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2022 Supreme(Ker) 544

IN THE HIGH COURT OF KERALA AT ERNAKULAM
N. NAGARESH, J.
M/S. SERVOTECH POWER SYSTEMS LTD. – Petitioner
Versus
THE INDIAN OIL CORPORATION LIMITED – Respondent
W.P. (C) No. 17593 of 2021
Decided On : 05-01-2022

Advocates:
Advocate Appeared:
For the Petitioners: SAJITH KUMAR, VIVEK A.V., GODWIN JOSEPH, APARNA CHANDRAN, REMYA VARMA N.K.
For the Respondents: M. GOPIKRISHNAN NAMBIAR, K. JOHN MATHAI, JOSON MANAVALAN, KURYAN THOMAS, PAULOSE C. ABRAHAM, RAJA KANNAN.

Headnote:

Indian Oil Corporation Conciliation Rules, 2014 – Demanded demolition of certain civil works – Petitioner-Company, which has been a vendor for Indian Oil Corporation Limited (IOCL), is aggrieved by action of IOCL in including petitioner-Company in “Holiday List” thereby disabling petitioner from entering into any contract with IOCL – Held, According to petitioner, they have successfully completed works of the 1st respondent worth more than Crores across India – Petitioner has completed an identical work successfully in Kochi Division – Delay occurred in Trivandrum and Kozhikode Division and respondents have terminated those contracts – Respondents are not amenable to neither conciliation nor arbitration, over dispute – 1st respondent is an instrumentality of State – In circumstances, respondents ought to have taken a decision on Holiday Listing of petitioner-Company in a pragmatic manner and with due application of mind – Ext.P1 lacks both – Writ petition allowed.

JUDGMENT :

N. NAGARESH, J.

1. The petitioner-Company, which has been a vendor for Indian Oil Corporation Limited (IOCL), is aggrieved by the action of the IOCL in including the petitioner-Company in the “Holiday List” thereby disabling the petitioner from entering into any contract with the IOCL.

2. The petitioner has been a vendor of the 1st respondent-IOCL on Pan India basis, in its Refineries, Terminals, Bottling Plants and State Offices and Retail Outlets. The petitioner states that they have completed contracts worth more than Rs. 100 Crores Pan India, with the IOCL. The petitioner entered into Exts.P3 and P4 contracts dated 16.06.2018 and 15.10.2018 respectively, for the work “Replacement of Non-LED bulbs with LED lights on canopy and Yard lights and allied works at ROs under Trivandrum and Kozhikode Divisional Office of Kerala State.” The petitioner was given Ext.P5 Work Order dated 27.07.2018 and Ext.P6 Work Order dated 03.10.2018. An identical work was awarded to the petitioner in Kochi Divisional Office, which the petitioner has completed successfully.

3. The petitioner states that on getting Work Orders, the petitioner started the work with all its resources, but due to labour issues and heavy rains and floods, the work could not be proceeded with, as per the agreed schedule. To complicate the work further, the luminaries delivered were not in tune with the requirements in the site. The number of lights required as per the contract was not based on spectrum, blind spot, band width, etc. The issues were communicated to the respondents promptly. The petitioner, still, completed substantial work in Trivandrum Division. The respondents delayed payments alleging slow pace of work. This also affected the progress of work.

4. Nationwide Lockdown was imposed in March, 2020. Immediately on lifting the Lockdown, the petitioner sent Ext.P14 mail to Trivandrum RO giving status of the completed work and explaining the difficulty in carrying out further work including approvals. The Third Party Inspection (TPI) engaged by the respondents expressed satisfaction over the completed works. But, the respondents withheld payments unreasonably. The petitioner states that out of the Bills raised, an amount of Rs. 64,59,682/- for Kozhikode DO and Rs. 71,66,728/- for Trivandrum DO still remain unpaid.

5. On 08.02.2021, the respondents issued Ext.P17 notice to the petitioner terminating the contract with Trivandrum DO. The petitioner was not afforded an opportunity of hearing before termination of the contract. The termination occurred when the petitioner has been working on the project after lifting of lockdown restrictions. The petitioner therefore sent Ext.P18 communication dated 12.02.2021 requesting for a personal hearing. However, there was no reply to Ext.P18. On 13.04.2021, as per Ext.P19, the respondents terminated the work in respect of Kozhikode DO.

6. When the petitioner tried to resort to arbitration proceedings, the respondents took a stand, as per Ext.P20, that Clause 9 relating to Arbitration is deleted. The petitioner thereupon invoked conciliation remedy under Indian Oil Corporation Conciliation Rules, 2014. By Ext.P21 letter dated 11.08.2021, the respondents informed the petitioner that since the work remains incomplete, Conciliation is impermissible. Meanwhile, the respondents issued Ext.P22 show-cause notice dated 30.06.2021 proposing Holiday Listing of petitioner-Company. The petitioner gave Ext.P23 reply dated 12.07.2021. The respondents, however, placed the petitioner-Company in Holiday List for a period of one year, as per Ext.P1 order.

7. The petitioner states that Holiday Listing of the petitioner-Company is without even affording an opportunity of personal hearing and is in violation of conditions stipulated in Ext.P2. The petitioner has successfully completed works of the IOCL, for around Rs. 100 Crores throughout India. The delay in completion of the projects in Kozhikode and Trivandrum Divisions, were for no fault of

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