Ncc Limited vs The Singareni Collieries Company ...
2022 Latest Caselaw 4570 Tel

    HONOURABLE SRI JUSTICE B. VIJAYSEN REDDY

             WRIT PETITION No.30770 OF 2022

ORDER:

Respondent No.1 issued Tender Enquiry No.E112000409

dated 27.02.2021 for drilling, excavation, loading, transportation,

dumping, spreading and levelling etc., of 320.873 LBCM of in-situ

hard OB (which includes 1.620 LBCM of coal) with conventional

equipment and additional works viz., 10,000 RMT of drilling, 1000

shovel hours and 1000 dozer hours at RG OC-II Extension Project,

RG-III Area for a period of 24 months. The petitioner participated

in the tender and was declared as a successful bidder. Letter of

Intent (LOI) dated 10.06.2021 was issued to the petitioner.

Subsequently, Order No.7600008743 dated 05.07.2021 for the

project was placed on the petitioner. The value of the work

awarded to the petitioner is Rs.37,646.012 lakhs exclusive of GST.

2.1. The relevant clauses of the order are as under:

"1.1.1 d. SCCL will not allow the contractor to procure

diesel from outside."

"1.1.4(e) The total value of the work with Excavation and Diesel component only would be as given below:

Sl.                          Qty.             Basic Rate          Value
No.     Description        (LBCM)               in Rs.             (Rs. in
                                                                   Lakh)
A     Excavation rate 320.873            Rs.51.70                 16589.134
      for In-situ OB                     per BCM
      Diesel          320.873            Rs.65.39 per BCM         20981.885
      component for                      (i.e., for 0.777 Lts per
      In-situ OB                         BCM @ Rs.84.16 per
                                         Ltr)


        1.4 SUPPLY OF DIESEL:

a. Monthly diesel quantity will be issued as per the notified quantity.

b. For monthly excess consumption the equivalent amount will be withheld from monthly bills.

c. Monthly saved quantity will be carried forward progressively till the end of the contract.

d. ... ... ...

e. ... ... ...

f. ... ... ...

g. ... ... ...

h. The year-wise quantity of diesel per BCM provided by SCCL is notified as per formulae given in the clause no.1.3.5(c).

i. At the end of every year, after assessing the weighted average lead operated as per clause

no.1.5(e) the diesel quantity shall be reconciled for actual lead as given at para 1.4(a) above. The quantity of diesel to be provided by SCCL for the balance years shall be re-assessed as per formula mentioned at clause 1.4(h) according to the weighted average leads tobe operated as per clause No.1.5(e) and the same will be the "Revised diesel quantity' for the respective years.

1.4(A) UTILISATION OF DIESEL:

a. The contractor shall use the diesel provided by SCCL for OB removal work which includes laying/formation of haul roads/ramps, usage of conveyance vehicles, etc., connected with the work in the project for which the diesel is provided.

u. if the contractor resorts to diversion of diesel provided by SCCL for OB removal and connected works (laying of haul roads/ramps, usage of conveyance vehicles, etc.) for other than OB removal works, SCCL reserves the right to terminate the contract without paying any compensation to the contractor.

v. In case of termination of the contract as above, an amount equal to the value (as per invoice) of the diesel quantity diverted for other than OB removal works will be recovered from the bills of the contractor. A penalty of 15% on the value of the

unexecuted quantity of the schedule of the total contract will be levied."

2.2. That during execution of contract, the petitioner has

drawn additional quantity of diesel, details of which, from March

2022 to June 2022, are as under:

       March, 2022         -         1,29,336.50 Ltrs.
       April, 2022         -         2,62,274.56 Ltrs.
       May, 2022           -         3,22,844.74 Ltrs.
       June, 2022          -         6,03,320.39 Ltrs.

