^0.,-;^. ^'' 3?' l^s HIGH COURT OF CHHATTISGARH AT BILASPUR Writ Petition (0 No.2418 of 2008 PETITIONER: Pragatl Enguieeriag Works Versus RESPONDENTS: Steel Aufhority of India Limited aad ofhers ORDER FOR CONSIDERATION HQrBLBMR.^USTICEItN.CHANDRAKAR -r^' Sd/- _.... JU D G E 4-5-2009 Sd/- R.N. Chandrakar Judge ^, POST FOR ORDER ON ^' MAY.2009 Sd/- DhirendraMishra Judge mm I^ HIGH COURT OF CHHATTI8GARH AT BILAfiPUR Writ Petition fQ No.2418 of 2008 PETITIONER: Pragati Engiaeenng Works, a Partnership finn, duty Registered under the Indian Partaership Act, 1832 having office at 79, Industrial Bstate, Bhilai, District Dwg, C.G. Versus RESPONDENTS: Steel Aufhorily of India Limited^ a coxnpany registered Under fhe Indian Coiiipaaies Act, haviaig office at Lodi Road, New Delhi and functioning at BhUai in Tahsil and Distdct Durg, In fhe name aad slyle of &Steel Aufhority of Ixidia Limited, Bhilai Steel Plaat, Bhilai," General Maaager (MM-Mech), Steel Aufhority of India Limited; Bhilai Steel Plant, Bhilai Depuly General Maiaager (O&M) and Secretary, Standiag Baiuiiag Conmxittee, Steel Aufhority of India Limited, Bhilai Steel Plaiit, Bhilai. Rresent: Shri V.G. Tacaaskar, counsel for fhe petitioner. a, Shri K. Shakeel, coiinsel for the respondents, Division Bencli: Hon. 8hri Dlitrendra Mlshra & Hon. Shri R.N< Chaiidrakw, JJ- ORDBR (Passed on 5~' 'May. 2009) The foUowmg onler ofthe Court was passed by Dliirettdra Mislira, J. 1. The petitioner by this petition under Article 226 & 227 of fhe Constitation oflndia has prayed for fhe followiag substaatial reHefs:- • The impiigned order dated 4-3-2008 passed by tibie respondeht No.3 xnay be quashed. l<-t- ^.: :ft^^ • The respondents inay be directed to restore the petitioner's status of anciUary and its naiae as a vendor niay be directed to be restored aad the respondents raay be dirccted to issue enquiries and tenders be issiied to it aiid its tenders may be considercd on merits aad Purchase Oniers may be placed upon the petitioner as usual and the petitioner's witliheld amounts may be directed to be released. 2. Briefly stated, case of fhe petitioner is fhat fhe petitioner has estabUshed a factory m the Industdal Estate, Bhilai and m engaged in general niachiaiag, fabncation, C.I, castiag, MS fabricated pipes and other activities. Respondent No.l has conferred upon fhe petitioner a status ofAncfflaiy Indiistiy (Annexure-P/5), Respondent No. 1 placed several supply orders to the petitioner in the year 2007 and ia conipUance fhereof suppUes were niade by fhe petitioner. However, the respondents did not pay the petitioner agaiast suppUes made by him whereupon the petitioner addressed a letter of Annexure-P/6 dated 3-9-2007 and requested his personal intervention for rcleasing payxnent of Rs. 15,86,830/- agaiast supplies made by him. However, the petitioner was sewed with a notice of Annexure-P/7 dated 6-9-2007 allegiag fhereia fhat each offhe 2 lots of 150 Nos. of Housings of Cyclone Eleiaent suppUed by tlie petitioner vide chaUans dated 1-12-2006 and 20-12-2006 was tested and the test residts of fhe sainples are deviating froin A/T specification and the iciaterial supplied does not conform to fhe ordercd specifications. 3. The petitioner was called upon to show cause as to why busmess dealings wifh his firm mcluding his sister concem should not be banned bv BhUai Steel Plant. The ordercd inaterials were to be ^f^wss ^^ ^ '..