Uttarakhand High Court
M/S Bharat Construction & Another. ... vs State Of Uttarakhand & Others on 28 November, 2018
Author: Alok Singh
Bench: Ramesh Ranganathan, Alok Singh
Reserved Judgment
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Special Appeal No. 945 of 2018
M/s Bharat Construction & another. ............ Appellants
Versus
State of Uttarakhand & others. ............. Respondents
Mr. Davesh Bishnoi, Advocate for the appellants.
Mr. Pradeep Joshi, Standing Counsel for the State of Uttarakhand / respondents.
Cases referred:
1. AIR 2000 SC 2573
2. (2000) 1 SCR 925
3. (1966) 1 SCR 120
4. AIR 1972 SC 843
5. (1975) 3 SCR 254
6. (1977) 3 SCR 249
7. (1981) 3 SCC 238
8. (1989) 1 SCR 743
9. (1994) 3 SCR 163
10. (1994) 2 SCR 67
11. AIR 1996 SC 3515
12. AIR 2002 SC 206
13. AIR 2003 SC 3823
14. (2008) 8 SCC 172
15. (1955) 1 SCR 305
16. AIR 1973 SC 205
17. (1989) 2 SCR 751
18. (1990) 1 SCR 818
19. (2001) 2 SCC 160
20. (2004) 3 SCC 553
21. AIR 1999 SC 22
22. AIR 2007 SC 119
23. (2015) 9 SCC 433
24. (2015) 7 SCC 728
25. (2008) 12 SCC 500
26. (2004) 3 ALD 463
27. (2004) 2 SCC 150
28. (2005) 8 SCC 242
29. AIR 1990 AP 171
30. (2015) 13 SCC 233
31. 2018 (1) UD 17
JUDGMENT
Coram: Hon'ble Ramesh Ranganathan, C.J.
Hon'ble Alok Singh, J.
Dated: 28th November, 2018 RAMESH RANGANATHAN, C.J.
This Special Appeal is preferred against the order passed by the learned Single Judge in Writ Petition (M/S) No. 3116 of 2018 dated 12.10.2018.
22. The appellants herein invoked the jurisdiction of this Court seeking a writ of mandamus directing the State of Uttarakhand to enquire into the matter of invitation of tenders and allotment of work under the District Plan in the year 2014-15, as to how tenders for work in excess of financial sanction were called for, and contracts on behalf of the Government were entered into with the appellants; a mandamus directing the respondent authorities to clear payment of the appellants, as the work entrusted to them had been completed about three years ago; and a mandamus directing the respondent authorities to pay interest @ 18% per annum to the appellants on the outstanding amount, as the work entrusted to them had been completed about three years back.
3. While larger questions of whether the State Government was justified in executing works without availability of funds are raised, these questions are merely a disguised attempt to have contractual disputes adjudicated in writ proceedings under Article 226 of the Constitution, as the main relief sought for in the writ petition was to direct the respondents to pay the appellants the outstanding amounts allegedly due for the works executed by them for the State Government. The appellants' grievance in the writ petition, in short, is that they were awarded construction works under the Zila Yojana during the Financial Years 2013-14 to 2016-17; separate contracts were signed between the appellants and respondent Nos. 5 & 6; the works, awarded under the contracts, were completed three years' ago; however payment, in respect of the works, has not been released till date; as the appellants had completed the works, they have been requesting the respondent authorities to release payment, but no action was taken; when no payment was received, the appellants and other similarly situated contractors sought information from the fifth respondent, vide letter dated 11.09.2017, regarding the funds sanctioned / released, tenders invited, etc. towards the work done under the District Plan; the information furnished by the fifth respondent is that respondent Nos. 4 & 5 had called for tenders much beyond the sanctioned limits; yet another information secured by the appellants discloses that, while several works were completed from 2013-14 to 2016-17, no payment has been made to them; there was no dispute regarding the work, its quality or of violation of any terms and conditions;
3they submitted letter dated 18.08.2018 for refund of the retention money, which is liable to be returned after completion of the "defect liability period"; the appellants met respondent Nos. 5 & 6 in their office on 18.08.2018, and they were assured that action would be taken; the cause for non-payment was non-availability of funds with the State Government; this has occurred on account of the lapse in the tendering process even without availability of finances; the appellants are being subjected to unnecessary harassment at the hands of the respondent authorities; a sum of ` 52,00,981/- is due to the first appellant and ` 32,24,793/- is due to the second appellant; though there is an arbitration clause in the contract, the same is of no consequence; there is no dispute regarding the liability from the side of the Public Works Department; since the arbitration clause provides that an officer of the rank of a Superintending Engineer shall be appointed as an Arbitrator, there is very little hope that the appellants would have any say in front of the might of the State; as the amounts are not being paid on account of non-availability of funds, there is no hope of the Arbitrator doing anything; and the action of the respondents is arbitrary and illegal.
