2020 Supreme(Pat) 168

IN THE HIGH COURT OF JUDICATURE AT PATNA
Mohit Kumar Shah, J.
Bspcl Infrastructure Ltd. Having Its Registered Office,hyderabad - Appellant
Versus
State Of Bihar - Respondent
Civil Writ Jurisdiction Case No. 7192 of 2020
Decided On : 14-09-2020

Headnote:

WRIT PETITION - CONTRACT - RESCISSION - MAINTAINABILITY - CONTRACTUAL DISPUTES - WRIT JURISDICTION - PUBLIC LAW REMEDY - PRIVATE LAW REMEDY - ARBITRARINESS - UNREASONABLENESS - IRRATIONALITY - ARTICLE 14 - NATURAL JUSTICE - PRINCIPLES OF FAIRNESS - SHOW CAUSE NOTICE - REASONS FOR RESCISSION - COGENT, CLEAR AND SUCCINCT REASONS - RECIPROCAL PROMISE - MOBILIZATION ADVANCE - UNENCUMBERED AND ENCROACHMENT FREE LAND - COMMENCEMENT OF WORK - DEFAULT - TERMINATION OF CONTRACT - CONTRACTUAL OBLIGATIONS - PUBLIC INTEREST - PUBLIC GOOD - EXECUTIVE ACTION - DISCRETION OF HIGH COURT - ALTERNATE REMEDY - CIVIL SUIT - WRIT JURISDICTION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA.

Fact of the Case:

The petitioner, a company, was awarded a contract for the construction of a new embankment on the bank of Mahananda river. The petitioner claimed that it was incumbent upon the respondent-State to acquire the land and deliver the same to the petitioner company, however, not a single inch of land was either acquired or made available to the petitioner company resulting in the petitioner company not being able to commence its work. The petitioner also claimed that despite several communications made by the petitioner with the respondents, no land was provided to the petitioner company so as to enable it to commence its work. The respondents issued a show cause notice to the petitioner company alleging that despite having requested the company on couple of occasions for commencing the work, the petitioner company had failed to commence the work and in fact had also not mobilized manpower and machinery on the site, hence it is clear that no concrete steps had been taken by the petitioner company for commencing the work despite the mobilization advance having been made available to the petitioner company, thus the petitioner company was told to file its clarification within one week as to why, on account of violation of the conditions of the agreement, action be not initiated to rescind the agreement. The petitioner company submitted its detailed reply inter alia mentioning therein various grounds for not commencing the work as also stating that till the filing of the reply not a single kilometer unencumbered and encroachment free land has been made available for the purposes of embankment construction so as to enable the petitioner company to start the work, hence the allegation of not commencing the work is baseless since the company is being told to commence the work without being given the details of alignment drawing in terms of Clause-35 of the Special Condition of Contract. The respondents issued an impugned order rescinding the agreement in question.

Finding of the Court:

The court held that the writ petition was maintainable as the issues raised by the petitioner company in its show cause reply dated 12.05.2020, especially the ones pertaining to the respondents having not made available unencumbered and encroachment free land to the petitioner company and further not even a kilometer of land having been acquired for the said purpose so as to enable the petitioner to commence the work in question, have neither been dealt with nor considered by the respondents in the impugned order dated 03.06.2020 and moreover no cogent, clear and succinct reasons have been furnished in support of the decision to rescind the contract in question, which is an indispensable component of a decision making process, thus the order dated 03.06.2020 stands vitiated. The court further held that the impugned order dated 03.06.2020 passed by the Executive Engineer, Flood Control Division, Katihar, was quashed and all consequential actions taken in pursuance to the order dated 03.06.2020 shall also stand quashed. However, liberty was reserved to the respondent Department to proceed afresh, in accordance with law.

Issues: 1. Whether the writ petition was maintainable? 2. Whether the impugned order rescinding the agreement in question was valid?

Ratio Decidendi: 1. The court held that the writ petition was maintainable as the issues raised by the petitioner company in its show cause reply dated 12.05.2020, especially the ones pertaining to the respondents having not made available unencumbered and encroachment free land to the petitioner company and further not even a kilometer of land having been acquired for the said purpose so as to enable the petitioner to commence the work in question, have neither been dealt with nor considered by the respondents in the impugned order dated 03.06.2020 and moreover no cogent, clear and succinct reasons have been furnished in support of the decision to rescind the contract in question, which is an indispensable component of a decision making process, thus the order dated 03.06.2020 stands vitiated. 2. The court held that the impugned order rescinding the agreement in question was not valid as the respondents had not fulfilled their reciprocal promise and obligation under the contract i.e. of acquiring the land and providing unencumbered and encroachment free land to the petitioner company so that the petitioner could commence work, hence the impugned order dated 03.06.2020 was void.

Final Decision: The writ petition was allowed and the impugned order dated 03.06.2020 passed by the Executive Engineer, Flood Control Division, Katihar, was quashed. All consequential actions taken in pursuance to the order dated 03.06.2020 shall also stand quashed. However, liberty was reserved to the respondent Department to proceed afresh, in accordance with law.