India Power Corporation Limited & Anr. vs Eastern Railway & Others

The following issues are to be determined :-

(i) Whether without giving any opportunity of hearing issuance of letter by the respondent authorities for invocation of bank guarantee ought to be

declared as illegal, whimsical or arbitrary act on the part of the respondent authorities ?

(ii) Whether prior to issuance of letter of invocation of bank guarantee the respondent authorities ought to have considered petitioner’s

representations dated January 16, 2018, February 5, 2018, February 14, 2018, February 23, 2018, March 7, 2018 & March 9, 2018 ?

The petitioner’s case in nutshell is as follows :-

The petitioner No.1, India Power Corporation Limited formerly known as DPSC Limited ( hereinafter referred to as IPCL), is an existing company

within the meaning of the Companies Act, 2013. The petitioner IPCL, established in 1919, is one of the leading power generation and utility companies

in India. An ISO 9001:2015 entity, it has actively forwarded into a diversified portfolio, with renewable and conventional modes of power generation,

distribution and power trading and has a diversified portfolio of conventional and renewable modes of power generation, multi-location distribution,

operation and maintenance and logistic outfits.

On June 26, 2015, IPCL entered into an agreement with the President of India acting through the Chief Electrical Engineer, Eastern Railway

(hereinafter referred to as the “said agreementâ€). By virtue of the said agreement IPCL was under obligation to supply the traction power to

respondent Eastern Railway and that it would take at the point of supply the electrical energy for electrical traction purpose together with the power to

be reserved for maintaining supply at Eastern Railway premises for 132dv/25kv Traction sub-station at Pandabeswar in Burdwan District.

It was, inter alia, also agreed between parties that the railway authority would pay IPCL for the electrical energy supplied and other services to the

respondent railway. The relevant terms of the said agreement are quoted below :-

“(4) IPCL shall sort out Right of Way (ROW) issue from Bankola GSS/J.K.Nagar to Railway’s traction feeding point at Pandabeswar/TSS.

However, Railway would extend necessary cooperation whenever practicableâ€​.

(6) …That E.R. will arrange for payment of Rs.13.93 crores (Rupees thirteen crores ninety three lakhs) towards the cost of 132 kv transmission line,

Bay extension work, equipments etc. (hereinafter collectively referred to as Service Line) and Apparatus necessary for the purpose of giving supply

at the point of Pandabeswar/TSS.

(8) …The payment shall be made only after signing of this Agreement and receipt of B.G. of Rs.13.93 crores from Nationalised Bank. IPCL shall

bear the remaining cost, if any, towards the Transmission line and Bay extension work for supply of power at Pandabeswar/TSS. It is made clear that

the time line for starting of the works will commence only after receipt of payment from E.R.

(30) ….Penalty for delayed Compensation- In case IPCL is not able to complete the construction and commissioning of 132 kv Transmission line

from J.K. Nagar/Bankola/GSS to Railway traction sub-station at Pandabeswar within the stipulated period of 18 months from the date of receipt of

payment of Rs.13.93 crore, further 6 (six) months maximum extension for completion of works may be considered by railways after receiving request

from IPCL with valid reason.

….If IPCL is not able to complete the works within 18 months plus 6 months extended period, IPCL will be liable for payment of interest on full

amount for the period (which may include the first 24 months period also) and interest rate (Maximum not exceeding 14% per annum) as decided by

Railway..â€​

Under the said agreement the petitioner IPCL was allowed a period of 18 months and an additional six months to complete the entire work, subject to

the timely performance of reciprocal obligations and extension of corporation by the respondent railway and other government authorities as would be

evident from various Clauses of the said agreement including the Clause 4 thereof. Such timely completion of the work was also subject to the

occurrence of any event mentioned in Clause 28 of the said agreement i.e. the Force Majeure Clause.

