Jharkhand High Court
Ms National Printers Represented ... vs Principal Secretary Hrd Cum State ... on 19 September, 2017
Author: Amitav K. Gupta
Bench: Amitav K. Gupta
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
----
W.P(C) No. 151 of 2015
-----
In the matter of an application under Article 226 of the
Constitution of India.
-----
M/s. National Printers, proprietor Apex Products Private
Limited having its office at 8H and 8I Industrial Area, Namkum,
Ranchi-834010 represented through its 010 represented
through its Director Shri Krishan Kant Kedia, s/o Sri Gopi
Chand Kedia, resident of Lalpur,P.O.P.S. Lalpur, District-
Ranchi-834001. .... Petitioner.
-Versus-
1. Principal Secretary, HRD-cum-State Project Director,
Jharkhand Education Project Council, New Cooperative
Building, Syamli Building, Doranda, P.O.P.S. Doranda, District-
Ranchi-834024.
2. State Project Director, Jharkhand Education Project Council,
New Cooperative Building, Syamli Building, Doranda, P.O.P.S.
Doranda, District-Ranchi-834024(Jharkhand).
3. Administrative Officer-cum-Indenting Officer, Jharkhand
Education Project Council, New Cooperative Building, Syamli
Building, Doranda, P.O.P.S. Doranda, District-Ranchi-
834024(Jharkhand).
4. Principal Secretary, Human Ressources Department(HRD),
Union of India(UOI), Shastri Bhawan,C-Wing, Dr.Rajender
Prasad Road, New Delhi-110001. ...... Respondents.
-----
CORAM: HON'BLE MR. JUSTICE AMITAV K. GUPTA
-----
For the Petitioner : M/s. M.S.Mittal, Sr. Advocate,
Naveen Kumar and Rahul Lamba,
Advocates.
For the Respondent-State : Mr.Ajit Kumar, Advocate General.
For the JEPC :Mr.Saurav Arun,Advocate.
For Union of India : Mr. Rajiv Sinha, ASG.
-----
15/19.09.2017The petitioner has prayed for issuance of an appropriate writ/order for quashing the order dated 05.06.2014 of the respondents refusing to release the outstanding dues of Rs.11,61,70,081/- in favour of the petitioner in terms of the agreement dated 25.09.2012, for printing and supplying of the text books for Class Vlll by the petitioner, for the academic session 2013-
14.
2. Petitioner's case is that the tender dated 25.08.2012 (Annexure-1) for printing and supplying of text books, for 2 Classes I to VIII was floated by the respondent/Jharkhand Education Project Council under the signature of Principal Secretary, Human Resource Development (HRD) Department-cum-State Project Director, JEPC, Ranchi.
3. The petitioner participated in the bidding process and submitted the requisite documents (Annexure-2) and gave his consent for printing and supplying of text books for Class VIII, at the lowest rate vide letter dated 24.09.2012 (Annexure-4). The contract was valued at Rs.16,62,79,595/-. The petitioner furnished the bank guarantee of Rs. 83,13,980/-, i.e., 5% of the amount as security, and the work order dated 25.09.2012, (Annexure-6), was issued in favour of the petitioner. The agreement/contract dated 25.09.2012 (Annexure-21) was executed and entered into by the petitioner and the respondents, consequent thereto, an advance amount of 30%, i.e., Rs.4,88,86,200/- of the contract value was released in favour of the petitioner vide Annexure-8. As per terms of the work order and contract the text books, of Package no.8 (i.e. for Class VIII), were to be delivered at the destination point within 145 days.
4. It is stated that the petitioner completed the work for printing and supplying of the text books within the stipulated period and submitted the bills, dated 21.02.2013 (Annexure-9). The petitioner filed the representation dated 28.06.2013, requesting the respondents to release the remaining amount of Rs.11,61,70,081/-, but the respondents did not release the outstanding amount. Then, the petitioner filed W.P. (C) No. 798/2014 and the High Court directed the respondent nos.3 and 4 (of the said writ) to consider the petitioner's representation and pass a reasoned ordered within six weeks.
