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2010 Supreme(J&K) 625

HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
Hasnain Massodi, J.
Vethesta Constructions--Good Luck Constructions -Appellant
Versus
State Of J&K & Ors. -Resopndent
OWP No. 894-2010, CMP No. 1209-2010
Decided On : 16-12-2010

Advocates Appeared:
G.Q. Bhat, Neeru Goswami.

The main legal point established in the judgment is that the termination of the construction contract did not involve a 'public law element' and fell within the realm of contract law, emphasizing the need for the petitioner to resort to the Dispute Redressal System agreed upon in the contract.

Headnote:

Contract Termination - Construction Contract - Para 52, J&K Arbitration and Conciliation Act 1997 - The court discussed the termination of the construction contract under Para 52 of the agreement and highlighted the absence of a 'public law element' in the decision, emphasizing the need to resort to the Dispute Redressal System mutually agreed upon in the contract.

Fact of the Case:

M/s Vethestha Constructions and M/s Good Luck Constructions, a joint venture, entered into a construction contract for road upgradation. The contract was terminated by respondent No.3, leading to the petitioner filing a petition seeking various reliefs.

Finding of the Court:

The court found that the termination of the contract did not involve a 'public law element' and fell within the realm of contract law. It emphasized the need for the petitioner to resort to the Dispute Redressal System agreed upon in the contract.

Issues: The issues revolved around the delay in execution of the project, alleged lapses by both parties, and the termination of the contract.

Ratio Decidendi: The court held that the termination of the contract did not have a 'public law element' and fell within the realm of contract law. It emphasized the need for the petitioner to resort to the Dispute Redressal System agreed upon in the contract.

Final Decision: The writ petition was dismissed, and the court emphasized that the appropriate forum for adjudicating the disputes was the one provided under the agreement entered into by the parties or any other civil remedies provided to the parties under law.

1. Heard. Admit.

2. The petition, having regard to controversy involved, is with the consent of learned counsel for the parties taken up for final disposal, at the initial stage.

M/s Vethestha Constructions and M/s Good Luck Constructions -- two construction companies, as a joint venture, responded to the Notice inviting tenders, issued by respondent No.3 on 12.09.2008, for upgradation of road from Achabal Soumbran to Chatpal. The joint venture/petitioner herein bagged the contract for upgradation of the aforementioned road at a cost of Rs.18,86,81,944.00 (Rupees eighteen crores, eighty six lacs, eighty one thousand, nine hundred and forty four only) and letter of acceptance No.CE/PMGSY/J&K/Sgr/667-83 dated 23rd January 2009 was duly delivered to the petitioner. The petitioner was required to furnish performance security in the form of Bank Guarantee/Fixed Deposit Receipt for an amount of Rs.47.17 Lacs, within a period of ten days. The petitioner duly furnished the Performance Bank Guarantee - BG No.04/2009 dated 29th May 2009 from J&K Bank Limited, whereafter respondent No.3 vide No.CE/PMGSY/J&K/S/1499-1503 dated 30th May 2009, asked petitioner to proceed with the work in accordance with the contract documents. The parties executed a formal agreement on 30th May 2009. The Contract Data, Special Conditions of Contract, General Conditions of Contract, and Specifications, Drawing etc., were agreed to be read and construed as part of agreement.

3. The petitioner, vide No.VCC/8111/ R-23/1585-86 dated 11th June 2009, made a request to respondent No.5 for handing over of the site, free from any interference of local inhabitants, Revenue and Forest department etc. The respondent No.6, in turn vide No.AEE/ PMGSY-Breng(L)104-05 dated 24th June 2009, informed the petitioner that no steps were taken by the petitioner to commence work and that the petitioner had not even established office/field lab at the site, mobilized resources and submitted the works programme. The upgradation work as per work plan, later submitted by the petitioner as also the terms of agreement, was to commence in July 2009, to be completed by December 2010. The work plan submitted by the petitioner, gave details of dates of commencement of different stages of work and the date of their completion. To illustrate survey/investigation /site clearance as also earth work excavation/ filling was to commence in July 2009, to be completed by December 2009. Similarly, construction of slab decked culverts, H.P. culverts, vented cause way, laying of 750 mm pipes, construction of cement concrete drain etc., was to be completed by December 2009. The petitioner appears not to have been able to adhere to the work plan submitted by him and approved/accepted by the respondent No.5, vide No.EE/PMGSY/Ang/528-31 dated 15th July 2009.

4. The petitioner, instead of making any progress as regards upgradation of road on ground, exchanged a series of communications/letters with the respondents. The respondent No.5 anguished that the petitioner was not showing any interest in execution of the allotted work and the petitioner complaining that site, free from encumbrances was not being delivered to the petitioner, so as to enable the petitioner to commence work. In the middle of the allegations counter allegations, benchmarks agreed by the parties were not followed and an ambitious project started with great enthusiasm to provide better road connectivity to thousands of people of an underdeveloped area, has failed to take off. It appears that after, repeated requests and reminders from respondents, allegedly failed to prompt the petitioner to speed up execution of contract work and even a warning that failure of the petitioner to abide by the revised work plan submitted by the petitioner, may entail termination of contract, went unnoticed, the respondent No.3 vide No.CE/PMGSY/1084-88 dated 28th May 2010 terminated the petitioner's contract. The respondent 3 seemingly took action pursuant to Clau























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