The central legal point established in the judgment is the importance of adhering to the principles of natural justice, particularly the right to be heard before the termination of a contract and the assignment of work to another contractor.

ORDER

Krishn Kumar Lahoti, J.

1. The Petitioner has challenged order Annexure P-1 dated 11.6.2010, by which the Respondents have terminated a part of contract of belt jointing relating to Birsinghpur 500 MW, which was assigned to the Petitioner for a period of 2 years and has awarded that part of work of belt jointing to Respondent No. 4.

2. In this petition, Petitioner has prayed for following reliefs:

(1) That by issuance of writ in the nature of certiorari the impugned order Annexure P-1 and Annexure P-2 may please be quashed as submitted above.

(2) That by issuance of writ in the nature of mandamus the Respondents be commanded by this Hon'ble Court to comply with the contract Annexure P-7 in letter and spirit.

(3) That any other writ, direction or order as may be deemed fit may also be issued together with awarding of costs of these proceedings.

3. The facts necessary for the decision of this petition are that the Petitioner in response to a notice inviting tender dated 19.6.2009 for the work of jointing the Nylon Conveyor belts by cold Vulcanizing Process/Replacement of Belt/Rubber Lagging on Conveyor Pulleys/Longitudinal Jointing of Belt, Spot Patch repairing and other conveyor works at STPS Sarni, SGTPS Birsinghpur and ATPS Chachai of MPPGCL of Respondents, submitted its offer by participating in the tender process. Out of 3 tenderers Petitioner was found the lowest. The offer of Petitioner was accepted and letter of intent was issued to the Petitioner on 6.2.2010 Annexure P-5. For the aforesaid 3 power plants the work was for Rs. 4,52,61,519/- excluding service tax. On 30.3.2010 the work order was issued to the Petitioner for 2 years for the aforesaid work of all the 3 units as per Annexure P-6. An agreement pursuant to the tender process was entered between the parties on 27.4.2010 Annexure P-7.

That on 11.6.2010 the Petitioner received a letter Annexure P-1 by which the work order relating to Birsinghpur 500 MW for aforesaid tender items was cancelled and was entrusted to Respondent No. 4 by order Annexure P-2. These orders are under challenge in this petition.

4. The Petitioner assailed the aforesaid orders on the ground: that

(a) Before cancellation of a part of contract no opportunity of hearing was given to the Petitioner. The order is a non-speaking order. There were no complaint against the Petitioner with regard to its work or for efficient working at the plant.

(b) That as per the agreement Annexure P-6, the period of contract was for 2 years w.e.f. 19.5.2010 and could be extended by 6 months at the discretion of Respondents.

(c) That a penalty which could be imposed for the breach of contract as are referred in para 8 & 9 of the contract, which reads as under:

(viii) PENALTY:

i) In case the contractor is found negligent and work progress remains unsatisfactory, it shall be lawful for MPPGCL to entrust the work to some other agency on the risk and cost of contractor.

ii) In case contractor fails to complete the work within the scheduled period, penalty @ 0.5% (half) per week, subject to maximum 10% will be imposed, as per the discretion of the Engineer-in-charge of the concerned job.

(ix) PENALTY FOR BREACH OF CONTRACT/FAILURE TO EXECUTE THE ORDER:

The contractor shall abide by the terms and conditions of the contract and shall work as per the instructions issued by the engineer-in-charge. In case the contractor fails to carry out the work as directed or is not able to cope up with the work satisfactorily and it is found that the smooth working of the plant is affected due to his unsatisfactory working and he fails to improve his working, the MPPGCL reserve the right to terminate the contract and time during the currency of contract by serving him notice of seven day. The security deposit in such case shall be forfeited.

MPPGCL shall be entitled to forfeit the security deposit or the balance there off, that may at that time be recoverable and to realize any further sums as damages from any sums due on the contract with MPPGCL