HIGH COURT OF TRIPURA
AGARTALA
WP(C) 686 OF 2023
Smt. Namita Paul,
Wife of Sri Swapan Kumar Paul, resident of B.K.Road,
Banamalipur, Agartala, P.S. East Agartala,
District-West Tripura.
Petitioner.
……
Vrs.
1. Food Corporation of India, represented by its
Managing Director, having its Head Office at 16-20 Barkhamba Lane,
New Delhi-110001.
2. The General Manager, Food Corporation of India NEF Region,
Mawlai, Mawroh, Shillong-793008.
3. Assistant General Manager (Cont.),
Food Corporation of India (RO:NEF), Mawlai, Mawroh,
Shillong-793008.
4. The Area Manager/Divisional Manager,
Food Corporation of India, Agartala Branch, Agartala,
West Tripura-799001.
. Respondents.
….
WP(C) 687 OF 2023
Smt. Namita Paul,
Wife of Sri Swapan Kumar Paul, resident of B.K.Road,
Banamalipur, Agartala, P.S. East Agartala,
District-West Tripura.
Petitioner.
……
Vrs.
1. Food Corporation of India, represented by its
Managing Director, having its Head Office at 16-20 Barkhamba Lane,
New Delhi-110001.
2. The General Manager, Food Corporation of India NEF Region,
Mawlai, Mawroh, Shillong-793008.
3. Assistant General Manager (Cont.),
Food Corporation of India (RO:NEF), Mawlai, Mawroh,
Shillong-793008.
4. The Area Manager/Divisional Manager,
Food Corporation of India, District office Aizawl,
Tuikhuahtlang Road, Aizawl, Mizoram-796001.
2
5. The Area Manager/Divisional Manager,
Food Corporation of India, Agartala Branch, Agartala,
West Tripura-799001.
6. Manager (S/M), Food Corporation of India, NEF Region,
Changsari, Guwahati, Assam-781101.
. Respondents.
….
WP(C) 688 OF 2023
Smt. Namita Paul,
Wife of Sri Swapan Kumar Paul, resident of B.K.Road,
Banamalipur, Agartala, P.S. East Agartala,
District-West Tripura.
Petitioner.
……
Vrs.
1. Food Corporation of India, represented by its
Managing Director, having its Head Office at 16-20 Barkhamba Lane,
New Delhi-110001.
2. The General Manager, Food Corporation of India NEF Region,
Mawlai, Mawroh, Shillong-793008.
3. Assistant General Manager (Cont.),
Food Corporation of India (RO:NEF), Mawlai, Mawroh,
Shillong-793008.
4. The Area Manager/Divisional Manager,
Food Corporation of India, Agartala Branch, Agartala,
West Tripura-799001.
. Respondents.
….
WP(C) 689 OF 2023
Smt. Namita Paul,
Wife of Sri Swapan Kumar Paul, resident of B.K.Road,
Banamalipur, Agartala, P.S. East Agartala,
District-West Tripura.
Petitioner.
……
Vrs.
1. Food Corporation of India, represented by its
Managing Director, having its Head Office at 16-20 Barkhamba Lane,
New Delhi-110001.
2. The General Manager, Food Corporation of India NEF Region,
Mawlai, Mawroh, Shillong-793008.
3
3. Assistant General Manager (Cont.),
Food Corporation of India (RO:NEF), Mawlai, Mawroh,
Shillong-793008.
4. The Area Manager/Divisional Manager,
Food Corporation of India, District office Aizawl,
Tuikhuahtlang Road, Aizawl, Mizoram-796001.
5. The Area Manager/Divisional Manager,
Food Corporation of India, Agartala Branch, Agartala,
West Tripura-799001.
. Respondents.
….
WP(C) 691 OF 2023
Smt. Namita Paul,
Wife of Sri Swapan Kumar Paul, resident of B.K.Road,
Banamalipur, Agartala, P.S. East Agartala,
District-West Tripura.
Petitioner.
……
Vrs.
1. Food Corporation of India, represented by its
Managing Director, having its Head Office at 16-20 Barkhamba Lane,
New Delhi-110001.
2. The General Manager, Food Corporation of India NEF Region,
Mawlai, Mawroh, Shillong-793008.
