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TEAM CODE C63

MEMORIAL ON BEHALF OF THE RESPONDENT

DR. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY, LUCKNOW

CONCOURS, 2018

Before,

THE HON’BLE HIGH COURT OF NAWABDWIP

WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF THE


UNION OF SAMUDRASTHAL

MODERN INFRASTRUCTURE PRIVATE LIMITED…………………….PETITIONER

v.

GOVERNMENT OF HIND PRADESH……………………………………... RESPONDENT

CLUBBED WITH
P
WRIT PETITION UNDER ARTICLE ARTICLE 226 OF THE CONSTITUTION
OF THE UNION OF SAMUDRASTHAL

CLIVE LLOYD CONSTRUCTIONS PVT LIMITED……………………….PETITIONER

v.

GOVERNMENT OF HIND PRADESH…………..….....................................RESPONDENT

ON SUBMISSION TO THE HIGH COURT OF NAWABDWIP

WRITTEN SUBMISSION ON BEHALF OF THE RESPONDENT

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MEMORIAL ON BEHALF OF THE RESPONDENT

TABLE OF CONTENTS
INDEX OF AUTHORITIES...........................................................................................................4
LIST OF ABBREVIATIONS..........................................................................................................5
STATEMENT OF JURISDICTION...............................................................................................6
STATEMENT OF FACTS..............................................................................................................7
ISSUES RAISED.............................................................................................................................9
SUMMARY OF ARGUMENTS...................................................................................................10
ARGUMENTS ADVANCED.......................................................................................................11
1. THAT THE ACTION OF GOVERNMENT OF HIND PRADESH OF NOT AWARDING
THE CONTRACT TO MODERN INFRASTRUCTURE PRIVATE LIMITED IS VALID
UNDER THE LAW...................................................................................................................11
1.(a)There is no obligation to accept tender or lowest tender................................................11
1.(b) The decision taken by the Government of awarding the contract to CLCPL was in
favour of public interest.........................................................................................................11
1.(c)Government action of awarding contract to CLCPL is not arbitrary and fair in nature
and it does not violate article 14 of MIPL.............................................................................12
1.(d) The action of Government of Hind Pradesh of awarding contract to CLCPL was done
with a bona fide intention and was not bias...........................................................................13
2. THAT THE DISTRICT COURT’S DECISION TO DISMISS ANY OBJECTION TO THE
JURISDICTION OF THE COURT IS VIOLATIVE OF LAW...............................................13
2.(a) The High Court of Nawabdwip has jurisdiction to hear the case..................................13
2.(b)In clause 13 of Annexure III Jurisdiction of courts of Farashdanga is left open which is
not available at reasonable expense therefore jurisdiction of High Court of Nawabdwip is
valid.......................................................................................................................................14
3. THE DISTRICT COURT WAS JUSTIFIED IN DECREEING A SUM OF RUPEES SIX
CRORES IN FAVOUR OF THE GOVERNMENT OF HIND PRADESH.............................14
3.(a) The Government of Hind Pradesh is entitled to compensation since the company
CLCPL had breached the contract by not following the obligations under clause 7............15
Section 73 in The Indian Contract Act, 1872:.......................................................................15
3.(b) The very purpose of the contract that is construction of SSHMC to bring development
and prosperity to the state of Hind Pradesh by providing education and healthcare to people
is defeated due to which State suffered at large....................................................................16
4. THAT THE ACTION OF THE GOVERNMENT OF HIND PRADESH OF
BLACKLISTING CLIVE LLYOD CONSTRUCTION PRIVATE LIMITED FROM
FURTHER GOVERNMENT WORKS IS VALID UNDER LAW..........................................16

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MEMORIAL ON BEHALF OF THE RESPONDENT

4. (a)The action of the Government of Hind Pradesh of blacklisting CLCPL is within the
ambit of article 298................................................................................................................16
4.(b)Government action of blacklisting is not against principle of natural justice therefore
not violative of article 21.......................................................................................................17
4.(c)The action of government of Hind Pradesh of blacklisting CLCPL is not against article
14 and 19 (1)(g) of the company...........................................................................................17
PRAYER........................................................................................................................................20

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MEMORIAL ON BEHALF OF THE RESPONDENT

