Jammu & Kashmir High Court – Srinagar Bench
M/S Navnirman Construction Company … vs Union Of India Through Secretary … on 31 December, 2024
Author: Rajnesh Oswal
Bench: Rajnesh Oswal
IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
WP ( C ) No. 2802/2024
CM No. 7637/2024
Reserved on 19.12.2024.
Pronounced on 31.12.2024
M/S Navnirman Construction Company through its ...Petitioner(s)/Appellant(s)
partner Manish Singh,
S/o Late Ajit Kumar Singh
C/o L-40, Road No-20, Sri Krishna Nagar, Patna,
800001 (Bihar)
Through: Mr. Arif Sikander Mir, Advocate with
Ms. Zeeshan Yaqoob, Advocate.
Vs.
1. Union of India Through Secretary Ministry of ...Respondent(s)
Defense Government of India;
2. Director General Border Roads,
Seema Sadak Bhawan, Ring Road Naraina,
Delhi Cantt, New Delhi-110010;
3. Chief Engineer
Project Vijayak, Border Roads Organization
R/o HQ CE (P) Vijayak
C/o 56 APO, Pin Code; 931721;
4. M/S Amardeep Constructions
Office-71, Ranjan Bar Kunjwani Talab,
Jammu, 189991;
Through: Mr. Rahul Panth, Sr. Advocate with
Mr. Aswad Attar, Advocate- R-4. (Th. Video conferencing)
Mr. Viqas Malik, Advocate (R-1-3).
CORAM:
HON'BLE MR. JUSTICE RAJNESH OSWAL, JUDGE
JUDGMENT
1. The petitioner was allotted work for “Design and Construction of
130. Mtr Span (90+40) Major permanent bridge (Durga Bridge) at
Km 173.55 on Leh-Chalunka Road under 54 RCC/16/BRTF” vide
letter of acceptance dated 31stJuly, 2020. After exchange of
numerous communications between the petitioner and the official
respondents, the Colonel, being the officiating Chief Engineer, vide
communication dated 12 May 2023, cancelled the contract allotted
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in favour of the petitioner w.e.f. 12thMay, 2023 by invoking the
condition 54 of general conditions of contract.
2. The petitioner being aggrieved of the termination of the contract
sought the settlement of the dispute through arbitration and an
Arbitrator was appointed vide order dated 4th August 2023 by the
Hon‟ble the Chief Justice. The learned Arbitrator entered the
reference and held the termination of the contract as bad under law,
vide award dated 15th October 2024.
3. During the pendency of the arbitration proceedings, the respondents
No. 3 floated a fresh NIT dated 25th April 2024 for “Execution of
the balance Design and Drawings (including proof checking from
IIT) and construction of 130 M Multi Span (90+40) Major
permanent Bridge (Durga BR) with Steel Super structure and
balance Sub- Structure at KM 173.55 on Leh-Chalunka Road under
54 RCC/18 BRTF of Project Vijayak in Ladakh (UT)”. This
contract was allotted to the respondent No. 4 vide Letter of
Acceptance dated 23rd September 2024.
4. The petitioner has filed the present petition for issuance of an
appropriate writ, order or direction including the one in the nature
of:-
a. Writ of certiorari to quash NIT dated 25th April
2024 and Letter of Acceptance dated 23rd
September 2024.
b. Writ of mandamus, directing the official
respondents to allow the petitioner to complete
the work in pursuance of Letter of Acceptance
dated 31st of July, 2020 of the Accepting Officer
(Chief Engineer)-respondent No.3 in the present
case at the revised rates.
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5. The petitioner has sought the above-mentioned reliefs on the
following grounds: –
i. That the learned Arbitrator has declared the letter
of termination of contract dated 12thMay, 2023, as
bereft of any legal force and the only effect of this
finding is that the work has to be completed by the
petitioner and the work allotted to the petitioner in
pursuance of earlier tender is legally intact.
