Telangana High Court

Sri. K.Chandrashekar vs The Union Of India on 21 March, 2023

Bench: Ujjal Bhuyan, N.Tukaramji

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


                 WRIT APPEAL No.356 of 2023


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


      Heard Mr. J.Venudhar Reddy, learned Counsel for the

appellant and Mr. Gadi Praveen Kumar, learned Deputy

Solicitor General of India for respondent Nos.1 to 6.


2.    This intra-court appeal is directed against the common

order dated 18.01.2023 passed by the learned Single Judge

dismissing writ petition No.23748 of 2022 and batch.


3.    The present appeal arises out of writ petition No.27582

of 2022.


4.    When the matter is taken up for consideration, learned

counsel for the parties submit that the subject matter of the

present appeal is squarely covered by the judgment and order
                                      2



dated 10.03.2023 passed by this Court in W.A.No.276 of

2023.


5.   The judgment and order passed by this Court in

W.A.No.276 of 2023 dated 10.03.2023 reads as under:


              Heard Mr. D.Prakash Reddy, learned Senior Counsel
     for the appellant and Mr. Gadi Praveen Kumar, learned
     Deputy Solicitor General of India for respondent Nos.1 to 6.


     2.       This intra-court appeal is directed against the
     common order dated 18.01.2023 passed by the learned
     Single Judge dismissing writ petition No.23748 of 2022 and
     batch.


     3.       The present appeal arises out of writ petition
     No.23757 of 2022.


     4.       Appellant as the writ petitioner had filed the related
     writ petition assailing the action of respondent No.4 in
     terminating the contract work awarded to the appellant
     under     Letter   of   Acceptance   dated   07.10.2021    and
     consequently, forfeiting the bank guarantee.


     5.       Subject matter of the contract relates to construction
     of Road under Bridge (RuB). Pursuant to a tender process,
     appellant was awarded the contract and in this connection,
     Letter of Acceptance was issued on 07.10.2021. Without
     entering into the rival contentions, it is seen that there was
                                 3


delay in the execution of the work. While according to the
appellant, the delay occurred because of respondent No.4
not taking prompt action in signing the contract agreement
and subsequently in preparing and approving the drawings,
on the other hand, according to the respondents, the delay
was because of the appellant's failure to execute the work
in a time bound manner. Ultimately, respondents issued
seven (7) days notice followed by forty-eight (48) hours
notice. It was thereafter that the contract was terminated
by the respondents.


6.     While according to the appellant, no notice was
issued and no hearing was granted to the appellant before
termination of the contract, it is the case of the respondents
that the termination notice was uploaded in the common
portal called Indian Railway- Works Contract Management
System (IRWCMS). After terminating the contract of the
appellant,     respondents   forfeited   the   bank   guarantee
furnished by the appellant. This led to filing of the writ
petition.


7.     At the initial stage, interim order was passed by the
learned Single Judge directing the respondents not to
award contract for the balance work to third party
contractors.


8.     Respondents in their vacate stay petition which was
treated      as   counter    affidavit   contested    the   very
maintainability of the writ petition. On merit, it was
contended that there was delay on the part of the appellant
in executing the contract which is of public importance.
                                   4


Therefore, respondents were compelled to terminate the
contract but before doing so, adequate notice was granted
to the appellant.


9.    Learned Single Judge held that though there is an
arbitration clause in the contract, yet the writ petition is
maintainable.       In support of such conclusion, learned
Single Judge has placed reliance on several decisions of the
Supreme Court. However, learned Single Judge after
entertaining the writ petition as being maintainable went
into the merit and held that appellant had failed to
complete the contract work within the agreed time. On
notice, learned Single Judge held as follows:


              35.     It is relevant to note that entire tender
      process and re-tendering process, submission of tender
      is online through respondent's e-mail ID. The aforesaid
      notices were placed in IRWMS site of the respondent
      Railways. However, the petitioner herein has filed copies
      of 7 days and 48 hours notice. Therefore, petitioner
      cannot contend that the said notices were not served on
      him. Therefore, according to this Court, there is no
      irregularity in terminating the aforesaid contracts by the
      respondents Railways and forfeiting the bank guarantee.



10.   Government of India in the Ministry of Railways
(Railway Board) has approved the new Indian Railways
Standard General Conditions of Contract, July 2020. While
Part I thereof lays down Regulations for Tenders and
Contracts, Part II provides for Standard General Conditions
of Contract. Clause 4 of the Standard General Conditions of
Contract reads as follows:
                                        5


                 4.        Communications to be in writing: All
      notices,      communications,     reference   and   complaints
      made by the Railway or the Engineer or the Engineer's
      Representative or the Contractor inter-se concerning the
      works shall be in writing or e-mail on registered e-mail
      IDs     and     no   notice,   communication,   reference   or
      complaint not in writing or through e-mail, shall be
      recognized.



11.   From the above, it is seen that as per the Standard
General Conditions of Contract all communications are to
be in writing. All notices, communications, reference and
complaints made by the Railways or the Engineer or the
Engineer's     Representative          or   the     Contractor     inter-se
concerning the works shall be in writing or e-mail on
registered e-mail IDs. No notice, communication, reference
or complaint not in writing or through e-mail shall be
recognized.


