YOUSUF AMANULLA CHOUDHURY vs THE STATE OF ASSAM

1.Heard Mr. B.J. Ghosh, learned counsel for the petitioner. Also heard D. Upamanyu, learned standing counsel, Health & Family Welfare

Department, appearing for the respondent Nos.1 & 6, Ms. A. Borah, learned standing counsel, National Health Mission (NHM), appearing for the

respondent Nos.2, 3 & 4 and Mr. T.C. Chutia, learned State counsel, appearing for the respondent Nos.5.

The Mission Director, NHM (respondent No.2) had issued an Invitation For Bids (IFB) on 15.10.2014 for the works under NHM as indicated in the

said IFB including construction of new Public Health Centre (PHC) with residential accommodation for staff under NHM at Lalcherra-I in Hailakandi

District on turn-key basis on the basis of two-bid system. The petitioner’s bid of ` 1,08,30,553/- was accepted by the respondent No.2 and a Letter

of Acceptance (LOA) was issued on 02.01.2015. The petitioner was asked to confirm as to whether he was agreeable to execute the works at the

above offered price and if so, to furnish performance security of ` 5,41,528/- within 10(ten) days from 02.01.2015 valid up to 28(twenty-eight) days

from the date of expiry of the defect liability period. The petitioner furnished requisite performance security of ` 5,41,528/- and thereafter, an

agreement was entered into between the petitioner and the respondent No.2 on 04.02.2015 for the aforesaid work, wherein terms and conditions,

rights and liabilities of the parties were laid out.

It is the case of the petitioner that though after execution of the agreement, the petitioner had mobilized resources for execution of the work in

question, yet the proposed site for construction was not delivered to the petitioner and, therefore, no work could be started at all. Subsequently, the

respondent No.5, the Deputy Commissioner, Hailakandi, informed the respondent No.4, the Special Consultant, NHM that in the District Health

Society meeting held on 18.04.2017, decision was taken to construct the PHC at Ramchandi Dinanathpur in place of Lalcherra-I. The petitioner, by

his letter dated 03.07.2017, requested escalation of price or minimizing part of the work in view of change of location. By communication dated

25.09.2017, issued by the respondent No.4, the prayer for price escalation or modification of the scope of work was rejected and the petitioner was

asked to resume work at the new site as per the earlier quoted rate and tender agreement within 7(seven) days of receipt of the letter, failing which, it

was indicated that the work would be withdrawn from him. Ultimately, the petitioner having not started the work at the changed site, the respondent

No.2, by letter dated 04.12.2017 (Anexure-13 of the writ petition) withdrew the work from the petitioner by terminating the contract as per Clause

59.1 of the General Conditions of Contract due to his failure to intimate his willingness to execute the work at the new location as per the contract

agreement and forfeiting the performance security.

In the present petition, the petitioner has put to challenge this order dated 04.12.2017 as well as the e-tender notice dated 17.03.2018 issued by the

respondent No.2 for construction of new PHC with residential accommodation for staff under NHM at Ramchandi Dinanathpur in Hailakandi District.

Mr. Ghosh, learned counsel for the petitioner has submitted that the petitioner had submitted his tender for construction of new PHC with residential

accommodation for staff under NHM at Lalcherra-I in Hailakandi District and an agreement was also executed with him for the said location. He

submits that it is an admitted position that the site of the land for construction of the PHC at Lalcherra-I could not be delivered as a result of which

location of the PHC had to be shifted to Ramchandi Dinanathpur. It was a failure on the part of the NHM to hand over the site and thus, there was a

fundamental breach of contract on its part and the petitioner cannot be penalized for not agreeing to work on the changed location as there is no

stipulation in the tender notice or in the agreement that in the event of change of location, the petitioner would be required to fulfill his obligation in the

changed location also. He submits that though liberty was granted by this Court as an interim measure to submit tender pursuant to the e-tender notice

dated 17.03.2018, the petitioner had not submitted the tender and if the performance security is directed to be refunded to the petitioner and

termination of the contract is not held against the petitioner in future, the petitioner would not object to the e-tender notice dated 17.03.2018.

By relying on the affidavit filed, Ms. Borah has submitted that the matter of forfeiting the performance security is being reviewed by the authority.

It is submitted by her that only because the willingness of the petitioner to execute the work at the new location was not forthcoming, the work was

withdrawn terminating the contract.

I have considered the submissions of the learned counsel appearing for the parties and have also perused the materials on record.