3. Assistant General Manager (Cont.),
Food Corporation of India (RO:NEF), Mawlai, Mawroh,
Shillong-793008.
4. The Area Manager/Divisional Manager,
Food Corporation of India, Agartala Branch, Agartala,
West Tripura-799001.
. Respondents.
….
WP(C) 692 OF 2023
Smt. Namita Paul,
Wife of Sri Swapan Kumar Paul, resident of B.K.Road,
Banamalipur, Agartala, P.S. East Agartala,
District-West Tripura.
Petitioner.
……
Vrs.
1. Food Corporation of India, represented by its
Managing Director, having its Head Office at 16-20 Barkhamba Lane,
New Delhi-110001.
4
2. The General Manager, Food Corporation of India NEF Region,
Mawlai, Mawroh, Shillong-793008.
3. Assistant General Manager (Cont.),
Food Corporation of India (RO:NEF), Mawlai, Mawroh,
Shillong-793008.
4. The Area Manager/Divisional Manager,
Food Corporation of India, District office Aizawl,
Tuikhuahtlang Road, Aizawl, Mizoram-796001.
5. The Area Manager/Divisional Manager,
Food Corporation of India, Agartala Branch, Agartala,
West Tripura-799001.
6. Manager (S/M), Food Corporation of India, NEF Region,
Changsari, Guwahati, Assam-781101.
. Respondents.
….
WP(C) 693 OF 2023
Smt. Namita Paul,
Wife of Sri Swapan Kumar Paul, resident of B.K.Road,
Banamalipur, Agartala, P.S. East Agartala,
District-West Tripura.
Petitioner.
……
Vrs.
1. Food Corporation of India, represented by its
Managing Director, having its Head Office at 16-20 Barkhamba Lane,
New Delhi-110001.
2. The General Manager, Food Corporation of India NEF Region,
Mawlai, Mawroh, Shillong-793008.
3. Assistant General Manager (Cont.),
Food Corporation of India (RO:NEF), Mawlai, Mawroh,
Shillong-793008.
4. The Area Manager/Divisional Manager,
Food Corporation of India, Agartala Branch, Agartala,
West Tripura-799001.
. Respondents.
….
5
Present:
For the petitioner (s) : Mr. Raju Datta, Advocate.
For the respondent (s) : Mr. Ratan Datta, Advocate.
Date of hearing : 14.05.2024
Date of delivery of
31.05.2024
Judgment & Order :
Whether fit for : Yes
reporting
HON’BLE MR.JUSTICE ARINDAM LODH
Judgment & Order
Since common questions of law and facts are involved, all the
writ petitions are taken up together for disposal by this common judgment on
the consent of learned counsels appearing for the parties.
2. The facts, in a nut shell, as enumerated in WP(C) No. 686 of
2023, being taken as lead case, are set out separately here-in-below for
convenience:
WP(C) No.686 of 2023:
The petitioner being a Government Contractor and Supplier for
the last 20 years has been executing various transportation contracts
successfully for carrying food grains/allied materials within and outside the
State of Tripura under the Food Corporation of India, the respondents herein.
In response to a Notice Inviting Tender, issued by the respondents-FCI she
was awarded transport contract for two years for loading/unloading &
handling contract at FSD Dharmanagar, Tripura on the basis of agreement
executed by the petitioner under appointment letter No.
CONT.9/NEFR/HANDLING-DMR/2006, dated 31.08.2006 issued by the
respondent no.2. It is averred that the petitioner had successfully completed
6
the contract with full satisfaction of the respondents and on satisfaction, the
respondents- -
FCI had issued a „No Demand Certificate‟ dated 24.02.2009 in
-Demand
favour of the petitioner. The petitioner, on receipt of the said „No
respondent
Certificate‟ by a communication dated 25.02.2009 demanded the
no.4 for releasing Rs.1,10,000/- being the security deposit of the aforesaid
contract dated 31.08.2006. But, the respondents did not refund the said
security deposit to the petitioner till date rather, vide letter No. RO NEF-
21/13/2023-Contract-RO NEF/21806 dated 05.09.2023 issued by the
respondent no.3 the claim of the petitioner for refund of Security Deposit
amounting to Rs.1,10,000/- was illegally set off on the plea that they suffered
losses due to the fault of the petitioner in connection with other contracts i.e.
