IN THE HIGH COURT OF JUDICATURE AT PATNA
Mohit Kumar Shah, J.
Kashish Developers Limited Registered Office, Champaran - Appellant
Versus
State of Bihar - Respondent
Civil Writ Jurisdiction Case No. 7240 of 2020
Decided On : 28-01-2021
Government Contract – Work Contract – Termination of agreement – Breach of principles of natural justice – On this ground alone i.e., on account of non-compliance of principles of natural justice and violation of Clause 14 of Contract, impugned order held to be void and accordingly quashed, consequently, any subsequent action taken by respondent authorities also held to be null and void – Impugned order is also bad in law for reason that Executive Engineer, Building Construction Department, who is competent authority under the contract to terminate contract in question, has not applied his mind and has not decided for himself by exercising his independent mind and unfettered judgment as to whether contract is required to be terminated or not inasmuch as he has acted in light of departmental directions given by Chief Engineer and Superintending Engineer – As far as issue regarding grant of opportunity to petitioner-company to complete work in question within a period of twelve months is concerned, petitioner is granted liberty to approach respondents by filing appropriate representation which shall be considered by respondents sympathetically, especially taking into account effect of complete lock-down in country as also in State of Bihar on account of Covid-19 Pandemic and effect of Full Bench judgment of this Court rendered in CWJC No. 5633 of 2020 (In Re: Functioning of Courts in Bihar during period of Covid-19, Pandemic vs. State of Bihar), Kems Services Pvt. Ltd. and B. K. Enterprises. (Paras 10, 16, 17 and 18)
JUDGMENT
Mohit Kumar Shah, J. - The present writ petition has been filed for setting aside the office order contained in letter no. 718 dated 02.07.2020 issued under the signature of Executive Engineer, Construction Division No. 2, Building Construction Department, Bihar, Patna, whereby and whereunder the agreement bearing agreement no. 05 SBD 2015/16 for construction of Vidhayak Awasan (MLC Parisar), entered into between the petitioner and the respondent authorities has been rescinded. The petitioner has further prayed that upon setting aside of the aforesaid order of termination of agreement, the respondent authorities be directed to grant eight months' time to complete the balance work inasmuch as the delay, which has occurred in the execution of the work in question, was beyond the control of the petitioner or on account of the lapses / latches on the part of the respondents and moreover, the last four months expired during the period of lock-down on account of Covid-19, Pandemic.
2. Shorn of the details, it would suffice to state that an agreement bearing agreement no. 05 SBD 2015/16 dt. 10.08.2015 was executed in between the petitioner-company & the Executive Engineer, Construction Division No. 2, Building Construction Department, Bihar, Patna, with respect to the construction of Vidhayak Awasan (MLC Parisar) at Patna. The work order was issued by the Executive Engineer, Construction Division No. 2, Building Construction Department, Govt. of Bihar, Patna, vide memo no. 911 dated 10.08.2015 with a stipulation that the work was to be commenced from 10.08.2015 and time of completion was fixed as 24 months, thus, the deadline for completion of the work was 10.08.2017. The petitioner is stated to have commenced the work, but the same got hampered on account of several unavoidable reasons like encroachment upon 80% of the construction site, number of trees present within the construction site which were required to be cleared for the purposes of construction and position of underground high tension electrical cable and water pipeline having not been provided.
3. It is the further case of the petitioner that subsequently, the work in question also got hampered on account of demonetization, ban on supply of sand, implementation of GST, irregular payments, Covid-19 Pandemic, and two supplementary agreements being executed for extra work. It is the contention of the petitioner that several communications had taken place in between the petitioner and the respondents, however, in the meantime, the Government of Bihar declared lock-down on account of outbreak of Covid-19 Pandemic vide notification dated 17.03.2020 / 22.03.2020 with effect from 23.03.2020, which was further extended up to 5th of June, 2020, whereupon the petitioner had requested the respondent-Executive Engineer to pay the outstanding dues of the petitioner and accordingly, extend the time for completion of the work in question, however, in the meantime, the agreement in question was rescinded by the impugned order dated 02.07.2020.
4. The learned Senior Counsel for the petitioner, Sri P. K. Shahi, assisted by Sri Ranjeet Kumar, Advocate, has made a short and crisp submission to the effect that Clause 14 of the Contract itself envisages issuance of a notice in writing to the contractor prior to cancelling of the contract, however, in the present case, admittedly, no show cause has been issued to the petitioner by the respondents prior to passing of the impugned order dated 02.07.2020, rescinding the agreement in question. It is submitted that compliance of the principles of natural justice is inherent in Article 14 of the Constitution of India and any deviation or breach thereof would render such decision of the authority illegal and void. It is further submitted that substantial work has been completed by the petitioner and it undertakes to complete the remaining work within a period of eight months from the date of passing of the judgment in the present case. In this re
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The central legal point established in the judgment is the requirement to provide an opportunity for the parties to be heard before rescinding a contract, in accordance with the principles of natural....
The main legal point established in the judgment is that the conclusion of a contract can occur upon the award of work, and non-compliance with tender and contract terms can justify contract terminat....
The court established that termination of a contract must comply with natural justice principles, requiring adequate reasoning and opportunity for the affected party to respond.
The court affirmed that principles of natural justice do not apply to non-statutory, purely contractual disputes where parties must adhere to the terms of their contract.
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