Jammu & Kashmir High Court
Union Territory Of J&K And Others vs Sanjeev Kumar on 23 February, 2021
Bench: Dhiraj Singh Thakur, Javed Iqbal Wani
115
HIGH COURT OF JAMMU AND KASHMIR
AT JAMMU
LPA No. 137/2020
CM Nos. 7358, 7359 &
7360/2020
Union Territory of J&K and others .....Appellant(s)
Through :- Mr. S. S. Nanda, Sr. AAG
V/s
Sanjeev Kumar .....Respondent(s)
Through :- Mr. Sachin Gupta, Advocate
CORAM :
HON'BLE MR. JUSTICE DHIRAJ SINGH THAKUR, JUDGE
HON'BLE MR. JUSTICE JAVED IQBAL WANI, JUDGE
ORDER
23.02.2021 (Oral) Per: Thakur-J
01. The instant Letters Patent Appeal has been preferred against the judgment and order 11.08.2020 passed in OWP No. 123/2018, by virtue of which the learned Single Judge has directed the respondents/appellants herein to release the admitted liability on account of the work done by the petitioner/respondent herein.
Briefly stated, the material facts are as under:-
2 LPA No. 137/2020
02. The respondent is a contractor and undertakes civil contract works for execution for various departments. It appears that many contracts came to be allotted to the respondent by the J&K Housing Board for construction of community halls, multipurpose halls, lanes, drains etc. between 2014-2015. The total bill amount for the work executed came to be around Rs. 125.14 lacs out of which an amount of approximately Rs. 115. 14 lacs is stated to have been still outstanding and payable by the J&K Housing Board towards the works so executed by the respondent herein.
Having failed to get the amount for the work done, the petitioner/respondent herein states that he was forced to file the writ petition before the learned Single Judge in the first round of litigation bearing WP(C) No. 123/2018. This came to be disposed of vide judgement and order dated 30.01.2018, by virtue of which the respondents were directed to make payment of the admitted amount payable to the petitioner within a period of six weeks.
03. An LPA bearing No.177/2018 was preferred against the said judgement and order on the ground that the petition had been disposed of without affording any opportunity of being heard to the appellant. The Letters Patent Appeal succeeded, judgment and order dated 30.01.2018 was set aside and the matter was considered yet again by the writ Court.
04. Before the writ Court, the stand of the J&K Housing Board was that the petitioner/respondent herein did execute works for the period between 2013-2014 and 2015 and that the payments were shown as outstanding pending liabilities for want of funds to be released by the Government. A report dated 02.03.2017 in this regard is stated to have been submitted to the Housing & 3 LPA No. 137/2020 Urban Development Department vide communication dated 02.03.2017 as reminder.
05. The stand of the Board further reveals that the amounts were certainly required to be released in favour of the petitioner but after due verification. In paragraph 4 of the objections, however, the Housing Board appears to have admitted that the extent of work executed by the petitioner/respondent herein was to the tune of Rs. 61.18 lacs for Unit No. 1 and Rs. 63.96 lacs for Unit No. II as per the record, which was subject to verification.
06. In the reply filed by the Planning Department, the stand taken was that it was the J&K Housing board, that was required to deal with the claims of the petitioner, as the contracts were allotted by the said Board. The reply further suggests that it had expressed no knowledge about the receipt of the claim in regard to the work done and also denied any assurance having been made by the said Department in favour of the contractor.
07. Mr. S. S. Nanda, learned Sr. AAG stated that no payment was due and payable to the contractor/respondent herein, inasmuch as, the contracts were allotted without jurisdiction by the J&K Housing Board. It was stated that the contracts had been allotted without inviting bids from eligible contractors and that the entire process of allotment was arbitrary. It was further urged that the works were executed even beyond the territorial jurisdiction of the J&K Housing Board and therefore, in those circumstances no payment was legally justified to the petitioner/respondent herein.
08. It was stated that the issue got examined by the Government through various enquiries dated 14.07.2015, 15.06.2017 and 05.10.2020 whereby the 4 LPA No. 137/2020 Committees were constituted and accordingly enquiry reports were submitted by the Committees respectively. The committee so constituted vide Govt. Order No. 178-HUD of 2015 submitted an Enquiry Report by concluding as under:-
(i) The Board has executed works beyond its jurisdiction i.e. works have been undertaken in areas/colonies which are not under it control i.e. in the colonies which have neither been developed by the Housing board and not transferred to the Housing Board by the Government for their upkeep/upgradation.
