2015 Supreme(Pat) 876
IN THE HIGH COURT OF JUDICATURE AT PATNA
RAVI RANJAN, J.
McNally Bharat Engineering Company Limited - Petitioner
Versus
The Bihar State Electricity Board & Ors. - Respondents
Civil Writ Jurisdiction Case No.7682 of 2015
Decided On : 22-05-2015
For the Petitioner:Mr. Y. V. Giri, Sr. Advocate, Mr. S.D. Sanjay, Sr. Advocate, Mr. Hemant Kumar, Advocate
For the Respondents:Mr. K.N. Choubey, Sr. Advocate, Mr. Vinay Kirti Singh, Mr. Akhileshwar Singh, Advocates
The duty of parties to resolve disputes through mutual consultation and the appointment of an Adjudicator as per Clause 6.1 of the General Conditions of Contract.
Headnote:
Termination - Contract Dispute - Clause 6.1 of General Conditions of Contract - [Clause 6.1 of General Conditions of Contract] - The court discussed the termination of a contract dispute and the applicability of Clause 6.1 of the General Conditions of Contract, emphasizing the duty of parties to resolve disputes through mutual consultation and the appointment of an Adjudicator. The court held that the termination notice failed the test of fairness and was an arbitrary action, quashing and setting it aside. The respondents were directed to respond to the request for an Adjudicator, and both parties were required to cooperate for adjudication of the dispute within 28 days.
Fact of the Case:
The petitioner entered into contracts with the respondent for the Ganges Water Supply Package for a thermal power station. The petitioner sought extensions due to impediments and raised objections to the termination of the contract. The respondents unilaterally terminated the contract without addressing the petitioner's request for adjudication under Clause 6.1 of the General Conditions of Contract.
Finding of the Court:
The court found that the termination notice was arbitrary and failed the test of fairness. It directed the respondents to respond to the request for an Adjudicator and quashed the termination notice, requiring both parties to cooperate for adjudication of the dispute within 28 days.
Issues: The issues included the unilateral termination of the contract without addressing the petitioner's request for adjudication, the duty of parties to resolve disputes through mutual consultation, and the applicability of Clause 6.1 of the General Conditions of Contract.
Ratio Decidendi: The court emphasized the duty of parties to resolve disputes through mutual consultation and the appointment of an Adjudicator as per Clause 6.1 of the General Conditions of Contract. It held that the termination notice failed the test of fairness and was an arbitrary action, quashing and setting it aside.
Final Decision: The writ application was allowed, and the termination notice was quashed and set aside. The respondents were directed to respond to the request for an Adjudicator, and both parties were required to cooperate for adjudication of the dispute within 28 days.
I have heard the parties and have perused the records of this case.
2. The writ petition has been filed inter alia for grant of following reliefs:-
“(i) For issuance of a writ of Certiorari or any other appropriate writ, order or direction quashing letter no.278 dated 11.05.2015 whereby and where under the respondent Chief Engineer (P & D), Bihar State Power Generation Company Limited (respondent no.5) has unilaterally terminated the contract of Ganga River Water Scheme with the petitioner company without even whispering about notice dated 20th April, 2015 given by the petitioner company for referring the matter before an Adjudicator in terms of Clause 6.1.1 of General Condition of Contract.
(ii) For issuance of a writ of mandamus or any other appropriate writ, order or direction commanding the respondents to act on the notice dated 20th April 2015 (Annexure-15) given by the petitioner company to the respondent no.1 under Clause 6.1.1 of General Condition of Contract and refer the matter before an Adjudicator in terms of the said clause of General Condition of Contract for adjudication of the dispute related with Contract Agreement no.03 & 04 dated 3rd July 2012.
(iii) For any other relief/relief (s) for which the petitioner is entitled to in accordance with law and in the facts and circumstances of the case.”
3. The petitioner claims that pursuant to an invitation of offer, it had quoted its offer for the required work, v.i.z, Ganges Water Supply Package for Barauni Thermal Power Station, Phase I and II.
4. The contracts were signed between the petitioner and the respondent-Bihar State Electricity Board now known as Bihar State Power Holding Company Limited. The copies of agreement/ contract nos.3 and 4 have been appended as Annexure 2 series. However, according to the petitioner, due to certain impediments, work could not be completed within time and, thus, letters were written to the respondents for suitable extension of the contractual delivery period. It has been contended on behalf of the petitioner that reasons for delay stands described in the copies of the letters written to the respondent-Company appended as Annexure 13 series. One of the reasons was the objection being raised by IWAI as necessary permission could not be obtained by the respondents regarding construction of coffer dam. It has been pointed out from Annexure 13, which is a letter written by the petitioner to the Chief Engineer (P & D), Bihar State Power Generation Co. Ltd. dated 02.07.2014, that, for establishing clear water pump house and desilting chamber/Electrical Sub-station Building, no front was made available till that date and there was issue of payment also due to which the contract was delayed.
5. Learned counsel for the petitioner has further pointed out from the minutes of the meeting convened on 19.12.2014 under the Chairmanship of the Chief Secretary, Government of Bihar to discuss the major issues faced by the Bihar State Power Generation Company Limited in bringing various generation projects in Bihar, a copy of which has been appended as Annexure 14/1, that the issue for execution of Ganga Water Scheme was also discussed and it was found that the site could not be made available to the petitioner by the respondents due to some technical reasons like existing constructed homes, shops and passing of IOCL pipeline etc. There was some issue for acquisition of Ash Dyke also and the Chief Secretary was requested to resolve the critical issue of acquisition of land. However, when nothing was done and contract was not extended as well as payments were not made then the petitioner, vide Annexure 15 dated 20.04.2015, had invoked Clause 6.1 of the General Conditions of Contract requesting to share the name of the Adjudicator appointed by the respondents for resolution of the issues but unfortunately, without taking such step, the impugned Annexure 1 which is a letter dated 11.05.2015, has been issued and though subject matter indicates t