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IN THE HIGH COURT OF GAUHATI, ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH
MANASH RANJAN PATHAK, J.
M/S SIMPLEX INFRASTRUCTURE LIMITED – Petitioner
Versus
NATIONAL HIGHWAY AUTHORITY OF INDIA – Respondent
WP (C) No. 5957 of 2021
Decided On : 19-01-2022
CONTRACTUAL DISPUTE - SUB-CONTRACTOR PAYMENT CLAIM - Clause 4.1, Clause 59.1, Clause 59.5 of the Contract Agreement; Section 31(1) of the Insolvency and Bankruptcy Code, 2016 - The court analyzed the contractual obligations under the agreement between the NHAI and the main contractor, emphasizing that the NHAI's role was limited to approving sub-contractors and that direct payments to sub-contractors were contingent upon the main contractor's disclosures. The court interpreted Clause 59.5 as applicable only to nominated sub-contractors, which did not include the petitioner. The court concluded that the petitioner’s claims were barred by limitation and the provisions of the Insolvency and Bankruptcy Code, as the petitioner failed to pursue claims through the appropriate channels.
Fact of the Case:
The petitioner, a sub-contractor, completed work on a highway project but was not paid by the main contractor, respondent No. 5. The petitioner sought direct payment from the NHAI, citing contractual provisions that allowed for such payments if the main contractor failed to pay. The NHAI, however, stated that it had settled all disputes with the main contractor and that any payment issues were between the petitioner and the main contractor.
Finding of the Court:
The court found that the petitioner’s claims were based on disputed facts regarding payment and contractual obligations. It ruled that the NHAI was not liable to pay the petitioner directly as the contractual provisions did not support such a claim. The court emphasized that the matter involved complex factual disputes that were not suitable for resolution under Article 226 of the Constitution.
Issues: Whether the petitioner, as a sub-contractor, was entitled to direct payment from the NHAI under the contract provisions, and whether the writ petition was maintainable given the nature of the disputes involved.
Ratio Decidendi: The court held that disputes involving contractual obligations and payment claims should be resolved through civil proceedings rather than through a writ petition. It reiterated that the High Court should not entertain petitions involving complicated questions of fact that require thorough evidence.
Final Decision: The writ petition was dismissed as not maintainable, and the interim order preventing the NHAI from releasing funds to the main contractor was vacated.
JUDGMENT :
MANASH RANJAN PATHAK, J.
1. Heard Mr. G.N. Sahewalla, learned Senior Counsel assisted by Mr. D. Senapati, learned counsel for the petitioner and Mr. C. Baruah, learned counsel, National Highway Authority of India for the respondent Nos. 1 to 4. Also heard Mr. D. Das, learned Senior Counsel assisted by Mr. G. Khandelia, learned counsel for the respondent No. 5.
2. The petitioner company is engaged in the business of executing work contract for Public Sector Undertakings and Government as well as Semi Government establishments. It is stated that it has developed adequate infrastructure, necessary technical know-how, technology resources equipments, materials etc., having fully trained, efficient capable personnel so as to execute construction works on contractual basis.
3. In respect of the project of “Widening and strengthening of the existing National Highway from 2 (two) lane to 4 (four) lane from Km. 183.000 to Km 163.895 of Sonapur to Guwahati Section of National Highway No. 37 in Assam on East-West Corridor under Phase-II programme of NHDP (National Highway Development Project) Package No. EW-II (AS-3)” (hereinafter referred to as the said Project), the respondents in the National Highway Authority of India (NHAI, in short) allotted the said project to the respondent No. 5 (Telecommunications Consultants India Limited and MBL Infrastructures Limited, in short, TCIL-MBL (JV) a Joint Venture through an Open Competitive Bidding Process and in respect of the award of work of the said project, an agreement was executed between the NHAI authorities and the respondent No. 5 on 03.06.2005.
4. Prior to the Award relating to the work of the said Project in favour of the respondent No. 5 by the NHAI authorities, a Joint Venture Agreement was executed on 27.05.2005 between M/s. Telecommunications Consultants India Limited (in short, TCIL) and M/s. Maheswari Brothers Limited Infrastructures Limited, the respondent No. 6 (in short MBLIL), where the MBLIL was the lead partner of the respondent No. 5 with 51% share in the said Joint Venture and the balance 49% share of the said Joint Venture (respondent No. 5) was with M/s. Telecommunications Consultants India Limited (in short, TCIL).
5. As per the RND (Record Notes of Discussion) and discussion had by the petitioner with the respondent No. 6 on 07.04.2007, the said respondent No. 6 vide Reference No. MIL/77 dated 26.04.2007 issued a Work Order to the petitioner for execution of Cross Drainage Work, Bridges, Underpass, Flyovers etc. relating to the said Project with certain terms and conditions and the petitioner by its communication dated 24.05.2007 accepted the said Work Order of the respondent No. 6 and submitted its structure wise work programme before the respondent No. 5. The respondents in the NHAI vide letter No. NHAI/11015/AS-03/4/2005/EW-1/650 dated 23.01.2009 gave its approval to the proposal of the respondent No. 5 M/s. TCIL-MBL (JV) to appoint the petitioner as Sub-Contractor for execution of parts of the work with regard to the said Project.
6. Petitioner stated that on the basis of the permission accorded by the authorities concerned in the NHAI and the Work Order allotted to it vide Reference No. MIL/77 dated 26.04.2007 (by respondent No. 6), noted above, the petitioner as Sub-Contractor on 31.12.2011 finally completed the work allotted to it with regard to the said Project and handed over the worksite to the respondent No. 5 and submitted its final bill, which the respondent No. 5 is yet to pay to the petitioner.
7. The petitioner through its reliable source came to know that the NHAI authorities shall disburse an amount of Rs.10,00,00,000/-in favour of the respondent No. 5 and that it is the only amount due to the respondent No. 5 by the NHAI authorities for the said Project.
8. Petitioner stated that if the said amount of Rs. 10,00,00,000/-is disbursed by the NHAI authorities to the respondent No. 5 as proposed, the petitioner shall suffer grave prejudice and shall b
Section 16 lays down that even interest is payable on amount entitled to by a unit.
The significance of admitted liabilities, conflicting stands, and serious disputed questions of fact in contractual matters, and the discretion of the court in exercising jurisdiction.
Writ jurisdiction under Article 226 not for complex contractual disputes requiring factual adjudication of performance, consents and payments; relegate to appropriate forums.
The court highlighted the importance of the arbitration clause in the contract agreement and the principles laid down by the Supreme Court regarding the maintainability of writ petitions in contractu....
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