Indra Singh Gusain vs State Of Uttarakhand & Others

Sharad Kumar Sharma, J

The brief facts, which engages consideration in the present writ petition, are, that it is an admitted case of the petitioner that he is a registered "C" class contractor with the respondents, and in pursuance to the tender notice which was floated by the respondents on 16.08.2019, to construct the building of "Mother and Child Health Welfare Center in Village Malari, District Chamoli", the petitioner had participated in the tendering process, in which he was declared as "L1" bidder on 13.09.2019, and accordingly, on the same day, the contract bond was executed, being Agreement No.43/Executive Engineer/Dated 13.09.2019.

The petitioner has contended, that on account of the nature of work, which was assigned to him under the terms of the contract, since he had to perform the work at an altitude of more than 3048 meters above the sea level, in Village Malari, District Chamoli, but due to the climatic conditions, and due to the other natural catastrophes also, he was unable to perform his work, and as a consequence thereto, he had number of times represented his grievance before the respondent Departments, agitating his grievances, but no response was given by the respondents.

The respondents had by virtue of an order dated 10.08.2021, which has been passed by respondent No.4 i.e. Executive Engineer, P.W.D. Gopeshwar, had terminated the agreement of the petitioner. Simultaneously, a penalty of Rs.2,79,450/- was also imposed, as well as the performance security of Rs.2,32,000/- was also forfeited, and simultaneously, a ban was also imposed on the petitioner, on the purchase of any tender for a period of six months thereinafter.

Primarily the petitioner had put a challenge to the impugned order dated 10.08.2021, as well as the act of the respondents, of forfeiture of the performance security, and imposition of the penalty too, by virtue of the present writ petition, and has also challenge the action of the respondents, by issuing a short term notice on 23.07.2021, which has been issued by the respondent No.4, for the purposes of completion of the remaining work, which was assigned to the petitioner for the construction of the building of the "Mother and Child Health Welfare Center in Village Malari, District Chamoli".

When this writ petition was filed before this Court, the terms of the contract was not placed on record by the petitioner. This Court by an order of 26.08.2021, considering the fact, on the ground that the petitioner has pleaded in the writ petition that the terms of the contract, and its copy was not supplied to him, had directed the learned Standing Counsel for the State to place the said contract on record.

Today, when the writ petition was taken up, the contract has been placed on record, along with the communication, which was made by the respondents, by virtue of which, the terms of the contract has already been earlier supplied to the petitioner. Hence, this theory, which have been pleaded in the writ petition that the terms of the contract was not supplied to the petitioner is not accepted by this Court, for the reason being that it was a "work contract", where the design of the proposed structure also constituted as to be the part of the contract, which the petitioner was supposed to perform, hence inference would be that copy of the contract, relating to a work contract, must have been supplied to the contractor, as work design and drawings constitutes part of it.

Learned Standing Counsel for the respondents/State, while placing the said contract on record had drawn the attention of this Court to Clause 31.3 of the contract, which provides that all questions relating to, the meaning of the specifications, design, drawing and instructions therein, as mentioned under the terms of the contract, in case, if there arises any dispute, it would be referable, to an Arbitrator under the terms of Clause 31.3 of the contract. Hence, the contention of the learned Standing Counsel for the State is, that the petitioner's claim, if at all, is sustainable to be agitated it could be only by raising a reference before the Arbitrator under the provisions of Arbitration and Conciliation Act, 1996. Clause 31.3 is extracted hereunder:-

"31.3 Except where otherwise provided in the contract all questions and disputes relating to meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality or workman ship or materials used in the work or as to any other questions, claim, right, or rates for extra items sanctioned and decided or not by the competent authority under the condition of the contract, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications estimates instructions or orders on these conditions or otherwise concerning the works, or the execution or failure to execute the same. Whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person or persons appointed by the Engineer-in-Chief, Uttarakhand Public Works Department, there will be no objection to any such appointments that the arbitrator so appointed is a Govt. servant that he had to deal with the matter to which the contract relates and that in the course of his duties as Government servant he had expressed views on all or any of the matters in dispute or differences. The arbitrator to whom the matter is originally or subsequently referred being incapacitate to act, the Engineer-in-Chief, shall appoint another person to act as arbitrator in accordance with the terms of contract. It is also a term of this contract that no person other than a person appointed by the Engineer-in-Chief of the Uttarakhand P.W.D as aforesaid shall act as arbitrator and if for any reason that is not possible, the matter is not to be referred to arbitration at all the arbitrator's may form time to time, with the consent of the parties enlarge the time for making and publishing the award.

Subject as aforesaid the provisions of Arbitration and conciliation Act 1996, or any statuary modification or re-enactment. Thereof and the rules made there under and for the time being in force shall apply to the arbitration proceedings under this clause."