2.3. The respondents have recovered cost of additional

diesel at the rate of Rs.123.289 per litre for the quantity of

1,29,336.50 litres under Bill No.15, at the rate of Rs.125.431 per

litre for the quantity of 2,62,274.56 litres under Bill No.17, at the

rate of Rs.128.234/- per litre for the quantity of 3,22,844.74 litres

under Bill No.19 and at the rate of Rs.137.793/- per litre for the

quantity of 6,03,320.39 litres under Bill No.21. The total amount

recovered/withheld by the respondents from the bills is

Rs.17,33,76,126.97 paise which is exclusive of invoice / purchase

rate of diesel. The excess amount of Rs.6,24,72,082.82 paise i.e.,

difference between the purchased rate and the basic order rate per

litre as given under Clause 1.2(e) of the Order, has been recovered

/ withheld by respondent No.1.

3. Heard Mr. Avinash Desai, learned counsel for the

petitioner, and Sri E. Madan Mohan Rao, learned senior counsel

appearing for the learned standing counsel for the respondents, and

perused the material on record.

4. It is submitted by the learned counsel for the petitioner

that recovery made by the respondents towards additional cost of

diesel is in contravention of the terms and conditions of the order.

The contract is an Item Rate Contract which excludes cost of diesel

in the excavation rate quoted by the petitioner and accepted by

respondent No.1. It is the obligation of respondent No.1 to provide

notified quantity of diesel for excavation at the rate of 0.777 Lts /

BCM for excavation of In-situ hard OB. Respondent No.1 will not

allow the petitioner to procure diesel from outside. The diesel rate

per litre is Rs.84.16 paise considering the rate at Rs.63.59 (i.e., for

0.777 Ltrs / BCM).

5.1. The learned counsel for the petitioner submitted that the

respondents have to supply diesel at the rate of Rs.84.16 paise per

litre as per Clause 1.2(e) of the order. The recoveries made by the

respondents are contrary to the terms and conditions of the contract

/ order which provides for equivalent amount. The term equivalent

amount is shown in Clause 1.4 of the order which denotes basic

rate of diesel at Rs.84.16 per litre which is the rate agreed upon by

the respondents for supply of diesel.

5.2. The respondents vide letter dated 09.04.2022 enclosed

Bill No.15 for the month of March 2022 in which

Rs.1,59,44,603.72 is shown as deducted towards excess

consumption of diesel quantity of 1,29,336.50 litres at the rate of

Rs.123.28 per litre. The petitioner objected to the deductions

shown in Bill No.15 vide its letter dated 20.04.2022 and sought

clarification on the said deduction with reference to terms and

conditions / clauses of the order and asked respondents to make

deduction at equivalent amount of Rs.84.16 per litre. In response

to the same, the respondents vide letter dated 26.04.2022, referring

to Clause 1.4(b) of the Order justified withholding the amount of

Rs.1,59,45,767.75 paise towards cumulative excess consumption

quantity of HSD i.e., 1,29,336.50 litres arrived at considering

purchase price of HSD at the rate of Rs.123.289/- per litre from

IOCL by respondent No.1 from 16.03.2022. The respondents have

also enclosed copy of the invoice dated 16.03.2022 issued by the

IOCL in the name of respondent No.1.

5.3. It is contended by the learned counsel for the petitioner

that the respondents have unilaterally recovered excess amount of

Rs.6,24,72,082.82 paise in total till date. The petitioner is

currently way ahead of the schedule and has excavated more than 2

crore BCM in just 11 months as against the agreed 1,54,09,500

BCM that was to be excavated in the first year of the contract.

5.4. The committees could not resolve the dispute as per

Clause 1.14 which contemplates reference of any issues / disputes

to the three level management committees. The meeting of

Management Committee was held on 16.05.2022. As the matter

was not resolved at the request of the petitioner, the dispute was

referred to the Area Management Committee and meeting was held

on 25.05.2022. The dispute was not resolved and the matter was

finally referred to Corporate Management Committee and a

meeting was held on 13.06.2022, however, the dispute remained

unresolved.

