The main legal point established in the judgment is the requirement for the authority to provide reasons for its decision, as mandated by Clause-4 of the General Conditions of the Contract, and the legal principle that nothing is permitted which is contrary to reason.

JUDGMENT :

Vineet Saran, J.

In response to a tender call notice dated 23.03.2011 issued by the opposite party -Paradip Port Trust (PPT) inviting tender for grant of license for installation, operation and maintenance of Mobile Harbour Crane (MHC) inside PPT for a period of five years, the petitioner, being the lowest bidder, was declared successful, and pursuant thereto a license was granted for execution of contract for a period of five years, i.e., till 23.03.2017.

2. While the work of the petitioner was being carried on, unfortunately, on 20.11.2015, there was a fire accident in the crane engine, which was immediately informed to the PPT on 23.11.2015 with the request to consider the fire accident as ‘force majeure’. Such intimation was given in terms of Clause-5 of the General Conditions of the contract, which provided for any such information to be given within seven days. After prolonged correspondence between the petitioner and PPT, the claim of the petitioner for treating the fire accident as ‘force majeure’ was rejected by the Executive Engineer of PPT on 20.02.2016 and by the said order, a total penalty amount of Rs.44.00 lakhs was imposed for the MHC being unoperational for 44 days beyond the permissible 10 days period.

3. The petitioner, thereafter, on 23.02.2016 represented to the Executive Engineer of PPT, with copy to the Chairman, PPT, for favourably considering the case of the petitioner and treating the fire accident as a ‘force majeure’. Such application of the petitioner was treated as a case of ‘resolution of dispute’ provided for under Clause-4 of the General Conditions of the Contract. Then by communication dated 16.03.2016 made by the Executive Engineer of PPT, the petitioner was informed that the Chairman, PPT had decided that the contention to treat fire accident as ‘force majeure’ was not accepted. Challenging the aforesaid communication of the Chairman, PPT, this writ petition has been filed.

4. We have Mr. Asok Mohanty, learned Senior counsel along with Mr. B.K. Nayak, learned counsel for the petitioner, and Mr. P.K. Nayak, learned counsel for the opposite parties, and perused the record. Pleadings between the parties having been exchanged, with the consent of learned counsel for the parties, this petition is disposed of at the admission stage.

5. Besides several other contentions, which have been raised by learned counsel for the petitioner, it has been specifically submitted that the order dated 16.03.2016, which has been communicated to the petitioner, is without assigning any reason as to why the representation of the petitioner for resolution of dispute submitted on 23.02.2016 has been rejected. Specific averment in this regard has been made in paragraph 27 of the writ petition, wherein it has been contended that the Chairman, PPT has not given any reason for rejecting the claim of the petitioner, which has been done so only by mentioning that the claim is not accepted.

6. In Clause-4 of the General Conditions of the Contract it is provided that for resolution of a dispute which may be raised, the Chairman, PPT shall take a decision, which shall be final and binding on both the parties. When a decision is to be taken by an authority, it would necessarily mean that the person taking the decision has applied his mind, and the least that would be expected, is that while taking any decision, the reasons for arriving at such conclusion or decision should be given in the order. Such specific ground that no reason has been given by the Chairman, PPT, while taking a decision rejecting the claim of the petitioner has been taken in the writ petition, which has not been denied in the counter affidavit filed by the opposite parties, nor has it been stated that the Chairman, PPT has passed any other separate reasoned order.

7. Cicero said:

“Reason is the mistress and queen of all things.”

The legal maxim-

“Nihil quod est contra rationem est licitum” means as follows:

“nothing is permitted which is contrary to reason.