5. Learned Sr. counsel, on behalf of the petitioner, has submitted that in view of the direction of the High Court in W.P(C) NO.798/2014 the petitioner submitted several reminders, for releasing the outstanding amount, to the respondents, as would be evident from Annexure-13 series appended to this writ petition. That the respondents, by letter dated 05.06.2014, without assigning any reason, rejected the claim of the petitioner on the basis of the communique dated 18.10.2013 of the Ministry of Human Resources Development Department (for short 'MHRD'), Government of India (for short GOI). It is submitted that due to non-payment of the outstanding dues, the petitioner is in dire financial straits and is unable to pay the dues to its employees and the petitioner has been further burdened with the liability to pay Rs.6.53 Crores as accrued 3 interest on the principal amount taken as loan for printing and supply of the text books.
6. It is submitted that the petitioner was also given work order for printing and supplying of the books for the year 2011-12 and was paid the entire amount. That for the subsequent years i.e. 2014-15, 2015-16 and 2016-17 work order was also given to the petitioner and Rs.15.5 Crores, Rs.22 Crores and Rs.24.00 Crores, respectively, were released for payment by the respondents. It is submitted that the terms of the contract/agreement for the academic year 2013-14 of the present writ petition is verbatim the same as that of the aforementioned years.
7. It is urged that in similar facts and circumstances, M/s. S. Dinesh had approached this Court in W.P.(C) No. 5568/2014 wherein by order dated 18.03.2016 (Annexure-19) the respondents have been directed to pay the outstanding amount to M/s. S. Dinesh.
8. It is canvassed that the plea of the respondents that the payment can only be made on release of the fund by the Central Government is capricious and not in consonance with the terms and conditions of the contract/agreement dated 25.09.2012 (Annexure-21).
9. Learned senior counsel has relied on the order of the Division Bench in the case of Setu Printers vs. States of Jharkhand; (2011) 4 JCR 374 (Jhr) and submitted that in the aforesaid case it has been observed that the respondents cannot take double benefit, i.e., receiving the goods of the petitioner as well as withholding the consideration amount of the goods. Accordingly the respondent/state was directed to pay the consideration amount to Setu Printers (Supra).
10. Learned counsel has reiterated that due to the arbitrary action of the respondents, the petitioner has suffered and incurred a loss of Rs.6.5 Crores which has been paid as interest to the Bank as would be evident from Annexure-24.
11. Learned counsel has relied on the decisions of the Hon'ble Apex Court reported in (2004)3 SCC 533 (para 27); (2002) 5 SCC 111 (paras 33,34,35 and 40); (1983) 4 SCC 582 (paras 21 and 22) and (2005) 4 SCC 649 (paras 32 and 33) and argued that the respondents action of not releasing the admitted dues is arbitrary and violative of the contractual obligation.
12. It is argued that in view of the undisputed facts, the respondents should be called upon and directed to pay the outstanding dues and the order dated 05.06.2014, rejecting the claim of the petitioner is fit to be quashed.
413. Mr. Rajiv Sinha, learned Assistant Solicitor General, appearing on behalf of respondent no.4, i.e., the Principal Secretary, Ministry of Human Resources Development Department (hereinafter to be referred as MHRD), Government of India (GOI), has submitted that it is amply clear that the agreement (Annexure-
21) was entered into and executed on behalf of respondents no.1 and 2 and MHRD, GOI is not privity to the contract.
14. It is submitted that it would be evident from the narration in the counter affidavit of MHRD that the Central Vigilance Commission had received a complaint on 19.09.2012, authored by one Somenath Ghosh, containing allegations regarding the irregularities committed in the tender process in the matter of supply of materials under Sarba Siksha Abhiyan (for short SSA) scheme, for the academic session 2013-14. The MHRD, by letter dated 13.06.2013, forwarded the complaint to the Chief Secretary of the State to enquire into the matter and fix the responsibility on the guilty person. The State Government, in the 32 nd meeting, included the said complaint in its agenda and constituted a committee to enquire into the allegation. The Committee submitted the inquiry report dated 19.09.2013, which was forwarded to MHRD by the State Government vide letter dated 25.09.2013. The MHRD examined the report and concluded that there was violation of SSA Manual with respect to financial management and procurement of text books. Due to financial impropriety in procurement of text books, MHRD directed the State Government not to make any payment from SSA funds or account. The decision of MHRD was communicated to respondent no. 1 by letter dated 18.10.2013 (Annexure-A to the counter affidavit filed by respondent no. 2 and Annexure-P/1 to the counter-affidavit of Government of India)
15. It is submitted that the State Project Director, Respondent no.2, vide letter dated 09.04.2014 requested MHRD, Government of India (GOI) to grant permission for payment for the text books supplied by the petitioner for the academic session 2013-
14. The MHRD, vide letter dated 02.07.2014 clarified that in the letter dated 18.10.2013 of the M.H.R.D., restriction/ban for payment was limited to the extent that no payment should be made from SSA fund or SSA account. That again the State Project Director, by letter dated 17.03.2015, requested MHRD, GOI to lift the restriction whereupon MHRD vide letter dated 27.03.2015 reiterated the fact that the State Government had not adhered to the SSA Manual on financial management and procurement with respect to procurement of the text books therefore, the payment from SSA fund was stopped 5 vide Annexure-P/2 and the State Government was advised to make the payment from the State's own resources. The State Government was further advised to take suitable action against the person guilty/ responsible for the financial mis-management.
