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Ashrae Clean Room Presentations Private Ltd. A Company Incorporated Under The Companies Act, Rep. by Managing Director, M.S. Anand, Hyderabad v/s The Department of Industries & Commerce, Represented by Its Principal Secretary (Industries), Thiruvananthapuram & Another

    WP(C). No. 28448 of 2021

    Decided On, 01 February 2022

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE N. NAGARESH

    For the Petitioner: Navia Sebastian, Advocates. For the Respondents: P.C. Sasidharan, SC, (Kerala State Drugs & Pharmaceuticals Limited), P. Santhoshkumar, Spl. GP. (Industries).



Judgment Text

1. The petitioner is a Company doing business in Heating, Ventilation and Air Conditioning. The petitioner is also specialised in Clean Room Technology. The petitioner has filed this writ petition seeking the following reliefs:

(i) Issue any appropriate Writ by declaring the action of the 2nd respondent in calling for Tender for Supply, Installation, Testing, Commissioning & Validation of HVAC Works as per GMP Standard for Non-Beta Lactam Project vide Ext.P14 Tender Reference Number KSDP/PRJ/NB/HVAC/10/21- 22/124 DATED 07/12/2021 AT 01:43 PM, as arbitrary, illegal and unreasonable.

(ii) Issue any appropriate Writ by declaring the action of the 2nd respondent in calling for Tender for Supply, Installation, Testing and Commissioning of Clean Room Panel Works Using PCGI Panels as per GMP Standard for Non-Beta Lactam Project vide Ext.P15 Tender Reference Number KSDP/PRJ/NB/PCGI/09/21-22/123 DATED 07/12/2021 01:48 PM, as arbitrary, illegal and unreasonable.

(iii) Issue any appropriate Writ by declaring the action of the 2nd respondent in calling for Tender for Supply, Installation, Testing, Commissioning and Validation of HVAC System as per GMP Standard for Beta Lactam Blister Packing Project vide Ext.16 Tender Reference Number KSDP/PRJ/BETA/11/21- 22/125 DATED 07/12/2021 01:45 PM, as arbitrary, illegal and unreasonable.

(iv) Issue Writ of Mandamus or any other appropriate writ directing the 2nd respondent to recall & cancel the Tender for Supply, Installation, Testing, Commissioning & Validation of HVAC Works as per GMP Standard for Non Beta Lactam Project vide Ext.P14 Tender Reference Number KSDP/PRJ/NB/HVAC/10/21-22/124 DATED 07/12/2021 AT 01:43 PM.

(v) Issue Writ of Mandamus or any other appropriate writ directing the 2nd respondent to recall & cancel the Tender for Supply, Installation, Testing and Commissioning of Clean Room Panel Works Using PCGI Panels as per GMP Standard for Non- Beta Lactam Project vide Ext.P15 Tender Reference Number KSDP/PRJ/NB/PCG1/09/21- 22/123 DATED 07/12/2021 01:48 PM.

(vi) Issue Writ of Mandamus or any other appropriate writ directing the 2nd respondent to recall & cancel the Tender for Supply, Installation, Testing, Commissioning and Validation of HVAC System as per GMP Standard for Beta Lactam Blister Packing Project vide Ext.P16 Tender Reference Number KSDP/PRJ/BETA/11/21-22/125 DATED 07/12/2021 01:45 PM.

vii) Issue Writ of Mandamus or any other appropriate writ directing the 2nd respondent to cancel the Termination of Workup order dated 19/02/2018 and permit the petitioner to continue the works.

(viii) Issue Writ of Mandamus or any other appropriate writ directing the 2nd respondent to cancel Termination Notice dated 28/09/2021 of Work order dated 19/02/2018 and permit the petitioner to continue the works.

(ix) Issue Writ of Mandamus or any other appropriate writ directing the 2nd respondent to cancel the Termination Notice dated 28/09/2021 of Work order 30/12/2017 and permit the petitioner to continue the works.