Contract No.CONT.9/NEFT/TC/CBZ-CDR/09 dated 29.04.2009 and Contract
No. CONT.9/NEFR/TC/CBZ-ADNR/09 dated 12.11.2009. It is contended by
the petitioner that the alleged Contract dated 29.04.2009 has already been
decided by this High Court in a proceeding wherein it has been held that the
respondents did not suffer any loss due to fault of the petitioner and in regard
to the Contract dated 12.11.2009 there is an appeal filed by the respondents
before this High Court which is pending.
3. Being aggrieved by non-refund of security deposit after repeated
persuasions, the petitioner filed a writ petition being WP(C) No.247 of 2022
before this Court to refund the said security deposit of Rs. 1,10,000/- along
with interest at the rate of 12% per annum w.e.f. 25.02.2009. During the
pendency of the writ petition the respondents-FCI vide communication dated
22.07.2022 informed the petitioner that the security deposit amounting to
Rs.1,10,000/- was set off under Clause XII(e) of the contract agreement for
the loss suffered by the respondents-FCI. Learned Co-ordinate Bench of this
7
Court vide judgment and order dated 02.05.2023 disposed the said writ
petition directing the petitioner to represent the matter before the respondents
along with all relevant documents in support of her claim. It is further
contended by the petitioner that on receipt of the copy of the said judgment
and order, she submitted a detailed representation for consideration of her
claim, but, she did not get any redress from the side of the respondents-FCI.
Hence, the petitioner by filing the instant writ petition has prayed for
following reliefs:
(i) As to why a Writ in the nature of Certiorari quashing the letter vide
No.RO NEF-21/13/2023-Contract-RO NEF/21806 dated
05.09.2023 issued by the respondent no.3 whereby the claim of the
petitioner for refund of Security Deposit amounting to Rs.1,10,000/-
was not considered and the amount of security deposit was illegally
set off by the respondents.
(ii) As to why a Writ in the nature of Mandamus should not be issued
directing the Respondents to refund Security Deposit amounting to
Rs.1,10,000/- along with interest at the rate of 12% per annum w.e.f.
25.02.2009 till the date of payment in respect of loading/unloading &
handling contract at FSD Dharmanagar, Tripura on the basis of
agreement executed by the Petitioner under appointment letter
No.CONT.9/NEFR/HANDLING-DMR/2006 dated 31.08.2006
issued by the Respondent No.2 (Annexure-1).
4. On similar background of facts, however, on different
transportation contract works, the petitioner has filed the connected writ
petitions referred to in the cause title here-in-above claiming refund of
Security Deposits with interest and the reliefs claimed for against different
writ petitions are given below in a tabular form.
Case No. Reliefs sought for
WP(C) No. 687 oaf (i) As to why a Writ in the nature of Certiorari should not be
2023
issued quashing the Order vide No.RO NEF-21/13/2023-
Contract-RO NEF/21809 dated 05.09.2023 issued by the
respondent no.3 whereby the claim of the petitioner for
refund of Security Deposit amounting to Rs.2,85,000/-
was not considered and the amount of security deposit was
illegally set off by the respondents.
a (ii) As to why a Writ in the nature of Mandamus should not be
8
issued directing the Respondents to refund Security Deposit
amounting to Rs.2,85,000/- along with interest at the rate of
12% per annum w.e.f. 08.07.2013 till the date of payment in
respect of loading/unloading & handling contract at FSD
Nandannagar, Agartala on the basis of agreement executed
by the Petitioner under appointment letter
No.CONT.9/NEFR/HANDLING-NGR/2009 dated
22.03.2010 issued by the Respondent No.2.
