Case Note & Summary
The petitioner, C5 Facility and Security Services, a proprietary concern registered with the Directorate General of Resettlement (DGR), was engaged in providing security services to CPSUs/CPSEs and Defence Establishments. On 11th February 2013, the petitioner was sponsored by DGR to provide security guards to the respondent, Bharat Sanchar Nigam Limited (BSNL), Nagpur. The petitioner participated in the tender process and was successful; an agreement was executed on 25th April 2013 for a period of one year from 1st May 2013 to 30th April 2014. The payment of service charges was to be as per the terms and conditions framed by DGR. A work order was issued on the same day requiring the petitioner to provide 34 security guards. The petitioner provided the services and raised bills at the rate of Rs. 14,000/- per guard per month, which were initially paid by the respondent. However, on 17th November 2014, the respondent issued a corrigendum reducing the rate to Rs. 12,000/- per guard per month, and sought to recover the excess amount paid. The petitioner challenged this corrigendum by way of a writ petition. The court observed that the agreement clearly stipulated that the rates would be as per DGR guidelines, and the respondent had no authority to unilaterally reduce the rate without the petitioner's consent. The court held that the corrigendum was arbitrary, violative of the terms of the contract, and issued without any notice or opportunity of hearing, thus violating principles of natural justice. The court quashed the corrigendum and directed the respondent to pay the petitioner at the rate of Rs. 14,000/- per guard per month for the entire contract period.
Headnote
A) Contract Law - Unilateral Variation - Corrigendum Reducing Rate - The respondent issued a corrigendum reducing the contract rate from Rs. 14,000/- to Rs. 12,000/- per guard per month without the petitioner's consent, which was held to be arbitrary and contrary to the terms of the agreement which provided for rates as per DGR guidelines. (Paras 2-8) B) Natural Justice - Opportunity of Hearing - The corrigendum was issued without any notice or opportunity of hearing to the petitioner, violating principles of natural justice. (Para 8) C) Writ Jurisdiction - Contractual Disputes - The court held that the action of the respondent was arbitrary and violative of Article 14 of the Constitution, and thus amenable to writ jurisdiction. (Para 8)
Issue of Consideration
Whether the respondent BSNL could unilaterally reduce the contract rate by issuing a corrigendum without the consent of the petitioner, and whether such action was arbitrary and violative of the terms of the agreement and principles of natural justice.
Final Decision
The court quashed the corrigendum dated 17th November 2014 and directed the respondent to pay the petitioner at the rate of Rs. 14,000/- per guard per month for the entire contract period.
Law Points
- Contractual rights
- Unilateral variation of contract
- Natural justice
- DGR guidelines
- Security services contract
- Writ jurisdiction
