iii) To issue an appropriate writ/order/direction in the nature of Mandamus directing the respondent authorities to refund the amount that has already been deducted unlawfully by way of liquidated damages.

iv) To issue an appropriate writ/order/direction commanding the respondent authorities to decide the dispute raised by the petitioner in its letter dated 3.7.2013 by way of arbitration as per Clause 25 read with letter dated 26.8.2013.

v) To issue an appropriate writ/order/direction preventing the respondent authorities from taking any coercive steps against the petitioner such as cancellation of the contract, forfeiture of security deposit, encashment of bank guarantee etc. unless the issue of default/ dispute as has been raised by the petitioner is adjudicated by an independent arbitrator."

3. Before the writ application with the aforementioned Patna High Court CWJC No.1344 of 2014 3 prayer could be taken up, the petitioner had filed two interlocutory applications, being I.A.No. 2104/2014 and I.A.No. 4012/2014, seeking amendment in the relief on account of certain subsequent developments and these reliefs were for quashing the report dated 3.3.2014 in relation to the meeting held on 26.2.2014 as also for quashing the order dated 13.5.2014 by which the petitioner‟s contract dated 15.4.2010 had been rescinded and the security deposit has been forfeited as well as the petitioner has been blacklisted.

4. This Court in fact by an order dated 16.5.2014 while adjourning the matter for enabling the learned counsel for the State to take instruction and file counter affidavit had stayed the operation of the impugned order dated 13.5.2014 in so far it related to forfeiting of the security deposit and blacklisting of the petitioner. The aforesaid order of this Court dated 16.5.2014 in fact reads as follows:

" I.A.No. 2104/2014 & I.A.No.4012/2014.

The two interlocutory applications have been filed for amendment in the reliefs prayed for in the writ application on account of some developments that have taken place and for adding the Joint Secretary, Public Health Engineering Department, Govt. of Bihar as party respondent no.6. The reliefs sought to be added are for quashing the report dated 3.3.2014 in relation to the meeting held on 26.2.2014 as also for quashing the order dated 13.5.2014, by which the petitioner‟s contract dated 15.4.2010 has been rescinded and security deposit has been forfeited and the petitioner has Patna High Court CWJC No.1344 of 2014 4 been blacklisted.

In the facts and circumstances of the case, prayers for amendment of reliefs and addition of party are allowed. I.A.No. 2104/2014 and I.A.No. 4012 of 2014 are, accordingly, disposed of.

Learned counsel for the petitioner submits that the respondents have acted in a most illegal manner contrary to the law laid down of this Court in the case of N.C.C.Ltd. vs. the State of Bihar and others: 2013(1) PLJR 952, in which it has been held that where allegations of default and non- performance of the terms and conditions of the contract against the State authorities are made it is not open to them to sit in judgment over the same and themselves decide the issue.

It is submitted by learned counsel for the petitioner that in the present matter, the respondents have not only cancelled the contract but have also blacklisted the petitioner with the civil consequence of forfeiting the security deposit as also blacklisting which they cannot do. This, according to learned counsel, has been done as against the letter dated 3.7.2013 of the petitioner, in which a specific demand was made for the decision of the dispute by reference to arbitration in terms of clause 25, which is the arbitration clause in the contract. As prayed for by learned counsel for the State, put up on 23.6.2014 in the same position to enable him to file counter affidavit in the matter.

Until further orders, the impugned order dated 13.5.2014, in so far as it relates to forfeiting of the security deposit and the blacklisting of the petitioner, shall remain stayed." Patna High Court CWJC No.1344 of 2014 5

5. Well before 23.6.2014, the date fixed by this Court in the aforesaid order dated 16.5.2014, the petitioner had again filed two more interlocutory applications, being I.A.No. 4110/2014 and I.A.No. 4111/2014, during Summer Vacation and a Vacation Bench of this Court had stayed operation of the order dated 5.6.2014 assailed in I.A.No.4110/2014, whereby and whereunder a letter was sent by the Executive Engineer, Public Health Engineering Division, Hajipur to the State Bank of India for invocation of the Bank guarantee dated 16.3.2013 and making payment of Rs.12,30,00,000/- being subject matter of three Bank guarantees. The aforesaid interim order dated 10.6.2014 is also reproduced hereinbelow:

6. Let it be noted that on 24.6.2014 the petitioner had filed a contempt application, M.J.C.No. 2114/2014, alleging violation of the order of this Court dated 10.6.2014 and this Court by an order dated 24.6.2014 had directed the opposite parties named in the contempt application to file their show cause reply by 1st July, 2014. By the Patna High Court CWJC No.1344 of 2014 8 same order dated 24.6.2014 the interim order passed on 10.6.2014 was directed to continue.

7. Thereafter when the pleadings have been completed both the cases were heard leading to the present judgment.

8. Mr. Y.V.Giri, learned Senior counsel for the petitioner, has submitted that once the petitioner itself had sought to communicate its foreclosure of the contract on account of non- fulfilment of the obligatory terms and conditions on the part of the respondents vide its letter dated 20.4.2013, the decision taken by the Principal Secretary of the Public Health Engineering Department (PHED) on 22.5.2013 taking a decision for cancellation of contract of the petitioner was wholly unsustainable either on fact or in law, inasmuch as the officials of the PHED could not have taken such a decision and the matter ought to have been referred to some independent Arbitrator. In this regard he has placed reliance on the judgment of this Court in the case of N.C.C.Ltd. v. State of Bihar & ors., reported in 2013(1) PLJR 952.

9. Proceeding further Mr. Giri had also submitted that once the petitioner by its letter dated 3.7.2013 had requested for settlement of all disputes by invoking Clause 25 of the Agreement which was followed by its another letter dated 26.8.2013 addressed to the Chief Engineer, PHED, Patna for requesting settlement of dispute and Patna High Court CWJC No.1344 of 2014 9 adjudication of its various claims in terms of Clause 25 of the Agreement and finally by letter dated 8.10.2013 addressed by the petitioner to the Principal Secretary, PHED, requesting for appointment of the Arbitrator for settlement of the dispute in terms of Clause 25(i) and (ii) of the Agreement, the decision to issue show cause notice to the petitioner on 20.3.2014 seeking explanation from the petitioner as to why its agreement should not be cancelled, its security deposit be not forfeited and the petitioner be not blacklisted was in teeth of inter-party agreement and specially its arbitration clause. Mr. Giri, in the same wake, having assailed the show cause notice has also submitted that the consequential decision taken on 13.5.2014 for cancellation of the agreement with the petitioner as well as forfeiting the security deposit made by the petitioner and its being blacklisted on 13.5.2014 was also bad because the petitioner‟s show cause reply dated 16.4.2014 was not at all considered and the impugned order dated 13.5.2014 also did not contain reasons for taking such a harsh decision.

10. Mr. Giri has then come out to explain the alleged contempt committed by the respondents- opposite parties and in this regard he has submitted that after the petitioner had given a copy of the order dated 16.5.2014 to the Engineer-in-Chief of PHED, the action taken by the Executive Engineer, Hajipur vide his three letters Patna High Court CWJC No.1344 of 2014 10 dated 5.6.2014 bearing No. 1307, 1308 and 1309 informing the State Bank of India, Kolkata invoking three Bank guarantees all dated 16.3.2013 issued against advance payment was in teeth of the direction given by this Court in the order dated 16.5.2014. According to Mr. Giri, the Executive Engineer ought to have not encashed the Bank guarantee and his receiving the Bank draft on 9.6.2014 from the authorities of the State Bank of India, Kolkata for a total of Rs.12.30 crores and its being entered by the Cashier in PH Division of the Executive Engineer on 10.6.2014 as also preparation of Challan on 11.6.2014 and the deposit of the Bank draft in the Treasury on 12.6.2014 were in teeth of the interim order passed by this Court on 10.6.2014.

11. On the basis of these submissions Mr. Giri was of the view that since the opposite parties have clearly committed contempt they should not be allowed to be heard on merits unless they first purge the contempt. Reliance in this regard has been placed by Mr. Giri on the judgment of the Apex Court in the case of State of Orissa & anr. V. Aswini Kumar Baliar Singh, reported in (2006)6 SCC 759, as also in the case of B.S.N. Joshi & Sons Ltd. V. Ajoy Mehta & anr., reported in (2009)3 SCC 458, as well as a judgment of the Division Bench of this Court in the case of Ram Vilas Mishra v. State of Bihar & ors., reported in 1993(1) PLJR 437.

12. Per contra, Mr. Lalit Kishore, learned counsel for the respondents in the writ petition and the opposite parties in the contempt application, has submitted that first of all there would be no question of violation of any interim order of this Court, inasmuch as by the interim order of this Court dated 16.5.2014 only the rescinding of the petitioner‟s contract dated 15.4.2010 had been stayed apart from forfeiting the security deposit and blacklisting of the petitioner. Mr. Lalit Kishore in this regard has explained that the aforesaid interim order was never violated and in fact that is also not the subject matter of the contempt application, wherein the petitioner has alleged contempt only on account of the violation of the order of this Court dated 10.6.2014.

