Calcutta High Court
Amco Traders & Another vs Union Of India & Ors on 23 March, 2011
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose
1
APO.No.70 OF 2010
W.P.No. 5320 OF 1988
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
--
Amco Traders & Another ..Appellant
Versus
Union of India & Ors. .. Respondents
For the Appellant: ... Mr. P.K. Ghosh, Sr. Adv.
For Respondents .. . Mr.N.C Bhattacharya, Adv.
BEFORE
The Hon'ble Justice Pinaki Chandra Ghose
The Hon'ble Justice Shukla Kabir (Sinha)
Heard on: 22nd March, 2011
Judgment delivered on: 23rd March,2011
PINAKI CHANDRA GHOSE, J:
1. This appeal is directed against a judgment and order passed by the Writ Court on 12th June, 2009 when the Writ Court was pleased to dismiss the writ petition on the ground of maintainability and further held that "the question of delay and laches would have a bearing while testing the claim of a late visitor to the writ Court". His Lordship upheld the objection of the respondent on the ground of delay. His Lordship further on the question of enforcement of contractual claim on the writ petition held that, "from the authorities cited, the ratio which emerges, in my opinion, is that in cases involving contractual dispute, if serious factual controversy is raised, then the writ court ought not to intervene. In the present writ petition, from the 2 facts which I have narrated in the earlier part of this judgment, it is apparent that the disputes are of such nature for resolution of which proper trial would be necessary".
2. The facts of the case briefly are as follows:
A tender was floated by SAIL for sale of certain steel craps which have been described as steel rounds, C.R. Sheet, Tor Steel and plates of diverse qualities and quantities. Pursuant to the said tender, the writ petitioners/appellants were declared as the highest bidder and accordingly an offer letter was issued to the appellant on March 29, 2011. It is the case of the appellants that they have offered to make payment for the said items, but at that point of time there was a labour strike in the stock-yard of SAIL and they were advised by the officers of the company to postpone the payment till the strike was lifted.
3. We have been able to find out that there was no written communication in this regard by SAIL or even by the appellants within the period mentioned in the offer letter. Therefore, admittedly the appellants did not brought the said facts on records or addressed the said facts to the respondents.
4. It is the further case of the appellants that a notice was put up on the notice board at the stock-yard on June 14, 1984 to the effect that all pending offers and delivery orders issued against various tenders may be treated as cancelled. As per the said notice, the customers holding delivery orders were required to surrender the delivery orders to SAIL for cancellation of the same and for arranging refund of the deposit. Such 3 notice was disputed by the learned Advocate appearing for SAIL as well as in the affidavit filed before this Court. The stand taken by SAIL is that the appellants offer stood cancelled as they could not make payment for price of the goods within the time stipulated. There is also a denial on the part of SAIL that any advice for late payment was given by SAIL to the appellants. The appellants sent several letters to SAIL asking for revival of the offer, but no response was received.
5. In these circumstances, on or about October 6, 1988 a writ petition was filed praying for a declaration that the notice of June 14, 1985 is invalid, inoperative and void. Prayer was also made for revival of the offer letter. Before us it has been stated that the goods should be supplied or similar items which were the subject matter of the tender in question should be delivered.
6. Mr. Pradip Ghosh, Senior Counsel appearing on behalf of the appellants contended that the objection raised on behalf of the respondents on the ground of delay cannot be accepted since SAIL filed their affidavit before the Trial Court almost after 18 years. He further contended that the enforcement of a contractual claim on the writ petition can be enforced in a writ proceedings since the legal right of the appellants has been breached by a State agency and he relied on a decision reported in 1995(5) SCC 482 (Life Insurance Corporation of India Vs. Consumer Education and Research Centre & Ors.) in support of his contention. He submitted that in the sphere of contractual relations, the State, its instrumentality, public 4 authorities or those whose acts bear insignia of public element, action to public duty or obligation are enjoined in a manner that is fair, just and equitable, after taking objectively all the relevant options into consideration and in a manner that is reasonable, relevant and germane to effectuate the purpose for public good and in general public interest and it must not take any irrelevant or irrational factors into consideration or appear arbitrary in its decision. Duty to act fairly is part of fair procedure envisaged under Articles 14 and 21. Every activity of the public authority or those under public duty or obligation must be informed by reason and guided by the public interest. It is the exercise of public power or action hedged by public element that becomes open to challenge. If it is shown that the exercise of power is arbitrary , unjust and unfair, it should be no answer for the State, its instrumentality, public authority or person whose acts have the insignia of public element to say that their actions are in the field of private law and they are free to prescribe any conditions or limitations in their actions as private citizens simplicitor do in the field of private law. Its action must be based on some rational and relevant principles. It must not be guided by irrational or irrelevant considerations and every administrative decision must be hedged by reasons.
7. Mr. Ghosh further submitted that there was no concluded contract between the parties, and therefore, according to him, if there is no concluded contract between the parties, then SAIL had no authority to forfeit the amount without showing any reasons. Therefore, according to 5 Mr. Ghosh, such action on the part of SAIL is illegal, irrational, arbitrary, non-est and without any reasons. Therefore, he submitted that the power has been exercised by the said authority is nothing, but arbitrary, unjust and unfair.