Therefore, the impugned NIT and LOA have to be
declared as non-est in the eyes of law.
ii. That during pendency of the arbitral proceedings,
the official respondents invited fresh bid which
contained certain data, that was missing in the
earlier bid document and because of absence of
that data only, the petitioner was prevented from
submitting the design for approval, resulting into
non-execution of work.
iii. That after the petitioner came to know about the
fresh bid, the petitioner vide communication 5th
February, 2024 and 22nd May, 2024, requested the
official respondents for providing fair opportunity
to the petitioner to execute the work. The
respondents appeared on 18thApril, 2024 and
sought time to examine the scope and feasibility of
the submission made by the petitioner before the
Arbitrator. The said submission is duly recorded in
the minutes of the proceedings of the learned
Arbitrator. The respondents on the one hand were
getting the arbitral proceedings postponed under
the guise of settlement and on the other hand a new
bid was invited for the balance work on 25 thApril,
2024. The lowest bidder, by playing fraud by
submitting manipulated documents obtained the bid
and the official respondents were duly informed by
the petitioner.
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iv. The respondents informed the learned arbitral
tribunal that the case for settlement has been taken
up with the higher authorities for necessary
direction in respect of feasibility of the settlement,
but the decision was still awaited. In view of this, a
request was made to postpone the date of hearing
by a month instead of 6th June 2024. The matter
finally came to be heard on merits by the learned
Arbitrator and was reserved for pronouncement of
award and in the meantime, the mandate of
Arbitral tribunal expired on 16th September 2024
and the parties by mutual consent extended the
mandate of the arbitral tribunal by one month. The
official respondents without waiting for the
outcome of the arbitral proceedings, vide letter of
acceptance dated 23rd September 2024, allotted the
execution of the balance work to the respondent
No. 4 illegally and arbitrarily.
6. Learned counsel for the respondent Nos. 1 to 3 had submitted the
reply in open court, which was taken on record.
7. The respondent Nos. 1-3 have objected the maintainability of the
writ petition on various pronouncements of the Hon‟ble Apex
Court. On facts, it is stated that the bridge in discussion is a
bottleneck on an axis which is the only connectivity to the Southern
Glacier, Sub-Sector Hanif and the Sub-Sector West, where the
troops of Indian Army are deployed on icy high-altitude axis at
close range of the Western enemy. These facts have been narrated
by the respondents, perhaps to demonstrate that the bridge in
question is of strategic importance. It is stated that the petitioner
was allotted contract for design and construction including Sub-soil
investigation of 130 mtr span (90m+40m) Major Permanent Bridge
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(Durga Bridge) at Km 173.55 on Leh-Chalunka road under 54
RCC/16 BRTF for Rs. 10,37,00,000.00. The petitioner took nine
months to deposit the performance security Deposit (PSD) and to
accept the work order after conclusion of the contract. Taking into
consideration the importance of the bridge, the poor response of the
contractor-petitioner and the progress of just 3.30% till May, 2023
(after lapse of 02 years, 09 months and 11 days), the said contract
was cancelled by the Accepting Officer, i.e. Officiating Chief
Engineer, Project Vijayak in the capacity of Accepting Officer. In
order to execute the balance work, a new contract was awarded to
the respondent No.4, i.e. M/s Amardeep Constructions on 23rd
September 2024 after taking approval of the higher authorities, i.e.
DGBR as per communication dated 13thSeptember, 2024.
Performance security deposit (PSD) of Rs. 91.40 lakhs was
deposited by the respondent No. 4 on 19 th October, 2024 well
within the period of 28 days and the work order has been placed on
25th October, 2024. The Sub-Soil Investigation (SSI) report, design
and drawings submitted by M/s Navnirman Construction Company
for Chalunka side abutment and super structure duly approved by
competent authority were included in the new tender, initiated for
execution of balance work of the said bridge. Scope of SSI was
deleted as it was already carried out by the petitioner. It is further
averred that the respondent No. 4 has mobilized the resources on
ground and started the excavation work of the abutment. It is further
pleaded that though the SSI was already carried out and included in
the agreement but for more surety, SSI is being carried out by the
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respondent No.4 at its own cost, so that better design can be carried
out based on actual ground inputs. In nutshell, the stand of the
official respondents is that the delay on the part of petitioner to
execute the work, prompted the official respondents to cancel the
contract allotted to the petitioner and float a fresh tender for
execution of balance work, and ultimately the respondent No. 4
emerged as a successful bidder.