The agreement at Clause-21 deals with possession of site and the same is quoted hereunder:-

“21. Possession of the Site 21.1 The Mission Director, National Health Mission, Christianbasti, Guwahati-5, Assam shall give possession of all parts

of the Site to the Contractor. If possession of a part is not given by the date stated in the Contract Data the Mission Director, National Health Mission,

Christianbasti, Guwahati-5, Assam is deemed to have delayed the start of the relevant activities and this will be Compensation Event.â€​

In the affidavit with regard to possession of the site, it is stated by the respondent No.2 at Paragraphs 7, 8 & 13 as follows:-

“7. That as regards to the statements made in paragraph 11, 12 & 13 of the writ petition, the deponent admits only the facts which are matters of

record. Delay in handing over site was because of non-finalisation of site due to some local issues.

That as regards to the statements made in paragraph 14 of the writ petition, the deponent begs to state that as stated above, delay in handing over

site at Lalcherra was due to local issues and non-availability of suitable land at the location for the proposed construction. It has therefore been

decided to change the location from Lalcherra-I to Ramachandi-Dinanathpur which was approved by the District Health Society, Hailakandi as

intimated by the Deputy Commissioner, Hailakandi vide his letter No.HD/55/Health/2015/79 dated 21.04.2017. Accordingly, the name of the work

‘Construction of new PHC with residential accommodation for staffs under NHM at Lalcherra-I in Hailakandi District’ has been modified as

‘Construction of new PHC with residential accommodation for staffs under NHM at Ramchandi-Dinanathpur in Hailakandi District’ by an

office order dated 29.05.17 vide No.NHM/C-CW/2012-13/LALCHERA-I/Hailakandi/2421/14/21. The deponent further states that the petitioner

contractor was also informed for necessary action whereby he should have approached the concerned district health authority and the site engineer

for site etc. Apparently this was not done by the petitioner contractor. Instead a petition dated 03.07.2017 was submitted before the Respondent

authority by the petitioner requesting for price escalation or reduction in scope of work. That the deponent denies the averments made in paragraph

19, 20 & 21 of the writ petition as the same are not based on actual facts and records of the case. As the authority could not provide suitable land for

construction at Lalcherra-I and had to change the location to Ramchandi-Dinanathpur and the petitioner contractor was not willing to do the work at

the new location unless price escalation or reduction in work is considered, the work had to be withdrawn from the petitioner.â€​

With regard to the impugned order dated 04.12.2017, at Paragraph 9 of the affidavit, it is stated as follows:-

 “9. That as regards to the statements made in paragraph 15 of the writ petition, the deponent begs to state that in continuation of what has been

stated in the above para 8, the prayer of the petitioner for price escalation or reduction in scope of work could not be considered as the same was a

Govt. of India approved activity with earmarked fund provision for the purpose. As such, the petitioner was asked to intimate his willingness to do the

work at the newly identified location as per approved plan and estimate and price as per contract agreement. As the petitioner contractor did not

respond even beyond the stipulated period, it was assumed that the petitioner was not willing to do the work at the new site as per his agreed rate and

terms and conditions and therefore the work was withdrawn from him terminating the contract as per relevant provisions of the contract agreement

and forfeiting the performance security.â€​

A perusal of the above paragraphs demonstrates that the construction of new PHC at Lalcherra-I was a non-starter, the site having not been

delivered to the petitioner and ultimately the respondents had to change the location of the site from Lalcherra-I to Ramchandi Dinanathpur.

The learned counsel appearing for the respondents have failed to point out any provision requiring the petitioner to execute the work in any

changed location although the petitioner had submitted his tender for location Lalcherra-I. In absence of any stipulation of the kind, as indicated above,

the respondents cannot force the petitioner to execute the work in the changed location, that too, after almost a period of 3(three) years.

Under Clause-59 of the General Conditions of Contract, the employer or the contractor may terminate the contract if the other party causes a

fundamental breach of the contract. Clause 59.2 of the General Conditions of Contract delineates certain fundamental breaches of the contract, which

are not limited to the enumerated breaches and it appears to the Court that delivery of the site for construction activities to progress is at the core of

the contract and in that regard, there was a failure on the part of the respondents and, therefore, it has to be construed that there was a fundamental

breach of the contract on the part of the respondents. If that be so, forfeiture of performance guarantee on the alleged ground that the petitioner had

not expressed his willingness to work on the new location is, to say the least, arbitrary and without any rational basis.

In that view of the matter, the impugned order dated 04.12.2017 forfeiting the petitioner’s performance security of ` 5,41,528/- is ex-facie

illegal and, therefore, a writ of mandamus is issued directing the respondents to release the performance security of ` 5,41,528/- within a period of

1(one) month from the date of receipt of a certified copy of this order. In the facts and circumstances of the case, withdrawal of the work from the

petitioner and consequent termination of the contract shall not be held against the petitioner in future contracts as the petitioner cannot be faulted for

any breach of the agreement. As the petitioner has not submitted any tender pursuant to the e-tender notice dated 17.03.2018, in the circumstances of

the case, the respondents will be at liberty to proceed with the aforesaid tender and to finalize the same in accordance with law.

The writ petition stands allowed and disposed of with the above observations and directions. No cost.