Writ Court Has Jurisdiction To Interfere With Non-Statutory Contractual Relationship Between State Authorities & Private Parties: Kerala HC
The Kerala High Court observed that a writ court is not denuded of its jurisdiction to interfere with a non-statutory contractual relationship between an entity under the description of a State and private parties.
The Court upheld the decision of the Single Bench wherein it was held that an instrumentality of the State as envisaged under Article 12 of the Constitution was expected to function “just and properly and refrain from acting in an irrational and arbitrary manner.”
A Division Bench of Justice A.K. Jayasankaran Nambiar and Justice Syam Kumar V.M. observed, “We find ourselves unable to accept, as a general proposition, the argument of the learned counsel for the appellants that in every case where an entity that answers to the description of “State” under Article 12 of the Constitution of India enters into a non-statutory contractual relationship with a private person, the writ court would be denuded of its jurisdiction to interfere with a contractual dispute that arises between the parties.”
Advocate G. Harikumar (Gopinathan Nair) appeared for the appellants, while Sr. Advocate P.K. Suresh Kumar represented the respondent.
The Indian Space Research Organization (ISRO) and its associated bodies (appellants) invited tenders in 2019 for the establishment of a Mechanical Testing Research Laboratory for Propulsion Systems at the Liquid Propulsion Systems Centre (LPSC) in Thiruvananthapuram. After delays due to technical evaluations, the work order was eventually issued shortly before the nationwide COVID-19 lockdown.
The lockdown led to delays and extensions. The respondent, M/s. Roopam Engineers, consented to these extensions without objection, until they requested the application of Clause 10C(ii) for price escalation due to the delay. This request was denied by ISRO, leading to the writ petition.
The Single Bench in the impugned judgment held that the respondent was entitled to claim compensation in accordance with Clause 10C(ii) of the General Conditions of Contract in view of the principle of novation under Section 62 of the Contract Act.
The High Court held that it would be “grossly inequitable and unfair” for the appellants to contend that, although the period of operation of the contract was extended well beyond 12 months, for the purposes of considering the respondent's claim for price escalation, the work had to be seen as one that was to be completed in less than 12 months.
“We are also not persuaded by the submission of the learned counsel for the appellants, placing reliance on Clause 3A of the General Conditions of Contract, that the respondent/writ petitioner had not chosen to close the contract by refusing to accept the request of the appellants for a delayed commencement of the work envisaged under the contract,” the Court remarked.
Consequently, the Court held, “We therefore see no reason to interfere with the impugned judgment of the learned Single Judge.”
Accordingly, the High Court dismissed the appeal.
Cause Title: Indian Space Research Organization & Ors v. M/S. Roopam Engineers and Contractors Private Limited (Neutral Citation: 2024:KER:58646)
Appearance:
Appellants: Advocate G. Harikumar (Gopinathan Nair)
Respondent: Sr. Advocate P.K. Suresh Kumar; Advocate C. Harikumar, Sandra Sunny and Arun Kumar M.A