In pursuance of the said agreement the petitioner IPCL duly submitted bank guarantee for a total sum of ` 13.93 crores on July 29, 2015 valid from

August 3, 2015 to August 2, 2018; `9.50 crores through RBl Bank Limited and `4.43 crores through Axis Bank. The stipulated time period for

completion of project would start upon submission of the bank guarantee. The said bank guarantees were not unconditional but payable only against

‘any loss or damage caused to or suffered or would be caused to or suffered by the Government by reason of any breach by the Contractor of any

of the terms or conditions contained in the said agreement in which the contractor has submitted his offer.â€​

It was further provided in the said guarantees that the banks giving the guarantees “further agree with the Government acting through FA &

CAO/Eastern Railway, Kolkata, that the Government shall have the fullest liberty without our consent and without affecting in any manner our

obligations hereunder to vary any of the terms and conditions of the said Agreement or to extend time of performance by the said Contractor from

time to time or to postpone for any time or from time to time any of the powers exercisable by the Government against the said Contractor.

During the course of execution of the agreement period the petitioner faced various obstructions and problems which were beyond the control of the

petitioner about which the petitioner time to time informed the authority but no response was received by the petitioner from their counterpart. It is the

case of the petitioner that despite series of information forwarded to the railway authority regarding various obstructions faced by the petitioner to

perform the contractual obligation which such situations squarly fall under Force Majeure clause of the agreement as a result the petitioner could not

complete project within the stipulated time as agreed.

It is also the case of the petitioner that vide letter dated January 26, 2018 the IPCL requested the respondent railway to grant extension for a period of

six months for completion of the said project and also explained the reasons which caused the delay. It is contended that without considering the

petitioners representation and the fact situation as explained the railway authority vide its letter dated February 2, 2018 agreed to extend the time for

completion only upon payment of penalty for a sum of `5,44,06,680/- in terms of Clause 30 of the agreement.

The said letter further provided that failure to deposit the said penalty within March 17, 2018 will result in the encashment of the bank guarantee

submitted by the petitioner, IPCL. In response to such letter the petitioner again on February 5, 2018 explained the unavoidable hindrances faced by

the petitioner to complete the work within the stipulated time. Thereafter the petitioner IPCL explained the causes of unavoidable delay in several

letters which were duly replied by the railway authority denying the causes highlighted by the petitioner in their letters. It was also the case of the

petitioner IPCL that delay occurred due to problems regarding Right Of Way (as referred ROW), as a result the petitioner had to divert its route from

A.P.9/7 to A.P. 25/0 for which petitioner had to negotiate two railway track crossing separately for their drivers.

Unfortunately, by the impugned order dated February 2, 2018 the respondent railway authority reiterated its stand to extend the time for completion

only upon payment of penalty amounting to `5,44,06,680/-as per Clause 30 of the said agreement and that failure on the part of the petitioner to deposit

the said penalty within March 17, 2018 would result in the encashment of the bank guarantee of the petitioner no.1. Immediately thereafter vide a

letter dated 5th February, 2018 once again petitioner brought to the notice of the respondent all the obstructions faced by the petitioner which squarely

come under Force Majeure clause and this protested that respondent railway has no authority to impose penalty invoking Clause 30 of the said

agreement.

Submission of Learned Advocates

Mr. Kalyan Bandyopadhyay, learned senior Counsel appearing for the petitioner vehemently urged that due to unavoidable circumstances as well as

the obstructions faced by the petitioner IPCL some delay was caused to complete the work within the stipulated time for which the railway authority

should not have imposed penalty resorting to Clause 30 of the agreement while granting extension of time for completion of the work.

Mr. Bandyopadhyay further contended that as per Clause 4 the respondent authorities are under obligation to ensure all cooperation and resolve the

problems/obstructions faced by the petitioner IPCL at the time of carrying on the project work. Relevant portion of Clause 4 is quoted below :

“Clause-4-IPCL will sort out Right of Way (ROW) issue from Bankola GSS/J.K Nagar to Railway’s traction feeding point at

Pandabeswar/TSS. However, Railway would extend necessary cooperation wherever practicable.â€​

Mr. Bandyopadhyay further urged that unfortunately in the present case the respondent authorities failed to perform their contractual responsibilities

and obligations which prevented the petitioner IPCL to complete the project within the stipulated time.

Mr. Bandyopadhyay also argued that time and again repeated representations were made by the petitioner before the respondent authorities

explaining the problems as faced by the petitioner IPCL. Unfortunately, the respondent authorities failed to pay any heed to those representations and

finally by the impugned order dated February 2, 2018 the extension was granted thereby imposing penalty of `5,44,06,680/- which is bad, arbitrary,

whimsical and totally contrary to the principle of natural justice.

