M/S Shri Vijay Kumar Singh vs. State Of Chhattisgarh

Facts

The petitioner, M/s Shri Vijay Kumar Singh, a contractor, entered into a contract for construction of two bridges under the Pradhan Mantri Gram Sadak Yojana in District Jashpur. The work order was issued on February 9, 2021, with a completion period of 16 months. The petitioner commenced work but faced delays due to COVID-19 restrictions, design changes, rainfall, river water levels, high material costs, elections, and festivals. The petitioner sought extensions. On July 4, 2024, the Executive Engineer (Respondent No. 5) terminated the contract. Subsequently, a demand of Rs. 1.13 crore was made on November 5, 2024, by Respondent No. 3. A fresh tender was floated for the remaining work, and Respondent No. 6 was awarded the contract. The petitioner challenged the termination order, the demand, and the fresh work order.

Held

The Court allowed the writ petition. It held that the State/respondents did not controvert the petitioner's submission regarding the percentage of work completed and the undertaking to complete the balance work by December 31, 2025. The Court found that the State/respondents ought to have taken a lenient view and granted more time for completion of the balance work, given the petitioner's undertaking. Consequently, the Court set aside the impugned order dated July 4, 2024, terminating the petitioner's contract, and the order dated November 5, 2024, imposing the demand. The NIT dated November 25, 2024, by which the remaining work was awarded to Respondent No. 6, was also set aside. The petitioner was permitted to complete the balance work by December 31, 2025, as undertaken. The Court noted that if Respondent No. 6 had any grievance, they could approach the appropriate forum. The issue of the exorbitant rate for the remaining work and the alleged loss to the public exchequer was implicitly addressed by setting aside the fresh tender and allowing the petitioner to complete the work at the old rate.

Key Issues

1. Whether the termination of the petitioner's contract agreement by Respondent No. 5 on July 4, 2024, and the subsequent demand of Rs. 1.13 crore by Respondent No. 3 on November 5, 2024, were arbitrary, unreasonable, and violative of the principles of natural justice, considering the petitioner's cited reasons for delay and the alleged lack of a fair hearing. 2. Whether the acceptance and work order issued to Respondent No. 6 for the remaining work on November 25, 2024, at a rate of 18.8% + GST above the Probable Amount of Contract, causing a significant loss to the public exchequer, was illegal and amenable to judicial review. Petitioner's arguments: The petitioner contended that the termination was done without a fair opportunity to be heard and that the demand of Rs. 1.13 crore was illegal as there was no clause in the agreement for such a pre-hearing penalty. They argued that the fresh tender awarded to Respondent No. 6 at a much higher rate than their original quote (which was 7% below the probable amount) would cause immense loss to the public exchequer, citing the principle that public interest overrides contract law in public procurement and relying on the Apex Court's decision in Sudhir Kumar Kad v. Central Bureau of Investigation (CBI), (2021) 19 SCC 703. The petitioner also stated they had completed 95% of one bridge and were in a position to complete the remaining work by December 31, 2025, and were willing to have liquidated damages deducted from their bills. State/Respondents' arguments: The State argued that the petitioner failed to complete the work within the prescribed period and subsequent extensions, leading to the cancellation of the work order in accordance with law. They also submitted that the petitioner was aware of the fresh tender but did not challenge it, filing the petition only after Respondent No. 6 started work, to cause delay. Respondent No. 6 claimed to have started work and prayed that their order not be disturbed.