M/S Khanday Infrastructure Private Limited v. U.T of J&K

ORDER 21.07.2022

1. The petitioner is a construction company and a registered contractor. The petitioner is aggrieved of the communication of Technical Officer to Executive Director JKPCC Limited, Srinagar, bearing No. PS/ED/J/1581-86 dated 15th July 2022, addressed to the Deputy General Manager, JKPCC Limited, Unit Pulwama/Shopain, whereby a decision of the accepting authority taken in terms of standard bidding document clause 53.2(c) and

53.4 of Section E of E-NIT dated 21st July 2020, and 19th April, 2021, with regard to the foreclosure of contracts at serial 1 and 2 and forfeiture of bank guarantee of the petitioner, has been conveyed with a copy to the petitioner. The petitioner has also been debarred from participation in future bidding in the JKPCC Limited for one year. The impugned communication has been challenged on several grounds.

2. The petitioner claims to have been allotted the construction work of Trenz at Sheikhpora Bridge for Span 01 and 02, as also for Span 03, 04 and 05. The petitioner claims that despite various factors causing disruption in the execution of the work, the petitioner successfully completed the works in span 03 and 04, but due to reasons beyond his control viz Covid-19 disturbances, observation of the World Bank “ERA”, banning of oxygen cylinders, etc. the execution of works of Span no. 01, 02 and 05 could not be completed within the stipulated period.

3. The slow performance of the petitioner and its failure to complete the works within time was placed before Contract Committee for deliberations. The Accepting Authority took a decision to foreclose the contracts for Span no. 1, 2 and Span no. 5, and forfeit the Performance Security given in terms of bank guarantee dated 5th October, 2020, drawn from Jammu and Kashmir Bank Unit Qazigund, and Rupees 6,57,600/- deposited vide TDR No. 514482 dated 5th July, 2021, drawn from the same branch. The respondents also debarred the petitioner from participating in bidding process in JKPCC Limited for a period of one year.

4. It is this order which is called in question by the petitioner on the ground that before foreclosing the contracts and acting under SBD clause 53.2 (c) and 53.4 of Section E, no prior notice to show cause and an opportunity of being heard was given to the petitioner. Mr. S.A. Naik, learned counsel appearing for the petitioner, relies upon couple of judgments from the Supreme Court to bring home his point that blacklisting of a contractor cannot be done without affording him an opportunity of being heard.

5. Having heard learned counsel for the parties, and perused the material on record, I am of the considered view that the disputes raised by the petitioner in this petition fall purely within the realm of contract. The entire case of the petitioner is built on the edifice that the impugned communication issued by the respondents is tantamount to breach of terms and conditions of the contract. The petitioner wants this Court to adjudicate and return a finding that the petitioner, by not executing the contract in time, has not breached any terms and conditions of the contract. He also wants this Court to return a finding that the delay in completing the works in question was attributable to the circumstances beyond his control and, therefore, respondents should have given him enough time to complete the works. Without commenting as to whether the time was essence of the contract or not, as saying anything on the issue may prejudice the petitioner, suffice it to say that this Court in the exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India is not empowered to adjudicate such disputed questions of complicated nature arising out of the contractual obligations. This Court would not interfere contractual matters in its writ jurisdiction unless it is pleaded and demonstrated that the impugned action by the respondents is unfair, utterly irrational, malafide or arbitrary. I do not find any such pleadings in this petition, nor, it was argued by Mr. S.A. Naik, learned counsel in support of his petition. It is also not the case of the petitioner that the bank guarantee, which the petitioner submitted by way of a performance security to the respondents, was obtained by fraud or misrepresentation. In these circumstances it was well within the powers of the respondents to invoke the relevant clauses of the contract and foreclose the contract. The necessary consequences of the foreclosure of the contract, due to fault attributed the petitioner, the forfeiture of Performance Security/Bank Guarantee. The petitioner may, however, dispute the forfeiture of the Bank Guarantee and the Performance Guarantee on merits, but it has to be done by the petitioner before the appropriate forum.

6. I am however in agreement with the learned counsel for the petitioner, that petitioner could not have been debarred from participating in the future bidding process of JKPCC for a period of one year without first affording him an opportunity of being heard.

7. For the foregoing reasons, I do not find any fault with the impugned communication dated 15th July, 2022, except that respondents ought to have passed the order of debarring the petitioner from participating in future bids by giving him a show cause notice and an opportunity of being heard. While the writ petition against the impugned communication, dated 15th July, 2022, to the extent of foreclosure of the contracts and forfeiture of Bank Guarantee/Performance Security is held not maintainable and the same is accordingly dismissed to that extent. The petitioner, however, shall be at liberty to avail of alternative remedies available to the petitioner in accordance with law. However, the decision of the respondents debarring the petitioner from participating in the biding of JKPCC Limited for a period of one year is quashed, leaving it open to the respondents to issue a show cause notice in this regard to the petitioner and pass an appropriate order if required only after providing the petitioner an opportunity of being heard.

8. Nothing said herein shall prejudice the petitioner in any manner for any forum chosen by the petitioner for redressal of his grievance.

9. The petition is accordingly disposed of. (SANJEEV KUMAR) JUDGE SRINAGAR 21.07.2022 “Mir Arif”