Penalties imposed in commercial contracts without a show-cause notice are arbitrary; COVID-19 may constitute force majeure affecting deadlines.

1. Petitioners, through the medium of this petition, filed under Art.226 of Constitution of India , seek directions from this Court for issuance of 'Writ of Certiorari' to call for the relevant record pertaining to allotment of contract of replacement of old air compressors with new air compressors - 02 Nos. (one working and one stand by) along with dryers and allied electrical works for supply of medical air at GMCH Jammu, pursuant to the notice inviting tender, No. MHDJ / e - NIT / 61 of 2020-21 dated 28 October, 2020, and another No. MHDJ / e - NIT / 63 of 2020 - 21 dated 29 October ,2020 for the similar work at SSH Jammu, issued by the Executive Engineer (Mech.), Hospital and Central Heating Division, GMCH Jammu, and petitioners further seek the details of payment made thereunder along with the proceedings and material leading to imposition of penalty, and also request to quash the said penalty indicated in the communication No. MHDJ / Accts / 2021-22/3800 dated 7 August, 2021 and the deduction on that account in the amount of Rs.89,790/- and Rs.1,07,500/- respectively, as arbitrary, unreasonable, unfair, unjust and unjustified.

2. It has further been pleaded by the petitioner - Firm M/S J.D. Enterprises, in the petition that it offered its services for the replacement of old air compressors (two units: one working and one standby) along with dryers and allied electrical works each for the supply of medical air at GMCH Jammu and SSH Jammu; that pursuant to the notice inviting tenders Nos. MHDJ / e - NIT - 61 of 2020-21 dated 28 October 2020 and MHDJ / e - NIT - 63 of 2020-21 dated 29 October ,2020, respectively, at an estimated cost of Rs.15 lakhs each, issued by the Executive Engineer Mechanical on behalf of the President of India, and after evaluating the bids, found the petitioner - firm to be the lowest bidder with proven efficiency for the job, thus awarding the contract to it. The work was completed with reasonable dispatch despite several challenges, and no delays could be attributed to the petitioner's default. However, a penalty of Rs.89,790/- and Rs.1,07,500/- was still imposed for the works at GMCH Jammu and SSH Jammu, respectively by the respondent.

3. Petitioner - firm claimed that the work orders were issued to the petitioner for the replacement of air compressors at GMCH Jammu and SSH Jammu, however, the site was not handed over to the petitioner as per the communication from the Assistant Executive Engineer (Mech.), Hospital and Central Heating Sub-Division / IInd GMCH Jammu vide No. MHCJ / SD - II / 58-60, dated 21 May, 2021, which delayed the start of the work; that despite this, the petitioner proceeded with the procurement of necessary machinery and deposited the required amount with the distributor but due to the COVID - 19 pandemic, supply chains were severely disrupted; that the petitioner informed the Executive Engineer vide his communication dated 26.02.2021 that the compressors had been dispatched by the company Atlas Cap Co. vide dispatch No. FK2027130754, LR No. B4001423232 on 05.02.2021 and may take 8 to 10 days to reach to the destination; that the petitioner sent several communications explaining the situation, including dispatch dates and assurances regarding the installation; that the petitioner vide his communication dated 15.04.2021 reported the Executive Engineer (Mech.) that compressors for SSH Jammu had been installed, while those for GMCH were expected by the end of April 2021.

4. It has been further pleaded that the delays were caused by factory's closures due to positive test of some workers in the production unit of the said factory and workfo