^ (z.8 iaspected by fhe iaspector ofrespondent No. 1 as per fhe terms of the purchase order of Annexure-P/8. The supplies were duly accepted after iaspection aad approval by the iaspector of rcspondent No.l. The petitioner repUed to titie show cause notice vide Aainexure-P/9 dated 10-9-2007 aad apprised the above fact, He also enquired as to under what circumstaaces aad when the suppUed materials were checked. However, fhe petitioner was agam advised vide Annexiire- P/10 dated 17-10-2007 to be present in fhe meeting ofthe Staadiag Bannmg Committee to be held on 29th October, 2007 for considermg show cause notice issued to him, The petitioner vide mexao of Annexure-P/11 dated 31st October, 2007 was informed fhat his payxnents were wifhheld agaiast fhe defective suppUes and as soon as the issue is settled, tlie saoie shaU be adjusted accordiagly. The respondents vide fheir memo dated 25-1-2008 of Axinexurc-P/15 iaforaied the petitioner fhat 10 samples were drawn by dnltmg on 4-1-2007 aad sent to Research &, Cheinical Laboratoiy, BSP. The test report of all the samples dated 11-1-2007 show that aU fhe samples are deviatmg finom A/T speci&cation. 4. The petitioner was further caJled upon to attend meeting of the Staading Bannmg Committee to be held on 12-2-2008. The petitioner repUed to the said notice on 12-2-2008 vide Annexure- P/ 16 and subndtted his objections against drawing saiaples from fhe supplied materials behiad the back of fhe petitioner arbitrarily and depriving 1iim of fhe business wifh BSP eveu before takiag any decision on baa and withholding payment agaiast fhe suppUes ah-eady inade aad further prayed for restoriag business relationship pendiag decision of the show cause notice. ^-5 5. The petitioner was served with yet anofher notice of Annexure-P/17 dated 20th February 2008 by which the petitioner was iaformed that after exaiaination of his representation as a special case, BSP has agreed to draw and test sainples once again in his presence and he was advised to be present on 26-2-2008 the date on which samples were to be drawn ia his presence or ia the presence of his representative. The petitioner repUed to fhe said communication vide Annexure-P/18 dated 25-2-2008 and stated fhat whole exercise appears to be prefixed axid fhe same were outside the scope of A/T. The nxaterials were supplied by fhe petitioner long back aad drawiag samples after the lapse of such a long tmie was not reasonably practicable aad, fherefore, he expressed his iatention not to present an.d participate in the process of rc-sainpling. However, fhe rcspondents without considermg objections of the petitioner passed fhe impugned order and baaned fhe petitioner for a period of 2 years vide Annexure-P/1* 6. The respondents ia fheir retum subxaitted fhat ia a surprise check conducted by the respondent VigUaace Departinent Housiags of Cyclone element suppUed by fhe petitioner was found to be sub- stan.dard. The cheinical coniposition of the material suppUed by the petitioner did not conlbrm to A/T specification. In fhese circuiastances, show cause notice was issued to fhe petitioner on 5-9-2007. The busiaess dealmgs wifh the petitioner compaay were suspended for a penod of6 xaonfhs w.e.f, 9-10-2007 vide Annexure- R/2 dated 5-9-2007. The two partaers of fhe petitioner compaay were present m the meetmg of Staiidiag Baanmg Commiftbee m which his case was discussed. A reply was sent to fhe petitioner on 25-1-2008 givin^g fuU detaUs regarduig saiaples drawa, and fhe date (W on which the samples were drawn and titie date 011 which report was received from respondent's laboratory. Inspection certificate dated 18-12-2006 (Anneuxre-R/3) clearly stipulates fhat acceptaace also does not absolve fhe suppUer of fhe responsft)iUly to rcplace/rectify free ofcost fhe above store, ifaay defects/discrepaacies are revealed later. Acceptmg fhe request of the petitioner, it was decided to take joint sampUng on 26-2-2008 ia fhe presence of representative of the petitioner. However, fhe petitioner did not tum up for sampling aad fbe respondents were inform.ed that A/T terms do not stipulate aay surprise check nor do fhey provide for drawiag of samples for iiispection whereas, A/T terms clause-13 under coluimx "Inspection & Rejection" clearly stipulates that ia case of aay rejection of fhe material on receipt at BSP Stores or while ia use, fhe suppUer inay be asked for £ree replaceinent or repair of fhe inaterial or procure fhe rejected quaatily of material from altemate sources at the risk and cost of suppUer or tenninate fhe contract. 