Karnataka High Court
Pankaj Cargo Mover, vs The Senior Divisional Commercial on 5 December, 2012
Author: Vikramajit Sen
Bench: Chief Justice, B.V.Nagarathna
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 05th DAY OF DECEMBER 2012
: PRESENT :
THE HON'BLE MR.VIKRAMAJIT SEN, CHIEF JUSTICE
AND
THE HON'BLE MRS. JUSTICE B.V. NAGARATHNA
WRIT APPEAL No. 3495 / 2012
C/W
WRIT APPEAL No. 3722 / 2012 (GM-TEN)
BETWEEN :
In W.A. No. 3495 / 2012 :
Pankaj Cargo Mover,
A registered partnership firm
Having its office at No.1,
Sri Jayalakshmi Complex,
No.33, Appajirao Lane,
C.T.Street Cross, Bangalore-560 002,
represented by its Authorised
Representative Narendra Kumar Rastagi.
In W.A. No. 3722 / 2012 :
Spiderman Express Private Limited,
a company registered under the
Companies Act, 1956, having its
office at Raghavendra Complex,
II Floor, 106/1, J.M.Road, Avenue Road
Cross, Bangalore-560 002, by its Director.
...Appellants
( By Sri M.N.Prasanna, Advocate, for
P.S.Rajagopal Associates. )
: 2 :
AND :
1. The Senior Divisional Commercial
Manager, South Western Railway,
Bangalore Division, Bangalore-560 023.
2. South Western Railway,
Hubli - 580 020, represented
by its Chief Commercial Manager.
...Respondents
( Common )
( By Sri N.S.Sanjay Gowda, Advocate. )
Writ Appeals filed under Section 4 of the
Karnataka High Court Act praying to set aside the order
passed in Writ Petition Nos. 7649/2012 & 7657/2012
dated 15.6.2012 respectively.
These writ appeals having been heard and
reserved, coming on for pronouncement of judgment
this day, the Chief Justice delivered the following:
JUDGMENT
Vikramajit Sen, C.J.
In these Appeals, the decision of the learned Single Judge dated 15.6.2012 has been assailed on the ground that the rejection of the Writ Petitions on the premise of the Division Bench judgment in Suguna Rajkumar Vs. R.Rajmal, ILR 2005 KAR 1583, which is contrary to several decisions of the Supreme Court : 3 : including ABL International Ltd. Vs. Export Credit Guarantee Corporation of India Ltd., (2004)3 SCC 553, and Sanjana M.Wig Vs. Hindustan Petroleum Corpn.
Ltd., (2005)8 SCC 242, is not correct. There can be no gainsaying that common law mandates that the view preferred by the superior Court is binding on all other Courts. Therefore, it was not open to the learned Single Judge to adopt the reasoning of a Division Bench in preference to that of the Apex Court in several decisions including the two mentioned above. In fairness to the Division Bench, which rendered Suguna Rajkumar, neither of the above judgments had been cited. We are in no manner of doubt that, had this been done by the learned Counsel who appeared in Suguna Rajkumar, the conclusion of the Division Bench would have been to the contrary. The learned Single Judge, in the impugned order, has concluded that since the disputed questions of facts required consideration and since allowing the Writ Petitions would have meant the specific enforcement of a : 4 : Contract, Article 226 of the Constitution was not available.
2. ABL International has discussed several decisions of the Apex Court that had already been pronounced. Firstly, K.N.Guruswamy Vs. State of Mysore, AIR 1954 SC 592, which was subsequently followed in D.F.O. Vs. Ram Sanehi Singh, (1973)3 SCC 864; LIC of India Vs. Escorts Ltd., (1986)1 SCC 264;
Gunwant Kaur Vs. Municipal Committee, Bhatinda, (1969)3 SCC 769, etc. After a comprehensive analysis of the rulings of the Apex Court then available, their Lordships summarized in ABL International the legal position thus:
"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.: 5 :
(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."
3. Sanjana M.Wig was decided by an altogether different Bench and the ratio is evident from the following paragraphs:
"12. The principal question which arises for consideration is as to whether a discretionary jurisdiction would be refused to be exercised solely on the ground of existence of an alternative remedy which is more efficacious. Ordinarily, when a dispute between the parties requires adjudication of disputed question of facts wherefor the parties are required to lead evidence both oral and documentary which can be determined by a domestic forum chosen by the parties, the Court may not entertain a writ application. [See Titagarh Paper Mills Ltd. vs. Orissa SEB [(1975) 2 SCC 436] and : 6 : Bisra Stone Lime Co. Ltd. vs. Orissa SEB [AIR 1976 SC 127].
