Delhi High Court
Hejian Solidkey Petroleum Machinery Co ... vs Indian Oil Corporation Ltd. And Anr on 18 September, 2015
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 18th September, 2015.
+ W.P.(C) 8789/2015 & CM No.19504/2015 (for stay)
HEJIAN SOLIDKEY PETROLEUM
MACHINERY CO LTD. ..... Petitioner
Through: Mr. Raman Gandhi, Adv.
Versus
INDIAN OIL CORPORATION LTD. AND ANR ..... Respondents
Through: Mr. V.N. Kaura, Mr. S. Sirish Kumar
and Mr. Abhinav Tandon, Advs. for
R-1.
Mr. Ashish Aggarwal and Mr. Ashish
Virmani, Advs. for R-2.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. The petition seeks a mandamus to the respondent No.1 to release a
payment of Rs.3,41,69,381/- minus Rs.20 lakhs to the petitioner towards
actual costs of work done under a contract entered into between the
petitioner and the respondent No.1. The respondent No.1 and respondent
No.2 Punj Lloyd Ltd. are also sought to be restrained from commencing the
completion of the work left by the petitioner under the contract.
2. It has been enquired from the counsel for the petitioner, as to how in a
purely simple contractual matter, writ remedy can be permitted to be
W.P.(C) No.8789/2015 Page 1 of 12
invoked.
3. The counsel for the petitioner first contended that, because the
respondent No.1 is a State within the meaning of Article 12 of the
Constitution of India, the writ petition would be maintainable.
4. The aforesaid, according to me, is not correct position in law. Merely
because there is a money claim against an entity which qualifies as State
within the meaning of Article 12 of the Constitution of India, does not justify
the resort to Article 226 of the Constitution of India, instead of to the
ordinary remedy available under the civil law.
5. The counsel for the petitioner has next invited attention to para 10 of
Food Corporation of India Vs. M/s. Seil Ltd. AIR 2008 SC 1101 but upon
the attention of the counsel being invited to the fact that the supply of goods
in that case was under a statutory order as distinct from under a contract as in
this case, the counsel contends that it was also observed that writ petition
was maintainable because there was no factual dispute to be adjudicated. It
is contended that writ remedy against State can be invoked for money claims
simplicitor, if undisputed.
6. It is pleaded in the writ petition itself that the petitioner has already
has had two rounds of litigation with the respondent No.1 i.e. firstly by way
W.P.(C) No.8789/2015 Page 2 of 12
of challenge to the termination by the respondent No.1 of the contract with
the petitioner and by way of a Original Miscellaneous Petition (OMP) under
Section 9 of the Arbitration and Conciliation Act, 1996 with respect to the
measurements of the work done by the petitioner and which OMP is still
pending. It has been enquired, whether not the same is indicative of the
monetary claims of the petitioner, as made in this writ petition being also
disputed by the respondent No.1 and being not undisputed.
7. The counsel for the petitioner though does not reply to the aforesaid,
states that in the OMP aforesaid, relief of payment of the admitted amounts
i.e. deductions made towards service tax have also been claimed.
8. I am of the opinion that unless the petitioner is able to show an
admission of the State / State instrumentality, against whom writ petition is
filed, for the monetary liability claimed, writ remedy cannot be invoked
contending that the monetary claimed made is undisputed. It is not open to
file a writ petition on this ground contenting that let a notice be issued to find
out whether the claim is disputed or not. Ordinarily, the State / State
instrumentality is expected to act reasonably and if is not disputing the claim,
not withhold the same.
9. The counsel for the respondent No.1 appearing on advance notice
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states that in fact there have been six earlier rounds of litigations and this is
the seventh litigation front which the petitioner is attempting to open. The
counsel further states that the respondent No.1 disputes the claim made in
this petition.
10. In view of the aforesaid, it has been enquired from the counsel for the
petitioner, as to how he can contend that there is no disputed question of fact.
11. The counsel for the petitioner then states that though the respondent
No.1 is now disputing the payment which the petitioner is claiming but the
dispute raised is not bona fide and the notice of the petition be issued and a
counter affidavit of the respondents be called and thereafter the Court should
adjudicate whether there is any bona fide dispute or not and if finds bona
fide dispute, to relegate the petitioner to the suit.
12. I am not able to fathom the aforesaid proposition of law. This Court is
inundated with writ petitions making monetary claims simplicitor. There
seems to be a misunderstanding prevalent that merely because the claim of
money is against a State, the same can be recovered in a writ petition.