7. Apart froin fhe above factual subinissions, it has been averred that the petition is not maiatainable, as fhe same iavolves disputed questions of fact, which caanot be gone into ia a writ proceediag under Article 226/227 of tiie Constitution of India. The petitioner's earUer Writ Petition (C) No.2355/2008 was dismissed by this Court vide order dated 24th April, 2008 aiid, therefore, this petition is hit by fhe doctruie of res'judicata, Even ofherwise, Clause 18 ofA/T terms and conditions provides for resolution of fhe dispute through arbitration. 8. We have heard learaed coimsel for fhe pardes. ••^ h. '^. ..*' ^ %^ ^•^'-•w'^' ^^^s^' ^ 9. It is not ia dispute that the itistant contract betwreen the parties is goveraed by fhe terms and conditions mentioned in acceptaace of tender (A/T). The grievance ofthe petitioner is that supplies made by fhe petitioner of 300 Nos. of Housiags of Cyclone Elexnent were accepted affcer iaspection aiid approval by fhe inspector of fhe respondents as per terms and conditions of A/T m the monfh of Decemiber, 2006. The petitioner was seryed wifh a show cause notice m fhe monfh of September, 2007 on fhe basis of some test results performed on the samples drawn frora fhe supply items behind the back of fhe petitioner. Sampliag and further testing after acceptance of supply was not penxiissible as per the terms of A/T. The whole exercise was undertaken with a malafide intention only when fhe petitioner requested for release of payxaents agaiast fhe suppUed itexns. The respondents did not release due paycient and suspended tlie busiaess relationship for a period of6 months even before takmg any decision on show cause notice issued to fhe petitioner. In tiiese circumstaaces, fhe petitioner did not accept proposal of the respondeuts for joiat sanipliag aad chose not to be present on fhe date fbced for sanipliag. lO.The terms aad conditions of A/T clearly stipulate that conditions iacluded ia this A/T togetherwifh fhe general conditions ofcompaay shaU be fhe sole repository of the traasactions between the suppUer aad the Plant Clause-5 of the general conditions of contract provides for uispection prior to dispatch at suppUer's premises by BSP's Inspectiag OflBcer. Clause-13 deals wifh Inspection aiid Rejection aad fhe same mandates fhat the suppUer shaU offer fhe niaterial for iaspection as per teraas indicated ia A/T. It furfher provides that where the material is rejected on receipt at BSP Stores n \Y^- orwhile ia use, the suppUer to make fnee replacement or repair offhe material or procure fhe rcjected quaatity of material from altemate sources at the xisk and cost of suppUer or termmate the contract. Clause-18 provides titiat atl questions, claim, disputes or dtffercnces of any kiad whatsoever arising out of or in connection wifh or concemiag this A/T at any tune shall be dealt with as per arbitration clause m vogue. The general conditions of contract made applicable by virtue of terois and conditions of A/T in the instaat case also contains Clause-16 which deals wifh iaspection aad rcjection. Similarly, clause-23 provides for resolution of aU questioiis, disputes or diJGTerences of any kmd whatsoever arisiag under fhese conditions or axiy special conditions of contract or ia connection with fhe contract (except as to aay niatters fhe decision whereofis spect&cany, provided by these conditions) shall be referred by the parties to fhis contract for decision to a sole arbitrator who shaU. be fhe Managiag Director of the BhUai Steel Plaat, Steel Aufhorily of India Ltd., or aiiy officer