SURINDER SINGH & ANOTHER vs F. C. I. & OTHERS

1) The petition is admitted for hearing. With the consent of the learned counsel for the parties, the matter is heard finally.

2) In this petition, the petitioners, inter alia, seek writ of mandamus commanding the respondents to scrap the existing contract and to float the new

tenders in respect of the transportation contracts allotted to the petitioners. The petitioners also seek writ of certiorari for quashment of the decision

taken by the respondents to reduce the distances in respect of the contracts awarded to the petitioner from the existing distances at the time of the

floating of the Notice Inviting Tenders on the opening of the ChenaniNashri Tunnel. The petitioners also seek quashment of office order dated

29.05.2017 to the extent it reduces the existing revised freight rates. The petitioners further seek writ of prohibition commanding the respondents

not to enforce the office order dated 29.05.2017 to the extent it pertains to the petitioners. The petitioner further seek writ of mandamus

commanding the respondents to continue to make the payments in respect of the work allotted to it as per work orders issued by the respondents for

the above referred stations /contracts. In order to appreciate the petitioners’ grievance, few facts need mention which are stated infra:

3) The petitioners are proprietorship concerns engaged in running the transportation companies for the last several years. The Food Corporation of

India vide online tender notice dated 15.03.2016, invited bids from the eligible contractors for movement of stocks by road from the FSD -New

Godown, Jammu to various Centres in Jammu and Kashmir Region. Accordingly, a notice inviting tender was issued on 15.03.2016 by which bids

were invited for 15 destinations. The petitioners participated for the majority of the destinations. From the perusal of the notice inviting tenders, it

is evident that the period of contract was for 2 years except three stations namely Kargil-1, Kargil-11 and FSD Phyang. For the aforesaid stations the

period of contract was one year. The tender notice indicated respective distances in kilometers from FSD New Godown Jammu to respective

destinations. However, the petitioners in OWP No.1370/2017 were declared successful bidders in respect of the following contracts:

Petitioner No. 1.Â

a. FSD New Godown Jammu to FSD Kishtwar.Â

b. FSD New Godown Jammu to FSD Khillani.

ANDÂ

Petitioner No. 2:

a. FSD New Godown Jammu to FSD Srinagar.Â

b. FSD New Godown Jammu to FSD Baramulla.Â

c. FSD New Godown Jammu to FSD KupwaraÂ

d. FSD New Godown Jammu to PEG BaramullaÂ

e. FSD New Godown Jammu to FSD Mir BazarÂ

f. FSD New Godown Jammu to FSIJ PhyangÂ

g. FSD New Godown Jammu to FSD Budgam.Â

h. FSD New Godown Jammu to PEG Budgam.

4) The contracts were allotted to the petitioners and the petitioners have been executing the work allotted to them. It is the case of the petitioner

that before starting the tender process in exercise of powers under Clause XVIII (v) of the Model Tender Form, Chief Engineer, Public Works

Department fixed the distances which were final and binding on the contractors. The Regional Office of the Food Corporation of India

communicated an order dated 29.05.2017 to the petitioners by which the decision was taken to reduce the distance of the contracts including the

contract of the petitioners.  The details of the contracts being executed in respect of the following destinations with their existing distance and

revised distance and existing rates and revised rates by petitioners in OWP No.1370/2017 are as under:

5) It is the case of the petitioners that the aforesaid revision of distance and freight rates have been made as per the provisions of Clause-XVIII(v) of

the Model Tender Form and the distance has been reduced from the existing distance to the revised distance in respect of the respective contract of

the petitioners. The petitioners on the receipt of the communication dated 29.05.2017 served a legal notice dated 21.06.2017 to the respondents calling

upon the respondents not to reduce the rates in any manner whatsoever or in the alternative scrap the existing contract and float new tenders. That

the respondents have replied to the notice of the petitioners vide notices dated 18.07.2017 and 18.07.2017, in which inter alia it was stated that as per

conditions contained in the Model Tender Form the distance has to be decided by the General Manager (R). Thus, the action is justified as per

