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2023 Supreme(Online)(Gau) 7467
TRIPURA HIGH COURT
S. R. Sen, J
K.L.D. Creation Infrastructure Pvt. Ltd. Khanpur v. Executive Director (Technical) National Highways and Infrastructure Development Corporation Ltd. New Delhi
W. P. (C) No. 472 of 2023
For the Appellants/Petitioners: Mr. Devansh Mishra
For the Respondents: Mr. S. Ghosh, Mr. Kohinoor N Bhattacharjee, Mr. Bidyut Majumder
Contractual obligations can lead to termination for neglecting performance, emphasizing compliance with principles of natural justice.
Headnote:(A) Principles of Natural Justice - The court emphasized compliance with contract terms, specifically the requirement for notice before termination under clause 23.1. The contractor's inability to present a clear timeline for project completion and address delays led to termination without violation of due process rights. (Paras 10, 11, 12)
(B) Contract Law - The court ruled that even though the contractor received extensions due to delays, continued non-performance allowed termination of their agreement, affirming that defaults can lead to fundamental breaches notwithstanding the granted time extensions. (Paras 10, 11)
Facts of the case:
Petitioner entered into a contract for road rehabilitation, faced delays attributed to adverse conditions, and was ultimately terminated due to lack of progress despite multiple extensions and opportunities.
Findings of Court:
The court found the respondent acted within rights to terminate the agreement after granting adequate notice and opportunity to rectify contract defaults.
Issues: The primary issue revolved around the procedural compliance regarding the notice of termination and the opportunity granted to the contractor to rectify defaults.
Ratio Decidendi: The court concluded that the respondent followed proper contractual procedures before termination, and there was no violation of principles of natural justice.
Result: The writ petition was dismissed.
| Table of Content |
|---|
| 1. contract execution and delays. (Para 2 , 3 , 4 , 5 , 6) |
| 2. arguments regarding principles of natural justice. (Para 8 , 9) |
| 3. court observations on compliance and contract terms. (Para 10 , 11 , 12) |
| 4. final ruling on the writ petition. (Para 13) |
1. Heard Mr. Devansh Mishra, learned counsel appearing for the petitioner. Also heard Mr. S. Ghosh, learned counsel appearing for respondent Nos.1 and 2 as well as Mr. Kohinoor N Bhattacharjee, learned counsel appearing for respondent No.3 and Mr. Bidyut Majumder, learned Dy. SGI appearing for respondent No.4.
2. Writ petitioner, being the successful tenderer, entered into agreement dated 24.05.2021 (Annexure - 3) with the National Highways and Infrastructure Development Corporation Ltd. for execution of the following work:
"Rehabilitation and up - gradation of road from design km 19.300 to km 31.300 (Total length:12.000 km) of Agartala - Khowai section on NH 108 B to two lane with paved shoulder in the state of Tripura on EPC basis (Package - II)."
3. As per the terms of the agreement, the date of commencement of work was 08.06.2021 and date of its scheduled completion was 06.12.2022. As per the case of the writ petitioner, the execution of the work encountered certain impediments which led to delay in its timely completion. Petitioner took a plea that the Right of Way had not been provided free from encumbrance; mobilization of men and machinery by the agency could not take place in time due to the adverse weather conditions such as excessive rains and outbreak of a pandemic during execution of the project. Petitioner has referred to Annexure - 4 series, which are correspondences written by the petitioner indicating the delay not attributable to the contractor. The Regional Officer, Agartala, NHIDCL had issued a letter on 24.02.2022 indicating the intention to terminate the petitioner EPC contractor for his defaults under Art.23.1.(i)(c), 23.1.i(e) and 23.1.i(p) of the contract agreement. The EPC contractor had submitted its representation on 09.03.2022 which is Annexure - 6 to the writ petition indicating that there were some serious health issues with the Managing Director of the company which badly affected the progress of the project. They had tried to achieve the financial progress of the work programme according to Art.10.1(iii) of the contract agreement but could not be achieved. As per them, the physical progress of work up to 28.02.2022 was 5.4% of the contract amount but it could not be converted in financial progress because stage payment statement had not been submitted and approved by the Authority Engineer till date.
4. The petitioner further stated that they had reviewed their project site properly and planned for all manpower, equipments and material procurement to speed up the progress of work according to requirement of contract agreement and had committed to achieve the financial progress in accordance with schedule - J and revised work programme. They had also submitted a tabular chart containing the strength of manpower, equipments which are mobilized to work in a schedule timeframe. They had also taken a plea that after elapse of 50% of time of contract period, the complete length of Right of Way (ROW) has not been handed over. In view of these facts and the reference of review meeting of Managing Director, NHIDCL, they had set their target for the month of March as 10% and for April - 10% to be achieved. Total financial progress up to 30.04.2022 of 20% was committed to be achieved. This letter was considered by the respondent authorities. The General Manager (P) by letter dated 26.04.2022 (Annexure - 5) had conveyed its intention to grant opportunity to the contractor to achieve the commitment made for minimum 20% physical progress up to 30.04.2022 as per the representation of the contractor and the review meeting held on 03.03.2022. The Assistant Engineer was asked to review the work progress of the contractor on 01.05.2022 and provide recommendat
