Judicial review is permissible in contractual disputes involving public law elements, but the existence of an arbitration clause limits the scope of such review.

JUDGMENT AND ORDER :

H.S.THANGKHIEW, ACJ.

1. The petitioner company on being the successful bidder in a tender floated by the respondent No. 2, for the work titled ‘East Garo Hills Circle-Distribution System Improvement: 33/11 KV Sub-station Development’, was issued the Letter of Allotment (LoA) and a contract agreement, was duly executed on 21.12.2020, between the respondent No. 2 and the petitioner, for the said work amounting to Rs. 74,34,56,822/- with the completion time for the said works being 18 months from the effective date of commission.

2. It appears that though the contract was scheduled to be completed in November, 2022, taking the effective date of contract to have commenced from 29.05.2021, the work was delayed due to various reasons which the petitioner company maintained was due to circumstances beyond its control. On 02.05.2023, a show cause notice was issued by the respondent No. 4, directing the petitioner to answer as to why the contract should not be terminated failing which clause 42.2 of the conditions of contract would be invoked. The petitioner replied to the said show cause assuring the respondents that the project would be completed by December, 2023. Thereafter the petitioner was called for a review meeting, on 06.07.2023 which however, the representative of the petitioner company did not attend citing reasons that he was suffering from COVID, the absence whereof, was not taken kindly by the respondents. Subsequent review meetings were then held on 06.07.2023 and 03.08.2023, and though the petitioner submitted a representation on 05.08.2023, replying to the issues raised in the minutes of the review meeting, the respondent No. 4 on 22.8.2023 issued a notice of termination, highlighting the slow progress of the work. The respondent No. 4 then on 15.12.2023 issued the letter of termination and decided to invoke clause 42.2.2 for termination w.e.f. 16.12.2023. Thereafter, the respondent No. 4 floated a fresh tender on 08.02.2024, for the remaining works, with the dead line for submission of bids on 25.04.2024. The petitioner company being aggrieved is therefore before this Court impugning the letter of termination dated 15.12.2023 and the tender notice dated 08.03.2024.

3. Ms. Liz. Mathew, learned Senior counsel assisted by Mr. S. Deb, learned counsel for the petitioner at the outset, has argued that though the matter is a contractual dispute, there has been a considerable shift in the scope of judicial review which would make the writ petition maintainable. In the instant case, she submits the issue is not merely of a termination of contract and computation of damages, which would typically invoke arbitration, but instead the issues center on the arbitrariness of the respondents in terminating the contract despite their own lapses, and the subsequent re-tendering of the project, which would result in loss being caused to the public exchequer and as such she contends the case also has public law character. In support of these contentions, the learned Senior counsel has placed reliance on the following judgments:-

i) ABL International Ltd. vs. Export Credit Guarantee Corporation of India Ltd., (2004) 3 SCC 553 ii) Joshi Technologies International Inc vs. Union of India (2015) 7 SCC 728 iii) M.P. Power Management Co. Ltd. Jabalpur vs. Sky Power Southeast Solar India Pvt. Ltd. (2023) 2 SCC 703 iv) Subodh Kumar Singh Rathour vs. Chief Executive Officer, 2024 SCC OnLine 1682

4. It is further submitted that time is not of essence in the contract, inasmuch as, from the initial stage though the contract was entered into on 21.12.2020, the respondents had paid the advance only on 29.5.2021, thereby delaying the effective date of the contract, though the petitioner promptly on the execution of the contract, had submitted the performance bank guarantee on 30.12.2020, and also advance payment bank guarantee on 12.01.2021. It is also submitted that substantial delay was caused by the respondents in handing over the work