Clause XVIII(v) of the Model Tender Form. In the aforesaid factual background, the petitioners have approached this Court. Â

6) Mr. K. S. Johal, Senior Advocate for the petitioners submitted that terms and conditions of a concluded contract cannot be altered during the

currency of the contract. It is further submitted that the respondents have resorted to the power under Clause XVIII (V) of the Model Tender

Form and have invoked the same prior to commencement of the process of NIT and have determined the distance. Therefore, the same cannot be

invoked again in the absence of any stipulation in this regard. It is also submitted that the action of the respondents in altering the distances and the

rates amounts to frustration of the contract and the respondents are bound by principles of promissory estoppel and the impugned action of the

respondents is also hit by doctrine of legitimate expectation. It is also argued that a bidder calculates the rates which are viable and thereafter

submitts the bid and the action of the respondents in unilaterally altering the terms and conditions of the contract has made the contract uncertain. It is

also submitted that principles of oppressor and oppressed as well as principle of pari-delicto are applicable to the fact situation of the case and the

contract cannot be divided. Lastly, it is also urged that under clause 20 of the agreement, the respondents ought to have referred the matter to the

dispute redressal committee before passing the order impugned as well before the rates and distance were altered.  In support of his submissions,

learned senior counsel for the petitioners has placed reliance on the decisions of the Supreme Court in cases of Delhi Development Authority v. Joint

Action Committee, Allottee of SFC, (2008) 2 SCC 672, Pawan Alloys & Casting Pvt. Ltd. Meerut v. U. P. State Electricity Board & others, (1997) 7

SCC 251, Mohd. Salim-ud-Din v. Misri Lal & others, (1986) 2 SCC 378.

7) Mr. Ajay Gandotra, learned counsel for the petitioner in OWP No.1314/2017 submitted has submitted that the respondents ought to have taken

recourse to the dispute redressal Committee before passing the impugned order. Mrs. Veenu Gupta, learned counsel states that she is appearing on

behalf of the for the petitioner in OWP No.1314/2017 and has handed over the written submission in which it is stated that the GRS has not given any

opportunity to the petitioner and even though the contracts were allotted on 31.03.2017 and 23.02.2017 and the respondents were aware about the

opening of the Chenani-Nashri tunnel, yet they did not notify any change through corrigendum. It is also urged that there is no stipulation in the

tender document or contract which authorizes the respondents to change or alter the rate on which the contracts have been allotted.Â

8) Mr. Pranav Kohli, learned counsel for the petitioner in OWP No.1248/2017 has submitted that after the distances were fixed by the Committee in

terms of Clause XVIII (v) of the Model Tender Form the distance in Kilometers was notified by the respondents. While inviting the attention of this

Court to Paragraph 4 of the Supplementary affidavit, it is urged that in case the distance is reduced, the total freight rate would also be reduced and

the respondents have no power under the contract to make deduction of any amount from the concluded contract. It is also submitted that under

Clause 39 (b) the revision of the rates is permissible only on account of change of diesel price and there is no provisions of escalation or decrease in

the rates on reduction in the distance. It is also submitted that the Contract was executed, therefore, Clause XVIII (v) of the Model Tender Form

does not apply. It is further submitted that in the previous tenders which were issued in the year 2014-15, there was a stipulation that the route from

Jammu to Srinagar is in relaying process. However, even though the respondents were fully aware that the tunnel would be opened, however, no

stipulation was inserted in the notice inviting tenders. It is also submitted that the dispute cannot be settled by the committee without hearing the

petitioners and unilaterally the freight rate cannot be altered which has resulted in frustration of the contract. Â