16. Learned ASG has reiterated that since respondent no.4 is not privity to the contract, hence it is not liable and the respondent Nos. 1 to 3 are liable to make the payment from State's own resources.
17. Mr. Saurav Arun, learned counsel for respondent no.2, i.e., State Project Director, Jharkhand Education Project Council (for short JEPC), has fairly conceded that the petitioner was awarded the work order whereafter the agreement (Annexure -21) was executed on 25.09.2012 for printing and supplying of the text books (for Class VIII) i.e. Package No.8, for the academic session 2013-14 and the petitioner had supplied the text books in terms of the agreement/contract.
18. It is submitted that the MHRD, GOI, by letter dated 18.10.2013 (appended as Annexure-A to the counter-affidavit), had directed that no expenditure for the procurement of text books should be incurred from the funds of the centrally sponsored scheme of SSA. That despite repeated requests for release of the fund vide letter dated 03.08.2015 and 14.10.2015, respectively (Annexure-B and C), the MHRD did not accord the permission, hence the outstanding amount has not been paid to the petitioner.
19. At this stage learned counsel has advanced the argument that the writ petition is not maintainable as the Jharkhand Education Project Council (JEPC) is a society registered under the Societies Registration Act. It has been formed for the implementation of Sarbh Siksha Abhiyan, a scheme of the Government of India. That in fact JEPC is not created by the Act but a creature under the Act and the functions of the JEPC is non- statutory. Learned counsel has referred to the rules/by laws of JEPC to buttress his argument that JEPC is not a State within the meaning of Article 12 of the Constitution of India therefore, not amenable to the writ jurisdiction under Article 226.
20. Learned counsel has relied on the decision of the Apex Court in the case of State of Bihar vs. Jain Plastics and Chemicals Ltd.; (2002) 1 SCC 216 and submitted that under Article 226 relief for contractual obligation is not maintainable. Learned counsel has referred to a decision of the Apex Court rendered in the case of Kerala State Electricity Board vs. Kurien v. Kalathil; AIR 2000 SC 2573 wherein it has been observed that 6 interpretation and implementation of a clause or contract cannot be the subject matter of a writ jurisdiction. It is submitted that Hon'ble Supreme Court in the case of Radha Krishna Agrawal vs. The State of Bihar; AIR 1977 SC 1496, has held that after the Government entered into contract with a private party their relationship per se is not governed by the constitutional provision. It is governed by the provisions of the Contract Act.
21. To fortify his argument, learned counsel has relied on the decision of the Supreme Court in the case of State of Punjab vs. Balbir Singh; AIR 1977 SC 1717, wherein observation has been made that the High Court has no jurisdiction under Article 226 to enforce the liabilities arising out of mutually agreed contract.
22. It is contended that the aforesaid ratio has been followed by the Supreme Court in the case of D.F.O. vs. Biswanath Tea Co.; AIR 1981 SC 1368. That in the case Karnataka State Forest Industries Corporation vs. Indian Rocks; (2009) 1 SCC 150; Hon'ble the Supreme Court has explained the jurisdiction of the High Court under Article 226 with respect to enforcement of a contract qua contract.
23. While relying on the said decisions, it is argued that the writ jurisdiction cannot be invoked for enforcement of the terms of contract because the question whether there is a breach of contract or not involves the adjudication of facts and appreciation of evidence and such disputed question, claims, counter-claims regarding the breach of contract cannot be investigated and determined in a writ jurisdiction since it involves and necessitates adjudication on the basis of the evidence to be led by the parties which can only be appreciated and adjudicated in a civil suit.
