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2021 Supreme(Pat) 365

IN THE HIGH COURT OF JUDICATURE AT PATNA
Mohit Kumar Shah, J.
Bjcl Srinath (jv) - Appellant
Versus
The State Of Bihar & Ors. - Respondent
Civil Writ Jurisdiction Case No. 14700 of 2019
Decided On : 09-07-2021

Advocates Appeared:
Mr. Prabhat Ranjan, Advocate, for the Appellant; Mr. Anjani Kumar ( AAG-4 ), Mr. Sanjay Kumar, AC to AAG-4, for the Respondent.

Headnote:

Government Contract – Rescission of Agreement – Encashment of Bank Guarantee – Competent authority under 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 Joint Secretary (Engineering), Water Resources Department – On this ground alone impugned order is fit to be set aside – Impugned order has been passed in violation of principles of natural justice – Impugned order rescinding agreement of petitioner set aside, however, liberty reserved to Executive Engineer, Western Embankment Division, to issue a fresh show cause notice to petitioner, detailing therein grounds on which respondent Department seeks to rescind agreement. (Paras 7, 8 and 12)

Constitution of India – Article 226 – Arbitration and Conciliation Act, 1996 – Sections 8 and 11 – Alternative remedy shall not be a bar to maintainability of writ petition – Even an arbitration clause in an agreement is not a bar to invocation of writ jurisdiction in case injustice has been caused inasmuch as the same has to be struck down as an anathema to rule of law and provisions of Constitution – Constitutional powers vested in High Court under Article 226 of Constitution of India, cannot be fettered by any alternative remedy available to parties – In case action of respondent is illegal and without jurisdiction, if principles of natural justice have been violated and if fundamental rights of petitioner has been violated, writ petition would definitely be maintainable, even in a contractual matter. (Para 11)

(2010) 13 SCC 427; (2021) 1 PLJR 642 – Referred.

(1998) 8 SCC 1 ; (2003) 2 SCC 107 ; (2005) 8 SCC 242 ; (2015) 7 SCC 728; (2011) 5 SCC 697 ; 2021 SCC OnLine SC 383 ; AIR 1952 SC 16 – Relied.

JUDGMENT

1. The present petition has been taken up for consideration through the mode of Video conferencing in view of the prevailing situation on account of COVID 19 Pandemic, requiring social distancing.

2. The present writ petition has been filed for quashing the show cause notice dated 27.06.2019 issued by the Executive Engineer, Western Embankment Division, Birpur, whereby and hereunder the petitioner has been asked to file his show cause reply as to why the agreement no. 01/SBD-2018-19 be not rescinded. The petitioner has further prayed for quashing of the order dated 04.07.2019 issued by the Executive Engineer, Western Embankment Division, Birpur, whereby and whereunder the agreement in question has been rescinded in terms of clause-3 of the General Conditions of Contract forming part of standard bidding documents.

3. The brief facts of the case are that a short re-tender notice no. 6 of 2017-18 was issued vide letter dated 05.02.2018 inviting offers for the work pertaining to "residual work of raising and strengthening of eastern and western Koshi embankment, construction of bituminous road over it and construction/ renovation/ restoration of structures". The petitioner had participated in the tender process and being the lowest bidder was awarded the tender and then the letter of acceptance dated 11.04.2018 was issued with the stipulation that the work was to be completed by 31.03.2019. An agreement dated 18.04.2018 bearing agreement no. 01/SBD/2018-19 was entered into between the respondent no. 7 and the petitioner. It is the case of the petitioner that there was delay in providing approved drawings, lay out plans etc. for starting the work in question leading to slow progress of work. Nonetheless, without issuing any show cause notice and without seeking any explanation from the petitioner, the petitioner was saddled with imposition of liquidated damages clause under the signature of the Superintending Engineer vide letter dated 07.01.2019. However, subsequently, the matter was sorted out and the liquidated damages which was imposed against the petitioner was withdrawn vide letter dated 02.02.2019. Thereafter the petitioner was served with a letter dated 21.06.2019 intimating the petitioner about the decision to rescind the agreement and get the remaining work done at the risk and cost of the petitioner firm. It appears that various communications were exchanged in between the petitioner and the respondent with regard to the submission of revised construction programme and grant of extension of time, nonetheless the respondents decided to withdraw the entire mobilization advance given to the petitioner firm and decided to invoke the bank guarantee, whereafter the concerned bank was directed to en-cash the same in favour of the respondents. The petitioner had then challenged the decision of the respondents to invoke the bank guarantee before this Court by filing a writ petition bearing CWJC No. 12998 of 2019 but the same was dismissed vide order dated 28.06.2019, however, with liberty to the petitioner to seek remedy, in accordance with law.

4. It is the further case of the petitioner that as soon as the aforesaid writ petition was dismissed, the petitioner was served with a show cause notice dated 27.06.2019, whereby and whereunder the petitioner was directed to submit its reply within a week, as to why the agreement in question by not rescinded, to which the petitioner had filed a detailed reply dated 01.07.2019. In the meantime, the respondents had proceeded to re-advertise the work in question by issuing a notice inviting tender dated 02.07.2019. The respondent no. 7 had then vide letter dated 04.07.2019 rescinded the agreement of the petitioner.

5. The learned counsel for the petitioner has submitted that firstly the show cause notice dated 27.06.2019 does not mention the grounds on which the show cause notice has been issued and steps have been initiated for rescinding the agreement in question. The learned counsel

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