4. In the order under appeal, the learned Single Judge noted the appellants' contention that they had executed works for the respondent authorities for which payment had not been made to them; hence, they had invoked the jurisdiction of this Court seeking a direction to the State to release payment; an objection had been raised, on behalf of the respondents, that the appellants had not annexed the contract on the basis of which they were awarded the work; Government contracts, generally, have an arbitration clause which the appellants can invoke; since the contract has not been filed before this Court, nothing could be said on this aspect; and considering the nature of the case, the writ petition was being dismissed in limine.
5. Before us Mr. Davesh Bishnoi, learned counsel for the appellants-writ petitioners, would submit that, since the facts are not in dispute and non- payment of the amounts, towards the works executed by the appellants, is only for the reason of non-availability of funds with the State Government, the appellants cannot be relegated to the remedy of invoking the arbitration clause of the agreement; a writ petition would lie to this Court even in cases 4 involving non-statutory contracts, in which no disputed questions of fact arise for consideration; and the learned Single Judge has, therefore, erred in refusing to entertain the writ petition, and in dismissing it in limine. Learned counsel would rely on a Division Bench judgment of this Court in M/s S.M. Construction vs. State of Uttarakhand & others (judgment in Special Appeal No. 742 of 2018 dated 30.10.2018).
6. On the question of maintainability of a writ petition involving contractual disputes, a distinction must be made between statutory and non- statutory contracts. A contract would not become statutory simply because it has been awarded by the Government or a statutory body. Merely because the obligations imposed by the contract, on the contracting parties, fall within the purview of the Contract Act, would also not make the contract statutory. A statute may expressly or impliedly confer power on the Government or a statutory body to enter into contracts in order to enable it to discharge its functions. The fact that one of the parties to the agreement is a statutory or a public body will not by itself affect the principles to be applied, for every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have the power to contract or deal with property. Such activities may not raise any issue of public law. (Kerala State Electricity Board & others vs. Kurien E. Kalathil & others[1]). Merely because a contract is entered into, in the exercise of an enabling power conferred by a statute, would not by itself render the contract statutory. It is only if entering into a contract, containing the prescribed terms and conditions, is a must under the statute would the contract be held to be statutory in character. A contract may contain terms and conditions which may not be statutory, and which have been incorporated therein as a result of mutual agreement between the parties. (India Thermal Power Ltd. vs. State of M.P. & others[2]). The contract, in the present case, is admittedly not statutory in character. Unlike disputes arising out of statutory contracts which can be adjudicated in writ proceedings under Article 226 of the Constitution, within the limited parameters of judicial review, non-statutory contractual disputes stand on a different footing.
57. On the question whether a writ petition would lie under Article 226 of the Constitution of India for resolution of non-statutory contractual disputes, or for enforcement of obligations arising therefrom, one line of judicial pronouncement of the Supreme Court is that the remedy under Article 226 of the Constitution of India is barred in such matters. In Lekhraj Satramdas, Lalvani vs. Deputy Custodin-cum-Managing Officer & others[3], the Supreme Court held that a writ of mandamus may be granted only in a case where there is a statutory duty imposed, there is failure to discharge that statutory obligation, and any duty or obligation arising out of a contract cannot be enforced by the machinery of a writ under Article 226 of the Constitution. In Banchhanidhi Rath vs. The State of Orissa & others[4], the Supreme Court held that a right claimed in terms of a contract cannot be enforced in a writ petition. In Har Shankar & others vs. The Deputy Excise and Taxation Commissioner & others[5], a Constitution Bench of the Supreme Court held that a writ petition was not an appropriate remedy for impeaching contractual obligations. In Radhakrishna Agarwal & others v. State of Bihar & others[6], the Supreme Court, following Har Shankar5, held:
"...Even if the appellants could be said to have raised any aspect of Article 14 of the Constitution and this Article could at all be held to operate within the contractual field whenever the State enters into such contracts, which we gravely doubt, such questions of fact do not appear to have been urged before the High Court. And in any event, they are of such a nature that they cannot be satisfactorily decided without a detailed adduction of evidence, which is only possible in ordinary civil suits, to establish that the State, acting in its executive capacity through its officers, has discriminated between parties identically situated. On the allegations and affidavit evidence before us we cannot reach such a conclusion. Moreover, as we have already indicated earlier, the correct view is that it is the contract and not the executive power, regulated by the Constitution, which governs the relations of the parties...."