(x) Issue Writ of Mandamus or any other appropriate writ directing the 2nd respondent to cancel the Termination Notice dated 28/09/2021 of Work order dated 10/01/2018 and permit the petitioner to continue the works.

(xi) Issue Writ of Mandamus or any other appropriate writ directing the 2nd respondent to settle the accounts after conducting the measurements for the works done and release the payments to the petitioner.

2. In the writ petition, it has been pleaded as follows. The 2nd respondent-Kerala State Drugs and Pharmaceuticals Limited is a Government of Kerala Undertaking. The petitioner has executed a number of works for the 2nd respondent. The 2nd respondent awarded three new works and issued work order Nos.KSDP/PRJ/NBETA/HVAC/ 30/1718/57 dated 30.12.2017, KDSP/PRJ/NBETA/PCGI/13/ 17-18/38 dated 11.11.2017 and KDSP/PRJ/BETABLISTER/ HVAC/38/17-18/77 dated 12.11.2018. Though the petitioner has been executing these works, the 2nd respondent withheld payments. The petitioner was not provided with structural drawings and site for progress of the work. At the same time, the 2nd respondent tried to invoke Bank Guarantee provided by the petitioner. The petitioner filed O.S. No.1275/2019 before the XXI Junior Civil Judge, Hyderabad. When the 2nd respondent tried to invoke Bank Guarantee, the petitioner filed injunction Suit. The 2nd respondent arbitrarily invoked Bank Guarantee.

3. The petitioner issued Ext.P3 letter dated 11.08.2021 to the 2nd respondent seeking payment of Bills to the tune of ?1,58,35,448/- due to the petitioner. The 2nd respondent, in response, directed the petitioner to complete all pending works within 30 days, as per Ext.P4 letter dated 26.08.2021. The petitioner submitted Ext.P5 reply dated 28.08.2021 pointing out that the work order was amended on three occasions and the 2nd respondent has not adhered to the contractual obligation of diminishing Bank Guarantee. The design of the partition was changed 14 to 16 times and it is humanly impossible to complete the work even in 90 days. By Ext.P6 letter dated 28.08.2021, the petitioner reminded the 2nd respondent about the pending bills.

4. To the dismay of the petitioner, the 2nd respondent terminated all the three work orders as per Exts.P7 to P9 dated 28.09.2021. The petitioner submitted Exts.P10 to 12 replies dated 29.09.2021 to Exts.P7 to P9 cancellations. The petitioner also requested for a joint measurement as to the work completed by the petitioner and requested for return of tools, as per Ext.P13 letter dated 10.11.2021. The request of the petitioner fell in deaf ears. Hence, the petitioner is before this Court.

5. The 2nd respondent filed a Statement and contested the writ petition. The 2nd respondent stated that the petitioner though entered into three agreements, did not show any progress in terms of the work order. The respondents have been issuing letters one after another to the petitioner requiring to complete the works as scheduled. The entire modernisation work of the 2nd respondent- Company was unduly delayed. Negotiations were held with the petitioner. A joint meeting was convened on 12.06.2019. The petitioner agreed to complete all works on or before 31.07.2019. Even thereafter, the works were not proceeding. Further discussions with the petitioner were held on 09.11.2019. The petitioner was granted extended time to complete the works. The petitioner as per Annexure-R2(e) agreed to complete the works by 27.02.2020.

6. The petitioner still did not honour its commitment. The delay on the part of the petitioner in executing the works would result in payment of liquidated damages to the States with whom the 2nd respondent entered into agreements for supply of medicines. In the circumstances, the 2nd respondent had no other option than to terminate the contracts. Time is the essence of all the three contracts. The agreement provided that if there is a dispute between the petitioner and the 2nd respondent, it should be resolved through arbitration proceedings. O.S. No.1275 of 2019 filed by the petitioner before the Junior Civil Judge, City Civil Court, Hyderabad was dismissed as per Annexure-R2(f). O.S. No.2174 of 2019 filed by the petitioner was closed as per Annexure-R2(g) as the issue was referred to Arbitrator.

