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IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU
M.A. CHOWDHARY, J.
Prime Contractors in consortium with DSSG Infra Private Limited – Appellant
Versus
National Highways Authority of India – Respondent
WP(C) No. 2243 of 2023, CM No. 5216 of 2023
Decided on : 02-11-2023
The court referred to the Contract Agreement between the parties, which provided for termination of the contract for non-compliance with its provisions. The court also considered the clause on force majeure claims and the jurisdiction clause specifying that disputes shall be settled through arbitration or in the courts at Delhi.
Fact of the Case:
The petitioner, a consortium of contractors, entered into a contract with the respondent authority for user fee collection at toll plazas. The petitioner defaulted on remittances, and the respondent diverted FASTag collections to its own account. The petitioner claimed force majeure due to traffic diversion during a religious pilgrimage, but the claim was not decided. The respondent terminated the contract and debarked the petitioner from future bids without issuing a show-cause notice. The petitioner filed a writ petition challenging the termination and debarment.
Finding of the Court:
The court held that the termination of the contract and debarment without issuing a show-cause notice violated the principles of natural justice. The court also noted that the force majeure claim was not decided before the termination, and the outstanding amount had been paid by the petitioner. The court quashed the termination and debarment orders and restrained the respondent from issuing a fresh tender for the toll plazas.
Ratio Decidendi: The termination of a contract without issuing a show-cause notice violates the principles of natural justice. Force majeure claims must be decided before taking any action based on non-compliance with the contract. The court has jurisdiction to hear contractual disputes involving state instrumentalities.
Result: The termination and debarment orders are quashed. The respondent is restrained from issuing a fresh tender for the toll plazas. The parties are free to pursue claims against each other in accordance with the contract.
JUDGMENT :
1. The petitioner-Prime Contractors in consortium with DSSG Infra Private Limited (‘Petitioner-Agency’ for short), through the medium of this writ petition under Article 226 of the Constitution of India has prayed for the following reliefs/writs:
b. Issue a writ order, or direction in the nature of mandamus, directing the Respondents to expeditiously adjudicate the Force Majeure claims of the petitioner under the correct provisions of the Contract Agreement into Clause 25(b)(ii) of the Contract Agreement dated 27.02.2023 within a period of 07 days;
c. Issue a writ of mandamus or any other appropriate writ, order or direction thereby directing Respondents to forthwith withdraw the direction to the Petitioner to replenish the cash performance security in relation to the Contract Agreement dated 27.02.2023 for Mada & Nashri Fee Plaza;
d. Issue of mandamus or any other appropriate writ, order or direction thereby restraining the Respondents from invoking the cash performance security and bank guarantee provided by Petitioner in pursuance to the Contract Agreement for Mada Nashri Fee Plaza drawn on HDFC Bank bearing No.034GT02230540002 of Rs.2,35,05,000/- till force majeure claims of the petitioner is decided by respondent no.3;
e. Issue a writ of mandamus or any other appropriate writ, order or direction thereby declaring that the force majeure period shall continue with respect to the Mada Fee Plaza and Nashri Fee Plaza, till the average user free collection reaches 100% of the agreed remittance; and
f. Issue a writ order or direction in the nature of certiorari, thereby quashing impugned letter dated 25.07.2023 bearing no.NHAI/RO-Jammu/2010/11035/C-N/126 issued by the Respondent No.3 and the fresh tender bearing reference ID NHAI/13013/547/CO/23/24/EQ/Mada-Nashri FP dated 23.08.2023 as floated by the Respondents from issuing fresh tender for the appointment of user fee collection for the Mada Fee Plaza and Nashri Fee Plaza, for the period overlapping the petitioner contract period.”
2. Shorn of minutes details, the facts of the case, which goaded the petitioner-Agency to file this writ petition are that the petitioner-Agency, who is a consortium engaged and involved in several toll plaza collection contracts with the respondent-National Highways Authority of India (for short ‘the respondent-Authority’) in a successful bidding, got the contract awarded in its favour vide Contract Agreement dated 27.02.2023, for user fee collection of the Mada Fee Plaza & Nashri Fee Plaza situate on National Highway-44; that as per the directions of the respondent-Authority, the petitioner-Agency submitted a bank guarantee of Rs.2,35,05,000/- which was equivalent to 15 days remittance (Rs.15,66,999/- per day) with NHAI along with equivalent Cash Performance Security of Rs.2,35,05,000/- before signing of the Contract Agreement; that due to unavoidable and unforeseen circumstances, the contractor delayed the payment of remittances which entailed deduction of an equivalent amount from the cash performance security, along with penal interest, as per the contract agreement and petitioner-Agency was asked to replenish the same; that due to delayed remittances, the respondent-Authority also diverted the FASTag collection to its account; that due to various advisories and office orders from the administrati
Termination of a contract without issuing a show-cause notice violates the principles of natural justice. Force majeure claims must be decided before taking any action based on non-compliance with th....
The court reaffirmed that contractual disputes with an arbitration clause are not maintainable under Article 226 unless exceptional circumstances arise, emphasizing lawful forfeiture of security for ....
The main legal point established in the judgment is that in contractual matters, the court may not entertain a writ petition if there is a public law element, and the parties should resort to the con....
The main legal point established in the judgment is that contractual disputes between the State and private parties should be resolved in accordance with the terms of the contract and the laws relati....
Point of Law : Commercial Vehicles - Toll plazas/posts/barriers - Collection of Toll Tax – Whether rights of petitioner is violated - Conduct of parties is governed by the Contract Agreement and the ....
Parties to a contract must adhere to its terms despite unforeseen circumstances like force majeure, and disputes arising from such a contract should be resolved through contractual mechanisms, not ju....
A writ petition is not the appropriate remedy for disputes relating to contractual obligations. Such disputes should be resolved through civil suits.
Reimbursement of amount - Entitlement of - Grant of relief of this nature would virtually amount to a money decree. Petitioner is at liberty to take recourse to remedies available by raising such a c....
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