IN THE HIGH COURT OF CALCUTTA
Sabyasachi Bhattacharyya, J.
Debashis Mitra - Appellant
Versus
Union Of India And Others - Respondent
W.P.A. No. 14148 of 2022
Decided On : 14-07-2022
Contract Termination - Maintenance and Provisioning - Clause 3.6(b) - [Bharat Sanchar Nigam Limited (BSNL) Contract] - [Clause 3.6 (b)]
Fact of the Case:
The petitioner was awarded a contract by BSNL for outsourcing maintenance and provisioning of landline and broadband. The contract stipulated termination and PBG forfeiture upon non-performance and failure to meet SLAs, with a requirement for notice before termination. The petitioner contended that their replies to the notices were not considered, and the purpose of show-cause notices was defeated.
Finding of the Court:
The court found that the contract's clause 3.6(b) was satisfied as three consecutive notices were served for alleged non-performance. It held that the clause did not contemplate a further opportunity of hearing and that the discretion to terminate the contract lay with the respondent-Authorities.
Issues: Non-consideration of petitioner's replies to notices, purpose of show-cause notices, delay in executing the work, and discretion of respondent-Authorities in terminating the contract.
Ratio Decidendi: The court interpreted the contract clause 3.6(b) and held that it did not provide for a detailed hearing to the noticee. It emphasized the discretion of the respondent-Authorities in terminating the contract based on the exigencies of the public work involved.
Final Decision: The petition failed, and the court dismissed it on contest, with no order as to costs.
JUDGMENT
Sabyasachi Bhattacharyya, J. - Upon succeeding in a tender floated by the Bharat Sanchar Nigam Limited (BSNL) for the purpose of outsourcing maintenance and provisioning of landline and broadband for external plant of copper network in CTD under Business Area-West, the petitioner was awarded a contract.
2. Sub-clause 3.6(b) of the said contract provides that the contract will be terminated and PBG forfeited upon non-performance and failure to meet all the SLAs, that is, MTTR, Provisioning, fault clearance and repeat fault parameters for consecutive three months. It was further stipulated in the said clause that notice shall be served for non- performance in the first month, second month and third month before final termination.
3. It is contended that although the petitioner gave written replies to each of the three notices issued by the respondent-Authorities, none of those was considered by the respondents.
4. It is submitted that the respondent-Authorities asked the petitioner to continue the work, while in the same breath issuing show-cause notices on allegations of faults on the part of the petitioner.
5. Learned counsel for the petitioner places reliance on the several replies sent by the petitioner, which have been annexed to the writ petition.
6. It is contended that the purpose of issuing a show-cause notice is to give an opportunity to the concerned bidder to present his version on the allegations levelled in the show-cause notices. However, the said purpose was defeated by the respondents not giving any opportunity of hearing to the petitioner and/or not considering such replies.
7. Learned counsel submits that even prior to the termination the petitioner had sent several communications to the respondent- Authorities explaining the delay of the petitioner on grounds like the Amphan Cyclone, 'Bandh'/strike, etc. The said communications were entirely overlooked by the respondents in terminating the contract with the petitioner.
8. Learned counsel submits further that while undertaking the job as per the contract, the BSNL, through the petitioner, had been discharging public functions. Hence, the contract or the impugned action could not be said to be a private contract between the parties simpliciter.
9. Prior to imposing the major penalty of termination, learned counsel submits, the respondents-Authorities ought to have given an opportunity to the petitioner to explain the delay, if occasioned, in executing the work.
10. In an order dated June 29, 2022 passed in a previous writ petition between the same parties, bearing WPA No.19654 of 2021, the petitioner specifically contended that no show-cause notice was issued to the petitioner, as such, there arose no question of the petitioner giving any reply. Although the said order went against the petitioner in respect of another contract, it is argued that the facts of the said case are distinct from the present since in the instant case, the petitioner gave replies to each and every show-cause notice issued by the respondents but those were never considered by the respondents at all.
11. Learned counsel for the petitioner places reliance on another order of a different co-ordinate Bench dated September 2, 2021 passed in WPA No.12367 of 2021, wherein a similar clause of a contract was under consideration, in support of his propositions.
12. Since none appears for the respondents when the matter is called on for hearing, although the respondents were represented through counsel previously, the matter is heard ex parte.
13. Upon a perusal of the relevant clauses of the contract between the parties, it is seen that Clause 3.6 (b) of the contract was satisfied in the present case inasmuch as the respondents served three notices in three consecutive months for alleged non-performance of the contract by the petitioner.
14. In the present case, three separate notices were given respectively in March, April and May, 2022, in consonance with Clause 3.6 (b).
15. Although Clause 3.6 (c) o
The discretion of the respondent-Authorities in terminating the contract based on the exigencies of the public work involved.
Contract termination must strictly follow the procedures outlined in the agreement, ensuring compliance with notice and opportunity to remedy deficiencies.
The judgment established the importance of strict adherence to contract clauses and the interpretation of notice requirements for termination, as well as clarified the applicability of alternative re....
The judgment emphasizes the importance of natural justice and fair procedure in quasi-judicial proceedings, highlighting the need for open-mindedness and a reasonable opportunity for the party to reb....
The grounds for termination must be properly communicated, and the petitioner's response must be considered before passing a termination order.
Administrative decisions must be based on communicated grounds and consider responses to show cause notices for fairness.
Debarment from government tenders requires issuance of a Show Cause Notice stating intended action, ensuring compliance with principles of natural justice.
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