Ms Tahal Consulting Engineers Inida Private Limited Through Ms Reetika Goel vs. The State Of Jharkhand Through The Secretary Deptt Of Drinking Water And Sanitation

Facts

The petitioner, M/s Tahal Consulting Engineers India Private Limited, was awarded two contracts by the Department of Drinking Water and Sanitation, Government of Jharkhand, for water supply schemes in Gobindpur & Nirsa Blocks. The contract values were approximately Rs. 187.45 crore (South Zone) and Rs. 334.95 crore (North Zone). The petitioner furnished bank guarantees equivalent to 10% of the contract price as mobilization advance. The petitioner claims delays in project completion were due to the respondents' laches, including delayed land handover, approvals, and payments, as well as the COVID-19 pandemic. The petitioner requested extensions of time under Clause 28.2 & 28.3 of the contract. The respondents, however, issued letters recommending forfeiture of mobilization advance and invocation of bank guarantees, alleging negligence and lack of progress. The petitioner sought to quash these letters and stay the invocation of bank guarantees, arguing that no decision was taken on their extension requests.

Held

The Court held that a writ petition cannot be entertained solely for granting interim relief. It reasoned that if the nature of the dispute is such that it cannot be adjudicated by the High Court, then no direction in the nature of interim relief can be passed. Interim relief can only be granted in aid of and ancillary to the main relief available upon final determination of rights in a suit or proceeding. Given that the time for project completion had expired and there were allegations and counter-allegations between the parties, the Court was not inclined to issue any direction to restrain the respondents from invoking the bank guarantees. The Court noted that Clause 28.3 of the Conditions of Contract does not confer a right to extension but requires the respondent No. 5 to satisfy himself with the justification and refer his decision to the employer. The Court dismissed the writ petitions, observing that the petitioner could approach a competent court of civil jurisdiction or another redressal forum for adjudication of its factual plea.

Key Issues

1. Whether the High Court, in its writ jurisdiction under Article 226, can grant interim relief by restraining the respondents from invoking bank guarantees, especially when the time for project completion has expired and there are allegations of delay against the petitioner, and the respondents have issued show cause notices for potential cancellation of agreements and forfeiture of advances. Petitioner's arguments: - The respondents have failed to take a decision on the petitioner's request for extension of time as per Clause 28.2 & 28.3 of the Conditions of Contract, making the proposed forfeiture of mobilization advance and invocation of bank guarantees arbitrary and illegal. - The delay in completion is attributable to the respondents' laches and the COVID-19 pandemic. - The invocation of bank guarantees should be stayed as it is premature and in violation of contractual provisions allowing repayment of mobilization advance upon completion or extended completion. Respondents' arguments: - The writ petitions are not maintainable due to the nature of the dispute, which involves contractual obligations and factual disputes regarding project progress. - The petitioner was given sufficient opportunity to complete the project but made excuses for the delay. - A show cause notice was issued to the petitioner regarding the delay and potential cancellation of the agreement.