M/S Teja Constructions vs. The Union Of INDIA And 3 Others
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Cause title — parties, addresses and appearances
The Court made the following: ORDER
n- // HON'BLE SRI JUSTICE K. LAKSHMAN WRIT PETITION No.30847 OF 2022 ORDER: Heard Mr.K. Saikrishna Mohan Rao, learned counsel for the petitioner and Mrs. L. Pranathi Reddy, leamed Senior Standing Counsel appearing on behalf of the respondents.
This writ petition is filed to issue a writ of certiorari calling for the records relating to the Notice No.GNT/W. 148/WA-lll/TN- 1368, dated 11.10.2021 issued by respondent No.4 and to set aside the same as illegal, and for a consequential direction to the respondents to release the legal amounts illegally withheld by the respondents recovered against Personal Bank Guarantee, Security Deposit respectively over and above the amount prescribed against the Circulars dated 20. I I .2020 and 27 .l | .2020 issued by the govemment of lndia.
Facts i) Respondent No.2 had issued a Tender Notification for Subways in lieu of Level Crossing Nos.3 l, 32, 36 and 37 in between Guntur - Nadikudi Section and Level Crossing No.96 in Nadikudi - Macherla Section to a total extent of 5 Level Crossing (l-Cs). The -,..ss tr';'i kl_..J \ir P r\o .ltr8,1l oi l0l: said Tender tr\rr. I 89g r^ as one1i,,C on 05.0-i.201 7 lor an overall value of Rs. 10,27..Y 5,216/- 'I.hc pctirioner concenr stood as successful bidder. Thcrelbre, a, agrccrrerl dated, 2(t.02.?_al g was entered into between thc per itione' a,rl Strlr. Divisionai Enginr:cr of. respo,cient on the specific terns and contl;rions. A Letter ot. Acceprtancs (leA) dated 24.08.20 l7 was also is:;rred to the petitioner. ii) fhougli thc said .l cnder. rt,as issueci for the aforesaid five LCs, L.C. Nos.l2 and 37 oLrt of the five LCs wcre cancelled and deleted on tlte ground that the cli'ersion roads were decided to be closed by the t)istrict ('orccror. Guniur'. The petitioner and the respondents have not entcred into common revised contract for the actual quantities lo be \,xccutclr. iii) As per the l_OA, lhr, rrcririoner shall cor.nplete the afor.esaid work within a per.iod ol six (0rr ) months frorn the date of issuance of the said LOA. iv) According ro thc rreiiriorler. on receipt of the LoA. it has furnished Performance of-Ilank (iuarantee for a sum of Rs.51,39,262/_ and Security Deposit ol I1s.4.5,29,9 721_ after ad.justing EMD ofRs.6,09,290/-. Accordi.g ro llrc peritioner, it has completed 97%o of the work and 3%o o1.the rxrr.k is <itre. Delay in cornpletion of the work
3 t,L.J W P. No 30847 of2022 is due to COVID-19 pandernic situation. It had completed the entire drainage arrangements as provided by the respondents. Due to faulty design and nature of soil, water is not being percolated into earth and, therefore, water got stagnated. Thereafter, the respondents have proposed and directed the petitioner to undertake certain additional works for better drainage facilities to keep the under pass water stagnation free with an improvised design after vacating the entire contract establishment from the site and re-establish the site bv re- mobilizing the resources for a minor value work for no fault of it which is unviable. The petitioner has informed the said fact vide its letter dated 08.05.2022 to the respondents. The respondents have not released the excess amount collected by it towards performance of Bank Guarantee and Security Deposit. It has committed breach of contract by not releasing the amount under Clause - 464, of the General Conditions of Contract (GCC) to a tune of Rs.24,67,7541-. The respondents failed to release the GST Neutralization amount to the extent of Rs.4,73,90,,2861- even after lapse of five years after introduction of the GST Act. The respondents have terminated the contract vide termination order dated I 1.10.2021 without following