24. It submitted that in the case of Shrilekha Vidyarthi vs. State of Uttar Pradesh; AIR 1991 SC 537 and in the case of Sterling computers vs. M and N Publication;(1993) 1 SCC 445, the Supreme Court has held that the contract which involves public law element can only be enforced in the writ jurisdiction.
25. It is argued that the Supreme Court has laid down that contractual duties cannot be enforced by issuance of writ of mandamus and in the case of Binny Ltd. vs. V.Sadasivam; in (2005) 6 SCC 657, the Apex Court observed that the contractual power of the government is used for public purpose and a contract cannot be characterised as statutory merely because it was awarded by a statutory body, therefore mandamus cannot be issued to compel a party to do something unless it is shown that there is a statute to 7 enforce its performance. It is canvassed that the said principle has been reiterated and followed in the case of National Textile Corporation Ltd. vs. Haribux Swalram; (2004) 9 SCC 786.
26. Learned counsel has relied on the decision rendered in the case of Ajay Hasia vs. Khalid Mujib Sehravardi; (1981) 1 SCC 722, and submitted that required guidelines and parameters have been laid down by Hon'ble Supreme Court for determining and holding whether an authority or instrumentality or agency of the Government can come within the purview of State under Article 12. It is argued that JEPC is not covered by the parameters laid down in the said case hence it is not a State within the meaning of Article 12.
27. Learned counsel has emphatically argued that JEPC is merely an agency which implements the scheme of Central and State Government. That it is economically and financially dependent on the State and Central Government. That in view of the direction of the MHRD (GOI) , JEPC has to adhere to the direction of the MHRD, GOI. It is also argued that mere signing of the contract cannot make JEPC a party as it is an agency acting on behalf of Central and State Government. Hence, if any, order/direction is to be given it should be against the Central and State Government and not against the JEPC.
28. It is argued that the petitioner has sought a direction for payment of compound monthly interest @ 12% on the outstanding amount of Rs.11,61,70,081/- in terms of the provisions of Sections 4 and 5 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1993. It is contended that the said Act has been repelled in terms of Section 32 of the Micro Small and Medium Scale Industries Development Act, 2006. That the prayer for interest can be raised before MSMED as there is no stipulation for payment of interest under the contract/agreement, (Annexure-21).
29. Learned counsel has also relied on the decision of the learned Single Judge, Patna High Court, reported in the case of Biju Paswan vs. State of Bihar; 2001 BLJR 62, and submitted that in the said decision in para 7, it has been held as under:-
"7. Having regard to the facts, noticed above, since the Bihar Education Project Council "BEPC" is a society registered under the Societies Registration Act and an autonomous and independent body, therefore, not a State within the meaning of Article 12 of the 8 Constitution of India or an establishment under Section 3 of the Reservation Act."
Learned counsel has urged that L.P.A has been preferred and is pending against the decision rendered in the case of S.Dinesh(Supra) therefore, the decision in S.Dinesh case, is not binding in the present writ petition and pendency of L.P.A operates as a stay in similar proceedings. It has been argued that the agreement/contract has been executed on a plain paper and not a stamp paper hence, it is a non-statutory contract and not amenable to the writ jurisdiction under Article 226.
30. It is argued that since the right of property is no longer a fundamental right under Chapter III of the Constitution, rather it is governed by Article 300, hence on this count also the writ is not maintainable. Reliance has also been placed on the decision rendered by the Apex Court in the case of Zoroastrian Co- operative Housing Society Ltd. and Anr. vs. District Registrar Cooperative Societies(Urban) and Anr.; (2005) 5 SCC, 632 and Supriya Basu vs. W.B.Housing Board, reported in (2005) 6 SCC 289.
Lastly it is contended that since the petitioner has alternative remedy for redressal of his grievance by filing a civil suit in the competent court therefore, the writ is not maintainable and deserves to be dismissed.
31. Respondent no.3 has filed a counter affidavit and adopted the argument propounded by respondent-JEPC. It is submitted that payment of the outstanding dues can be only be made when permission is granted by MHRD,GOI. That SSA is a scheme of the Central Government for universalisation of elementary education. The financial contribution for the scheme is apportioned in the ratio of 60:40 between the Central Government and the State Government. That the three member inquiry committee headed by the Development Commissioner had made an extensive inquiry and recommended for appropriate action with respect to the procedural lapses in the tender process in view of the allegation made by one Somenath Ghosh. That the State Government cannot release the funds from its own resources for payment to the petitioner as it would be in violation of financial rules.
