Calcutta High Court
Toshniwal Enterprises Controls Pvt. ... vs State Of West Bengal & Ors on 11 November, 2014
Author: Debangsu Basak
Bench: Debangsu Basak
ORDER SHEET
WP 1018 of 2013
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
TOSHNIWAL ENTERPRISES CONTROLS PVT. LTD. & ANR.
Versus
STATE OF WEST BENGAL & ORS.
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
Date : 11th November, 2014.
Mr.Kishore Datta, Sr.Adv.
Mr.Indranil Roy, Adv.
Ms.Sumita Bhattacharya, Adv.
..for the petitioner.
Mr.A.Majumder, Adv.
..for the State.
Mr.Debnath Ghosh, Adv.
..for the respondent no.7.
The Court:- The writ petitioners seek a direction upon the respondent to release a sum in excess of Rs.1.90 crores along with interest at the rate of 18 per cent per annum on the ground that, the writ petitioners had executed work for supply of Global Positioning System (G.P.S.) Enabled Tracking Devices. Mr.Kishore Datta, learned Senior Advocate for the petitioners submits that the writ petitioners have entered into two contracts with the respondent no.7 for supply 2 of G.P.S. Enabled Tracking Devices. The writ petitioners duly supplied the goods. According to him, the goods were received without any objection. Such goods were utilised by the respondent no.7. The respondent no.7 supplied such goods to the Fisheries Department of the State of West Bengal. The Fisheries Department apparently have raised disputes with the respondent no.7. He submits that the contract between the writ petitioner no.1 and the respondent no.7 is a back to back contract between the respondent no. 7 and respondent no.1. He contends that, there exists lawful relationship between the writ petitioner no.1 and the respondent no.7. He relies upon section 70 of the Contract Act, 1872 and All India Reporter 1962 Supreme Court 779 (State of West Bengal versus M/s. B.K.Mondal And Sons) and 1980 Volume-3 Supreme Court Cases page 469 (Union of India versus M/s. J.K. Gas Plant) in support of such proposition.
He submits that, public law element is involved in the two contracts. The goods sold by his client were utilised by the respondent no.1 in tracking fisheries trawlers. He relies upon 2011 Volume -2 Supreme Court Cases page 439 (Godavari Sugar Mills Ltd. versus State of Maharashtra and Others) in support of his contention that, a writ petition to enforce payment where public law element is involved a remedy under Article 226 of the Constitution should not be denied.
Learned Government Pleader for the State respondents submits that, a contract between the writ petitioner no.1 and the respondent no.7 is a back to back contract with the payment terms specifying that respondent no.7 will pay the writ petitioner no.1 as and when payment is received by the respondent no.7 3 from the respondent no.1. He relies upon two communications being letters dated July 17, 2013 to submit that, the respondent no.1 has serious issues with regard to the quality of the goods provided by the writ petitioner no.1. The devices supplied by the writ petitioner no.1 was not in accordance with the work order and that its effectiveness fell below the required limit.
Learned Government Pleader submits that, the respondent no.1 is under no obligation to pay the respondent no.7 in view of the inferior quality of the devices. He refers to the prayers made in the writ petition and submits that, the prayers are couched in such a fashion that the writ petitioner is espousing the cause of the respondent no.7. He relies upon 2010 Volume 15 Supreme Court Cases page 546(2)(Panjab Financial Corporation and Another versus Garg Steel And Another) and submits that, a writ petition is not available to enforce back to back transaction. He points out that, the respondent no.1 has no privity of contract with the writ petitioner no.1.
Mr. Debnath Ghosh, learned Counsel for the respondent no.7 refers to the two purchase orders and their clauses for payment. The terms for payment in both the two purchase orders specify that back to back payment will be made as and when payment is received from the Fisheries Department of the State of West Bengal. He submits that, the respondent no.7 has no obligation to pay in absence of payment being received from the State of West Bengal. He points out that, the contract between the writ petitioner no.1 and the respondent no.7 contains an arbitration clause.
4
In reply it is contended on behalf of the writ petitioner that, the writ petitioner no.1 has disputed the quality complaint raised on behalf of the respondent no.7 by a letter appearing at page 134 of the writ petition.
I have considered the rival contentions of the parties and the materials made available on record.
The writ petitioner no.1 entered into two several contracts with the respondent no.7. The two purchase orders are at pages 66 and 70 of the writ petition. The first purchase order has the following terms of payment :-
"6) Terms of payment :- Back to back payment will be made as and when payment received from the customer (Fisheries Deptt., West Bengal)"
The second purchase order has the following terms of payment :-
"(6) 100% back to back payment will be made on delivery, installation, acceptance of the same from the customer and after receiving payment from Fisheries Department, on production of bill in triplicate & necessary challan.
Free delivery to the sites shall be made by the vendor."
