Advantage, Dewas vs Municipal Corporation, Dewas & One Another

Petitioner has filed the present petition being aggrieved by the order dated 29.08.2020 whereby the Commissioner, Municipal Corporation, Dewas has terminated the contract of "Plantation at service road along both sides of the A.B Road from LNB Club to Vikas Nagar Chouraha" ( in short : 'Plantation work') awarded to the petitioner vide Letter Of Acceptance (LOA) dated 16.07.2020.

Facts of the case, in short, are as under:

Petitioner is a registered firm having GST registration and certificate from the Govt. of India, Ministry of Micro, Small & Medium Enterprises. The respondent No.1 Municipal Corporation is a body corporate constituted under the Municipal Corporation Act, 1956. The respondent No.1 issued an NIT dated 08.06.2020 for awarding the contract of plantation work with total contract value Rs.35.70 lakhs and the completion period 90 days including the rainy season. In pursuant to the aforesaid NIT petitioner participated in the tender process by submitting the bid. The bid of the petitioner was accepted and LOA dated 16.07.2020 was issued for to execute an agreement and deposit of the performance security/guarantee. It has been made clear in the LOA that 3 months including the rainy season completion period shall be reckoned from the date of signing of the agreement.

Vide notice dated 25.07.2020 the Executive Engineer of the Municipal Corporation has reminded the petitioner that the work of the plantation has not been started yet and directed to start the work of plantation within 3 days. The petitioner submitted a reply dated 27.07.2020 that the plants have been purchased and the same being transported from Sarangpur, State of U.P which 850 km. Away and due to lock-down at various places there is a possibility of delay. The petitioner assured that the plantation would be started within 3-4 days and also assured to deposit the bank guarantee. Vide notice dated 29.08.2020 the Commissioner, Municipal Corporation, Dewas has terminated the contract alleging that the plantation done by him is not as per the specification as the plantation done on both sides of the service road is not as per the contract and the specification. It is also observed that the rainy season is going to be expired but the work has not been completed. Being hurt by the above drastic action the petitioner is before this Court.

Shri L.C Patne, learned counsel for the petitioner submits that the petitioner has purchased has invested lakhs of rupees by purchasing various plants and he has also started the work. There was some delay in the initiation of the work but that was due to the reason beyond its control. All the plants are ready with the petitioner and would be planted within the next ten days as the contract period is yet to expire on 15.10.2020. He further submits that under clause 27.1 of the agreement before terminating the contract the Engineer-Incharge should have given notice to the petitioner to make good the failure within the specified reasonable time. He further submits that though the clause 12 of the NIT provides a dispute resolution system, but it is a fit case in which the High Court should entertain the writ petition because there is no disputed question of fact in the matter and the government instrumentality has failed to exercise its discretion reasonably. In support of this contention, he is placing reliance over the judgment passed by the Apex Court in the case of ABL International Ltd. & another vs. Export Credit Guarantee Corporation of India Ltd. & others reported in (2004) 3 SCC 553 & State of Kerala & others vs. M.K.Jose reported in (2015) 9 SCC 433 in which it has been held that in an appropriate case the writ Court has the jurisdiction to entertain a writ petition involving the disputed question of fact and there is no absolute bar, therefore, the petitioner be not relegated to the arbitration proceeding which may take considerable time.

I have heard the learned counsel Shri Patne and perused the record.

Petitioner was awarded a work contract of plantation during the rainy season and the time was the essence of the contract. As per the contract, the petitioner was required to complete the plantation work within 3 months the rainy season as per the terms and conditions of the contract and the LOA. The LOA was issued to the petitioner on 16.07.2020 and an agreement was also executed on the same day. Admittedly, the petitioner did not start the work until the reminder later dated 25.07.2020 was issued. In reply to it, the petitioner admitted that the work could not be started yet and going to start within the next 3-4 days after receipt of the plants. The respondents are alleging that the plantation was done by the petitioner is not as per the contract and the specification and most of the rainy season has already gone. All these are certainly disputed questions of fact which cannot be adjudicated in this writ petition. The contention of the petitioner that there was a delay in the execution of the work as he could not collect the plants in time due to Corona lock-down. The petitioner decided to purchase the plants from a place which is situated 850 kms. Away from the place of execution of the work. The NIT was issued during the Corona epidemic period and the petitioner with open eyes participated in the tender process and executed an agreement. The entire work was to be performed within the Corona epidemic period, therefore, the petitioner was aware of the ground realities at the time of submission of the bid and execution of the agreement.