(emphasis supplied)
8. In Divisional Forest Officer vs. Bishwanath Tea Co. Ltd.[7], the Supreme Court held that, ordinarily, where a breach of contract is complained of, a party complaining of such breach may sue for specific performance of the contract, or for damages; such a suit would ordinarily be cognizable by the Civil Court; and the High Court, in its extraordinary 6 jurisdiction, would not entertain such a petition. In Bareilly Development Authority & another vs. Ajai Pal Singh & others[8], the Supreme Court held that where the contract, entered into between the State and the person aggrieved, was non-statutory and the rights were governed only by the terms of the contract, no writ or order could be issued under Article 226 of the Constitution so as to compel the authority to remedy the breach of contract; and the High Court in such cases could not examine the question of arbitrariness and unreasonableness on the part of the State or its instrumentalities. In State of Gujarat & others vs. M.P. Shah Charitable Trust & others[9], the Supreme Court held that, if the matter is governed by a contract, a writ petition is not maintainable since it is a public law remedy and is not available in the private law field. In Asstt. Excise Commissioner & others vs. Issac Peter & others[10], the Supreme Court held that there was no room for invoking the doctrine of unjust enrichment in business transactions; the rule of promissory estoppel, and estoppel by conduct, could not be invoked to alter or amend specific terms of the contract; the rule of legitimate expectation could not be invoked to modify or vary the express terms of the contract; in case of contracts freely entered into with the State, there was no room for invoking the doctrine of fairness and reasonableness against one party to the contract (State), for the purpose of altering or adding to the terms and conditions of the contract; and in such cases, the mutual rights and liabilities of the parties are governed by the terms of the contract and the laws relating to contracts.
9. In State of U.P. & others vs. Bridge & Roof Co. (India) Ltd.[11], the Supreme Court held that the contract between the parties was a contract in the realm of private law; any dispute, relating to interpretation of the terms and conditions of such a contract, could not have been agitated in a writ petition; and it was a matter either for arbitration as provided by the contract or for the civil court, as the case may be. In Kerala State Electricity Board1, the Supreme Court held that the interpretation and implementation of a clause in a contract cannot be the subject matter of a writ petition; if a term of a contract is violated, ordinarily, the remedy is not a writ petition under Article 226; the contract between the parties was in the realm of private law; disputes relating to interpretation of the terms and conditions of 7 a non-statutory contract could not have been agitated in a petition under Article 226 of the Constitution of India; and it was a matter for adjudication by a civil court, or in arbitration if provided for in the contract.
10. In State of Bihar & others vs. Jain Plastics & Chemicals Ltd.[12] the Supreme Court held that, while it was true that many matters could be decided after referring to the contentions raised in the affidavits and counter- affidavits but that was hardly a ground for exercise of the extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract; such seriously disputed questions or rival claims of the parties, with regard to breach of contract, was to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit, rather than by a Court exercising the prerogative of issuing writs.
11. In National Highway Authority of India vs. Ganga Enterprises & others[13], the Supreme Court held that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. In Pimpri Chinchwad Municipal Corporation & others vs. Gayatri Construction Company & others[14], the Supreme Court, following its earlier judgments in National Highway Authority of India13, Kerala State Electricity Board1, India Thermal Power Ltd.2, and Bridge & Roof Co. (India) Ltd.11, held that the High Court ought not to have entertained a writ petition involving contractual disputes.
12. There is, however, another line of decisions of the Supreme Court wherein it has been held that where the action of the State or its instrumentalities, even in contractual matters, is in violation of Article 14 of the Constitution of India, a writ petition would lie; entertaining such disputes was in the discretion of the High Court; and the scope of judicial review, in such contractual disputes, was limited.