due procedure laid down under law and also without consideration the 1 KI,,J \\/ P \o.10847 of2022 explanation dated 07.10.2021 1o the seven (07) days Notice dated 27.09.2021 ancl :18 I'lours'\Lrticc dated 07.10.202 l. Thereflore, the action of the respondents in tcrntinating the contract is arbitrary and illegal. -1. Contcnlions of thr: res pondents i) Srhereas, the rcspondent:; have filed counter contending that despite granting time, the petirioner f'ailed to complete the work withir.r the agreed period and even aftt-.r Lrvo (02) y'cars of period. Therefore, the said contract order was terutinated by the respondents by fcillowing due procedure laid dorvrr unrler GCC including issuance of 07 days notice and 48 houls' notice. ii) As per Ihe agrccrncnl conditions, the petitiorrer has to submit 5oZ Security I)cposit i.e.. I{s. l 1,42,2681- and 5%o performance Guarantee i.e.,Rs.3 1,42.268i- on the proportional value of Rs.6,28,45,-352l- lbr construction ol three strbu,ays at L,C Nos.3 l, 36 and 96. 'Ihe petitioncr has cornpleted 7 5.41ot'o i.e., work value of Rs.4,73,90.286/- out of I{s.6.28.4-i.i52l-, bur not 95Yo of the work as claimed by the petitioncr. The Pcrlbnnance Guarantee submitted by the petitioner u,as expiled on i0.06.202 I itself and the petitioner
. .-:i-!=8.--:--7 =-'4-.a-:.,"ft+ry. , 5.-t:7' )/ 5 KI- J W.P. No.10847 of2022 failed to submit fresh Performance Guarantee as per the conditions of the agreement. iii) Referring to Clause 16 (a) of the GCC, the respondents would submit that if the Contractor fails to extend validity of the Performance of Guarantee, the Railway may claim the full amount of the Performance Guarantee. The time for completion of work gets extended, the Contractor shall get the validity of the Performance Guarantee extended to cover such extended time for completion of work plus 60 days, even if the petitioner has not completed the said work. Therefore, after following the procedure laid down under GCC, the respondents have terminated the work of the petitioner vide proceedings dated 11.10.2021. Vide letter dared 08.05.2022, the petitioner requested respondent No.1 to appoint an Arbitrator, who is not from the Railway existing Officers or Retired Officer but from retired High Court Judge or any other Officer, and the same is pending. Vide the aforesaid letter, the petitioner also requested the respondents to cancel termination notice dated 11.10.2021 and the same was not considered
5 (l-,1 \\' P No.'10817 of20ll
Anal sis and findin of the Court: i) The aloresaicl rival srrhrnissions u,ould reveal that respondent No.2 had issued the srrtriect tr:nclet notitication No.l 899 calling for subways in lieu of I-evcl Cross,irg Nos.3 1, 32, 36 and 37 in betu'een Guntur - Nadikudi Section ancl Lcvel Crossing No.96 in Nadikudi - Macherla Section to a tota[ extcnt of 5 Level Crossing (LCs). The said 'Iender was opened on t15.05.2017 lor an overall value of Rs. 10.27,85,246r-. Thc petitioner concem stood as successful bidder Therefore, an agreement dated 26.02.2018 was entered into between the petitioner and Sub-Divisional Engineer of respondent on the specific terms and corrditions. A Letter of Acceptance (LOA) dated 24.08.2017 was also issued to the said effect. Thereafter. two L.C Nos.32 and 37 out of the flve L('s were cancelled and deleted on the ground that the diversion roacls rvere decided to be closed by the District Collector, Guntur. r\s per the LOA, the petitioner shall complete the wolk within six (06) months lrom the date of said LOA which the petitioner has not complcted. According to the petitioner, it has completed 95% of the work. whereas, according to respondents, it has completed only 7 5.41o/o ot- thc rvork even after tra,o (02) years of tim${he said six (06) rnonth-. linrc was expired by 23.02.2018 1 I (,
