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2018 Supreme(Bom) 1863
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NARESH H. PATIL, G.S. KULKARNI, JJ.
OLECTRA GREENTEC LIMITED - Appellant
Versus
BRIHANMUMBAI ELECTRIC SUPPLY AND TRANSPORT UNDERTAKING - Respondent
Writ Petition Lodging No. 3069 of 2018
Decided on : 16-10-2018
Advocate Appeared:
Milind Sathe, Adv., P.K. Dhakephalkar, Adv., Kazan Bhosale, Adv., Neha Bhosale, Adv., Aditi Bhargava, Adv., G.S. Godbole, Adv., Aseem Naphade, Adv., Arsh Misra, Adv., Deepali Patankar, Adv., Rajendra K Singh, Adv., Atul Singh, Adv.
Headnote:
The petitioner was awarded a contract to supply 40 electric buses to the BEST. The BEST later terminated the contract, citing a change in the subsidy conditions by the Government of India. The petitioner challenged the termination, arguing that it had accepted the new conditions and that the BEST's decision was arbitrary and illegal.
Fact of the Case:
The petitioner, Goldstone Infratech Limited, was awarded a contract by the Brihanmumbai Electric Supply & Transport Undertaking (BEST) to supply 40 electric buses. The contract was subject to the approval of the Department of Heavy Industries (DHI), which had agreed to provide a subsidy for the purchase of the buses. After the contract was awarded, the DHI changed the subsidy conditions, requiring that the buses be jointly owned by the BEST and the petitioner. The petitioner accepted the new conditions, but the BEST terminated the contract, citing the change in subsidy conditions.
Finding of the Court:
The court found that the BEST's decision to terminate the contract was arbitrary and illegal. The court held that the BEST was bound by the terms of the contract, which was subject to the approval of the DHI. The court also found that the petitioner had accepted the new subsidy conditions imposed by the DHI. The court further held that the BEST's decision to terminate the contract was not in the public interest, as it would result in the loss of a valuable contract for the supply of electric buses.
Issues: 1. Whether the BEST's decision to terminate the contract was arbitrary and illegal. 2. Whether the petitioner had accepted the new subsidy conditions imposed by the DHI. 3. Whether the BEST's decision to terminate the contract was in the public interest.
Ratio Decidendi: The court held that the BEST's decision to terminate the contract was arbitrary and illegal because: * The BEST was bound by the terms of the contract, which was subject to the approval of the DHI. * The petitioner had accepted the new subsidy conditions imposed by the DHI. * The BEST's decision to terminate the contract was not in the public interest, as it would result in the loss of a valuable contract for the supply of electric buses.
Final Decision: The court quashed and set aside the BEST's decision to terminate the contract.
G.S. KULKARNI, J.
1. Rule returnable forthwith. By consent of the parties and at their request taken up for final hearing.
2. The petitioner was formerly known as 'Goldstone Infratech Limited'. The petitioner was a successful bidder in a tender issued by respondent no.1Brihanmumbai Electric Supply & Transport Undertaking and Others. (for short "BEST") on 10 January 2018, invited for the work of "Appointment of Service Provider/Fleet Operator for Operating 20 Nos. of Midi NonAC & 20 Nos. of MIDI AC Electric Buses In the City of Mumbai & Its Extended Suburbs On Gross Cost Contract (GCC) Model". By a communication dated 26 February 2018, the BEST informed the petitioner of acceptance of the petitioner's proposal for hiring of 40 electric buses consisting 20 Nos. Midi NonAC Buses and 20 Nos. Midi AC Electric Buses, for a period of seven years. One of the delivery terms was that the petitioner agreed to provide 25% buses within three months and balance 75% by six months after release of Contract Work Order by BEST.
It would be appropriate to note some of the contents of the acceptance letter which read thus:
(f)
DELIVERY TERMS
You have agreed to provide 25% buses within 3 months and balance 75% by 6th month after requirement is given by the Undertaking after release of Contract Work order.
(g)
PENALTIES/FINES
You have accepted Clause no.1.33 of Annexure-C.
(h)
SECURITY DEPOSIT
You are requested to furnish Rs. 20,00,000.00 in Cash or Demand Draft or Bank Guarantee in the prescribed format as shown in the Annexure1 in favour of the BEST Undertaking. Bank Guarantee should be valid for a period of 96 months from the date of release of Contract Work Order. In case of Bank Guarantee, you will have to pay Rs. 2,000/towards the Administration Charges
(i)
CONTRACT VALIDITY PERIOD
96 months from the technical bid opening date. (i.e. 06022026)
(j)
OTHER IMPORTANT TERMS & CONDITIONS
As shown in the attached Annexure-C
This Letter for all purposes should be treated as Contract Work Order. The system generated Contract Work Order will be issued after your furnishing Security Deposit. Further, this contract work order is also subject to other terms and conditions of the tender."
3. In Annexure-C as referred in clause (j), there is a note below clause 4.2 which reads thus:
"Note: This acceptance letter is subject to approval of incentive from Department of Heavy Industries (DHI)."
4. The petitioner was issued a formal 'contract work Order' by the BEST on 28 February 2018. It is not in dispute that the petitioner complied with all the requirements of the letter of acceptance interalia of furnishing the bank guarantee etc.
5. The case of the petitioner is that in view of the clear stipulation to deliver 25% of the buses in three months, the petitioner immediately, on award of the contract acted upon the same by mobilizing resources and spend substantial amounts, for manufacturing of the ebuses. The petitioner in fact by June 2018 manufactured 24 electric buses.
6. As the BEST had issued the said tender in question under the incentive scheme of the Government of India -Department of Heavy Industries, whereby subsidy would be received from the Central Government by the BEST, there was correspondence entered by the BEST with the Central Government, in the context of present contract. We refer to this long correspondence at a later stage. However, the sequel to this, though ostensibly was the BEST issuing the impugned communication dated 30 August 2018 whereby the petitioner was informed, that the contract work order stands, withdrawn with immediate effect. The petitioner being aggrieved by this communication dated 30 August 2018 has invoked the jurisdiction of this court under Article 226 of the Constitution by filing the present petition, interalia pr