INDEX OF AUTHORITIES

Cases
A B C Laminart Pvt Ltd & Anr vs A P Agencies 1989 SCC (2) 163.............................................14
Air India Ltd v Cochin International Airport Ltd (2000) 2 SCC 617............................................13
Association of Registration Plates v Union of India (2004) 5 SCC 364.......................................18
C K Achutan v State of Kerala 1959 SCR Supl (1) 787................................................................12
G E & E Co v Chief Engineer AIR 1960 All 72............................................................................12
ION Exchange Waterleau Ltd V The commissioner Madurai Municipal Corporation 2008 SCC
OnLine Mad 315........................................................................................................................11
Patel Engineering Limited v Union of India 2014 SCC Online Bom 791....................................17
Punnen Thomas v State of Kerala AIR 1969 Ker 81.....................................................................19
Radhakrishna Agarwal v State of Bihar (1977) 3 SCC 457..........................................................17
Radhkrishna Agarwal v State of Bihar (1977) 3 SCC 457............................................................12
State of Orissa And others v Harinarayan Jaiswal And others 1972 SCR (3) 784.......................19
The Union Of India v A K Mathiborwala (1974) 76 BOMLR 659..............................................20
Trilochan Mishra v State of Orissa (1971) 3 SCC 153.................................................................10
Statutes
The Indian Contract Act 1872, s 28...............................................................................................14
The Indian Contract Act 1872, s 73...............................................................................................15

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MEMORIAL ON BEHALF OF THE RESPONDENT

LIST OF ABBREVIATIONS
1. AIR- All India Reporter
2. SC- Supreme Court
3. SCC- Supreme Court Cases
4. SCR- Supreme Court reporter
5. Ltd. - Limited
6. Anr.-Others
7. Pvt.-Private
8. GHP- Government of Hind Pradesh
9. CLCPL- Clive Lloyd Construction Pvt. Ltd.
10 MIPL- Modern Infrastructure Pvt. Ltd.
11. SSHMC- Super Specialty Hospital & Medical College.
12. CPC- The Code of Civil Procedure

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MEMORIAL ON BEHALF OF THE RESPONDENT

STATEMENT OF JURISDICTION
The petition has been filed by the Petitioners and invokes the Special Leave Jurisdiction of this
court under Article 226 of the Constitution of Samudrasthal.
The present memorandum sets forth the facts, contentions and arguments in the present
case.

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MEMORIAL ON BEHALF OF THE RESPONDENT

STATEMENT OF FACTS

Hind Pradesh is a state within the boundary of Samudrasthal. The problem of „inequality of
income‟ is the acutest here amongst all states. minority. Mr. Saurabh Sharma, the leader of PPS,
was elected as the Chief Minister. He formed his government and he floated the idea of
constructing a Super-Specialty Hospital & Medical College at the state capital, Nawabdwip. A
tender was floated inviting proposals to construct the SSHMC in Nawabdwip. There were four

Proposer who possessed the requisite technical qualifications and qualified for the financial
round. In which MIPL was found to be L1 bidder but was still not given the contract instead the
GHP awarded the contract to CLCPL. Considering the dangers of awarding the contract to
MIPL, a company which was not financially sound, Mr. Agarwal exercising the inherent power
of the Government as mentioned in the advertisement to add, alter, modify or remove any
qualification, disqualified MIPL and awarded the contract to CLCPL. MIPL moved to the High
Court at Nawabdwip under Article 226 of the Constitution challenging the decision of the
Government of Hind Pradesh to award the contract to CLCPL alleging that the action was
arbitrary, unreasonable and coloured with bias. The same is pending before the High Court.

The contract which was to be started in May took long time due to many factors like late
payments and government being ignorant in many situations. Considering all these unfortunate
events a new deadline for the handover of the completed project was set. Work continued
without any disruption after the visit of Mr. Agarwal. On November 10, 2015, however, CLCPL
made an application to Mr. Agarwal to extend the deadline by a period of six more months. Mr.
Agarwal sought the Chief Minister‟s advice on the issue who advised him to allow the extension.
Therefore, the deadline was changed to August 15, 2016. The deadline was extended till January
26, 2017 (Republic Day of Samudrasthal). After the elections on February 27, 2017, the DAS
was sumptuously elected to power. Mr. Adarsh Anand was appointed as the Secretary, Family
Welfare and Health Department.

