Amar Ali Sheikh vs. The Union Of INDIA And 6 Ors

Held

The Court held that the petitioner has an adequate and efficacious alternative remedy for redressal of his grievances as provided in sub-clause (b) of Clause XX of the Terms and Conditions of the Contract. This clause mandates that disputes arising out of the contract are to be first referred to the Dispute/Grievance Redressal Committee (GRC) constituted at the Zonal Office of the FCI. The Court reasoned that since the dispute arose out of the contract and the terms of the contract govern the field, the petitioner should pursue the contractual remedy. The Court acknowledged that while High Courts have discretion under Article 226 of the Constitution, this discretion is restricted when an effective alternate remedy is available, unless specific exceptions like violation of fundamental rights or natural justice apply, which were not evident in this case. Therefore, the Court found it not a fit case to exercise its discretionary power. The Court directed the petitioner to approach the Assistant General Manager (Contract) of FCI, Guwahati Region, who shall forthwith refer the matter to the GRC for settlement, and the GRC shall proceed accordingly.

Facts

The petitioner, Amar Ali Sheikh, proprietor of M/S. Sheikh Enterprise, participated in an e-tender process initiated by the Food Corporation of India (FCI) for road transport services. The FCI issued a letter of acceptance on November 25, 2020, requesting the petitioner to furnish a security deposit and bank guarantees totaling Rs. 1,11,90,000/-. The petitioner deposited Rs. 9,33,000/- as security and obtained two bank guarantees from UCO Bank amounting to Rs. 37,30,000/- and Rs. 55,95,000/-. While one bank guarantee's confirmation was sent, the other allegedly failed due to technical reasons. Consequently, the FCI terminated the contract on February 3, 2021, citing the non-submission of the bank guarantee within the stipulated time. The petitioner sought a refund of the security deposit and release of the bank guarantees.

Key Issues

1. Whether the petitioner has an adequate and efficacious alternative remedy for redressal of his grievances regarding the refund of security deposit and release of bank guarantees, despite the termination of the contract by the FCI? (Question of law) Petitioner's contention: The petitioner argued that the FCI, having terminated the contract and allotted the work to another party, should have initiated the dispute resolution process for the refund of his security deposit and bank guarantees. He contended that the FCI's failure to do so necessitated his approach to the High Court. Respondent's (FCI) contention: The FCI contended that the contract itself contains a dispute resolution mechanism as per Clause XX of its Terms and Conditions. They argued that the petitioner approached the Writ Court without exhausting these remedies, and therefore, the petition should not be entertained. The FCI also noted that the petitioner had requested an extension for submitting the bank guarantee with a penalty, which was approved but not adhered to.