7 KI_..t W l, No.10847 of2022 ii) As discussed above, the agreed period to complete the work was expired by 23.02.2019. There is an arbitration clause in the said agreement. The petitioner has already invoked the said arbitr.ation clause and arbitration proceedings are pending. There are certain disputes which are mostly of factual in nature i,e., percentage of completion of work, Performance of Bank Guarantee and Security Deposit furnished by the petitioner and according to the petitioner, it has fumished excess amount and the respondents have to return the same. The said aspects cannot be considered by this Court in a writ petition filed under Article - 226 of the Constitution of India. iii) It is relevant to nore that one Mr. Vardhineni Venkateswara Rao had filed a writ petition vide w.p. No.24265 of 202r before the High Court of Andhra pradesh at Amaravathi challenging the termination notice dated I I .10.2021. In fac1, the said contract was awarded in favour of M/s. Teja Constructions represented by its proprietor, Mr. T. Nagendra prasad. Thc said Mr. Vardhineni Venkateswara Rao is no way concemed with the said contract. However, he withdrew the said writ petition with a liberty to file fresh writ petition. Considering the submissions made by the learned counsel for the petitioner therein, the High Cloufl of Andhra pradesh
ti KI,.J Ur t, No -i0lJ1l ol:0-l:l disrnissed tlte said vulit peiltiort as $'ithclrav/n vide order datcd | 3.07 .2022,'uvith leave. iv) tt is relevant to notc that the petitioner is situated at Plot No.32l, I INIT Sethavahena Nagil ' Kukatpalty' I-Iyderabad' 'Telangana State, whereas. the General N4arrager of the South Central Railways is situated at Secunderabad. Ercept that, there is no caltse of action within the teni',orial .!ulisrJiction of this Clourt' The L'OAs are in Guntur, Andhra Pradesh Statc' subject Tender was issued 1ly respondent No.2 liom Gunttrr" Andhra Pradesh State' Since the petitioner anci the Senior Divi:iional E'ngineel of the respondents have entered into Contract irl Gunlur' there is no cause of cause of action' much less part of cause of actiorr within the territorial juri iction of this Court and accordingl-v tirc prcsent rvLit petition filed betbre this Court is not maintainable' v) The Apex CotLrt in Union of India (UOl) v' Adani Exports Ltd.r, it was held as fbllows:- "17. tt is seen fiom thc above that in order to cotrfer jurisciction on I High ( r)urt to entenain a writ petition or a special civil application as in this case' the IIigh Court must be satislle.l llonr thc entire lacts pleaded in support of thc cause of actiorr llliit those facts do constitute a cause '. ntn 2roz sc l:o .\
9 KI J W.P No.l08l7 o12022 of action so as to empower to court to decide a dispute which has, at leasr in-part, arisen within its juri iction. lt is clear lor the above judgment that each and evcry fact pleaded by the respondents in their application does not ipso facto lead to thc conclusion that those facts give rise to a cause of action within the court's territorial Bank[MANUiAPlOsg0lz0l2l, it was held as lollows:- "
Considering the legal position as settled by the decisions aforesaid, it is already noticed that there are no pleadings on the part of the petitioner, as to how any part of cause of action arises within the tenitorial juri iction of this Court. On the contrary, taking the averments. as noted above, no part of cause of aetion arises within the territorial juri iction of this Court inasmuch as on the date of service of show cause noticcs, which were originally impugned at the time of filing of the writ petition and when the chargc memos were sought to be served on the petitioner, hc was working at head office at Kolkata. [t is not only essential for the petitioner to show that a part of cause of action has arisen within the juri iction of this Cou( but he must also show that the said cause of action is an integral parl having nexus to thc substantial cause ol'action. l'he merc residence of thc petitioner at Hyderabad aftcr his retircrltent and merely {