13. In this regard he has also submitted that whereas the interim order was passed on 10.6.2014 staying operation of the impugned order dated 5.6.2014 passed by the Executive Engineer, Public Health Engineering Division, Hajipur, the said letter had already been acted upon by the State Bank of India, Kolkata on 9.6.2014 itself by not only invoking of the Bank guarantee but its encashment as well by giving the amount to the Executive Engineer in three Bank drafts on 9.6.2014 itself. According to the learned PAAG, once the entire encashment of the Bank guarantee was already completed on 9.6.2014, its being entered either in the cash book by Patna High Court CWJC No.1344 of 2014 12 the Executive Engineer on 10.6.2014 or its being deposited in the Treasury on 11.6.2014 will not amount to committing contempt, inasmuch as all that was said in the interim order dated 10.6.2014 was confined to encashment of the Bank guarantee which according to him had already stood encashed on 9.6.2014 itself well before passing of the interim order by this Court dated 10.6.2014.

14. Learned PAAG has also submitted that the impugned order cancelling the contract of the petitioner is strictly in accordance with the terms and conditions of the agreement and in fact a writ petition will not be maintainable in presence of arbitration clause in such agreement specially when the petitioner itself claims to invoke arbitration clause.

15. In the considered opinion of this Court the encashment of the Bank guarantee by the Bankers of the petitioner having been completed on 9.6.2014 itself, inasmuch as admittedly three Bank drafts to the tune of Rs. 12.30 crores had already been handed over to the Executive Engineer, PHED, Hajipur on 9.6.2014 by the competent authority of the Bank, there would be no question of committing any contempt by the Executive Engineer and therefore, this Court does not find any merit in the plea of contempt raised by the petitioner.

16. Let it be kept in mind that all that was said by the order dated 10.6.2014 was that the operation of the impugned order dated Patna High Court CWJC No.1344 of 2014 13 5.6.2014 bearing letter nos. 1307, 1308 and 1309 issued by the Executive Engineer, Public Health Division, Hajipur for payment of three Bank guarantees to the extent of Rs.12,30,00,000/- shall remaine stayed. As noted above, by the aforementioned letter of the Executive Engineer dated 5.6.2014 bearing Nos. 1307, 1308 and 1309 only a request was made by the Executive Engineer to the concerned Bank requesting him to pay the amount covered by the Bank guarantee. Thus, when the Bank guarantee was already invoked and also Bank had given resultant Bank draft to the Executive Engineer on 9.6.2014 well before passing of the interim order on 10.6.2014 by this Court, there would be no question of violation of the first part of the interim order dated 10.6.2014, inasmuch as the operation of the letter dated 5.6.2014 had already been completed on 9.6.2014.

17. For the same reason this Court would also not find any violation of clarifying portion of the interim order dated 10.6.2014, inasmuch as the expression „encashment of Bank guarantee‟ will always mean that the Bank guarantee which was given by the Bank to the Executive Engineer was not to be encahsed but then when the Bank itself had encashed the Bank guarantee by preparing and also handing over the draft of Rs.12,30,00,000/- to the Executive Engineer on 9.6.2014, it would be very difficult for this Court to hold the opposite parties in contempt.

18. Once this Court finds that no contempt was actually committed by the opposite parties on account of completion of encashment of the Bank guarantee well before passing of the interim order of this Court, there would be no question of application of the judgment of the Apex Court in the case of Aswini Kumar Baliar Singh (supra) and in the case of B.S.N. Joshi & Sons Ltd. (supra) or the Division Bench judgment of this Court in the case of Ram Vilas Mishra (supra), all of whom proceed on the basis that the contempt had already been committed, whereafter the opposite parties- contemnors cannot be heard on merit unless they purge the contempt. It is here that the facts of the case and the finding arrived by this Court that no contempt was committed would by itself be sufficient to reject the submission of Mr. Giri, learned Senior counsel for the petitioners.

19. Reverting back to the main issue as with regard to the decision taken for cancellation of contract of the petitioner followed by forfeiture of security deposit and the decision of blacklisting this Court, in the peculiar facts and circumstances of the case, would find that when the petitioner itself had sought remedy of arbitration under the agreement it had no reason to file the writ application. To that extent the preliminary objection raised by Mr. Lalit Kishore, learned PAAG, seems to be apt and appropriate, inasmuch as it is not in dispute that the inter-party agreement between the petitioner and the Patna High Court CWJC No.1344 of 2014 15 respondents had contained the following arbitration clause:

Thereupon, the Superintending Engineer shall given his written instructions or decision within a period of fifteen days from the receipt of the contractor's letter. If the Superintending Engineer fails to give his instructions or decision in writing within the aforesaid period or if the contractor is dissatisfied with the instructions or decision Patna High Court CWJC No.1344 of 2014 16 of the Superintending Engineer, the contractor may, within 15 days of the receipt of Superintending Engineer's decision, appeal to the Chief Engineer who shall afford an opportunity to the contractor to be heard, if the latter so desires, and to offer evidence in support of his appeal. The Chief Engineer shall give his decision within 30 days of receipt of contractor's appeal. If the contractor is dissatisfied with this decision, the contractor shall within a period of 30 days from receipt of the decision, give notice to the Chief Engineer for appointment of arbitrator failing which the said decision shall be final binding and conclusive and not referable to adjudication by the arbitrator.

ii) Except where the decision has become final, binding and conclusive in terms of Sub para (i) above disputes or difference shall be referred for adjudication through arbitrator appointed by Engineer-in-Chief or the administrative head of the said P.W.D. If the arbitrator so appointed is unable or unwilling to act or resign his appointment or vacates his office due to any reason whatsoever another sole arbitrator shall be appointed in the manner aforesaid. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor.

It is a term of this contract that the party invoking arbitration shall give a list of disputes with amounts claimed in respect of each such dispute along with the notice for appointment of arbitrator and giving reference to the rejection by the Chief Engineer of the appeal. Patna High Court CWJC No.1344 of 2014 17

It is also a term of this contract that no person other than a person appointed by such Engineer-in-Chief or the administrative head of the department as aforesaid should act as arbitrator and if for any reason that is snot possible, the matter shall not be referred to arbitrator at all. It is also a term of this contract that if the contractor does not make any demand for appointment of arbitrator in respect of any claim in writing as aforesaid within 45 days of receiving the intimation from the Engineer-in-Charge that the final bill is ready for payment, the claim of the contractor shall be deemed to have been waived and absolutely barred and the Government shall be discharged and released of all liabilities under the contract in respect of these claims.

The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) or any statutory modifications or re- enactment thereof and the rules made there under and for the time being in force shall apply to the arbitration proceeding under this clause.

It is also a term of the contract that if any fees are payable to the arbitrator these shall be paid equally by both the parties.

It is also a term of the contract that the arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties calling them to submit their statement of claims and counter statement of claims. The venue of the arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid Patna High Court CWJC No.1344 of 2014 18 before the award is made and published, be paid half and half by each of the parties. The cost of the reference and of the award (including the fees, if any, of the arbitrator) shall be in the discretion of the arbitrator who may direct to any by whom and in what manner such costs or any part thereof shall be paid and fix or settle the amount of costs to be so paid. All arbitration shall be held at Patna and at no other place."

(underlining for emphasis)

20. As a matter of fact when the petitioner itself admits that it had made repeated requests to the Superintending Engineer, Chief Engineer and the Secretary to the PHED for taking recourse to arbitration, the only remedy for the petitioner in case arbitration clause was not being followed by the respondents was to invoke Section 11(5) of the Arbitration and Conciliation Act under which this Court could have passed an order for appointment of Arbitrator. A writ petition in any view of the matter for the relief sought herein was not maintainable in presence of the aforesaid arbitration clause.

21. Reference in this connection may be usefully made to the judgment of the Apex Court in the case of State of U.P. v. Bridge & Roof Co. (India) Ltd. , reported in (1996)6 SCC 22, wherein it was held as follows:

22. The same principle in fact has also been reiterated by the Apex Court in the case of ABL International Ltd. & anr. V. Export Credit Guarantee Corporation of India Ltd. & ors., reported in (2004)3 SCC 553, wherein it was held as follows:

23. Mr. Giri, however, had placed reliance on the judgment of the Apex Court in the case of Verigamto Naveen v. Govt. of U.P. & ors., reported in (2001)8 SCC 344, with a specific reference to paragraph no.21 to contend that a writ petition can be also maintainable in the matter of contract and it is not that this Court will Patna High Court CWJC No.1344 of 2014 20 non-suit the petitioner only on the ground of parties being bound by an agreement constituting contract and also containing an arbitration clause.

24. In the considered opinion of this Court the reliance placed on the judgment of Verigamto Naveen (supra) is wholly misplaced, inasmuch as that case was in relation to a statutory contract flowing out of Mines and Minerals (Regulation and Development) Act, 1957 and the issue before the Apex Court was illegal termination of the lease/ sub-lease in violation of the provisions made in the aforesaid Act. It was in relation to this statutory contract that the Apex Court in paragraph 21 of the judgment had come to a finding that the cancellation of contract is subject to the statutory provision and therefore, the matter cannot be said to be purely arising out of the contractual field.

25. In the present case it is an admitted position that the contract in question for design, construction and commissioning of 1500 nos. mini water supply scheme in 26 draught effected districts of Bihar with provision of electrical pumping set on turn key basis was never within the realm of statutory contract. Thus, what was said way back in the case of M/s Radha Krishna Agrawal & ors. v. State of Bihar & ors., both by this Court as also by the Apex Court in the judgment reported in AIR 1977 Patna 65 and further by the Apex Patna High Court CWJC No.1344 of 2014 21 Court in AIR 1977 SC 1496, had still remained the good law and has not been watered down as is being submitted by Mr. Giri by referring to the case of Verigamto Naveen (supra).