WP(C) No. 688 or f (i) As to why a Writ in the nature of Certiorari quashing the
2023
Letter vide No.RO NEF-21/13/2023-Contract-RO
NEF/21804 dated 05.09.2023 issued by the respondent no.3
whereby the claim of the petitioner for refund of Security
Deposit amounting to Rs.2,50,000/- was not considered and
the amount of security deposit was illegally set off by the
respondents.
a (ii) As to why a Writ in the nature of Mandamus should not be
issued directing the Respondents to refund Security Deposit
amounting to Rs.2,50,000/- along with interest at the rate of
12% per annum w.e.f. 25.02.2009 till the date of payment
transportation of food grains/sugar/allied materials from
Railway siding Changasari/CWC Amingaon/RH.FSD
Guwahati to FSD Dharmanagar on the basis of agreement
executed by the Petitioner under appointment letter
No.CONT.7/NEFR/TC/CHNG-DMR/08-Adhoc dated
18.06.2008 (Annexure-1).
WP(C) 689 of 2023 hy (i) As to why a Writ in the nature of Certiorari should not be
issued quashing the Order vide No.RO NEF-21/13/2023-
Contract-RO NEF/21808 dated 05.09.2023 issued by the
respondent no.3 whereby the claim of the petitioner for
refund of Security Deposit amounting to Rs.2,50,000/- was
not considered and the amount of security deposit was
arbitrarily and illegally set off by the respondents.
(ii) As to why a Writ in the nature of Mandamus should not be
issued directing the Respondents to refund Security Deposit
amounting to Rs.2,50,000/- along with interest at the rate of
12% per annum w.e.f. 10.07.2013 till the date of payment in
respect of transportation of food grains/sugar/allied material
from Railway siding Changasari/CWC Godown,
Amingaon/RH.FSD Guwahati to Godown Complex Agartala
on the basis of agreement executed by the Petitioner under
appointment letter No.F.1(14)/DO-SH/HTC/CORRES/2010
(Agartala) dated 31.08.2010.
WP(C) 691 of 2023 i ) (i) As to why a Writ in the nature of Certiorari quashing the
letter Vide No.RO NEF-21/13/2023-Contract-RO
NEF/21803 dated 05.09.2023 issued by the respondent no.3
whereby the claim of the petitioner for refund of Security
Deposit amounting to Rs.3,03,080/- was not considered and
the amount of security deposit was arbitrarily and illegally
set off by the respondents.
(ii) As to why a Writ in the nature of Mandamus should not
9
be issued directing the Respondents to refund Security
Deposit amounting to Rs.3,03,080/- along with interest at the
rate of 12% per annum w.e.f. 23.03.2011 till the date of
payment in respect of loading/unloading & handling contract
at FSD Nandannagar, Agartala on the basis of agreement
executed by the Petitioner under appointment letter
No.CONT.9/NEFR/HANDLING-NGR/07 dated 14.03.2008
issued by the Respondent No.2 (Annexure-1).
WP(C) 692 of 2023 (i) As to why a Writ in the nature of Certiorari should not
be issued quashing the Order vide No.RO NEF-21/13/2023-
Contract-RO NEF/21807 dated 05.09.2023 issued by the
respondent no.3 whereby the claim of the petitioner for
refund of Security Deposit amounting to Rs.24,95,132/- was
not considered and the amount of security deposit was
arbitrarily and illegally set off by the respondents.
(ii) As to why a Writ in the nature of Mandamus should not be
issued directing the Respondents to refund Security Deposit
amounting to Rs.24,95,132/- along with interest at the rate of
12% per annum w.e.f. 08.07.2013 till the date of payment in
respect of transportation of food grains/sugar/allied material
from Railway siding Changasari/CWC Godown,
Amingaon/RH.FSD Guwahati to FSD Bualpui on the basis of
agreement executed by the Petitioner under appointment
letter No.CONT.7/NEFR/TC/CHNG-BPI/2008/4429 dated
10.07.2008 issued by the Respondent no.2.
i)
WP(C) 693 of 2023 (i)As to why a Writ in the nature of Certiorari quashing the
letter vide No.RO NEF-21/13/2023-Contract-RO
NEF/21804 dated 05.09.2023 issued by the respondent no.3
whereby the claim of the petitioner for refund of Security
Deposit amounting to Rs.2,50,000/- was not considered and
the amount of security deposit was arbitrarily and illegally set
off by the respondents.