12.   In the writ affidavit, appellant specifically pleaded in
paragraph 7 that while it was waiting for approval of thrust-
bed drawings and alternate solution, it received a call from
respondent No.4 on 02.05.2022 evening that it had been
served with 48 hour notice for several bridges. Appellant
had addressed a letter on 06.05.2022 to respondent No.4
and questioned illegal termination of contract without
notice. In paragraph 10, this was elaborated upon by the
appellant by stating that termination of contract and
forfeiture of bank guarantee was without any notice and
hearing and thus being in violation of the principles of
natural justice. Paragraphs 7 and 10 of the writ affidavit of
the appellant reads as follows:
                                    6




                7.     While we were waiting for approval of
       Thrust-bed drawings and for alternate solution for
       28mm TMT steel, we got a call from respondent No.4 on
       02.05.2022 evening that we have been served with 48
       hour notices for several bridges.        Immediately we
       addressed a detailed letter on 06.05.2022 elaborating
       the entire issue involved in all the RUB works, and
       specifically stated that we did not receive any notice from
       them since 01.04.2022, much less 48 hours notice, and
       requested to revoke the termination of contract, if
       initiated.


                ***

10. I submit that termination of contract and forfeiture of the BG by the respondent No.5, without issuing any notice and without any fault on the part of our company, is totally illegal, arbitrary and high handed and in violation of principles of natural justice and Article 19(1)(g) of Constitution of India. Due to such forfeiture and abrupt terminations of contracts, the Company went to deep financial crisis and unable to pay the vendors and meet the salaries of the workmen who are already deployed at the respective work sites and also huge material procedure at the work sites is at risk.

13. This was contested by the respondents in their application for vacate stay which was treated as the counter affidavit by stating as follows:

7. In reply to paras 1 to 3 of the petitioner affidavit filed in support of above writ petition, it is to submit that all the notices have been sent to the petitioner ID in Indian Railway - Works Contract Management System (IR-WCMS) (online platform for

making agreements, recording bills, paying bills, granting extension of currency, issuing notices, etc.). The petitioner having participated in the tender and after getting the Letter of Acceptance is supposed to get all the agreements, bills, variation, currency extensions, etc., in Indian Railway - Works Contract Management System. The maintenance of their account, correctness of information being furnished is their responsibility and is as per Clause 6 of Annexure-V of General Conditions of Contract (GCC) submitted by the Tenderer at the time of participation in the said tender.

14. From the above, it is seen that stand taken by the respondents was that all notices were uploaded on IRWCMS i.e., the online platform. Appellant having participated in the tender and after obtaining Letter of Acceptance was supposed to get all agreements, bills, extensions etc., through the aforesaid online portal; it is the responsibility of the appellant to obtain such information.

15. Learned Single Judge observed that the termination notice was placed in the IRWCMS site. Appellant had filed copies of seven (7) days and forty-eight (48) hours notice which were issued prior thereto and therefore, appellant cannot contend that the said notices were not served upon the appellant. Learned Single Judge held that there was no irregularity in terminating the aforesaid contract by the respondents.

16. Before we proceed to deal with the above conclusion of the learned Single Judge, our attention has also been drawn to clause 64 of the Standard General Conditions of Contract which provides for arbitration. It is another matter

that learned Single Judge has held the writ petition to be maintainable notwithstanding availability of the remedy of arbitration. Having entertained the writ petition, we are of the view that learned Single Judge instead of entering into the merit as to the justification for cancellation of contract, ought to have confined the deliberation to the decision making process. After all, judicial review is primarily concerned with the decision making process and not with the decision per se. If the writ court feels that the decision making process is vitiated by non-compliance to the procedural requirements and violation of the principles of natural justice etc., certainly a writ court would be entitled to entertain a writ petition in exercise of its power of judicial review notwithstanding availability of alternative remedy. When clause 4 of the Standard General Conditions of Contract clearly provides that all notices, communications etc., should be in writing or on registered e-mail IDs, it means that the notices would have to be sent to the affected party in writing or to the registered e-mail ID of the affected party. Otherwise, clause 4 would have mentioned that such a notice would be uploaded or posted in IRWCMS portal. That having not been done, we are of the view that there is violation of the principles of natural justice inasmuch as due notice and adequate opportunity of hearing was not granted to the appellant before cancellation of contract.

17. Having said that we are of the view that appellant should be relegated to the forum of respondent No.4. Now that appellant is aware of the reasons for termination of contract, let the appellant appear before respondent No.4 on 20.03.2023 at 11.00 am whereafter respondent No.4

shall take a fresh decision in accordance with law. All contentions are kept open. Needless to say, if the appellant is aggrieved by any decision that may be taken by respondent No.4, it will be open to the appellant to avail the remedy as provided in clause 64 of the Standard General Conditions of Contract.

18. This disposes of the writ appeal. However, there shall be no order as to costs.

Miscellaneous applications pending, if any, shall stand closed.

6. Having regard to the aforesaid, we are of the view that

appellant should also be relegated to the forum of respondent

No.4. Now that appellant is aware of the reasons for

termination of contract, let the appellant appear before

respondent No.4 on 27.03.2023 at 11.00 am whereafter

respondent No.4 shall take a fresh decision in accordance

with law. All contentions are kept open. Needless to say, if the

appellant is aggrieved by any decision that may be taken by

respondent No.4, it will be open to the appellant to avail the

remedy as provided in clause 64 of the Standard General