Calcutta High Court (Appellete Side)
Akb Purma Plast Private Limited vs Bharat Sanchar Nigam Ltd. & Ors on 29 June, 2016
Author: Arijit Banerjee
Bench: Arijit Banerjee
1
24 29.6.16 M.A.T. 1146 of 2016
akb Purma Plast Private Limited
-Versus-
Bharat Sanchar Nigam Ltd. & Ors.
Mr. Kishore Dutta
Mr. Biswaroop Bhattacharjee
Mr. Srijit Chakraborty
Mr. Swaraj Shaw
Ms. Urmila Chakraborty
Mr. Aasish Choudhury ...For the Appellant
Mr. Anshuman Gupta ...For the Respondents
Re.: C.A.N. 6142 of 2016 (Injunction) Heard learned Senior Counsel Mr. Kishore Dutta for the appellant as also Mr. Anshuman Gupta, learned Counsel for the respondents.
The entire issue revolves around the terms of purchase orders alleged to have been placed in favour of the appellant writ petitioner for supply of 2080 KM and 2600 KM of 40/33 mm PLB HDPE Pipe with pre-installed PP Pulling Rope (Coil size 200 m. coil length) with accessories and/or to amend the Advance Purchase Orders.
Apparently, there seems to be an offer by way of tender and acceptance of the said offer without making a formal agreement in writing when the dispute between the parties arose. Initially the supply was to be to the State of Madhya Pradesh, then it was changed to the State of Maharashtra and thereafter there was a direction to supply certain quantity of material to the State of West Bengal. This is in respect of 2080 KM of 40/33 mm PLB HDPE PIPE. So far as 2600 KM of 40/33 mm PLB HDPE Pipe, there was no dispute. When appellant refused to supply the changed quantity to the State of West Bengal, the respondent authorities terminated the entire agreement between the parties, which became the subject matter of dispute before the learned Single Judge. In the writ petition the petitioner has sought for the following 2 reliefs :-
"a. Grant leave to your petitioner under Rule 26 of the Rules of this Hon'ble Court relating to applications under Article 226 of the Constitution of India to move the present writ petition without service of notice or copy hereof on the respondents or any of them;
b. Issue a writ of/in the nature of Certiorari calling on the respondents and each of them to certify and remit the records of the case to this Hon'ble Court so that this Hon'ble Court may do conscionable justice to the case inter alia by directing the respondent authorities to release the purchase orders in favour of the petitioner quashing and/or setting aside and/or withdrawing the impugned notice dated March 10, 2016;
c. Issue a writ of/in the nature of Prohibition prohibiting the respondents and each of them and/or the men, agents, servants, staff, employees, subordinates and/or authorities and/or each and/or any of them from giving effect and/or further effect to the impugned notice dated March 10, 2016 and impugned amended Advance Purchase Order dated August 21, 2015 and from taking any coercive steps on the basis thereof;
d. Issue a writ of/in the nature of Mandamus commanding the respondents and each of them to forthwith cancel and/or quash and/or rescind and/or recall and/or revoke and/or withdraw the purported notice dated March 10, 2016 and the impugned amended Advance Purchase Order dated August 21, 2015;
e. Issue a writ of/in the nature of Mandamus commanding the respondents and each of them and/or the respondent No. 1 to forthwith release/issue the Purchase Orders in favour of the Petitioner for supply of 2080 KM and 2600 KM of 40/33 mm PLB HDPE Pipe with pre-installed PP Pulling Rope (Coil size 200 m. coil length) with accessories despite receipt of Performance Bank Guarantees of Rs. 61,85,178/- and Rs. 77,31,479/- and/or to convert the Advance Purchase Orders dated May 27, 2015 into Purchase Orders;
f. Pass Appropriate Direction(s)/Order(s);
g. Issue Rule Nisi in terms of prayers (b), (c), (d), (e) and (f) above;3
h. Pass an interim order restraining the Respondents and each of them and/or their men, agents, servants, staff, employees, subordinates and/or authorities and/or any of them from giving effect and/or further effect to the notice dated March 10, 2016 and the impugned amended Advance Purchase Order dated August 21, 2015 till the disposal of the Rule and/or this application;
i. Pass an interim order directing the respondents and each of them to forthwith issue the purchase orders in favour of the petitioner for supply of 2080 KM and 2600 KM of 40/33 mm PLB HDPE Pipe with pre-installed PP Pulling Rope (Coil size 200 m. coil length) with accessories and/or to convert the Advance Purchase Orders dated May 27, 2015 into Purchase Orders;
j. Pass an interim order restraining the respondents and each of them and/or the men, agents, servants, staff, employees, subordinates and/or authorities and/or each and/or any of them from placing the purchase orders to any third party for supply of 2080 KM and 2600 KM of 40/33 mm PLB HDPE Pipe with pre-installed PP Pulling Rope (Coil size 200 m. coil length) with accessories and/or if purchase orders are already placed in favour of any third party not to give effect thereof till the disposal of the Rule and/or this application;
k. Pass ad interim order(s) in terms of prayers (h), (i) and (j) above;
l. Pass such other and/or further order(s)/direction(s) as may seem fit and proper."