l0 $ l' No l0E{7 042022 !,t becausc the cl'lrrges relut. to the alleged omissions and commissions ol the hranch of the tcspondent bank at H1'derabad, in ntv vieu. has no nexus r.r,ith thc cause of action relating ro rnir,ation of disciptinary pl.oceedings agains( the petiticrncr. In a given case. the chargcs mav relatc to any evcnt hapl).rning in any branch in any part of lndia irut the situs rvith rr:spect to initiation of disciplinary proceedings cannot be said to have any integral nexus with the omissions and commissions at all/any of such branchcs. 1he shou r:ause notices as weli as the charge rnemos in thc llrcsent casc incidentally refer to omissions zind commissions at Baniara Hjlls branch at Hyderabad, but evcn if it could harc been at some other branch in Karnatlka or Kcrala, it rvould not be pemrissible, under Anicl< 226(2) of the ( onstitution of lndia. lor rhe petitioner to invol<e thc rcrritorial juri iction ol the High Clourt within *ho's territorial limits, such branch is sitrratetl. Ihe prcliminary objection raised bi, thc leamed senior counsel lbr the respondents has, therefore, to bc held as well foLrnded and suslainable a,qrd consequentll,. the u,rit petition is liable to be disntissed orr this ground alone. 12.2. tltc Apex Court in Navinchandra N. Majithia vs. State of Maharashtra [MANU/.4P/0590120121 . ir u,as he ld as folloivs:- '
Even in tlie contcxr of Article 226(2) of thc Constihrtion this Court adopted the same interpretation to the expression 'cause o1'action wholly or in part arises,, vide litatc ol' Rajasthan v. Swaika propertics MANU SC/C30.1,t985 : Il985I3SCR598 . A three Judge Ilench cl'this CoLrrr in Oiland Natural Gas Commission v.
KL.J W.P. No 10817 of2022 Utpal Kumar Basu and Anr. MANtjiSCl0759/1994 : (1994)4SCC7Il observed that it is well settled that the expression 'cause of action' means that bundle of facts which the petitioner must prove, if traversed to entitle him to a judgment in his lavour. Having given such a wide interpretation to the expression Ahmadi, J. (as the leamed Chief Justice then was) speaking fbr M.N. Venkatachalliah. CJ. and B.P. Jeevan Reddy. .J.. utilised the oppornrnity to caution the High Courts against transgressing into the juri iction of the-other High Courts merely on the ground of some insignificancc event connected with the cause of action taking place within the tenitorial limits of rhe High Courr to which rhc litigant approaches at his own choice or convenience. The following are such observations: If an impression gains ground that even in cases which fall outside the territorial juri iction of the Court, certain members ol the Court would be willing to exercise juri iction on the plea thar some event, however, trivial and unconnected with the cause of action had occurred within the juri iction of the said Court, litigants would seek to abuse the process by carrying the cause belore such members giving rise to avoidable suspicion. That would "lower the dignity of the institution and put the entire system to ridicule. We are greatly pained to say so but if we do not strongly depreciable the growing tendency we will, we are afraid, be failing in our duty to the institution and thc system of administration of justice. We do hope thal we rvill not have another occasion to deal with such a situation. ll
2 I\I-,J Ur.l'. No :l0lt47 of :012
The Apex (iourt in Kusum lngots and Alloys Ltd. vs. Union of India ([JOI) [MANU/SC/0430/2004 - AIR 2004 SC 2321l. it u,as held as lollows:-