13. In K.N. Guruswamy vs. The State of Mysore & others[15], a Constitution Bench of the Supreme Court observed:
"...The next question is whether the appellant can complain of this by way of a writ. In our opinion, he could have done so in an ordinary case. The appellant is interested in these contracts and has a 8 right under the laws of the State to receive the same treatment and be given the same chance as anybody else...."
14. In D.F.O., South Kheri & others vs. Ram Sanehi Singh[16], the Supreme Court expressed their inability to hold that merely because the source of the right, which the respondent-Board claimed, was initially in a contract, he must resort to a suit, and not to a petition by way of a writ for obtaining relief against any arbitrary and unlawful action on the part of a public authority; and, in view of the judgment in Guruswamy15, there could be no doubt that the petition was maintainable, even if the right to the relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power.
15. In Dwarkadas Marfatia and Sons vs. Board of Trustees of the Port of Bombay[17], the Supreme Court held that a public body must act in public interest, and an infraction of that duty is amenable to examination either in a civil suit or in writ jurisdiction; and if a governmental policy or action, even in contractual matters, failed to satisfy the test of reasonableness, it would be unconstitutional. In Mahabir Auto Stores v. Indian Oil Corporation[18], the Supreme Court observed that if governmental action, even in matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable; and the decision of the State/public authorities under Article 298 of the Constitution was an administrative decision, and could be impeached on the ground that the decision was arbitrary or in violation of Article 14 of the Constitution of India or any other ground available in the public law field.
16. In Life Insurance Corporation of India & others vs. Asha Goel (Smt.) & another[19], the Supreme Court held that it cannot be laid down as a general proposition of law that in no case the High Court can entertain a writ petition under Article 226 of the Constitution to enforce a contractual claim; the matter was to be considered in the facts and circumstances of each case; if the contract entered into between the parties provided an alternate forum for resolution of disputes arising from the contract, then the parties should approach the forum chosen by them; the High Court, in its writ jurisdiction, should not permit them to by-pass the agreed forum of dispute 9 resolution; and, ordinarily, the High Court should not entertain a writ petition for mere enforcement of a claim under a contract.
17. In ABL International Ltd. vs. Export Credit Guarantee Corporation of India Ltd.[20], the Supreme Court held that there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact; and in cases where there is a contravention of Article 14, a writ court can issue suitable directions to set right such arbitrary action. The Supreme Court laid down the following legal principles 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, the same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule and (c) a writ petition involving a consequential relief of monetary claim is also maintainable. The Supreme Court, thereafter observed that, while entertaining an objection 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 (Whirlpool Corporation v. Registrar of Trade Marks[21]), 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.
18. The Supreme Court, in ABL International Ltd.20, further held that, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the High Court, having regard to the facts of the case, has the discretion to entertain or not to entertain a 10 writ petition; 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 Article 14; the scope of judicial review in respect of disputes falling within the domain of contractual obligations is limited and, in doubtful cases, the parties may be relegated to adjudication of their rights by resort to the remedies provided for adjudication of purely contractual disputes, but to the extent a challenge is made on the ground of violation of Article 14, alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14; and this obligation is of a public character.
19. In Noble Resources Ltd. vs. State of Orissa & others[22], the Supreme Court held that, if the action of the State is violative of Article 14, a writ petition would be maintainable even in the contractual field; while exercising contractual powers also, government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part; while contractual matters are not beyond the realm of judicial review, its application may be limited; each case must be decided on its own facts; having regard to ABL International Ltd.20, it could not be held that only because there existed disputed question of fact, or an alternative remedy was available, the same by itself would be sufficient for the High Court to decline its jurisdiction; in cases where serious disputed questions of fact arose for determination, such disputed questions of fact, ordinarily, could not have been entertained by the High Court in the exercise of its power of judicial review; and, ordinarily, specific performance of a contract would not be enforced by issuing a writ of/or in the nature of mandamus.