32. Heard. On the basis of the arguments advanced and the pleadings of the parties it is not disputed that the order impugned, herein, has been signed by the Director of the State Project. It is not denied that the tender advertisement has been issued under the signature of Principal Secretary, HRD Department-
9cum- State Project Director, JEPC, Ranchi. The work order and contract has been entered into by the officer on behalf of the State Project Director.
33. In this context it is pertinent to take note of the fact that in the agreement dated 25.09.2012, there is no stipulation, or terms and conditions that the outstanding dues would be paid, subject to the condition, on approval by the Central Government for release of the fund. It is amply clear that MHRD is not a privity to the contract/agreement.
34. The respondent no.2, by order dated 05.06.2014 rejected the claim of the petitioner by citing the letter dated 18.10.2013 of the MHRD, GOI. On going through the letter dated 18.10.2013, it is evidenced that reference has been made to the contents of the allegation made by one Somenath Ghosh. The allegation is specially against the manufacturers of paper regarding the terms and conditions of the tender. The MHRD,GOI, had advised the State Government to fix the responsibility on the person responsible for the irregularities committed in the tender process and take suitable action against the guilty. The MHRD,GOI had advised the respondent/State to make the payment from State's own resources and not from SSA funds or account.
35. Admittedly the tender document was authored and floated by respondent nos. 1 and 2. Evidently the petitioner did not have any say or control or role to play with respect to the terms and conditions of tender. This Court is in agreement with the contention of the learned counsel for the petitioner that the allegation in the complaint is regarding the increase in the cost of papers which cannot be attributed to the petitioner who is not the manufacturer of the paper rather he had to buy and print the text book on the prescribed quality of paper failing which he would have been disqualified for not abiding, or executing the work in accordance to the terms and conditions of work order and agreement.
36. Contention of the learned counsel for the respondent that since letters patent appeal in the case of S. Dinesh is pending hence, this writ cannot be proceeded with, is liable to be rejected as preposterous. Learned counsel has lost sight of Rule 205 (2) of the Jharkhand High Court Rules, 2001 read with Order 41 Rule 5 of Code of Civil Procedure which prescribes that mere filing of an appeal cannot be a ground for stay until and unless the appellate court grants the stay. The observation in the case of the Kerala State Electricity Board vs. M.R.F. Limited; (1996) 1 SCC 597, is relevant which has been referred to by the learned 10 counsel for the petitioner. In the said case Hon'ble Apex Court has held in para 22, as follows:-
"22. Pendency of appeal before this Court only ensured that the proceeding has not been finally concluded. But in the absence of interim order of this Court granting stay of operation of the impugned judgment, the judgment of the High Court was binding between the parties to the lis despite pendency of the appeal."
Therefore, in the light of the aforesaid decision and the rules the contention is unsustainable and responded to accordingly.
37. On going through the decision of the Apex Court in the case of Zoroastrian Co-operative Housing Society Ltd. (Supra) which has been relied on by the counsel for the respondent/ JEPC and the State, it is evident that the ratio of the said decision is not applicable to the facts of the present case. In the said case, Hon'ble Supreme Court has observed that the by laws framed by the Co-operative Society cannot be said to be opposed to the public policy. That the Registrar could not have directed the Society to admit a person as a member who did not qualify for membership as per the bye laws. It was held that no citizen has a fundamental right under Article 19 (1) (c) to become a member of such a body which are governed by the Statute thus the ratio laid down in the said decision is of no assistance to the respondents. On the contrary, in the said case it has been explained that a co-operative society can be termed as instrumentality or agency of the State if it fulfills the criterion and the guidelines laid down in Ajay Hasia Case (Supra).
38. In the case of Supriya Basu vs. W.B.Housing Board; (2005) 6 SCC 289, there was a dispute with respect to the title to the property, consequently, it was held that when the title is in dispute and the subject matter is to be adjudicated by a competent court then in such circumstances the writ is not maintainable. It was concluded that the said cooperative society was neither a department of the State nor a creature of the statute. It is explicit that the obtaining facts of the aforesaid case is not applicable to the present case and is of no help to the respondents.
