Madras High Court
M/S.Star Traders vs The Regional Manager on 21 November, 2011
Author: M.M.Sundresh
Bench: M.M.Sundresh
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 21.11.2011 CORAM THE HONOURABLE MR. JUSTICE M.M.SUNDRESH W.P. NO.13333 OF 2011 AND M.P.NOS.1 TO 3 OF 2011 M/s.Star Traders Rep.by AI.Asifdeen No.197/1, Maduvinkarai 1st Street Alandur, Chennai 600 016. .. Petitioner Versus 1.The Regional Manager M.S.T.C.Ltd., Leelavathi Building 69, Armenian Street Chennai 600 101. 2.M/s.Hindustan Newsprint Ltd., Rep.by The Managing Director Newsprint Nagar Kottayam 686 616. .. Respondents PRAYER: Writ Petition filed Under Article 226 of the Constitution of India praying to issue a Writ of Certiorarified Mandamus, calling for the records of the first respondent pertaining to his letter bearing No.MSTC/HNL/2011-12/870 dated 11.05.2011 and quash the same in so far as the petitioner is concerned and consequently direct both the respondents to refund the amount of Rs.15,62,513/- illegally withheld along with interest. For Petitioner : Mr.T.K.Kulasekaran For Respondent-1 : Mr.T.S.Vijayakumar For Respondent-2 : Mr.M.Vijayan for M/s.King & Partridge * * * * * O R D E R
By consent, the Writ Petition itself has been taken up for final disposal.
Facts in brief:
2.The first respondent is a selling agent. As per the rules and regulations, the waste materials of the Government undertakings will have to be sold by way of an e-auction, with the first respondent as the selling agent. An agreement was entered into between the petitioner and respondents 1 and 2 engaging the first respondent as the selling agent for the disposal of scrap through e-auction. In pursuant to the same, the first respondent has put up a notice of auction in the Website for selling 50 metric tonnes of S.S.Scrap indicating the date and time along with the terms and conditions related to the same. The material offered for auction was "as is where is and no compliant basis". The same is also mentioned in Clause 7(a) of the terms and conditions. It also states that the seller does not give any assurance or guarantee regarding the materials. The purchaser shall have to satisfy himself on inspection of the lots. No plea or misunderstanding or ignorance or conditions putforth subsequent to any confirmation of sale shall be accepted. The registered parties should inspect the materials. Similarly, Clause 7(e) states that the bidder shall be solely responsible for all consequences arising out of the bid submitted by him. Clause 7(h) stipulates that the participation in the e-auction will be deemed to imply that the bidder has made himself thoroughly aware of and accepted the conditions. Clause 8 provides for arbitration with the Courts at Kolkota having the jurisdiction.
3.Clauses referred above are extracted hereunder for better appreciation:
"Clause 7(a)Inspection of Materials: Notwithstanding anything contained in the auction sale notice issued as to description and particulars of materials put for sale, the sale is on "as is where is" and no complaint basis only. MSTC/Seller do not give any assurance or guarantee that the materials to be delivered will adhere to notice or list. The purchaser shall have to satisfy himself on inspection of the lots as to what they contain and make his/her offer accordingly. No plea or misunderstanding or ignorance or conditions putforth subsequent to any confirmation of sale shall be accepted. The principle of "CAVEAT EMPTOR" (LET THE BUYER BE AWARE) WILL APPLY. The registered Parties (or their Authorised Representative) should inspect the materials at the specified locations by producing their e-Auction Photo ID Card to the Seller or by producing a copy of this eAuction Catalogue downloaded from the Website.
7(e)Caution in Submission of Bid: The Bidder shall be solely responsible for all consequences arising out of the bid submitted by him (including any wrongful bidding by him) and no complaint / representation will be entertained by MSTC/Seller in this regard. Hence Bidders must be careful to check (the Bid Amount/No.Of 0/No. Of Digits/Unit Of Measurement etc.) and rectify their bid (if required) before submitting their Bid into the live eAuction floor by clicking the 'Bid Button.' 7(h)Terms and Conditions of Sale: The Sale will be governed by the Material List & Special Terms & Conditions (STC) displayed on the Live eAuction Floor (and not under Forthcoming Auctions) as well as the General Terms & Conditions (GTC) and Buyer Specific Terms & Conditions (BSTC) already accepted by the Bidder at the time of eAuction Registration with MSTC. The Material List & STC displayed under view Forthcoming Auctions on MSTC's eAuction Website are tentative and subject to change at MSTC's sole discretion before the start of eAuction. Bidders should therefore download the Material List and STC displayed only under View Live Auctions for their record purpose, if required. The BSTC and GTC can be seen and downloaded by going to the Home Page of the eAuction Website and clicking on NEW USER. Participation in the eAuction will be deemed to imply that the Bidder has made himself thoroughly aware of and accepted the STC, BSTC and GTC. In case of any conflict between the STC and BSTC, the STC shall prevail. MSTC shall have the right to issue addendum to the STC or BSTC to clarify, amend, modify, supplement or delete any of the conditions, clauses or items stated therein and the Addendum so issued shall form a part of the original STC.
