Back
2012 Supreme(Pat) 753
IN THE HIGH COURT OF JUDICATURE AT PATNA
S.S. HUSSAIN, J.
Rama Kant Singh, S/o Late Ram Khelawan Singh, resident of 101, Lotus Apartment, New Patliputra Colony, P.S. Patliputra, Dist. Patna - Petitioner
Versus
National Hydraulic Power Corporation Ltd. through its Managing Director, NHPC Office Complex, Sector 33, Faridabad (Haryana) & Ors. - Respondents
Civil Writ Jurisdiction Case No.783 of 2011
Decided on: 18.5.2012
Advocate Appeared:
For the Petitioner:Mr. Alamdar Hussain, Advocate.
For the Respondents:Mr. Rajeshwar Prasad, Advocate.
The main legal point established in the judgment is that the termination of a contract and the forfeiture of security deposit and performance guarantee must be legally justified and based on the fulfillment of contractual obligations.
Headnote:
termination - contract - Clause 52.2, Clause 44.1, Clause 19(c) - The court discussed the termination of the contract under Clause 52.2 of the GCC, liquidated damages under Clause 44.1, and the maximum limit of liquidated damages for delay in completion of work under Clause 19(c). The court highlighted the breaches alleged by the respondents and analyzed each sub-clause of Clause 52.2 to determine their applicability. It concluded that the termination of the contract and the decision of the Standing Empowered Committee were quashed due to the respondents' failure to fulfill their obligations and the absence of legal justification for the termination and forfeiture of security deposit and performance guarantee.
Fact of the Case:
The petitioner entered into a contract with NHPC for the construction of rural roads. The petitioner faced various problems during the execution of the contract and repeatedly requested payment for the work done. The respondents terminated the contract, forfeited the security deposit, and invoked the bank guarantee.
Finding of the Court:
The court found that the termination of the contract and the decision of the Standing Empowered Committee were unjustified due to the respondents' failure to fulfill their obligations and the absence of legal justification for the termination and forfeiture of security deposit and performance guarantee.
Issues: The main issues were the legality of the termination of the contract, the forfeiture of security deposit and performance guarantee, and the non-payment for the work done by the petitioner.
Ratio Decidendi: The court held that the termination of the contract and the decision of the Standing Empowered Committee were quashed due to the respondents' failure to fulfill their obligations and the absence of legal justification for the termination and forfeiture of security deposit and performance guarantee.
Final Decision: The court allowed the writ petition, quashed the decision of the Standing Empowered Committee and the termination of the contract, and directed the refund of the petitioner's full security deposit, bank guarantee, and liquidated damages, along with interest at the rate of 8% per annum from the date of termination of the contract.
This writ petition was filed by the petitioner for the following reliefs:-
(i) For quashing of the part of the decision of the Standing Empowered Committee dated 25.11.2010 so far as the Standing Empowered Committee concluded (a) termination of the contract by the respondents due to fundamental breach by the petitioner as per the provisions of the contract for package no.BR-3613, (b) contractor?s claim on account of material at site, loss of profit, hire charges for machine and equipments, advance to supplier, site expenses, litigation expenses, prospective loss of profit and interest are not admissible.
(ii) For appropriate declarations that (a) the rescinding of the agreement on the basis of admitted fact is on account of employer’s convenience and not on account of fundamental breach of the contractor, (b) in the absence of finalization of rate, final determination of payable amount including variation in quantity, extra item, the action of rescinding and consequential decision of forfeiture of security and bank guarantee is wholly without jurisdiction.
(iii) For a direction to the respondents to release the security deposit, bank guarantee forthwith and further direction to the respondents to work out and finalize the rate of extra item, prime coat and variation in quantity and make payment.
(iv) For a direction to the respondents to refrain from acting upon the decision of the Standing Empowered Committee so far as realization of liquidated damage in terms of contract data is concerned.
(v) For any other relief of consequential reliefs to which the petitioner may be found entitled to in the facts and circumstances of this case.
2. An interlocutory application bearing I.A. No.3009 of 2011 has also been filed on behalf of the petitioner for restraining the respondents from taking any action upon the impugned decision of the Standing Empowered Committee and from raising any claim with respect to agreement in question vide Package No.BR-3613.
3. The authorities of the Ministry of Rural Development, Government of India selected National Hydroelectric Power Corporation (hereinafter referred to as “NHPC” for the sake of brevity) for the purpose of execution of Bihar Rural Road Project (hereinafter referred to as “the Project” for the sake of brevity) under Pradhan Mantri Gram Sadak Yojna (hereinafter referred to as “PMGSY” for the sake of brevity) and accordingly the NHPC invited tender for construction of rural road at Mahnar (Naya Tola to Bhagwanpur T-04-L-30) in the district of Vaishali under Package No.BR-3613. In response to the aforesaid notice inviting tender several persons submitted their tenders and out of them petitioner’s tender was accepted after all the due processes and intimation to that effect was given to him vide letter dated 18.07.2005 by the Chief Engineer (Contracts) NHPC, whereafter petitioner furnished bank guarantee and additional bank guarantee on 08.09.2005 and 21.03.2006 and agreement with respect to the said Package No.BR-3613 was entered into between the petitioner and the respondent-Chief Engineer of NHPC on 03.11.2005.
4. Learned counsel for the petitioner stated that during the course of execution of the said contract work the petitioner faced insurmountable problem on account of obstructions created by certain land owners, who claimed that their personal lands were being used for construction of road without acquisition. The petitioner also faced problems of non-availability of sufficient quantity of emulsion and G.S.B. Jhama. With respect to these problems the petitioner wrote to the authorities repeatedly on 28.03.2006, 15.12.2006, 21.04.2007, 04.06.2007 and 06.03.2008. In those letters the petitioner also requested payment of dues.
5. Learned counsel for the petitioner submitted that the respondents in their defective estimate did not make any provision for prime coat which was essential for bituminous work and under the dictate of the respondents the petitioner completed the prime coat but n