20. In State of Kerala and others vs. M.K. Jose[23], the Supreme Court held thus:
".....In this regard, a reference to Noble Resources Ltd. v. State of Orissa, (2006) 10 SCC 236 would be seemly. The two-Judge Bench referred to the ABL International, Dwarkadas Marfatia and Sons v. Board of Trustees, Port of Bombay, Mahabir Auto Stores v. Indian Oil 11 Corporation and Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai and opined thus:
"29. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise the power of judicial review. In a case where a public law element is involved, judicial review may be permissible. (See Binny Ltd. v. V. Sadasivan and G.B. Mahajan v. Jalgaon Municipal Council)"
Thereafter, the court in Noble Resources case, proceeded to analyse the facts and came to hold that certain serious disputed questions of facts have arisen for determination and such disputes ordinarily could not have been entertained by the High Court in exercise of its power of judicial review and ultimately the appeal was dismissed......"(emphasis supplied)
21. As noted hereinabove, while one line of judicial pronouncements of the Supreme Court is that a writ petition would not lie for resolution of non- statutory contractual disputes, the other line of decisions is that, while interference is permissible, it is on limited grounds of violation of Article 14 of the Constitution of India and is, in any event, a matter to be decided by the High Court in its discretion.
22. It must, however, be borne in mind that, while there is no absolute bar to the maintainability of a writ petition even in non-statutory contractual matters or where there are disputed questions of fact or even when a monetary claim is raised, discretion lies with the High Court which, under certain circumstances, it can refuse to exercise. It also follows that under the following circumstances, 'normally', the Court would not exercise such discretion i.e. (1) the Court may not examine the issue unless the action has some public law character attached to it; (2) whenever a particular mode of settlement of disputes 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 resorted to through the means of arbitration; (3) if there are serious disputed questions of fact which are of a complex nature and require oral evidence for their determination; and (4) money claims per se, particularly arising out of contractual obligations, are 12 normally not to be entertained except in exceptional circumstances. (Joshi Technologies International Inc. vs. Union of India & others[24]).
23. If the contract, between a private party and the State/instrumentality and/or agency of State, is under the realm of private law, and there is no element of public law, the normal course for the aggrieved party is to invoke the remedies provided under the ordinary civil law rather than approaching the High Court under Article 226 of the Constitutional of India and invoking its extraordinary jurisdiction. (Joshi Technologies International Inc.24). The remedies for a breach of contract, being purely in the realm of contract, are dealt with by Civil Courts. The public law remedy, by way of a Writ Petition under Article 226 of the Constitution of India, is not available to seek damages for breach of contract or specific performance of contract. However, where the contractual dispute has a public law element, the power of judicial review under Article 226 of the Constitution of India may be exercised. (Kisan Sahkari Chini Mills Ltd. and others vs. Vardan Linkers and others[25]).
24. The distinction between public law and private law assumes significance as this Court would not, ordinarily, exercise its extraordinary jurisdiction, under Article 226 of the Constitution of India, to adjudicate disputes in the private law realm. What then is "Public Law"? Public law is a system which enforces the proper performance by public bodies of the duties which they owe to the public. Every "body" which is created by a statute, and whose powers and duties are defined by the statute, is a 'public authority'. Private law is a system which protects the private rights of private individuals or the private rights of public bodies. Distinction therein is that the public as a whole is the beneficiary of what is protected by public law, and it is the individuals or bodies entitled to the right which are beneficiaries of the protection provided by private law. Not all decisions taken by bodies in the course of their public functions are the subject-matter of judicial review. In the following two situations, judicial review will not normally be appropriate even though the body may be performing a public function:
13(a) Where some other branch of the law more appropriately governs the dispute between the parties. In such a case, that branch of the law and its remedies should and normally will be applied; and
(b) Where there is a contract between the litigants. In such a case, the express or implied terms of the agreement should normally govern the matter. This reflects the normal approach, namely, that the terms of a contract will normally govern the transaction, or other relationship between the parties, rather than the general law. Thus, where a special method of resolving disputes (such as arbitration or resolution by private or domestic tribunals) has been agreed upon by the parties (expressly or by necessary implication), that regime, and not judicial review, will normally govern the dispute."