9) On the other hand, learned senior counsel for the respondents has invited attention of this Court to the general information to the tenderers and has

appointed out that the aforementioned information contains an information that the tenderers must themselves fully acquainted with the size and

location of the go downs as well as loading/unloading points before submitting tender and rates shall be deemed to have been done after such

acquaintance. While inviting attention of this Court to Clause 3 of the notice inviting tenders, it is submitted that the rates were to be offered in price

bid inclusive of all taxes, duties, cess etc. in rupees per metric ton/Kilometer and the rates have been quoted by the petitioners per Kilometer/per

metric basis and not on the basis of distance. Attention of this Court has also been invited to the terms and conditions regarding calculation of

transportation charges, and Clause XVIII of the terms and conditions in which it is stated that all the rates will be treated as firm for the period of the

contract. It is further submitted that the distance in the NIT was mentioned for the purposes of evaluation of the contract for deciding EMD and

security deposit etc. However, while awarding the contract, the rate has been approved for per metric ton/kilometer. It is further submitted that

no variation has been made in the rates and the Grievance Redressal Committee (GRC) considered the matter and has rejected the same vide

decision dated 13.11.2017. it is also urged that the respondents have not altered the terms and conditions of the contract and there has been a

change of distance due to construction of Chenani-Nashri Tunnel as the distance has been approximately reduced by 23 Kilometers. It is also

argued that the profit margin of the petitioner remain same. In case the respondents are required to pay the petitioner as per the existing terms and

conditions the same will amount to undue enrichment. It is also argued that the committee in exercise of Clause XVIII (v) of the Model Tender

Form has determined the distance on account of construction of Chenani-Nashri Tunnel and, therefore, no interference is called for. Â

10) I have considered the submissions made by the learned counsel for the parties and have perused the record. The Supreme Court in the case of

Kerala SEB v. Kurien E. Kalathil, (2000) 6 SCC 293 has held that the interpretation and implementation of a clause in a contract cannot be subject

matter of a writ petition. It has further been held that the dispute relating to the interpretation of terms and conditions of a contract should not have

been agitated in a writ petition under Article 226 of the Constitution of India. Similar view has been taken by the Supreme Court in the case of

Central Bank of India vs. Devi ISPAT Ltd. (2010) 11 SCC 186 and it has been held that dispute relating to interpretation of terms and conditions of a

contract could not be examined/ challenged in a writ petition filed under Article 226 of the Constitution of India. It has also been held that this matter

be adjudicated upon by the civil court or arbitration, if provided under the contract. (see also Rajasthan State Industrial Development and

Investment Copon. vs. Diamond and Gem Development Corpn ltd. (2013)5 SCC 427.

In the backdrop of the aforesaid well settled legal position the facts of the case in hand may be seen. From perusal of the E-Tender dated

15.03.2016, it is evident that online tenders under two bids system have been invited for appointment of Road Transport Contractors for movement of

stocks by road from the FSD New Go down, Jammu to various Centres in J&K Region. In the aforesaid notice inviting tenders, the distances have

been mentioned as well as estimated value of the contract EMD and security deposit have also been mentioned. In the aforesaid, NIT, the following

note is appended:

“Since National Highway Jammu to Srinagar is under relaying process, tenderers are advised to get acquainted with road (mileage)/route and take

into consideration shortest pliable route for heavy vehicles before quoting rates. Once the tender is submitted, the Tenderer will be deemed to have

fully acquainted himself with the route and he will not be entitled for any compensation on account of road blockade, diversions etc. on the route.â€​

12) From the perusal of the order dated 29.05.2017, it is evident that the distances have been revised in exercise of the powers under Clause XVIII(v)

of the Model Tender Form. As per Clause XVIII of the Model Tender Form governing the contracts, it is evident that the rates will be treated as

firm for the period of the contract and could be revised only due to change of diesel price. Clause XVIII(v) of the Model Tender Form reads as

under:

“The distance will be reckoned as fixed by the Chief Engineer, PWD, or an officer nominated by him, or by the General Manager, or verified by an

officer acting on his behalf and rounded off to the nearest Kilo Meter, which will be final and binding on the contractor.â€​

13) From perusal of the Clause 3 of the instructions for online bid submissions, it is evident that the rates are to be offered in price bids inclusive of all

taxes, duties cess etc. in rupees per Matric Ton/Kolometer. From the letter of acceptance issued on behalf of the respondents, it is evident that the

rates of the petitioners have approved as per Matric Ton/Kilometer. Clause XX of the terms and conditions governing the contract for food grains

reads as under:

“Law Governing the Contract & Dispute Resolution:

(a) The Contract will be governed by the Laws of India for the time being in force.