39. For answering the questions raised by the learned counsel for the respondents that JEPC is not a State, within the meaning of Article 12 of the Constitution of India, it is pertinent to take note of the submissions and pleadings of the respondent, wherein it is not disputed that JEPC was created and constituted 11 under the Sarv Siksha Abhiyan(SSA) scheme of Central Government. For proper understanding of the functioning and work of JEPC, it is necessary to go through the documents regarding the composition and hierarchical structure of JEPC, which has been brought on record by the petitioner and not disputed, controverted or traversed by the respondent/JEPC.
40. Perusal of the documents reveals that the General Council is the apex body of JEPC and the Chief Minister of Jharkhand is the Ex-officio Chairman of JEPC, the Minister of Human Resource Development, Jharkhand is the Ex-officio Member- Secretary. That the Executive committee of JEPC is empowered to monitor, co-ordinate, facilitate implementation of the programme of which Chief Secretary, Government of Jharkhand is the Chairman and the Secretary, Human Resources Development, Jharkhand, Director, Primary Education, HRD, Jharkhand and Director, Mass Education, Human Resource Development are the members. The State Project Director is the Member Secretary. At the district level Executive Committee has been constituted to facilitate coordination with the concerned department of the State Government at the district level for ensuring support and timely implementation of the programme. The Deputy Commissioner of the district is the Ex- officio Chairman of District Executive committee and the District Executive Committee comprises of officers from the department of the Primary Education, Mass Education, Health, DWSD and Welfare Departments of the districts. In addition, the representative teacher, parents, Village Education Committee and NGOs are also associated with the Committee.
It is abundantly clear that the Council is controlled by the government financially, functionally and administratively meaning thereby the Government's control is all pervasive. It is admitted that the funds are provided by the Central and State Government.
41. In response to the argument of the respondent/JEPC and the State it is necessary to state that the established and general proposition is that an authority need not be a creature of a statute rather, what is essential to be determined is as to how and why such an authority or agency was created or brought into existence. An authority may be a statutory or non- statutory it may be set up by an act of the legislature or even administratively. The test whether the said authority is an instrumentality of the State is to be determined as to for what purpose was it created or established. When the functions are of 12 public importance and closely related governmental function, it would be a relevant factor in classifying the body as an agency or instrumentality of the State. Public Office is one where the powers and duties enjoining the office relate to a large section of the public. It comprises all acts which can be brought within the fall of 'State action' (Some Prakash vs. Union of India, AIR 1981,SC 212). It is established principle that where the statutory Corporations are the "voice and hands" of the Government they are authorities under Article 12 and will be considered as 'State'.
42. Hon'ble Supreme Court in Sukhdev Singh vs. Bagatram Sardar Singh Rghuvanshi; ( 1975) 1 SCC 421, has observed that 'State is an abstract entity and it can act only through the instrumentality or agency of natural or juridical person, therefore, there is nothing strange in the notion of the State acting through corporation and making it an agency or instrumentality of State.
43. Learned counsel for respondent-JEPC and State have relied on the decision of Patna High Court rendered in Biju Paswan's case(Supra) wherein it has been held that Bihar Education Project Council is an autonomous and independent body and not a State within the meaning of Article 12 of Constitution of India. On perusal of the said decision it is abundantly clear from the facts of the said case that the World Bank and UNICEF were providing grant to the extent of 85% to BEPC and the State Government's contribution was only 15%. Thus, in the attending facts of the said case the learned Judge observed that Bihar Education Project Council was not a State under Article 12. It is explicit from the obtaining facts of the instant case that the facts of the case of Biju Paswan(Supra) are distinguishable consequently, the said decision does not lend any credence to the contention of the respondent.
44. In the case of Pradeep Kumar Biswas vs. Indian Institute of Chemical Biology; (2002) 5 SCC 111, Hon'ble Supreme Court has enunciated the guidelines as laid down in the case of Ajay Hasia(Supra) for determining how an authority can be categorised as a State. It has been observed that the question in each case to be considered and determined would be whether on facts the body is financially, functionally and administratively dominated by or under the control of the Government. That such control must be particularly to that body and must be pervasive and if answer is in affirmative then that body is a State.
1345. At this juncture it is necessary to point out that in the pleading the respondents have not taken the stance that JEPC is not an instrumentality, agency or authority to characterise it as a State within the meaning of Article 12.
