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2020 Supreme(Gau) 560
GAUHATI HIGH COURT
Achintya Malla Bujor Barua, J.
Devi Engineering And Construction Pvt Ltd., Lotus Expendito Road No 1, Banjara Hills, Hyderabad - Appellant
Versus
Oil India Ltd. & Anr. - Respondent
Writ Petition (Civil) No. 3518 of 2020
Decided On : 04-09-2020
B.D. Dasl, Advocate, S.N. Sarma, Advocate
The court balanced the impact of Force Majeure events with the urgency of completing the contract work for public interest.
Headnote:
Force Majeure - Contract Termination - Manual for Procurement of Goods 2017 - [SUMMARY OF ACTS AND SECTIONS REFERENCED: Force Majeure Clause, Contract Termination Clause]
Fact of the Case:
The petitioner was awarded a contract for seismic data acquisition but failed to mobilize materials within the prescribed period due to the Covid19 pandemic. The respondent terminated the contract, leading to the writ petition.
Finding of the Court:
The court found that the Covid19 pandemic did hinder material transportation but emphasized the urgency of completing the work for public interest. The court directed the petitioner to transport the materials within 15 days and obtain an explosive license with cooperation from the respondent.
Issues: Contract termination, Force Majeure invocation, material transportation, and explosive license acquisition.
Ratio Decidendi: The court balanced the impact of the Covid19 pandemic with the urgency of completing the contract work, providing a specific timeline for material transportation and directing cooperation for explosive license acquisition.
Final Decision: The writ petition was disposed of, requiring the petitioner to transport materials within 15 days and obtain an explosive license with cooperation from the respondent, with a warning of appropriate action if the requirements were not met.
JUDGMENT
Achintya Malla Bujor Barua, J. - Heard Mr. BD Das, learned senior counsel for the petitioner. Also heard Mr. SN Sarma, learned senior counsel for the respondent Oil India Ltd (for short, OIL).
2. Having participated in the tender process, the petitioner was awarded a contract No.6113426/CDG1116P20/FB/19 for ''Acquisition of 200 LKM 2-D and 100 SQKM 3D seismic data in West Mechaki (AA-ONHP-2017/12) & 125 SQKM 3-D seismic data in Namrup Borhat (AA-ONHP2017/20)'', which falls within the States of Arunachal Pradesh and Assam. The total estimated contract cost is Rs.110,60,32,240/- inclusive of all taxes and dues including GST but excluding the basic custom duty.
3. As per the letter of award dated 04.10.2019, the duration of the contract is provided to be 14 operating months reckoning from the date of commencement of the operation. The petitioner makes a submission that the 14 operating months would mean that the work is required to be completed within January 2022.
4. Further the letter of award dated 04.10.2019 provides that the mobilization period for man and material would be 90 days from the date of issuance of the letter of award. A provision was also put in place that in view of the urgency in the requirement of services, the contractor was requested to complete the mobilization at the earliest. A reading of the letter of award would give an indication that there is an urgency on the part of the respondent company to have the work completed at the earliest and Mr. SN Sarma, learned senior counsel appearing for the respondent company states that the completion of the work is related to some other requirement of law that the whole of the work of which the work involved in the letter of award is a part, would have to be completed within the year 2022.
5. From the said point of view, we cannot be oblivious of the fact that this contract is urgent in nature for public interest. The petitioner is aggrieved by the letter of termination dated 14.08.2020 issued by the respondent company. Clause 2.0 of the letter of termination provides that the contractor has failed to perform as per the contract terms and even after giving commitment and repeated follow-up, contractor has failed to mobilize the man and materials within the prescribed period in terms of Clause 2.2 of GCC of the Contract and the failure to do so amounts to nonperformance/unsatisfactory performance. The respondent company also relies upon the clause of termination entered between the parities which is extracted as below:
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"Termination for Unsatisfactory Performance: If the company considers that, the performance of the contractor is unsatisfactory, or not upto the expected standard, the company shall notify the Contractor in writing and specify in details the cause of the dissatisfaction. The Company shall have the option to terminate the Contract by giving 15 days notice in writing to the Contractor, if Contractor fails to comply with the requisitions contained in the said written notice issued by the Company."
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6. The termination clause clearly provides that if the performance of the contractor is unsatisfactory or not upto the expected standard, the company shall give a notice to terminate the contractor within 15 days in writing. Accordingly, by the notice of termination dated 14.08.2020, the petitioner contractor was given a period of 15 days to complete the mobilization.
7. Being aggrieved by the letter of termination dated 14.08.2020, this writ petition has been preferred.
8. Mr. BD Das, learned senior counsel for the petitioner contends that the materials which are relevant for executing the contract has been mobilized by the petitioner contractor from the Republic of China as well as from the Republic of France and they are at present lying in the port at Kolkata. But because of the prevailing Covid19 pandemic situation, the petitioner is unable to transport the mobilized materials to the place of work in Assam-Arunachal Pradesh border. In the c
