A.S. Chandurkar, J.@mdashHeard learned counsel for the parties.
2. Challenge in the present appeal is to the order dated 24-11-2014 passed by the trial Court partly allowing the application for injunction moved by the present respondent No. 1.
3. The facts in brief are that a tender notice came to be issued by the present appellant on 2-6-2012 in respect of two jobs. The respondent No. 1 submitted its bid and on 27-11-2012, work order was issued to the respondent No. 1. The work in question was to be completed within 21 months between the period from 6-10-2012 to 5-7-2014. According to the respondent No. 1, there were various hurdles while executing aforesaid work and hence said work could not be completed within stipulated time. A legal notice came to be issued on 12-9-2014, but there was no response from the present appellant. Ultimately, in August, 2014, respondent No. 1 filed suit in which prayer was made for awarding compensation of Rs. 4,01,74,706/-. Another relief sought was with regard to return of machineries, equipments and vehicles as well as damages to the tune of Rs. 2 Crores.
4. After filing of the suit, the present appellant on 7-10-2014, invoked the bank guarantees that were furnished by the respondent No. 1 and thereafter on 9-10-2014, appellant gave a notice of termination of contract to the respondent No. 1. As per said notice, besides terminating the work, penalty came to be imposed and respondent No. 1 was also debarred from participating in future tenders in individual capacity as well as by forming joint venture. The respondent No. 1, therefore, amended the suit and challenged the notice of termination dated 9-10-2014. An application for interim injunction was also moved by the respondent No. 1 in which it was prayed that present appellant be restrained from acting on the notice of termination.
5. The present appellant opposed the aforesaid application on the ground that the default was caused by the respondent No. 1 and it had therefore, taken action in terms of Clause 6 and 9.2 of the Conditions of Contract. It also pleaded that present appellant had to recover various amounts from the respondent No. 1 for which a separate counter claim was proposed to be filed.
6. The trial Court, while considering the application in question, prima facie found that at said stage, it was difficult to come to the conclusion as to which party was at fault. It noted that there were faults and defects on the part of both the parties and a finding could be arrived only after evidence was recorded. It then found that the contract in question had already been terminated and, therefore, the present appellant could not be restrained from carrying out the incomplete work through some other contractor. It however, restrained present appellant from taking possession of the material, plant and equipment of the respondent No. 1 and from recovering the amount of penalty and costs. It also restrained the present appellant from debarring the respondent No. 1 from participating in future tenders. Being aggrieved, this order is challenged by the original defendant No. 1.
7. The learned counsel for the appellant submitted that the trial Court erred in partly allowing the application for temporary injunction. It was submitted that under the terms of the contract, it was open for the appellant to take possession of the materials, plant and equipment and similarly, it was permissible to impose penalty to the extent of 10% of the total contract value. Similarly, under Clause 6 of the Conditions of Contract, the appellant could have debarred the present respondent No. 1 from participating in future tenders. It was submitted that it was the respondent No. 1 who had delayed completion of work in question and hence the appellant was justified in terminating agreement in question. It was further submitted that if at all the respondent No. 1 finally succeeded in the suit, it could be compensated in monetary terms and hence, there was no reason to grant any interim injunction. Reference was also made to the provisions of Sections 14 and 41 of the Specific Relief Act, 1963 and to the judgment dated 22-1-2015 in Writ Petition No. 6400/2014 to indicate adjudication of similar issues.
8. Learned counsel for the respondent No. 1 opposed the aforesaid submissions. It was submitted that trial Court was justified in partly allowing the application for temporary injunction. It was submitted that various no penalty certificates had been issued by the present appellant in respect of very same work and hence it could not be said that the present respondent No. 1 was at fault. It was then urged that without adjudicating the actual loss caused to the appellant, no penalty could have been imposed. Similarly, until it was found that the respondent No. 1 was responsible for not complying with the Conditions of Contract, the contract could not have been terminated.
9. I have considered the aforesaid submissions and I have gone through the material placed on record. The fact that the parties have entered into agreement, pursuant to which the work order was issued is not in dispute. The aforesaid work was to be completed by 5-7-2014. Disputes have arisen between the parties on account of work not been completed within the period of twenty one months. While the plaintiff has sought to urge that it was not responsible for delaying the work and that the hurdles were not removed by the defendant No. 1, it is the case of the defendant No. 1 that the plaintiff alone is to blame for aforesaid delay. As per the Conditions of Contract, Clause 9.2 which stipulates termination of the contract provides for incomplete work being carried out at the risk of the contractor, determination of amounts to be recovered for completing the remaining work or to assess the loss caused and also to recover any amounts from the contractor in question. The appellant has terminated the aforesaid contract on 9-10-2014 stating that the performance of the present respondent No. 1 was not in terms of the agreement. On that basis, it has imposed penalty of 10% of the total contract value and has also taken possession of the material, plant and equipments. In the written statement, it has been pleaded in the specific pleadings in para 41 that the amount which is liable to be recovered from plaintiff was not ascertained and after such determination, the said defendant reserved right to file counter claim or separate suit.