46. In the case of Pradeep Biswas (Supra) the Apex Court has observed that the writ under Article 226 can be against a person if it is a statutory body or performs a public function or discharges the public or statutory duty. Taking into account the established principle it is evidenced that there is no dispute to the fact that the Jharkhand Education Project Council has been constituted with the object and purpose for implementation of the universalisation of the elementary education under the Central Government scheme of Sarb Siksha Abhiyan(SSA). The duty and responsibility of JEPC is in the nature of discharge of public function and the powers have been conferred to carry out the function in the interest of the public at large.
47. Admitted position is that the financial funding is in the ratio of 60:40 by the Central Government and State Government. It is noticed that the object and purpose of the scheme was monitored by the government officials. It is well settled that the words "any person or authority" used in Article 12 is not confined to statutory authority and instrumentality of the State rather they govern any person or body which is performing the public duty.
It is noticed that since the respondent did not have the means or time to print and supply the text books required under SSA scheme it entered into an agreement with the petitioner to fulfill the obligation for implementation of the scheme of universalisation of elementary education.
48. At this stage it is relevant to refer to the observation of the Apex Court in the case of Shri Anandi Mukta Sadguru Shree Mukta Jeevandasswami Suvarna Jaya Vs. V.R. Rudani & Ors.; (1989) 2 SCC 691 wherein it was held that it is not the form of the body which is relevant rather it is the nature of the duty imposed on the body which is relevant. The body must be judged in the light of positive obligation owned by the persons or authorities to the affected party no matter by what means the duty is imposed. The element of public interest created for catering to the interest of the public. If other tasks are satisfied a statutory body established for carrying on education, social or commercial functions would be an authority falling within the purview of Article 12 and any arbitrary action or discriminatory or unresonable action of the State is hit under Article 14 hence amenable to writ 14 jurisdiction under Article 226 which confers power on the High Court to issue writ in the nature of prerogative writ against any person or body performing public duty.
49. In the backdrop of the established principle it is relevant to take note of the fact that indisputably the petitioner had fulfilled the contract and the goods have been utilised by the respondent/State Government under the aforesaid scheme. If the officers had not followed the procedure in issuance of the tender the petitioner cannot be faulted or penalised for the wrongful acts of the officers. The MHRD had advised the State Government to fix the responsibility on the errent and take necessary action against the guilty person. There is no averment that such action has been taken. Moreover, this is not a question or issue germane for adjudication in the present writ application. Be that as it may, there is no dispute on the question that there was a lawful agreement/contract. The terms and conditions of the contract were complied to by the petitioner. There is no allegation of violation of any provision or terms of contract. The outstanding dues is neither disputed nor questionable, which admittedly has not been paid to the petitioner.
50. In L.P.A. No.118 of 2001-in para 9- the judgment of Hon'ble Supreme Court rendered in the case of State of West Bengal vs. B.K.Mandal and Sons; AIR 1962, SC 779 has been referred to wherein the question of 'lawful contract' has been considered while interpreting Section 70 of Indian Contract Act which prescribes that if a person has lawfully done something or lawfully delivered something to another person then he is entitled to get the consideration or reasonable damages for the same. In para 20 the Supreme Court observed " It is well known that in functioning of the vast organisation represented by a modern State Government, officers have invariably to enter into a veracity of contracts which are often of pelty nature. Sometimes they have to act in emergency, and on many occasions, in the pursuit of the welfare of the policy of the State. The Government officers may have entered into contract orally or through correspondence without strictly complying with the provisions of Section 175(3) of the Act."
It was observed that "like ordinary citizens even the State Government is subject to the provisions of Section 70, and if it has accepted the things delivered to it or enjoyed the fruits of the work done such acceptance and enjoyment would afford a valid basis for claim of compensation against it. "
15This observation answers the argument of learned counsel for the respondent/JEPC and State regarding the contract being non-statutory.
51. In ZEE Telefilms Ltd. and Anr. vs. Union of India, (2009) 4, SCC 649, the Supreme Court has observed in para 32 while referring to the observation in the case of Anandi Mukta Sadguru(Supra) wherein it has been held that Article 226 confers power on the High Court to issue writ for enforcement of the fundamental rights as well as non-fundamental rights. The words 'any person or authority' used in Article 226 therefore, is not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty.' In para 33 it was held that an aggrieved person has a remedy against a body performing public function not only under the ordinary law but also under the Constitution by way of a writ petition under Article 226.