Mr. Anand writing for the Government of Hind Pradesh, terminated the contract with immediate
effect while adding that since time was the essence of the contract and it was the duty of CLCPL
to complete the project on time. After consulting the Chief Minister, he floated a new tender for

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MEMORIAL ON BEHALF OF THE RESPONDENT

completion of the outstanding work. One Suresh Yadav and Sons Constructions Private Limited
(hereinafter referred to as “SYSCPL”) took up the work was completed in time on July 25, 2017.

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MEMORIAL ON BEHALF OF THE RESPONDENT

The Government of Hind Pradesh filed a suit for compensation in the District Court at
Nawabdwip on the strength of clause 12 of the contract between it and CLCPL. CLCPL objected
to the jurisdiction of Court on the strength of clause 13 of the contract. In the alternative, it
submitted a counter-claim. The Court ruled against CLCPL while holding that the exclusionary
jurisdiction clauses are not recognized in Samudrasthal and decreed a sum of INR 6,00,000
(Rupees Six Crores) in favour of the Government of Hind Pradesh. Meanwhile the Chief
Minister decided to blacklist CLCPL from further government contracts due to the irreparable
loss suffered by the state and the unprofessional attitude of the management of CLCPL. CLCPL
has filed an appeal against the decree passed by the Hon’ble District Court Nawabdwip to the
High Court at Nawabdwip on the ground that the Court did not have jurisdiction to hear the same
and in the alternative, contended that the decree passed by the Hon’ble Court is a nullity as it is
not in consonance with the principles of contract law. It has also pleaded that the act of
unwarranted termination of the contract has given rise to losses amounting to a sum of INR
5,00,000 (Rupees Five Crores Only). It has also filed a writ petition under Article 226 of the
Constitution alleging that the action of blacklisting CLCPL is violative of Article 14, 19(1)(g)
and 21 of the Constitution of Samudrasthal.

The Court has decided to hear all the matters including the writ petition filed by MIPL against
the Government of Hind Pradesh together.

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MEMORIAL ON BEHALF OF THE RESPONDENT

ISSUES RAISED

I. Is the action of Government of Hind Pradesh of not awarding the contract to Modern
Infrastructure Private Limited valid under the law?
II. How fatal, if it was, was the District Court’s decision to dismiss any objection to the
jurisdiction of the Court ?
III. Was the District Court right in decreeing a sum of INR 6,000,00,00(Rupees Six Crores
Only) in favour of the Government of Hind Pradesh in the lights of facts and circumstances of
the case?
IV. Is the action of the Government of Hind Pradesh of blacklisting Clive Lloyd Construction
Private Limited from further government works valid under the law?

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MEMORIAL ON BEHALF OF THE RESPONDENT

SUMMARY OF ARGUMENTS

I. THAT THE ACTION OF GOVERNMENT OF HIND PRADESH OF NOT


AWARDING THE CONTRACT TO MODERN INFRASTRUCTURE PRIVATE
LIMITED IS VALID UNDER THE LAW.

The Government had no obligation to accept the tender of lowest bidder and it chose CLCPL
over MIPL because it felt that CLCPL was better option and in doing so the Government did
not violate any fundamental right of MIPL.

II.THAT THE DISTRICT COURT’S DECISION TO DISMISS ANY OBJECTION


TO THE JURISDICTION OF THE COURT IS NOT VIOLATIVE OF LAW.

The district court’s decision to dismiss any objection to the jurisdiction of the court is not
violative of law as the cause of action arose in Nawabdwip itself, so the court had the
jurisdiction to give the decision.

III.THE DISTRICT COURT WAS JUSTIFIED IN DECREEING A SUM OF RUPEES


SIX CRORES IN FAVOUR OF THE GOVERNMENT OF HIND PRADESH.

The GHP is entitled to receive the compensation of the damage caused by CLCPL under section
73 of Indian Contract Act. Economically GHP suffered a lot since it had to pay twice to get the
same work done and also there was loss of MBBS seats for 2 years.

