The court ruled that a contractor cannot claim an extension of a contract as a matter of right after its expiration, and disputes must be resolved through arbitration.

JUDGMENT :

(K. Vinod Chandran, CJ.)

The petitioner, a contractor who had been entrusted with a work, challenge the Notice Inviting Tender (NIT) issued by the respondent authority, the Bihar Urban Infrastructure Development Corporation Ltd., (‘BUIDCO’ for short) to award the same work but for a different period.

2. The period of contract of the petitioner is over, however, the petitioner’s challenge is based on the recommendation granted by the Bid Evaluation Committee to allow extension of the petitioner’s contract for two years since its operation remained suspended during the pandemic period. It is also an admitted position that the petitioner has invoked the arbitration clause in the agreement.

3. We have heard Mr. Ashar Mustafa learned Counsel appearing on behalf of the petitioner and Mr. Lalit Kishore, learned Senior Counsel appearing on behalf of the respondent- BUIDCO.

4. The petitioner was granted the contract as per Annexure-P/2 for the period 2017-22. The petitioner, according to the submission made, has also paid the entire premium amounts due as per the contract; despite the petitioner having not been able to operate it during the pandemic period. The work awarded to the petitioner for the five-year period was the operation and maintenance of bus queue shelters and displaying advertisements on such shelters within Patna. It is pointed out from the agreement that the authorization period can be extended as per Clause-1.2 for Force Majeure situations and the dispute resolution procedure as delineated in Clause-12.3 requires that the performance of the contract not be hampered when the dispute resolution process is pending. The learned Counsel for the petitioner has also produced a translation of the documents produced along with the counter affidavit, across the bar.

5. Annexure-R/1 indicates that the contract was awarded to the petitioner and one another agency and an agreement was signed on 14.02.2017. The period of the contract expired on 14.02.2022 and the Executive Engineer, Bus Queue Shelter, Patna based on Clause-1.2(b) of the agreement recommended extension of agreement for five years till 14.02.2027 on the condition of 5% increase in the amount of the present premium. There were complaints received by the BUIDCO from Patna Municipal Corporation regarding the advertisements displayed having not complied with the stipulations in the tender and also having been carried out in flagrant violation of the terms and conditions, resulting in huge loss of revenue.

6. Be that as it may, the Technical Bid Evaluation Committee had recommended the award of work from 15.02.2022 to 14.02.2024. The final decision however was to extend the period from 15.02.2022 to 31.12.2023 at a penalty of 2% on the amount of premium. The extended period also has expired and we are of the opinion that there is no cause to challenge the issuance of fresh NIT; which is the prerogative of the respondent-BUIDCO and the Patna Municipal Corporation. Whatever claim the petitioner has on the ground of the petitioner having been prevented from running the contract during the period of pandemic has to be urged in the arbitration proceeding; which, in the circumstance of the newly floated NIT cannot be for extension of the period of contract.

7. We have looked at the specific provisions regarding the extension as provided in Clause-1.2 of the agreement. Clause-1.2 has the nominal heading of authorization period and sub-clause (b) speaks of extension on mutual agreement at such terms and conditions as may be mutually agreed. It is also stipulated by Clause-1.2(c) that authorization period could be extended due to Force Majeure conditions. The words employed does not impose an obligation on the Awarder to extend the period and admittedly there is neither mutual agreement nor did the Awarder deem it appropriate to extend the period beyond that extended already on the condition of 2% penalty on premium.

8. The petitioner cannot as a matter of right claim extensio