Wc nrust. horvcr,er. rcrnind ourselves that even if a snrall ;rart of caLrsc ol action arises within the tcrritorial juri iction of the IIi6rh f ourt. the same by itself may not be considcred to bc a tletr.'rminative factor compclling the High Court to decidc thc rna[ter on rnerit. ln appropnate cascs, rhe Court may relirsc to exercise its discretionary juri iction irl inrokilg the doctrine of lorum convenience. (See Bhagar Singh Bagga v. Devran JagbirS au,hanl'. AIR l94l Cal; Mandal Jalan v. Ir4adanlal.; Ilharat ('oking Lloal Limited v. Jharia Talkies & Ccld Storagc Pvt. L.tcl.: S.S. Jain & Co. and Anr. v. Union of India and Ors. ( I994) CHN 445; New Horizon [,td. r. [Jnion ol- ]ndia, MANU/DE/0014/ 1994 : AII{19941)elhii16 )." vi) In N. An.iamma v. South Central R.ailway2, the notification was fbr awarding of'license for installation and operation of multipurpose stalls at lour locations in three Stations for a period of five years over Vijaya\\,ada Division. Respondent No.2 therein is stationed at Vijavawada. Respondent No. I has no role at all in the entire tender pl'ocess. -fhere is no cause of action, much less part ol causc of action within thc tcrritorial juri iction of this Court. Considcring the said f'acts and also the law laid down by the Apex .i{ !l Ordcr in W.1,. No.29Il8 ol202l. dccidecl ol 28.0g.2022
l3 KI-.J W.P No 10E47 o12022 Court in the aforesaid judgments, this Courl dismissed the writ petition on the ground that there is no part of cause of action within the territorial juri iction ol this Court. A similar view was taken by this Court in Dumpala Madhusudhana Reddy v. State of Maharashtra3. vii) Referring to the above said decisions and other decisions, this Court also in Smt. K. Padmaja v. Union of lndiaa held that since there is no cause of action, much less part of cause of action within the territorial juri iction of this Court, the writ petition is not mhintainable and the same is liable to be dismisscd. In view of the same, in the case on hand, except that the petitioner company is situated within the territorial juri iction of this Court, there is no cause of action, much less part of cause of action. 'l'herefore, this writ petition is liable to be dismissed on the point ofjuri iction also' viii) It is also contended by respondent Nos.2 to 4 that in view of the arbitration clause, the writ petition filed by the petitioner is not maintainable. The said contention of the respondents is unsustainable in view of the law laid down by the Hon'ble Supretne Court in State r. Order in w.P.No 6470 of 2022, decided' on 09'02 2022 o. w.P. No.5252 0f 2023' decided o(t 23 '03 '2023
l4 Ki_.1 \VP No.]084? ot2022 of U.P. v. Britlgo & Rool'Co. (India) Ltd.5 wherein the Apex Court held that the c.u.ts shail not entcdain a writ petitio. when arbitr.ation is available as dispute resolution rrechanism. Further, the Courl r-roted that any disputt' irvol'ing intcr'prctation of terms of contract cannot be enteftained unclcr Articlc 226. I'he relevant paragraphs are extracted below:
"
Firstlv. lltc contracl betrrct,n the parties is a contract in the realm ofprivate Iar.\. I( is rrot a statu(orv contract. It is governcd bv the rovls lons 0f thc (lontract Act or ma be also b certain Drovlslons ol the Sale of (ioods Act. Anv dispute relatin to intcrpretation of thc ternrs and conditions of such a contract cannot be asitated, and could not havc been agitated, in a writ Detition. That is a matter eithcr for arbitration as nrovided bv thc contract or fol the civ iI court. as the case mav be. Whether any amount is due to the rcsponcierrt fiom the appellant_Govemment under the contract rrnd. if so. hou, rlnrch and the further question whether retcntion or rclirsal to pay an) unrount by the Government isjustified, or not. are all nrattcrs lhiclr carrnol be agitated in or adjudicated upon in a writ petirion. The prayer in tlic writ pctition, viz., to restrain the Government liom dcrlucting a pafticular amount from the u,rit petitioner's bill(s) was not a pra),cr which could be granted by the High Court under r'rrticle 216. lndeed. thc I{igh Court has not granted the said praver.