52. In view of the aforesaid discussions and settled principle coupled with the pleadings and submissions, it is established that the Jharkhand Education Project Council is an agency of the State constituted for carrying out the government policy of universalisation of education. It is manifest that it was performing the function of public importance and there was pervasive control of State in its management and functioning.
Keeping in view the observation and conclusion of the Apex Court in the aforesaid decision, the argument of the learned counsel for JEPC and State is answered to, accordingly.
53. As stated above it is evident from the work order and agreement dated 25.09.2012(Annexure-21) that there is no clause or stipulation that the consideration amount of the contract would be paid subject to condition or approval for release of the fund by the Central Government. The contract has to be interpreted in terms of the words and expression used therein. To reiterate, it is emphasized that agreement was a lawful agreement and the respondents were bound to fulfill the terms and conditions of the agreement/contract.
54. In this context it would be relevant to refer to the observation of Supreme Court in the case of Biman Krishna Bose vs. United India Insurance Co. Ltd. , reported in (2001) 6 SCC 477 wherein in placitum 'b' of para 3 it has been observed "...........even in an area of contractual relation, the State and its instrumentality enjoined with the obligation to act with fairness and 16 in doing so they can take into consideration only relevant materials. They must not take any irrelevant consideration while arriving at a decision. The arbitrariness should not appear in their action or decision.........."
It is evident that the order dated 05.06.2014 is in contravention of Article 14 of the Constitution of India which includes not only what right is infringed but it also extends to the arbitrariness and unreasonable of an action or act done by the authority, i.e., the State.
55. In terms of the agreement contractual and constitutional obligation is cast on the respondents to abide by the terms of agreement. In this connection the decision in the case of M/s. Setu Printers(Supra) as relied on by the petitioner is applicable. In the said decision reference and reliance has been placed on the observation of the Supreme Court in the case of ABL International Ltd. vs. Export Credit Guarantee Corporation of India Ltd., (2004) 3 SCC 553 is as follows "............ that in an appropriate case writ petition arising out of contractual obligation is maintainable and merely because some disputed facts arise the same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. That the writ petition involving consequential relief of monitory claim is also maintainable and there is no dispute with respect to the above principle."
56. From the facts delineated hereinabove, it is not disputed that the agreement(Annexure-21) was entered into between the petitioner and the respondent no.2. The contract value was Rs.16,62,79,595/- and he was paid an advance of Rs.4,88,86,200/-. It is evidenced from the facts elucidated in the foregoing paragraphs that due to financial impropriety committed by the State officials, the Central Government had directed the State Government to enquire into the matter, then fix the responsibility on the guilty person. The violation of the rule or procedure was with respect to the tender process committed by the officials. The allegations were not with respect to the contract for printing and supply of the text books by the petitioner rather it was against the stockist and manufacturer of paper.
57. The petitioner has supplied the books in terms of the agreement and despite repeated representations the respondents have denied payment by taking refuge of letter dated 18.10.2013 of MHED, GOI. The dispute with respect to release of fund for the financial impropriety is between the respondent/State and the Central Government. In such circumstance, the petitioner 17 cannot be denied the payment of Rs.11,61,70,081/- on account of fault of the officials of respondent/State as this would amount to penalising the petitioner for no fault of his, especially when he has completed the work order in terms of the agreement and supplied the text books under the lawful agreement.
58. The argument of the learned counsel for the respondents that the facts are in dispute is not acceptable particularly when they have not controverted that the outstanding amount in terms of the contract is to be paid to the petitioner. The excuse that they cannot pay due to the freezing of the SSA funds/SSA Account is patently fallacious because the MHRD, GOI has not found any fault or lacuna with respect to the validity of the agreement. MHRD has advised the respondents to arrange for payment of the amount to the printers from State's own resources and not from the SSA fund.
59. In view of the undisputed facts the contention of the respondent/State that the petitioner cannot invoke the jurisdiction of the Court under Article 226 for enforcement of contractual obligation is misconceived and not tenable, consequently the letter dated 05.06.2014(Annexure-14) containing the conditional payment is quashed and respondent nos.1,2 and 3 are directed to arrange payment of the admitted outstanding dues of Rs.11,61,70,081/- with interest at the rate of 6% from the date it became due, within three months from the date of receipt/production of this order.
60. In the result, the writ petition stands allowed.
(Amitav K. Gupta, J) Biswas.