TEE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 14"' DAY OF OCT0BE'}}:~~2(1Qi9__"__t:If "
BEFORE:
THE I-ION'BLE MR. JUSTICE s§.NAN[§f'vI34'15I3iI4§R-1€'Dl3f .;_I
WRIT PETITION No.2'5V778. OEI2nO5(GIM;tREs)t :1
C/W WRIT PETITION No;:~I.7_os OF 200sIGM--nEs)
WRIT PETITION No.2577s oI?II2Q()5£(;WI-IRES)'
BETWEEN: I I I I
Doiomite Berhfid, _. .,
No.3, JalaniSBC'*--2V,"""°--.__
Tarnan S_rI.BatII"'Ca,.YEs, 3 A
68 1.00,: 'IISelang.oI¢ _Da*f'§IVi I I
Malaysia, -. ' . ' ~
Through»The Pi'CjCC'I__IVIaI}?},g6lf..~" PETITIONER
(By Vonugopak, Senior Counsel and
, '_ Sh;'«»;'..?{§.S'hasVhikiran .ShOtty, Advocate)
E} V Nati'Onj_a1aI'HighWays Authority of India,
(Minifiry of Road, Transport and Highways,
'Government of India)
A. , PI"()ject Implementation Unit KPIU)
._ Near J.}Vi.I.T., NR4 (Km 201),
'A Chitradurga -577 502,
Kamataka,
8
l\3
Through its Chairman.
The Louis Berger Group, INC.
Sree Lakshmi Venkateshwara Nilaya,
Vidya Nagar Extension,
Chitradu1'ga~577 502,
Karnataka,
Through the Engineeit
A.L.Sudershan Construction (fornpany Lirnii1e:d,~ it
7-~3-~719, Rashtrapathi Road,
Secundarabad--500 O03, 3
Through its Managing Di1'ector".'-i
Standard Chartered Bank, * K
Raheja Tower, 6%' Floor, C
26, M.G.Road, V
Bangalore-560 003*.-_ _
Standared C red V V
G_rindEays°Centre, ~
}.9',«Rajaji S,a'Iaij,*._
Cheiinai~600 001.. "
. 'ifitaizdared Chartered Bank,
._ Connaught Circus,
3 10 00].
.* _ Stir;-iierne Infrastructure Limited
and MBL Infrastructure L£_m_i:ed,
Registered Office at No.8,
Bhavani, Service Industrial Estate,
it a in Powal, Mumbai-400 076.
Site office Taralabalu Nagar,
Nea1'J.M.I.T. College,
E
Behind NHAI Office,
Chitradurga--577 502. RESPONDENTS
(By Shriifdaya Holla Senior Counsel, ,
Smt.Shi1pa Shah, Singahria and Partners for
Shri.C.M.\/eeeranna for Respondent 2,
M/s.Rangai-aju and Prabhakaran for" 'p nu
Shri.G.Krishna.murty for Resptindentlf) A j;
>i< =%il'(i"V227 of if
the Constitution of India, p1'ayin.g.. tov.de't:.lare tf1'a--t.._tAhe;3action of
the respondents trying to_i€':ncas;h thee"BVa.nk~-guarantees refereed
to in paragraph 6 above as f1-aud_u'ie}nt, hi_ghiy_arbitrary, iilegal
and without authority of'1awv:and etc; " .,
WRIT PET'¥'f1{jN.ii\fCi.5:76c}«bi?.2{i0i?(_§.M»RES)
aETw,aah " ~ 3'1, if A
Doiornite' Be'1'had,x._ii" ~_ 9" 1
No.3, Ja1ani:'},BC 2,
Taman"Sifi.Batuflavies, '
V' Selangor Dflaru-1--«Ehsan,
.Ma.1ays_ia,_
,__.TEir.ough"«T¥jhe°Proj,ect Manager. PETYTIONER
(13iy--.__iSh1'.i:i\ti..;}irishnan Venugopai, Senior Counsel and
Shri.1{.Si'hashikiran Shetty, Advocate)
if is.1si~AVNn.;
i National Highways Authority of India,
(Ministry of Road, Transport and Highways,
3
Government of India)
Project Implementation Unit t PIU)
Near J.M.I.T., NPL4 (Km 20} ),
Chitradurga -577 502,
Katnataka,
Through its Chairman.
The Louis Berger Group, INC'. _ .
Sree Lakshmi Venkateshwar;-1 i\Iilaya.,_
Vidya Nagar Extension,
Chitradu1'ga--577 502, 'V
Karnataka, __
Through the Engineei:,_
A.L.Sudersha_n Const1f_u'ction__(Torn}:)-anyL..Li tnited,
7~3~7_i9, Rasht._tapathi Road,_ ' '
Secundaré1ba§?3~»t5CQ
Through VN§af:aging«._D'ireCt_m*'._: '
Standard. Bank, _
Raheja' Towe 1}; ._6"' ieeohr; -. '
26,"M.G.Roa_d; V.