(Desmith, Woolf and Jowell's Judicial Review of Administrative Action, 5th Edition; Hindustan Petroleum Corporation vs. Ali Jafar[26])
25. Public duty can never be equated to that of an obligation to any person or identifiable group of persons. Public duty is owed to the public in general and not specifically to any person or group of individuals. That is the precise character of a public law duty in contra distinction to private law, which is normally founded upon a contract or tort etc., as the case may be. (Ali Jafar26). The public law remedy is enforceable, under Article 226 of the Constitution, where the actions of the authority fall in the realm of public law - be it a legislative act of the State, an executive act of the State or an instrumentality or a person or authority imbibed with a public law element. The question is required to be determined in each case having the aforementioned principles in mind. It may not, however, be possible to generalize the nature of the action which would come either under public law remedy or the private law field nor is it desirable to give an exhaustive list of such actions. (Union of India vs. S.B. Vohan[27]). Access to justice by way of a 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. A writ petition would be entertained when it involves a public law character or involves a question arising out of 14 public law functions on the part of the respondents. (Sanjana M. Wig vs. Hindustan Petroleum Corporation[28]).
26. In this context, it is useful to refer to Sri Konaseema Cooperative Central Bank Ltd. vs. N. Seetharama Raju[29], wherein a Full Bench of the Andhra Pradesh High Court observed:-
".......Distinction between 'public law' and 'private law':
Difficult as this distinction is and incapable of precise demarcation, it is yet necessary to keep the broad distinction in mind. Lord Denning in his book "The Closing Chapter" has this to say on the subject:
"The first thing to notice is that public law is confined to 'public authorities'. What are 'public authorities'? There is only one avenue of Approach. It is by asking, in the words of Section 31(2)(b) of the Supreme Court Act 1981: What is the 'nature of the persons and bodies against whom relief may be granted by such orders', that is, by mandamus, prohibition or certiorari'?
These are divided into two main categories:
First, the persons or bodies who have legal authority to determine questions affecting the common law or statutory rights or obligations of other persons as individuals. That is the formula stated by Lord Justice Atkin in R. London Electricity Joint Committee Co. (1920) Ltd, (1924) 1 KB 171/2005 as broadened by Lord Diplock in O'Reilly Vs. Mackman (1982)3,, wlr 1096/1104).
Second, the persons or bodies who are entrusted by Parliament with functions, powers and duties which involve the making of decision of a public nature...........To which I would add the words of Lord Goddard, C.J. in R. v. National Joint Council for Dental Technicians, ex parte Neate (1953) 1 QB 704/707):
"The bodies to which in modern times the remedies of these prerogative writs have been applied have all been statutory bodies on whom Parliament has conferred statutory powers and duties which, when exercised, may lead to the detriment of subjects who may have to submit to their jurisdiction".
But those categories are not exhaustive. The courts can extend them to any other person or body of a public nature exercising public duties which it is desirable to control by the remedy of judicial review.
There are many cases which give guidance, but I will just give some illustrations.
15Every body which is created by statute and whose powers and duties are defined by statute is a 'public authority'. So Government departments, local authorities, police authorities, and statutory undertakings and corporations, are all 'public authorities'. So are members of a statutory tribunal or inquiry, and the board of visitors of a prison. The Criminal Injuries Compensation Board is a public authority. So also, I suggest, is a university incorporated by Royal charter, and the managers of a State School. So is the Boundary Commission: and the Committee of Lloyd's.
But a limited liability company incorporated under the Companies Acts is not a 'public authority', (see Tozer Vs. National Greyhound Racing Club Ltd (1983) Times, 16 May). Nor is an unincorporated association like the Jockey Club......".
Sir Harry Woolf, a Lord Justice of Court of Appeal, points out the distinction in the following words:-
"I regard public law as being the system which enforces the proper performance by public bodies of the duties which they owe to the public. I regard private law as being the system which protects the private rights of private individuals or the private rights of public bodies. The critical distinction arises out of the fact that it is the public as a whole, or in the case of local government the public in the locality, who are the beneficiaries of what is protected by public law and it is the individuals or bodies entitled to the rights who are the beneficiaries of the protection provided by private law..."
(see page 221 of this Article "Public Law Private Law: Why the Divide?
A personal View (published in "Public Law" Summer: (1986)") The learned Law Lord stated further in the same Article, at page 223:
"While public law deals only with public bodies, this does not mean that the activities of public bodies are never governed by private law. Like public figures, at lest in theory, public bodies are entitled to have a private life There have been suggestions that in the commercial field public bodies should adopt different and higher ethical standards than private individuals, but this is not yet required as a matter of law and in relation to purely commercial transactions the same law is applicable, whether or not a public duty is involved. Prima facie, the same is true in relation to employment. The servant employed by a public body ordinarily has the same private rights as any other servant....."