Learned counsel for the petitioner had submitted that the act of forfeiture and imposition of the penalty on him was arbitrary, because it is not a part of the terms of the contract, whereby, the forfeiture of the performance guarantee could be made by the respondents, due to the non completion of the work, within the terms of the contract. If the reference be had to Clause 5 of the said terms of the contract, in fact the right of forfeiture has been protected under the terms of the contract, which would be equally binding on both the contracting parties for forfeiting the performance security, if there is a default or any breach in performance of the work.

The petitioner contends that the impugned order of the termination of the contract dated 10.08.2021, suffers from the vices of violation of principle of natural justice. This Court is of the view that the principle of natural justice, cannot be pressed into under Article 226 of the Constitution of India, particularly, where before arriving to the conclusion about the impact of principle of natural justice, the factual determination is required to be made, with regards to the extent of the non compliance of the terms and conditions of the contract by the petitioner which entails scrutinization of factual claims and counter claims. Apart from it, since the terms of the contract itself reserves the right of the employer to terminate the contract without assigning any reasons and principle of natural justice, under the contractual laws cannot be applied with the tenacity, as it is under the service jurisprudence or any other field of law. For reference Clause 5 of the contract is extracted hereunder:-

"Clause Action when whole of performance security is forfeited

No.5.1

(5.1) The officer accepting the contract on behalf of the Government or the Engineer-in-Charge shall have the power, without prejudice to his right against the contractor in respect of any delay or inferior workmanship or otherwise or to any claims for damage in respect of any breaches of the contract and without prejudice to any rights or remedies under any of the provisions of this contract or otherwise whether the date for completion has or has not elapsed by notice in writing to determine, the contract in any of the following cases:"

Learned counsel for the petitioner has further argued that the action of the respondents happens to be in violation of Article 14 and 19 (1) (g) of the Constitution of India. This argument of the learned counsel for the petitioner is from the prospective that the action of the respondents happens to be in violation of Article 14 of the Constitution of India, I am of the view that by termination of the contract, in an event of violation to comply with its conditions of contract, where right of termination of contract has been reserved under the terms of agreement, will not attract Article 14 of the Constitution of India, because the redressal forum of approaching the arbitrator, itself has been provided under the terms of the contract under clause 31.3, and if at all there is an infringement of a right of the petitioner which is allegedly guaranteed under Article 19 (1) (g) of the Constitution of India, if the Article 19 of the Constitution of India is read in its totality, the rights protected under Article 19 (1) of the Constitution of India is not an absolute, and certain exceptions has been carved, out under the said Article, where the State can impose a reasonable restriction in the exercise of its rights conferred in sub-clause of Article 19 (1) (g), as it has been provided under sub-clause (6) of the Article 19 of the Constitution of India. The exceptions provided therein by Article 19 (1) (6) are extracted hereunder:-

"(6) Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, 2 [nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to,-

(i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or

(ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise."

Learned counsel for the petitioner had made a reference to a circular which was issued by the U.P. PWD, Lucknow, by virtue of a letter No.362 MTG/70F-60, dated 08.10.982, under the head of the "classification and enlistment", of the contract in the Public Works Department. The very purpose and intention of this circular issued by the U.P. PWD, Lucknow, will not take a shape of being a statutory circular to be enforced in a writ jurisdiction under Article 226 of the Constitution of India, because it takes a shape of being an administrative order only, as it does not discloses the source of its legislative power of its formation. Apart from it, the very heading of this circular is only limiting its applicability, so far it relates to the classification and enlistment of the contract in the PWD, it has got nothing to do with regards to the execution of the contract, and the consequential termination on a breach of terms of the contract.

The petitioner further contends that under Article 20 of the Constitution of India, certain protection has been granted with regards to the respect of conviction of an offences, the tenacity of the argument is not acceptable for the reason being, that imposing the restrictions from prohibiting the petitioner in participating the tender process for six months, will not entail the attraction of Article 20 of the Constitution of India to bring it within the ambit of the purview of the terminology of conviction, because it is a restriction, which has been imposed in the participation in tendering process, and not in conviction for any act of an offence committed by the petitioner. Similarly, Article 21 of the Constitution of India with regards to the protection of the life and person's liberty has not been infringed is too not acceptable because the relationship of the petitioner and the employer are exclusively governed by the terms of the arbitration clause and the terms of the contract, which has been admittedly executed into amongst themselves will be interse finding amongst themselves at least, and hence, if at all the petitioner has any grievances, as against the order of the termination of his contract, the sole remedy which would be available to the petitioner, would be to invoke Clause 31.3 of the contract, which will have a binding effect on it, as such in view of the fact that there exists an arbitration clause contained under clause 31.3 of the contract, which was executed on 13.09.2019, the writ petition is dismissed. The petitioner is relegated to agitate all his grievances before the Arbitrator, under clause 31.3 of the Contract Agreement. Writ petition is accordingly dismissed.