Ban gLae§.ote<5 60. 00
'Standatd Chartered' Bank,
. _ Gtind1aysCentte,
" ~VtA9t,¢1za_;ajtsaa1at,
Ch'en1tai--60wO' 001.
i'.""Staf1:(.fa1'ti Chartered Bank,
H-«.2,'3~Connaught Circus,
* ~t._New Delhi-1 to 001.
L' HM/s.Supreme Infrastructure Limited
and MBL Infrastructure Limited,
S
Registered Office at No.8,
Bhavani, Service Industrial Estate,
HT Powal, Mumbai-~40O 076.
Site office Taralabalu Nagar,
Near }.lVl.IT. College,
Behind NHAI Office,
Chiti'adurga--577 502.
(By Shri.Udaya Holia Senior Counsclilg if
Smt.Shilpa Shah, Singahria a'nd«-.._Partn'erllfnr iiesjondent ll,
Shri.C.M.Veee.ranna for Respondenffl,
M/s.Rangaraju and P1'£'xl_)h.Etl<2l1"'é1y1_'l.._il"'0,_l"' 'V.l§espondevntsVAvf-4 to 6
Shri.G.Krishnamurty for R'e.sponden{ 7)._ _ L' ' .. y.
This Writ Petition isfiled unrler A'rtic"l--es 226 and 227 of
the Constitution of lndiagg praying..to*~.quas'h'the communication
dated 10.3.2036 issued'. by the j--plroj'e'c'tl director of the
respondent.l=:'lnatioiial, hi'g._l_jiway.sV':Ay.authority of India and/or
declare that t'hCll"'lri:yjocatioVnby .respdndent that of the Bank
Giiaranteesl"rnentioneii"'in'pai*agraphWl above and the action of
the Res1i2,ondent.,4"to'=-6;'standard 'chartered bank in releasing the
amounts under tlie_said_ b'an:k~.g"ua1'a1:1tees in fraudulent, highly
arbitrary, illegal' and'../orylfwithoiit authority of law Vide
Annexure--A aI7'tCi_6['C:,'l' l
.V _ These "petitionslllllhaving been heard and reserved on
V__6.8.2909.and:'c.orn.ing on for pronouncement of orders this day,
the Court-.de1Vi_v'elijed' the fol_lowing:--
5
ORDER
Heard the counsel for the parties.
2. These petitions are disposed of by this c0mm’on.’__ordei*
as the parties are common and are given the in”
both the petitions and the reliefs ci:£iAmed..arfe in ‘i’espeC’t’ofithe.i
same subject matter.
3. The facts ofthe case are___a”s-foilows:i” ~ it I
The petitioner, M/s’;Diol0inite’ is, a subsidiary of a
public third respondent, M/s. ‘
A L Sudershan Cons:t1’iiiC’tioiii”Company Limited, Secunderabad
is a govrnpariiy under the Companies Act, I956.
Authority of India, respondent No.1
it'(hereina’f*ie’r,,i_efiier1″ed to as “NHAI” for brevity) had invited bids
V .V by notiification dated 31.5.2001 for the rehabilitation and
of Chitradurga Section of the Western Traiiisport
Tumkur–Haveri NH-4 (National Highway No.4)
é
Project from 1<.rn.189 to k.n'i.2()'.? — Package No.WTC 3
(hereinafter referred to as the "Project" for brevity).
The petitioner and the third respondent had entered a
joint Venture agreement dated 5.7.200}, agree_iri.g
profits equally, and had subm_i.tted theirbid ii
invitation as on 22.12.2001. The
been accepted an ag1'eement'–v.tw'as e)iecuted_'*_between1V the V
petitioner and respondent Theiconsideration
was Rs.87.24 crore. The arider the project
was be11ic'i':inmenced on 1.3.2002 and
completieduibyi months). The petitioner had
furnished se"ve.rai~ban1< guarantees, in respect of various
1'"cont'ingencies~__fo1' the due performance of contract, valued at
"'ov'e'1_f with the execution of the agreement and
release ofim<'§bi1ization advances. Within two months from the
up=,cot.n.:neacernent of work a dispute broke out between the
– namely, the originai design of the Project was for 4
57>
laning the highway at a particular point where there was a
hillock. The excavation provided under the contract as per the
Bil} of Quantities (BOQ) was 38000 cu.m under ordinary rock
and 3800 cum. under hard rock. This was sought to
by NHAI under communications dated i5.5.?.002 .
which required the petitioner to change theiideisign. ifroirri
laning to 6 laning, in the particular l1i’i1oC:i_§areaii'(c’h.
ch 195.050); to provide. ser’viceV1’o_ad~sp of metres’ “instead ‘V
of 4 metres; and the side.»siopes.iw’c*–1’r%§’–req:1ired to”‘ue~tiattened,
re uirin fiattenin ahillock bi’ hardrockieiteaivation.
q 3 3 Y .
