M/S Sew Kranthi Jv vs The State Of Telangana
2021 Latest Caselaw 3167 Tel

THE HON'BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA
                         AND
     THE HON'BLE SRI JUSTICE A.RAJASHEKER REDDY

                   WRIT APPEAL No.578 OF 2021

JUDGMENT: (Per the Hon'ble the Chief Justice Satish Chandra Sharma)

      The present Writ Appeal is arising out of an Order

dated 13.05.2021 passed in W.P.No.6790 of 2021 by the

learned Single Judge.


      The facts of the case reveal that in respect of an

Irrigation Project, tenders were issued and the appellant

company being the successful bidder was issued a Work

Order. An agreement was executed on 20.01.2010 and the

work was required to be completed by 19.01.2014. The

facts further reveal that extension of time was granted

from time to time, the disputes arose between the parties

and finally the contract was terminated by Order dated

18.02.2021. The undisputed facts further reveal that the

contract for the balance work was entrusted to a third

party and being aggrieved by an Order dated 18.02.2021

terminating the contract, the writ petition was preferred

with a prayer to set aside the Order dated 18.02.2021 and

to consider the representation dated 02.12.2020 for

extension of time till 31.12.2022 to complete the work.
                                 2




     The learned Single Judge has dismissed the writ

petition keeping in view the clauses 55, 55.1 and 55.2 of

the Contract and the same are reproduced as under:-

          "55.0 Termination

          55.1 The Department may terminate the Contract,
          if the contractor causes a fundamental breach of
          the Contract.

          55.2 Fundamental breaches of Contract include,
          but shall not be limited to the following:-
                 The Contractor stops work for 28 days when
          no stoppage of work is shown on the current
          program and the stoppage has not been authorised
          by the Engineer-in-Charge.
                 The Contractor is made bankrupt or goes into
          liquidation other than for a reconstruction or
          amalgamation.
                 The Engineer-in-Charge gives Notice that
          failure to correct a particular defect is a
          fundamental breach of Contract and the Contractor
          fails to correct it within a reasonable period of time
          determined by the Engineer-in-Charge; and
                 The Contractor does not maintain a security
          which is required and
                 The Contractor has delayed the completion of
          works by the number of days for which the
          maximum amount of liquidated damages can be
          paid as defined.
                 If the Contractor, in the judgment of the
          Department, has engaged in corrupt or fraudulent
          practices in completing for or in the executing the
          contract."


     The learned Single Judge dismissed the writ petition

on the ground of availability of alternative remedy. While

dismissing the writ petition, the learned Single Judge

observed as under:-

          "A perusal of the terms of the contract as well as
   the impugned termination letter and the other material
                                      3




available on record shows that even though originally the
petitioner has entered into contract on 20.01.2010 with a
completion period of 48 months, subsequently it was given
extension of time for four times for completing the work.
Admittedly, the petitioner has not completed the work in
spite of availing extension of time on four occasions. It is
pertinent to note that as per the documents filed by the
petitioner       itself,   more    specifically,   the   letter   dated
25.09.2020 addressed by the Executive Engineer to the
petitioner sets out of the various lapses committed by the
petitioner and the same are also reiterated in the letter
dated 29.01.2021 addressed by the Executive Engineer to
the Superintending Engineer wherein a detailed statement
showing the balance of work at the end of each extension
has been stated and the same read as follows:
        Sl.No.              EOT             Balance work at the
                            No.              end of each EOT
          1)                 1st                 94.76%
                            EOT
          2)                2nd                    83.15%
                            EOT
          3)                 3rd                   80.47%
                            EOT
          4)                 4th                   77.18%
                            EOT

  Admittedly, in the case on hand, the subject contract is
for the purpose of irrigating vast extents of land and any
delay in execution of the work will not only cause loss to the
State Exchequer, the overall cost of the project will result in
price escalation, which will result in wastage of public
money and have an adverse impact on the entire irrigation
project itself.

         As per clause 55.2 of the terms of the contract in
case there is any stoppage of work for period of 28 days, the
same shall be duly intimated to the Engineer-in-charge.
But, in this case, the petitioner has admittedly stopped the
work for more than 120 days without any intimation and
moreover there is a serious allegation made against the
petitioner that it had not only stopped the work but also
taken away the men and machinery from the site.                     No
reason is forthcoming from the petitioner in this regard.
                                     4




      The percentage of work that the petitioner has
completed and yet to complete are seriously disputed by the
officials and as held in a catena of judgments by the Hon'ble
Supreme Court and various High Courts, wherever serious
disputed questions of facts are involved, the Courts under
Article 226 of the Constitution of India should refrain from
interfering and the parties should be relegated to avail the
alternative remedy available under common Law where the
parties can lead evidence in support of their case and on the
basis of which enable the Courts to come to a just decision.
But in the present case, the respondents are seriously

disputing the percentage of work completed by the petitioner and there is also a serious dispute with regard to the amounts due to the petitioner.

