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2024 Supreme(Jhk) 152

IN THE HIGH COURT OF JHARKHAND AT RANCHI
HON'BLE MR. JUSTICE RONGON MUKHOPADHYAY, HON'BLE MR. JUSTICE DEEPAK ROSHAN, JJ.
M/s Aditya and Rashmi Construction Pvt. Ltd. - Petitioner
Versus
The State of Jharkhand, through the Secretary, Road Construction Department, Government of Jharkhand & Ors. - Respondents
W.P.(C) No. 2924 of 2014
Decided On : 27-02-2024

Advocates Appeared:
For the Petitioner: Mr. Siddharth Singh, Mr. Raunak Sahay, Ms. Ahana Bhardwaj.
For the Respondents: Mr. Nehru Mahto, A.C. to G.P.-IV.

IMPORTANT POINT
A contract termination must adhere to principles of natural justice, including the right to a personal hearing, and disputes regarding breaches must be adjudicated by an independent forum rather than unilaterally by one party.

Headnote:

CONTRACT TERMINATION - Writ Application for Quashing Termination of Contract - Bihar and Orissa Public Demand Recovery Act, 1913; SBD Agreement Clause 49 - The court discussed the principles of natural justice, emphasizing the necessity of providing an opportunity for a personal hearing before contract termination. It highlighted that the failure to acquire the entire land necessary for construction was a significant factor in the delay, and the unilateral termination of the contract without proper adjudication was deemed arbitrary. The court quashed the termination order and the subsequent recovery notice, reinforcing the need for an independent adjudicatory process in disputes regarding contract breaches.

Fact of the Case:

The petitioner, a Private Limited Company, was awarded a contract for constructing a bridge but faced delays due to the non-acquisition of necessary land by the authorities. After requesting closure of the contract due to these delays, the authorities terminated the contract without a personal hearing and sought to recover liquidated damages.

Finding of the Court:

The court found that the termination of the contract was arbitrary as it violated principles of natural justice by not providing a personal hearing. It also determined that the delays were primarily due to the authorities' failure to acquire the necessary land, not the petitioner's actions.

Issues: Whether the termination of the contract was justified given the circumstances surrounding the delays and whether the petitioner was afforded due process before termination.

Ratio Decidendi: The court held that a party cannot unilaterally determine a breach of contract without an independent adjudication. The failure to provide a personal hearing and the lack of complete land acquisition were critical in deeming the termination invalid.

Final Decision: The court quashed the termination order and the recovery notice, allowing the writ application.

JUDGMENT :

Rongon Mukhopadhyay, J.

Heard Mr. Siddharth Singh, learned counsel for the petitioner and Mr. Nehru Mahto, learned A.C. to G.P.-IV appearing for the respondents.

2. In this writ application, the petitioner has prayed for quashing the order as contained in Letter No. 574/Sahibganj dated 17.05.2014 issued under the signature of the respondent no. 4, whereby and whereunder the agreement of the petitioner in Agreement No. 07/SBD/2012-13 has been cancelled without any notice or any opportunity of hearing to the petitioner. The petitioner has further prayed for quashing of the Office Order No. 1604 dated 29.12.2014 issued by the respondent no. 4 wherein an amount of Rs.1,04,33,493/- in lieu of termination of the work contract has been sought to be recovered from the petitioner.

3. An application for amendment was preferred by the petitioner being I.A. No. 5098 of 2023, on account of certain developments which had occurred during the pendency of this writ application relating to initiation of a certificate proceeding and the said amendment application was allowed vide order dated 13.07.2023. On account of the amendment so allowed the petitioner has prayed for the following reliefs:

    (a) For issuance of an appropriate writ(s), order(s), direction(s) or a writ in the nature of a writ of Certiorari quashing the order contained in Letter No. 574 / Sahibganj dated 17.05.2014 (Annexure-12) issued under the seal and signature of the Executive Engineer, Road Construction Dept., Road Division, Sahibganj whereby and whereunder, the contract of the petitioner comprised in Agreement No. 07/ (SBD)/ 2012-13 has been terminated, without giving any notice or providing any opportunity of hearing to the petitioner, on the ground of fundamental breach, negligence and slow progress whereas, on the contrary, a portion of the land on which construction was to be carried out admittedly, was never acquired by the respondent authorities and handed over to the petitioner during the subsistence of the contract;

AND/OR

(b) For a direction upon the respondents to consider the petitioner’s contract for closure since the same now has become infructuous due to the efflux of time;

AND/OR

(c) During pendency of this writ petition, further proceedings or any coercive step in pursuance of the contract be kept in abeyance;

AND/OR

(d) Pass such other writ(s), order(s), direction(s) as Your Lordship may deem fit and proper.

AND/OR

(e) For issuance of appropriate writ(s), order(s) or direction(s) or a writ in the nature of a writ of Certiorari quashing the Office Order No. 1604/Sahibganj dated 29.12.2014 (Annexure 13) issued under the seal and signature of the Executive Engineer, Road Construction Department, Road Division, Sahebganj, whereby and whereunder a demand notice for recovery of an amount of Rs.1,04,33,493/- in lieu of termination of the work contract on the ground of fundamental breach, negligence and slow progress;

AND/OR

(f) For staying the operation of the Office Order No. 1604/Sahebganj dated 29.12.2014 for recovery of an amount of Rs.1,04,33,493/- from the petitioner company during the pendency of the writ application.

AND/OR

(g) For issuance of an appropriate writ or a writ in the nature of Certiorari quashing the notice dated 13.04.2021 issued by the District Certificate Officer, Sahibganj under Section 7 of Bihar and Orissa Public Demand Recovery Act, 1913 (now Jharkhand), whereby and whereunder the petitioner has been summoned to appear before the court and has been directed to give clarification regarding deposit of due amount, in the Certificate Case No. 4/2015-2016, for the recovery of Rs.1,04,33,493/- (One Crore Four Lakhs Thirty-three thousand four hundred ninety-three only).

4. Briefly stated the facts reveal that the petitioner is a Private Limited Company which had participated in a tender process consequent to a notice inviting tender floated by the respondent-authorities for construction of a High-Level Bridge over Mayurkola River at 17 Km. of Pakur-B

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