(emphasis supplied)
27. The distinction between public law remedies, and those in the private law field, cannot be demarcated with precision. Each case should be 16 examined on its facts whether the contractual relations between the parties bear the insignia of a public element. Once, on the facts of a particular case, it is found that the nature of the activity or controversy involves a 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 ascertain whether the 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. (Joshi Technologies International Inc.24).
28. A writ court should, ordinarily, not entertain a writ petition, if there is a breach of contract involving disputed questions of fact. (M.K. Jose23). Contractual disputes are, ordinarily, outside the purview of judicial review under Article 226, with the exception of contractual disputes having a public law element. (Rishi Kiran Logistics Private Limited vs. Board of Trustees of Kandla Port Trust and others[30]). A writ petition, under Article 226, is not the proper proceedings for adjudicating contractual disputes. Under the law, it was open to a party to the contract to approach the court of competent jurisdiction for appropriate relief for breach of contract. When an alternative and equally efficacious remedy is open to the litigant, he should be required to pursue that remedy and not invoke the writ jurisdiction of the High Court. Equally, the existence of an alternative remedy does not affect the jurisdiction of the court to issue a writ but ordinarily that would be a good ground for refusing to exercise the discretion under Article 226. (Jain Plastics and Chemicals Ltd.12; M.K. Jose23). The scope of judicial review in respect of disputes falling 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. (Joshi Technologies International Inc.24). Disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a court exercising the prerogative of issuing writs. (Jain Plastics and Chemicals Ltd.12; M.K. Jose23). While matters can be decided after referring to the contentions raised in the 17 affidavits and counter-affidavits, that would hardly be a ground for exercise of the extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. (Jain Plastics and Chemicals Ltd.12; M.K. Jose23).
29. The question, therefore, is not of lack of jurisdiction but of exercise of discretion. While even disputed questions of fact can be adjudicated by the High Court, under Article 226 of the Constitution of India, such disputed questions of fact, more so, when they relate to non-statutory contractual disputes, which are in private law realm, are better suited for adjudication either before the arbitral tribunal constituted in terms of the agreement or before a civil court of competent jurisdiction.
30. The dispute, in the present writ proceedings, arises under a non- statutory contract, and is in the realm of private law. The public law remedy, under Article 226 of the Constitution of India, cannot, normally, be permitted to be invoked to adjudicate non-statutory contractual disputes. 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, this Court may not entertain a writ application. The question as to when such a discretionary jurisdiction is to be exercised, or refused to be exercised, by the High Court, has to be determined having regard to the facts and circumstances of each case, and no hard-and-fast rule can be laid down. (Sanjana M. Wig28).
31. It is not as if, in all cases where the writ petitioners claim that certain amounts are admittedly due to them, the Court is bound to entertain the writ petition, for it lies in its discretion to refuse to entertain the writ petition and to relegate the writ petitioners to the remedy of either invoking the arbitration clause in the agreement or to approach the competent civil court. Shorn of all verbiage, and their attempts to present it as a public law dispute notwithstanding, the appellants-writ petitioners, in effect, only seek payment of the amounts allegedly due to them, for the works executed by them for the respondents, with interest @ 18% per annum. While they have sought to disguise this claim by raising other questions only to bring it in the public 18 law realm, the aforesaid relief which they have sought is purely in the private law field for which they ought to have either invoked the arbitration clause of the agreement, or if the said clause is inapplicable, to then approach the competent civil court.
32. While its jurisdiction, even to entertain non-statutory contractual disputes, is not barred, this Court would, ordinarily, refrain from exercising its extra-ordinary jurisdiction, under Article 226 of the Constitution of India, to entertain writ petitions involving disputes in the contractual realm, as these matters are more suited for adjudication either before an Arbitrator (if the agreement contains an arbitration clause) or before the competent civil court before which evidence can be adduced by both the parties, and the lis adjudicated.
