LUDHIANA WOOL SYNDICATE Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner is primarily aggrieved by the order dated April 10, 1991 by which the Director General of Supplies & Disposals, cancelled the contract for supply of articles as the petitioner had failed to supply the goods by the stipulated date. A few facts may be noticed.

(2.) THE petitioner is a partnership firm. The Director General of Supplies and Disposals, respondent No. 2 invited tenders for the supply of various articles. The petitioner submitted its tenders. It was accepted. Accordingly, a letter indicating the acceptance of the tender was issued to the petitioner on December 15, 1988. The petitioner had to supply Full Sleeves Woolen Vests. The total value of goods which the petitioner had to supply was Rs. 25,64,604. 80. The supplies had to commence on the expiry of two months and completed on or before December 31, 1989. The petitioner could not supply the goods by the stipulated date. He asked for extensions periodically. Initially, the period was extended upto April 30, 1990. The final extension was to expire on December 31, 1990. The petitioner still failed to supply the goods. Accordingly, vide letter dated April 10, 1991 a copy of which has been produced on the record as Annexure P-23, the respondents informed the petitioner that as it had failed to supply the goods by the stipulated date, the letter accepting tender "is hereby cancelled at your risk and expenses for the entire quantity. . . . . in exercise of the rights under Clause 14 of the general conditions of contract DGS&d - 68 (Revised) governing this contract without prejudice to other rights of the purchaser under the terms of the contract. " This was followed by a letter dated April 11, 1991 by which the respondent invited fresh tenders. Even the petitioner was permitted to furnish 'quotations'. Thereafter, vide letter dated May 9, 1991, the respondent called upon the Bank to encash the Bank guarantees which had been furnished by the petitioner at the time of the submission of the tender and the acceptance of the offer made by the respondent. The petitioner impugns these orders.

(3.) THE solitary ground urged by the learned counsel for the petitioner in support of his claim in the writ petition is that the action of the respondents is violative of the principles of natural justice. Reliance has been placed by the learned counsel on the decision of their Lordships of the Supreme Court in Mahabir Auto Stores and Ors. v. Indian Oil Corporation, A. I. R. 1990 S. C. 1031. 5. The sequence of events as delineated above clearly shows that the respondents had placed an order on the petitioner for the supply of certain goods on December 15, 1988. In accordance with the terms the letter accepting the tender, the supply should have commenced on or before February 15, 1989 and completed by December 31, 1989. The petitioner failed to do so. He was given extension of time till April 30, time was further extended upto December 31, 1990. The petitioner still failed to curry out its commitment. In such a situation, the action of the authority cannot he said to be either arbitrary or unfair. In fact, it is in complete conformity with the terms of the contract. 6. It is no doubt true that every administrative authority must act fairly. That is the mandate of Article 14 of the Constitution. The decision of a State or Public authority must be based on good reasons and should not be arbitrary. However, it is equally important that when a party to a contract totally fails to carry out its obligations thereunder, the authority may be left with no choice except to cancel it. This is precisely what appears to have been done by the respondents in the present case. 7. Mr. V. Ram Swaroop learned counsel for the petitioner has placed reliance on the observations of their Lordships of the Supreme Court in Mahabir Auto Stores's case (supra ). This case is clearly distinguishable on facts. Therein, the petitioner had been carrying on the business of sale of lubricants supplied by the Indian Oil Corporation for a period of 18 years. Suddenly, the Indian Oil Corporation which had a complete monopoly stopped the supply of goods without giving any intimation, notice or making any query or seeking any clarification. In this situation, their Lordships were pleased to hold that "decision of the State/public authority under Article 298 of the Constitution, is an administrative decision and can be impeached on the ground that the decision is arbitrary or violative of Article 14 of the Constitution of India on any of the grounds available in public law field. In respect of Corporation like IOC when without informing the parties concerned, as in the instant case, on alleged change of policy, an action is taken to seek to bring to an end the course of transaction over 18 years involving large amounts of money it is not fair action, especially in view of the monopolistic nature of the power of the I. O. Corporation in this field. It is necessary that relevant persons concerned or to be affected, should be taken into confidence. Such transaction should continue as an administrative decision with the organ of the State. It may be contractual or statutory but in a situation of transaction between the parties for nearly two decades, such procedure should be followed which will be reasonable, fair and just, that is, the process which normally be accepted to be followed by an organ of the State and that process must be conscious and all those affected should be taken into confidence. " In the present, case, the situation is just not the same. Herein, the petitioner has made continuous defaults and as such, can have no legitimate ground for alleging that the action is either arbitrary or unfair. 8. Faced with this situation, learned counsel for the petitioner contended that the differences having arisen between the petitioner and the respondents, the matter should have been referred to the Arbitrator for settlement. In the written statement filed on behalf of the respondents, it has been specifically averred that "the dispute if any is referable to Arbitration in terms of Clause 24 of DGS&d - 68 (Revised ). No request from the petitioner has been received for reference to Arbitration. " It is, thus, apparent that the petitioner has not made any request for arbitration. In this situation, no direction can be issued for the matter being referred to the Arbitrator. However, there is no doubt that if the petitioner makes such a request, the competent authority would consider it in accordance with law. 9. In view of the foregoing, there is no merit in this writ petition. It is dismissed. Since no one has put in appearance on behalf of the respondents, I am making no order as to costs.