Mr. Bandyopadhyay further strongly argued that under Clause 33 of the agreement respondent authorities were obliged to resolve the issue upon

discussion with the petitioner IPCL but unfortunately they failed to do so.

Mr. Bandyopadhyay further emphatically contended that because of the circumstances and obstacles faced by the petitioner IPCL in carrying out

work it is a clear case of Force Majeure under Clause 28 of the agreement. The said Clause is quoted below :-

“Force Majeure- A party shall not be deemed in default of this Agreement, nor shall it hold the other party liable for any cessation, interruption or

delay in the performance of its obligations (excluding payment obligations) due to earthquake, flood, fire, storm, lightning, natural disaster, act of God,

war, terrorism, armed conflict, labour strike, lockout, boycott, sabotage, civil/local grid failure, power failure from State, load restrictions imposed by

grid.â€​

Mr. Bandyopadhyay further argued that before imposition of Clause 30 the respondent authority should have negotiated or discussed the situation

with the petitioner as per Clause 33 of the said act. Unfortunately without acting in terms of Clause 33 and without considering Clause 28 of the said

agreement as well as without giving any opportunity of hearing to the petitioner to explain the problems the respondent railway authority resorted to

Clause 30 and imposed penalty making the payment thereof as a condition of extension of time for completion of the work. It is strongly contended

that such action of the authority is patently arbitrary, bad, illegal, unjust, unfair, unwarranted and over and above clearly contrary to the principle of

natural justice. Clause-30 & Clause-33 are quoted below:-

“Clause-30-Penalty for delayed completion-In case IPCL is not able to complete the construction and commissioning of 132kv Transmission line

from J.K. Nagar/Bankola/GSS to Railway traction sub-station at Pandebeswar within the stipulated period of 18 months from the date of receipt of

payment of Rs.13.93 crore, further 6 (six) months maximum extension for completion of works may be considered by Railways after receiving

request from IPCL with valid reason.

If IPCL is not able to complete the works within 18 months plus 6 months extended period, IPCL will be liable for payment of interest on full amount

for the period (which may include the first 24 months period also) and interest rate (Maximum not exceeding 14% per annum) as decided by

Railway.â€​

Clause-33-Any dispute arising out of or in connection with this Agreement including matters relating to the rights and obligations of the parties arising

out of or in connection with this Agreement or the breach or termination of it, shall be first discussed in good faith among representatives of each party

who are of appropriate authority within a period of 20 days from the date of notice by one party to another. If the dispute is not resolved by discussion

within 20 days (or such longer period as may be mutually agreed), then any party may refer such matter to be finally resolved by arbitration conducted

by a panel of three arbitrators appointed as per the provisions of the Arbitration and Conciliation Act, 1996,. The appointment of all the three

arbitrators shall be completed within 45 days of first reference of dispute by any party. The place of Arbitration shall be Kolkata. The place of

jurisdiction shall be at Kolkata, West Bengal.â€​

Mr. Bandyopadhyay, submitted that assailing those letter dated 2nd February, 2018 , 20th February, 2018 and 6th March,2018 thereby imposing

penalty on the petitioner IPCL, the petitioner filed the present writ petition before this Hon’ble Court.

Mr. Bandyopadhyay, further submitted that in view of continuing cease work in Calcutta High Court, the petitioner was compelled to file a special

leave petition before the Hon’ble Apex Court for interim protection against invocation of bank guarantees. Upon the said application the

Hon’ble Supreme Court on 26th March, 2018 directed the petitioner to deposit ` 5.8 crores in this court within four weeks. It was also directed by

the Hon’ble Supreme Court that there shall be ad interim stay of operation of the letters issued by respondent dated 2nd February 2018, 20th

February 2018, and 6th March, 2018 (prayer (I) at page 187 of the paper book) .

Accordingly, the petitioner deposited the said amount before the Hon’ble Supreme Court. Since the Calcutta High Court resumed functioning

learned Counsel for the petitioner sought permission to withdraw the special leave petition and the permission was granted by the Hon’ble

Supreme Court to withdraw the special leave petition. It was also directed by the Hon’ble Supreme Court that the amount deposited in

Hon’ble Supreme Court shall be transmitted to the Calcutta High Court. The petitioner was also given liberty to apply for withdrawal of the

amount in excess of ` 5.44 crores as has been deposited pursuant to the Hon’ble Supreme Court Order.