13. The counsel for the petitioner has then invited attention to ABL
International Ltd. Vs. Export Credit Guarantee Corporation of India Ltd.
(2004) 3 SCC 553 to contend that in that case also, a direction for payment
W.P.(C) No.8789/2015 Page 4 of 12
of the insurance claim, was issued in writ jurisdiction.
14. That case turned on its own facts. The Supreme Court, thereafter in
Godavari Sugar Mills Ltd. Vs. State of Maharashtra (2011) 2 SCC 439
after considering all the earlier judgments on the subject culled out the
situations in which a writ petition in contractual matters would lie or not lie.
Recently also, in Joshi Technologies International Inc. Vs. Union of India
MANU/SC/0616/2015 it has been held as under:
"67. The Court thereafter summarized the legal position in the
following manner:
27. From the above discussion of ours, following legal
principles emerge as to the maintainability of a writ petition:
(a) In an appropriate case, a writ petition as against a
State or an instrumentality of a State arising out of a
contractual obligation is maintainable.
(b) Merely because some disputed questions of facts arise
for consideration, same cannot be a ground to refuse to
entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of
monetary claim is also maintainable.
28. However, while entertaining an objection as to the
maintainability of a writ petition Under Article 226 of the
Constitution of India, the court should bear in mind the fact
that the power to issue prerogative writs Under Article 226
W.P.(C) No.8789/2015 Page 5 of 12
of the Constitution is plenary in nature and is not limited by
any other provisions of the Constitution. The High Court
having regard to the facts of the case, has a discretion to
entertain or not to entertain a writ petition. The Court has
imposed upon itself certain restrictions in the exercise of this
power [See: Whirlpool Corporation v. Registrar of Trade
Marks, Mumbai and Ors. [MANU/SC/0664/1998: 1998 (8)
SCC 1]. And this plenary right of the High Court to issue a
prerogative writ will not normally be exercised by the Court
to the exclusion of other available remedies unless such
action of the State or its instrumentality is arbitrary and
unreasonable so as to violate the constitutional mandate of
Article 14 or for other valid and legitimate reasons, for
which the court thinks it necessary to exercise the said
jurisdiction.
68. The position thus summarized in the aforesaid principles has
to be understood in the context of discussion that preceded
which we have pointed out above. As per this, no doubt,
there is no absolute bar to the maintainability of the writ
petition even in contractual matters or where there are
disputed questions of fact or even when monetary claim is
raised. At the same time, discretion lies with the High Court
which under certain circumstances, can refuse to exercise. It
also follows that under the following circumstances,
'normally', the Court would not exercise such a discretion:
(a) the Court may not examine the issue unless the
W.P.(C) No.8789/2015 Page 6 of 12
action has some public law character attached to it.
(b) Whenever a particular mode of settlement of dispute
is provided in the contract, the High Court would
refuse to exercise its discretion Under Article 226 of
the Constitution and relegate the party to the said
made of settlement, particularly when settlement of
disputes is to be resorted to through the means of
arbitration.
(c) If there are very serious disputed questions of fact
which are of complex nature and require oral
evidence for their determination.
(d) Money claims per se particularly arising out of
contractual obligations are normally not to be
entertained except in exceptional circumstances.
69. Further legal position which emerges from various judgments of
this Court dealing with different situations/aspects relating to the
contracts entered into by the State/public Authority with private
parties, can be summarized as under:
(i) At the stage of entering into a contract, the State acts
purely in its executive capacity and is bound by the
obligations of fairness.
(ii) State in its executive capacity, even in the contractual
field, is under obligation to act fairly and cannot
practice some discriminations.
(iii) Even in cases where question is of choice or
consideration of competing claims before entering
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into the field of contract, facts have to be investigated
and found before the question of a violation of Article
14 could arise. If those facts are disputed and require
assessment of evidence the correctness of which can
only be tested satisfactorily by taking detailed
evidence, Involving examination and cross-
examination of witnesses, the case could not be
conveniently or satisfactorily decided in proceedings
Under Article 226 of the Constitution. In such cases
court can direct the aggrieved party to resort to
alternate remedy of civil suit etc.
(iv) Writ jurisdiction of High Court Under Article 226 was
not intended to facilitate avoidance of obligation
voluntarily incurred.
