The Telangana Civil Supplies ... vs The State Of Telangana
2023 Latest Caselaw 1069 Tel

         THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN
                                       AND
              THE HON'BLE SRI JUSTICE N. TUKARAMJI


                  WRIT APPEAL No.169 OF 2023

JUDGMENT: (Per the Hon'ble the Chief Justice Ujjal Bhuyan)


       Heard Mr. Chalakani Venkat Yadav, learned counsel

for the appellant and Mr. M.A.K.Mukheed, learned counsel

for the second respondent.

2. This intra-court appeal has been preferred by the

appellant against the order dated 03.01.2023 passed by

the learned Single Judge allowing writ petition No.45549 of

2022 filed by the second respondent as the writ petitioner.

3. Second respondent had filed the related writ petition

taking exception to the order dated 22.11.2022 passed by

the Vice Chairman and Managing Director of Telangana

State Civil Supplies Corporation Limited (briefly, 'the

Corporation' hereinafter), which is in appeal before us. By

the aforesaid order, the contract awarded to the second

respondent was terminated along with forfeiture of security

deposit and bank guarantee for violation of contractual

agreement.

4. Appellant had issued Notice Inviting Tender (NIT) on

22.12.2021 for transportation of food grains, pulses or any

other commodities for the period from 01.10.2021 to

30.09.2023 to all the thirty three districts of the State of

Telangana. Present writ petition relates to transportation of

such food grains to the District of Nalgonda.

5. It is not necessary to dilate on the details of the

tender proceedings. Suffice it to say, second respondent

participated in the tender process pursuant to NIT relating

to Nalgonda District and was declared as the successful

bidder on 09.02.2022. Thereafter, the contract was

awarded to the second respondent on 25.08.2022 on which

date an agreement was also entered into between the

appellant and the second respondent. One of the

conditions of the contract was that all the twenty four (24)

vehicles of the contractor should be installed with GPS

device. But it was stated that out of the twenty four (24)

vehicles of the second respondent, only ten vehicles (10)

had GPS devices. Appellant alleged in the impugned order

that the second respondent did not respond to telephonic

calls of the agency assigned for installation of GPS devices

in the vehicles of the contractor for the remaining fourteen

(14) vehicles.

6. Adverting to clause 9(iii) of the contract as well as

clause 13(vi) thereof, appellant took the view that since the

second respondent had failed to install GPS devices within

fourteen (14) days from the issue of the appointment order,

the contract should be terminated with forfeiture of earnest

money deposit, security deposit and bank guarantee.

Accordingly, the contract was terminated.

7. Learned Single Judge was of the opinion that there

was a lapse of eight months on the part of the appellant in

issuing the appointment order. While acknowledging that

the second respondent failed to install GPS devises in all

the vehicles to be deployed for the contract, learned Single

Judge nonetheless took the view that there were clear

lapses on the part of the appellant in issuing the

appointment order. The vehicles were hired by the second

respondent and they could not be kept in such an

uncertain condition for an indefinite period. Learned Single

Judge further noted the contention of the second

respondent that it was ready with all the twenty four (24)

vehicles installed with GPS devices and had furnished the

vehicle particulars. In such circumstances, learned Single

Judge set aside the order dated 22.11.2022 and directed

the appellant to allow the second respondent to run the

vehicles for the purposes of the contract.

8. We have heard learned counsel for the parties and

perused the terms and conditions of the contract.

9. Clause 65 of the contract says that any dispute

arising out of the tender shall be resolved as per the

Arbitration and Conciliation Act, 1996. This clause is

equally applicable to both the parties in the contract.

10. We are of the view that without negotiations and

without taking recourse to such dispute resolution

mechanism, appellant was not justified in straightaway

terminating the contract and at the same time forfeiting

security deposit and bank guarantee of respondent No.2.

11. We find that while passing the order dated

22.11.2022, the second respondent was not heard. Thus,

the said order was passed in violation of the principles of

natural justice and contrary to clause 65 of the terms and

conditions of the contract.

12. While we concur with the view taken by the learned

Single Judge that the approach of the appellant was abrupt

and drastic, we are however of the view that instead of the

writ court directing enforcement of the contract, it would

be more appropriate to remit the matter back to the

appellant for taking a fresh decision in accordance with law

including the terms and conditions of the contract and

after giving due opportunity of hearing to the second

respondent.

13. Accordingly, we modify the order passed by the

learned Single Judge in paragraph 7 of the judgment and

order dated 03.01.2023 passed in writ petition No.45549 of

2022 and remand the matter back to the appellant for

taking a fresh decision as stated hereinabove. Till such

decision is taken, order dated 22.11.2022 shall remain in

abeyance. It is also open to the appellant to settle the issue

with the second respondent inasmuch as object of the

contract is transportation of essential commodities for use

of the public.

14. Let the above exercise be carried out within a period

of fifteen (15) days from the date of receipt of a copy of this

order. All contentions are kept open.

15. The writ appeal is accordingly disposed of.

Miscellaneous applications pending, if any, shall

stand closed. However, there shall be no order as to costs.

______________________________________ UJJAL BHUYAN, CJ

______________________________________ N. TUKARAMJI, J 03.03.2023 vs