Termination of contract requires explicit grounds per the contract’s terms and conditions; remedies under arbitration clause must be exhausted before court intervention.

JUDGMENT :

Ziyad Rahman A.A., J.

The petitioner is a joint venture, which was entrusted with a work for the 2nd respondent, and the 1st respondent is the implementing agency. The agreement was executed between the petitioner and the 1st respondent on 22.08.2022. The scope of the work, as per the agreement, is the refurbishment of old pre-existing sheds of the 2nd respondent Port Authority. Based on the agreement executed between the parties and in fulfilment of the terms and conditions therein, the petitioner had started the work, and according to it, 70% of the work has been completed.

2. According to the petitioner, during the course of execution of the work, certain changes in the nature of the work became necessitated, which were to the effect that, instead of refurbishment, certain reconstructions were to be carried out. According to the petitioner, the work to be carried out falls within the area in which the sanction under the Regulations of Coastal Regulation Zone (CRZ) is required. Although, the 2nd respondent had already obtained a sanction from the authority under CRZ regulations, for the work originally provided to the petitioner, which is the refurbishment of certain buildings, for the revised work that amounts to reconstruction, no permission under the CRZ was obtained. As the petitioner apprehended that, the proceeding with the construction without such permission, may expose them to legal proceedings by the authorities of CRZ, Ext.P10 communication was issued by the petitioner to the 1st respondent, highlighting this aspect, and requiring them to indemnify the petitioner.

3. In response to Ext.P10, Ext.P11 was issued by the 1st respondent wherein, it is made clear that, as far as issues connected with the CRZ applications and the approvals are concerned, they do not fall under the purview of the contractor and hence, the petitioner has to execute the said work as per the contract entered between the parties.

4. Subsequently, Ext.P15 show cause notice was issued by the 1^st respondent on 21.11.2025 in which, the petitioner was required to show cause within 10 days, why an action under clause 3 (a) and (c) in the General Conditions of the Contract shall not be taken against the petitioner, on account of breach of contract. In the said notice, the petitioner was also required to furnish the reasons for the delay in implementation of the project and was also required to submit an action plan to complete the project within the stipulated time, to the satisfaction of the 1st respondent.

5. Ext.P16 was issued by the petitioner in response to Ext.P15 show cause notice, wherein, the allegations are denied and also highlighted various reasons, which, according to the petitioner, caused delay in continuing the project. This communication was issued on 01.12.2025. On the same day, the petitioner issued Ext.P14 notice invoking the clause 26 in the agreement delaing with force majeure. This notice was issued by the petitioner, due to the reason that, according to the petitioner, certain events which qualify to be termed as force majeure as defined under clause 26.4. (p) of the agreement has occurred and thus, the petitioner has a duty to report, as contemplated under Clause 26.5. In response to Ext.P1, Ext.P17 was issued by the 1^st respondent to the petitioner, requesting the petitioner to vacate labourers from labour hutments within three days and to close all labour facilities, as the petitioner had temporarily suspended the subject work with effect from 30.11.2025 due to CRZ link approval and no works are progressing at the site.

6. Aforesaid notice was followed by Ext.P22 order of termination, wherein,