(b) In case of any disputes arising out of and touching upon the contract, the same will be first referred to the Dispute/Grievance Redressal

Committee constituted and functioning at the Zonal Office of the Corporation, with a view to settle the disputes. If any disputes remain thereafter,

the same will be settled in the Court of Law having competent jurisdiction.â€​

14) The petitioner in OWP No.1248/2017 has taken a stand in Paragraph 4 of the Supplementary Affidavit in the following terms:

“That the contention of the respondents that the rates have not been reduced is also false on the face of it. The contractor quoted its bid at the

rate of 8.63 per MT/Kilometer and for a distance of 334 KM from one destination to another, the total rate per trip of vehicle having 9 MT capacity

comes to Rs.25,941/-, whereas, with the deduction from the allotted rates, the rate has been reduced to Rs.23,534/- i.e. Rs.2407/- are being deducted

from the per trip of the vehicle. The total estimated contract value which was determined as 23.62 crores on which the deponent has paid the

Earnest Money Deposit which is 2% of the contract value, Security Deposit which is 5% of the contract value and Bank Guarantee @ 15% of the

contract value as another security deposit. With this reduction of the rate, the total contract value has also been reduced by an approximate amount of

Rs.2,42,96,258/- (Rupees two crores, forty two lacs ninety six thousand and two hundred fifty eight only) which shall be the loss to the contractor.â€​

15) It is the case of the petitioner that there is no provision either in the NIT of Model Tender Form which contains the provisions or stipulation by

which the respondents can make any deduction in the existing price on which the contract has been allotted. On the other hand, the respondents

have taken a stand that the price officer by the petitioners has not been reduced but only the distance has been reduced on account of opening of

Chenani - Nashri Tunnel. In the facts and circumstances of the case and in view of the aforesaid well settled legal position, instead of interpreting

the terms of the contract in these writ petitions, it would have been appropriate that the terms and conditions of the contract should have been looked

into by an expert body as provided in the agreement itself.Â

16) The impact of reduction of the distance in view of the stand taken in paragraph 4 of the supplementary affidavit filed by the petitioner in OWP

No.1248/2017 can be examined by an expert Committee. I find substantial force in the submissions of the learned senior counsel for the

respondents that in fact the petitioner ought to have resorted to Clause XX of the Contract instead of rushing to this Court. However, the fact

remains that a Bench of this Court by an ad-interim order dated 04.08.2017 passed in OWP No.1248/2017 directed that it would be appropriate for the

respondents to refer the dispute to the Dispute/Grievance Redressal Committee as provided in the terms and conditions of the NIT.Â

17) In view of the aforesaid order dated 04.08.2017, the meeting of the Grievance Redressal Committee was held on 13.11.2017 by which the claim

of the petitioner was rejected by the respondents. However, the fact remains that the aforesaid order has been passed by the Grievance Redressal

Committee without affording opportunity of hearing to the petitioners. The petitioners had a remedy to approach the Grievance Redressal Committee

under Clause XX of the contract. However, instead of resorting to the aforesaid remedy, the petitioners have rushed to this Court. Therefore, it is not

necessary to deal with other contentions made by the parties. Â

18) In view of the preceding analysis, no interference is called for with the decision of the respondents. However, it would be open to the petitioners to

approach the Grievance Redressal Committee, if they so advised in terms of Clause XX of the agreement. Needless to say that in case the

petitioners approach the Grievance Redressal Committee, the aforesaid Committee shall decide the dispute by a speaking order within a period of

three weeks from today.Â

With the aforesaid directions, the writ petitions are disposed of along with connected MPs.