vires the Service Level Agreement. That, the discontinuance of services by the Petitioner caused a set back to the State-Respondents No.1 and 2 for timely implementation of the One Nation One Ration Card Scheme, hence they were to explain as to why the Agreement entered on 04.05.2017 should not be terminated.

(x) By a Letter also of the same date i.e. 11.01.2021 (Annexure-11), the State-Respondent No.2 agreed to release payments which were due to the Petitioner in a phased manner.

(xi) It is the Petitioner's case that on 16.01.2021, the response to the Show Cause was given by them.

(xii) Despite the response to the Show Cause, the services of the Petitioner were terminated vide Letter bearing No.801/F&CSD/2021, dated 22.01.2021.

(xiii) Having thus terminated the services of the Petitioner, the Respondent No.2 on 02.02.2021, issued "Notice Inviting E-Tender" from eligible Bidders for the same works that had earlier been awarded to the Petitioner i.e. Automation of Fair Price Shops in Sikkim.

(xiv) Pursuant to the E-Tender, the Respondent No.3 was awarded the Contract and Work Order issued on 09.03.2021.

(xv) On 24.04.2021, the Petitioner was before the Learned Commercial Court, East Sikkim at Gangtok, seeking reliefs under Section 9 of the Arbitration and Conciliation Act, 1996, the prayers being;

"i. Kindly issue an ad interim ex-parte injunction order to restrain the Respondent from accepting any bid in relation to the Notice Inviting E-Tender dated 02.02.2021. ii. Kindly issue an order of injunction to restrain the Respondent from accepting any bid in relation to the Notice Inviting E-

COURT NO.1 HIGH COURT OF SIKKIM : GANGTOK Record of Proceedings

Tender dated 02.02.2021 until the conclusion of the determination of the controversy between the parties by an Arbitrator.

iii. Kindly pass an order quashing the Show Cause Notice bearing No.753/F&CSD dated 11.01.2021. iv. Kindly pass an order quashing Notice of Termination of Service issued by the Secretary, Food and Civil Supplies Department bearing No.801/F&CSD/2021 dated 22.01.2021. v. Any other order/orders that this Hon'ble Court deems fit to pass in the interests of justice."

The reliefs so claimed supra are similar to the prayers made before this Court (xvi) Vide an ex-parte ad interim Order, dated 27.04.2021, the Learned Commercial Court restrained the State Respondent No.2 herein, the Secretary, Food and Civil Supplies Department, who was the Respondent therein, from accepting any Bid in connection with the E-Tender floated by them on 02.02.2021.

(xvii) Later, after hearing both parties, by a subsequent Order, dated 27.05.2021, the Learned Commercial Court vacated its earlier ex-parte ad interim Order, dated 27.04.2021.

(xviii) Learned Counsel for the Petitioner submits that subsequent to the Order dated 27.05.2021, the Petitioner invoked the Arbitration Clause of the Agreement, dated 04.05.2017 and sought for appointment of an Arbitrator. The suggested Arbitrator was not agreeable to the State-Respondent No.2 and hence further steps in this context are being taken and the process is underway."

4. The learned Single Judge after considering the respective

submissions advanced by the parties came to the following conclusion:

"5. It may relevantly be stated here that this Court is aware that the existence of an Arbitration Clause would not divest the High Court of its jurisdiction under Article 226 of the Constitution, neither is the exercise of Writ jurisdiction under Article 226 in a contractual matter ruled out. However, this jurisdiction is invoked when there is no efficacious alternative remedy for the Petitioner.

6. The Hon'ble Supreme Court, recently in Bhaven Construction through Authorised Signatory Premjibhai K. Shah vs. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Another1 referred to the ratio in Nivedita Sharma v. Cellular Operators Association of India2 and inter alia observed as follows;

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"17. In any case, the hierarchy in our legal framework, mandates that a legislative enactment cannot curtail a Constitutional right. In Nivedita Sharma v. Cellular Operators Association of India, (2011) 14 SCC 337, this Court referred to several judgments and held:

"11. We have considered the respective arguments/submissions. There cannot be any dispute that the power of the High Courts to issue directions, orders or writs including writs in the nature of habeas corpus, certiorari, mandamus, quo warranto and prohibition under Article 226 of the Constitution is a basic feature of the Constitution and cannot be curtailed by parliamentary legislation - L. Chandra Kumar v. Union of India, (1997) 3 SCC 261. However, it is one thing to say that in exercise of the power vested in it under Article 226 of the Constitution, the High Court can entertain a writ petition against any order passed by or action taken by the State and/or its agency/instrumentality or any public authority or order passed by a quasi-judicial body/authority, and it is an altogether different thing to say that each and every petition filed under Article 226 of the Constitution must be entertained by the High Court as a matter of course ignoring the fact that the aggrieved person has an effective alternative remedy. Rather, it is settled law that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."

(emphasis supplied)

18. It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear 'bad faith' shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient."

7. In light of the detailed discussions that have emanated supra, and in view of the obtaining facts and circumstances in the instant matter as reflected hereinabove, I am of the considered opinion that the Petitioner has failed to put forth any exceptional circumstances for invoking the Writ jurisdiction of this Court under Article 226 of the Constitution.

8. The Writ Petition is accordingly dismissed and disposed of."

5. In an Intra-Court Mandamus appeal, interference is usually

warranted only when palpable infirmities or perversities are noticed on

a plain reading of the judgment and order. In the facts of the instant

case, on a plain reading of the impugned judgment and order, we do

not notice any such palpable infirmity or perversity. That apart and in

COURT NO.1 HIGH COURT OF SIKKIM : GANGTOK Record of Proceedings

any event, the impugned judgment and order is supported with cogent

and justifiable reasons. It is patently evident that the learned Single

Judge has dismissed the writ petition while choosing not to exercise

the writ Court's discretion to entertain the petition upon considering

the facts of the case.

6. As stated hereinbefore, it would be evident from the relevant

facts of the case that the contract between the appellant/writ

petitioner and the State-respondent no.2 stood terminated on 22nd

January, 2021. If this termination is wrongful, it is always open to the

appellant/writ petitioner to invoke the arbitration clause, which

admittedly is in existence in so far as the contract in question is

concerned. At this juncture, the learned Additional Advocate General

representing the State-respondent no.2, informs this Court that the

appellant/writ petitioner has already invoked the arbitration clause.

7. So far as the subsequent award of contract to the private

respondent no.3 is concerned, in the facts of this case, that cannot be

the subject matter to be decided by the writ Court. Clearly, in the facts

of the instant case, the appellant/writ petitioner's remedies are

elsewhere.

8. For reasons stated above, we do not find any merit in the instant

appeal, which is liable to be dismissed and stands accordingly

dismissed along with all connected applications.

                 (Bhaskar Raj Pradhan)                     (Biswanath Somadder)
                        Judge                                   Chief Justice
jk/avi/bp