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Indian Oil Corporation v/s Deka Consultancy And Agency Services

    Writ Appeal 52,56,57 Of 1999

    Decided On, 10 June 1999

    At, High Court of Assam


    For the Appearing Parties: N.M. Lahiri, N. Choudhury, S.C. Kayal, B.W. Phira, R. Gogoi, D. Das, A.C. Das, K.K. Sarma, Advocates.

Judgment Text


(1.) By this common judgment we propose to dispose of the three appeals which have arisen out of a common judgment passed by learned Single Judge in Civil Rule No. 4003, 5145 and 5638 of 1998.

(2.) The facts in brief are that - the Indian Oil Corporation Ltd., hereinafter referred to as the IOC, in pursuance to a decision of the Govt. of India undertook to set up an LPG Bottling, Plant at Mirza, within the district of Kamrup, Assam. The project was estimated to costs around 30 Crores. On 24.4.96 IOC invited tenders for the land development work and M/s Deka Consultancy and Agency Services, hereinafter referred to as the Contractor", was selected as the contractor to do the above land development job and the work order was issued on 21.2.97. The work commenced on 7.3.97 and as it was a time bound project it was to complete within 35 weeks, that is, on or before 23.10.97. However, the work could not be completed within the due time for heavy rain, inundation of the project site etc. and the contractor prayed for extension. IOC granted extension till February, 1998. Thereafter vide letter dated November 5, 1998 the IOC terminated the contract of the contractor, whereupon the contractor approached this Court in Civil Rule No. 5638/98. Writ Appeal No. 57/99 has arisen out of the said Civil Rule No. 5638/98. On 19.1.98, IOC floated another tender. The IOC through the respondent No. 3, Metallurgical and Engineering Consultants (India) Limited, for short MECON floated another tender in respect of construction of roads and drainages at the site of LPG bottling plant at Mirza. The contractors submitted another tender and a letter of intent was issued in favour of the contractor on 30.4.98. The contractor was required to complete the said work on or before 30.9.98 but on 5.8.98 itself the letter of intent was withdrawn by the IOC, whereupon the contractor preferred Civil Rule No. 4003/98. Writ Appeal No. 56/99 is in respect of Civil Rule No. 4003/98. The contractor also instituted Civil Rule 5145/98 challenging the order passed by IOC on 26.1.98, whereby the contractor was debarred from using main approach road. During the course of hearing before the learned Single Judge the contractor submitted that they are not pressing Writ Petition No. 5145/98 as substantial part of that work has been completed in view of the stay order granted by the Court. Writ Appeal No. 52/99 is in respect of Civil Rule No. 5145/98.

(3.) The main grievance of the petitioner is that the work would not be completed due to heavy rain and inundation of the work site due to flood and direction of the authority to use imported earth. According to the contractor out of required filling to the tune off 3,00,000 cubic metre he has completed about 2.9 lakh cub.m.of earth work and only 10,000 cum. was balance. The contractor has however admitted that with his consent some work allowed to him, concerning 22,00)0 cum. of earth work, was off loaded from him and given to other person. As regards the withdrawal of the latter of intent the case of the contractor is that he mobilised the resources but the work could not be started and the letter of intent was withdrawn before the expiry date, that is, before 30.9.98. The case of the appellant IOC is that the project of LPG Bottling plant was to be completed within the 8th Plan Period and this being an important project under the new initiatives for north-eastern region, it was monitored by the Prime Minister Office, the project was to be completed within 30th months from the date of approval, i.e. 4.4.96. According to the IOC the contractor failed to fulfill commitment and inspite of extension given he could carry out only 1.83 lakh cu.m. of earth work which has resulted in delaying the whole project. So far the work of roads and drainages are concerned, inspite of specific direction the contractor even failed to start the work and as such the IOC had no other alternative but to withdraw the order of intent. According to the appellants the progress of the entire project has been jeopardised and public interest has suffered due to the failure of the contractor and, as such, the contract was terminated. The appellants also raised amongst other the following grounds: (1) Time being an essence of the contract and as the contractor failed to complete the work in time, he cannot seek any relief under Article 226. (2) That the writ petitions are not maintainable as they relate to contractual matters which cannot be adjudicated under Article 226 of the Constitution, more so when there is disputed question of facts. (3) There is an arbitration clause in the contract agreement and without exhausting that remedy the writ Court cannot be approached.

(4.) As stated above, all the three writ petitions were disposed of by common judgment and the relevant directions given by the learned Single Judge reads as follows:

"15. Considering all the aspects and the undertaking so given by the petitioner before this Court, I direct the respondents to re- reconsider their decision and settle the matter amicably between the parties. While doing so, the parties should bear in mind the observations made by this Court hereinabove. to that view of the matter, I direct the respondents to withdraw the impugned orders and allow the petitioner to complete the work within the specified period as stated above. It is however, made clear that the petitioner shall" complete the work as per the assurance given by him before this Court and in case he fails to complete the work as per undertaking, the Respondents are at liberty to terminate the contracts and allot the same to any. other party as per terms and conditions of the agreement already arrived at. 16. In the result, the writ petitions are disposed of with the above observation and directions. Interim orders so passed by this Court in the above Civil Rules are also vacated and the miscellaneous cases are disposed of accordingly. In the facts and circumstances of the case, parties shall bear their own costs."

