Kerala HC dismisses contractor’s plea against terminating Mormugao cruise terminal contract

Panaji: Kerala high court dismissed a writ petition by RCC-ACC, the contractor tasked with building the Rs 72 crore cruise terminal for Mormugao Port Authority (MPA), challenging the termination of its contract. The ruling by Justice Ziyad Rahman effectively clears the decks for the MPA to proceed with the project afresh, though the contractor retains the right to challenge the termination through arbitration.

RCC-ACC was awarded the contract in Aug 2022 to build a cruise terminal for Mormugao port, but the project ran into trouble and multiple delays when the scope of work changed, triggering a requirement for fresh CRZ clearance. The contractor invoked the force majeure clause in the contract, stating it could not proceed with the revised work without the CRZ clearances. The contract was subsequently terminated by Cochin Port Authority (CPA), which has been entrusted with overseeing the construction on behalf of MPA.

RCC-ACC’s senior counsel argued before the court that the termination order was legally flawed since the contractor had no opportunity to respond. The CPA and the MPA said the show cause notice was issued because of delay and had specifically required the contractor to submit an action plan to complete the work, which RCC-ACC failed to provide. They said that no force majeure event, as defined under the contract, had actually occurred.

They said the contract contains an arbitration clause, and RCC-ACC had already approached the commercial court in Ernakulam under Section 9 of the Arbitration and Conciliation Act in connection with the dispute.

High court observed that RCC-ACC’s move to approach the commercial court under the Arbitration Act demonstrated that, even by its own reckoning, an arbitrable dispute existed. The writ petition was accordingly dismissed.

The dismissal of the writ petition lifts the stay that was protecting RCC-ACC from coercive action since Dec. The court has, however, explicitly preserved the contractor’s right to invoke arbitration or pursue any other civil remedy available to it, and has clarified that it expressed no opinion on the merits of either side’s claims.