10. On the basis of this material on record, the trial Court recorded a prima facie finding that at said stage, it was not possible to determine as to which party had defaulted in completion of the work in question. As per Clause 9.2 of the Conditions of Contract, besides cancellation of the contract, it is stipulated that the amount to be recovered from the contractor is to be determined after giving due credit to the work already executed. Similarly, value of the contractor''s materials, plant and equipment has also to be taken. It is, therefore, clear that prior to determining the amount to be recovered, the appellant proceeded to impose penalty of 10% on the respondent No. 1 by holding it liable for breach of aforesaid agreement. This maximum penalty is being imposed in terms of Clause 6.2 of aforesaid agreement. Said Clause 6.2 also stipulates the manner in which the amount of penalty has to be calculated which is maximum of 10% of the total contract value.
11. It is to be noted that the action of the defendant No. 1 of terminating the work order on 9-10-2014 is under challenge. The action that has been taken pursuant to aforesaid termination is with regard to imposition of 10% penalty, taking possession of materials, plant and equipment and debarring the plaintiff from participating in future tenders. At this prima facie stage, no finding can be recorded as to which party was at fault. As referred to above, the defendant No. 1 has not yet determined the exact amount which according to it is liable to be recovered from the plaintiff. Similarly, whether the defendant No. 1 was justified in terminating the contract is also an issue to be adjudicated after evidence is led. The facts further indicate that after filing of the suit, the defendant No. 1 has already encashed the bank guarantee that was furnished by the plaintiff. In this background, when at this prima facie stage, there is no sufficient material to indicate breach of the contract either by the plaintiff or by the defendant No. 1, the trial Court was justified in restraining defendant No. 1 from taking possession of the materials, plant and equipment. Similarly, it was also justified in restraining the defendant No. 1 from recovering the balance amount of costs, penalty and from debarring the plaintiff from participating in future tenders. All these are consequences of the termination of the work order. If ultimately, the defendant No. 1 succeeds in proving that it was justified in issuing the notice of termination dated 9-10-2014, then at that stage, the consequences for breach of agreement can be imposed on the plaintiff. However, at this prima facie stage, when the material is insufficient either to even prima facie uphold the action of termination or to label it as uncalled for, in my view, the trial Court was justified in partly allowing the application for injunction.
12. As regards the submission made on behalf of the appellant that in view of the provisions of Sections 14 and 41 of the Specific Relief Act, 1963, the injunction in aforesaid terms could not have been granted, it is to be noted that even according to the defendant No. 1, the liability of the plaintiff has not yet been determined. The trial Court has assigned the reason that merely permitting the machinery and equipment to lie in custody of the defendant No. 1 would serve no purpose inasmuch as the plaintiff was required to pay monthly installments towards purchasing the same. For same reason, it also found that detaining the vehicles would also serve no purpose. Hence, the submissions on the basis of provisions of Specific Relief Act cannot be accepted. Similar is the direction so far as debarring the plaintiff is concerned, Clause 6 of the Conditions of Contract also stipulates such bar to be imposed on defaulting the contractor. As noted above, if ultimately, the defendant No. 1 justifies its action of termination, then the consequences provided by clause 6.2 can be worked out even at that stage. The reliance placed by the learned counsel for appellant in the judgment of the Division Bench in Writ Petition No. 6400/2014 is distinguishable on facts as the present adjudication arises out of an interlocutory application filed during pendency of the suit while in said proceedings, the petitioners therein had directly approached this Court under Article 226 of the Constitution of the India.
13. From the aforesaid, therefore, it is clear that the view taken by the trial Court is possible view of the matter and it cannot be said to be not based on material available on record. Hence, there is no reason to interfere with the impugned order. It is, however, clarified that aforesaid observations made by this Court or by the trial Court are only for the purposes of deciding the interlocutory application and the suit shall be decided independently without being influenced by said observations. Similarly, it is clarified that the impugned order of temporary injunction has been examined as per contents of notice of termination dated 9-10-2014.
The appeal is, therefore, dismissed with no order as to costs.