8. The respondent No. 4 has opposed the writ petition on the ground
that the petitioner through the medium of present writ petition is
virtually seeking the execution of award passed by the learned
Arbitrator and it was never the case of the petitioner before the
learned Arbitrator that it be permitted to execute the balance work
but to the contrary, the petitioner in its claim, claimed the payment
of Rs. 1,50,41,600.00 as loss of contractor‟s profit of 15% of the
balance work and even the said claim has not been allowed by the
learned Arbitrator. It is also stated that in the garb of present
petition, the petitioner is seeking enforcement of one part of arbitral
award dated 15.10.2024, the enforceability of which can only lie in
terms of Section 36 of the Arbitration and Conciliation Act, 1996,
once the period stipulated for setting aside the arbitral award
prescribed under section 34 of the Act (supra) lapses. In the instant
case, the award is still open to challenge, therefore, the question of
enforceability does not arise at all. It is also the stand of respondent
No. 4 that it has submitted the performance bank guarantee of Rs.
91,40,000/- and after receiving the work order, it has mobilized the
men and machinery immediately to site for conducting SSI for
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confirming the underground status at site. The respondent No.4 has
also appointed the Designer for the balance design work for the
project and prepared the drawing and design of the above referred
bridge which are in process of submission to HQDGBR. It is also
pleaded that for the „A1″ side foundation, the answering respondent
has mobilized machinery to achieve the foundation level given to
answering respondent as per the approved drawings which were
provided as a part of the contract by the department, as these
drawings were approved by HQDGBR. For pier well foundation
and „A2‟ foundation side, the respondent No.4 has fabricated the
cutting edge (approximately 8.5 MT) for the bridge and has already
procured the 13.3 MT reinforcement required to build „A1‟ side
foundation. The respondent No. 4 has also stated that the petitioner
was declared as L1 bidder at a cost of Rs. 10.37 Crore. In the same
bid, the L2 bidder had quoted an amount of Rs. 17.50 Crores. The
fact that the respondent No. 4 has been declared as successful
bidder for amount of Rs. 18.28 Crores, clearly demonstrates that bid
of Rs. 10.37 Crores submitted by the petitioner concerned was
grossly undervalued. The petitioner when subsequently realized that
the work could not be completed at the said amount, the project was
abandoned by the petitioner.
9. Mr. Arif Sikander Mir, learned counsel for the petitioner has
submitted that once the learned Arbitrator has declared the
termination of the contract vide communication dated 12.05.2023,
as non-est and has directed the authority concerned to pass fresh
orders in the light of the relevant material, the contract between the
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petitioner and the official respondents gets revived and as such the
respondents cannot proceed ahead with the execution of the work
allotted to the private respondent in pursuance to NIT dated
25.04.2024, impugned by the petitioner in the present petition.
During his submissions, the learned counsel for the petitioner has
submitted that the petitioner would not press the relief, whereby the
petitioner has sought the directions to the official respondents to
allow the petitioner to complete the work in the present case at the
revised rates. He has also submitted that the benefit of the work
executed by the petitioner was granted to the private respondent by
providing the data in the NIT impugned in this petition.
10.Per contra, Mr. Viqas Malik, learned counsel for the official
respondents, has submitted that the petitioner had made 14 claims
before the learned Arbitrator and no relief was sought by the
petitioner for permitting the petitioner to continue with the work.
When the NIT dated 25thApril 2024 was floated by the official
respondents and the Letter of Acceptance dated 23.09.2024 was
issued in favour of the private respondent, the petitioner never
initiated any proceedings, to demonstrate its willingness to execute
the work in question, till the award was passed by the learned
Arbitrator. During the arbitral proceedings, the petitioner no doubt
made offer for executing work at revised rates, but the offer was not
accepted by the official respondents. He has laid much stress that
the award passed by the learned arbitral tribunal has not attained
finality and the official respondents have already awarded the
contract to the private respondent and the private respondent after
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complying the initial conditions, has proceeded ahead with the
execution of the work. He has also argued that for the commercial
interest of the petitioner, the work on the project of strategic
importance cannot be stalled, by quashing the tender impugned in
this petition.