Consequently, the amount which was deposited before Hon’ble Supreme Court was transmitted to the Calcutta High Court. Thereafter, the

petitioner pursuant to the leave granted by the Hon’ble Supreme Court applied before this High Court for withdrawal of the amount in excess of `

5.44 crores which was deposited by the petitioner pursuant to the Hon’ble Apex Court Order. Thereafter, vide order dated 10th July, 2018 the

Registrar General of the Calcutta High Court allowed the petitioner to withdraw the excess amount out of ` 5.44 crores as deposited on 26th March,

2018, pursuant to the Hon’ble Apex Court Order.

Mr. Bandyopadhyay, argued that when admittedly the railway authority is in default to provide the Right Of Way and also to resolve the issue

pertaining to obstructions faced from different corners, the railway authority could not impose any penalty while granting extension of period for

completion of the project. It was also argued by Mr. Bandyopadhyay that clear 24 months time for completion of work also not given by the railway .

According to the respondent authority on 7th March, 2018, period of contract was over but the railway authority gave permission only on 7th May,

2018 on the basis of the petitioner’s letter dated 22nd September, 2017 that too after imposing penalty.

Mr. Bandyopadhyay further vehemently argued that no opportunity of hearing was granted and the impugned order is a non-speaking order.

Mr. Bandyopadhyay further contended that though in the said agreement there is an arbitration clause but in the present case violation of natural

justice is involved which issue could only be decided by the Hon’ble High Court not by any arbitrator. Therefore, the petitioner filed the present

writ petition before this Hon’ble Court challenging the impugned letters dated 2nd February 2018, 20th February 2018, and 6th March, 2018.

Furthermore, Mr. Bandyopadhyay submitted that existence of arbitration clause in the agreement is not a bar to file a writ petition before the

Hon’ble High court.

Mr. Bandyopadhyay further emphasized that alternative remedy is not to operate as a bar to file writ petition. In support of his submission Mr.

Bandyopadhyay relied on an Hon’ble Apex Court decision reported in 1998 (8) SCC Page- 9 Paragraph-15 (Whirlpool Corporation vs Registrar

Of Trade Marks, Mumbai And Others).

On the same issue Mr. Bandyopadhyay also relied on several Hon’ble Apex Court decisions reported in 2007 (9) SCC Page-593 Paragraphs-20

to 47 (Popcorn Entertainment And Another vs City Industrial Development Corporation And Another), 2003 (2) SCC Page-107 (Harbanslal Sahnia

And Another vs Indian Oil Corporation Ltd. And Others), 2010 (10) SCC Page-388 Paragraphs-9, 10 & 20 (Sushila Chemicals Private Ltd. And

Another vs Bharat Coking Coal Limited And Others), 2015 (9) SCC Page-433 Paragraphs-17, 18 and 19 (State Of Kerala And Others vs M.K. Jose)

and also 2011 (9) SCC Page-697 Paragraphs 33 & 34 (Union Of India And Others vs Tantia Construction Private Limited).

Mr. Bandyopadhyay further emphasized that imposition of penalty by the railway authority while granting extension by the impugned letters is bad,

arbitrary, unjust, unwarranted and unfair.

Mr. Bandyopadhyay also contended that no one can be judge of his own case. In the present case invoking Clause 30 the railway authority imposed

penalty upon the petitioner and directed payment of the same as a condition of granting extension while the petitioner as well as the railway authority

both are the parties to the said agreement.

On this issue Mr. Bandyopadhyay relied on a decision of this Hon’ble High Court reported in 1985 (1) CLJ Page-332 Paragraphs-14 & 15 (Shri

Surendra Kumar Ray Chowdhury vs The Collector of Calcutta & Ors).

Mr. Bandyopadhyay also relied on an unreported decision of the Hon’ble Single Judge in MAT 1970 of 2014 with C.A.N 10686 of 2014 delivered

on December 24, 2014 (Reshmi Metaliks Limited And Another vs Union Of India And Others) Paragraph-9.