8.Arbitration/Legal Jurisdiction: Only the Courts at KOLKATA, INDIA shall have the exclusive jurisdiction to entertain any dispute connected with the arbitration proceedings or any other matter or claim arising out of or in connection with the e-auction.10) In case of any dispute regarding payment/delivery or any other matter relating to this e-auction, the decision of MSTC/SELLER shall be final."
4.The petitioner inspected the materials available with the second respondent. Thereafter, he took part in the auction and became the successful bidder. In the auction conducted on 18.04.2011, the petitioner's tender was accepted and he remitted the amount on 25.04.2011. Thereafter, he once again visited the place and found the goods were of inferior quality. It is also stated in the affidavit that he has the experience of five years in the said business.
5.After the subsequent inspection, the petitioner sent a letter to the respondents 1 and 2 claiming refund on the ground that the materials are substandard and not in conformity with the 316 grade. It is the case of the petitioner that in the materials it has been written in handwriting that the grade was of 316, which was not found to be correct subsequently. The petitioner issued a legal notice on 06.05.2011 to the respondents 1 and 2 stating that he would take criminal action. Thereafter, the order impugned was passed on 11.05.2011 making reliance upon the Clause 7(a) of the terms and conditions. The petitioner thereafter sent another legal notice on 27.05.2011 stating that the terms and conditions do not apply to him, as he is not a signatory. The second respondent gave a reply on 27.05.2011 denying the allegations made by the petitioner in his legal notice. Thereafter, the petitioner has filed the present writ petition seeking a writ of certiorarified mandamus, to quash the proceedings of the first respondent dated 11.05.2011 with the consequential direction to refund the amount of Rs.15,62,513/- paid by him by way of Demand Draft.
Submissions of the learned counsel for the petitioner:
6.The learned counsel appearing for the petitioner submitted that the conditions imposed by way of terms and conditions cannot be made applicable to him as he has not signed the same. The photographs produced by the petitioner would show that the material was sold as that of 316 grade. There is no element of fairness in the auction conducted. The respondents being the instrumentalities of state cannot enrich themselves at the cost of the petitioner. Even when there is a disputed question of fact, the power under Article 226 of the Constitution of India can be exercised in a given case, when the action of the authorities is arbitrary, unjust and unreasonable. In support of his contention, the learned counsel has made reliance upon the following judgments:
"HARYANA FINANCIAL CORPORATION AND ANOTHER vs. RAJESH GUPTA [2010-3-L.W.14] ABL INTERNATIONAL LTD. AND ANOTHER vs. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. AND OTHERS [(2004) 3 SCC 553] MAHABIR AUTO STORES & OTHERS vs. INDIAN OIL CORPORATION [1990 U.J. (S.C.) 62]"
Submissions of the learned counsel for the second respondent:
7.Per contra, learned counsel appearing for the second respondent submitted that the facts would reveal that the petitioner has made two inspections, one prior to the sale and second after the sale. As per the terms and conditions contained in Clause 7(a), (e) and (h), the petitioner being the participant cannot question the quality of the product sold. Having seen the materials and satisfied with the same, it is not open to the petitioner to contend otherwise. The terms and conditions are applicable to the petitioner as seen from Clause 7(h), which states that the participation in the e-auction will be deemed to imply that the bidder has accepted the said conditions. The second respondent has specifically denied the sale of the materials, as if they are of 316 grade. The photographs produced by the petitioner are not accepted and as the issues involved are disputed questions of fact, the jurisdiction under Article 226 shall not be exercised. In support of his contention, the learned counsel has made reliance upon the following judgments:
"ORISSA AGRO INDUSTRIES CORPORTION LTD. AND OTHERS vs. BHARATI INDUSTRIES AND OTHERS [(2005) 12 SCC 725]"
Analysis:
8.As seen from the above said analysis of facts, the first respondent is nothing but a selling agent and the sale was effected by way of e-auction. The petitioner has inspected the material before participating in the auction. It is only in pursuant to the subsequent inspection, the petitioner has raised the plea of inferior quality. Clause 7 of the terms and conditions clearly stipulates that the sale is "as is where is and no complaint basis" only. The seller, namely, the first respondent has not given any assurance or guarantee regarding materials. Therefore as per the said Clause, the petitioner being the purchaser shall have to satisfy himself on the inspection of goods. Accordingly as per the said Clause, it is not open to him to raise a plea of ignorance or misunderstanding of the conditions putforth.