(ii) As to why a Writ in the nature of Mandamus should not be
issued directing the Respondents to refund Security Deposit
amounting to Rs.2,50,000/- along with interest at the rate of
12% per annum w.e.f. 25.02.2009 till the date of payment
transportation of food grains/sugar/allied materials from
Railway siding Changasari/CWC Amingaon/RH.FSD
Guwahati to FSD Dharmanagar on the basis of agreement
executed by the Petitioner under appointment letter
No.CONT.7/NEFR/TC/CHNG-DMR/08-Adhoc dated
18.06.2008 (Annexure-1).
5. Heard Mr. Raju Datta, learned counsel appearing for the
petitioner and Mr. Ratan Datta, learned counsel appearing for the respondents-
FCI.
10
6. Mr. Datta, learned counsel appearing for the petitioner in all the
writ petitions, at the very outset, has submitted that the petitioner had
successfully completed the contract works within the stipulated period of the
respective agreements mentioned in each of the writ petitions. The
respondents had issued „No Demand Certificates‟ in respect of all the work
contracts executed by the petitioner and, therefore, the respondents cannot
withhold the respective security deposits as claimed by the petitioner in the
instant writ petitions after full satisfaction of their work contracts. Mr. Datta,
learned counsel agitated that there is no scope of demanding demurrage
charges from the petitioner without any fault of the petitioner. The petitioner
never violated any terms and conditions of the agreements made with the
respondents-FCI and no public distribution was disrupted. Thus, Mr. Datta,
learned counsel for the petitioner has urged before this court to refund the
respective security deposits as claimed for in each of the writ petitions to the
petitioner as per clauses in the contract whereby the petitioner is not liable to
pay any demurrage charges.
7. On the other hand, Mr. Ratan Datta, learned counsel appearing
for the respondents-FCI has submitted that the respondents-FCI had suffered
huge loss because of the petitioner in execution of various transportation
contracts in terms of demurrage charges. Mr. Datta, learned counsel appearing
for the respondents-FCI further contended that the Corporation has a right to
recovery the losses sustained by them and the security deposit of the
contractor is refundable only if the contractor successfully executes the work.
It is the further contention of Mr. Datta, learned counsel for the respondents-
FCI that since the Clauses No. XI(b), XII(b) and XII(e) of the said Tender
Agreement had been accepted and agreed to abide by the petitioner, the
11
respondents are not liable to refund the respective security deposits to the
petitioner.
8. According to the respondents, quashing of letter dated 05.09.2023
issued by the respondents-Corporation is not tenable in law and facts and the
security deposits as claimed for in each of the writ petitions were rightly set
off/appropriated by the respondents-Corporation as per Tender Agreement
Clause No. XI(b), XII(b) and XII(e) which have been duly agreed and
accepted by the petitioner.
9. From the written arguments submitted by Mr. Raju Datta, learned
counsel appearing for the petitioner in the instant writ petitions, it is revealed
that the subject matter of the cases i.e. WP(C) No.686 of 2023, WP(C) No.687
of 2023 and WP(C) No.691 of 2023 are related with handling contract i.e.
supply of labourers for loading and unloading of food grains and on the other
hand, subject matter of the cases i.e. WP(C) No.688 of 2023, WP(C) No.689
of 2023, WP(C) No.692 of 2023 and WP(C) No. 693 of 2023 are all related
with transportation contract for carrying food grains for which the respective
security deposits as claimed in the instant writ petitions had been kept with the
respondents-FCI.
10. It is revealed from the records that all the works awarded to the
petitioner had been successfully completed. No sorts of complaint/objection
are found against the petitioner as regards the proper execution of the awarded
works. Therefore, on successful completion of the execution of the awarded
work, the respondents-FCI had - Annexure-2
issued „No Demand Certificate‟ (
to the writ petitions) to the petitioner and accordingly, the petitioner had
claimed the respective security deposits which were kept with the
respondents-FCI for the alleged contract agreements as mentioned in the
12
instant writ petitions. But the respondents-Corporation in their pleadings
contended that they had suffered huge losses i.e. in crores in terms of
demurrage, risk and cost because of negligence and unworkman like
performance of the petitioner in executing transport contracts awarded by the
respondents-Corporation in regard to (i) Appointment Letter
No.Cont.9/NEFR/TC/CBZ-AND/09 dated 12.11.2009 Ex-Railway siding/FSD
Churaibari to FSD Arundhutinagar, Agartala with losses of Rs.1,89,86,602/-
and (ii) Appointment Letter No. No.Cont.9/NEFR/TC/CBZ-CDR/2009 dated
29.04.2009 Ex-Railhead/FSD Churaibari to FSD Chandrapur with losses of
Rs.1,23,11,613/-.