13. However, access to justice by way of public law remedy would not be denied when a lis involves public law character and when the forum chosen by the parties would not be in a position to grant appropriate relief.
xxx xxx xxx
18. It may be true that in a given case when an action of the party is dehors the terms and conditions contained in an agreement as also beyond the scope and ambit of domestic forum created therefor, the writ petition may be held to be maintainable; but indisputably therefor such a case has to be made out. It may also be true, as has been held by this Court in Amritsar Gas Service, (1991)1 SCC 533, and E.Venkatakrishna, (2000)7 SCC 764, that the arbitrator may not have the requisite jurisdiction to direct restoration of distributorship having regard to the provisions contained in Section 14 of the Specific Relief Act, 1963; but while entertaining a writ petition even in such a case, the court may not lose sight of the : 7 : fact that if a serious disputed question of fact is involved arising out of a contract qua contract, ordinarily a writ petition would not be entertained. A writ petition, however, will be entertained when it involves a public law character or involves a question arising out of public law functions on the part of the respondent."
4. In order to make our judgment a composite one, we shall very succinctly deal with the following decisions of the Supreme Court.
i) Zee Telefilms Ltd., Vs. Union of India (2005) 4 SCC 649
160. In Assam Brook Exports Ltd. v. Export Credit Guarantee Corpn. of India Ltd. it has been held that public law remedy would be available when determination of a dispute involving public law character is necessary. The said decision has been affirmed by this Court in ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. (See also Tata Cellular v. Union of India, SCC paras 83 and 84: AIR paras 101 & 102 and State of U.P. v. Johri Mal) : 8 :
(ii) Air India Ltd. Vs. Vishal Capoor (2005) 13 SCC 42
35. In ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. the dispute was limited to an interpretation of the terms of a contract of insurance and an export contract. Counsel for the respondent contended that for a correct interpretation of the clauses of the contracts there was need for oral evidence being led without which a proper interpretation of the clauses was not possible, and therefore, it was a fit case in which the appellants should be directed to approach the civil court to establish their claim. This Court construed the clauses of the contracts and said that there was no room for a second or other construction. It was noted (and as we would like to emphasise) that there was no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such factual situation, this Court was of the opinion that the facts of the case did not and should not inhibit the High Court or this Court from granting the relief sought for by the petitioner. In other words, merely : 9 : because the respondents want to dispute a construction to be placed on a clause of a contract, it would not become a disputed question of fact. On the other hand, if there are allegations of fraud, misrepresentation, etc. it may be a disputed question of fact and the High Court should not go into the same but allow the parties to approach the alternative forum legally available.
iii) Food Corporation of India Vs. SEIL Ltd (2008) 3 SCC 440
21. Jurisdiction of the High Court to entertain a writ application involving contractual matter was considered by a Bench of this Court in ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. wherein upon referring to a large number of decisions, it was held:
(SCC p. 570, para 23) "23. It is clear from the above observations of this Court, once the State or an instrumentality of the State is a party of the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of : 10 : the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the above said requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent."
iv) Indian Bank Vs. Godhra Nagarik Co Op. Credit Society Ltd., (2008) 12 SCC 541
37. The law as regards application of the power of judicial review, inter alia, in the contractual field stands covered by a large number of decisions. (See LIC v. Consumer Education & Research Centre, Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd., ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. and DFO v. Ram Sanehi Singh.) We, however, do not think that facts involved in each case and the law laid down therein need to be discussed at length as there does not exist any dispute in regard to basic principles laid down therein.
: 11 :v) Karnataka State Forest Industries Corporation Vs. Indian Rocks (2009) 1 SCC 150
38. Although ordinarily a superior court in exercise of its writ jurisdiction would not enforce the terms of a contract qua contract, it is trite that when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable. (See ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd.)
vi) Allied Motors Ltd Vs. Bharat Petroleum Corporation (2012) 2 SCC 1
55. Reliance has also been placed on Karnataka State Forest Industries Corpn.
v. Indian Rocks wherein the Court observed thus: (SCC pp. 166-67, para 38) "38. Although ordinarily a superior court in exercise of its writ jurisdiction would not enforce the terms of a contract qua contract, it is trite that when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a : 12 : writ petition would be maintainable. (See ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd.)"
5. ABL International has been followed in the above cases and thus has assumed proportions greater than a mere precedent, and because of its long standing and acceptance by the Constitution Bench and larger Benches has metamorphosed into jurisprudence and consequently commands following.
6. The chronological extracts from the above decisions, however, will disclose that the principles prescribed in ABL International have continuously received the approval of the Hon'ble Supreme Court. Unfortunately, these decisions were not cited before the Division Bench and we are in no manner of doubt, that had this has been so done, the view of the Division Bench in Suguna Rajkumar would have been altogether different. In any case, this plentitude of precedents was available before the Division Bench which passed the impugned order. That being the position, the : 13 : Division Bench was duty bound to apply the ratio and pronouncements of the decisions of the Supreme Court. We hasten to clarify that since we find ourselves unable to subscribe to the view of the Division Bench in Suguna Rajkumar, in the normal course the judicial discipline should have demanded us to refer the legal conundrum to be placed before a larger Bench. We do not need to charter this course because of the enunciation of the law by the Supreme Court which was available to the Division Bench but was not cited rendering that judgment per incuriam.