11.Mr. Rahul Pant, learned senior counsel for the private respondent,
has submitted that the petitioner is virtually seeking the execution
of the award passed by the learned Arbitrator through the medium
of this writ petition, which in fact can be enforced only in terms of
Section 36 of the Arbitration and Conciliation Act, 1996, once the
period stipulated for setting aside the arbitral award lapses. The
award passed by the learned Arbitrator is still open to challenge,
therefore the question of enforceability does not arise at this stage.
He has further argued that the private respondent, not only has
invested huge amount and has collected men and machinery for the
purpose of execution of the work but also has done good amount of
work on spot, as such at this belated stage, the work being done on
spot cannot be stopped.
12.Heard learned counsel for the parties and perused the pleadings of
the parties.
13.This is admitted fact that the termination of the contract allotted to
the petitioner, vide communication dated 12th May 2023 has been
declared non-est by the learned Arbitrator vide award dated 15th
October, 2024. A perusal of the award reveals that aggrieved of the
termination of the contract, the petitioner had lodged 14 claims
including the relief of cancellation of the termination of the contract
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by the official respondents. The learned Arbitrator vide award dated
15th October 2024 has declared the termination of contract as
non-est and has directed the authority concerned to pass fresh
orders in the light of relevant material. He has further observed that
the fate of performance security and action contemplated to be
taken, if any in the light of agreement entered into between the
parties, will depend on the outcome of his finding including how
the part of work executed by the claimant is to be treated. The
submission made by the petitioner that with the passing of award by
the learned Arbitrator, the old contract is revived, though appears to
be very attractive but the relief sought by the petitioner, though
relinquished subsequently during arguments, that the official
respondents be permitted to allow the petitioner to complete the
work on revised rates, speaks a lot about the intention of the
petitioner.
14.This is also evident that the NIT impugned in this petition was
floated in the month of April, 2024 and till the award was passed by
the learned Arbitrator, the petitioner did not find itself aggrieved of
the same and never threw any challenge to the NIT, though the
petitioner made offer to the official respondents for execution of
work at the revised rates i.e. the enhanced rates but was not
accepted by the official respondents. It is evident that the petitioner
got encouraged to file this writ petition by the passing of award
only, whereby the termination of the contract was held to be bad in
law. This court cannot lose the sight of the fact that the contract has
been awarded to the private respondent, who has proceeded ahead
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with the execution of work and has also made huge investments.
There is substance in the submission made by the learned senior
counsel for the private respondent that the petitioner is in fact
seeking the execution of the award through the medium of this writ
petition, which has not yet attained any finality.
15.The fact that there were negotiations between the petitioner and the
official respondents for the execution of the work at the enhanced
rates, cannot come to the rescue of the petitioner, as any indulgence
by this court directing the official respondents to permit the
petitioner to execute the work at enhanced rates would amount to
re-writing of the contract by the court, which is not permissible
under law. Otherwise also, during his submissions, the learned
counsel for the petitioner has submitted that the petitioner would
not press for the relief of directing the official respondents to permit
the petitioner to execute the work at enhanced rates. The impugned
NIT cannot be quashed merely because the termination of contract,
awarded earlier in favour of the petitioner, has been held to be bad
in law, more particularly when the authority concerned has been
directed by the learned Arbitrator to pass fresh orders. The authority
may or may not pass the order in favour of the petitioner and till the
same is done, the fate of the construction of a bridge, of vital
importance cannot be permitted to hang in balance.