9.Clause 7(e) of the terms and conditions says that the bidder shall be solely responsible for all consequences arising out of the bid. Similarly, Clause 7(h) of the terms and conditions clearly stipulates that participation in the e-auction would imply that the bidder has accepted the conditions. Therefore, the petitioner is bound by the terms and conditions.
10.The contention of the learned counsel for the petitioner that the terms and conditions are not applicable to him as he has not signed it can only be quoted to be rejected. As per Clause 7(h), the participation in the e-auction would amount to accept the terms and conditions. For a binding nature of the terms and conditions, it is not necessary that it has to be signed by the parties. In law there can be an agreement by conduct of the parties and the same need not be signed necessarily in all circumstances. Therefore, this Court is of the view that the terms and conditions being binding of the petitioner, it is not open to him to contend that the same are not applicable to him.
11.Admittedly, Clause 8 provides for an arbitration. Inasmuch as the terms and conditions are applicable to the petitioner, the only course open to him is to invoke the said Clause to redress his grievance. As submitted by the learned counsel for the second respondent, the disputed questions of fact cannot be adjudicated before this Court under Article 226 of the Constitution of India, as the exercise of the power is both discretionary and extraordinary in nature. Moreover, the contract is not statutory and the relief sought for by the petitioner depends upon the facts. As seen from the stand taken by the second respondent through his legal notice and thereafter, the averment made by the petitioner regarding the materials having shown as 316 grade has been denied specifically. Merely based upon the photographs, this Court cannot act as its relevancy and admissibility will have to be proved in the manner known to law, by applying the provisions of the Indian Evidence Act. It is also not in dispute that the petitioner has made a personal inspection and satisfied himself being a person doing business in the said field for a period of five years prior to his participation. Therefore, he has participated only after seeing the materials.
12.It is also to be seen that there is no privity of contract between the petitioner and the second respondent. In so far as the first respondent is concerned, he is only a selling agent and therefore, no relief can be claimed against the first respondent. Similarly, no relief can be claimed against the second respondent, as there is no privity of contract with the petitioner.
13.In the judgment relied upon by the learned counsel for the petitioner in HARYANA FINANCIAL CORPORATION AND ANOTHER vs. RAJESH GUPTA [2010-3-L.W.14], the facts are totally different. Infact in the said judgment, the auction has been conducted by the owner of the property. In other words, the seller itself conducted the auction and therefore, it knows the conditions of the property sold very well. The communication between the buyer and seller would also indicate that in the said case there was no passage to the property sold. Therefore, based upon the admission made on record by the seller being the person who conducted the auction, the Honourable Apex Court was pleased to hold that the writ petitioner is entitled for the relief. The relevant paragraphs of the judgment referred supra are apposite:
"14. Factually, the appellants have accepted that on 29-1-1998 the respondent had in no uncertain terms informed the appellant Corporation about the non-existence of the independent passage. No denial could possibly be made in the face of the letter dated 29-1-1998 which makes a reference to the visit of the respondent to the factory premises on 21-1-1998. There is a categorical assertion that the premises do not have an independent appropriate passage from the road. When enquiries were made from the branch office, the respondent was simply informed that copies of the site plan and building plan were not available, and would be available at the head office only. Thereafter, there is a studious silence from the appellant Corporation with regard to the aforesaid grievance made by the respondent. Again, on 7-3-1998 the respondent informed the appellants/ Corporation as follows:
In this regard, it is submitted that we have come to know that there is no approved/authorised passage to factory sufficient to pass a truck through it. The gate/passage presently being used is unauthorised.
In the light of the above you are requested to kindly apprise us in this matter and supply us the copy of approved building plan, site plan for the building mortgaged by HFC so that we may not face any problem in future in running the unit.
22.The aforesaid observation would be clearly applicable to the Corporation as it is exercising the rights of an owner in selling the property. The appellants/Corporation is not selling the property as an Official Liquidator. Hence considering the ratio laid down by the Honourable Apex Court, this Court is of the view that the same is not applicable to the facts on hand.