11. It is further contended by Mr. Datta, learned counsel appearing
for the petitioner that in connection with Contract dated 12.11.2009, the
respondents had filed Commercial Suit No.4 of 2016 for alleged recovery of
losses suffered by FCI, but learned Commercial Judge dismissed the suit by an
Order dated 06.07.2022 which was subsequently affirmed vide judgment and
order dated 19.10.2023 passed by the Division Bench of this Court in RFA 25
of 2022 and RFA 26 of 2022. Mr. Datta, learned counsel for the petitioner has
said
also reiterated that the Hon‟ble Apex Court has also affirmed the
judgment dated 19.10.2023 and according to him, the plea taken by FCI is not
sustainable in the eye of law.
12. Having considered the submissions of Mr. Datta, learned counsel
appearing for the petitioner that the petitioner had successfully completed all
the alleged contract works as mentioned in each of the writ petitions with
utmost satisfaction of the respondents and the respondents-Corporation issued
s (Anneure-2 to the writ petitions) in each of the
„No Demand Certificate ‟
contracts which are the subject matters in each of the writ petitions, let me
13
reproduce here-under one of
the said „No Demand Certificates‟ submitted in
WP(C) No. 686 of 2023, for convenience:
no breach of contract by the contractor of any of
“1.(a) That there is
the terms and condition of the contract and no damage, loss and expenses
where suffered by the corporation due to contractor‟s negligence of unwork
men like performance by M/s. Namita Paul, FCI contractor, B.K. Road,
Banamalipur, Agartala, Tripura (w).
(b) The Contractor has not been held responsible for any loss
wastage or damage of grains loading/unloading, shortage etc. and no
recovery is the due to him on that account.
(c) No demurrage was incurred due to delay or negligence on the
part of the contractor in loading/unloading and removal of corporation
goods within the freetime allowed by the F.C.I. authority at Shillong.
(d) The Contractor has not been responsible for any loss or damage
to articles of the dead stock including gunnies and any other Govt. property.
(e) All claims of the contract
or‟s have since been settled and none is
pending with the F.C.I. except refund of the deducted value of transit loss
etc.
2. The security deposit is free from claims so far as this office is
concerned and can be refunded to the contractor or there are no other
outstanding claims under audit objection against the contractor.
Certified that there is no outstanding lying at the depot as per
records available against M/S Namita Paul, FCI contractor for the
st
year from 2006 to 31 August,2008.
Sd/-
Sudhamoy Sarma
Manager (D)
FCI, FSD,
Dharmanagar,
”
13.
Obviously, after getting „No Demand Certificate‟ from the
respondents-Corporation, the petitioner claimed for releasing her security
deposits kept against the respective contract agreements as mentioned in the
instant writ petitions, but, the respondents-Corporation did not release the
same rather, they adjusted the respective security deposits alleging the
negligent and unworthy man like performance of the petitioner in execution of
some other transport co
“ ntract.”
14. Therefore, the principal question centers around whether the
respondents-Corporation can adjust the security deposits submitted in
connection with a particular work by the Contractor for the alleged loss
suffered by them in relation to other works.
14
15. In considering this issue, it leads me to peruse the Clause
No.XI(b), XII(b) and XII(e) of the tender document [Annexure-4 to the
WP(C) No.686 of 2023] postulating the terms and conditions which are
reproduced here-in-below:
“Clause XI. Security Deposit:
(a) ****
(b) The security deposit will be refunded to the contractors on due and
satisfactory performance of the services and on completion of all
obligations by the contractors under the terms of the contract and
on submission of a No Demand Certificate, subject to such
deduction from the security as may be necessary for making up of
the Corporations claims against the contractor.