In7.c_respp’onseVii’orthiisp,'”the'”peti’tione1′ proposed various rates
for the addit.i_o3aa1 Vw.oi*ks,” communications dated 3.6.2002
and Ho’vve.V_e.r,’ it is the petitioner’s case that it had
V’–,co.ntii1ued._Vito’-eiiecute the work on the assurances of the
rep1’e.seintativ’es_ N HA1 and M/s.Louis Berger Group Inc. (The
. *.E,nginee”rs appointed as Supervision Consultants, in terms of the
it pV.’aigI’e.eri1ent) respondent NO.2 hereinabove, that the enhanced
rates would be mutuaily agreed to in due course.
3
9
It was on 8.11.2002 that the second respondent issued a
variation order No.3/00}. This was issued in terms of Ciause
51 of the agreement and is a formal expression of the additional
works and according to the petitioner, is used for pL1ifposes?.of
making interim payments to the petitioner. ‘Fhe_-‘petiiitiiohier ~
said to have Compieted the addit%onav1.._worksHii’nei§idii1gi_’_=the._V
excavation of 400000 cubic metres ofrocifiiat anaddi.tit;na1:coist*._
of Rs.20 crore. It is stated tvha’t..t>the “es_tirnatej:I rock it
excavation in terms of the.v_Bii1.~eiot’ ‘Qiuantit.ies was”‘3’800 cum.
whereas the hard rock excaVatec?1″t>_t;/0 biasting aione
was 2697 petit%oner’s case that during the
period JL1n'<':s.__2O02x0' 2004, without the issue of
'_ enhvaricedii't'ates he'ing___se.ttIed, the entire working capital of the
petitioneuwast iiblocked in the excavation work. To add to its
woes} the petitioner's joint venture partner who was required to
iyinvest 50% of the working capital pleaded inability on account
i"o§.1_ac}:; of funds and a dispute having arisen between them, the
.._Vrnatter was in arbitration proceedings. It was, therefore,
3
1 (3
imperative for the petitioner that respondent No.1 released
funds on the basis of the enhanced rates.
The second respondent had issued a variation orderi»3{/ClQ8
fixing a rate of Rs.180 per cum. for the excavationioif ‘orfdinar*-}?__ .
rock. As the petitioner had claimed. an e–nhia”ne:ed ii”ate..Vo’f_
Rs.583.36 per cu.m., the petitioner:’acc:eptedlithe’ ,ra’ter
protest while pointing out Vth.ata_ethe h”e.2;cayat’ion~-iViireqdired i’
controlled blasting as the shard rock VVprimarily”iigneous rock
and requested fixing a higher.irate’.v’E’l3ut.,__thefse(;Ond respondent
withdrew Vazfiatio’-n_:Order 31008 u«nde-if’–the_:dictates of the first
respondent and on i’ts9.arguinevnt that the price for excavation of
oi’dinaryi’and«.hard. vrock._iNaisVi”p.r<:;-vidcd in the Bill of Quantities.
The same 2 -not constitute 2% of the contract price.
'¥"hereifore;~ under 52.2 of the Contract Conditions of
V. i'Partict;.lai5'iApplicationmihereinafter referred to as "CCPA", for
i_)reViit'yT) :the.p.eti.tioner was not entitled for an enhanced rate.
""Thepieit_itioner immediately raised a dispute and sought
-V :’eferei1ce’;i,Qf” this claim for enhanced rates for the additional
§
11
works, to the Disputes Adjudication Board (hereinafter referred
to as the “DAB”, for brevity) under Clause 67.} of the CCPA,
as on 22.9.2004.
The DAB on consideration of the rival cot’ater1t.i’ons
concluded that the petitioner’s claim ought
Considered at the earliest and the secondp reisponideint vhaving-.
delayed the classification of the rock for_ over two’ years «arid
having provided its report to th’e,p’etitionei< vvas place.
But rejected the petitionei-'apclai_nimf<51'i-Ienhanced ravtesgivaccepting
the NHAFS interpretation oftlfieticlaiises.ViVofl.ith.e.'–~contract, by an
order dated * A
By a"il_ettar the second respondent the
SupVei*3visi_iig Consiultanti. Engineers. extended the time for
cotiiijpiexioiiitwork to £15.] 1.2015.
A’ “dHowe’\re_1″i,t” the second respondent issued notices dated
“~~v._’__V’-5.7.2OU’3.,’__land 19.8.2005 recommciiding termination of the
A p:.”pAetit_ioner’s contract, which prompted NHAI to bring relentless
2 pressure on the petitioner to take extreme measures to expedite
3
the work or suffer the consequences. NHAI threatened to
invoke bank guarantees as per letters dated 26.10.200§ and
7.11.2005. There was no response to the petitione1″.«s”request
for extension of time. The petitioner contend-3:”tha.t_:’i’t-it V’
ultimately informed after the officizsilsmof’
contacted personaily, that a decisioniiw_ais”.takeni.o*nA18.1
not to extend any further time f’oir”~9o’1tnpietion_of’the contract. It
was thereafter that the pe;ti’t-i_one_’ri haidt-he first iofthese writ
petitions seeking__ to res.tta’in.V ‘terminating the
contract and _iiiV(‘iE<ii';r.gi AV.biank""'gua1'antees and for
compen_sat1o'n ii1'ra:'s-pAectio'tfrthe additional works.
