R.K. Transport Private Limited vs Central Coalfields Limited And Ors

The present writ petition has been filed for quashing the order No. Legal/2015/102 dated 10.08.2015 (Annexure-34 to the writ petition) passed by

the respondent no. 2 â€" the Chairman-cum-Managing Director, Central Coalfields Limited rejecting the representation of the petitioner to permit it to

continue the work of loading and transportation of coal as per work order/letter of award dated 18.11.2006. Further prayer has been made for

quashing 2the letter as contained in memo no. GM(R)/Dal/BG/07-08/5545-47 dated 10.11.2017, whereby the respondent-CCL has requested the Bank

of India, Phusro Bazar Branch, Bokaro to encash the bank guarantees submitted by the petitioner and credit the same in its bank account maintained

at S.B.I, Main Branch, Daltonganj.

The factual background of the case as stated in the writ petition is that a tender notice bearing No. CCL/CGM(T)/Rajhara/2006/267 dated

23/25.08.2006 was issued under the signature of the respondent no. 4 â€" the Chief General Manager (Transport), CCL inviting sealed tenders from

reputed and experienced transport contractors for transportation of coal from Tetariakhar Open Cast Mines to Dakra Manual Siding for a period of

nine months. Pursuant to the said tender notice, the petitioner submitted its tender in the prescribed manner. Thereafter, the respondent no. 4 vide

letter no. CCL/CGM(T)/Rajhara/06/114 dated 15/16.11.2006 communicated the decision of the Board of CCL to the respondent no. 5 â€" the General

Manager (Rajhara), CCL regarding approval of the recommendation of the Tender Committee to award the work in favour of the petitioner for a

period of nine months. Consequently, the respondent no. 6 vide letter No. GM(R)/Dal/06-07/WO/CT/TTK/2065(a) dated 18.11.2006 issued work

order/letter of award in respect of three works of transportation for a total value of Rs.6,38,35,000/-. According to the petitioner, it faced great

difficulty in execution of the work and on the said issue, it repeatedly wrote letters to the respondent no. 8 about the miserable condition of the road as

well as disturbances created by the local villagers and requested to resolve the said issue for enabling the petitioner to carry out the work. The

respondent no. 6 vide letter dated 13.07.2007 intimated the petitioner that a parallel agency was engaged for transportation of coal, however, no such

letter of engagement was served to it. The petitioner vide letter dated 17.08.2007 requested the respondent no. 5 to compensate the loss suffered by it

due to providing the work to another agency. As per the petitioner, the other agency also did not complete the work which shows malafide action on

the part of the respondent. The respondent-CCL vide letter dated 03.11.2007 intimated the petitioner that the bank guarantees deposited by it would be

encashed and the amount due to CCL shall be adjusted. Subsequently, the respondent no. 4 vide letter dated 06.11.2007 informed the petitioner that

explanation dated 17.08.2007 submitted by it was considered and found to be incorrect. Thereafter, the respondent no. 5 vide memo no.

GM(R)/Dal/BG/07-08/5545-47 dated 10.11.2007 asked the respondent no. 7 to encash the bank guarantees of the petitioner and credit the amount in

favour of the respondent-CCL. The petitioner filed a writ petition being W.P.(C) No. 6184 of 2007 which was disposed of vide order dated 17.11.2011

with a direction to the respondent-CCL that if the petitioner files a representation, the same shall be decided by the concerned authority on providing

an opportunity of hearing to it within a period of six weeks. Thereafter, the petitioner made a detailed representation, however, vide letter dated

10/07.09.2012, the General Manager (C.M.C) intimated the petitioner that its representation was found without merit except the issue of additional

transportation cost deducted due to engagement of parallel agency which was being communicated to the concerned area for adjustment. The

petitioner again filed a writ petition being W.P.(C) No. 6275 of 2012 which was allowed vide order dated 15.07.2015 with a direction to the respondent

no. 2 to give personal hearing to the petitioner on 23.07.2015 and to pass a reasoned order. Pursuant to the said order of this Court, the representative

of the petitioner appeared before the respondent no. 2 and presented its case, however, vide order dated 10.08.2015, the respondent no. 2 rejected the

petitioner’s claim.

The learned counsel for the petitioner submits that the respondent no. 2 while passing the impugned order did not consider the relevant documents

as well as the arguments advanced on behalf of the petitioner. It is further submitted that even a parallel agency engaged by the respondent-CCL was

given extension, whereas the petitioner being the main contractor was not given extension of a single day. Though the parallel agency was granted

extension up to 31.03.2008, it transported coal to the extent of 26990.060 M.T as against the target of 90,000.00 M.T. The decision of the

management to forfeit performance security/encashment of bank guarantees may be technically correct, but the same is extremely harsh considering

the prevailing situation of the project and that the parallel agency which was deployed at the higher rate could not even complete the contract and

abandoned the work in the mid-way.