14.In ABL INTERNATIONAL LTD. AND ANOTHER vs. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. AND OTHERS [(2004) 3 SCC 553], the Honourable Apex Court was pleased to hold that in a case where the disputed questions of fact are pertaining to the interpretation/meaning of documents or parts, the Courts of law can go into the same and decide on merits. It was further held that merely because one of the parties wants to dispute the meaning of a document or part thereof, the same would not make it as the disputed questions of fact. Infact in the very same judgment, the Honourable Apex Court was pleased to hold as follows:
"25.......This judgment cannot be read as laying down the law that no writ petition at all can be entertained where claim is made for only refund of money consequent upon declaration of law that levy and collection of tax/cess is unconstitutional or without the authority of law. It is one thing to say that the High Court has no power under Article 226 of the Constitution to issue a writ of mandamus for making refund of the money illegally collected. It is yet another thing to say that such power can be exercised sparingly depending on facts and circumstances of each case. For instance, in the cases on hand where facts are not in dispute, collection of money as cess was itself without the authority of law; no case of undue enrichment was made out and the amount of cess was paid under protest; the writ petitions were filed within a reasonable time from the date of the declaration that the law under which tax/cess was collected was unconstitutional. There is no good reason to deny a relief of refund to the citizens in such cases on the principles of public interest and equity in the light of the cases cited above. However, it must not be understood that in all cases where collection of cess, levy or tax is held to be unconstitutional or invalid, the refund should necessarily follow. We wish to add that even in cases where collection of cess, levy or tax is held to be unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending on facts and circumstances of a given case.
26.Therefore, this objection must also fail because in a given case it is open to the writ court to give such monetary relief also.
27.From the above discussion of ours, the 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 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 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 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 Corpn. v. Registrar of Trade Marks(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.
The above said ratio laid down by the Honourable Apex Court would mean that the High Court shall not venture into the controversy on facts and act like a civil forum by exercising its discretion. Therefore this Court is of the view, that the said judgment would infact act against the petitioner.
15.The judgment relied upon by the learned counsel for the petitioner in MAHABIR AUTO STORES & OTHERS vs. INDIAN OIL CORPORATION [1990 U.J. (S.C.) 62] has also no relevancy to the case on hand. There is no difficulty in the settled position of law that when an administrative decision of an instrumentality of the state is unreasonable, arbitrary or violative of Article 14 of the Constitution of India, the party aggrieved would impeach the same before the Courts of law. It has been held in ORISSA AGRO INDUSTRIES CORPORTION LTD. AND OTHERS vs. BHARATI INDUSTRIES AND OTHERS [(2005) 12 SCC 725] by the Honourable Apex Court while dealing with the issue involving disputed questions of fact in the following manner:
"7.A bare perusal of the High Court's judgment shows that there was clear non-application of mind. On one hand the High Court observed that the disputed questions cannot be gone into a writ petition. It was also noticed that the essence of the dispute was breach of contract. After coming to the above conclusions the High Court should have dismissed the writ petition. Surprisingly, the High Court proceeded to examine the case solely on the writ petitioner's assertion and on a very curious reasoning that though the appellant Corporation claimed that the value of articles lifted was nearly Rs 14.90 lakhs no details were specifically given. From the counter-affidavit filed before the High Court it is crystal-clear that relevant details disputing claim of the writ petitioner were given. Value of articles lifted by the writ petitioner is a disputed factual question. Where a complicated question of fact is involved and the matter requires thorough proof on factual aspects, the High Court should not entertain the writ petition. Whether or not the High Court should exercise jurisdiction under Article 226 of the Constitution would largely depend upon the nature of dispute and if the dispute cannot be resolved without going into the factual controversy, the High Court should not entertain the writ petition. As noted above, the writ petition was primarily founded on allegation of breach of contract. Question whether the action of the opposite party in the writ petition amounted to breach of contractual obligation ultimately depends on facts and would require material evidence to be scrutinised and in such a case writ jurisdiction should not be exercised. (See State of Bihar v. Jain Plastics & Chemicals Ltd. [(2002) 1 SCC 216])
8.In a catena of cases this Court has held that where the dispute revolves round questions of fact, the matter ought not to be entertained under Article 226 of the Constitution. [See State Bank of India v. State Bank of India Canteen Employees' Union [(1998) 5 SCC 74] and Chairman, Grid Corpn. of Orissa Ltd. (GRIDCO) v. Sukamani Das [(1999) 7 SCC 298].]"
16.Therefore, considering the ratio laid down above and in the light of the discussions made, this Court is having no hesitation in holding that the Writ Petition is liable to be dismissed. Accordingly, the same is dismissed. However, it is made clear that the dismissal of the Writ Petition will not stand in the way of the petitioner either approaching the respondents or working out his rights in the manner known to law. It is also made clear that any observation made by this Court will not stand in the way of such an authority to decide the dispute on facts and in accordance with law. No costs. Consequently, connected miscellaneous petitions are closed.
sri To
1.The Regional Manager M.S.T.C.Ltd., Leelavathi Building 69, Armenian Street Chennai 600 101.
2.M/s.Hindustan Newsprint Ltd., Rep.by The Managing Director Newsprint Nagar Kottayam 686 616