7. With great respect, we are unable to subscribe to or affirm the conclusion arrived at by the learned Single Judge, as to the appreciation of law on the scope and ambit of the extraordinary powers bestowed by the Constitution under Article 226 upon the High Courts. Writ Petitions are maintainable even if they require adjudication of disputed questions of facts; writ petitions are also maintainable even if an Arbitration Clause is contained in the contract which is : 14 : at the kernel of the conundrum. In any event, a perusal of the facts of the present dispute persuade us to hold that the disputed questions of facts were in such a narrow compass, that the Writ Court would not have faced much difficulty in pronouncing a verdict.
8. We shall now advert to the dispute between the parties. The Petitioners had entered into an "Agreement for leasing of parcel space in brake vans", the currency of which was 3 years. By virtue of Clause 18 thereof, it had been agreed that - "Extension of lease is permissible only in case of long term lease for 3 years wherein the same can be extended only once, by 2 more years at a lease rate of 25% more than the lumpsum leased freight rate subject to satisfactory performance by the leaseholder, without any penalty for overloading or violation of any provision of the contract". It transpires that despite this contract between the parties envisaging extension of the currency of the contract by 2 years at an escalation of rates by 25%, the Respondent Railways extended the contract for only 3 months. It is also not : 15 : controverted that this period of 3 months was conceived of by the Respondent in order to enable them to float fresh tenders. It is also not in dispute that there was no violation of the terms of the Contract in respect of one Petitioner. So far as the second Petitioner is concerned, there appears to have been one violation pertaining to overloading for which a penalty was demanded and paid. It is difficult to appreciate the nature and extent of what has been perceived by the learned Single Judge as disputed question of fact. There can be no gainsaying that the Hon'ble Supreme Court has, in several Writ Petitions, adjudicated far more complex and controverted facts than what we have delineated and indicated to exist in the Petitions in hand.
9. So far as Petitioner Pankaj Cargo Movers is concerned, it is evident from a reading of its letter dated 12.3.2010 that its case was that it had loaded only 3790 kgs and had disputed the excess weight of 148 kgs against the carrying capacity of 3.9 tons. It had : 16 : disputed the manipulated weighment of the load but, in order to put the controversy to rest, had deposited Rs.10,695/- under protest. In fact, in response to their letter requesting for extension of lease, the Railways granted a three month extension upto 10.05.2012 or till the finalization of tender whichever is earlier vide letter dated 08.12.2012 (Annexure-G)
10. Even in this case, we think it is totally unjustified and legally unbecoming of the Respondent to treat this one disputed default, for which penalty had been demanded and duly paid with alacrity, to justify refusal to grant an extension of the contract for additional 2 years. It is stated by the appellants' counsel that the Railways have condoned such defaults repeatedly committed by other similarly placed contractors. The Government or any Authority is not expected to terminate its contractual obligations for superficial considerations, capriciously or petulantly, merely because a marginally more profitable engagement has been thought of. We think that given : 17 : the enunciation of law in several judgments of the Supreme Court, the facts and circumstances of these cases call for exercise of the extraordinary writ jurisdiction.
11. The matter had been adjourned from time to time with the objective of enabling the parties to arrive at an amicable settlement, which alas has not come to fruition. In this regard, it is sought to be contended by the learned counsel for the Railways that the Petitioners have disentitled themselves to any relief as they have made a prayer for leave to participate in the new tender. This leave, however, was categorically denied by the learned Single Judge. Secondly it is contended that rather than strictly enforcing the terms of the contract by holding the Respondent to an escalation of only 25%, the Petitioners should at least be held to the offer made by them in the course of these proceedings, which is higher than 25%.: 18 :
12. We had cautioned the Respondents against pursuing the litigation since, if they are unsuccessful, it would result in loss of revenue to the Railways. The officers of the Respondent, however, declined to come to a settlement apprehending the possibility of having to face vigilance investigation. Unfortunately, no longer is this fear a flight of fancy.
13. We are of the opinion that keeping the language of Clause 18 in perspective, the Respondent was contractually bound to grant an extension to the Petitioners for a further term of 2 years on an escalation of rates by 25%. Having come to this conclusion, mindful of the writ jurisdiction which we are exercising, we think it pragmatic equitable and necessary to hold the Petitioners to the offer made by them in these proceedings. By doing so, we shall be ensuring substantial justice to both the adversaries before us. As could be seen from the order dated 18.10.2012, the Appellants have offered escalation at 60% which would come to Rs.33,403/- and Rs.39,984/- respectively. In : 19 : these circumstances, the tender notification dated 17.02.2012 is quashed insofar as the appellants before us are concerned. Accordingly, we mandate the Respondents to execute a fresh agreement for a period of 2 years commencing from the expiry of the subject agreement, on the above said terms offered by the Petitioners/Appellants within a period of one month from today. The Appeals are allowed in these terms. Parties to bear their respective costs.
Sd/-
CHIEF JUSTICE Sd/-
JUDGE Ckc/VR