On 1,2005*.i.ti:is"_;~court had issued notice to the
respondentspbut did.nQt.g2fant any interirn relief.
–V.TAi\’§iIAI'<~r.e%at.ered appearance and filed its statement of
objections.'.ioi_1_i'2t).1.2006 and denied that it had decided to
V._terrninete":. the contract or to invoke the bank guarantees.
by notice dated 10.3.2006 the petitioner's contract
i .i _._was terminated and the bank guarantees were encashed.
3
It is contended that thereafter NHAI has awarded the
balance works of the Project to :1 third–party, namely, the
seventh respondent, for a consideration of Rs.lO3 crore,”-.._¥t is
the petitioner’s case that it had Completed 43%
works. The value of the remaining was about,,Ris;4.9;7_i2~ crore.~i _ i’
But NHAI having awarded the remainingin/iorlt’atitheiexorbiitlapnti’
sum as stated above seeks to hold thel”petit_ionetr”l’iable for the
difference of the value of the rerii’ai..inin_g worksi_i(Rs.llE03 crore
less Rs.49.72 crore). It is on,t’i–3_is development that the
second of the above_writ1petitio:ns.lis,tt7i.led; 2
S-.’n’ri .Kris’l1nan_»Vent:gop’al, Senior Advocate appearing
for the c.o1.ins_el f()1’lthe’petit.i_lone1′ contends as follows:
“the.maintainability of the writ petition, in the
of”‘a,n”a_rbi:tra.tion clause, under Clause 67 of the Agreement
between _t,hedlVpai”ties, he would submit that a writ petition is
V’-».maintainable despite the existence of an arbitration clause as
_whatif.–‘is sought to be enforced is a fundamental right of the
V. ..,.petitioner.
3
In that, the petitioner seeks to question the interpretation
sought to be placed by NHAI on ciause. 52.2 of the contract.
The same is patently unfair and arbitrary. Further, an Arbitral
Tribunal is fettered by the terms 01′ the contract. It wouid._be
beyond its jurisdiction to adjudicate upon the.§i_:piet’itio–i1e;*-‘.sf’.
contention. The clause requires to _be..read dowirfto. render it
reasonabie and fair and render justice tothe ip~etii’ti_oneir.-it”=-The
contract being a standard forni a:o’n.1V_ract has a _pu’b1i’e.;’c’iiaracter, ” V
in so far as it is applied t()p.*.§i’)”11ti§1.”.itii(‘)’1’r.S_’ engag’eld«’oy NHAI
through the length and it>;:eaditiie:o’f its acclaimed
Golden; Q~uadi’i_later.al’t ‘ and therefore, is yet another
circumstariceilwyhich iwoulyd_;e»:raake these proceedings the most
a ire riate rem_ed*<,,i__Hev laces reliance on several authorities in
J …. ..
V th is repg’ardi he.:e”u–nder:
(.ciz)_.il!i”)iF.Q;i’iis:S{ii1Ih Khan’ vs. Ram f~;g.znehi Sing/1, (I971}3 SCC
864,
AISL InIern.ari0n.czl I.im:’rea’ i-us’. Export’ Credit Guarantee
C{)I'[){)f£ZTi()f1 Qflrzdia Limited, (2€)04)3 SCC 553
8
(c) Shri1ekl’i.(z Vz’c1yc1rr/Ii (Kmmfl us’. State of UP. (1991)! SCC
212
(d) LIC oflndicz vs. C onsumer Edmminrz and Researclz egztre,
(1995)5 SCC 482
(6) Urrar Pradesh State Bridge Cwzsrrucrzion C0%y?)rra:if}rz
B.D./«L and Others, 2005(5) I<ar.LJ 112- i_
Srimauli Builders vs. Ban (:1()r£2 "WaIer'..';.§ii";i'v '.cii'1d
, .3 ._ , P1" « . .
Sewerage Board and or/’zers, (‘6)KczriLiI
(g) S/1eIty’s Cor1_9truc’ti0i:i.’_:C.<)rn;–ian;'.i rishna Bhagya Jala
Nigam Limited and c3tbe.!<t,_ §2_5;i2,f2(51a,éi;=;
Ityis Contefidédofth.at"the"—question to be addressed by this
Court is iinrii.t_ed. in' scopenaiid does not involve any disputed
…..
