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2021 Supreme(Cal) 564
IN THE HIGH COURT AT CALCUTTA
SABYASACHI BHATTACHARYYA, J.
Sahakar Global Limited and another – Appellant
Versus
The State of West Bengal and others – Respondents
WPA No. 23444 of 2019 With WPA No.221 of 2020
Decided on : 11-06-2021
Advocate Appeared:
For the Appellant : Mr. Jishnu Saha, Mr. Souritro Ganguly, Mr. Sandip Agarwal, Mr. Tanay Agarwal, Mr. S. Bhinsaria.
For the Respondent: Mr. Kishore Dutta, Mr. Md. T.M. Siddiqui, Mr. Srikanta Paul.
The interpretation of contractual terms, the doctrine of frustration, the principles of natural justice and proportionality, and the consequences of breach of contract.
Headnote:
CONTRACT - TOLL COLLECTION - RESTRICTIONS ON VEHICULAR TRAFFIC - TERMINATION OF CONTRACT - SUSPENSION AND DEBARMENT OF CONTRACTOR - VALIDITY - INTERPRETATION OF CONTRACT - DOCTRINE OF FRUSTRATION - NATURAL JUSTICE - PROPORTIONALITY - BLACKLISTING.
Fact of the Case:
The petitioner was awarded a contract for toll collection on a bridge. Subsequently, severe restrictions were imposed on vehicular traffic movement over the bridge due to its distressed condition. The petitioner continued to pay the fortnightly amounts while seeking exemption from depositing the full amount of the agreed toll charges. The contract was terminated and the petitioner was debarred from participating in any procurement process of the Government of West Bengal for a period of two years.
Finding of the Court:
1. The restrictions imposed on vehicular traffic movement were not a full closure of traffic, which would have entitled the petitioner to remission/partial remission of the bid amount. 2. The execution of a lease deed was an essential condition of the contract and the petitioner's failure to execute the same was a valid ground for suspension and debarment. 3. The orders of suspension and debarment were passed after providing sufficient prior notice and full scope of hearing to the petitioner and were based on proper, intelligible, and adequate reasons. 4. The petitioner's failure to comply with the terms of the contract was a breach of contract and the respondents were justified in terminating the contract and debarring the petitioner from participating in future tenders.
Issues: 1. Whether the restrictions imposed on vehicular traffic movement entitled the petitioner to remission/partial remission of the bid amount? 2. Whether the execution of a lease deed was an essential condition of the contract? 3. Whether the orders of suspension and debarment were passed in violation of the principles of natural justice and proportionality? 4. Whether the petitioner's failure to comply with the terms of the contract was a breach of contract?
Ratio Decidendi: 1. The expression "full closure of traffic" in Clause 5 of the Special Terms & Conditions under Section C of the NIT should be interpreted strictly and does not include partial restriction of traffic, even of a permanent nature. 2. The execution of a lease deed is an essential condition of a contract for toll collection, as evidenced by Clauses 13 and 20 of the NIT and the proforma of the lease deed provided in Section D of the NIT. 3. The orders of suspension and debarment were passed after providing sufficient prior notice and full scope of hearing to the petitioner and were based on proper, intelligible, and adequate reasons. Therefore, there was no violation of the principles of natural justice and proportionality. 4. The petitioner's failure to comply with the terms of the contract, including the payment of the bid amount and the execution of the lease deed, was a breach of contract.
Final Decision: The writ petitions challenging the orders of suspension and debarment were dismissed.
JUDGMENT :
Sabyasachi Bhattacharyya, J.
1. The respondent-authorities floated a tender for toll collection on the bridge over the river Ajay. The petitioners’ bid of Rs.5,13,000/-per day was accepted, whereupon a Letter of Acceptance (LoA) was issued to the petitioners on November 27, 2017, followed by a formal work order dated November 29, 2017. The work order was issued for a period of 730 days from November 30, 2017.
2. It was mentioned in the tender notice that toll charges were payable by the following four categories of vehicles:
(i) Light Motor Vehicles (LMV) including motor car, ‘matador’ and ‘tempo’;
(ii) Medium Commercial Vehicle (MCV) including bus, truck, lorry, mini bus;
(iii) Heavy Construction Machinery (HCM) or Earth Moving Equipment (EMQ) or multi-axel vehicle with three to six axles; and
(iv) Oversized vehicles (seven or more axles).
3. The respective rates of toll charges for the above categories were also specified in Part II of the tender notice.
4. Pursuant to the terms of the work order, the petitioner deposited a sum of Rs.74,89,000/-as contract of 73 days’ bid money in advance.
5. Clause 22 of the Special Terms and Conditions of the tender (STC) required the successful bidder to deposit 15 days of the offer bid value after every 15 days of toll collection. Such payment was made by the petitioner without default till October 25, 2018.
6. However, the tender also provided for execution of a lease deed by the bidder/lessee as per terms and conditions of the tender. Such lease deed was never executed.
7. Severe restrictions on vehicular traffic movement over the Ajay bridge were imposed subsequently by the Public Works Department (PWD), as evidenced by a letter dated September 17, 2018 written by the Principal Secretary of the Government of West Bengal to the Director General of Police, which, inter alia, recorded that the authorities had requested to restrict commercial traffic over the bridge and restriction of the speed of other light vehicles up to 10 kilometre per hour.
8. The bridge was inspected by engineers of the PWD, during which the Engineer-in-Chief, as well as the author of the said letter were allegedly present. Due to the bridge being in a “very distressed” condition requiring replacement, the repair work was being taken up by the PWD and a new bridge was being constructed by the side of the existent bridge, which was supposed to be completed by the end of 2019.
9. The letter further stipulated that all commercial vehicles may be stopped from plying on the bridge. However, if not possible due to existing lack of connectivity, the following were advised:
(a) No overloaded vehicle should be allowed on the bridge;
(b) Vehicles should be allowed alternatively from either side of the bridge, that is, at any point of time only one direction of traffic should be allowed;
(c) There should not be more than one heavy vehicle in one span at a time, that is, there should be a gap of 15 metres between two successive heavy vehicles;
(d) Speed of vehicles should be restricted to 10 km/hour.
10. While the above restrictions were still in force, the respondents terminated the petitioners’ contract by a letter dated August 26, 2019.
11. Pursuant thereto, an order of debarment of the petitioners was issued by the respondent-authorities on December 26, 2019, against which WPA No.221 of 2020 has been preferred.
12. Such debarment of the petitioners from participating in any procurement bidding process of the Government of West Bengal for a period of two years with effect from November 19, 2019, was issued as per sub-clause 6.1 under Clause 17(c) of the tender notice.
13. It is relevant to mention that, preceding the debarment, the respondents passed an order dated November 7, 2017 suspending the petitioner from participating in any procurement process of the Government of West Bengal for a period of six months with effect from October 24, 2019 as per sub-clause 4.1.3 under Clause 17(c) of the tender notice, against which the petiti