33. As reliance is placed on behalf of the appellants-writ petitioners on a Division Bench judgment of this Court, it is necessary to take note of its contents. In M/s S.M. Construction (judgment in Special Appeal No. 742 of 2018 dated 30.10.2018), the appellant had executed certain construction works in the Irrigation Department; though the work had been executed, payment was not made to the appellant; and the appellant claimed that there was no dispute with regards the execution of the work. The Division Bench noted that the learned Single Judge had not examined the plea taken by the appellant that the respondents had admitted of execution of the work by the appellant, and there was no violation of any of the terms and conditions of the work order. The Division Bench observed that it is settled law that, if it is admitted by the respondents that there is no dispute regarding execution of the work, disputed questions of fact can also be examined in a writ petition filed under Article 226 of the Constitution of India. The Division Bench relied on an earlier Division Bench judgment of this Court in Kawaljeet Singh Talwar vs. State of Uttarakhand & others (judgment in Special Appeal No. 914 of 2017 dated 27.11.2017)[31], wherein it was held as under:
"6. .....When a matter arises under a contract, it is true that ordinarily the Court would relegate the party to a competent forum, but this is not an inflexible or invariable rule. The power of the writ court is wide enough to deal with injustice wherever it is found. In fact, the Courts in India are not trammeled by technicalities of the law, which bogged down the English Courts. It is also true 19 that if the disputed questions of fact arise, it may be a ground to turn away a writ applicant even in a writ of mandamus. It is not the law that the writ court cannot decide a question of fact. When a case is brought up before the court for the first time, by the nature of the case, the Court may be in a position to turn-away an applicant on the basis that it necessarily would involve adjudicating a highly disputed question of fact, which cannot be decided, except after oral evidence is taken. The question as to whether a disputed question of fact arises, in many cases, would, however, depend upon the pleadings, which are introduced in response to the writ petition by the answering respondent(s). In a case, which may arise out of a contract, if the complaint is that the work has been done by a contractor and there is absolutely no dispute regarding the fulfillment of the contract raised by the respondent, it may not be a proper exercise of the jurisdiction, wide as it is, to relegate a party to the prolix process of the Civil Court, when there is nothing much to be decided by the Civil Court. There may be other reasons like paucity of fund as in fact is the case, which is sought to be projected in this case. We do notice that ordinarily the matters relating to enforcement of contractual rights should not be entertained by the writ court, but if the dispute is only relating to the non-payment of an amount, which is totally beyond the pale of doubt, in appropriate cases, the writ court can entertain such cases......"(emphasis supplied)
34. The Division Bench set-aside the order passed by the learned Single Judge and directed the respondents to make payment of the admitted work executed by the appellant within a period of 10 weeks.
35. Unlike in M/s S.M. Construction and Kawaljeet Singh Talwar31, in the present case, the writ petition has been dismissed in limine. Neither was the writ petition admitted, nor were the respondents called upon to file their counter affidavits. While the appellants claim that there is no dispute regarding the amounts payable to them, this assertion of the appellants could only have been rebutted or disputed by the respondents, if the learned Single Judge had chosen to entertain the writ petition, and had called upon the respondents to file their counter affidavits.
36. It must also be borne in mind that this intra-court appeal is preferred against the order of the learned Single Judge refusing to exercise his discretionary jurisdiction, under Article 226 of the Constitution of India, to entertain the writ petition. It is the internal working of the High court which splits it into different 'benches' and yet the court remains one. In an intra- court appeal, the Division bench, sitting as a court of correction, corrects its 20 own orders in the exercise of the same jurisdiction as was vested in the Single bench, i.e. under Article 226 of the Constitution of India. The judgment under appeal cannot be faulted on the ground that an alternative view, which might commend itself to the appellate court, has not been accepted by the learned Single Judge. At least, such review is not open to an appellate court hearing appeals against orders made under Article 226 of the Constitution which is a discretionary remedy. Interference can only be on an error of principle but not on re-evaluation of evidence; nor on the basis of preferential choice of alternatives.
37. Viewed from any angle, we are satisfied that the order of the learned Single Judge does not suffer from a patent error or illegality necessitating interference in an intra-court appeal. As the learned Single Judge has exercised his discretion not to entertain the writ petition, and has dismissed it in limine, suffice it to make it clear that neither the order under appeal, nor the order now passed by us, shall disable the appellants-writ petitioners from availing their remedy of invoking the arbitration clause in the agreement (if such a remedy is available), and if it is not, from availing their common law remedy of filing a suit before the Civil Court of competent jurisdiction.
38. Subject to the aforesaid observations, the appeal fails and is, accordingly, dismissed. However, in the circumstances, without costs.
(Alok Singh, J.) (Ramesh Ranganathan, C. J.)
28.11.2018 28.11.2018
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