IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN TUESDAY, THE 16TH FEBRUARY 2010 / 27TH MAGHA 1931 WP(C).No. 33033 of 2009(Y) ---------------------------------------- PETITIONER(S): ------------------------- ROMAN TARMAT LIMITED, TARMAT CHAMBERS, SECTOR-24,PLOT-19,TURBHE FLYOVER, NAVI MUMBAI- 400 705, REPRESENTED BY ITS AUTHORISED SIGNATORY AND POWER OF ATTORNEY HOLDER C.J.GEORGE, GEO TEACH CONSTRUCTION COMPANY PVT.LTD.,KSHB OFFICE COMPLEX, 8THFLOOR,PANAMPALLY NAGAR,COCHI-682 036. BY ADVS. MR.P.K.SURESH KUMAR, SMT.P.JAYALAKSHMI. RESPONDENT(S): ---------------------------- 1. THE PROJECT DIRECTOR, KERALA STATE TRANSPORT PROJECT TC 47/1795,2ND FLOOR, RAJADHANI COMPLEX, KILLIPALAM, KARAMANA P.O., THIRUVANANTHAPURAM - 695 002. 2. THE FINANCE CONTROLLER, KERALA STATE TRANSPORT PROJECT, TC 47/1795,2ND FLOOR, RAJADHANI COMPLEX, KILLIPALAM,KARAMANA P.O., THIRUVANANTHAPURAM - 695 002. 3. STATE OF KERALA, REPRESENTED BY ITS SECRETARY, PUBLIC WORKS DEPARTMENT, THIRUVANANTHAPURAM. R3 BY GOVERNMENT PLEADER MR. K.V. MANOJKUMAR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16/02/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss P.N.RAVINDRAN, J. --------------------------------------- W.P.(C)No. 33033 of 2009 ---------------------------------------- Dated 16th February, 2010 JUDGMENT The petitioner is a company incorporated under the Companies Act, 1956. The balance upgrading work of Shornur – Palakkad road (Km 00.00 – 45.30) was awarded to the petitioner and Ext.P1 agreement was entered into between the petitioner and the Project Director, Kerala State Transport Project, Thiruvananthapuram on 22.9.2007. As per the terms of the agreement, the work had to be completed by 5.10.2008. According to the petitioner, as the State Government did not hand over possession of unencumbered land and arrange various other facilities, the work could not be completed in time. The petitioner therefore requested for extension of time. That was not accepted by the Government. The petitioner thereupon moved the Adjudicator under the terms of the agreement and the Adjudicator after hearing both sides passed Ext.P2 award dated 19.8.2009 granting extension of time for performance of the agreement by a period of 230 days from 5.10.2008. The said period expired on 22.5.2009. Though the work was progressing, liquidated damages was being recovered from the part bills presented by the petitioner. Thus in all Rs.276.86 lakhs was recovered as liquidated WP(C).No.33033/2009 2 damages by the awarding authority. The petitioner thereupon moved the Government and the Government after discussions with the petitioner, the Project Director of Kerala State Transport Project and others, decided to release the sum of Rs.276.86 lakhs recovered as liquidated damages on the petitioner producing a Bank Guarantee from a Nationalised Bank, preferably from State Bank of Travancore. The Government also directed stoppage of further recovery of liquidated damages beginning from 17.9.2009. The petitioner also agreed to complete the work by 31.12.2009. Shortly thereafter, the Project Director took a different view. He was of the opinion that he has lost trust in the petitioner. At that stage, this writ petition was filed challenging the proposal to terminate the contract. 2. When this writ petition came up for admission on 18.11.2009, this Court while issuing notice to the respondents by speed post also passed an interim order restraining the respondents from terminating the contract covered by Ext.P1 and from invoking from Bank Guarantee pursuant to Ext.P8 minutes. However, notwithstanding the stay order, the Project Director issued Ext.P12 notice terminating the contract. The petitioner thereupon filed I.A.No.14749 of 2009 to amend the writ petition, challenging Ext.P12 and seeking other reliefs and I.A.No.14750 of 2009 seeking stay of WP(C).No.33033/2009 3 operation of Ext.P12 communication. After hearing both sides, I.A.No.14749 of 2009 was allowed. On I.A.No.14750 of 2009, this Court passed the following order: “Heard the learned counsel appearing for the petitioner and Sri.K.V.Manoj Kumar, the learned Government Pleader appearing for the respondents. On going through the writ petition as amended, and the submissions made at the Bar and having regard to the admitted fact that the sum of Rs.276.86 Lakhs was not released to the petitioner notwithstanding the production of bank guarantee, I am prima facie satisfied that the respondents have acted illegally in terminating the contract entered into with the petitioner. There will accordingly be an interim order staying the operation of Ext.P12 communication until further orders.” 3. The respondents in the writ petition carried the matter in appeal by filing W.A.No.2770 of 2009. The Division Bench of this Court declined to interfere with the interim order but reserved liberty with the respondents to seek expeditious disposal of the writ petition. The writ petition was accordingly posted before me for hearing today. When the writ petition came up for hearing today, Sri.P.K.Suresh Kumar, the learned counsel appearing for the petitioner submitted that the State Government have already moved the Arbitrator in terms of the agreement challenging Ext.P2 award passed by the Adjudicator extending the time for completion of the work. He also submitted that the petitioner has also raised certain claims before the Arbitrator and WP(C).No.33033/2009 4 that the said claims are pending. The learned counsel for the petitioner also submitted that the petitioner is not desirous of prosecuting this writ petition any further and that the petitioner will challenge the termination of the contract before the Arbitrator. He submitted that in such circumstances, the writ petition may be disposed of leaving open the petitioner's contentions and reserving liberty with the petitioner to challenge the termination of the contract before the Arbitrator. The learned counsel also submitted that till such time, Ext.P11 Bank Guarantee furnished by petitioner at the time of entering into the contract which is being renewed from time to time should not be invoked. Sri.K.V.Manoj Kumar, the learned Government Pleader appearing for the respondents submitted, on instructions received from the Project Director, namely, the first respondent, that the respondents have no objection in the petitioner prosecuting his claims before the Arbitrator and that they also will not invoke Ext.P11 Bank Guarantee until the Arbitrator passes an award. In the light of the stand now taken by both sides and in view of the fact that the Arbitrator is already seized of the dispute arising out of Ext.P2 award passed by the Adjudicator, I dismiss this writ petition as withdrawn reserving liberty with the petitioner to challenge the orders impugned in this writ petition in other appropriate WP(C).No.33033/2009 5 proceedings before the Arbitrator. The contentions of both sides on the merits are kept open. The respondents shall not, until the Arbitrator passes an award and for a period of one month thereafter, invoke the original of Ext.P11 Bank Guarantee. The petitioner shall however keep the Bank Guarantee alive during the said period. The interim order passed by this Court on 18.11.2009 on the writ petition and on 24.11.2009 on I.A.No.14750 of 2009 shall stand vacated. It will be open to the respondents to rearrange the work. The writ petition is dismissed as withdrawn with the above observations. P.N.RAVINDRAN Judge TKSj