V “‘It’isi’iiiotiiii-‘dispute that the expansioii of the scope of
wo1’]$ii11cre£iSegi’eEmost 30 times in the quantum of excavation of
ii”»~’««___i’~hard 1’o’CkV__ii111d by 5% times in the case of ordinary rock. Citing
_i’the–j.u_:igment of the Supreme Court in S.Harcharan .vs. Uniorz
-sgfiilndia ((1990) 4 SCC 647), which was a case concerning a
3
26
construction contract, involving additional work of excavating
hard r0ck~it was held that a contractor could not be held liable
to execute the additional quantity of the tendered iternsat the
tender rates to an unlimited extent and that it was perr_1fn’sls’ihl’elto
read into the contract a deviation limit, 20% inll”t.hatfciase;
excess of which the contractor wwald en«titl¥ed.__torevisedllr
I’Elt€S .
It is also found as a fact thatv:l§’\’HAl ifaiiledltg) indicate
for over two years, the revised ratcsi.._w»hile assuring it of the
same — only to fix the sanie_arbitra1’il»y a’n_d’eiqua’ily arbitrarily to
have wl’ithdr21w.1l1″the..3ame”oTn'”the ‘ground that the petitioner was
not even entitled to. It is the interpretation of clause
‘lofithe contr’Aactib.y. N HA1, in the face of the circumstances
_ n’igh’ligh’t.ed requires to be addreased by this Court.
‘ It is ‘contended that Clause 52.12 of the General conditions
Wof the ct)_nti’act reads as follows:
52.2 Provided that if the nature or amount of
any varied work relative to the nature or amount of
the whole of the works or to am’ part thereof, is such
3
17
that, in the opinion of the Engineer . the rate or price
contained in the contract for any item of the works ,
is, by reason of such varied work, rendered
inappropriate or lr121pp1iCabl<:. then, after duet"
consultation by the Engineer with the Employe&15..'<1_l:dh''''if. ''
the Contractor, a suitable rate or price shall be.–agree;;l" –
upon between the Engineer and lhyeAACbontra<.;'to'r'."
event of disagreement the E1igineeii,,sh.al'l.yy H
other rate or price as is, in his op__ini'on, app'ropri'ate
and shall notify the C0nV[l'E1,(é'f€'5~|Vf' acco1't1__ingly,
copy to the Employer. Unti_l"':;.u_ch._Vtime,hasrates for
prices are agreed fixed , th_e._Engineer shall
determine the provisionalVrat'es'or enable on-
account payrnents t§ibeiinciudet1Vi'i.n c-ert§t'icate.s issued
in accor'dt:.i–1Vce yVith'Cla'.£l_S€–_6Q.
'–Provided':_i'al_s'o' –.t_ha»t.41;~o varied work. instructed to
be doneby the Ei1_gine~er pursuant to Clause 53 shall
beiyztlueciliulntfer Snb–clause 52.1 or under this Subw
"unless within 14 days of the date of such
V*in:s'tr_uCtionhand, other than in the case of omitted
wotl{,'s:l§;ei9oi'e the commencement of the varied work,
tioticeshall have been given either:
a) by the Contractor or to the Engineer of his
intention to claim extra payment or a varied
rate or price, or
5
l9
oi’ the quantity set out in the Bill of Quantities
by more than 25 per cent <
From a reading of the second proviso it should be
understood that it would include a claim to varied rate_s.ca~s_es
where the additional work amounts to more than
contract price and not only in cases where_ the .iltern"inljVthe"Bill ll
Quantities as originally estimated is'i.ess._than -. To
the argument of NHAI W()Ltlt:l'-vll)lg:.t§"..gt0 p.lac.e'a._ all
willful or even an inadver.tent .r1nde:%estii"nation of"t'z1e scope of
work being foisted on the eontifacror detriment. in the
presentacase, therefisi on record to indicate that the
Detailed Project Regaort:s('heirei11after referred to 'DPR', for
not finaiised before the invitation for bids in May
did not provide for the hugely expanded
worlé at thelhiiilllsection.
lt,__is also contended that the petitioner had furnished a
it =total..oi’ seven bank guarantees during the performance of the
“~~c–ontract. Of these, five bank guarantees were issued by
5
respondent No.5 » bank. These hank guarantees are in the
standard format and were executed in favour of the chairman,
NI-IAI and could be invoked by him alone. But h0we.”vei’:;:<«.:vi/'ere
invoked by an officer other than the Chairman '
permissible. Reliance is placed oi:—ifi'iz:-cfii.vti?zar1_yCa?ijisIm+:?'iir)i:.
C0.LId. vs. State 0fBih.ar. [(1999) »re«gaiid.*
It is contended that more'"'i«rhpo.rtantiy.._itheisinvtocation of V
the bank guarantees was¢.1ea1'iyiiani';:-CI iiittyriminaliicontempt of
this Court. Elaboratihg f1_;:rt'i~,e_;-, e'o.nite.hd_ed that this court
had issued em{_.ei'g§?;ntV ;i.oiticeoh petit–io'n. The respondent
havihg7.a,e11te'red"iia§peaziai'1ce'"-had" smteti in its statement of
objectionsiitiatediii2(i.'.§.2€)iio, that it had no intention of
-V V. ‘_ tern1i’natiii’1g the CiOI1t1f;1_(_.’,£vO:’ invoking the bank guarantees.
matter was pending consideration by this
th.e’ii’ii’i”_sti respondent has, by design, invoked the above
igbank guaiitantees on 10.3.2006, a Friday, thereby ensuring that
,,_”‘_the_ifietitioner could not approach this Court till 13.3.2006.
it .. __I:ibwever, on 14.3.2006, when the mattei- was being considered
2
the said contract and to award the xame to the petitioner, who
undertakes to complete the same for a consideration-«j(>f:iRS:95
CFOFG.
