HIGH COURT OF JUDICATURE AT MADRAS
T.S. SIVAGNANAM, J.
M/s. Riththika Construction, Kurinjipadi Taluk, Cuddalore – Appellant
Versus
The Director/Power, Neyveli Lignite Corporation Ltd., Neyveli & Others – Respondent
W.P.Nos. 10622, 10660 & 13160 of 2014
Decided On : 23-03-2015
Contractor - Contract Termination - Arbitration Clause - [Clause 19, Clause 28, Arbitration and Conciliation Act, 1996] - The court considered the termination of a contract awarded to a partnership firm, which was dissolved and became a proprietary concern. The court analyzed the relevant clauses of the contract agreement, particularly Clause 19 and Clause 28, and the Arbitration clause. The court held that the dissolution of the partnership firm and its reconstitution as a proprietorship did not satisfy the requirements of Clause 19, and the dispute fell within the scope of the Arbitration clause.
Fact of the Case:
The petitioner, a contractor, sought relief against the termination of a contract awarded to a partnership firm, which was dissolved and became a proprietary concern. The petitioner contended that the termination was illegal and pre-determined.
Finding of the Court:
The court found that the termination was valid as the dissolution of the partnership firm and its reconstitution as a proprietorship did not satisfy the contract requirements. The court also held that the dispute fell within the scope of the Arbitration clause.
Issues: The issues involved the validity of the contract termination, the applicability of contract clauses, and the availability of the Writ Petition as a remedy.
Ratio Decidendi: The dissolution of the partnership firm and its reconstitution as a proprietorship did not satisfy the contract requirements, and the dispute fell within the scope of the Arbitration clause, making the Writ Petition not maintainable.
Final Decision: The Writ Petition was dismissed, and the petitioner was advised to resort to Arbitration as per the contract. The other related Writ Petitions were closed, with the option to raise factual contentions before the Arbitrator.
1. The petitioner in these Writ Petitions is a contractor, who had been awarded the work of “Up keep of main building, service building and plant and non plant buildings in Thermal Power Station-I Expansion of the Neyveli Lignite Corporation Limited (NLC)” (hereinafter referred to as the “respondent corporation”).
2. In W.P.No.10622 of 2014, the petitioner has sought for issuance of a Writ of Mandamus to direct the Chief Vigilance Officer of the respondent Corporation to take action against Mr.Sankaran, Deputy General Manager (Civil), of the respondent Corporation for alleged violations by considering his representation, dated 28.11.2013.
3. In W.P.No.10660 of 2014, the petitioner seeks for a direction to the respondent Corporation not to insist the special condition of minimum man power requirement for the contract work or alternatively direct the respondent Corporation to increase the tender value proportionately as per the condition in the contract.
4. In W.P.No.13160 of 2014, the petitioner has challenged the order dated 29.04.2014, and to quash the same and to allow the petitioner to continue the contract work. By the said impugned order, the petitioner was informed that since the partnership firm M/s.Riththika Construction ceased to exist the work allotted to the petitioner under the contract agreement, dated 27.09.2013, cannot be continued. As by virtue of the impugned order, the petitioner has not been permitted to continue the work, W.P.No.13160 of 2014, is taken up first for consideration and the result of the other two Writ Petitions would depend upon W.P.No.13160 of 2014. The learned counsel appearing for the petitioner fairly concedes to the said position and accordingly W.P.No.13160 of 2014, is taken up for consideration.
5. The relevant facts leading to the filing of the Writ Petition are that the petitioner was awarded the said contract and an agreement was entered into on 27.09.2013. The Petition states that they have been carrying on the contract work without any complaint or remarks. The petitioner further states that the respondent Corporation was insisting the petitioner to engage the workman of their choice, as a result of which, difference of opinion arose between the petitioner and the officials of the respondent Corporation. In this regard, there are certain averments and allegations made against the Deputy General Manager (Civil), who has been impleaded in his personal capacity as a respondent in W.P.No.10622 of 2014. However for the purpose of considering the correctness of the impugned order, dated 29.04.2014, the allegations made against the Deputy General Manager (Civil) in his personal capacity need not be gone into at this stage.
6. The petitioner would further state that the show cause notice was issued to the petitioner on flimsy grounds and therefore, the petitioner was constrained to approach this Court by filing the other two Writ Petitions and the Writ Petitions were admitted on 11.04.2014, and they were pending. It is submitted that on 28.03.2014, the petitioner's partnership firm was dissolved and became a proprietary concern and this was informed to the Chief General Manager of the respondent Corporation vide letter dated 01.04.2014. Pursuant to which the petitioner was informed by letter dated 19.04.2014, the matter has been referred to the Legal Department. Subsequently, by letter dated 29.04.2014, the petitioner's request for reconstitution of partnership firm to proprietary concern was rejected and contract was terminated. It is stated that the said order was served on the petitioner only on 30.04.2014, but before serving the order, the fourth respondent a proprietorship concern was engaged as a contractor and entry passes were issued to their workman. This according to the petitioner establishes that the respondent Corporation was pre-determined to terminate the petitioner's contract. The order dated 29.04.2014, is impugned in this Writ Petition.
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