26. As a matter of fact when it is also not in doubt that the present contract was out and out non-statutory contract, the following observations made by the Division Bench of this Court in the case of M/s Radha Krishna Agrawal (supra) has to be squarely made applicable, inasmuch as this Court had held as follows:

19. So far as the cases under categories (i) and (ii) are concerned, it is almost settled that the person aggrieved can invoke the writ jurisdiction of this Court. In Union of India v. M/s Anglo Afghan Agencies (AIR 1968 SC 718), Century Spinning and Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council, (AIR 1971 SC 1021) and Robertson v. Minister of Pensions, ((1949)1 KB 227), it was pointed out that public bodies are as much bound as private individuals to carry out representations of facts and promises made by them relying on which other persons have altered their position to their prejudice and in such cases even if the contract has not been embodied in the form prescribed, it can be enforced by a writ in appropriate cases in equity. Similarly in K.N. Guruswamy v. State of Mysore , (AIR 1954 SC 592), D.F.O. South Kheri v. Ram Sanhi Singh, (AIR 1973 SC 295) and Shree Krishna Gynoday Sugar Ltd. v. State of Bihar (AIR 1975 Pat. 123), it has been held that, even if the right to relief arose not of an alleged breach of contract, but the action Patna High Court CWJC No.1344 of 2014 23 of the authority which was being challenged was of a public authority vested with statutory power, this Court, in exercise of its writ jurisdiction, can grant relief to the aggrieved person. On the other hand, in case falling under category (iii), where there is no question of exercise of any statutory power and the rights of the parties flow from mere terms of the contract entered into by the authorities of the State, a party to such agreement should not be allowed to invoke the writ jurisdiction of this Court for the purpose of finding out as to whether there has been a breach of contract on the part of the State or on the part of such person. It is apparent that in such cases there cannot be adjudication without evidence on the point. There is no question of infraction of any rules or statutes. Courts have always called upon such petitioners to seek their remedy in the Civil Court. In this connection reference can be made to a Bench decision of this Court in B.K.Sinha v. State of Bihar (AIR 1974 Pat 230), where Untwalia, C.J. (as he then was) after making a reference to the Supreme Court in Umakant Saran v. State of Bihar (AIR 1973 SC

964); and Lekhraj Sathram Das v. N.M.Shah, (AIR 1966 SC 334) observed:

In the same case at page 231 it was further observed:-

(Underlining for emphasis)

27. When the case of Radha Krishna Agrawal (supra) from this Court had gone to the Apex Court, the same was not only approved but in fact was further explained in the following words:

13. It rightly held that the cases such as Union of India v. M/s. Anglo Afghan Agencies, AIR 1968 SC 718 andCentury Spinning & Manufacturing Co. Ltd. v. Ulhasnagar Municipal Council, AIR 1971 SC 1021; and Robertson v. Minister of Pensions, (1949) 1 KB 227 belong to the first category where it could be held that public bodies or the State are as much bound as private individual are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities. The High Court thought that in such cases the obligation could sometimes be appropriately enforced on a Writ Petition even though the obligation was equitable only. We do not propose to express an opinion here on the question whether such an obligation could be enforced in proceedings under Article 226 of the Constitution now. It. is enough to observe that the cases before us do not belong to this category."

28. Thus, in the considered opinion of this Court the judgment of the Division Bench of this Court and the Apex Court in Patna High Court CWJC No.1344 of 2014 26 the case of Radha Krishna Agrawal (supra) will leave nothing for speculation that the case of the present nature arising out of a non- statutory contract either with regard to termination of contract or consequential order of blacklisting will not be maintainable, inasmuch as the term of the contract itself empowers the departmental authorities to cancel such contract in certain eventualities.

29. A division bench of this Court following the ratio in the case of C.K. Achutan (supra) in the case of B.K. Sinha Vs. State of Bihar reported in AIR 1974 Pat 230 had again reiterated the same principles by holding as follows:-

30. The Apex Court again in the case of Har Shankar Vs. Dy. Excise & Taxation Commissioner reported in AIR 1975 SC 1121 while considering the issue of cancellation of retail sale of country liquor and foreign liquor on account of default in making payment had gone to hold as follows:-

31. The overemphasized submission of the learned counsel for the petitioner that it had completed almost all the work and it was wholly unfair on the part of the respondents to also forfeit the amount of security and advances as well as invoking the bank guarantee would also not impress this Court. Rescinding of contract having been already set out in Clause-14 of the SBD, already quoted above, this court would find no error in the action of the respondent in invoking the bank guarantee. The issue as to whether the amount of bank guarantee invoked is much more than the value of the work left to be completed by the petitioner is a question of evidence but the parties having been bound by the inter-parte agreement also providing for forfeiture of the security and advance and also rescinding of the agreement, no complaint can be made if one of the parties has taken an action well within the terms of the contract. Reference in this connection may also be usefully made to the judgment of the Apex Court in the case of Divisional Forest Officer Vs. Bishwanath Tea Co. reported in AIR 1981 SC 1368 wherein it was held as follows:-

32. Yet again, the same view was reiterated in a more emphatic manner by the Apex Court in the case of Premji Bhai Parmar Vs. Delhi Development Authority reported in AIR 1980 SC 738 where it was held as follows:-

33. This Court would in fact found the present case to be fully covered by the ratio laid down by the Apex Court in the case of State of Bihar Vs. Jain Plastic & Chemicals Ltd. reported in 2002(1)SCC 216 Patna High Court CWJC No.1344 of 2014 29 wherein a writ application filed against the deduction of amount from the final bill to be paid to the contractor due to breach of contract was held to be not maintainable and the Apex Court had gone to hold that even if it is possible to decide the question raised in the petition on the basis of affidavits and counter affidavits, it would not be proper to exercise extraordinary jurisdiction under Article 226 of the Constitution in cases of alleged breach of contract.

34. The aforesaid view of the Apex Court in the case of Jain Plastics and Chemicals Ltd. (supra) has been again reiterated in a very recent judgment of the Apex Court dated 14.08.2015 in the case of State of Kerala and others Vs. M.K.Jose reported in 2015(4) PLJR 146 (SC) wherein law has been laid in the following terms :-

35. In the aforesaid case, it has been further observed by the Apex Court:-

14. In National Highways Authority of India v. Ganga Enterprises reported in (2003) 7 SCC 410, the respondent Patna High Court CWJC No.1344 of 2014 31 therein had filed a writ petition before the High Court for refund of the amount. The High Court posed two questions, namely, (a) whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and also contrary to Section 5 of the Contract Act; and (b) whether the writ petition is maintainable in a claim arising out of breach of contract. While dealing with the said issue, this Court opined that:-

Union of India reported in (1986) 3 SCC 247. These, however, are cases where the writ court was enforcing a statutory right or duty. These cases do not lay down that a writ court can interfere in a matter of contract only. Thus on the ground of maintainability the petition should have been Patna High Court CWJC No.1344 of 2014 32 dismissed."

36. Thus, on the basis of the law laid down by the Apex Court, as discussed above, there will be no difficulty in coming to the conclusion that the present writ application as with regard to non- statutory contract also containing arbitration clause, questioning the termination of contract as per the terms of the contract, will not be maintainable.

37. The next submission of Mr. Giri, that once the petitioner had already sought foreclosure of the contract on account of non- fulfilment of the terms and conditions under the agreement by the respondents, the authorities of the PHED could not have taken a decision for either cancellation of contract or forfeiting the security amount or blacklisting the petitioner because they could not have been the judge of their own cause, also seems to be an argument in desperation. The plain and simple fact is that the petitioner was awarded a contract to complete the work of design, construction and commissioning of 1500 nos. mini water supply scheme in 26 draught effected districts of Bihar with provision of electrical pumping set on turn key basis and the contract was to be completed within a period of 18 months i.e. 1.4.2010 to 30.9.2011.

38. From the counter affidavit of the respondents it is also very clear that the petitioner could not complete the work despite Patna High Court CWJC No.1344 of 2014 33 repeated indulgences including extension of time given to it. This aspect has been explained in paragraph no.6 of the counter affidavit which reads as follows:

It is also relevant to mention here that the respondents handed over 349 sites after 15.10.2011 for completion the work of electric pumping set of 349 sites in different districts and thus the respondents handed over total 1229 sites out of 1500 sites in different districts, but the petitioner/ contractor only completed the work of 115 sites since after 15.10.2011 and 230 sites are pending and on query the respondents found that the petitioner/ contractor slowed down the work after March, 2012 and stopped their work since March, 2013.

(vi) That as per terms and conditions as laid down in clause 10B(ii) of the agreement that mobilization amount may not be given exceeding 10% of the tendered value, if request made by the contractor in writing within one month of the Patna High Court CWJC No.1344 of 2014 35 order to commence the work and mobilization amount of 10% may be given in two or more than two installments, if the contractor executes a Bank guarantee/ Bond from a scheduled Nationalized Bank but the same is not applicable in clause 10B(ii) of the contract.