5. On. the other hand, Shri Uti;;:y’a Hollaji ii
appearing for the counsel for theiKreS;i1ondent_–»i c’o»!1tend_S’–~taS’~_
follows:
N HA1 has been
Authority of it;”~~iiv§ureisiaonsible for the
development,” of the National
Highwayra hand is a part of the
an-ica the North–South and East-
West Corri’dQ_i’ Proijectg Golden Quadrilateral Project aims
to Connect the fou’1*m.e.t.17opoIitan citétrs, namely, Delhi, Calcutta,
iiw.~’Iurn13_a’i..4ar:d ‘Cihe.11nai. The North~.’j§outh Corridor Project aims
to’ ,_connect’t:i1.:§€ashmir to K3..!1yElkii§11E1i’i and the East-West
V’-.CorridorV__i’Project connects Siichar and Porbander. In this
” .re*rrarti, the existinv hi hwa are to he a raded. A section of
. (:2 .. 2: 3
/,_H1h:e road connecting Mumbai and Chennai passes through
£
23
Chitraduiga and work for one of the packages was entrusted to
the petitioner.
NHAI has engaged respondent No.2 as a Supervising
Consultant Engineer to supervise the quality of the worhand
the operation of the Contract as prescribed in Ciat_1se”2;6_~
Contract and acts impa.rtia1I_y insofar the ob’r1’gati.on’s.: of the
petitioner and NHAI are concerned.
It is contended that theii_ai’iegatio’i’i having = L’
sought to change the design Sprf3€ii:iiiC£1ti0i’i fro.r11=4..1aning to 6
ianing in the year 2002 ini'[i’§’i}i’i’~i,§’E’§3E3. eittc..V;».iS° denied as being a
change’..cont’em_ip’iatedi’ifoi”i’-the first time. It is contended that
even du1_~1n’g.the,. teridesfiiigfstzige, it was anticipated that rock
WO11i’:3. beencountere.d_..and accordingiy items for ordinary rock
and har”ct.._ro.fi:i]<; were included in the Bit? of Quantities. However,
itvvas a.1Sot'i:–}es§”
Further, the petitioitigr l1.:i<:l"e.i€ Sub§Contractor to
carry out the said work with'oL_tt ..l-V'-1'ior sanction of
the second '3'espoin;l'§:nAt'wih'ieVh"'i-s a cleai' violation of the contract.
It is also to" noticed't.liat_:_t.ne petitloner had engaged the Sub»
Conizractor to exeeute.___t.he works at it rate much less than agreed
profiting trom the execution of the work
andthe falsehclaim of having inctm-ed losses to the extent of
"-.Rs.2O (role and the impasse having: resulted in a <:lischa1'ge of
its .obligation under the contract to ggierform etc., is false to the
i V. …l<.riowleclge of the petitioner. The falsity of the claim of the
3
petitioner is also evident from the tact that the petitioner has
approached the second respondent my a varied rate, E9 months
after accepting the Variation Ordea: The Consultant Engiiieer
had by oversight issued a Var’:-ation Order
27.7.2004. But soon after realising the. e_rror,_7iiariaely.ltl1a_t.the_ K”
Variation did not qualify for a vai”ied’=i”2ttei_i
the particular item was less thttnt_VLilf2t’5’§?: of the covntract.i}5r’ice’i the ”
Variation order was withtli*ztw=ni..r”‘A–.d’i–s;5tate haying been raised
by the petitioner before a detailed
deliberation, stand as the
petitionet’ s2 diseiititlc o’rde:r dated 24. 3.2005.
It is lconiteynded that’ initlie meanwhile, the rate of progress
i_ of e’X3ecut_Li’on_ of the «worlts, which had remained Very slow npto
t;teter~i.orated further and all work had practically
stophed vhylliiifaiceniber 2(.)(‘)4. in =-;pit.e of review committee
“~..meetin’gsV__7and other attempts to expedite the work, the total
A’ ptogtjess achieved over a period of eleven months from January
é
26
to November 2005 was works of only R5387 lakh which was
wholly unsatisfactory.