5.5. It is contended by the learned counsel for the petitioner

that there is no allegation of diversion against the petitioner. The

agreed rate for supply of diesel by the respondents is Rs.84.16

paise per litre. Even if rates of fuel are increased due to ongoing

war between Russia and Ukraine, the burden will be passed on to

the consumers by the SCCL. There are no disputed questions of

fact. The only interpretation is regarding equivalent amount. The

learned counsel further submits that in similar contract which was

awarded to the petitioner in Clause 1.4, it is mentioned that the

diesel will be charged at invoice rate whereas in the instant case, it

was mentioned as equivalent rate i.e., the rate agreed upon under

the contract. Irrespective of variation in prices, the respondents are

bound to supply diesel at Rs.84.16 paise per litre. The learned

counsel relied on the decisions of the Hon'ble Supreme Court in

ABL International Limited v. Export Credit Guarantee

Corporation of India Limited1 and Manmohan Nanda v. United

India Assurance Company Limited2.

6.1. In ABL International Limited's case (Supra 1), the

Hon'ble Supreme Court held as under:

"53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. ... ... ... On facts we have found that the terms of the policy do not give room to any ambiguity as to the risk covered by the first respondent. We are also of the considered opinion that the liability of the first respondent under the policy arose when the default of the exporter occurred and thereafter when the Kazakhstan Government failed to fulfil its guarantee. There is no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such factual situation, we are of the opinion, the facts of this case do not and should not inhibit the

(2004) 3 SCC 553

(2022) 4 SCC 582

High Court or this Court from granting the relief sought for by the petitioner.

57. For the reasons stated hereinabove, we think the Appellate Bench of the High Court was not justified in reversing the judgment of the learned Single Judge. For the reasons stated above, the impugned judgment of the Appellate Bench of the High Court is set aside and that of the learned single Judge is restored. The appeal is allowed with costs."

6.2. In Manmohan Nanda's case (Supra 2), the Hon'ble

Supreme Court held as under:

"45. The contra proferentem rule has an ancient genesis. When words are to be construed, resulting in two alternative interpretations then, the interpretation which is against the person using or drafting the words or expressions which have given rise to the difficulty in construction, applies. This rule is often invoked while interpreting standard form contracts. Such contracts heavily comprise of forms with printed terms which are invariably used for the same kind of contracts. Also, such contracts are harshly worded against individuals and not read and understood most often, resulting in grave legal

implications. When such standard form contracts ordinarily contain exception clauses, they are invariably construed contra proferentem rule against the person who has drafted the same."

7.1. On the other hand, Mr. E. Madan Mohan Rao, learned

senior counsel, appearing for Mr. J. Sreenivasa Rao, learned

standing counsel for the respondents, has submitted that the writ

petition is not maintainable. The prayer of the writ petition is for

refund of amount on the assumed rate of diesel supply to the

petitioner. The petitioner wants interpretation of clauses which

does not come in the realm of writ jurisdiction and so also this

Court exercising power under Article 226 of the Constitution of

India cannot direct refund of the amount, that too disputed amount.

The rate at Rs.84.16 per litre shown in the table of the order is

indicated only for arriving at the total value of the work.

7.2. The learned senior counsel submitted that the

respondents supplied diesel for excess consumption at market

price. Due to increase in the market price, the petitioners are

bound to pay differential amount. Clause 1.14 of the order

provides for settlement of disputes. The petitioner cannot rely on

earlier contract which is independent of the present contract. There

are 15 similar contracts and none of the contractors have

challenged the deductions. Much water has flown from the

judgment of the Hon'ble Supreme Court in ABL International

Limited (Supra 1). The writ petition under Article 226 of the

Constitution is not maintainable when the project is of a private

contract and no public law element is involved. The respondents

have every right to recover the differential amount and nothing

extra is recovered. The decision in ABL International Limited's

case (Supra 1) relates to an insurance contract and did not involve

complexity in facts and issues. The learned senior counsel relied

on the judgments of the Supreme Court in Kerala State

Electricity Board v. Kurien E. Kalathil3, Joshi Technologies

Internatiaonl INC. V. Union of India4, and Bharat Coking Coal

Limited v. AMR Dev Prabha5.