It is relevant to mention here that the contractor submitted application before respondents with a prayer to grant mobilization advance vide letter no. 125 dated 15.2.2010 and thereafter the respondents decided to grant mobilization amount in three installments to the petitioner/ contractor vide official letter no.1574 dated 12.5.2010 so that contractor may complete the work within time under the provisions of 10B(ii) clause of the contract.

It is also relevant to mention here that recovery of such sums advance shall be made by deduction from the contractor‟s bills commencing after first ten percent of gross value of the work as per provision 10B sub-clause (iv).

(vii) That the respondents handed over the list of 880 sites before 15.10.2011 for completion of the work of electric pumping set, but the petitioner/ contractor only completed the work of 26 sites of electric pumping set. It is out and out to place mention here that the respondents also given the list of 349 sites to the petitioner/ contractor after the lapse period, but the contractor only completed the work of 89 items and thus the contractor only completed the work of 115 sites of electric pumping set and work of 230 sites is pending as yet. Reason best known to the petitioner/ contractor. The respondents made several correspondences to the contractor, but the petitioner/ contractor has not Patna High Court CWJC No.1344 of 2014 36 followed the instructions of the respondents which shows his malafide intention and his intentions is to digest the mobilization amount and the contractor also finally stopped the work since March, 2013.

(viii) That the petitioner/ contractor submitted bill of Rs.2942.26024 Lac for the different districts and after verification of Rs.2133.93974 Lac was paid and Rs.267.5238 Lac is pending due to defect of bills. And the petitioner/ contractor submitted bills of Rs.559.61717 Lac without work.

(ix) That the petitioner/ contractor admitted that he completed the installation work of 115 items of electric pumping set and deposited the cost for supply of electric power of 104 items and cost for supply of electrical power of 11 items has not been deposited as yet.

The petitioner/ contractor also accepted before the respondents that the work for installation of 230 items is going on but there is no three phase line in 66 items of pumping set. The petitioner/ contractor accepted that he deposited the cost for supply of electrical power of 13 items but he has not deposited the cost for supply of electrical power of 53 items. Thus, it appears that there is laches and negligency on the part of the petitioner/ contractor and made violation of the agreement.

And the petitioner/ contractor has not done the work as per the agreement and committed mischief.

(x) That the petitioner/ contractor submitted a presentation as per clause-25 of the contract for Arbitration on 3.7.2013 before Superintending Engineer, P.H.Divisoin, Muzaffarpur, Patna High Court CWJC No.1344 of 2014 37 but the petitioner/ contractor has not proceeded as per the document of Arbitration and the respondents become confirmed that due to malafide intention and negligence of the contractor/ petitioner has not proceeded as per the norms of contract as yet.

(xi) That the petitioner/ contractor submitted bills for mobilization advance of different districts of Bihar before the respondents and the respondents made advance payment of Rs.1495.43944 Lac and Rs.224.72359 Lac has ben adjusted by the different districts from the contractor in different bills and mobilization amount of Rs.1270.71595 as well as interest is lying with the contractor.

(xii) That after lapse of the contract period, authority of the concerned department directed the firm to expedite the work project but in spite of the several reminders and notices from the different concerned P.H. Divisions the progress of the project remained slow and sluggish. The contractor has not pay heed towards the direction of the authority.

(xiii) That on 26.2.2014 a meeting was held by the Joint Secretary (Management Cell), PHED, Patna in presence of the several concerned Executive Engineers as well as the representatives of the firm and fully discussed the grievances of the contractor and lastly it was decided that the contractor has committed illegalities and gross negligency towards the work handed over to him causing irreparable damage to the people of drought affected districts, the meeting was resolved with a direction to recover the mobilization advance and cancel the contract and also forfeit the security amount of the contractor.

(xiv) That it is relevant to mention here that the total amount of Rs.1495.43944 (Mobilization Advance) has been given to the petitioner/ contractor so that he may proceed towards the work speedily and Rs.224.72349 is adjusted by the respondents and Rs.1274.38376 as well as interest is liable to be adjusted from the petitioner/ contractor.

(xv) That the work of petitioner/ contractor is not satisfactory in spite of several directions given by the respondents and villagers of several draught affected districts have not taken the benefit of water supply. And the people remained deprived from the basic need of drinking water supply in spite the best effort of respondents. It is relevant to mention here that in spite of approval of designs and drawings of 1085 sites and handed over 800 sites with NOC for starting the work, but the contractor has not completed the work causing loss to the mass suffering for drinking water and hampered the citizens of the draught affected districts of Bihar.

Under the facts it appears that the petitioner/ contractor with malafide intention induce the respondents to grant mobilization advance and after getting the said amount the petitioner/ contractor has not completed the work as per the agreement and dishonestly withheld the amount of Rs.1274.38376 which was liable to be recovered and for that reason the three Bank Guarantees given against the mobilization advance were invoked on 6.6.2014. The State Bank of India, Kolkata office paid the Bank Guarantee on 9.6.2014 after seeking legal opinion from their own Lawyer."

39. This Court is not going to hold for the time being as to who was the erring party but this much becomes clear from the stand taken by both the petitioner and the respondents that a contract which was given by the respondents to the petitioner was not completed within the prescribed period and the claim of the petitioner is that the respondents had failed in furnishing and fulfilling the conditions for execution of the contract by it, whereas the respondents have come out to say that it was the petitioner which had failed to complete the work despite of the co-operation extended by the departmental authorities. In fact the pleadings on record will be sufficient to show that there was/ is presence of a dispute as defined under the Arbitration Act and its resolution can be made possible only by leading of evidence both oral and documentary before the Arbitrator as per the dispute resolution mechanism evolved, agreed and entered into between the parties.

40. The only submission of Mr. Giri, that the departmental authorities could not have decided as to whether the petitioner was the erring person either on fact or in law and the matter should have been left in the hands of the independent authorized person, would in fact amount to rewriting of the terms and conditions of the agreement.

41. The submission of Mr. Giri, learned Senior counsel for the petitioner, that authorities of the department could not have taken Patna High Court CWJC No.1344 of 2014 40 an action because it was a party to the agreement and the matter had to be referred to a neutral person for determining as to whether the petitioner had committed any breach of terms and conditions of the agreement, has to be also noted for its being rejected.

42. The reliance of the learned counsel for the petitioner to certain observations made in this regard in paragraph no.26 in the case of M/s NCC Ltd. (supra) seems to be wholly misplaced, inasmuch as some observation therein on the basis of a judgment of Apex Court in the case of M/s J.G.Engineers Private Ltd. v. Union of India & anor., reported in (2011)5 SCC 758, is far too wide and in fact not at all contextual, inasmuch as in the case of M/s J.G.Engineers Pvt. Ltd. (supra) the issue actually before the Apex Court was with regard to correctness of an award of the arbitrator. The terms and conditions of the agreement were, therefore, pressed into action to examine as to whether the counter claim of the Union of India against the contractor M/s J.G.Engineer could be rejected by the arbitrator in view an unilateral decision of the authorities of the Union of India. Let it be noted that the arbitrator had held that the contractor had committed no delay and thus, was entitled to certain relief of payment of amount under the terms and conditions of the agreement as claimed by it in the arbitration proceeding but the High Court had reversed the decision of the arbitrator against which the contractor M/s Patna High Court CWJC No.1344 of 2014 41 J.G.Engineers had moved the Apex Court.

43. It was actually in that context that certain observations were made by the Apex Court with regard to unilateral decision taken by the department which were examined by the arbitrator and were found to be not correct. The said judgment of M/s J.G.Engineers Pvt. Ltd. (supra), therefore, is not an authority that in no case the department or the Government awarding contract can take its decision as also annul the contract on the ground of violation of terms and conditions of the contract and for each and every issue such decision has to be taken by a neutral person.

44. Such observation made by this Court in the case of M/s N.C.C. (supra) said to be based on the judgment of the Apex Court in the case of M/s J.G.Engineers Pvt. Ltd. (supra) would actually place the contractor on dictating terms because firstly it would default in completing work and then it would expect the department to refer the matter to a neutral person to adjudicate as to whether there was no fault on the part of the contractor. That, however, is not even the ratio of the judgment of the case of M/s J.G.Engineer Pvt. Ltd. (supra) which in fact lays down the law only with regard to the grounds on which the award of the arbitrator can be interfered by the Court in exercise of power under section 34 of the Arbitration and Conciliation Act. Thus, whatever has been held by the learned Single Judge in the Patna High Court CWJC No.1344 of 2014 42 case of M/s NCC Ltd. (supra) on the basis of ratio laid down by the Apex Court in the case of M/s J.G.Engineers Pvt. Ltd. (supra) does not seem to be correct ennunciation of law.