Clause XII. Liability of Contractors for losses etc. suffered by
Corporation:
(a) ****
(b) The Corporation shall be at liberty to reimburse themselves of any
damages, losses, charges, costs or expenses suffered or incurred by
them due to contractors negligence and un-workmanlike performance
of service under the contract or breach of any terms thereof. The total
sum claimed shall be deducted from any sum than due or which at any
time hereafter may become due to the contractors under this or any
other contract with the Corporation. In the event of the sum which may
be due from the Corporation as aforesaid being insufficient the
balance of the total sum claimed and recoverable from the contractors
as aforesaid shall be deducted from the security deposit furnished by
the contractors as specified in Para XI. Should this sum also be not
sufficient to cover the full amount claimed by the Corporation, the
contractors shall pay to the Corporation on demand the remaining
balance of the aforesaid sum claimed.
(c) ****
(d) ****
(e) A set off any sum of money due and payable to the contractors
(including security deposit returnable to them) under this contract may
be appropriated by the Corporation and set-off against any claim of
the Corporation for the payment of any sum of money arising of this or
under any other contract made by the contractors with the
Corporation.
”
16. On careful reading of the provisions of Clause No. XI(b), XII(b)
and XII(e) of the tender document as quoted above, in the opinion of this
Court, before invoking set-off Clause under Clause XII(e), it must be proved
that the Corporation suffered loss due to negligence or un-workman like
15
performance of the contractor in execution of any work under any contract.
There is no material or details of breakup how the respondents-Corporation
suffered loss in execution of any other contract works. Negligence or un-
workman like performance being a matter of fact is to be established by laying
evidence where all materials and records are to be placed and this only can be
considered by a Civil Court.
17. On the aforesaid context, this Court had passed a judgment on
02.06.2023 in WP(C) No.113 of 2021 titled as Shri Abhijit Paul Vrs. FCI & 3
Ors. wherein at para 17 & 18 of the judgment this Court had observed thus:
“17. I have also taken into consideration the decisions cited by
learned counsel appearing for the respondents-FCI. His submission
was that a dispute emerged out of a contract cannot be agitated or
resolved in a writ proceeding invoking this court s extra-ordinary and
‟
discretionary jurisdiction under Article 226 of the Constitution. Mr.
Bhaumik, learned counsel appearing for the respondents urged that it
was open to the respondents to approach the court of appropriate
jurisdiction for appropriate relief for breach of contract. In support of
his submissions, learned counsel had placed reliance upon the case of
(i) Joshi Technologies International inc. Vrs. Union of India &
Ors.,[(2015) 7 SCC 728, para 69], (ii) Barreily Development
Authority & Anr. Vrs. Ajai Pal Singh & Ors.,[(1989) 2 SCC 116,
paras 21 & 22].
18. Observance of procedural fairness and fair play is the soul of all
administrative actions. According to this court, negligence or poor
work-manship on the part of the Contractor is to be established
first.The expression that “any sum of money due and payable to the
contractor (including security deposit) refundable to the contractor
under this contract may be set-off against any claim of the
Corporation for the payment of any sum of money arising out of
“any
in my
other contract” made by the contractor with the Corporation”,
opinion, is a punitive clause and being it imposed upon the Contractor
as a punitive measure, it cannot be invoked by an administrative/State
authority mechanically without following the due process of law. In
addition, such punitive measure can be taken against the Contractor
only when t -
he fact of “negligence” or “poor work manship” is proved
by an appropriate statutory adjudicating body under the Corporation
having authority to decide such issues, which is to be discerned from
the related contract document itself. However, in absence of such
statutory adjudicating body, the remedy lies with the Corporation to
approach the civil court of competent jurisdiction, where the
Corporation would get the opportunity of leading relevant evidence to
substantiate its loss due to the negligence or poor-workmanship of the
16
Contractor. Pertinent to mention here-in that, admittedly, there is no
statutory adjudicating body to determine issues relating to
-
“negligence” or “poor workmanship” attributed to the Contractor
during the performance of works under different contracts entered
upon between the Contractor and the Corporation.