(2000) 6 SCC 293

(2015) 7 SCC 728

(2020) 16 SCC 759

8.1. In Kerala State Electricity Board's case (Supra 3) ,

the Hon'ble Supreme Court held as under:

"11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not arise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if

provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies."

8.2. In Joshi Technologies International INC.'s case

(Supra 4), the Hon'ble Supreme Court held as under:

"70.5. Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business.

70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being

specifically performed. Otherwise, the party may sue for damages.

70.7. ... ... ...

70.8. If the contract between private party and the State/instrumentality and/or agency of the State is under the realm of a private law and there is no element of public law, the normal course of the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitution of India and invoking its extraordinary jurisdiction.

70.9. ... ... ... In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions under Article 226 of the Constitution of India to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision making process or that the decision is not arbitrary.

70.10. ... ... ...

70.11. The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes."

8.3. In Bharat Coking Coal Limited's case (Supra 5), the

Hon'ble Supreme Court held as under:

"30. But merely because the accusations made are against the State or its instrumentalities does not mean that an aggrieved person can bypass established civil adjudicatory processes and directly seek writ relief. In determining whether to exercise their discretion, the writ courts ought not only confine themselves to the identity of the opposite party but also to the nature of the dispute and of the relief prayed for. Thus, although every wrong has a remedy, depending upon the nature of the wrong there would be different forums for redress.

31. ... ... ... However, writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. ... ... ..."

9. In reply to the arguments of the learned senior counsel for

the SCCL, learned counsel for the petitioner has submitted that

there are no factual disputes involved in this case. Only dispute is

regarding equivalent amount. Everyday, fuel prices would be

changing. It was held in Joshi Technologies International INC

(Supra 4) that writs are maintainable even when terms of the

contract are challenged.

10. It is specific case of the respondents that as per Clause

1.2(e), the invoice price of diesel at Rs.84.16 paise per litre was

taken in to consideration at the time of floating the tender for

arithmetical calculation only and for arriving total value of the

diesel component to be supplied by the SCCL on free of cost to the

contractor to obtain approval from the Board.

11. It is also contended by the respondents that on reading

of clauses of the tender, the term equivalent amount denotes value

of the diesel supplied by the SCCL as per the day-to-day invoice

price of diesel. Recoveries are made by the SCCL for excess

consumption of diesel as per Clause 1.4 (a)(e) and (k) of the order.

The basic rate of diesel as per "model calculation for recovery of

excess consumption of diesel" contained in Clause 1.4(k) of the

order is that calculation was done on the basis of invoice rate that

prevailed as on the date of tender notification.

12. On the other hand, the learned counsel for the petitioner

has submitted that equivalent amount which can be withheld by the

respondents for monthly consumption as per clause 1.4 of the

order, does not permit any interpretation and there is no doubt that

equivalent rate is the basic rate i.e., Rs.84.16 per litre as shown in

the tabulated column under clause 1.2(e) of the order.

13. In the considered opinion of this Court, the dispute in

the instant case falls in the realm of civil law jurisdiction. A bare

reading of few clauses of the contract would not be sufficient to

determine nature of contract and interpret the disputed terms and

conditions of the contract. It is an established principle of law that

entire terms of the contract have to be read to understand intention

of the parties and for interpreting terms of the contract. It is not

within the purview of the writ jurisdiction to decide whether

equivalent rate is basic rate (Rs.84.16 per litre) or market rate in

the context of assertions made by the respondents in its counter and

submissions of the learned senior counsel appearing for the SCCL.