It is an admitted position that, the contracts are back to back. The writ petitioner no.1 agreed to receive payment as and when the respondent no.7 received payment from the respondent no.1. It is not the case of the writ petitioners that, the respondent no.7 has received payment from the respondent no.1. The letters dated July 17, 2013 written by the Fisheries Department raises quality issues with regard to the devices in question. Such quality issues have not been settled by the writ petitioners. The Fisheries Department refused payment on the ground of quality issues. In my view, the quality issues raised by 5 the respondent no.1 requires a more elaborate consideration than by way of an affidavit evidence as in a writ petition.
In J.K.Gas Plant (Supra) and B.K.Mondal and Sons (Supra) the Supreme Court was considering the effect of Section 70 of the Contract Act, 1872 in a suit. The proceeding herein is a writ petition. Existence of lawful relationship between the writ petitioner no.1 and the respondent no.7 cannot be denied. The question is which party is guilty of breach of contract, if any and which party is entitled to what amount.
In Godavari Sugar Mills Ltd. (Supra), the Supreme Court considered the question whether the writ petition before it was for "recovery of money" and therefore maintainable. In such context, it was of the following view :-
"8. The observations in Suganmal related to a claim for refund of tax and have to be understood with reference to the nature of the claim made therein. The decision in Suganmal has been explained and distinguished in several subsequent cases, including in U.P. Pollution Control Board v. Kanoria Industrial Ltd. and ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. The legal position becomes clear when the decision in Suganmal is read with the other decisions of this Court on the issue, referred to below:
(i) Normally, a petition under Article 226 of the Constitution of India will not be entertained to enforce a civil liability arising out of a breach of a contract or a tort to pay an amount of money due to the claimants. The aggrieved party will have to agitate the question in a civil suit. But an order for payment of money may be made in a writ proceeding, in enforcement of 6 statutory functions of the State or its officers. (Vide Burmah Construction Co. v. State of Orissa.)
(ii) If a right has been infringed ----- whether a fundamental right or a statutory right ------- and the aggrieved party comes to the Court for enforcement of the right, it will not be giving complete relief if the Court merely declares the existence of such right or the fact that existing right has been infringed.
The High Court, while enforcing fundamental or statutory rights, has the power to give consequential relief by ordering payment of money realised by the Government without the authority of law. (Vide State of M.P. v. Bhailal Bhai)
(iii) A petition for issue of writ of mandamus will not normally be entertained for the purpose of merely ordering a refund of money, to the return of which the petitioner claims a right. The aggrieved party seeking refund has to approach the civil court for claiming the amount, though the High Courts have the power to pass appropriate orders in the exercise of the power conferred under Article 226 for payment of money. (Vide Suganmal v. State of M.P.)
(iv) There is a distinction between cases where a claimant approaches the High Court seeking the relief of obtaining only refund and those where refund is sought as a consequential relief after striking down the order of assessment, etc. While a petition praying for mere issue of a writ of mandamus to the 7 State of refund the money alleged to have been illegally collected is not ordinarily maintainable, if the allegation is that the assessment was without a jurisdiction and the taxes collected was without authority of law and therefore the respondents had no authority to retain the money collected without any authority of law, the High Court has the power to direct refund in a writ petition. (Vide Salonah Tea co. Ltd. v. Supdt. of Taxes.)
(v) 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, where the facts are not in dispute, where the collection of money was without the authority of law and there was no case of undue enrichment, there is no good reason to deny a relief of refund to the citizens. But 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. (Vide U.P. Pollution Control Board v. Kanoria Industrial Ltd.)
(vi) Where the lis has a public law character, or involves a question arising out of public law functions on the part of the State or 8 its authorities, access to justice by way of a public law remedy under Article 226 of the Constitution will not be denied. (Vide Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd.) We are therefore of the view that reliance upon Suganmal was misplaced, to hold that the writ petition filed by the appellant was not maintainable. "
In the facts of the case before the Supreme Court, it found the writ petition to be not maintainable . Supreme Court refuses to entertain the writ petition although the writ petition was filed to challenge the rate of interest awarded.
The writ petitioners before me seek to recover a money claim. The entitlement of the writ petitioners to such claim is seriously disputed at least by the respondent no. 1. The respondent no. 1 claims that the goods supplied was of inferior quality and therefore the respondent no. 1 was not liable to pay the respondent no. 7. The respondent no. 7 sets up the payment clauses as its defence.
It is not for the Writ Court to rewrite the contract between the parties. The writ petitioners are to abide by the terms and conditions of the contract which speaks of payment by the respondent no. 7 only after receipt of payment by the respondent no. 7 from the respondent no. 1.
In Garg Steel & Anr. (supra), the Supreme Court was of the view that adjustment of accounts and enforcement of back to back transaction with a party 9 with whom there was no privity of contract are contractual matters unenforceable by way of writ petition. In the instant case there is no privity of contract between the writ petitioner no. 1 and the respondent no. 1. The writ petitioner no. 1 seeks a direction upon the respondent no. 1 on the basis of a back to back contract with the writ petitioner no. 1 entered with the respondent no. 7.
In such circumstances, I find no merit in the writ petition being WP No. 1018 of 2013. The same is dismissed. No order as to costs.
(DEBANGSU BASAK, J.) dg2/TR