45. The view of learned Single Judge in the case of M/s N.C.C. (supra) even other wise cannot be made applicable to the facts of the present case of the petitioner because in this case such power in the agreement has been vested to the department to take action against the defaulting contractor in case of breach of terms and conditions of the agreement as clearly spelt out in different clauses forming part of the contract. If the wide proposition laid down by the learned Single Judge in the case of M/s NCC Ltd. (supra) is accepted to be correct enunciation of law, this Court would find it difficult to allow any contractor to be subjected to determination or cancelling any contract though it may have agreed to it with its open eyes, as the petitioner had, while entering into the agreement, Clause 3 whereof reads as follows:

"CLAUSE 3 When Contract can be determined/Rescined Subject to the other provisions contained in this clause the Engineer-In-Charge may, without prejudice to his any other rights or remedy against the contractor in respect of any delay inferior workmanship, any claims for damages and/or any other provisions of this contract or otherwise, and whether the date of completion has or has not elapsed, Patna High Court CWJC No.1344 of 2014 43 by notice in writing absolutely determine the contract in any of the following cases :

When the contractor has made himself liable for action under any of the cases aforesaid, the Engineer-in- Charge on behalf of the Governor of Bihar shall have powers :

in-Charge shall be conclusive evidence). Upon such determination or rescission the Earnest Money Deposit, Security Deposit already recovered and Performance Guarantee under the contract shall be liable to be forfeited and shall be absolutely at the disposal of the Government.

b) After giving notice to the contractor to measure up the work of the contractor and to take such Patna High Court CWJC No.1344 of 2014 45 whole, or the balance or part thereof as shall be un- executed out of his hands and to give it to another contractor to complete the work. The contractor, whose contract is determined or rescinded as above, shall not be allowed to participate in the tendering process for the balance work.

In the event of above course(s) being adopted by the Engineer-in-Charge, the contractor shall have no claim to compensation for any loss sustained by him by reasons of his having purchased or procured any materials or entered into any engagements or made any advances on account or with a view to the execution of the work or the performance of the contract. And in case action is taken under any of the provision aforesaid the contractor shall not be entitled to recover or be paid any sum for any work thereof or actually performed under this contract unless and until the Engineer-in-Charge has certified in writing the performance of such work and the value payable in respect thereof and he shall only be entitled to be paid the value so certified.

46. Yet again Clause 14 of the agreement of the petitioner had itself stipulated for cancellation of contract in full or part on the certain eventuality which again for the sake of clarity and convenience is quoted hereinbelow:

On cancellation of the contract in full or in part, the Engineer-in-Charge shall determine what amount, if any, is recoverable from the contractor for completion of the works or part of the works or in case the works or part of the works is not to be completed, the loss of damage suffered by Government. In determining the amount, credit shall be given to the contractor for the value of the work executed by him up to the time of cancellation, the value of contractor's materials taken over and incorporated in the work and use of plant and machinery belonging to the contractor.

Any excess expenditure incurred or to be incurred by Government in completing the works or part of the works or the excess loss or damages suffered or which may be suffered by Government as aforesaid after allowing such credit shall without prejudice to any other right or remedy available to Patna High Court CWJC No.1344 of 2014 49 Government in law be recovered from any moneys due to the contractor on any account, and if such moneys are not sufficient the contractor shall be called upon in writing and shall be liable to pay the same within 31 days.

If the contractor fails to pay the required sum within the aforesaid period of 30 days the Engineer-in- Charge shall have the right to sell any or all of the contractors unused materials, constructional plant, implements, temporary buildings, etc. and apply the proceeds of sale thereof towards the satisfaction of any sums due from the contractor under the contract and if thereafter there be any balance is outstanding from the contractor, it shall be recovered in accordance with the provisions of the contract.

Any sums in excess of the amounts due to Government and unsold materials, constructional plant, etc., shall be returned to the contractor, provided always that if cost or anticipated cost of completion by Government of the works or part of the works is less than the amount which the contractor would have been paid had he completed the works or part of the works, such benefit shall not accrue to the contractor."

(Underlining for emphasis)

47. The aforesaid underlined stipulations made in the agreement have been quoted in extenso only for the purpose to show that the competent authority of the department has been vested full power and authority to take action against the contractor and therefore, it will be Patna High Court CWJC No.1344 of 2014 50 very difficult for this Court to accept the submission of the learned counsel for the petitioner that in no event any action can be taken against the contractor by the authorities of the department and such a decision, as to whether any default was committed by the contractor, has to be decided only by a neutral person. That in fact again would be firstly amount to enforcing the terms and conditions of the contract and that too of a non-statutory contract which cannot be done in writ jurisdiction under Article 226 of the Constitution of India in view of law laid down by the Apex Court in the case of Radha Krishna Agrawal (supra). Secondly as per stipulation made in Clause 3 and 14 of the Agreement if the contractor makes a default or causes breach of terms and conditions it is the competent authority of the department who has been vested power to take appropriate action not only for determination of contract but also taking other penal measures.

48. As a matter of fact it is for this reason that the terms of agreement had envisaged that if the contractor becomes aggrieved on account of any action taken by the competent authorities of the department within the terms and conditions of the contract that a provision for arbitration in Clause 25 of the Agreement has been also made as has been already quoted above. The dispute in fact relating to the agreement in any form can arise only when the department will take a decision against the contractor and the remedy in such cases Patna High Court CWJC No.1344 of 2014 51 would be only the arbitration and nothing else.

49. The petitioner also cannot expect this writ Court to decide as to whether it had justified reasons either in not completing the work or seeking extension of time because even the issue of extension of time is not a matter of right and is well covered by Clause 5 of the Clause of contract which reads as follows:

then upon the happening of any such event causing delay, the Contractor shall immediately give notice thereof in writing to the Engineer-in-Charge but shall nevertheless use constantly his best endeavors to prevent or make good the delay and shall do all that may be reasonably required to the satisfaction of the Engineer-in-Charge to proceed with the works.

5.3 Request for the rescheduling of Milestones and extension of time, to be eligible for consideration, shall be made by the contractor in writing within fourteen days of the Patna High Court CWJC No.1344 of 2014 53 happening of the hindering event causing delay on the prescribed form. The Contractor may also, if practicable, indicate in such a request the period for which extension is desired.

5.4 In any such case the authority mentioned in Schedule 'F' may give a fair and reasonable extension of time and reschedule the milestones for completion of work. Such extension shall be communicated to the Contractor by the Engineer-in-Charge in writing, within 3 months of the date of receipt of such request. Non application by the contractor for extension of time shall not be a bar for giving a fair and reasonable extension by the Engineer-in-Charge and this shall be binding on the contractor.

5.5 The basic centerlines, reference points and benchmarks will be fixed by the department. The contractor shall established at his own cost at suitable points, additional reference lines and bench marks as may be necessary and instructed by the engineer-in-charge. The contractor shall remain responsible for the sufficiency and accuracy of all the bench marks and reference lines."

(underlining for emphasis)

50. Thus, merely because the petitioner had filed an application for extension of time and the same was in any way under consideration would not mean that on non-completion of work even upto 80% in a period of four years from the date of award of the contract for which the completion period was from 01.04.2010 to 30.09.2011 no action could have been taken against the petitioner Patna High Court CWJC No.1344 of 2014 54 save and except to refer the matter to a neutral person to adjudicate as to whether the petitioner on account of non-completion of work had become defaulter. The ratio laid down by the Apex Court in the case of M/s J.G.Engineers Pvt. Ltd. (supra) in no view of the matter does go to this extent and in fact whatever observations have been made therein in relation to examining the correctness of an award in terms of section 34 of the Arbitration and Conciliation Act cannot have such a far consequence that the department having awarded the contract to a contractor within the specified terms and conditions of the agreement will become a slave and captive in the hand of the contractor and will also be compelled to keep on awarding fresh contract to a contractor irrespective of default made by him by way of non-completion of work.

51. The next submission of Mr. Giri that the impugned order does not contain the reasons and as such, the same would be in violation of the principles of natural justice because whatever was stated by the petitioner in the show cause reply has not been taken into consideration also does not appeal to this Court for two reasons, firstly, the Division Bench of this Court in the case of M/s Radha Krishna Agrawal (supra) has specifically held that the adherence to the principles of natural justice will not be applicable in a purely contractual matter arising out of non-statutory contract and in this Patna High Court CWJC No.1344 of 2014 55 regard this Court has said as follows:

I may also usefully refer to what was said by the Privy Council in Durayappan, v. Fernando (1967) 2 A. C. 337 at p. 349. Giving the opinion of the Board Lord Upjohn said "In their Lordships' opinion there are three Patna High Court CWJC No.1344 of 2014 56 matters which must always be borne in mind when considering whether the principle should be applied or not. These matters ars ..... Secondly, in what circumstances or upon what, occasion is the person daiming to be entitled to exercise the measure of control entitled to intervene." To put the same matter tersely borrowing the phrase of Lord Denning. "Every thing depends on the subject matter". In my view, unless the Court is of the opinion that the occasion or circumstances for the exercise of power is such, that it would be unfair or unjust to the party affected by action taken, to be visited by the consequences thereof, unless it had been given an opportunity to have his say in the matter, the principles of natural justice are not attracted. In my view the exercise of contractual right is not such an occasion. There is nothing unjust or unfair in a party terminating a contract, even without giving the other party an opportunity to have his say in the matter, on the basis of the express right conferred by the contract itself. The very nature and occasion of the exercise of right flowing as it does from the contract, is such as to exclude the applicability of the rules of natural justice. Further it is to be observed that when a right to terminate a lease, on the ground of the existence of conditions which give a right of termination, has been exercised, it is open to the party exercising the option to justify the action taken, if properly challenged, not only on the grounds which were under contemplation when the action was taken, but also on other grounds which are available in law to the Patna High Court CWJC No.1344 of 2014 57 contracting party in terms of the agreement. This is an additional reason as to why rules of natural justice cannot be held to be attracted in cases where a lease has been terminated in terms of the contract itself."

