The court emphasized the importance of contractual terms, specifically the price variation clause, in justifying the termination of a work order and rejected the petitioner's claim of the global increase in diesel prices as a Force Majeure event.

JUDGMENT :

A.S. Chandurkar, J.

RULE. Rule made returnable forthwith and heard the learned counsel for the parties.

2. The challenge raised in this writ petition is to the order dated 08.12.2021 that has been issued by the Area General Manager, Umrer Area of the Western Coalfields Limited by which the work order issued to the petitioner pursuant to the tender notice dated 20.02.2016 has been terminated and the performance security deposit furnished by the petitioner has been forfeited. In addition, the petitioner has been debarred from participating in future tenders of the Western Coalfields Limited for a period of three years.

3. The facts giving rise to the present writ petition are that the petitioner is a company incorporated under the Companies Act, 1956 and is engaged in the business of excavation as well as mining of coal and other allied services. On 20.02.2016, the Western Coalfields Limited issued a tender notice inviting bids for three jobs with duration of 83 months. As per Clause 6.2 of the tender notice if there was failure on the part of the Contractor to complete the work within the agreed time and also to maintain the progress of that work, the Contractor was liable to pay liquidated damages. As per Clause 6.4 there was a provision for extending the date of completion for reasons stipulated therein including a cause beyond the control of the Contractor. As per Clause 9, the contract was liable to be cancelled in full or in part if the Contractor defaulted in proceeding with the works with due diligence and the Contractor continued to do so even after a notice in writing from the Engineer In-charge. As per Clause 9(b) if there was failure to achieve monthly agreed quantity of 75% or a period of six consecutive months or a cumulative period of six months within a continuous period of eighteen months then except on account of non-availability caused by a Force Majeure event or an act of omission of company not occurring due to any default of the Contractor, the Western Coalfields Limited was free to act accordingly. Though there are other sub clauses to Clause 9 they are not relevant for the present purpose. As per Clause 19 there is a provision for payment of price variation and as per Clause 19.04.1 price variation on account of diesel has been provided. In the formula stated in that clause the diesel component expressed as percentage of total value of work was 0.30. The bid submitted by the petitioner was accordingly accepted by issuing the letter of acceptance on 27.05.2016. Pursuant thereto the petitioner was issued the work order dated 08.12.2016. In Clause 21 of the said work order, the rate of diesel as on 15.03.2016 was indicated at Rs.52.37 Ps. per litre. It was stated that the escalation/de-escalation would be payable/recoverable as per the price variation clause of the Special Terms and Conditions of the Tender Document.

4. It is the case of the petitioner that pursuant to aforesaid work order the work commenced and the same was being done smoothly. However on account of setting in of the Covid-19 pandemic the petitioner started facing difficulties. On 02.04.2020 a letter was issued by the petitioner to the Area General Manager stating therein that for aforesaid reason which was beyond the control of the petitioner the daily targets could not be achieved. On 12.10.2021 the petitioner called upon the Area General Manager that the price of diesel had increased and it was higher than the basic price of contract for which reason the petitioner was not in a position to clear the outstanding dues of the Indian Oil Corporation Limited. This was likely to result in interruption of the ongoing work. By a communication dated 10.08.2021 the petitioner informed the Chairman and the Managing Director of the Western Coalfields Limited, Nagpur all the difficulties faced on account of increase in the price of diesel to Rs.97.09 Ps. per litre on 30.07.2021. The rates thereafter increased to about Rs.103/- per litre as per