IV.THAT THE ACTION OF THE GOVERNMENT OF HIND PRADESH OF


BLACKLISTING CLIVE LLOYD CONSTRUCTION PRIVATE LIMITED FROM
FURTHER GOVERNMENT WORKS IS VALID UNDER LAW.

The action was valid because it was within the ambit of article 298 and right to do a contract
and not to do with a particular person is with the Government and also while blacklisting
CLCPL the government did not violate article 14, 19(1)(g) ,21 of the company.

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MEMORIAL ON BEHALF OF THE RESPONDENT

ARGUMENTS ADVANCED
1. THAT THE ACTION OF GOVERNMENT OF HIND PRADESH OF NOT
AWARDING THE CONTRACT TO MODERN INFRASTRUCTURE PRIVATE
LIMITED IS VALID UNDER THE LAW.
1.(a)There is no obligation to accept tender or lowest tender
A party inviting tenders is not bound to accept any tender, nor it is bound to accept lowest tender.
There is no liability on government for not accepting any tender. Awarding contract to CLCPL
and not to MIPL is totally up to government and if the government feels that CLCPL is more
suitable option than MIPL then choosing higher tender does not ipso facto make the acceptance
illegal.
In the proposition its only written that generally L1 is granted the contract but its not mentioned
that it is mandatory to award the contract to lowest bidder. In Deepak Kumar Sarkar v. State of
W.B. there was no liability for accepting any tender.
In Trilochan Mishra v. State of Orissa , the government did not accept the highest bidder for the
sale of Kendu leaves . The court held that government is not bound to accept the highest tender
but may accept the lower tender in case it thinks that the person offering lower tender is an
overall consideration to be preferred over higher tenderer. Also that the refusal to accept the
higher bids could not be the cause of any complaint as the government could have preferred one
tenderer over the another1.
1.(b) The decision taken by the Government of awarding the contract to CLCPL was in
favour of public interest.
On page 3 para VI, it is mentioned that had the qualifications of the advertisement dated 22 June
2012,stood as it was , MIPL would have been disqualified on technical ground. Considering the
dangers of awarding the contract to MIPL, a company which was not financially sound , Mr.
Agarwal exercising the inherent power of the government ,awarded the contract to CLCPL.
If the Government would have given the contract to a party whose financial stability was
doubtful, The result could be that the economic operator would be unable to fulfil the contract or
would even become insolvent. The contracting authority would then need to re-tender the
services or works that the economic operator has failed to deliver. The outcome would be lost
time as well as additional administration and costs incurred by the contracting authority.
Government also kept in mind the quality of the project. Quality risk is that the goods or
services provided will be of a lower quality than they should be according to the terms of the
contract. For example, an economic operator that had proposed a very low tender could try to
cheat the contracting authority by replacing materials of high quality with less expensive
substitutes or by not performing all of the required services.

1
Trilochan Mishra v State of Orissa (1971) 3 SCC 153.

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MEMORIAL ON BEHALF OF THE RESPONDENT

The Government is the guardian of the finances of the State. It is expected to protect the financial
interest of the State and the power to refuse the lowest or any other tender is always available to
the Government. The right to choose cannot be considered to be an arbitrary power. Of course, if
the said power is exercised for any collateral purpose, the exercise of that power will be struck
down. In a commercial transaction, the State can choose its own method to arrive at a decision
and it is free to grant any relaxation for bona fide reasons, provided the tender conditions permit
such a relaxation. Even when some defect is found in the decision-making process, the Court has
to necessarily exercise its discretionary powers under Article 226 with great caution and should
exercise it only in furtherance of public interest and not merely on the making out of a legal
point. The Court should always keep the larger public interest in mind in order to decide whether
its intervention is called for or not2.
1.(c)Government action of awarding contract to CLCPL is not arbitrary and fair in nature
and it does not violate article 14 of MIPL.
The government of Hind Pradesh could enter into specific contract with anyone it wanted and it
is not bound to accept the lowest bid at auction for execution of any work when the government
chooses one person over another to enter into contract the MIPL can not claim the protection of
article 14 because the choice of the person to fulfill the particular contract must be left to it.
There is no discrimination, because it is perfectly open to the Government ,even as it is to a
private party, to choose a person to their liking , to fulfil contracts which they wish to be
performed. When one person is chosen rather than another, the aggrieved party cannot claim the
protection of Art.14 because the choice of the person to fulfil a particular contract must be left to
the Government.3
In G.E. & E. Co. v. Chief Engineer, the Government awarded the contract for executing some
work to a person other than the lowest tender. He alleged that the discrimination had been done
against him and that preferential treatment was accorded to government owned company whose
chairman was also the chairman of government stores purchase committee. the court rejected the
contention saying that when the government chose one person rather than the other, the
aggrieved party could not claim the protection of article 14 because the choice of the person to
fulfil the particular contract must be left to the government,” it is perfectly open to government
even as it to a private party to choose a person to their liking to fulfil a contract which they wish
to be performed.”4
No question of violation of article 14 arises even when one out of several persons is selected by
the state for a particular contractual transaction.5