(Underlining for emphasis)

52. Secondly, even on going through the content of the impugned order of cancellation of contract of the petitioner dated 13.5.2014 which essentially has to be read in the backdrop of the show cause notice issued to the petitioner on 20.3.2014 it would become clear that there was a full application of mind by the authorities before passing the impugned order. Let it be kept in mind that apart from various communications and reminders periodical assessment of the work done by the petitioner was made and it was noticed that after March, 2013 the petitioner had failed to do any work. Thus, the petitioner in the show cause notice was directed to explain on specific issues as would be evident from perusal of the show cause notice dated 20.3.2014 which for the sake of clarity and convenience is quoted hereinbelow:

vfHk;ark eqtIQjiqj }kjk vuqeksfnr fd;k x;k ,oa vkidks miyc/k djk;k x;k A mDr ls Li"V gS fd iVuk ,oa Hkkxyiqj iz{ks= ds vUrzxZr dqy 1275 ;kstukvksa ds dk;kZUo;u gsrq fMtkbZu ,oa Mzkbax ekg tqykbZ 2010 esas gh vuqeksfnr dj foHkkx }kjk miyC/k djk;k x;kA ijUrq ;kstuk ds dk;kZUo;u esa visf{kr izxfr vkids }kjk ugha yk;h x;hA  ;kstuk ds dk;kZUo;u gsrq LFky lwfp fofHkUu dk;Z izeaMyksa }kjk ;kstuk ds dk;kZUo;um gsrq fu/kkZfjr le; vof/k ds vUrZxZr vkidks 880 LFky miyC/k djk;s x;s ftuds fo:n~/k ek= 26 ;kstukvksa dks iw.kZ dj pkyw fd;k x;kA mDr ls Li"V gS fd vkids }kjk ;kstuk ds dk;kZUo;u esa vfHk:fp ugha fn[kkbZ x;hA foHkkx }kjk ;kstuk iw.kZ djus dh fu/kkZfjr vof/k ds i'pkr Hkh 349 vnn vkSj LFky vkidks miyC/k djk;s x;sA vcrd vkids }kjk ek= 115 ;kstuk,a iw.kZ dh x;h gS rFkk 230 ;kstuk,a viw.kZ fLFkfr esa gS tks dk;Z ds izfr vkids ykijokgh dk ifjpk;d gSA  ;kstuk ds dk;kZUo;u gsrq eksosykbZys'ku vfxze ;kstuk ds dk;kZUo;u esa rasth ykus ds mn~ns'; ls vkids vuqjks/k ij SBD dh dafmdk&10B¼AA½ ds vkyksd esa nl izfr'kr Patna High Court CWJC No.1344 of 2014 60 ekscsykbZys'ku vfxze nsus dk izko/kku fd;k x;kA fofHkUu ize.Myksa ds }kjk ;kstuk dk dk;kZUo;u lqxerkiwoZd djus gsrq izFke fd'r ds :i esa ekg vxLr 2011 rd :i;s 1136-74044 yk[k rFkk f}rh; fd'r ds :i esa ekg ekpZ 2011 ls ekg tqykbZ 2012 rd :i;s 358-699 yk[k ;kfu dqy 1495-43944 yk[k :i;s dk ekscsykbZts'ku vfxze vn;k x;k ftlds fo:n~/k dkZ dh izxfr de jgus ds dkj.k ek= 224-7249 :i;s ds vfxze dk lek;kstu pkyw foi=ksa ls fd;k tk ldkA bl izdkj vHkh Hkh vkids ikl 1270-71595 yk[k :i;k eksosykbZts'ku vfxze ds :i esa gS] ftlij lwn dh jkf'k dh x.kuk djus ij mDr jkf'k vkSj vf/kd gks tk;sxhA foHkkx }kjk ;kstuk ds dk;kZUo;u esa rsth ykus gsrq lg;ksx djus dh mijkar Hkh visf{kr izxfr vkids }kjk ugha ykbZ x;ha] tks dk;Z ds izfr vkids ykijokgh dk ?kksrd gSA  ;kstuk ds dk;kZUo;u gsrq Hkqxrku fofHkUu dk;Z izeaMyksa esa vkids }kjk lefiZr fd;s x;s foi= dh jf'k 2942-26024 yk[k :i;k gS] ftlds tkap ds mijkar vkidks 2133- 93974 yk[k :i;k dk Hkqxrku fd;k x;k ,oa foi= eas =qfV jgus ds dkj.k 267-5238 yk[k :i;s dk Hkqxrku yafcr gSA blds lkFk gh vkids }kjk fcuk dk;Z djk;s Hkh dqN izeaMyksa esa vfu;fer :i ls yxHkx 559- 61717 yk[k :i;s dk foi= lefkiZr fd;k x;k] tks lgh ugha gSA  fo|qr la;kstu fofHkUu izeaMyksa ds v/khu fo|qr la;kstu gsrq 104 LFkyksas ds fy, jkf'k tek dh x;h gS] tcfd 115 ;kstuk,a iw.kZ dh x;h gSA fuek.kZ/khu 230 LFkyksa esa ls 13 LFkyksa ds fy, fo|qr la;kstu dh jkf'k tek dh x;h gSA vr,o fo|qr la;kstu ysdj ;kstuk dks pkyw djkus dh fn'kkk esa Hkh vkids }kjk dkbZ :fp ugha yh x;hA mi;qzZDr rF;ksa ls Li"V gS fd vkids }kjk djk;s x;s dk;Z dh izxfr 'kq:vkrh nkSj ls gh dkQh /kheh ,oa vlarks"kizn jgh gS rFkk ekpZ 2013 ls ;kstuk dk dk;Z yxHkx can gSA fnukad 26-02-2014 dks gqbZ cSBd esa Hkh vkids izfrfuf/k }kjk mDr fcUnqvksa ds laca/k esa dksbZ [kaMu Hkh ugh fd;k x;kA ,djkjukek ds vuqlkj dk;Z lekfIr ds vof/k fcrs gq, djhc <kbZ o"kZ gks x;s gSA vr,o D;ksa u vkids ,djkjukek dks fo[kafMr djrs gq, tekur dh jkf'k jkT;lkr dj vkids deZ dks dkyh lwph esa Mkyh Patna High Court CWJC No.1344 of 2014 61 tk;\ vr,o funs'k gS fd mi;qZDr fcUnqvksa ij viuk Li"Vhdj.k ,d lIrkg ds vUnj fuf'pr :i ls miyc/k djkosa] vU;Fkk ,drjQk fu.kZ; ysrs gq, vkids QeZ ds fo:n~/k mDr dkjZokbZ dh tk;sxhA fo'oklHkku g0@* 20@03@14 ¼t;'kadj pkS/kjh½ vfHk;ark izeq[k&lg&fo'ks"k lfpo** (underlining for emphasis)

53. Let it be noted that the petitioner claims that it had filed exhaustive show cause reply on 16.4.2014 which reads as follows:

2) That the Joint Secretary, PHED had convened a meeting on 26th February 2014 wherein SPML had stated that SPML is willing to complete the work in villages which was started during the contract period will be completed within six months. It was also clarified that in 1155 villages where work was not started, SPML will not be able to take up and complete the work.

A. Making available work fronts and locations (No Objection certificates for sites):

However, the NOC received with Khata and Khesara during the contract period i.e. from 1.4.2010 to 30.9.2011 is for 548 villages. Out of these 548 villages, NOC for 79 v villages was received within 3 months prior to the completion date. In case of 89 villages, the sites are still disputed and/or power line is not available. Bores have failed in 28 villages. Considering this, the total available and clear sites for construction are in 352 villages.

2. There are other 593 locations wherein the list of sites was provided during the contract period but Khata and Khesara were not available, however SPML started the work at 167 locations by obtaining the land through joint survey and Patna High Court CWJC No.1344 of 2014 64 consultations with the PHED.

Hence, considering this, the total villages come to 352+ 167 =519 which is received within the contract period duly cleared for execution. Details of these is annexed hereto and marked as Annexure 2.

B. Work Execution Plan

1. SPML has already completed work in 170 units as on date out of which 104 village schemes have already been commissioned. The balance to be completed, therefore works out to 519- 170= 349 villages. A statement showing division wise balance work for completion in these 349 villages is annexed hereto and marked as Annexure 3, SPML agrees and proposes to complete the work in these balance 349 villages, subject to the fulfillment of conditions as stated hereinabove.

2. That SPML proposes to complete the balance villages (519- 170= 349) as per the following schedule.

3. That SPML agrees to complete the 349 village water supply schemes as above subject to PHED agreeing to take over these villages as well as the villages which are earlier completed (170 villages) for operation and maintenance. PHED shall also ensure availability of electrical power for commissioning of all the completed villages immediately on their completion without any delay whatsoever.

4. That out of 170 village works in 104 villages are completed and commissioned. The log book for taking over is ready. However, PHED ha snot taken over the village schemes for operation and maintenance. A list showing these 104 villages is annexed hereto and marked as Annexure 4.

5. That out 170 villages, works in 66 village schemes are completed. However, commissioning could not be done by SPML as the electrical power connection is yet to be received at these villages. A list showing these 66 villages is annexed hereto and marked as Annexure 5.