7. The 2nd respondent has already revoked the Bank Guarantee and has terminated the agreements. The works were re-tendered. The contention of the petitioner that measurement was not taken in its presence does not merit any consideration. The measurement was taken in the presence of the representatives of the petitioner-Company. The 2nd respondent is entitled to recover the loss incurred from the petitioner. The petitioner cannot invoke this Court’s writ jurisdiction for redressal of disputes of a commercial nature.

8. The learned counsel for the petitioner submitted that in view of the judgment of the Apex Court in Union of India and others v. Tantia Constructions Private Limited [(2011) 5 SCC 697], alternative remedy is not an absolute bar to invoke the jurisdiction of this Court. Arbitration is only one alternate remedy as per the agreement. The petitioner had assured the 2nd respondent that work will be completed in all respects and plant handed over to the 2nd respondent on or before 27.02.2020, provided the 2nd respondent clears all the 22 points mentioned in the e-mail dated 18.11.2019 forwarded by the petitioner.

9. The counsel for the petitioner pointed out that the measurements noted by the respondents in Ext.R2(k) are not visible and is not countersigned by the petitioner. Entire joint measurements have not been taken. Joint measurements of a large number of works, have not been done. The termination of the contracts is highly arbitrary. As per the terms of contract, Agreement Authority shall give 15 days notice of termination in writing to the Contractor, which has not been done by the 2nd respondent. The drawings given by the 2nd respondent were incomplete, which is the major reason for the delay.

10. I have heard the counsel for the petitioner, the Special Government Pleader (Industries) for the 1st respondent and the Standing Counsel for the 2nd respondent.

11. Three contracts were entered into by the petitioner and work orders were issued on 11.11.2017, 30.12.2017 and 12.11.2018. The first two works were to be completed within 90 days and the 3rd one within 30 days. The petitioner did not carry out the work with promptitude. A joint meeting was convened by the 2nd respondent on 12.06.2019. By the time, more than 18 months had elapsed. In this meeting, the petitioner agreed to complete all the works before 31.07.2019. Annexure-R2(d) minutes of the meeting would disclose that the petitioner had not raised any technical issues which would hamper the completion of work. The issue of drawings is not seen raised by the petitioner in the meeting. The only concern expressed appears to be in respect of payment of Bills.

12. The petitioner did not complete the work by 31.07.2019. Again, another meeting was held on 09.11.2019. By Annexure-R2(e), the petitioner again agreed to complete the work by 27.02.2020. It is the specific case of the 2nd respondent that it had cleared all the 22 points as mentioned in the petitioner’s e-mail dated 18.11.2019. Yet, the work was not completed even by 27.02.2020. The inordinate delay on the part of the petitioner delayed the modernisation plans of the 2nd respondent and consequential financial losses were incurred.

13. The agreements provided for arbitration proceedings for resolution of any disputes arising from the agreements. The petitioner, however, filed O.S. No.1275/2019 in the Court of the Junior Civil Judge, City Civil Court, Hyderabad during the extended period of contract, which was withdrawn on 30.07.2019. In another O.S. No.2174/2019 filed before the Court of the Junior Civil Judge, the said court referred the dispute for arbitration as per Annexure-R2(g) order.

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/> 14. The 2nd respondent has already terminated the contracts and has invoked Bank Guarantee. The works have been already retendered. 15. The grounds urged by the petitioner challenging termination of contracts are all disputed questions of facts which cannot be decided by this Court, in exercise of the powers conferred under Article 226 of the Constitution of India. The agreements executed by the petitioner provide for arbitration for resolution of disputes arising out of the contract. The counsel for the petitioner urged that even if the petitioner is to be relegated to arbitration proceedings, this Court may order a joint inspection in respect of the works completed by the petitioner in pursuance of the agreements. The 2nd respondent disputed the said claim also stating the measurements of works done by the petitioner have already been taken in the presence of the officials of the petitionercompany. 16. In the facts and circumstances of the case, this Court find that the petitioner has to resort to arbitration or other civil proceedings for redressal of grievances and a writ petition is not maintainable, in the facts of the case. The writ petition fails and it is consequently dismissed.
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