Making it clear that the scope of judicial intervention was very limited when it came to issues of national security,a Delhi court has dismissed a firms petition,which had challenged a penalty of Rs 4.16 lakh for violations of a contract with the Ministry of Defence.
Hearing the firms appeal against an arbitrators decision,Additional District Judge (ADJ) Kamini Lau held that the law was settled on the issue that a courts interference was restricted on the matter,as the issue involved the public policy and not merely a business agreement.
These issues are intricately connected with operational activities and national security where the public policy requires a minimal scope of judicial intervention,as there can be no question of compromising with national security, said the court in a recent decision.
Modi Enterprises was imposed a penalty of Rs 4.16 lakh,which was deposited by it as a bank guarantee while entering into a contract with the Ministry of Defence in June 1985.
The contract pertained to supply of 1,028 mules of a particular specification for carrying out operational tasks in forward areas.
However,the supplier first claimed the animals of the said specifications were not available and then cited drought in the procurement areas,causing delay in the delivery.
The Ministry,though agreed to a few terms initially,took strong exception to the delay in supply,owing to which local ponies had to be hired to carry out operational tasks.
Following its inability to supply the required number of animals,Modi Enterprises asked for cancellation of the agreement and return of the bank guarantee.
The Ministry,however,refused to give the money back,contending that the contractor had failed to procure animals of agreed specifications,thereby causing loss to them by compromising on operational requirements of the Union of India. The arbitrator,too,termed the penalty right.