There is ycl another su bsta n tial reason for llot en nins the tertai writ n€tition
(t996) 6 sc(. 22 . I'hc con tract in ucs tion contains 4clause Drovidins l,|
l5 KI-.J W P No.108.1? of2022 inter alia for scttlement of disputes by rcfcrencc 1o arbitration (clause 67 of the contract). The arbitrators can dccide both questions of fact as well as questions of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and a&)pt thatlgmedv and invoke thc extraordinary iuri iction of the Hish Coura under Articlc 226. The existcnce of an effective alternative remedv - in this case Drovided in the contract itself - is a sood sround for the court to decline to exercise its extraordinarv iuri iction under Article 226. The said article was not meant to suoolant the existin g rcmedics at law but onlv to suDDlement them in certain well-recosnised situations. As pointed out abovc. the ra er for issuance of a writ of mandamus was whol misconceived in this case since the respondent was not seekins to enforce any statutory risht of theirs nor was it seekinq to enforce anv statutorv obligation cast uoon the aooellants. Indeed. the vcry resort to Article D6 - whether for issuance of mandamus or any other writ. order or direction - was misconceived for the reasons m9!rtioned supra." ix) Referring to the above said decision and other decisions of the Apex Court, this Court in lWs. Suprcme l,aundry Services Joint Venture Pvt. Ltd. v. The Union of India6 held that when there is an alternative remedy in the form of arbitration, this Court cannot entertain the writ petition. x) As discussed above, respondent Nos.2 to 4 have issued seven (07) days Notice and 48 Hours' Noticc to the petitioner ;l 6 W.P. No.4906 of 2021. decidcd on 05.06.2023
l6 W I, No.lU817 of202l {. informing aborrt slor.i, pro,tress anci the petitioner herein had submitted expianation darcd 07.10.202 I xi) In the counter. filcrl b1, the respondents, it is specifically mentioned thar l_(' No.: I ar KM No.33/9 _ 34/O between Peddakurapadu - Sa*enapaili l{airway Stations in Guntur - Nadikudi Section was proposecl 1br percolation pit as drainage according to the ceneral arrang('rneut Drau'ing. But, due to topographic conditions and raising the watcr level percolation pit is not suitable. Thus, the Engineer has de.rided to pror ide drain connecting to low lying area as drainage an'angerlenr lor the Rairr.r'ay Under Bridge (RUB) as per site condition. Accordingly. the conrractor has been advised to start drain work at LC No.3 I bur the (.ontractor has not completed drainage arrangernent at IitJB e'e, after passing of two (02; years and without drainage arrange ncnt. RIJB uill not be functioned. Hence, drainage arrangelnent is inr|ortant lor Rt III u,hich cannot be delayed further. xii) It is also specificallr contended by the respondents that the respondents havc taken decision for construction of RtrEl at the aforesaid LCs to uvoicl accidents etc., and it is time bound programme. Therefbre, the' h,r'e spccifically, ,e,tioned six (06) months time for completion of t rc albresaid ivor.ks. Despite granting arnple
t7 Kt .J \\ P No ]0817 0f2022 opportunity, the petitioner failed to complete the said works within the time stipulated and even after completion of two (02) years' Though there are specific allegations, the petitioner has not filed any reply or rejoinder controverting the allegations rnade by the respondents. It is relevant to note that the petitioner failed to make out any case including any procedural inegularity cornmitted by respondent Nos.2 to 4 in issuing termination order dated I1.10.2021r. xiii) In view of the aforesaid discussion, according to this Court, the petitioner failed to make out any case to interfere with the said o.der dated I l. lO.2O2l . Fu(her, the petitioner herein has already invoked the arbitration clause and, therefore, the arbitration proceedings are on. Viewed from any angle, the present writ petition is devoid of merits and thc same is liable to be dismissed.
Conclusion: The writ petition is accordingly dismissed. However, liberty is granted to the petitioner and respondent Nos.2 to 4 to take all the contentions and grounds raised which they have raised in the present writ petition before the Arbitrator in arbitral proceedings' In the circumstances of the case, there shall be no order as to costs. I I
t8 KI-,J W i, No..l()8e7 oa2022 As a seqrrcl, titc- rniscclllneous petitions, if any, pending in the writ petit ion shall.larrtl ulo>,.., A..'.ifffdlqsiixA //rRUE coPY// ,#;;r;;; . One CC to SRI K SAt KRTSHNA_I\4OH4N RAe Advocate tOpUCl . ?#3 33 B#::, eRANAiHT ne oby,'si i"C;6H"aEr.iin[r_b6w ropuc] &- ig \t To, KK GJ 1 J S P
HIGH COURT DATE D : 1 910612023 ORDER WP.No.30847 o12022 DISMISSING THE WP WITHOUT COSTS ('i S:r..:,, a ,{: * J 11 iljl 2tu3 ri'( ; ',/ 't ). _ . .':+!i'+r -'- - 05 4"' y'"fi- t|r.
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.