C. Outstanding payments SPML places on record the following factual details relating to the outstanding payments.

a) Payment due commensurate to the work actually done.

An amount equivalent to Rs.12,60,82,198/- is outstanding to be paid by PHED to SPML towards the work already done in the 394 villages. Details thereof is annexed hereto and marked as Annexure 6.

b) Mobilization advances adjustment Patna High Court CWJC No.1344 of 2014 66 Rs.14,16,11,197/- were paid by the PHED to SPML as Mobilization Advance under clause 10B(ii) of the Contract. Against this, advance payment, Rs.2,84,59,602/- have been adjusted so far as the provisions of the contract. Details thereof are annexed hereto and marked as Annexure 7.

c) Reimbursement of Electrical Connection Charges Providing electrical power at the village location was the responsibility of the PHED. However, to get the connections for commissioning of the schemes, SPML under knowledge of the PHED had paid connection charges to the BSEB, PHED has to reimburse these charges to SPML as they were to be paid by PHED only. Details thereof is annexed herewith and marked as Annexure 8.

That this proposal is without prejudice to the right of SPML to pursue the contractual claims which are already made and subject to an agreement to be reached with the PHED that the contract shall be foreclosed and discharged as performed on completion of the villages mentioned hereinabove. PHED is hereby requested to consider this proposal and issue a letter of confirmation extending the time of completion upto 18 months from the date of its confirmation without levy of any liquidated damages or without any contractual action whatsoever.

For and on behalf of SPML Infra Ltd.

(Authorized Signatory)"

i=kad&6@izk0vk0&111@11&777 fnukad 16-04-2014 ds }kjk Li"Vhdj.k dk tcko 25-04-2014 rd nsus gsrq funs'k fn;k x;kA foHkkx }kjk iwNs x;s Li"Vhdj.k ds fcUnqvksa ds lUnHkZ esa fcUnqokj tcko ugha nsdj QeZ vius i=kad&1583 fnuad 16-04-2014 tks foHkkx esa fnukad 25-04-2014 dkz izkIr gqvk] ds }kjk lwfpr fd;k gS fd 349 LFkyksa ij dk;Z iw.kZ fd;k tk ldsxk] c'krsZ fd foHkkx mugsa 18 eghus ds vkSj le; o`f} dh Lohd`fr nsA blizdkj ;g Li"V gksrk gS fd QeZ ds }kjk ,djkfjr 1500 ;kstukkvksa ds iw.kZ djus ds y{; ds izfr dksbz izfron~/krk ugha jg x;h gSA ,djkjukek dh 'krksZ ds vuqlkj ;kstuk dh izxfr vlarks"ktud jgus ,oa ,d yaca vlsZ ls dk;Z can j[kus dh fZLFkfr esa ,djkjukek ds Claus of Contract dh dafMdk 1A] 2] 3 ,oa 14 ds vkyksd esa QeZ dh lafonk dks fo[kafMr dj tekur dh jkf'k jkT;lkr djus ,oa Patna High Court CWJC No.1344 of 2014 70 dkyh lwph esa Mkyus dk mi;qDr ekeyk curk gSA mi;qzZDr ifjis{; esa lE;d~ fopkjksijkar es0 ,l0ih0,e0,y0 baQkz fy0 ubZ fnYyh] fudk fuca/ku la[;k 290@10 gS dh lafonk ¼,djkjukek la[;k ,l0ch0Mh0&01] o"kZ 2010&11½ dks fo[kafMr dj tekur dh jkf'k jkT;lkr djus ,oa dkyh lwph esa Mkyus dk fu.kZ; fy;k tkrk gSA ;g vkns'k rRdky izHkko ls ykxw gksxkA g0@& 13@05@14 ¼t;'kadj pkS/kjh½ vfHk;ark izeq[k&lg&fo'ks"k lfpo Kkikad&874 iVuk] fnukad 13-5-14** (underlining for emphasis)

57. The result of the aforesaid discussion, on the issue of show cause notice and show cause reply, would be that the impugned order cannot be held to be bad on account of its being allegedly non- speaking because the petitioner had never raised any issue pertaining to the allegations made against it in the show cause notice dated 20.3.2014 and in fact did not file his show cause reply despite reminder given on 16.4.2014. In that view of the matter this Court does not find that the petitioner can raise the issue of violation of the principles of natural justice which in the peculiar facts and circumstances of this case seems to be more or less ornamental or in the words of the Apex Court in the case of Gulam Mustafa v. State of Gujrat, reported in AIR 1977 SC 448, "the last refuse of a losing litigant".

58. The last submission of the learned counsel for the petitioner that the authorities of the department could not have invoked the Bank guarantee, inasmuch as the petitioner had competing claim and was always desirous to complete the work is also not acceptable to this Court either on fact or in law. Let it be noted that the impugned order rescinding the contract of the petitioner came to be passed on 13.5.2014 and the Bank guarantee was invoked thereafter on 9.6.2014. The Bank guarantee invariably is given by a party by way of its financial commitment. The department on account of several acts of omission and commission and particularly non- completion of allotted work in the prescribed period had sustained loss and therefore, it was definitely entitled under the terms of the agreement to invoke Bank guarantee.

59. Secondly, the issue as with regard to maintainability of a writ petition questioning the decision of invoking Bank guarantee has also been well settled by the Apex Court in the case of Larsen & Toubro Ltd. V. Maharashtra State Electricity Board & ors., reported in (1995)6 SCC 68, wherein having referred to its earlier judgment in the case of United Commercial Bank v. Bank of India , reported in (1981)2 SCC 766, U.P.Coop. Federation Ltd.v. Singh Consultants & Engineers (P) Ltd., reported in ( 1988)1 SCC 174, General Electric Technical Services Co. Inc. v. Punj Sons (P) Ltd. , reported in (1991)4 Patna High Court CWJC No.1344 of 2014 72 SCC 230, and the decision of the Court of Appeal in England in Elian and Rabbath v. Matsas and Matsas, reported in (1966)2 Lloyd‟s Rep 495, CA, as also the judgment in the case of Svenska Handelsbanken v. Indian Charge Chrome , reported in (1994)1 SCC 502, it had been held that "In case of confirmed bank guarantee/ irrevocable letters of credit, it cannot be interfered by the courts unless there is fraud and irretrievable injustice involved in the case and fraud has to be an established fraud."

60. What would be irretrievable injustice has been also explained therein stating that it has to be based on the ground that the guarantee was not encashable on its terms. The Apex Court in this regard in the case of Larsen and Tubro (supra) had held that "There should be prima facie case of fraud and special equities in the form of preventing irretrievable injustice between the parties and mere irretrievable injustice without prima facie case of established fraud is of no consequence in restraining the encashment of bank guarantee."

61. This judgment in the case of Larsen & Toubro Ltd. (supra) was again followed by the Apex Court in the case of Hindustan Steel Workers Construction Ltd. V. G.S.Atwal & Co. (Engineers) Pvt. Ltd. , reported in (1995)6 SCC 76, as well as in the case of U.P.State Sugar Corporation v. Sumac International Ltd. , reporte din (1997)1 SCC 568, wherein it was held as follows:

62. The other relevant decision on the same issue of the Apex Court is in the case of Hindustan Steelworks Cosntruction Ltd. V. Tarapore & Co. , reported in (1996)5 SCC 34, wherein it was held Patna High Court CWJC No.1344 of 2014 74 as follows:

63. Applying the aforementioned principles in the facts of the present case this Court does not find existence of any fraud, inasmuch as there is at best only a dispute between the parties to the contract which cannot be a ground for issuing an injunction to restrain enforcement of the Bank guarantee.

64. This Court, however, must take one more submission of Mr. Giri that if the petitioner now would invoke its arbitration clause of the agreement in the light of the impugned order of cancellation of contract of the petitioner, as well as forfeiture of its security and its blacklisting, arbitration cannot be held in a fair and objective manner. According to Mr. Giri, the Arbitrator should have been given a clean slate in view of the dispute raised by the petitioner seeking reference to arbitration proceeding.

65. Mr. Lalit Kishore, learned PAAG, on the other hand, has submitted that once the petitioner takes recourse of arbitration proceeding the same shall be conducted and decided on its own merits and the Arbitrator will never be bound by the action taken or the order passed by the department.

66. In the considered opinion of this Court the prayer of the Patna High Court CWJC No.1344 of 2014 75 petitioner in this writ application for invoking arbitration clause was itself premature, inasmuch as the petitioner on its own showing had not moved the competent authority in terms of Clause 25 of the Arbitration Clause. The prayer made in this writ application seeking a direction from this Court to the respondent authorities of PHED to decide the dispute as raised by it in its letter dated 3.7.2013 cannot be said to be invoking arbitration clause as per Clause 25 of the Agreement. The petitioner in fact had to first move the Superintending Engineer for a written instruction and if the Superintending Engineer had failed to give such instruction he had to move the Chief Engineer and the Chief Engineer had to give his decision within 30 days and if the petitioner was aggrieved by such decision of the Chief Engineer he had to give notice to the Chief Engineer for appointment of Arbitrator.

