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2021 Supreme(Online)(KER) 1824
N. NAGARESH, J
M/S.P AND C PROJECTS PVT. LTD. – Appellant
Versus
STATE OF KERALA – Respondent
WP(C).No.2200 OF 2021(Y)
For the Appellants/Petitioners: SRI.K.P.DANDAPANI (SR.), SRI.MILLU DANDAPANI, SRI.RAMEEZ NOOYH, SMT.MEERA RAMESH, SMT.BHAIRAVI S.N, SMT.FATHIMA K.
For the Respondents: SRI.P.NARAYANAN, SRI.V.G.ARUN, SRI.P.U.SHAILAJAN
The court affirmed that delays in contract execution must be justifiable under contract terms, emphasizing limited grounds for judicial review in purely contractual matters.
Headnote:(A) Contract Law - Principles of Natural Justice - Termination of contract - The petitioner challenges the termination of agreements due to alleged slow progress and quality of work along with disputes over non-payment of bills - Court held that the petitioner failed to complete the project within the extended timeline due to reasons not excusable under contract terms. (Paras 3, 22, 26)
(B) Writ Jurisdiction - A writ petition under Article 226 is not maintainable in purely contractual disputes without a public law element unless there's a violation of Article 14 of the Constitution - The court established that the procedural irregularities do not merit a judicial intervention in contractual matters. (Paras 19, 20)
Facts of the case:
The petitioner entered into a contract for the construction project at Cochin Cancer Research Centre. The project faced delays attributed to natural calamities and alleged contractual mismanagement by the 3rd respondent.
Findings of Court:
The court found that despite the extensions granted, delays were mainly due to the petitioner's performance and quality concerns. The contractual obligations and timely completion deemed the termination valid under the contractual clauses.
Issues: Whether the delays were justifiable under the event circumstances and whether the termination was arbitrary.
Ratio Decidendi: The court maintained that delays could not solely be attributed to unforeseen disasters in the wake of existing contract provisions acknowledging timely performance and quality requirements. The nature of contractual agreements limits the grounds for judicial review under Article 226 absent regulatory breaches.
Result: Writ petition dismissed.
| Table of Content |
|---|
| 1. overview of the contract and delays. (Para 2 , 3 , 4 , 5) |
| 2. details on the contractual obligations and the justification for termination. (Para 6 , 8 , 9 , 10) |
| 3. arguments presented by the petitioner regarding the contract termination. (Para 12 , 13 , 14) |
| 4. judicial reasoning on limits of writ jurisdiction in contractual disputes. (Para 19 , 21) |
| 5. outcome of the case. (Para 27) |
JUDGMENT
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Dated this the 26th day of April, 2021
The petitioner, a registered Private Limited Company which has entered into Ext.P3 Bilateral Agreement and Ext.P6 Supplemental Agreement with the 3rd respondent, is aggrieved by the termination of those agreements by the 3rd respondent.
2. The petitioner states that the petitioner-Company entered into Ext.P3 agreement with the 3rd respondent for construction of the flagship project of “Cochin Cancer Research Centre, Ernakulam”. The project is funded by the 2nd respondent-Kerala State Infrastructural Investment Fund Board (KIIFB). The 3rd respondent is a Special Purpose Vehicle (SPV) for the Cochin Cancer Center Project, acting on behalf of the 1st respondent-State of Kerala.
3. The petitioner was the successful bidder. The work was awarded for ₹87,14,32,492/- on 13.06.2018. Ext.P3 agreement with the SPV was signed on 06.08.2018. The work was to be completed within 730 days. The petitioner started the work on 25.07.2018 and had to complete the work by 23.07.2020. The unprecedented floods in the years 2018 and 2019 and the Covid-19 pandemic of 2020 caused hindrance. These coupled with non-payment of pending bills, labour problems and delay in approval of drawings, made it impossible to complete the work in time.
4. The petitioner has been communicating to the respondents regarding delays occurring at various stages of the work due to unforeseen events as well as for reasons attributable to the 3rd respondent. The petitioner requested for extension of time to complete the work. Thereupon, Ext.P6 Supplemental Agreement was executed on 24.09.2020 extending the completion date upto 28.02.2021, though the petitioner had opposed the time frame.
5. In spite of extension of time, the 3rd respondent did not release pending bills and showed lethargy in approval of designs and drawings. The continuing threat of Covid-19 pandemic added to the hardships. In spite of all these, the petitioner proceeded with the work. However, on 26.12.2020, the 3rd respondent issued Ext.P8 show-cause notice alleging that the progress of work is slow. The petitioner submitted Ext.P9 reply. The petitioner also issued Ext.P10 letter dated 06.01.2021 to the 3rd respondent raising a dispute and requesting to constitute a Dispute Redressal Committee invoking Clause No.25 of Ext.P4 General Conditions of Contract. Without considering the representation of the petitioner, the 3rd respondent issued Ext.P13 on 18.01.2021 terminating Exts.P3 and P6 Agreements. The petitioner challenges Ext.P13 order of termination.
6. The 3rd respondent contested the writ petition. The 3rd respondent stated that the delay caused is not due to non-payment of part bills, labour disputes or delay in providing drawings, etc. The petitioner has been delaying the work from the very beginning. The agreement provided 10 milestones of work. It was a condition that if any milestone is not achieved on the stipulated day, bill amounts will be withheld and paid only after reaching and completing the subsequent milestone within the respective time limit.
7. As the petitioner failed to complete the work as agreed in Ext.P3, Ext.P6 Supplemental Agreement was signed extending the period up to 28.02.2021, taking into account Covid-19 pandemic. The petitioner cannot rely on floods for failure to complete work, after signing Ext.P6 Supplemental Agreement. The petitioner was paid ₹4.36 Crores as mobilisation advance. The petitioner did not renew bank guarantees executed to secure the mobilisation advance, after 30.11.2020. The petitioner was given secured advan
