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Judgment
The petitioner, an enterprise registered under the Micro, Small and Medium Enterprises Development, Act, 2006, is before this Court seeking to
declare that cancellation of work order by the 1st respondent and re-tendering of the work, are illegal and arbitrary. The petitioner further seeks to
quash Ext.P9 cancellation letter and Ext.P14 re-tender notification.
The 1st respondent-Kerala Minerals and Metals Limited (KMML) invited e-tender for the work of site clearance, dewatering the mining pit and
mining the inland deposits of Kovilthottam mining area (northern and southern side of church) by excavating or dredging or by any other means up to a
depth of mineralisation (min. 8 metre), and depositing the mineral sand in level ground, heaping for dewatering, economic way of loading and
transporting the same by tippers to the Mineral Separation (MS) Unit and for transportation of tailing sand from MS Unit. The petitioner was the
successful bidder. The 1st respondent issued Ext.P2 work order dated 29.02.2020 to the petitioner for a contract value of Rs.20,51,00,000/-. The
period of work was one year from the date of the work order.
The petitioner states that the petitioner paid Rs.2 lakhs as EMD. The 3rd respondent terminated the contract on 08.07.2020 as per Ext.P9
termination notice. Ext.P9 stated two reasons for termination of the contract, namely non-commencement of work and non-payment of security
deposit. The petitioner states that this is not the first time that the petitioner has executed work on behalf of the 1st respondent. The petitioner has
executed more than 18 works. The normal practice followed by the 1st respondent is to deduct security deposit from the first payment due to the
contractor.
The petitioner had submitted Ext.P3 letter dated 24.03.2020, informing the 1st respondent that security deposit can be deducted from the first
invoice of the petitioner. The petitioner further stated that the delay in execution was due to the spread of Covid-19 pandemic and the lockdown
imposed. There were serious issues in the locality identified for excavation demanding reclamation of the excavated area, by the evictees. There were
labour issues also, when the locals demanded employment. Due to the objections, all mining activities in the area were suspended.
The RDO, Kollam had to convene a meeting of the stakeholders on 19.06.2020. In the said meeting, an agreement was arrived at between the
persons concerned and representatives of various trade unions and political parties in the locality. Under this agreement, the 1st respondent was to
provide employment to affected persons on contract basis. In spite of that, the issues continued and no decision was taken on commencement of
mining at the locality. Ext.P4 minutes of the meeting would evidence these facts.
The petitioner further stated that costly machinery including excavators were purchased by the petitioner expending considerable sum to carry out
the work in question. The petitioner also mobilised employees. By Ext.P7 letter dated 30.06.2020, the petitioner was directed to start the work. The
petitioner thereupon submitted Ext.P8 representation to the District Collector requiring to convene a meeting and convince the trade unions and the
stakeholders to provide a conducive atmosphere for carrying out the work awarded to the petitioner. However, the issues are not solved. The non-
commencement of the work was not due to any fault of the petitioner. The situation was totally beyond the control of the petitioner.
The petitioner further stated that one Jose Antony had filed W.P.(C) No.7326/2020 on 07.03.2020 challenging the award of work to the petitioner.
The petitioner appeared in the said case and filed a detailed counter affidavit.
However, on 09.07.2020, when the writ petition came up for hearing, a submission was made on behalf of the 1st respondent that the work order
issued to the petitioner herein is already cancelled. Accordingly, the writ petition was disposed of. The action of the respondents in cancelling the work
awarded to the petitioner is grossly illegal, highly arbitrary and unsustainable, contended the petitioner.
Respondents 1 to 3 defended the writ petition filing counter affidavit. The respondents stated that the writ petition is not maintainable as there is no
public law element involved. The remedy of the petitioner is elsewhere and not under Article 226 of the Constitution of India. The work awarded to
the petitioner was cancelled on 08.07.2020, after six months from 29.02.2020 on which date Ext.P2 work order was issued. Before cancelling the
work order, the petitioner was issued with Ext.P7 notice. The respondents thereafter issued Ext.P14, a fresh tender notification. The fresh tender
proceedings are put on hold, due to the interim order passed by this Court. The respondents further stated that the petitioner was bound to make
payment of security deposit within 15 days.
The learned Senior Counsel assisted by the counsel for the petitioner, strenuously argued that the cancellation of the work order granted to the
lowest tenderer for trivial reasons is highly arbitrary and unsustainable. The work could not commence in time due to reasons beyond the control of
the petitioner. Respondents 1 to 3 were indeed aware of the ground situation. In spite of interference by the District authorities, there was no
conducive atmosphere to start the work. Even under the terms of contract, the respondents could have very well realised the security deposit payable
by the petitioner from the first invoice itself. Therefore, cancellation of work for these reasons, is illegal and just.