2
ION Exchange Waterleau Ltd V The commissioner Madurai Municipal Corporation 2008 SCC OnLine Mad 315.
3
C K Achutan v State of Kerala 1959 SCR Supl (1) 787.
4
G E & E Co v Chief Engineer AIR 1960 All 72.
5
Radhkrishna Agarwal v State of Bihar (1977) 3 SCC 457.

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MEMORIAL ON BEHALF OF THE RESPONDENT

1.(d) The action of Government of Hind Pradesh of awarding contract to CLCPL was
done with a bona fide intention and was not bias.
Considering the danger of awarding contract to MIPL a company which was financially not
sound Mr. Agarwal when asked Chief Minister about awarding the contract to a particular
company then the Chief Minister asked him to do whatever he thinks is the best so it was totally
at the discretion of Mr. Agarwal to decide upon the matter. Earlier also in the fact sheet it is
mentioned that the Chief Minister had asked Mr. Agarwal to award the contract to MIPL as soon
as possible. So merely on the fact that one of the promoters happened to be the brother in law of
Chief Minister we can not say that the action of the government was bias.
Also Government took into consideration various aspects of awarding contract to lowest bidder
which was not financially stable and about the economic condition and need of medical
healthcare at affordable rate in the state, Government made the correct decision . : An economic
operator that was chosen on the basis of a very low tender might, in the course of the execution
of the contract, seek to charge the contracting authority for extra costs and request increased
remuneration. Another risk is that the goods or services provided will be of a lower quality than
they should be according to the terms of the contract. . For example, an economic operator that
had proposed a very low tender could try to cheat the contracting authority by replacing
materials of high quality with less expensive substitutes or by not performing all of the required
services.
Also amongst all the four proposers possessing the requisite technical qualification CLCPL was
found to be the most suitable option since its experience, standard and quality of earlier job
performed, financial status of the tenderer, quality were qualifying and in financial quotation also
it was only 40K above than the lowest tender therefore also economical.
3The law relating to award of contract by the State and public sector corporations was reviewed
in  Air India Ltd. v. Cochin International Airport Ltd. and it was held that the award of a
contract, whether by a private party or by a State, is essentially a commercial transaction. It can
choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide
reasons, if the tender conditions permit such a relaxation. 6
2. THAT THE DISTRICT COURT’S DECISION TO DISMISS ANY OBJECTION TO
THE JURISDICTION OF THE COURT IS VIOLATIVE OF LAW.
2.(a) The High Court of Nawabdwip has jurisdiction to hear the case.
Article 226(2) in The Constitution of India 1949 states that: The power conferred by clause (1) to
issue directions, orders or writs to any Government, authority or person may also be exercised by
any High Court exercising jurisdiction in relation to the territories within which the cause of
action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of
such Government or authority or the residence of such person is not within those territories.