On the point of passing non-speaking order by the respondent railway authority which is bad in law Mr. Bandyopadhyay relied on an Apex Court

decision reported in 2010 (9) SCC Page-493 Paragraph-47 (Kranti Associates Private Limited And Another vs Masood Ahmed Khan And Others).

Before parting with his argument Mr. Bandyopadhyay submitted that in the present case there is no termination of agreement no money claim is

involved.

Per-contra Mr. Chakrobarty learned senior counsel appearing for the railway authority at the outset took the point of res-judicata.

Mr. Chakrobarty, contended that as per section 11 of the Civil Procedure Code as well as Order 2 Rule 3 of the Civil Procedure Code and Order

23 of the Civil Procedure Code no leave was granted by the Hon’ble Supreme Court to move afresh before this Hon’ble High Court . Only

Supreme Court allowed the petitioner to withdraw excess amount deposited pursuant to the Hon’ble Court’s direction. In support of his

contention Mr. Chakrobarty relied on Hon’ble Apex Court decision reported in 1994 ( 2 ) Supreme Court Cases Page 14 paragraph 6,7 and 9 (

Sulochana Amma vs. Narayanan Nair ).

Mr. Chakrobarty, further contended that no leave under Order 2 Rule 3 has been obtained by the petitioner from the Hon’ble Supreme Court

to file and proceed with this writ petition. Mr. Chakrobarty, also submitted that the Hon’ble Court only granted the applicant to withdraw the suit

as per Order 23 Rule 1 of the CPC but did not grant any liberty to institute any writ petition afresh in respect of the self same subject matter. The

order of the Hon’ble Court only granted leave to the petitioner to withdraw excess amount of deposit. Therefore this writ petition can not be

entertained being barred by law.

It is further submitted by Mr. Chakrobarty that peculiarity of the contract is that entire money being Rs.13.93 crores has been paid to the petitioner at

the time of execution of the contract.

It is further strongly submitted by Mr. Chakraborty that the contract in question is pure and simple an executory contract on terms and conditions

contained therein and there is no public element involved in the contract warranting intervention of the Writ Court.

Mr. Chakrobarty further vehemently urged that the railway authority is not under obligation to provide the ‘Right Of Way’ to the petitioner.

It is the duty of the petitioner to get the drawing of the ‘Right Of Way’ but in the present case the petitioner wrongly claimed that the railway

authority should provide ‘Right Of Way’ to carry out the said project work and significantly approached the railway authority for grant of

‘Right of Way’ after expiry of two years of the agreement.

Mr. Chakrobarty further emphasized his argument by submitting that whether the petitioner approached the railway authority prior to the expiry of

the period of agreement is a disputed question of facts. Therefore, Writ Court would not venture to decide the disputed question of facts. In support of

his contention Mr. Chakrobarty relied on a Supreme Court decision reported in 2014 (1) Supreme Court Cases Page-329 paragraph 26 to 30 ( Gail

(India) limited vs. Gujarat State Petroleum Corporation Limited ).

Mr. Chakrobarty, also drew the attention of the Court at page 7 of the affidavit- in- reply where the petitioner admitted the fact that the petitioner

appointed a sub-contractor to complete the work. Since the sub-contractor failed to complete the work within the stipulated time of the agreement,

therefore, the petitioner cancelled the appointment of the sub-contractor and started to carry out the said work only after expiry of the said agreement.

Mr. Chakrobarty strongly argued that neither of the parties to the contract has any authority to alter the terms of the contract. In support of his

contention Mr. Chakrobarty relied on a Hon’ble Apex Court decision reported in 2010 (10) SCC Page 174 Paragraphs- 8 to 9. He also relied on

the sections 211,214 and 226 of the Contract Act 1972 to counter the argument of Mr. Bandopadhyay on the point that writ lies even in a contractual

field.

Mr. Chakraborty countering the submission of Mr. Bandyopadhyay on the point that writ lies even in contractual manner Mr. Chakraborty

contended that if there is any public law involved then even in contractual matter writ lies but in the present case there is no public element involved.

That being the scenario Mr. Chakraborty submitted that no writ lies even if the government is a party to such a contract. In support of his contention

Mr. Chakraborty relied on a Supreme Court decision reported in 2015 (7) SCC Page-728 Paragraphs-69, 70, 70.3, 70.4 and 70.5 (Joshi Technologies

International INC. vs Union of India & Others).