16. It is the stand of the petitioner that the bridge in question is of
strategic importance from the security point of view, as it will
provide connectivity to the southern glacier, sub-sector Hanif and
the sub sector West, where the troops of Indian army are deployed
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on high altitude at close range of the western country, known to
threaten the security of the country. At present, the capability of
these soldiers is dependent upon the logistic support of the fragile
400 feet bailey suspension bridge which is in deteriorated condition
and is of the limited load capacity. It is due to this reason that the
construction of the bridge in question is of a vital importance. The
claims made by the petitioner before the learned Arbitrator clearly
reveals that the petitioner has only commercial interest in the work,
whereas the work in question is of strategic importance from the
security point of view. When the commercial interest is pitted
against the public and national interest, then the balance must tilt in
favour of public and national interest. In Abraham Patani v. State
of Maharashtra, (2023) 11 SCC 79, the Hon‟ble Apex Court has
held that when the public interest is so clearly articulated and is an
urgent and pressing exigency, private interests must give way to the
extent required.
17.In Joshi Technologies International Inc. v. Union of India, (2015)
7 SCC 728, the Hon‟ble Apex Court has held as under:
69. The position thus summarised in the aforesaid principles
has to be understood in the context of discussion that preceded
which we have pointed out above. As per this, no doubt, there
is no absolute bar to the maintainability of the writ petition
even in contractual matters or where there are disputed
questions of fact or even when monetary claim is raised. At the
same time, discretion lies with the High Court which under
certain circumstances, it can refuse to exercise. It also follows
that under the following circumstances, “normally”, the Court
would not exercise such a discretion:
69.1. The Court may not examine the issue unless the action
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has some public law character attached to it.
69.2. Whenever a particular mode of settlement of dispute is
provided in the contract, the High Court would refuse to
exercise its discretion under Article 226 of the Constitution
and relegate the party to the said mode of settlement,
particularly when settlement of disputes is to be resorted to
through the means of arbitration.
69.3. If there are very serious disputed questions of fact which
are of complex nature and require oral evidence for their
determination.
69.4. Money claims per se particularly arising out of
contractual obligations are normally not to be entertained
except in exceptional circumstances.
70. Further, the legal position which emerges from various
judgments of this Court dealing with different
situations/aspects relating to contracts entered into by the
State/public authority with private parties, can be summarised
as under:
70.1. At the stage of entering into a contract, the State acts
purely in its executive capacity and is bound by the obligations
of fairness.
70.2. State in its executive capacity, even in the contractual
field, is under obligation to act fairly and cannot practise some
discriminations.
70.3. Even in cases where question is of choice or
consideration of competing claims before entering into the
field of contract, facts have to be investigated and found before
the question of a violation of Article 14 of the Constitution
could arise. If those facts are disputed and require assessment
of evidence the correctness of which can only be tested
satisfactorily by taking detailed evidence, involving
examination and cross-examination of witnesses, the case
could not be conveniently or satisfactorily decided in
proceedings under Article 226 of the Constitution. In such
cases the Court can direct the aggrieved party to resort toAbdul Rashid Ganaie
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alternate remedy of civil suit, etc.
70.4. Writ jurisdiction of the High Court under Article 226 of
the Constitution was not intended to facilitate avoidance of
obligation voluntarily incurred.
70.5. Writ petition was not maintainable to avoid contractual
obligation. Occurrence of commercial difficulty,
inconvenience or hardship in performance of the conditions
agreed to in the contract can provide no justification in not
complying with the terms of contract which the parties had
accepted with open eyes. It cannot ever be that a licensee can
work out the licence if he finds it profitable to do so : and he
can challenge the conditions under which he agreed to take
the licence, if he finds it commercially inexpedient to conduct
his business.
70.6. Ordinarily, where a breach of contract is complained
of, the party complaining of such breach may sue for specific
performance of the contract, if contract is capable of being
specifically performed. Otherwise, the party may sue for
damages.
70.7. Writ can be issued where there is executive action
unsupported by law or even in respect of a corporation there is
denial of equality before law or equal protection of law or if it
can be shown that action of the public authorities was without
giving any hearing and violation of principles of natural
justice after holding that action could not have been taken
without observing principles of natural justice.