(v) Writ petition was not maintainable to avoid
contractual obligation. Occurrence of commercial
difficulty, inconvenience or hardship in performance
of the conditions agreed to in the contract can provide
no justification in not complying with the terms of
contract which the parties had accepted with open
eyes. It cannot ever be that a licensee can work out the
license if he finds it profitable to do so: and he can
challenge the conditions under which he agreed to
take the license, if he finds it commercially
inexpedient to conduct his business.
(vi) Ordinarily, where a breach of contract is complained
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of, the party complaining of such breach may sue for
specific performance of the contract, if contract is
capable of being specifically performed. Otherwise,
the party may sue for damages.
(vii) Writ can be issued where there is executive action
unsupported by law or even in respect of a
corporation there is denial of equality before law or
equal protection of law or if can be shown that action
of the public authorities was without giving any
hearing and violation of principles of natural justice
after holding that action could not have been taken
without observing principles of natural justice.
(viii) If the contract between private party and the
State/instrumentality and/or agency of State is under
the realm of a private law and there is no element of
public law, the normal course for the aggrieved party,
is to invoke the remedies provided under ordinary
civil law rather than approaching the High Court
Under Article 226 of the Constitutional of India and
invoking its extraordinary jurisdiction.
(ix) The distinction between public law and private law
element in the contract with State is getting blurred.
However, it has not been totally obliterated and where
the matter falls purely in private field of contract. This
Court has maintained the position that writ petition is
not maintainable. Dichotomy between public law and
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private law, rights and remedies would depend on the
factual matrix of each case and the distinction
between public law remedies and private law, field
cannot be demarcated with precision. In fact, each
case has to be examined, on its facts whether the
contractual relations between the parties bear
insignia of public element. Once on the facts of a
particular case it is found that nature of the activity or
controversy involves public law element, then the
matter can be examined by the High Court in writ
petitions Under Article 226 of the Constitution of
India to see whether action of the State and/or
instrumentality or agency of the State is fair, just and
equitable or that relevant factors are taken into
consideration and irrelevant factors have not gone
into the decision making process or that the decision
is not arbitrary.
(x) Mere reasonable or legitimate expectation of a citizen,
in such a situation, may not by itself be a distinct
enforceable right, but failure to consider and give due
weight to it may render the decision arbitrary, and
this is how the requirements of due consideration of a
legitimate expectation forms part of the principle of
non-arbitrariness.
(xi) The scope of judicial review in respect of disputes
falling within the domain of contractual obligations
W.P.(C) No.8789/2015 Page 10 of 12
may be more limited and in doubtful cases the parties
may be relegated to adjudication of their rights by
resort to remedies provided for adjudication of purely
contractual disputes".
15. Reliance is also placed by the counsel for the petitioner on M/s
Dwarkadas Marfatia Vs. Board of Trustees of the Port of Bombay (1989) 3
SCC 293 and Whirlpool Corporation Vs. Registrar of Trade Marks,
Mumbai AIR 1999 SC 22 but in both of which, there was a statutory flavour
and an element of statutory function i.e. of the Port Trusts Act, 1963 and the
Trade and Merchandise Marks act, 1958 respectively as distinct from the
present case which is purely contractual. Moreover, the Supreme Court, in
Joshi Technologies International Inc. supra has pronounced as aforesaid
after considering all the earlier judgments.
16. It is also the contention of the counsel for the petitioner that, because
the arbitration agreement provided for in the contract excludes money
claims, the writ petition would be maintainable.
17. The petitioner forgets that money claim can also be made under the
general civil law by way of suit and merely because arbitration is not
provided for, is no ground to entertain a writ petition. I remind the
petitioner, that a writ petition under Article 226 of the Constitution of India
W.P.(C) No.8789/2015 Page 11 of 12
is an extra-ordinary remedy. However, it appears to have been made an
ordinary remedy, with writ petitions being preferred over ordinary remedies
available under the general law. The same, according to me was not the
purport thereof.
18. The same is the position with respect to the other relief qua which it is
contended that the respondent No.1, at the cost and risk of the petitioner, is
getting the balance work done from the respondent No.2 at a much higher
rate, of 20 times its cost. The same also, cannot be adjudicated in writ
jurisdiction.
19. The writ petition is indeed misconceived in its inception and is
dismissed and, for pressing the same, at the cost of considerable time of this
Court, the petitioner is burdened with costs of Rs.20,000/- payable to the
respondent No.1, as a pre-condition to institution of appropriate proceedings,
if any against the respondent No.1.
RAJIV SAHAI ENDLAW, J.
SEPTEMBER 18, 2015 bs..
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