In matters, such as these, the official respondents are best suited to take a decision as to whether to extend the time to the petitioner or not. The Government after duly taking into consideration the opinion of the Experts in the field and the ground realities has taken a decision not to extend the time for executing the contract and thereby to terminate the contract. Therefore, this Court is not inclined to interfere with the termination order.

Further, as can be seen from the terms of the agreement, more specifically clause No.23 provides a comprehensive mechanism for redressing the grievance for settlement of disputes and the same reads as under: "23. Settlement of disputes:

23.1 If any dispute of difference of any kind whatsoever arises between the department and the Contractor in connection with, or arising out of the Contract, whether during the progress of the works or after their completion and whether before or after the termination, abandonment or breach of the Contract, it shall in the first place, be referred to and settled by the Engineer-in-charge who shall, within a period of thirty days after being requested by the Contractor to do so, give written notice of his decision to the Contractor. Upon receipt of the written notice of the decision of the Engineer-in-Charge the Contractor shall promptly proceed without delay to comply with such notice of decision.

23.2 If the Engineer-in-Charge fails to give notice of his decision in writing within a period of thirty days after being requested or if the Contractor is dissatisfied with the notice of the decision of the Engineer-in-Charge, the Contractor may within thirty days after

receiving the notice of decision appeal to the Department who shall offer an opportunity to the contractor to be heard and to offer evidence in support of his appeal, the Department shall give notice of his decision within a period of thirty days after the Contractor has given the said evidence in support of his appeal, subject to arbitration, as hereinafter provided. Such decision of the Department in respect of every matter so referred shall be final and binding upon the Contractor and shall forthwith be given effect to by the Contractor, who shall proceed with the execution of the works with all due diligence whether he requires arbitration as hereinafter provided, or not. If the Department has given written notice of his decision to the Contractor and no claim to arbitration, has been communicated to him by the Contractor within a period of thirty days from receipt of such notice the said decision shall remain final and binding upon the Contractor. If the Department fail to give notice of his decision, as aforesaid within a period of thirty days after being requested as aforesaid, or if the Contractor be dissatisfied with any such decision, then and in any such case the contractor within thirty days after the expiration of the first named period of thirty days as the case may be, require that the matter or matters in dispute be referred to arbitration as detailed below:-

Settlement of Claims:

Settlement of claims for Rs.50,000/- and below by Arbitration.

All disputes or difference arising of or relating to the Contract shall be referred to the adjudication as follows:

a) Claims upto a value of Rs.10,000/-

Superintending Engineer, CCH Circle, K.C.Camp, Warangal

b) Claims above Rs.10,000/- and up to Rs.50,000/- in value

Chief Engineer, SRSP Stage-I, L.M.D.Colony, Karimnagar.

The arbitration shall be conducted in accordance with the provisions of Indian Arbitration and Conciliation Act, 1996, or any statutory modification thereof.

The arbitrator shall state his reasons in passing the award.

Claims above Rs.50,000/-.

All claims of above Rs.50,000/- are to be settled by a Civil Court of competent jurisdiction by way of civil suit and not by arbitration.

A reference for adjudication under this clause shall be made by the contractor within six months from the date of intimating the contractor of the preparation of final bill or his having accepted payment whichever is earlier."

Admittedly, the said remedy was not availed by the petitioner prior to approaching this Court under the Article 226 of the Constitution of India. Further, in case the petitioner is seeking any damages, as per the said clause, its

remedy is to approach the competent Civil Court and file a suit for damages.

In State of U.P., v. Bridge & Proof Company (India) Ltd., ((1996) 6 SCC 22), the Hon'ble Supreme Court, at paras 16 and 21, has held as under:

"16. Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, may be, also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated in a writ petition. That is a matter either for arbitration as provided by the contract or for the civil court, as the case may be. Whether any amount is due to the respondent from the appellant-Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition......

