TMI Blog2019 (7) TMI 1959X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged - the writ petition is entertained to the extent of examining and finding out as to whether forfeiture of earnest money to the tune of ₹ 50,00,000/- is legal and proper or it suffers from vice of arbitrariness leaving rest of dispute with regard to cancellation of contract, blacklisting and fresh tender for the said work and risk and cost to be raised by the petitioner by way of arbitration as provided in clause 13A of the conditions of contract, as such, the writ petition is entertained only to that extent indicated hereinabove leaving rest of the dispute to be adjudicated by way of arbitration, if any, to be invoked by the petitioner or avail any other remedy available to him under the law. Since the Letter of Intent has been cancelled and consequently, earnest money deposit has been forfeited and that being realm of contract, writ petition under Article 226 of the Constitution of India is not maintainable? - HELD THAT:- It is quite well settled law that where the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause 13A of conditions of contract relating to settlement of dispute by way of arbitration, if any. The writ petition is allowed. - Writ Petition (C) No.1120 of 2019 - - - Dated:- 25-7-2019 - HON'BLE SHRI P. R. RAMACHANDRA MENON, CHIEF JUSTICE AND HON'BLE SHRI SANJAY K. AGRAWAL, JUDGE For the Petitioner : Mr.Bharat Sangal, Senior Advocate with Mr.Kshitij Sharma and Mr.Rishabh Rarg, Advocates For the Respondent : Mr.Vivek Chopda, Advocate C.A.V. Order Sanjay K. Agrawal, J. 1. The petitioner herein, who is a company registered under the provisions of the Indian Companies Act, 1956 and engaged in coal loading and removing of overburden work, has called in question legality, validity and correctness of the impugned order dated 26.2.2019 (Annexure P/1) passed by respondent No.3 herein, by which Letter of Intent (LOI) dated 2.5.2018 issued in its favour for work of Hiring of HEMM for OB removal including Access Trench diversion of nallah at Jagannathpur OCM, Bhatgaon Area has been cancelled and earnest money deposit amounting to ₹ 50,00,000/- has been forfeited and eventually the petitioner herein has been debarred from participating in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent-SECL requested the petitioner to personally meet and discuss the issue which was reiterated by the respondent-SECL on 5.7.2018 and ultimately, on 5.7.2018 the petitioner made its stand clear and requested the respondent-SECL to refund its earnest money deposit. Thereafter, the petitioner filed writ petition being WP(C) No.2146 of 2018 before this Court seeking refund of its earnest money deposit and thereafter, the respondent-SECL issued show-cause notice to the petitioner as to why its Letter of Intent (LOI) issued to it be not cancelled and earnest money deposit be not forfeited, which the petitioner replied. The writ petition was disposed of by this Court on 13.9.2018 reserving liberty in favour of the respondents to take decision on the issue. After consideration, on 26.2.2019, Letter of Intent issued in favour of the petitioner was cancelled by the impugned order and earnest money deposit was forfeited and the petitioner company has been debarred from participating in future bids, which has been questioned in this writ petition stating inter-alia that statutory clearance for the said work was not obtained by the respondent-SECL right in time and possession was not with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is strictly as per terms of contract and no interference is called for in exercise of jurisdiction under Article 226 of the Constitution of India. 4. Mr.Bharat Sangal, learned Senior Counsel appearing on behalf of the petitioner, would submit that action of the respondent-SECL in cancelling the Letter of Intent (LOI) issued in favour of the petitioner including forfeiture of earnest money deposit is arbitrary, illegal and contrary to law, as from the Letter of Intent dated 2.5.2018 it was quite vivid that statutory clearance and physical possession of subject land was not available with the respondent-SECL, yet Letter of Intent was issued in favour of the petitioner in hasty manner. He would further submit that even after a month of issuance of Letter of Intent (LOI) when the petitioner mobilized its men and machinery at the site, work could not be commenced because statutory clearances and physical possession of land were not available with the respondent-SECL and despite being informed to the respondents-authorities, they did not pay any heed to the request made by the petitioner except making verbal assurances and when the petitioner filed writ petition seeking refund of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and not one of compulsion. In an appropriate case, in spite of availability of alternative remedy, this Court may still exercise its writ jurisdiction at least in three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged (See Whirlpool Corpn. v. Registrar of Trade Marks(1998) 8 SCC 1 and Harbanslal Sahnia and another v. Indian Oil Corpn. Ltd. and others (2003) 2 SCC 107). 