Learned Judge opined that in light of Arbitration Clause and also the nature of reliefs sought in the writ petition, being specific performance of a contract, the Writ Court cannot entertain the matter since it requires evidence to come on record to substantiate the stand of each of the parties to the agreement.
Aggrieved by the same, the present appeal is filed by the appellant writ petitioner.
Learned Senior Counsel Mr. Dutta brought to our notice that even in the case of contractual liabilities there is no justification to reject a petition under Article 226 of the Constitution of India merely because it requires certain factual matters to be ascertained.
4Mr. Dutta refers to decisions of the Apex Court in the cases of ABL International Ltd. & Anr. Vs. Export Credit Guarantee Corporation of India Ltd. & Ors., reported in (2004) 3 SCC 553; Nobel Resources Ltd. Vs. State of Orissa & Anr., reported in (2006) 10 SCC 236 and the latest judgment of the Apex Court in the case of Joshi Technologies International Inc Vs. Union of India & Ors., reported in (2015) 7 SCC 728. Placing reliance on these decisions learned Senior Counsel Mr. Dutta tried to persuade the Court with regard to the maintainability of the writ petition on the ground that obligations arising out a the contractual agreement need not be alien to Article 226 of the Constitution of India.
After referring to the earlier judgments in 2004 and 2006 of the Apex Court, in the 2015 decision, Their Lordships analysed the entire concept of entertaining a matter under Article 226 of the Constitution of India, even if it pertains to contractual obligation. The relevant paragraphs 69 and 70 are quoted below :-
"69. The position thus summarised 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, 'normally', the Court would not exercise such a discretion:
69.1. The Court may not examine the issue unless the action has some public law character attached to it.
69.2. 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 mode of settlement, particularly when settlement of disputes is to be restored to through the means of arbitration.
69.3. If there are very serious disputed questions of fact which are of complex nature and required oral evidence for their determination.
69.4. Money claims per se particularly arising out of 5 contractual obligations are normally not to be entertained except in exceptional circumstances.
70. Further, the legal position which emerges from various judgments of this Court dealing with different situations/aspects relating to contracts entered into by the State/public authority with private parties, can be summarised as under:
70.1. At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness.
70.2. State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practice some discriminations.
70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution 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 case the Court can direct the aggrieved party to resort to alternate remedy of civil suit, etc. 70.4. Writ jurisdiction of the High Court under Article 226 of the Constitution was not intended to facilitate avoidance of obligation voluntarily incurred.
70.5. 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 licence if he finds it profitable to do so; and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business.
70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specific ally performed. Otherwise, the party may sue for 6 damages.
70.7. 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 it 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 nature justice.
70.8. If the contract between private party and the State/instrumentality and/or agency of the 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 Constitution of India and invoking its extraordinary jurisdiction.
70.9. The distinction between public law and private law element in the contract with the 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. The dichotomy between public law and private law rights and remedies would depend on the factual matrix of each case and the distinction between the 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 than relevant factors are taken into consideration and irrelevant factors have not gone into the decision-making process or that the decision is not arbitrary.
70.10. 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.
70.11. The scope of judicial review in respect of disputes falling within the domain of contractual 7 obligations 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."
In the case of Joshi Technologies (Supra), paragraphs 70.10 and 70.11 clearly indicate under what circumstance the Writ Court can entertain contractual obligations, if a writ petition is filed under Article 226 of the Constitution of India.
Both the parties have referred to various terms and conditions including correspondence between the parties in order to substantiate their respective stand.
According to the appellant writ petitioner, the very first clause in the tender document clearly indicates, at no point of time the quantity of supply can be below 50% of the entire quantity for which tender was called for. But paragraph 13 at page 114 of the stay application clearly indicates under what circumstance changes could be made by the purchaser.
A letter was brought to our notice at page 175-A of the stay application, which clearly indicates the stand of the appellant writ petitioner that he does not intend to proceed further with the supply.
These are all the documents which have to be definitely taken into consideration by the Court in order to arrive at a right conclusion whether the appellant writ petitioner is at fault in backing out of the entire terms and conditions or whether there was intentional termination of the agreement by the respondent purchaser.
It is well established, even in the cases of contractual matters an application under Article 226 of the Constitution of India can be entertained but, however, this is subject to the discretion of the High Court. Under what circumstances how such discretion is to be exercise will depend upon the facts and circumstances of the each case. There may be straightforward cases where much evidence is not 8 required to be recorded.
Apparently, there is no public law involved in the present case, which can persuade this Court to exercise jurisdiction under Article 226 of the Constitution of India. It is definitely in the realm of private law between the parties and individual stand of each of the parties would decide the litigation after recording evidence. That apart whether there is Arbitration Clause, which has to be complied with prior to entering into a formal written contract between the parties is a matter to be decided by the Civil Court, if a suit is filed either for specific performance of the contract or claiming damages for termination of contract as claimed by the appellant writ petitioner.
However, we decline to intervene with the observation of the Trial Court.
Accordingly, the appeal and the application for stay are dismissed.
( Manjula Chellur, Chief Justice ) ( Arijit Banerjee, J. )