In distinguishing Reshmi Metallic (supra.) Mr. Chakrobarty submitted that in that case there was no penalty clause involved but in the case in hand

there is a penalty clause being Clause No. 30 which has been invoked.

Mr. Chakrobarty, also contested the argument of Mr. Bandyopadhyay on the point that a person can not be the Judge of his own cause, strongly

submitting that the proposition is not applicable in the present case in as much as by virtue of Clause 30 the railway authority is contractually

empowered to impose penalty if the work is not completed within the agreed period and such right so vested with the Railway has been exercised in

this case.

Mr. Chakrobarty, also has drawn Court’s attention to paragraph 12 A,B,D , 13 of the affidavit-in-opposition.

Mr. Chakrobarty, referring to the agreement submitted that the agreement was executed on 26th June 2015 between the parties where it is

specifically provided that within 1 year 6 months the petitioner has to complete the work and 18 month period ends on 26th December, 2016. As per

the agreement after 18 month’s which the petitioner had already availed again six months extension could be granted on payment of penalty as per

Clause 30 which has been done in this case.

Mr. Chakrobarty further contended that nowhere in the contract it is provided that opportunity of hearing shall be given to the petitioner before

imposing penalty under Clause 30. Therefore, Mr. Chakrobarty, emphasized his argument submitting that there is no violation of natural justice as has

been contended by Mr. Bandhopadhyay in his argument.

Mr. Chakrobarty, also contended that last extension granted to the petitioner is going to expire on 17th July, 2018 subject to payment of penalty.

Mr. Chakrobarty further vehemently urged that terms of the contracts are binding upon the parties and none of the party has any right to avoid or

act contrary to the terms of the contract. In support of his contention Mr. Chakrobarty relied on a Supreme Court decisions reported in AIR (1976)

SC Page-1766 Paragraph-7 (The Regional Manager vs Pawan Kumar Dubey) and 2011 (7) Supreme Court Cases Page 639 Paragraph-16 (State of

Madhya Pradesh vs Narmada Bachao Andolan And Another) and 2018 (6) SCC Page-157, Paragraphs-5, 10, 13 & 14 (Madhya Pradesh Power

Management Company Limited vs Renew Clean Energy Private Limited And Another).

Mr. Chakraborty further vehemently urged that even if there is a Force Majeure Clause due to delay in completion of the work penalty can be

imposed as per the terms of the agreement.

Mr. Chakraborty further emphasized that though in the said impugned letter it has been mentioned as penalty but actually it is the calculation of

interest in terms of the contract. Therefore, in conclusion Mr. Chakraborty submitted that there is no illegality or unreasonableness in the impugned

order which deserves interference by this Hon’ble Court. Therefore, this writ petition should be dismissed.

Decision with Reasons

I now deal with the arguments advanced by the learned Advocates of the parties.

The admitted fact in this case s that the petitioner initially filed a writ application in this Hon’ble Court and at the relevant time this Hon’ble

Court was not functioning owing to resolution taken by the Bar to abstain from work and in such circumstances, the petitioner approached the

Hon’ble Supreme Court and an interim order was passed by the Hon’ble Supreme Court on 06.03.2018 staying operation of the letters dated

02.02.2018, 20.02.2018 and 06.03.2018 on the condition that the petitioner would deposit ` 5.8 crore with the Hon’ble Supreme Court. The

petitioner deposited the said sum with the Hon’ble Supreme Court as directed.

Despite the Hon’ble Supreme Court passed the interim order dated 06.03.2018, the respondent appeared to have invoked two bank guarantees

aggregating ` 13.93 crore and realised the amount covered under the said guarantees. As the respondent invoked the bank guarantees and collected

the amounts covered thereunder, during the pendency of the interim order passed by the Hon'ble Supreme Court, the petitioner filed a contempt

petition before the Hon’ble Supreme Court whereupon an order was passed directing personal appearance of the officers of the respondent. In

view of such order passed by the Hon’ble Supreme Court, the respondent returned the amounts received under the bank guarantees to the

respective banks. In the meantime, this Hon’ble Court started functioning and the members of the Bar resumed their work and this fact was

brought to the notice of the Hon’ble Supreme Court whereupon the Hon’ble Supreme Court passed an order on 07.05.2018 permitting the

petitioner to withdraw the application and directed that the amount deposited by the petitioner with the Hon’ble Court be transmitted to this

Hon’ble Court and the petitioner was also permitted to withdraw the amount deposited in excess of `5.44 crore and the initial interim order dated

06.03.2018 was accordingly corrected. Further, in view of return of the amount received under the bank guarantees by the respondent, the contempt

proceeding was also dropped.