9. It is the case of the petitioner herein that the respondent-SECL did not provide possession of subject land to execute/initiate the work in question despite repeated requests made by him and made only oral assurances by which he could not commence the work in question and when he filed writ petition before this Court for refund of earnest money, showcause notice for cancellation of contract in question was issued and thereafter, Letter of Intent was cancelled and his earnest money deposit was forfeited, as such, the respondent-SECL has acted most arbitrarily, particularly, forfeiting the earnes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve case of Gunwant Kaur (1969) 3 SCC 769, this Court even went to the extent of holding that in a writ petition, if the facts require, even oral evidence can be taken. This clearly shows that in an appropriate case, the writ court has the jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact. 27. From the above discussion of ours, following legal principles emerge as to the maintainability of a writ petition :- (a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. (b) Merely because some disputed questions of facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. (c) A writ petition involving a consequential relief of monetary claim is also maintainable. 28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company/SECL under Section 11 of the Act of 1957 and thereafter, under Section 12 of the Act of 1957 the competent authority may, by notice in writing, require any person in possession of any land acquired under this Act to surrender or deliver possession of the land within such period as may be specified in the notice, and if a person refuses or fails to comply with any such notice, the competent authority may enter upon and take possession of the land, and for that purpose may use or cause to be used such force as may be necessary. Thus, in light of aforesaid provisions, the respondent-SECL while floating tender on 30.10.2017 indicating status of the land clearly mentioned in NIT that compensation has been disbursed to the land losers, but physical possession of land is expected to be with SECL within a period of two months and thereafter Letter of Intent (LOI) was issued in favour of the petitioner on 2.5.2018, but there is nothing on record to show that before issuance of Letter of Intent, possession of subject land was delivered to the SECL by the competent authority under the Act of 1957. 15. It is the case of the petitioner that on 11.6.2018, 19.6.2018 and 20.6.2018 the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir signatures on such document. (v) If beneficiary of the acquisition is an agency/instrumentality of the State and 80% of the total compensation is deposited in terms of Section 17(3A) and substantial portion of the acquired land has been utilised in furtherance of the particular public purpose, then the Court may reasonably presume that possession of the acquired land has been taken. 17. The respondent-SECL has not brought any document including panchnama evidencing that he was placed in possession of subject land after vesting of in his possession under Section 11 of the Act of 1957 after issuance of subject tender and before issuance of Letter of Intent in favour of the petitioner as the respondents while floating the notice inviting tender (Annexure P/3) and while detailing the status of land on 30.10.2017 specifically stated that physical possession of land is expected within a period of two months, but while filing return, though the respondents have specifically claimed 95% of land to be in their possession, but no document has been brought on record placing them in possession of subject land which they claimed to have given to the petitioner for execution of work in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and consequently, forfeiture of earnest money deposit to the extent of ₹ 50,00,000/- suffers from vice of arbitrariness and smacks total non-application of mind, which is violative of Article 14 of the Constitution of India and consequently, the impugned order to that extent deserves to be struck down. 18. As a fallout and consequence of the above-stated discussion, the impugned order dated 26.2.2019 (Annexure P/1) passed by respondent No.3 to the extent of forfeiture of earnest money deposit i.e. ₹ 50,00,000/- is set aside. The respondents are directed to make payment of the aforesaid amount to the petitioner within a period of four weeks from today. However, with regard to cancellation of subject work and other related disputes, parties are left to invoke clause 13 and clause 13A of conditions of contract relating to settlement of dispute by way of arbitration, if any. It is made clear that with respect to other parts of the impugned order (Annexure P/1), this Court has said nothing and any observation made hereinabove has been made only for the purpose of examining the validity and correctness of order forfeiting the earnest money deposit to the extent of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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