The contention of the respondents is that basic rate was indicated in

the tabulated column under clause 1.2(e) of the order which is only

for the purpose of arriving at total value of the contract. That due

to ongoing Russia - Ukraine war, there was steep increase in the

price of diesel; the petitioner was aware of the changed

circumstances; at no point of time, the petitioner has raised

objection; the invoice rate of diesel is charged only for the excess

consumption and if the petitioner is able to meet the targets with

optimum consumption of diesel, only Rs.84.16 per litre will be

charged.

14. It is borne out from the record that the petitioner has

invoked dispute resolution mechanism provided under Clause 1.14

of the order. At three levels, the grievance of the petitioner was

heard, and there were several deliberations between the petitioner

and the SCCL authorities. It is not the case of the petitioner that

there are mala fides on the part of the respondents and that the

petitioner was not heard. Thus, it cannot be held that there was any

violation of principles of natural justice and the respondents acted

in an arbitrary manner. The petitioner having availed the remedy

provided under the Disputes Redressal Committee as per clause

1.14 of the order, ought to have approached the civil Court as there

are complex disputed questions of facts involved in this case and

further it requires interpretation of terms and conditions of the

contract. The relief if any granted to the petitioner will have

financial implications on the respondents running into several

crores of rupees. The market / invoice rate of diesel is demanded

by the respondents only for the excess consumption of diesel by the

petitioner. So far as supply of diesel for the notified quantity, the

rate charged by the respondent is Rs.84.16 per litre irrespective of

the market price / invoice price. In the opinion of this Court,

detailed analysis of terms and conditions of the contract and

interpretation thereof is required to reach a conclusion that the

equivalent rate as per clause 1.4.b of the order is basic rate of

Rs.84.16 per litre. The dispute in ABL International Limited's

case (Supra 1) was entertained by the Apex Court by coming to a

conclusion that there is no ambiguity in the terms of the policy

(See Paragraph No.53). The contention of contra proferentem rule

put-forth by the learned counsel for the petitioner will have to be

considered only when the Court deciding the dispute comes to the

conclusion that there are two possible interpretations. The said

judgment is not relevant in the instant case in view of the

observations of this Court in the preceding paragraphs that the

matter involves disputed questions fact and interpretation of terms

of the contract which do not come within the realm of writ

jurisdiction. It is nobody's case that writ Court does not have

jurisdiction to entertain contractual disputes. The border line is

discretion of the Court. The writ Court would exercise discretion

in contractual matters keeping in mind the factors like availability

of alternate remedy, existence of disputed questions of fact,

complexity of dispute, interpretations of terms of contract, the

contract being private in nature and no public law element is

involved etc.

15. The subject contract is a private contract. As noted

above, there is no allegation of mala fides on the part of

respondents and the respondents have adhered to the dispute

redressal mechanism under the contract. Further, the instant case is

not a case of simple nature and the resolution thereof requires

detailed analysis and interpretation of terms of the contract; oral

and documentary evidence is required to be adduced by the parties,

which, normally, is the domain of civil law Courts. [See: Kerala

State Electricity Board's case (Supra 3) and Joshi Technologies

International INC's case (Supra 4)]. Thus, exercise of

jurisdiction under Article 226 of the Constitution is not warranted.

There are no merits in the writ petition.

16. Resultantly, the writ petition is dismissed. By the

interim order dated 02.08.2022 passed by this Court, the

respondents were directed to release the bill for the current month

(August 2022) by making deductions for excess consumption of

diesel only at the rate specified in the Work Order No.7600008743

dated 05.07.2021. The same arrangement shall continue for the

month of September 2022. The petitioner is given liberty to

institute suit before 30th September 2022 and may seek interim

relief before the civil Court having jurisdiction. The civil Court

shall decide the case on merits and may pass orders in the

interlocutory application, if any, filed uninfluenced by any of the

observations made in this order. No order as to costs.

As a sequel thereto, miscellaneous petitions, if any, pending

in the writ petition stand closed.

______________________ B. VIJAYSEN REDDY, J September 13, 2022.

PV