In the circumstances aforementioned, the present writ application was proceeded with in this Hon’ble Court and was heard after exchange of

affidavits.

The first question raised by the respondent is that the writ petition is barred by res judicata as the issue pleaded by the petitioner in the writ petition

was raised before and decided by the Hon’ble Supreme Court.

Narration of admitted facts above clearly reveal that excepting passing of interim relief, the Hon’ble Supreme Court has not decided the writ

petition. It is trite law that the res judicata would apply only when the matter has been directly and substantially in issue in a former proceeding and

has been finally decided by the Court then such similar issue cannot be raised in subsequent proceedings. This is not the case here. There has not

been any decision of the Hon’ble Supreme Court on any issue which is raised by the petitioner in the writ petition. Thus the plea of res judicata

raised by the respondent fails and the writ petition is held to be not barred by res judicata.

The next question raised by the respondent is that the writ petition is barred under Order 2 Rule 2 of Code of Civil Procedure. On a reading of the said

provision, it appears that the said provision would apply when a party intentionally omits or relinquishes any portion of claim in order to bring the

proceedings within the jurisdiction of any Court, in that event, the portion of claim or cause of action so relinquished could not be included in

subsequent proceedings unless leave of Court is obtained. Considering the facts pleaded in the writ petition and the reliefs sought for and also the

proceedings before the Hon’ble Supreme Court, I am of the opinion that the present writ petition is not in any way barred under Order 2 Rule 2 of

the Code of Civil Procedure. The contention of the respondent thus fails.

The focal point of attack of the petitioner in the writ petition is that the respondent had committed breach of their obligation in providing right of way to

the petitioner, failed to cooperate with the petitioner to remove the obstacles the petitioner had faced to execute the contract and that the respondent

despite committing breach of their obligations under the contract still imposed penalty under Clause 30 of the contract, although according to the

petitioner the obstacles/hindrances faced by the petitioner, which caused delay in execution of the work, is fully covered by the “Force Majeureâ€

clause being Clause 28 of the contract and, therefore, imposition of penalty under Clause 30 of the contract is illegal, arbitrary and violative of the

principles of natural justice.

These allegations have been seriously contested by the respondent. Without any doubt, these allegations clearly relate to question of facts and the

question for decision that arises is who had committed breach of obligations under the contract; was it the writ petitioner or the respondent. Such

question admittedly delve upon scrutiny of facts. It is settled position of law that disputed question of facts, the decision on which could be arrived at

only upon taking evidence, could not be entertained in writ jurisdiction. Considering the claims and contentions raised by the parties in their pleadings I

am of the opinion that there are disputed question of facts which could only be decided upon taking evidence and the writ court is not the appropriate

forum.

The petitioner contended that the respondent failed to provide “Right of Wayâ€​ in this regard, Clause 4 of the contract is quoted below :

“IPCL will sort out Right of Way (ROW) issue from Bankola GSS/J.K Nagar to Railways; traction feeding point at Pandabeswar/TSS. However,

Railway would extend necessary co-operation wherever practicable.â€​

The Clause 4 above clearly provides that primary responsibility to sort out “Right of Way†was of the petitioner and to what extent the petitioner

discharged such obligation is not very clear and in any event it is a question of fact.

Now to what extent the necessary co-operation of the respondent railway was sought for and correspondingly to what extent the respondent railway

failed to oblige the petitioner in this regard and how far it was practicable for the respondent to do so are again question of facts, which could only be

decided on taking evidence. The petitioner’s contention relating to “Right of Wayâ€​ thus cannot be entertained in writ jurisdiction.