67. Admittedly this part of requirement of Clause 25(i) and

(ii) of the Agreement was never completed by the petitioner before rushing to this Court by filing this writ application on 16.1.2014. As a matter of fact the petitioner had also not even taken plea of pendency of this writ application either in the joint meeting held on 26.2.2014 or in the alleged show cause reply filed by it on 16.4.2014 though this writ petition had already been filed on 16.1.2014, which for the reasons indicated above was wholly premature. As a matter of fact the Patna High Court CWJC No.1344 of 2014 76 impugned order of cancellation of contract was passed only during the pendency of this writ application on 13.5.2014, whereas the writ petition was heard only for the first time on 16.5.2014.

68. It, thus, becomes clear that the petitioner actually wanted to preempt the authorities of PHED in not taking any action against it but then when it had not only attended the meeting on 26.2.2014 in its bid to explain its point of view but had also submitted its proposal in the letter dated 16.4.2014 without even referring to pendency of this writ application, it cannot come out to assail the impugned order on the ground of pendency of the writ application.

69. The submission of Mr. Giri that the petitioner did not move the Bihar Public Works Contracts Disputes Arbitration Tribunal (hereinafter referred to as „the Arbitration Tribunal‟) because the Bihar Public Works Contracts Disputes Arbitration Tribunal Act, 2008 (hereinafter referred to as „2008 Act‟) had the effect of superseding Clause 25 of the Agreement envisaging arbitration proceedings to be conducted as per Arbitration and Conciliation Act, 1996 is also to be only noted for its being rejected. The 2008 Act under section 2(k) defines „Works Contract‟ in the following terms:

Supervision; project advisory, quality assurance, Project Management or any other management services.

(iii) Words and expressions used and not defined in this Act, but defined in the Arbitration Act , shall have the meanings assigned to them in the Arbitration Act ."

70. Section 8 of 2008 Act also lays down that the provision of 2008 Act shall be in addition to Arbitration and Conciliation Act and therefore, when Clause 25 of the Agreement talks of provision of Arbitration and Conciliation Act, 1996 it cannot be said that 2008 Bihar Act has the effect of either overriding the provisions of Arbitration and Conciliation Act, 1996 which is a Central Legislation. The Bihar Act of 2008 in fact does not in any manner create an impediment for arbitration in Clause 25 of the Agreement inasmuch Patna High Court CWJC No.1344 of 2014 78 as Section 8 of Bihar Act, 2008 in this regard reads as follows:

71. Section 9 of 2008 Bihar Act in fact is a complete answer to the submission of Mr. Giri wherein either party has been given the liberty to move to the Tribunal for raising the dispute and its being adjudicated by the Arbitral Tribunal. Section 9 in this regard reads as follows:

72. In view of above, this Court will have no difficulty in also holding that the petitioner has/ had statutory effective alternative remedy by way of arbitration before the Bihar Public Works Contracts Disputes Arbitration Tribunal.

73. Thus, for the reasons indicated above, this Court will have no difficulty in coming to the conclusion that this writ application has got no merit.

74. That being so, this writ application must fail and is, accordingly, dismissed, as a result whereof the interim order of this Court dated 13.5.2014 and 10.6.2014 shall automatically stand vacated.

75. There would be, however, no order as to costs. M.J.C.No. 2114 of 2014

76. As this Court has already discussed earlier the facts as Patna High Court CWJC No.1344 of 2014 80 with regard to the alleged contempt they need not be repeated for deciding the issue raised by the petitioner in this contempt application. Suffice it to say that this contempt application was filed on 19.6.2014 alleging that the opposite parties have caused willful disobedience to the interim order dated 16.5.2014 and 10.6.2014. In this regard the case of the petitioner is that even when this Court by the interim order dated 16.5.2014 had stayed operation of the impugned order dated 13.5.2014 so far it related to forfeiting of the security deposit and blacklisting of the petitioner but even then the opposite parties have in complete violation of the aforementioned order had forfeited the security deposit by way of encashment of Bank guarantee despite a separate interim order of restraint passed by this court on 10.6.2014.

77. According to the petitioner, it is the action on the part of the Executive Engineer encashing the Bank guarantee of a sum of Rs.12,30,00,000/- by depositing it in Treasury on 12.6.2014 which would amount to committing further contempt of the interim order of this Court dated 10.6.2014.

78. The opposite parties, on the other hand, have filed their show cause reply and have explained that they have not violated any part of the interim orders dated 16.5.2014 and/or 10.6.2014. According to the opposite parties what was protected by way of stay under the interim order of this Court dated 16.5.2014 was only Patna High Court CWJC No.1344 of 2014 81 security deposit as per the Agreement which came to be cancelled by the impugned order passed by the Engineer-in-Chief. The opposite parties have in this regard explained that such security amount furnished at the time of execution of the agreement vide Bank guarantee dated 7.4.2010 to the tune of Rs.4,40,00,000/- has not been touched and that has never been invoked. The opposite parties have in fact also explained that it was the subsequent three Bank guarantees dated 16.3.2013 by way of performance guarantee clearly distinguishable from the security deposit as per agreement executed in the year 2010, which actually was invoked as there was no stay of the same in the order dated 16.5.2014 of this Court.

79. In the same way the opposite parties have also explained that there would be no question of violation of the subsequent interim order dated 10.6.2014, inasmuch as on the request of the Executive Engineer in its letter dated 5.6.2014 the officials of the State Bank of India at Kolkata had encashed the Bank guarantee on 9.6.2014 by way of furnishing and handing over the bank draft in the name of the Executive Engineer, whereafter the ministerial act of its being deposited in the Treasury would not amount to contempt, inasmuch as what was said in the order dated 9.6.2014 was only with regard to either staying operation of the order dated 5.6.2014 whereby and whereunder a request was made by the Executive Engineer to the Patna High Court CWJC No.1344 of 2014 82 State Bank of India, Kolkata to encash the performance Bank guarantee or staying encashment of Bank guarantee but then both the acts were already completed on 9.6.2014 at a point of time when the interim order was not there and the said interim order came to be passed only on 10.6.2014.

80. In this regard the opposite parties given a detailed explanation in paragraph no.6 of the show cause reply which reads as follows:

81. Let it be kept in mind that the aforesazid statement has not been controverted by the petitioner and therefore, the plea of security deposit referable to Rs.4,40,00,000/- at the time of execution of the agreement cannot be equated much less made comparable with the mobilization advance of Rs.13,20,00,000/- which actually did not form part of the earlier agreement and was a subsequent condition agreed between the parties. Once this aspect becomes clear there would be no question of violation of at least the interim order dated 16.5.2014.

82. In the considered opinion of this Court when the stay order was passed on 16.5.2014 staying operation of part the order of the Engineer-in-Chief dated 13.5.2013 only as with regard to either blacklisting or forfeiting of the security deposit, the meaning of security deposit has to remain confined in the context of agreement which was sought to be cancelled on 16.05.2013. Under the Agreement, which were executed way back in the year 2010, there was only one security deposit of Rs. 4,40,00,000/- and that was furnished by the petitioner by a bank guarantee dated 7.4.2010. That security deposit as noted above has not been invoked or encashed by the opposite parties till date. Thus there is apparently no violation of interim order dated 16.5.2014 by the opposite parties.

83. The next question would be as with regard to alleged Patna High Court CWJC No.1344 of 2014 84 violation of the interim order dated 10.6.2014. Let it be noted that on 10.6.2014 this Court had restrained either operation of the content of the letter dated 5.6.2014 written by the Executive Engineer to the State Bank of India, Kolkata or had directed that the Bank guarantee of the petitioner would not be invoked. This interim order was however passed on 10.6.2014 but then it is an admitted fact and again asserted by the opposite parties in their show cause reply that pursuant to the aforementioned request made by the opposite party Executive Engineer to the State Bank of India, Kolkata in its three seprate letters dated 5.6.2014 for encashing the Bank guarantee involving amount of mobilization advance to the tune of Rs.13.30 crores was already acted upon by the State Bank of India, Kolkata by way of not only encashing the Bank guarantee but also preparing of a draft and handing it over to the Executive Engineer on 9.6.2014.

84. This aspect again has been clarified in paragraphs no. 8, 9 and 10 which again is reproduced hereinbelow:

85. Let it be again only noted that there is no denial of the aforementioned stand taken by the opposite parties in their show cause reply by the petitioner despite service of copy on them on 1.7.2014.

86. This Court has also carefully perused the Bank‟s letter dated 9.6.2014, as contained in Annexure D to the show cause reply. It gives full detail of not only encashment of the Bank guarantee but Patna High Court CWJC No.1344 of 2014 86 also its payment through three Bank drafts No. 765854, 765855, 765856 all dated 9.6.2014 as is apparent from photo copy of the draft enclosed with the show cause reply.

87. As a matter of fact this Court would find that it was the petitioner who wanted to confuse the authorities of the Bank by writing some uncalled for letter to the State Bank of India on 6th June, 2014 wherein the authorities of the Bank were requested by the petitioner not to encash the Bank guarantee on the ground that the High Court on 16.5.2014 had granted stay order against "forfeiture of Bank guarantee" until further orders, whereas the fact remains that the order of this Court dated 16.5.2014 was only with regard to stay on 'forfeiture of security deposit'.

88. Thus, for the reasons indicated above, this Court does not find that the opposite parties have committed any contempt.

89. That being so, this contempt application has also no merit and is, accordingly, dismissed.

(Mihir Kumar Jha, J) Patna High Court Dated 26th November, 2015 Surendra/ A.F.R. U