”
18. Further, in the case of Abhijit Paul (supra), this Court had also
referred to a decision dated 27.02.2015, passed by a Co-ordinate Bench of this
Court in WP(C) No.366 of 2012 along with other connected writ petitions
titled as Sri Abhijit Paul Vrs. the FCI & 2 Ors. wherein learned Co-ordinate
Bench had dealt with similar submissions regarding the exercise of
discretionary power of judicial review of this court in contractual matters and
observed thus:
“8. Even though the dispute has emerged from the contract, this
court have the limited jurisdiction to judicially review the action of the
respondents, inasmuch as, it has been enunciated by the apex court in
Kumari Shrilekha Vidyarthi Vs. State of U.P. & Ors., reported in
AIR 1991 SC 537 that the State activity in contractual matters also
may fall within the purview of judicial review. Every State action must
survive the test against arbitrariness and abuse of power. Non-
arbitrariness, being a necessary concomitant of the rule of law, is
imperative that all actions of every public functionary, in whatever
sphere, must be guided by reasons and not whim, caprice or personal
predilections of the persons entrusted with the task on behalf of the
State. Exercise of all powers must be for public good, instead of being
abuse of the power.
”
19. In the case of Sri Abhijit Paul (supra), this court being
encountered with almost similar facts, set aside the impugned order of
adjustment/set-off issued by the respondents-Corporation, which was affirmed
Food Corporation of India &
and approved by the Hon‟ble Apex Court in
Ors. Vrs. Abhijit Paul, reported in 2022 Online SC 1605.
20. In the instant case, record speaks that the petitioner was not given
any reasonable opportunity to explain and defend herself before forfeiture of
the security deposits in question. No adjudication was made by any statutory
adjudicating authority under the corporation before such punitive action. Such
17
unilateral action, needless to say, is illegal and arbitrary and violative of the
principles of natural justice.
21. Natural justice is the essence of fair adjudication, which is to be
ranked fundamental. The purpose of observance of the doctrine of natural
justice is the prevention of miscarriage of justice. Here, I may gainfully refer a
three-Judge Bench judgment in the case of Food Corporation of India vs.
Kamdhenu Cattle Feed Industries, (1993) 1 SCC 71 held that every state
action must conform Article 14 of the Constitution of India. The relevant
portion may be set out hereunder:
7. In contractual sphere as in all other State actions, the State
“
and all its instrumentalities have to conform to Article 14 of the
Constitution of which non-arbitrariness is a significant facet.
There is no unfettered discretion in public law : A public
authority possesses powers only to use them for public good. This
imposes the duty to act fairly and to adopt a procedure which is
The decision so made would
„fairplay in action‟. …………………
be exposed to challenge on the ground of arbitrariness. Rule of
law does not completely eliminate discretion in the exercise of
power, as it is unrealistic, but provides for control of its exercise
by judicial review.
”
22. Moreso, the respondent-FCI has not brought on record anything
as regards the sum of money they suffered or incurred due to negligence or
otherwise in performance or execution of the other contract works; or such
sum of money out of loss as alleged was determined by any competent Courts
of Law or arbitration, and such determination, if any, attained its finality by
way of decree or award. Therefore, the forfeiture of security deposits
furnished in relation to other contract works is liable to be quashed and set
aside.
18
23. In addition to what have been stated here-in-above, it has also
come to fore that the FCI-Corporation instituted Money suit against the
petitioner for recovery of alleged loss. On consideration of the evidence on
record, the learned Commercial Court dismissed the suit. FCI-Corporation
preferred appeal before this Court as stated above, which upon hearing were
dismissed and lateron, SLPs preferred by the FCI-respondent also have been
dismissed by the Supreme Court. On this score also, the impugned action of
the FCI-respondent is unsustainable.
24. Having regard to the aforesaid facts and the principles of law, in
the context of the present writ petitions, this Court is of the considered view
that the impugned order(s) dated 05.09.2023 issued by the respondents-FCI in
relation to setting off forfeiture of the respective security deposits furnished in
connection with the respective contract works questioned in the present writ
petitions, stand set aside and quashed.
25. In the result, the above bunch of writ petitions are allowed and
disposed of accordingly. The respondents-Corporation are directed to
release/refund the security deposits as claimed in each of the writ petitions
within a period of 30(thirty) days from today.
Pending application(s), if any, shall also stand disposed.
JUDGE
sanjay