of the Bhilai Steel Plant nommated by fhe said Maaaging Director ia fbat behalf and decision of such arbitrator shaU be fraal aad biadiag on bofh tlie parties. The provisions of the Indiaa Arbitration Act, 1940 aad all statutory niodtfication fhereof shaU govem such arbitration proceediags. ll.The iaspection note submitted by fhe Inspectmg Officer mentions the dimensions veri&ed, however, note No.2 clearly mentions fhat acceptaace also does not absolve the suppUer of fhe responsibility to rcplace/rectify free of cost fhe above stores if any defecte/discrepancies are revealed later. A.. --.•».1 '^^. .IL^^ |53 12. Proni fhe docuinents avaUable on record filed by the respective pardes, we fiad that durmg siirprise check by fhe Vigilance Department of fhe respoadents, 10 samples of fhe materials suppUed by the petitioner were drawn, the same were sent for aaalysis to fhe laboratoiy aiid as per the test resiilt, the quaMty of the material did not conform to the standard prescribed as per the terms ofA/T. The petitioner was served witli a show cause notice by the respondents; he was, time and agam, advised to remam present in the meeting of fhe Staading Baaniag CoiaDiittee; representatives of fhe petitioner attended few ineetings of fhe Standiag Baaniag Coxxiiaittee also; acceptiag the request of the petitioner a date was fixed for takmg fi-esh samples m the presence of the petitioner; the petitioner was iaformied about fhe date, however, he chose to reraam absent. The argument of the petitioner that suppUes were accepted after due inspection aad approval by fhe Inspecting Aufhority and, therefore, fhe saine cannot be ogaisi subjected to fresh test is untenable, as we have already obseryed in the foregoiag paragraphs fhat terins of A/T as also general conditions of fhe contract clearly stipulate that the inaterial if found sub-staadard at fhe store or during use, fhe supplier is duty bound to replace/rectify fhe same free ofcost. Apart froin that, the respondents have rcserved fheir right to procure fhe saiHe through soiae ofher agency at fhe risk aiid cost of tlie suppMer and even to terminate fhe contract. The iaspection report filed by fhe respondents also reiterates the aforesaid condition. 13. In fhe matter of Harbanslal Sah.nia and another Versus Xndifim Oil Corpa. Ltd. and others1, the Hon'ble Supreme Court while dealkig (2003) 2 Supreme Court Cases 107 ',/'' \^ '^. ^K-'' wifh fhe question of nxaio.taiaability of the writ petition in a contract matter haviag arbitration clause has held thus:- <<The rule of exclusion of writ jurisdiction by availabitity of aa altemative reinedy is a nile of discretion aad not one of compiilsion* In aa appropriate case, ia spite of avattability of the altemative reraedy, the High Court may stiH exercise its writ jurisdiction ia at least fhree contingencies: (i) where fhe writ petition seeks enforcexnent of any of tfae fandatnental rights; (ii) where there is failiirc of prmciples of nataral justice; or (in) where fhe orders or proceediags are whoUy wifhoutjurisdictionor fhe vires ofan Act is challenged." 14. In vie\v of fhe aforesaid principles of law laid do^vn by fhe Supreine Court aad keepiag ia view the above facts and also considermg that clause-23 of fhe general conditions of the contract provides for rcsolution of fhe dispute ansiag out of conditions of A/T aad general conditions of the contract through arbitrator aad his decision is to be final, we are of the opiaion fhat fhe iastant petition is also Mable for disinissal on the grouud of availabitlty of alteraative reniedy, as disputed questions of fact raised by fhe parties caanot be decided ia awrit proceedmgs, as fhe same would require recordmg ofevidence. l5.The petition is accordiagly disinissed. There shaU be no orders as to costs. Sd/- Dhirendra Mishra Judge Sd/- R.N. Chandrakar Judge Borve