It is stated that the Consult-mat Engineer had therefore
recommended termination of the contract. But N4HdA-Io_’iihas
afforded time to the petitioner to maite further ei’forfs to .
the required progress. The petitione2’_ha.v.ing rniiseralaly i’aa1¢a to id id
perform its part of the contiacu”NH_}=\i( was_:”jiistifie_d«._:i’1i..
terminating the contract. The«.._:ai.legation ‘t-hat: Vl\l:}3I’}Xl has ‘V
fraudulently invoked i3E1El}€_gL1£ii?alllt(‘c3:S’ ahd. that the same were
acts which amount to criiuilnai i’coi:iem.oticourt is strongly
refutedviand it —deinm:sti’ated that this Court had
not thoughti..i_t fit to ;g:f;’1’iit.::¥’iiiy* interim order of stay of such
invocation in thefii*::t…i.:ista11ce. N}–EA} has hence proceeded to
‘yiiievoke ‘t’he”s,arrie”–after due notice. The bank guarantees were
unconditio.ii’ai-.V_ahd hence NH.-‘»\l’ was within its right to invoke
Wthe sariaef There is no giouiitl lTii:e:.,iC out to demoiisfiate that
has Committed contempt of C’oui*t.
Z
Shri Holla Places reliance on :1 large number of
authorities to support the contention»: tliat the writ petition is not
maintainabie hzwiiig regard to the mntractual relationship and
the dispute pertaining to the terms of contract.
In the above background, the circumstance: V’
has terminated the contract with the pe’titi~oner7_4is dispiztef
If it is alleged that the terrninzition \>.’z1is«._iE’le_gial andsnot. j1:1stifiedi,i’~.
the remedy in respect of such i1i*1’il;ire1″2il teirr:_ir1’at.i’on°is to seek
damages.
6. The Senior Advoe’:.ite K3t’iSVll’13i1t1.. Venugopai does
not disputerthatVthe:”corr:i’éiet__pit<)Vides for settlement of disputes
by t-ecourse_4_ito, 2irbitratio_i?;'. tit't(;lL-IE' the provisions of the
ginci Conei..l.iati<)n Act, 2996. Therefore, the oniy
iground 0ni'Wif1vi§;li'*.th6 present petition is sought to be sustained
ar1d,__the iiinitetliilqiiestirin that may be relevant is whether the
-v.__i’-terior (if_C’iause 52.2 of the General Conditions of Contract
e:i’so’ui_dAii.–ibe addressed by this COLIFL as it is the case of the
vi..peititione1* that the interpretation smigiit to be pieced on the
3
same by NH/Xi and duly (3E1(l()E’S€t’i by the DAB and a plain
reading of the same wouid not enabie the Arbitral Tribunal, that
may be called upon to adjtitiieate any claim, to go beyond the
letter of the clause. .It is hence sotagght to be etintenderliltaijvinig
regard to the circumstance that the second prov’i’so to-.Clat1se_f
52.2 above, ought to be understood to inelt1:3.ez_a <:'iai_r"ri–_to_Wa'rds"«
Varied rates in cases where aiiiy a:idit–ion*al worl{.s.Aa'ni'oL1nt to
more than 2% of the ctintraez prixtit:-:_'f::::1tl not'-t.oi"be': restricted to
cases where the Bill of Q-1,1ahtiti–¥:s Vios<is__g;i,:ially estimated is less
than 2% of the contract pr-ice.::m(i.-isr11essVthis[.Court in exercise
of its power' of,_;u'd.s_c-131~;:¢vi_g.w ..reads down the above clause, any
Ciairn raised in arbitration wfhaslti be an exercise in futility.
the ft1'rt.ht_3__i_'___ease oi' the petitioner that a Detailed
P.rojer.:t 'R_eport.fWhich is geiieraiiy the basis to arrive at the Bill
0i"Qnantitiesi._a;nd more pzai"t.iet1lai'ly in quantifying the rock
H,excava'tiVoin and the classification thereof in the present case, had
finalised before the %n\–'it;stion for bids in May 2001
.. warid hence, it is contended that the Bill of Quantities did not
%
2:}
provide for the hugely exp:-indcd w:’k at the hill section, which,
of course, is denied by NHAI.
It foilows that in pi’c’>eeeLiin;_f to address the tenor of
Clause 52.2 a disputed question of fact as to whether the
contract proceeded on mixz”::pre:sem:.1tion of fact ar}d_tl1eli’efore”,V.