70.8. If the contract between private party and the
State/instrumentality and/or agency of the State is under the
realm of a private law and there is no element of public law,
the normal course for the aggrieved party, is to invoke the
remedies provided under ordinary civil law rather than
approaching the High Court under Article 226 of the
Constitution of India and invoking its extraordinary
jurisdiction.
70.9. The distinction between public law and private law
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element in the contract with the State is getting blurred.
However, it has not been totally obliterated and where the
matter falls purely in private field of contract, this Court has
maintained the position that writ petition is not maintainable.
The dichotomy between public law and private law rights and
remedies would depend on the factual matrix of each case and
the distinction between the public law remedies and private
law field, cannot be demarcated with precision. In fact, each
case has to be examined, on its facts whether the contractual
relations between the parties bear insignia of public element.
Once on the facts of a particular case it is found that nature of
the activity or controversy involves public law element, then
the matter can be examined by the High Court in writ petitions
under Article 226 of the Constitution of India to see whether
action of the State and/or instrumentality or agency of the
State is fair, just and equitable or that relevant factors are
taken into consideration and irrelevant factors have not gone
into the decision-making process or that the decision is not
arbitrary.
70.10. Mere reasonable or legitimate expectation of a citizen,
in such a situation, may not by itself be a distinct enforceable
right, but failure to consider and give due weight to it may
render the decision arbitrary, and this is how the requirements
of due consideration of a legitimate expectation forms part of
the principle of non-arbitrariness.
70.11. The scope of judicial review in respect of disputes
falling within the domain of contractual obligations may be
more limited and in doubtful cases the parties may be
relegated to adjudication of their rights by resort to remedies
provided for adjudication of purely contractual disputes.
(emphasis added)
18.In National High Speed Rail Corpn. Ltd. v. Montecarlo Ltd., (2022) 6
SCC 401, the Hon‟ble Supreme Court of India has observed as under:
48. Even while entertaining the writ petition and/or
granting the stay which ultimately may delay the execution
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of the Mega projects, it must be remembered that it may
seriously impede the execution of the projects of public
importance and disables the State and/or its
agencies/instrumentalities from discharging the
constitutional and legal obligation towards the citizens.
Therefore, the High Courts should be extremely careful and
circumspect in exercise of its discretion while entertaining
such petitions and/or while granting stay in such matters.
Even in a case where the High Court is of the prima facie
opinion that the decision is as such perverse and/or arbitrary
and/or suffers from mala fides and/or favouritism, while
entertaining such writ petition and/or pass any appropriate
interim order, High Court may put to the writ petitioner’s
notice that in case the petitioner loses and there is a delay in
execution of the project due to such proceedings initiated by
him/it, he/they may be saddled with the damages caused for
delay in execution of such projects, which may be due to such
frivolous litigations initiated by him/it. With these words of
caution and advice, we rest the matter there and leave it to
the wisdom of the Court(s) concerned, which ultimately may
look to the larger public interest and the national interest
involved.
(emphasis added)
19. It would be apt to note that the rights of the petitioner have not been
finally determined and the official respondents may or may not choose
to assail the award passed by the learned Arbitrator and in the event,
they choose not to do so, still the competent authority has to decide the
issue in the light of directions of the learned Arbitrator, which may lead
to time consuming further litigation. In fact, there appears to be no end
to litigation in the near future and as such, the execution of the work
cannot be allowed to remain in limbo till the litigation comes to an end.
If the petitioner finds that wrong has been committed, the petitioner can
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resort to proceedings seeking damages, as it earlier sought before the
learned Arbitrator, but cannot seek the quashing of NIT dated 25th April
2024 and letter of acceptance dated 23.09.2024 by writ of certiorari.
20.In view of what has been considered and discussed above, this Court is
of the considered view that the present petition lacks merit and deserves
to be dismissed.
21. Accordingly, the writ petition is dismissed along with connected
CM(s).
(RAJNESH OSWAL)
JUDGE
SRINAGAR:
31.12.2024.
“Ab. Rashid – PS”
Whether approved for reporting: Yes/No
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