21. There is yet another substantial reason for not entertaining the writ petition. The contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration (clause 67 of the contract). The arbitrators can decide both questions of fact as well as questions of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extraordinary jurisdiction of the High Court under Article 226. The existence of an effective alternative remedy - in this case, provided in the contract itself - is a good ground for the Court to decline to exercise its extraordinary jurisdiction under Article 226. The said article was not meant to supplant the existing remedies at law but only to supplement them in certain well-recognized situations...."

In State of Bihar v. Jain Plastics and Chemicals Ltd., ((2002) 1 SCC 216), the Hon'ble Supreme Court, at paras 3 and 7, has held as under:

"3. ....It is to be reiterated that writ petition under Article 226 is not the proper proceedings for adjudicating such disputes. Under the law, it was open to the respondent to approach the court of competent jurisdiction for appropriate relief for breach of contract. It is settled law that when an alternative and equally efficacious remedy is open to the litigant, he should be required to pursue that remedy and not invoke the writ jurisdiction of the High Court. Equally, the existence of alternative remedy does not affect the jurisdiction of the court to issue writ, but ordinarily that would be a good ground in refusing to exercise the discretion under Article 226.

7. .....It is true that many matters could be decided after referring to the contentions raised in the affidavits and counter- affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road permits by the appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a

properly instituted civil suit rather than by a Court exercising prerogative of issuing writs."

(emphasis supplied)

In State of Gujarat v. M.P. Shah Charitable Trust ((1994) 3 SCC 552), the Hon'ble Supreme Court, at para 22, has held as under:

"We are unable to see any substance in the argument that the termination of arrangement without observing the principle of natural justice (audi alteram partem) is void. The termination is not a quasi- judicial act by any stretch of imagination; hence it was not necessary to observe the principles of natural justice. It is not also an executive or administrative act to attract the duty to act fairly. It was - as has been repeatedly urged by Shri Ramaswamy - a matter governed by a contract/agreement between the parties. If the matter is governed by a contract, the writ petition is not maintainable since it is a public law remedy and is not available in private law field e.g., where the matter is governed by a non-statutory contract...."

In National Highways Authority of India v.

Ganga Enterprises ((2003) 7 SCC 410), the Hon'ble Supreme Court observed that it is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India.

In ABL International Ltd., (supra), the Hon'ble Supreme Court, at para 28, has held as under:

"28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. [See Whirlepool Corpn. V. Registrar of Trade Marks (1998) 8 SCC 1)]. And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction."

In view of the law laid down by the Hon'ble Supreme Court in the aforementioned decisions, this Court is not inclined to interfere in the present writ petition. Moreover, it is stated that the contract for the balance work is already entrusted to a third party. Thus, this Court is in complete agreement with the contention of the learned

Additional Advocate General that insofar as contract matters are concerned, the scope and interference of this Court under Article 226 of the Constitution of India is very limited.

For the afore-stated reasons, this Court does not find any merit in the present writ petition and the same is accordingly dismissed."

In the present writ appeal, as seriously disputed

questions and rival claims of the parties with regard to

breach of contract are involved, they can be investigated

or determined on the basis of evidence which may be led

by the parties in a properly instituted civil suit or before

the arbitrator or before the Grievance Redressal Forum.

Keeping in view the Judgment delivered in the case of Jain

Plastics and Chemicals Ltd., (supra), the learned Single

Judge was justified in dismissing the writ petition on the

ground of availability of alternative remedy. Clause 23 of

the Contract provides for settlement of disputes and the

same has been reproduced above. In the considered

opinion of this Court, when the contract itself provides for

a mode of settlement of disputes arising from the contract,

there appears no justification in entertaining a writ

petition under Article 226 of the Constitution of India in

the light of the existence of effective alternative remedy

and therefore, the learned Single Judge was justified in

dismissing the writ petition. The appellant shall certainly

be free to avail the alternative remedy keeping in view the

contract executed between the parties. It is certainly true

that even in case of availability of alternative remedy, this

Court does have the power to entertain a writ petition.

However, the present case involves seriously disputed

questions of facts and they cannot be looked into in

exercise of writ jurisdiction. Therefore, the learned Single

Judge was justified in dismissing the writ petition. This

Court does not find any reason to interfere with the Order

passed by the learned Single Judge.

Resultantly, the Writ Appeal is dismissed.

Miscellaneous petitions, if any pending, shall stand

dismissed. There shall be no order as to costs.

__________________________________ SATISH CHANDRA SHARMA, CJ

_____________________________ A.RAJASHEKER REDDY, J

02.11.2021 Pln