Shri Patne, learned counsel has further submits that the petitioner has purchased all the plants and work can be completed within next ten days. In my considered opinion, it is also a disputed question of fact as to how petitioner can complete the said work within ten days which could not complete within two and half months especially when the rainy season has gone.

The Supreme Court of India in the case of Empire Jute Co. Ltd. v. Jute Corpn. of India Ltd., (2007) 14 SCC 680, has held as under

The power of judicial review vested in the superior courts undoubtedly has wide amplitude but the same should not be exercised when there exists an arbitration clause. The Division Bench of the High Court took re-course to the arbitration agreement in regard to one part of the dispute but proceeded to determine the other part it-self. It could have refused to exercise its jurisdiction leav-ing the parties to avail their own remedies under the agreement but if it was of the opinion that the dispute be-tween the parties being covered by the arbitration clause should be referred to arbitration, it should not have pro-ceeded to determine a part of the dispute itself.

Similar question arose for consideration in Bisra Lime Stone Co. Ltd. v. Orissa SEB2 wherein it was held that the High Court may refuse to exercise its jurisdiction if there exists a valid arbitration clause stating: (SCC p. 174, para 24)

"24. It is then submitted that this Court should not use its discretion in favour of arbitration in a matter where it is a pure question of law as to the power of the Board to levy a surcharge. This submission would have great force if the sole question involved were the scope and ambit of the power of the Board under Sections 49 and 59 of the Act to levy a surcharge, as it was sought to be initially argued. The question in that event may not have been within the content of Clause 23 of the agreement. But all questions of law, one of which may be interpretation of the agreement, need not necessarily be withdrawn from the domestic forum because the court has discretion under Section 34 of the Arbitration Act or under Article 226 of the Constitution and that the court is better posted to decide such questions. The arbitration Clause 23 is a clause of wide amplitude tak-ing in its sweep even interpretation of the agreement and necessarily, therefore, of Clause 13 therein. We are, therefore, unable to accede to the submission that we should exercise our discretion to withhold the mat- ter from arbitration and deal with it ourselves."

A similar view was taken by this Court in Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd.3 holding: (SCC p. 247, paras 12-13)

"12. The principal question which arises for consid-eration is as to whether a discretionary jurisdiction would be refused to be exercised solely on the ground of existence of an alternative remedy which is more ef-ficacious. Ordinarily, when a dispute between the par-ties requires adjudication of disputed question of facts wherefor the parties are required to lead evidence both oral and documentary which can be determined by a domestic forum chosen by the parties, the Court may not entertain a writ application. (See Titagarh Paper Mills Ltd. v. Orissa SEB4 and Bisra Lime Stone Co. Ltd. v. Orissa SEB2.)

However, access to justice by way of public law remedy would not be denied when a lis involves public law character and when the forum chosen by the parties would not be in a position to grant appropriate relief."

Relying on some of the earlier decisions of this Court, this Court held: (Sanjana M. Wig case3, SCC p. 248, para 18)

"18. It may be true that in a given case when an action of the party is dehors the terms and conditions con-tained in an agreement as also beyond the scope and ambit of the domestic forum created therefor, the writ petition may be held to be maintainable; but indis-putably therefor such a case has to be made out. It may also be true, as has been held by this Court in Amritsar Gas Service5 and E. Venkatakrishna6 that the arbitrator may not have the requisite jurisdiction to direct restora-tion of distributorship having regard to the provisions contained in Section 14 of the Specific Relief Act, 1963; but while entertaining a writ petition even in such a case, the court may not lose sight of the fact that if a serious disputed question of fact is involved arising out of a contract qua contract, ordinarily a writ petition would not be entertained. A writ petition, however, will be entertained when it involves a public law character or involves a question arising out of public law func-tions on the part of the respondent."

The legal position has undergone a substantial change, having regard to Section 5 of the Arbitration and Conciliation Act, 1996 vis-à-vis provisions of the Arbitra-tion Act, 1940. The said provision reads as under:

"5. Extent of judicial intervention.-Notwithstand-ing anything contained in any other law for the time being in force, in matters governed by this Part, no ju- dicial authority shall intervene except where so pro-vided in this Part."

In view of the above, I do not find any reason to exersice the judicial discretion under article 226 of the Constitution of India . Accordingly, the petition is dismissed. However, the petitioner is at liberty to raise a dispute under clause-12 of the agreement and if such a dispute is raised the same shall be decided on its merit without being influenced by the observations made by this court.