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2018 Supreme(Pat) 997
IN THE HIGH COURT OF JUDICATURE AT PATNA
Nilu Agrawal, J.
Baba Hans Construction Pvt. Ltd. – Appellant
Vs.
State of Bihar Through Principal Secretary –Respondent
Civil Writ Jurisdiction Case No. 15400 of 2018
Decided On : 23-08-2018
Y.V. Giri, Adv., Raj Kishore Prasad, Adv., Anjani Kumar, Adv., Shailendra Kr Singh, Adv., Santosh Kumar Singh, Adv.
The main legal point established in the judgment is that the action of the respondents in rescinding the contract, forfeiting the earnest money and security deposit, and blacklisting the petitioner for a period of 10 years was illegal and in violation of principles of natural justice. The court emphasized the need for an independent forum to adjudicate the issue of delay before any further action could be taken against the petitioner.
Headnote:
Delay in Completion of Work - Rescinding of Contract - Blacklisting - Bihar Contractors Registration Rules, 2007 - [WATER RESOURCES DEPARTMENT] - [Rule 11(ka)(ii) of the Bihar Contractors Registration Rules, 2007] - [Clause-3 and 14 of the agreement] - The court held that the action of the respondents in rescinding the contract, forfeiting the earnest money and security deposit, and blacklisting the petitioner for a period of 10 years was illegal and set aside. The court directed that all questions and liability would be subject to arbitration proceedings before the Tribunal. The court also permitted the petitioner to complete the remaining work at the present rate itself and ordered the cancellation of the performance guarantee/security deposit invoked by the Department.
Fact of the Case:
The petitioner, a registered Class-I contractor, was engaged in the construction of canals and its distribution system of Durgawati Reservoir Project under the Water Resources Department of the State of Bihar. The work had to be completed within 12 months, but the petitioner faced several hurdles, including non-acquisition of land, non-payment of compensation to farmers, and non-cooperation from the Department, which led to delays in the execution of the work. The Department extended the period for completion of work twice, but the petitioner was still unable to complete the work within the stipulated time.
Finding of the Court:
The court found that the action of the respondents in rescinding the contract, forfeiting the earnest money and security deposit, and blacklisting the petitioner for a period of 10 years was illegal and set aside. The court directed that all questions and liability would be subject to arbitration proceedings before the Tribunal. The court also permitted the petitioner to complete the remaining work at the present rate itself and ordered the cancellation of the performance guarantee/security deposit invoked by the Department.
Issues: The issues involved the delay in completion of the work, the legality of the action taken by the respondents in rescinding the contract, forfeiting the earnest money and security deposit, and blacklisting the petitioner, and the availability of an alternative remedy through arbitration.
Ratio Decidendi: The court held that the respondents were precluded from passing any orders until the issue of delay was adjudicated and deliberated by an independent forum. The court also emphasized that the issue of delay should be adjudicated by the Tribunal before the respondents could proceed against the petitioner for either cancellation of the contract or blacklisting. The court further directed that all questions and liability would be subject to arbitration proceedings before the Tribunal.
Final Decision: The court allowed the writ application, set aside the action of the respondents in rescinding the contract, forfeiting the earnest money and security deposit, and blacklisting the petitioner for a period of 10 years, and directed that all questions and liability would be subject to arbitration proceedings before the Tribunal. The court also permitted the petitioner to complete the remaining work at the present rate itself and ordered the cancellation of the performance guarantee/security deposit invoked by the Department.
Nilu Agrawal, J.
Heard Mr. Y.V. Giri, learned Senior Advocate duly assisted by Mr. Raj Kishore Prasad, Mr. Anjani Kumar, learned AAG-4 duly assisted by Mr. Shailendra Kumar Singh and Mr. Santosh Kumar Singh, learned counsel appearing for the State Bank of India.
2. Petitioner in the present writ application has prayed for following reliefs :
"i) To issue an appropriate writs, orders, directions in the nature of writ of Certiorari for quashing the order passed by the respondent Executive Engineer, Durgawati Works Division, vide Letter no. 439 dated 23.07.2018 (as contained in Annexure-17 to this writ application), whereby and whereunder the work allotted to the petitioner vide Agreement No. 01 SBD/2016-17 dated 09.07.2016, has been rescinded in purported exercise of his power under Clause-3 of Standard Bidding Document (in short SBD), as a result thereof, the earnest money and Security Deposit will be forfeited, besides that, the Department will be free to get the balance work completed at the risk and cost of the petitioner under Clause-14 of the SBD.
ii) To issue an appropriate writs, orders, directions in the nature of writ of Certiorari for quashing the show cause notice issued to the petitioner by the respondent Engineer-in-Chief vide his letter no. 2909 dated 30.07.2018 (as contained in Annexure-18 to this writ application) by which the petitioner has been asked to submit an explanation within a week as to why the registration of the petitioner (Registration No. 33/2016 class-I) be not blacklisted for ten years, as the petitioner has failed to complete the work in question and the Agreement No. 01 SBD/2016-17 dated 09.07.2016 has already been rescinded.
iii) To issue an appropriate writs, orders, directions in the nature of writ of Mandamus, directing the respondents to allow the petitioner to complete the balance work at the present rate itself, as there is no latches on the part of the petitioner in not completing the work in question within the stipulated period in terms of the Agreement and actually, it is the Department on whose non-cooperation, the work has been delayed.
iv) To issue an appropriate writs, orders, directions in the nature of writ of Mandamus, directing the respondents to make payments to the petitioner with respect to the pending bills and admitted amount of dues for the work done by the petitioner and accordingly direct the respondents to extend the period of completion of work adequately and further to provide valid clear site of the work so that the petitioner could be able to complete the work without any hindrance, particularly the land which has not yet been acquired by the Government, upon which the petitioner has to execute the work in question.
v) To any other relief or reliefs for which the petitioner is found to be entitled in the facts and circumstances of the case.
3. During pendency of the writ application, the order of blacklisting dated 06.08.2018 has been passed, which the petitioner challenges by way of I.A. No. 6078 of 2018 seeking amendment in the prayer of the main writ application, which is as follows :
"To issue an appropriate writs, orders, directions in the nature of writ of Certiorari for quashing the order passed by the respondent Engineer-in-Chief vide his Memo No. 2996 dated 06.08.2018 (as contained in Annexure23 to this application), whereby and whereunder the petitioner (Registration No. 33/2016, class-I) has been blacklisted for ten years from the date of issuance of the order under Rule-11(ka)(ii) of the Bihar Contractors Registration Rules, 2007, without affording any opportunity to file explanation to the show-cause notice."
4. Considering the nature of claim made by the petitioner, I.A. No. 6078 of 2018 is allowed.
5. Consequent to the order of blacklisting bank guarantee has been revoked and a demand draft of Rs. 1,59,28,000/- has been prepared in the name of the Executive Engineer, Durgawati Works Division, Chenari by the State Bank of India, Kadamkuan Branch, Pat
