M/s Dalip Singh Adhikari vs State of Uttarakhand and others

The petitioner before this Court has invoked the jurisdiction of this Court under Article 226 of the Constitution of India and prays for the quashing of the order dated 25.08.2017. By the impugned order dated 25.08.2017, the contract which was executed in favour of the petitioner on 03.01.2017 for construction of two lane Tanakpur Joljibi motor road has been cancelled. The impugned order is a consequential order to the order dated 22.08.2017 passed by the Additional Chief Secretary, P.W.D., Government of Uttarakhand and the order dated 23.08.2017 passed by the Engineer-in-Chief, Public Works Department, Dehradun, in which there is a reference of certain enquiries in which it has been found that the very bid of the petitioner was a non-responsive bid and the contract was not liable to be given to him in the first place and hence appropriate action be taken.

Learned counsel for the petitioner challenges the order dated 25.08.2017, inter alia, for reason that in the contract executed between the parties on 03.01.2017 specific grounds for termination of contract have been given in clause 56.1 and 56.2. These grounds do not exist nor has the contract been cancelled on these grounds. The reason assigned by the impugned order for cancellation of the contract is that the bid made by the petitioner was non responsive. The learned counsel for the petitioner would argue that this can never be a ground for cancellation of contract as had the bid been non responsive, the contract would never have been granted in his favour. Moreover subsequent to the petitioner''s bid being L-1, a contract was executed in his favour and he was duly performing his contractual obligations for the last six months when the contract was arbitrarily cancelled.

In the counter affidavit, however, it has been stated that the contract has been cancelled as the petitioner had indulged in fraudulent practices, etc.

According to the petitioner, contract was executed in his favour on 03.01.2017 and thereafter the construction work is already in progress. The contract has been cancelled on the basis of a complaint made by a local Member of Legislative Assembly, in which initially a preliminary inquiry and then a final inquiry has been done. The reference is of preliminary inquiry dated 15.06.2017 and final inquiry dated 25.07.2017, which does not disclose anything adverse against the petitioner. In fact the petitioner relies on these reports and states that there was absolutely no basis on which contract could have been cancelled.

The contract admittedly has a provision for resolution of disputes in case they arise as presently there is one. Reference has been made to certain provisions of contract, which read as under:- "23. Appointment of the Adjudicator -

1. The Adjudicator shall be appointed jointly by the Employer and the Contractor at the time of the Employer''s issuance of the Letter of Acceptance. If, in the Letter of Acceptance, the Employer does not agree on the appointment of the Adjudicator, the Employer will request the Appointing Authority designated in the PCC, to appoint the Adjudicator within 14 days of receipt of such request.

23.2. Should the Adjudicator resign or die, or should the Employer and the Contractor agree that the Adjudicator is not functioning in accordance with the provisions of the Contract, a new Adjudicator shall be jointly appointed by the Employer and the Contractor. In case of disagreement between the Employer and the Contractor, within 30 days, the Adjudicator shall be designated by the Appointing Authority at the request of either party, within 14 days of receipt of such request.

Procedure for Disputes -

24.1 If the Contractor believes that a decision taken by the Engineer was either outside the authority given to the Engineer by the Contract or that the decision was wrongly taken, the decision shall be referred to the Adjudicator within 14 days of the notification of the Engineer''s decision.

24.2 The Adjudicator shall give a decision in writing within 28 days of received of a notification of a dispute. If the adjudicator fails to give its decision within the period of 28 days of the receipt of a notification of a dispute, either party may within 28 days of the expiration of the above mentioned period, give notice to the other party of its dissatisfaction and intention to commence arbitration.

24.3 The Adjudicator shall be paid the daily allowance of the rate specified in the PCC, together with reimbursable expenses of the types specified in the PCC, and the cost shall be divided equally between the Employer and the Contractor, whatever decision is reached by the Adjudicator. Either party may refer to a decision of the Adjudicator to an Arbitrator within 28 days of the Adjudicator''s written decision. Neither party shall be entitled to commence arbitration of a dispute unless a notice of dissatisfaction has been served in accordance with the GCC 24.2 above. If neither party refers the dispute to arbitration within 28 days, the Adjudicator''s decision shall be final and binding. In the event that a party fails to comply with the decision of the adjudicator which has become final and binding, then the other party may without prejudice to any other rights it may have, refer the failure itself to arbitration.

24.4 The arbitration shall be conducted in accordance with the arbitration procedure published by the institution named and in the place specified in the PCC."

Inspite of the admitted provisions referred above, under which the petitioner and the respondents can avail a suitable remedy, the learned counsel for the petitioner Mr. Vinay Garg relies upon a decision of Hon''ble Apex Court in the case of Harbanslal Sahnia and another v. Indian Oil Corpn. Ltd. and others reported in (2003) 2 SCC 107 and would argue that this is, however, a unique case where there has been a total arbitrariness and high- handedness at the hands of the Government authorities, where even though there are conclusive report in two inquiries set up by the Government holding the petitioner to be a responsive bidder and the complaint being absolutely frivolous, and advising the Government against cancellation of contract, yet because of the total arbitrary action on the part of the authority, the contract has been cancelled, and considering the facts and circumstances of the case an interference is required by this Court in a writ jurisdiction.

Heard learned counsel for the petitioner Mr. Vinay Garg as well as learned Advocate General for the State Mr. S.N. Babulkar assisted by Mr. Paresh Tripathi, Chief Standing Counsel.

It is a settled position of law that once it comes to the knowledge of any judicial authority that the case before it has an arbitration clause, the parties must be referred for arbitration. Undoubtedly, in a suitable case, there has always been a discretion for exercising jurisdiction under Article 226 of the Constitution of India, however, this Court is not inclined to exercise such a discretion in the present facts and circumstances of the case.

Considering that there is an arbitration clause in the matter, where atleast first the petitioner must approach the Adjudicator and where a statement has been given by the learned Advocate General that the moment the petitioner approaches before the Adjudicator, all necessary action would be taken in accordance with law for an expeditious disposal, nothing further needs to be said in the matter. The relief which the petitioner is presently seeking in this matter cannot be granted.

Subject to the aforesaid observations, writ petition stands dismissed.

Let a certified copy of this order be issued within twenty-four hours on payment of usual charges.