(ii) The Board has undertaken the construction of shelters/dwelling units for weaker sections of the society without any approval schemes or approved guidelines.
The list of beneficiaries of the activity has not been approved by any Competent Authority and mechanism adopted for selection for beneficiaries could not be known.
(iii) Works have been undertaken without any budgetary provisions, thereby depleting the financial reserves of the Board which are meant for the welfare of the employees like salaries, pensions and other benefits to the serving and retired employees of the Board.
(iv) Funds have been released to the Engineering sections/divisions by the Accounts section without ensuring that requisite codal formalities are followed by the Executing Agencies i.e.DGM;s of the J&K Housing board.
(v) The Works have been executed without any approval of the work plan and disbursements have been made without prior approval of the competent Authority. No Action plan of works programme has been prepared and the works have been executed arbitrarily in violation of defined procedures as being followed by similar Government Department/Corporations to maintain transparency and proper management."
5 LPA No. 137/2020
09. The enquiry reports mentioned above on which the appellants seek to place reliance today was never placed before the writ Court and was not a part of the writ Court record. Even the objections filed by the Planning Department as also the J&K Housing Board do not suggest that there was any apprehension in the mind of the Planning Department or the Housing Board with regard to the manner in which the contracts stood allotted to the petitioner/respondent herein. While it may be true that certain codal formalities might not have been followed before the allotment of the contract in favour of the respondent herein, yet the Government as also the Housing Board permitted not only the allotment of contract but also its completion at the relevant point of time.
10. The petitioner who was allotted the contract by the Housing Board cannot be expected to first verify as to whether the contract that has been allotted to him was being executed within the territorial jurisdiction of the Housing Board or not, nor was he expected to refuse the execution of the work simply because the subject matter of the work was not put to open tendering system. Needless to say that the contractor did execute the works upon being allotted to him him for which some amount is certainly due to him.
11. We cannot overlook the various communications issued by the J&K Housing Board annexed with the writ Court record as also the LPA, wherein certain directions were issued to release of pending bills in favour of the petitioner/respondent herein for the works executed.
12. While the entire emphasis of Mr. Nanda, learned Sr. AAG appearing on behalf of the Union Territory was on the manner in which the works stood allotted yet we cannot lose sight of the fact that the works executed did result 6 LPA No. 137/2020 in creating infrastructure in the shape of community halls, multipurpose halls, lanes, drains etc in the city for the benefit of the common man.
13. During the course of arguments, Mr. Nanda, learned Sr. AAG had also urged that the writ petition is not maintainable because this is a contractual matter and the right remedy was to file a civil suit before the Civil Court.
14. The issue with regard to the maintainability of the petition under Article 226 for purposes of enforcing contractual obligations is no longer res integra.
15. The extent of applicability of Article 14 in contractual matters, where the State was a party, came up for consideration in the case of "M/s Radhakrishna Agarwal and ors Vs State of Bihar & ors," (1977) 3 SCC 457, wherein the Apex Court held as under:-
"10. It is thus clear that the Erusian Equipment & Chemicals Ltd.'s case (supra) involved discrimination at the very threshold or at the time of entry into the field of consideration of persons. with whom the Government could contract at all. At this stage, no doubt, the State acts purely in its executive capacity and is bound by the obligations which dealings of the State with the individual citizens import into every transaction entered into in exercise of its constitutional powers. But, after the State or its agents have entered into the field of ordinary contract, the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Article 14 or of any other constitutional provision when the State of its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract."7 LPA No. 137/2020
16. Subsequently, however, in "Verigamto Naveen Vs Govt. of A.P. & ors," (2001) 8 SCC 344, the Apex Court held that if the breach of contract involved breach of statutory obligation when the order complained of was made in exercise of statutory power by a statutory authority, though cause of action even when arising out of contract, brought it within the sphere of public law. It was held in paragraph 21 as under:-
"21....... In cases where the decision making authority exceeded its statutory power or committed breach of rules or principles of natural justice in exercise of such power or its decision is perverse or passed an irrational order, this Court has interceded even after the contract was entered into between the parties and the Government and its agencies. We may advert to three decisions of this Court in M/s Dwarkadas Marfatia & Sons vs. Board of Trustees of the Port of Bombay; Mahabir Auto Stores & Ors. vs. Indian Oil Corporation & Ors.; and Srilekha Vidyarthi vs. State of U.P.. Where the breach of contract involves breach of statutory obligation when the order complained of was made in exercise of statutory power by a statutory authority, though cause of action arises out of or pertains to contract, brings within the sphere of public law because the power exercised is apart from contract."