the above clause could not be S{I’lC{l applied todeny the ;:1aimg i
of the petitioner, requires adjLidicaiitirint he
bound by an arbitration cEaL1se,,t’lie_ dictun_i or the,Supre_me eotilt
in the case of ABL Intcérncitt1’r2fiz.5/i Lfci. ..¢iE’,\
eci,’1-i;i;«–; helid :
“II is well knmm #21:!” If I/’M parI1’e.s’ In (I dIZs’pLtfe
‘ /rad c1gnec2d’ Io .s’cezi’Ie? r1’m’r (]f.$'[):’:fc” by arbz’t1’aI;.’0n arid if
there is an. cIg1’een2ea;-:1 in Him rt-(<,wr"(1'. the Courts' will not
permit r'ec'r2ur.s'e to rim-' olfm' m«I1m'_\' wz'II'z()uI invoking
E
30
the r’er7recf}-* fay waif.’ ofr::*£>:’tt’rItr’tw. i.m1c*.s’..s’ 0fc,’0ur.s’c*, bolt’:
the pczrrim In the z2’1′.s’/Jim-* z.rgn=c-J an (mot/zer !?Z()d£’ of
dispute re.s’0[m’i(m. ”
7. I_t is to be noticed f’mi’n decgided cases that clauses. akin
to clause 52.2 and the interpretatim; thereof have been
matter of disputes referred to arbitration and it beenii’hieidi.i
that the arbitrator would be x-vithin E”:-viis j{ii’isdie.ti0:n ‘£i_e.¢iidingi”«
the proper interpretation to be ;;)}eeeti oii–siieh a elai1sev’gi’Ver1′. the
circumstances of the case. (iS”s:t_i_’ _1€a;n.}-mt/ii ‘Ir2té’;;rzar2′(2nal
Constructirm (P) Lrd., 1i’.’~.”);’.tV’:j!1f.(‘ of” ~–t._:”»9i9§7t)_ J 1 SCC 645 and
State (x?fV’i1PL(4ffI,_rI'{I:[)ii’ivi’;’VAIfttaFi’I’CZitf7?”-.f,J}§(1.i”_It.'(i/ (2002) I S C C 26).
The ‘rootriion’*of”the. that the said clause unless
interpreted ._.ith’isCo-ui’t’i in il manner suggested by the
‘V.__petitLié}ne.r:would dise.ntit’le the pCEtI.§t)t1L’t’ to raise any claim in
.ari3itratiQr1, forwa varied rate in respect of the enormous
,/ifiddi{iOA1ivEl,ii”‘~53vXC€{\?;3;t’iOn work rerideretf. is a desperate contention
seeking i.__iit’er,§’e1’iti(‘)i1 of this C(‘)iEl’L
1,3
This contention of the petitioner ought not to deter the
petitioner from raising 21 dispute as to the iRE€I’p1’€[21{i.()i”‘;.,bf the
clause before the arbitrator and it Wtitiiii be for theitirhitrtitor ‘
the arbitrators to decide the sa:hg=:;'”‘t)’a:.z: “_.consitie’1*_3.tiori} of.’
supporting factual data and ;1Ufi31″3Li;ifv}’i._'(ii’f§3E.lI’}’1S{.£1i)C€S,3 VAKS”-.to’~_
whether the remedy of arbitrz1tio”nuis bar1’ed._h’ytiitniittition is a
question that is neither 1*aiis’ed M 2.E’11’Vir~i’\’it’¢tf(%”{§~. here. i
8. The question re;;_ltii’ is the. :\$C(‘)”p.£f’Of;El~VC()I1trZtCtt1’E11 term
and it cannotfbei}ése1id.. v:'{‘}1ti€T_ ‘tuiyj’ t.gLies’téon’ of violation of a
funda1IVientéil”tAright 2i1§fVivses”‘i’o’t” eoi1_si'{1′{:i’titit)1i in the present writ
petitioh.7V *
g9. _ Insofz1i”a’s”‘the- interloctatory uppiiwtions in I.A.H to
were to be tronsidereci are concerned, I.A.H is
i”‘fi1ed_Vsieeviéi’1i,g Ehf:2v’CO)3SEi{H§i{}§E of’ committee at the behest of this
Cotiit toeciiuantify the competisaticiu payab}_e for the additional
v”vo1′–k. rendered by the petitioner.
Z
33
i.A.N0.iii’ seeks at tiirectioia to NBA! for refund of
monies received pursuant to invocation of bank guarantees
furnished by the petitioner.
I.A.N0.IV seeks issuance of sun motu p1’cieee(.iingsi*f0r
contempt of court on E1CC()Li§’%E of invocation of bani; gtt£1’1néiiji1tees_Ti ~
during the pendency of these ;_>i’oceeti§ngs.._ H i
I.A.N0.V seeks to l’L”S[i’i1il} theiigtespontients te_6′
calling for counter gL1&r&l}{t’:f5~; by ‘M/’s..iS_’eut’hefn” Bank
Berhard, Kauia Lampur, iV.i..t_%i1i}-‘f~;”iitii.\ -A
i.A.N’0.VI is filed sec’i~;ingi”Ci()iTeeti0~nj~<)f_i.the order dated
17.3.2606. . e X
In [ii1i't)i~;<3L'i in the absence of any interim
Q1"de1_jn.–'0f this Court, even if an inaccurate statement made
i V. the counsel as to whether nfigtat the same had been actually
.49
Du
encashed is not very imiiméeai. It may not amount to contempt
of court — but may be an aamieizlbie inadvertence by counsel.
Hence the application is disn'i:é+;scc1.
The interim order gl”ai§’}it:d on I.A.N0.V on .
having been continued by ihia C(>:3_:’L~ };é’Hd€f€’d
infructuous and hence, the said 2.1ppiiC’:iti(inS”2ii’e ii'<)f1
In the result. the writ ]7i31vli'~i.,(_)a'f"IS"StE1I1.(iiL1.
f .. riv' *-