The petitioner contended that imposition of penalty by the respondent while granting extension of time is illegal, arbitrary and violative of principles of

natural justice. There is no dispute that the parties hereto executed a contract dated 26.06.2015 which contained reciprocal rights and obligations of

the parties. The petitioner relied upon certain clauses of the contract in support of its contentions in the writ petition, e.g. “Right of Way†etc. The

petitioner, therefore cannot dispute the right of the respondent to impose penalty in the event the petitioner is unable to complete the construction and

commission of 132KW Transmission line within the stipulated period. The respondent exercised their right as provided in Clause 30 of the contract and

imposed penalty while granting extension of time. The respondent is contractually entitled to do so. The petitioner cannot contend that such exercise of

right by the respondent is wrong or illegal. Thus the action of the respondent cannot be held to be illegal.

The writ petitioner contended that the respondent could not be the judge of its own case. Each of the parties is entitled to enforce the terms of the

contract. The respondent having exercised their right provided under Clause 30 of the contract, such action cannot be assailed to be an act of judging

its own case. Undisputedly Clause 30 could only be exercised by the respondent and not the petitioner. The contention of the writ petitioner therefore

fails.

The writ petitioner contended that before imposing penalty under Clause 30 of the contract, the petitioner should have been heard. It is noticed that the

contract does not provide any such term whereby the petitioner is entitled to be heard and the respondent is obliged to hear the petitioner before the

respondent exercises its right under Clause 30 of the contract. Therefore the contention of the writ petitioner is devoid of any merit.

Last but not the least, the question raised by the respondent is that the writ petition is not maintainable to enforce a contract which is not a statutory

contract but a private contract between the parties and does not involve any public element. This contention has been seriously contested by the writ

petitioner. Both the parties cited decisions in support of their respective contentions. On a perusal of the contract in question it is evident that the

contract is pure and simple an executory contract and that the work to be executed by the contractor, qua the writ petitioner, against payments

stipulated in the contract. The contract provides respective rights and obligations of the parties and also contains a clause for settlement of disputes

through arbitration. In my opinion, There is no public element involved in the contract. The contention of the respondent raised in this regard thus

succeeds.

As aforementioned, the contract contains an arbitration clause. The respondent contended that in view of the arbitration clause contained in this

contract, the writ petition should not be entertained. The petitioner submitted that notwithstanding existence of an arbitration clause in the contract,

infraction of fundamental rights could be agitated in writ jurisdiction and there is no bar on Curt to entertain writ petition based on such contract. On

this point I accept the contention of the petitioner and reject that of the respondent.

In view of the discussions above, the writ petition is not entertained.

The decision cited by the parties are settled law; therefore, those are not separately discussed.

However, the disputes between the parties emerged from the rival pleadings filed in this proceedings and noticed by this Curt need to be resolved in an

appropriate forum. In this case, the parties agreeing to the arbitration clause in the contract, have chosen to resolve the disputes by the Arbitral

Tribunal.

Therefore, I direct the parties to take recourse to arbitration by virtue of Clause 33 of the contract and appoint Arbitral Tribunal in terms thereof to

adjudicate the disputes between the parties. All such steps shall be taken by the parties within 8 (eight) weeks from the date hereof and the Arbitral

Tribunal would thereafter proceed with the matter in accordance with law.

Considering the facts situation and to sub serve the ends of justice, I direct that the order dated 06.03.2018 passed by the Hon’ble Supreme Court

shall continue till publication of the arbitral award.

With regard to the deposit of ` 5.44 crore by the petitioner with the Hon’ble Supreme Court and since transferred to this Hon’ble Court, I

direct the Registrar General of this Hon’ble Court to invest the said sum in a Nationalised Bank earning highest rate of interest with auto renewal

clause and the said deposited amount and all interest accrued thereon shall stand to the credit of the arbitration proceedings and the right to receive the

said deposited amount with all interest accrued thereon would abide by the Award of the Abitral Tribunal.

Be it noted that all observations made by this Court in this judgement are prima facie and have been so made only to dispose of the writ petition; the

Arbitral Tribunal therefore shall adjudicate the disputes between the parties without being influenced by any observations made herein.

32..With this direction this writ petition is disposed of. However, no order as to costs.

Urgent photostat certified copy of this judgment, if applied for be supplied to the parties on priority basis.