6
Air India Ltd v Cochin International Airport Ltd (2000) 2 SCC 617.

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MEMORIAL ON BEHALF OF THE RESPONDENT

Order II Rule 2 of the Civil Procedure Code states that a plaint must mention the cause of action
if it is to be instituted as a suit. Thus we can interpret from the above said that the cause of action
is essential to a civil suit. The term Cause of Action refers to a set of facts or allegations that
make up the grounds for filing a lawsuit. A Cause of Action is therefore by its very nature
essential to a Civil Suit, since without a Cause of Action a Civil Suit cannot arise.
In this case cause of action was construction of SSHMC ,which was being performed in
Nawabdwip and the present case is also being filed in the High Court of Nawabdwip therefore it
implies that the High Court of Nawabdwip has the jurisdiction to hear the case.
 in the case of A.B.C. Laminart Pvt. Ltd. & Anr vs A.P. Agencies it has been stated that Under
section 20(c) of the Code of Civil Procedure subject to the limitation stated there before, every
suit shall be instituted in a court within the local limits of whose jurisdiction the cause of action,
wholly or in part arises.7
2.(b)In clause 13 of Annexure III Jurisdiction of courts of Farashdanga is left open which
is not available at reasonable expense therefore jurisdiction of High Court of Nawabdwip is
valid.
Generally ,three jurisdictions are available: the place of making of a contract, that of its
performance and defendant’s place of business or residence. If out of these jurisdictions, atleast
one is left open, competent under Civil Procedure Code and it will not offend section 28
,provided that the jurisdiction which is left open competent under the CPC and is a convenient
one, i.e. available at reasonable expense and not inaccessible8

In the present case jurisdiction of courts of Farashdanga is left open but it known that
Farashdanga is in another state and therefore not available at reasonable expense. And
performance of contract , i.e. construction of SSHMC is being done in Nawabdwip therefore

Jurisdiction of the court of Nawabdwip is valid.

3. THE DISTRICT COURT WAS JUSTIFIED IN DECREEING A SUM OF RUPEES SIX


CRORES IN FAVOUR OF THE GOVERNMENT OF HIND PRADESH
It is humbly submitted before the Hon’ble High Court of Nawabdwip that the Hon’ble District
Court of Nawabdwip was justified in decreeing a sum of rupees six crores in favour of the GHP.
This contention is based on following submissions:

7
A B C Laminart Pvt Ltd & Anr vs A P Agencies 1989 SCC (2) 163.
8
The Indian Contract Act 1872, s 28.

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MEMORIAL ON BEHALF OF THE RESPONDENT

3.(a) The Government of Hind Pradesh is entitled to compensation since the company
CLCPL had breached the contract by not following the obligations under clause 7.
Section 73 in The Indian Contract Act, 18729:
Compensation for loss or damage caused by breach of contract.—When a contract has been
broken, the party who suffers by such breach is entitled to receive, from the party who has
broken the contract, compensation for any loss or damage caused to him thereby, which naturally
arose in the usual course of things from such breach, or which the parties knew, when they made
the contract, to be likely to result from the breach of it.
When an obligation resembling those created by contract has been incurred and has not been
discharged, any person injured by the failure to discharge it is entitled to receive the same
compensation from the party in default, as if such person had contracted to discharge it and had
broken his contract.

Under clause 12 of Annexure III part (1) The GHP shall have the right to claim damages from
CLCPL for any loss occurred on account of CLCPL not conforming to its obligations under this
agreement.
Clause 7 has obligations of CLCPL which shall be followed as

(i) To finish the work assigned to it within the time-frame as mutually determined by the parties.
(ii) To ensure that the specifications of the work conform to the mutually agreed plan between
the parties. (iii) To demolish any existing structure, if any and start work as soon as possible. (iv)
To obtain the necessary permissions from the regulatory authorities regarding anything that is
incidental or ancillary to the work being done.

The company CLCPL could not follow its obligations since it could not complete its work within
the time-frame as was mutually determined by both the parties and asked for extension of time
repeatedly which resulted in loss of revenue as well as the time of the Government therefore had
breached the contract due to which government had to suffer and under section 73 of Indian
Contract Act the GHP is entitled to receive the receive the compensation from CLCPL.

9
The Indian Contract Act 1872, s 73.

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MEMORIAL ON BEHALF OF THE RESPONDENT

3.(b) The very purpose of the contract that is construction of SSHMC to bring development
and prosperity to the state of Hind Pradesh by providing education and healthcare to
people is defeated due to which State suffered at large.
It is mentioned that the problem of “inequality of income” is the acutest amongst all the states of
Samudrasthal and to deal with the problem Government wants to establish medical college and
hospital SSHMC so that the people of the state are provided with all facilities which will help in
the overall development of the state and the gap between the two strata of people will be
minimized. But due to delay in work and unprofessional attitude of the company CLCPL the
Government suffered a lot and it had to hire another company to get the construction of
SSHMC done and spent money again for the same purpose which would otherwise have been
utilized for other important work.