On the contrary, the learned counsel for the respondents submits that sufficient assistance was provided to the petitioner at the project siding, but its

execution of work was not satisfactory. It is further submitted that there was no disturbance by the local villagers and the said allegation made by the

petitioner was found to be false. The concerned road was also inspected and it was found that the road was not in poor condition. This fact was

informed to the petitioner vide letter no. PO/TTK/46 dated 03.04.2007. In fact, the petitioner did not even commence the execution of work in spite of

repeated requests causing huge loss to the respondent-company and as such, a suitable action has been taken against it as per the terms and

conditions of the contract. A reasoned order has been passed by the respondent no. 2 after considering the representation and providing due

opportunity of hearing to the petitioner’s representative. Thus, the impugned order dated 10.08.2015 passed by the respondent no. 2 does not

require any interference. It is also submitted by the learned counsel for the respondents that the petitioner has got an efficacious remedy to move

before the Civil Court of competent jurisdiction for adjudication of the disputed questions of fact raised by it in relation to the present contract.

Heard the learned counsel for the parties and perused the materials available on record. Admittedly, the petitioner fell short of the target as per the

terms and conditions of the contract. However, both the parties have their own contentions making allegation against each other for the delay

occurred in execution of the work. The petitioner has raised several grounds such as difficulty in transportation of coal due to bad road condition,

insufficient siding space, theft of coal, hindrance put by the villagers etc., whereas the respondents have denied the said contentions made by the

petitioner.

In the case of “Joshi Technologies International Inc. Vs. Union of India & Ors.â€, reported in (2015) 7 SCC 72,8 the Hon’ble Supreme

Court held as under:

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, “normallyâ€, the Court would not exercise such a

discretion:

69.1. The Court may not examine the issue unless the action 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.

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 discrimination.

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 to 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 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.

Keeping in mind the aforesaid principles and after considering the arguments of the respective parties, we are of the view that on the facts of the

present case, it is not a fit case where the High Court should have exercised discretionary jurisdiction under Article 226 of the Constitution. First, the

matter is in the realm of pure contract. It is not a case where any statutory contract is awarded.

It is thus trite that serious disputed questions of fact which are complex in nature and require evidence to be adduced by the parties for

determination of an issue should not normally be entertained under writ jurisdiction. If one party in a contract complains of a breach of any terms

thereof, the party complaining such breach may sue the other party for specific performance of the contract, if the same is capable of being

specifically performed. Otherwise, the party may sue for damages.

In the factual context of the present case, it appears that the petitioner filed two writ petitions before this Court challenging the action of the

respondents. In the second writ petition i.e., W.P.(C) No. 6275 of 2012, a Bench of this Court vide order dated 15.07.2015 while quashing the decision

taken by the respondents in this regard directed the respondent no. 2 to decide the representation of the petitioner by providing him a personal hearing.

Thereafter, the respondent no. 2 vide impugned order dated 10.08.2015 rejected the claim of the petitioner. On perusal of the impugned order dated

10.08.2015, it appears that the respondent no. 2 has observed inter alia that the petitioner transported only 40445 M.T of coal from 28.11.2006 to

11.02.2007 i.e., in 76 days against target of 1,26,692 M.T. The work was stopped from 12.02.2007 to 25.03.2007 due to washing away of the

causeway over Damodar River and after the same was made ready on 26.03.2007, the petitioner was requested to resume the work, however, it did

not commence the work, rather started communicating different authorities of the respondent-CCL showing its inability to do the work on different

excuses. The impugned order dated 10.08.2015 further suggests that the execution of the job was done by a parallel agency from 07.06.2007 to

05.07.2007 i.e., till availability of the causeway over Damodar River which indicates the fact that the transportation could have been done during the

said period.

Thus, I am of the considered view that the respondent no. 2 while passing the impugned order has considered the grievance raised by the petitioner

with respect to the work in question. The issue raised before this Court is purely a disputed question of fact which can only be determined by the fact

finding court/forum considering the evidence adduced by the parties. Several factual plea taken by the petitioner in the present writ petition cannot be

entertained under discretionary jurisdiction of this Court. Moreover, the agreement entered between the parties for the said work specifically provides

that the monthly target of coal transportation would be strictly followed, failing which penalty under Section 3 Clause No. 6.2 and 6.3 shall be applied

as per the General Terms and Conditions of the contract. Hence, if the petitioner has any grievance against the action taken by the respondents for

breach of any terms and conditions of the contract, it may agitate the same before appropriate forum.

In view of the aforesaid discussion, the writ petition is accordingly dismissed.