W.P.(C)/7945/2018 of M/S SRICO PROJECTS PVT. LTD. Vs NBCC (INDIA) LIMITED

IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C) 7945/2018 & CM 30489/2018M/S SRICO PROJECTS PVT. LTD...... PetitionerM/S SRICO PROJECTS PVT. LTD...... Petitioner

Through Mr R.M. Sinha, Mr P.M. Sinha,Advocates.

versus

NBCC (INDIA) LIMITEDThrough

..... Respondent

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRUO R R%31.07.2018

1.Thepetitionerhasfiledthepresentpetitionimpugningacommunicationdated12.07.2018(hereafter‘theimpugnedcommunication’), whereby the contract awarded to the petitioner forconstruction of ‘Aayakar Bhawan’ at Kochi, Kerala (hereafter ‘theContract’) was terminated by the respondent (hereafter ‘NBCC’).

2.The aforesaid contract was awarded to the petitioner at contractvalue of ₹43,87,42,868/-, by letter of award (LOA) dated 14.03.2018 pursuant to competitive bidding. In terms of the tender conditions, thepetitioner was required to deposit the performance guarantee within periodof 30 days and was to enter into formal agreement within period of 45days, thereafter. Admittedly, there were some delays in furnishing of theperformance bank guarantee.

3.It is the petitioner’s case that although it took all efforts to commencethe construction, it was delayed for reasons attributable to NBCC. It isclaimed that NBCC had submitted Good for Construction (GFC) drawingsbut the same did not match the situation at the site. It is stated that thepetitioner had repeatedly informed the same to NBCC. The petitioner statesthat on one hand, NBCC had indicated that the Consultant would visit thesite and take decision but on the other hand, it had simultaneously issuedletters alleging delay on the part of the petitioner.

4.On 22.06.2018, NBCC issued show cause notice calling upon thepetitioner to show cause as to why the action be not taken for termination ofthe Contract and for forfeiture of the earnest money and the performancebank guarantee. The principal allegation against the petitioner was that ithad failed to mobilize manpower and machinery at site and had, further,failed to commence the construction within the time as stipulated.

5.By letter dated 10.07.2018, the petitioner responded to the aforesaidshow cause notice giving its explanation as to the delay caused andindicating the measures already taken for commencing construction.

6.Apparently, there are serious disputes as to the explanation given bythe petitioner. First of all, it is stated that the petitioner was required tocommence the foundation work in May, 2018; however, the petitioner hadgiven the sub-contract for the work only recently. It is also contended thatnotwithstanding the issues raised by the petitioner, there was sufficient siteavailable with the petitioner to carry out construction activity.

7.NBCC did not find the explanation to be satisfactory and, therefore,

proceeded to issue the impugned communication terminating the Contract.

8.There is no dispute that there have been delays in commencing theconstruction. The controversy mainly revolves around the question whetherthe delay is attributable to the respondent and/or beyond the control of thepetitioner. This Court is of the view that it would not be apposite to examinethe said controversy in the present petition, as it involves several disputedquestions of fact which may require trial.

9.The learned counsel appearing for the petitioner has referred to thedecision of the Constitution Bench of the Supreme Court in S.N. Mukherjeev. Union of India : (1990) 4 SCC 594 in support of his contention that therespondent was required to give detailed reasons for the impugned action forterminating the Contract. He submitted that the impugned communicationdid not deal with any of the explanations submitted by the petitioner.

10.This Court is not persuaded to accept the aforesaid contention. Thedecision in the case of S.N. Mukherjee (supra) is of no assistance in thefacts of the present case. The said decision related to proceedings under theArmy Act, 1950. The observation, made by the Supreme Court in the saidcase and as referred to by the petitioner, have little application in the case ofcontractual matters. The scope of judicial review under Article 226 of theConstitution of India in matters relating to commercial contracts is verylimited. Unless the Court finds that the action is ex-facie perverse andunreasonable so as to fail the Wednesbury test – that is, no sensible personcould, in the given facts, arrive at such decision – no interference by thisCourt would be warranted. The State has much larger elbow room in

contractual matters. Its decision in contractual matters cannot be tested onthe principles that are applicable to the decisions of quasi judicialauthority.

11.In view of the above, the present petition is dismissed leaving it openfor the petitioner to take such remedies as may be advised in law. It isclarified that all rights and contentions of the parties are reserved andnothing stated in this order should be construed as an expression of opinion(prima facie or otherwise) on the merits of the controversy between theparties.

12.The pending application is also disposed of.

13.Order dasti under the signature of Court Master.

JULY 31, 2018pkv

VIBHU BAKHRU, J