Also because of the delay in project given to CLPCL ,there was loss of MBBS seats for 2 years.

So the State of Hind Pradesh suffered due to loss of revenue and precious time because if
SSHMC would have been constructed at time there would be great difference in the health and
education of the people.

4. THAT THE ACTION OF THE GOVERNMENT OF HIND PRADESH OF


BLACKLISTING CLIVE LLYOD CONSTRUCTION PRIVATE LIMITED FROM
FURTHER GOVERNMENT WORKS IS VALID UNDER LAW
4. (a)The action of the Government of Hind Pradesh of blacklisting CLCPL is within the
ambit of article 298.
Article 298 in The Constitution Of India 1949-  Power to carry on trade, etc. The executive
power of the Union and of each State shall extend to the carrying on of any trade or business and
to the acquisition, holding and disposal of property and the making of contracts for any
purpose. The Government’s right to contract flows from Article 298 of the Constitution. Hence,
the parallel right not to contract also rests with the Government who can choose to blacklist any
particular person or member of the public. 

The concept of Blacklisting is explained by this Court in M/s. Erusian Equipment & Chemicals
Limited v. Union of India and others,(1975) 1 SCC 70, as under: "Blacklisting has the effect of

17
MEMORIAL ON BEHALF OF THE RESPONDENT

preventing a person from the privilege and advantage of entering into lawful relationship with
the Government for purposes of gains. "The nature of the authority of State to blacklist persons
was considered by this Court in the abovementioned case[1] and took note of the constitutional
provision (Article 298)[2], which authorises both the Union of India and the States to make
contracts for any purpose and to carry on any trade or business. It also authorises the acquisition,
holding and disposal of property. This Court also took note of the fact that the right to make a
contract includes the right not to make a contract. 10

4.(b)Government action of blacklisting is not against principle of natural justice therefore


not violative of article 21.
Ordinarily, Natural justice does not apply when it seeks when the government seeks to cancel a
contract under its term because in such a case the Government does not exercise any statutory
power11

The High Court of Andhra Pradesh in Earn Singh v. State took the view that a blacklisting order
without giving show-cause notice or an opportunity of being heard did not violate any
fundamental right of the Government contractor. 

4.(c)The action of government of Hind Pradesh of blacklisting CLCPL is not against article
14 and 19 (1)(g) of the company.
The Article 19 (1) (g) guarantees to all citizens the right to practice any profession or to carry on
any occupation, trade or business. This freedom is not uncontrolled, for clause (6) of Article 19
authorises legislation which imposes reasonable restrictions on this right in the interest of general
public. However, reasonable restrictions can be imposed on the use of this right. A law imposing
in the interests of general public reasonable restrictions on the exercise of the above right,

The government can impose restriction on the business of the company CLCPL since it has kept
under consideration the interest of general public. Company ‘s unprofessional attitude towards its
work and frequent time extension for the completion of the project resulted in irreparable loss to
state revenue thus affecting the economy of the state which is affecting public interest, also due
to carelessness of the company there was loss of MBBS seats for 2 years and its mentioned in
10
Patel Engineering Limited v Union of India 2014 SCC Online Bom 791.
11
Radhakrishna Agarwal v State of Bihar (1977) 3 SCC 457.

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MEMORIAL ON BEHALF OF THE RESPONDENT

proposition that the state of Nawabdweep was in need of proper healthcare at affordable rate and
therefore it became the duty of the government to provide the public with the proper hospital
facilities but due to inefficieny of CLCPL the work could not be completed so it was in the
interest of general public to blacklist a company whose work affected the revenue of the state .

In paragraph XII of moot proposition its given that the Chief Minister decided to blacklist
CLCPL from further government contracts due to irreparable loss suffered by the state and the
unprofessional attitude of the management of CLCPL, the government has not put restriction on
business of CLCPL absolutely, the company is still allowed to continue his business with anyone
other than the Government therefore does not violate article 19(1)(g) of CLCPL.