Relying on the judgment of this Court in Vijayakumari v. Kerala Land Development Corporation Limited [2020 (3) KLT 773], the learned Senior
Counsel argued that when the High Court, under Article 226 of the Constitution reaches a conclusion, upon consideration of materials placed before it,
that the decision of the authority was so unfair, arbitrary or unreasonable, its hands are not tied and the High Court can grant such reliefs as it deems
necessary to set right the illegality.
Relying on the judgment of the Hon'ble Apex Court in Commissioner of Income Tax and Others v. Chhabil Dass Agarwal [(2014) 1 SCC 603,]
the learned Senior Counsel argued that non-entertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy
is available is the rule of self-imposed limitation. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 despite the
existence of an alternative remedy. In view of the law laid down by the Hon'ble Apex Court and in the facts and circumstances of the case, the
petitioner is entitled to get relief, contended the learned Senior Counsel.
The Standing Counsel appearing for the respondents, on the other hand, argued that contract between the parties is under the realm of private law
governed by the provisions of the Contract Act and the dispute relating to interpretation of terms and conditions of contract cannot be agitated in a
writ petition and it has been so held by the Hon'ble Apex Court in Pimpri Chinchwad Municipal Corporation and Others v. Gayatri Construction
Company and Others [(2008) 8 SCC 172]. Relying on the judgment of the Apex Court in State of Bihar and Others v. Jain Plastics and Chemicals
Ltd. [(2002) 1 SCC 216], the Standing Counsel asserted that Article 226 is not the remedy for enforcing contractual obligations.
The learned Standing Counsel also relied on the judgment of the Apex Court in National Highway Authority of India v. Ganga Enterprises and
others [(2003) 7 SCC 410] to question the maintainability of this writ petition. Placing reliance on the judgment of the Apex Court in Kerala State
Electricity Board and Others v. Kurien E. Kalathil and Others [(2000) 6 SCC 293, ]the Standing Counsel argued that when the contract between the
parties is not a statutory contract, the disputes relating to interpretation of the terms and conditions of such contract should not be agitated in a petition
under Article 226 of the Constitution of India. The judgment of the Apex Court in State of U.P. and Others v. Bridge and Roof Company (India) Ltd.
[(1996) 6 SCC 22], was relied on by the Standing Counsel to underline that the remedy adopted by the petitioner is misconceived as the contract
between the parties is a contract in the realm of private law.
I have heard the learned Senior Counsel for the petitioner, learned Standing Counsel for respondents 1 to 3 and learned Government Pleader
appearing for respondents 4 and 5.
The tender in respect of the work in question was issued on 04.12.2019, as per Ext.P1. The work order was granted to the petitioner as per
Ext.P2, on 29.02.2020. The work had to be completed within a period of one year. As the petitioner did not at all start the work, respondents 1 to 3
issued Ext.P7 letter dated 30.06.2020 requiring the petitioner to commence the work. It was on the failure of the petitioner to commence the work that
Ext.P9 order of cancellation of the work order, was issued by the respondents.
Going by the nature of the work, it is clear that it is a work to be carried out on a day-to-day basis. Time bound and regular input of mineral sand is
necessary for the running of the 1st respondent-company. Any delay in execution of the work in question would indeed affect the very functioning of
the industry of the 1st respondent. The petitioner though was aware of this fact, did not commence the work for more than four months, which is a
substantial period. The delay on the part of the petitioner is capable of inflicting material blow to the production and productivity of the 1st respondent-
company, which is a public sector undertaking.
Respondents 1 to 3 have specifically denied the allegation of the petitioner relating to the labour issues subsisting in the area, hampering the
commencement of the work. Respondents 1 to 3 have specifically stated that there is nothing to show that the petitioner was prevented from
commencing the work. The petitioner has no case that he tried to start the work, which was obstructed by third parties. Whether there is labour unrest
preventing the petitioner from commencing the work, is a disputed question of fact, which this Court cannot adjudicate in writ proceedings. This Court
cannot pass an order based on a disputed question of fact.
The other reason for cancelling the work order is that the petitioner has not paid the security deposit within the stipulated 15 days. The work order
issued to the petitioner shows that in case security deposit is not submitted by the petitioner before the commencement of the work, the company holds
its right to withhold an equal amount towards civil security deposit from payments made against the work. This, however, is only a provision enabling
respondents 1 to 3 to withhold security amount equal to the security deposit from the petitioner. The said enabling provision in the work order will not
give a corresponding right to the petitioner not to make security deposit as agreed. The argument of the petitioner in defence of non-payment of
security deposit also is therefore unsustainable.
In the facts of the case, this Court finds no merit in the writ petition filed by the petitioner. The writ petition is accordingly dismissed. Needless to say,
the interim order passed by this Court on 29.07.2020 and extended thereafter, would also stand vacated.