(5.) Now coming to the question whether time was essence of the contract or not as claimed by the IOC, we find that there is no dispute to the above proposition as such, in para 5 of the writ petition the contractor has stated:

"... and the project was required to be completed within the time bound period of 35 weeks."

In the impugned judgment the learned Single Judge has observed that "there is no dispute that time is the essence of the contract executed between the parties" (Para 12 of the judgment). The land development work was to be completed within 23.10.97 and apparently on the date of termination of the contract, that is, 5.11.98 the work was not completed by the contractor. Monsoon, rain and floods are not new phenomena in this part of the country and as such the contractor was expected to know that they may be some delay on those counts and that must have been taken care of while executing the contract for the time bound programme. The allegation that the IOC did not provide earth from the plant premises as provided under Clause 2.26 of the Agreement, has been stoutly denied by the IOC. According to them under the above clause the IOC was not required to provide any earth from the project site. According to them the contract was for filling up the project site by putting in 3,00,000 cu.m. of earth, hence if the earth was to be escavated from the site, there was no question of filling up of the project site with 3,00,000 cu.m. of imported earth as stated in the contract. According to IOC reference to clause 2.26 of the Technical Specification of Contract is relevant. There is no decision by the learned Single Judge that IOC was required to provide earth from the project site itself. (6.) According to the contractor he has already filled up 2.30 lakh cu.m. of earth (although in the undertaking dated 26.11.98 the contractor claims to have tilled up 2.90 lakh cu.m.) which has been disputed by the appellants and according to them the contractor has carried out approximately 1.83 lakhs of cu.m. of earth work only. As this disputed question of fact cannot be decided by the Writ Court, the learned Single Judge has not discussed the above matter. Without entering into the dispute as to how much work was completed and how much work was left to be carried out, the fact remains that although the work was to be completed within 3 5 weeks from 1.3,.91, the contractor could not complete the said work within 89 weeks, i.e. upto the date of termination of the contract on 5.11.98. The contractor was thus given additional 54 weeks time to complete the project but he has failed. It is stated by the contractor that about 199 days (27/28 weeks) was disturbed/affected due to floods and rain. Even if this period is excluded from calculation it is seen that the contactor got additional 27 weeks totalling 61 /62 weeks to complete the project and admittedly contractor has failed.

(7.) So far the withdrawal of the letter of intent is is concerned, the grounds shown by the appellant IOC is that although the work order was accepted by the contractor on 1.5.98 and from time to time IOC requested the contractor to start the work, the later failed to commence the work and as such IOC had no omen alternative but to terminate the contract in public interest as they could not have waiited till 30.9.98. As the work was not even started till 1 st week of August, there was no question of completion of the said work before 30.9.98. The above decision must have influenced by the failure of the contractor to complete the land development work within the stipulated time. Any prudent man will react in a similar manner only. Learned counsel for the appellant has submitted that the impugned order is not a consent or compromise order but the learned Single Judge has given the direction extending the time limit etc. without coming to a finding whether the writ is maintainable or not and as to who is at fault. There is no finding that the act of the IOC amount to arbitrary exercise of power.

(8.) In support of the submission that the contract between the parties is in respect of terms of private contract and any dispute relating to the interpretation of the terms and condition cannot be agitated in writ petition, learned counsel for the appellant has refered to a decision of the Apex Court in the case of State ofU.P.-Vs-Bridge and Roof Co. (India) Ltd., 1996 (6) SCC 22. The Apex Court held as below:

"Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, may be, also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as provided by the contract or for the Civil Court, as the case may be. Whether any amount is due to the respondent from the appellant-Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or mot, are all matters which cannot be agitatted in or adjudicated upon in a writ petition. The prayer in the writ petition, viz., to restrain the Government from deducting a particular amount from the writ petitioners' 'bill(s) was not a prayer which could be granted by the High Court under Article 226. Indeed, the High Court has not granted the said prayer."

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/>(9.) In the instant case, there was a clause of arbitration in the contract agreement between the parties but the contactor has approached the Court in writ jurisdiction with out initiating and exhausting the arbitration proceeding. Further there is dispute between the parties as regards the supply of earth from the project site and also as regards the total quantity of work done by the contractor till the time of termination. It is well settled that such disputed question of fact cannot be decided in a writ proceeding (State of M.P. and others-Vs-M. V. Vyavsaya and Co. 1997(1) SCC 156. If the contract was illegally or irregularly terminated the contractor could have approached either Civil Court or the Arbitrator for compensation or damages, if any. (10.) In view of the foregoing discussion and decision, we are of the view that the respondent-contractor was not entitled to relief regarding extension of period of work and the termination order and withdrawal orders could not have been set aside without any finding of fault on the part of the IOC. The writ appeals are therefore allowed and the impugned order is set aside. The dismissal of the writ petition will be no bar to the respondent contractor to approach the competent authority for compensation or damages, if any.