“No person has a fundamental right to carry on business with the government .All that he can
claim is that the Government should be reasonable and fair in giving its contract and it must be in
public interest.”12

Article 14 of the Constitution of India reads as under: “The State shall not deny to any person
equality before the law or the equal protection of the laws within the territory of India.”

However, Article 14 does not mean that all laws must be general in character or that the same
laws should apply to all persons or that every law must have universal application. This is
because all persons are not, by nature, attainment or circumstances in the same positions. Thus,
the State can treat different persons in differently if circumstances justify such treatment.
Further, the identical treatment in unequal circumstances justify such treatment. Further, the
identical treatment in unequal circumstances would amount to inequality.

Thus, there is a necessity of the “reasonable classification” for the society to progress. The
Supreme Court has maintained that Article 14 permits reasonable classification of persons,
objects, transactions by the State for the purpose of achieving specific ends that help in the
development of the society. In the present case the government is being reasonable in deciding
that CLCPL should be blacklisted since it is in the interest of general public because by
terminating further contracts with such company the state can utilize the revenue for welfare of
public which would otherwise go waste due to unprofessional attitude and management of the
company

12
Association of Registration Plates v Union of India (2004) 5 SCC 364.

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MEMORIAL ON BEHALF OF THE RESPONDENT

There is no discrimination, because it is perfectly open to the Government, even as it is to a


private party, to choose a person to their liking, to fulfill contracts which they wish to be
performed. When one person is chosen rather than another, the aggrieved party cannot claim the
protection of Art. 14, because the choice of the person to fulfill a particular contract must be left
to the Government. Similarly, a contract which is held from Government stands on no different
footing from a contract held from a private party. The breach of the contract, if any, may entitle
the person aggrieved to sue for damages or in appropriate cases, even specific performance, but
he cannot complain that there has been a deprivation of the right to practise any profession or to
carry on any occupation, trade or business, such as is contemplated by Art. 19(1)(g).13

Reference could also be made to Harinarayan case:

A citizen could not have any fundamental right to trade or carry on business in the properties or
rights belonging to the Government14

 The learned Counsel for the appellants urged that the Government like a private person is free to
choose any person with whom to deal with or transact business and no citizen has a fundamental
right to carry on business in properties, privileges or rights of Government, that an order
blacklisting a party is an administrative order and its effect was merely to refuse to such a party
the prospects of doing business with Government which did not affect any right or interest of
such a party and even if such a refusal carried any stigma, it does not amount to a punishment
and that as there is no adjudication of any rights of such a party, no question of principles of
natural justice arises. He, therefore, contended that in the present case it was not necessary to
give opportunity to be heard before passing the impugned order and that Article 14 was not at all
attracted.15

Therefore submits that the GHP’s action of blacklisting CLCPL was valid under law.

13
Punnen Thomas v State of Kerala AIR 1969 Ker 81.
14
State of Orissa And others v Harinarayan Jaiswal And others 1972 SCR (3) 784.
15
The Union Of India v A K Mathiborwala (1974) 76 BOMLR 659.

20
MEMORIAL ON BEHALF OF THE RESPONDENT

PRAYER
In the light of the facts of the case, issues raised, arguments advanced and authorities cited this
Hon’ble court may be pleased to adjudge and declare that:

In the case of Modern Infrastructure Private Limited v Government Of Hind Pradesh. :

That the action of the Government of Hind Pradesh of not awarding the contract to Modern
Infrastructure Private Limited is valid under the law.

In the case of  Clive Lloyd Constructions Private Limited v Government Of Hind Pradesh:

That the District Court’s decision to dismiss objection to the jurisdiction of the court is not
violative of law as it is contradictory to exclusive jurisdiction.
That the district court’s decision to decree a sum of INR 6, 00,000 in favour of the GHP was
right in the light of the facts and circumstances of the case as it violated clause 8,10,12 and 13 of
the contract.
That the action of the Government of Hind Pradesh of blacklisting CLCPL from further
government works is valid under the law.

And may pass any other order in favour of the respondent that it may deem fit in the interest of
justice, equity and good conscience.

SD/-

Counsel for Respondent

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