2016 (4) TMI 1389 - HC - Companies Law

Setting aside of notice inviting tenders for completing the residual work for which contract was awarded to the respondent No.2 agency - privity of contract - HELD THAT - The petitioner has no privity of contract with either respondent No.2 or IOC the principal assigner of the contract. In fact counsel for the IOC has stated that whatever outsourcing agreements executed were without the permission of IOC. Be that as it may under no condition the petitioner can claim any relief against IOC particularly in facts of the present case. Firstly the entire issue is in realm of contractual relations. Secondly large number of disputed questions of facts are involved. Thirdly there is no privity of contract between the petitioner and the IOC - Mere completion of the work even by the principal agency need not always be the sole criteria for payment when complex contractual obligations are to be performed. Petition dismissed.

Summary

Issues:
1. Petitioner's request to set aside the notice inviting tenders issued by Indian Oil Corporation (IOC) and for the release of pending payments.
2. Lack of privity of contract between the petitioner and IOC or the agency awarded the contract.
3. The slow execution of work and subsequent retendering by IOC.
4. Legal precedents cited regarding contractual obligations and payment disputes.
5. Availability of civil remedies for the petitioner.

Analysis:

1. The petitioner sought to annul the tender notice issued by IOC and demanded the release of outstanding payments for work done. The High Court noted the absence of a direct contractual relationship between the petitioner and either the agency awarded the contract or IOC. The petitioner's inability to claim relief against IOC was emphasized due to the contractual nature of the dispute and the involvement of various factual disputes.

2. The Court highlighted that the petitioner's lack of privity of contract with IOC or the agency precluded them from preventing IOC from readvertising the contract or seeking direct payment for completed work. The complexity of contractual obligations and the absence of a direct contractual link between the petitioner and IOC were crucial factors in the dismissal of the petitioner's claims.

3. The issue of slow work execution leading to retendering by IOC was addressed, indicating that the petitioner had been involved in the work through a third party without a direct contractual arrangement with the principal contracting parties. The Court emphasized that completion of work alone may not entitle the petitioner to payment in the absence of a valid contractual relationship.

4. Legal precedents were cited to support the decision, including the case of Union of India v. M/s. J. K. Gas Plant, which highlighted the importance of lawful delivery and direct benefit for payment entitlement. The Court also referenced the case of State of Kerala and others v. M.K. Jose, which discouraged the appointment of Court commissions for fact-finding in contractual matters within writ petitions.

5. The judgment clarified that the dismissal of the petition did not preclude the petitioner from pursuing civil remedies available under the law. The Court affirmed the decision to dismiss the petition, emphasizing the lack of legal grounds for the petitioner's claims in the context of contractual relations and payment disputes.