17. In "Kumari Shrilekha Vidyarthi and others Vs State of UP and others"
(1991)1 SCC 212, it was held that :-
"20 ............Applicability of Article 14 to all executive actions of the State being settled and for the same reason its applicability at the threshold to the making of a contract in exercise of the executive power being beyond dispute, can it be said that the State can unbridled power unfettered by the requirements of Article 14 in the sphere of contractual matters and claim to be governed therein only by private law principles applicable to private individuals whose rights flow only from the terms of the contract without anything more? We have no hesitation in saying that the personality of the State, requiring regulation of its conduct in all spheres by requirements of Article 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the 8 LPA No. 137/2020 requirements of Article 14 and contractual obligations are alien concepts. which cannot co-exist. The Preamble of the Constitution of India resolves to secure to all its citizens Justice, social. Economic and political; and Equality of status and opportunity. Every State action must be aimed at achieving this goal. Part IV of the Constitution contains `Directives Principles of State Policy which are fundamental in the governance of the country and are aimed at securing social and economic freedoms by appropriate State action which is complementary to individual fundamental rights guaranteed in Part III for protection against excesses of State action to realise the vision in the Preamble. This being the philosophy of the Constitution, can it be said that it contemplates exclusion of Article 14--non-arbitrariness which is basic to rule of law from State actions in contractual field when all actions of the State are meant for public good and expected to be fair and just? We have no doubt that the Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. In our opinion, it would be alien to the Constitutional Scheme to accept the argument of exclusion of Article 14 in contractual matters. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion. This is more so when the modern trend is also to examine the unreasonableness of a term in such contracts where the bargaining power is unequal so that these are not negotiated contracts but standard form contracts between unequals."
18. In paragraph 22, the Court further proceeded to hold :-
"22. There is an obvious difference in the contracts between private parties and contracts to which the State is a party, Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes failing within the domain of contractual 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. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that 9 LPA No. 137/2020 the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also fails within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions."
19. The issue was also considered at length in ABL International Limited Vs Export Credit Guarantee Corporation of India Limited and noticing the various judgments on the point, the following legal principles were crystallized regarding maintainability of the writ petition:-
a. In an appropriate case, a writ petition as against the State or an instrumentality of the State arising out of the contractual obligations is maintainable.
b. Merely because some disputed questions of fact 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 the consequential benefit of monetary claims is also maintainable.
20. The Court further proceeded to hold that in entertaining the writs under Article 226, the Court has the discretion to entertain or not to entertain the petition and with reference to "Whirlpool Corporation Vs Registrar of Trade Marks, Mumbai & ors," 1998(8) SCC 1, it was held that the 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 10 LPA No. 137/2020 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the writ jurisdiction.
21. Testing the facts of the present case on the touchstone of the law discussed above, the explanation for refusing the payment to the respondent can be said to be arbitrary justifying exercise of writ jurisdiction by this court.
22. On a perusal of the judgment and order dated 11.08.2020, impugned in the present LPA, it can be seen that the learned Single Judge has directed the appellants to release only the admitted liability towards the petitioner/respondent herein within a period of two months. The learned Single Judge has, thus, specifically omitted to mention the amount which was being claimed to the tune of Rs. 115.14 lacs. The direction simplicitor is to release only the admitted liability, which would be worked out by the appellants in this case.
23. Having gone through the judgement and order impugned, we feel that there is no illegality committed by the learned Single Bench in the directions passed vide judgement and order dated 11.08.2020. This appeal is found to be without any merit and is, accordingly, dismissed along with connected applications.
(Javed Iqbal Wani) (Dhiraj Singh Thakur)
Judge Judge
JAMMU
23.02.2021
(Muneesh)
MUNEESH SHARMA
2021.03.01 13:29
I attest to the accuracy and
integrity of this document