8. Mr. Ghosh further relied on a decision reported in 2004(3) SCC 553 (ABL International Ltd. & Anr. Vs. Export Credit Guarantee Corporation of India Ltd. & Ors.) and submitted that a writ petition involving serious disputed question of fact which requires consideration of evidence, which is not on record, will not normally be entertained by Court in exercise of its jurisdiction under Article 226 of the Constitution, but there is no absolute rule that in all cases involving disputed question of fact, the parties should be relegated to a civil suit. He further submitted that in an appropriate case the writ court has the jurisdiction to entertain the writ petition involving the disputed question of fact and there is no absolute bar in entertaining a writ petition even if it arises out of a contractual obligation and/or involve some disputed question of fact. He further relied on a decision reported in 2008(10) SCC 404 (United India Insurance Company Ltd. Vs. Manubhai Dharmasinghbhai Gajera & Ors.) and submitted that even in this case the contracts entered into by State, public law duties to act fairly and reasonably is more applicable. It is further submitted that this is unequal bargaining power of parties and where contract is not an negotiated one and based on standard form contract between unequals, the State must act reasonably and fairly in the matter. He further drew our 6 attention to the offer letters both dated 29th March, 1984 and it has been specifically stated in the said offer letter that for a remittance of the sum as mentioned in the said offer letter should be paid within five days from the date of the offer to enable SAIL to issue the delivery order. He submitted that this offer is subject to the terms and conditions appearing on the reverse of the said document and pointed out that it has been specifically stated that, 'your remittance in full or part of the above amount will imply that all our terms and conditions are acceptable to you. Notwithstanding anything mentioned in your communication'. Therefore, he contended that until and unless this amount is being remitted by the appellants, it cannot be said that there was a concluded contract between the parties and therefore he submitted that since there was no concluded contract between the parties, the amount cannot be forfeited by the said authority. He submitted that the learned Single Judge could not appreciate these facts and came to the conclusion without deciding this question.
9. On the contrary, our attention has been drawn to the terms of the tender notice by Mr. Bhattacharya and submitted that the tender should be accompanied with earnest money subject to a maximum of Rs.50,000/-. He particularly submitted that in the tender notice it has been specifically stated that in case the parties do not make stipulated payment for issue of delivery orders against accepted tenders, the earnest money deposited by them would be forfeited. In other cases the earnest money would be adjusted while issuing delivery orders. Earnest money so deposited would 7 be refunded to the offeror if the tenders given by them are not accepted. Therefore, he submitted that SAIL had a right to forfeit the amount of security deposit of the tenderer whose offer has been accepted and who have been requested to deposit the amount for issuance of delivery order within a stipulated time and if he feels to deposit the said amount within the said stipulated time, then in that case, delivery order should be issued in terms of the said tender notice SAIL but when an offeror failed to comply with the said clause mentioned in the tender notice, then SAIL had a right to forfeit the said amount. He further relied upon the decision reported in AIR 1984 SC 1020 (Hari Singh & Ors. Vs. State of U.P. & Ors.), 2006(4) SCC 322 and 2009(3) SCC 381 (Yunus (Baboobhai) A. Hamid Padvekar Vs. State of Maharastra & Ors.) in support of his contention. It appears that in the case of 2006(4) SCC 322 (supra) it was held that mere making of representation would not perpetuate of extend the cause of action. He further relied on 2003(7) SCC 410 (National Highways Authority of India Vs. Ganga Enterprise & Anr.) and 2004(8) SCC 321 (Defence Enclave Residents Society Vs. State of U.P. & Ors.) and submitted that the writ court should not interfere in case of contractual obligations. He further contended that time is the essence of contract in the instant case. Therefore, SAIL had a right to forfeit the earnest money so deposited by the appellants.
10. Having heard the learned counsel for the parties and after considering the materials placed before us, it would appear from the tender notice that 8 there is a clause where it has been specifically stated that where the earnest money is deposited by a party and if a party does not make payment within the stipulated time for issue of delivery orders against accepted tenders, in that case, the authority has a right to forfeit the said earnest money so deposited by the offeror. The writ petitioners/appellants duly gave their bid in terms of the said conditions contained in the tender notice and thereby on the given facts they had an obligation to remit the amount as mentioned in the said two offer letters issued by SAIL on 29th March, 1984. It is also a fact that the said amount should have been deposited by them within five days from the date of the offer i.e. 29th March, 1984 which expired on 4th April , 1984. In the instant case, the appellants have failed to comply with the terms of the conditions mentioned in the said tender notice thereby we hold that SAIL had no right to forfeit the said amount.
11. We have not been able to find out any document or correspondence exchanged between the parties which would show that the appellants at that point of time duly requested the said authority the cause for non remitting the said earnest money within the stipulated time, and that too on the ground that there was an alleged strike at the premises of SAIL. Therefore, it cannot be accepted by us that the appellants did take any steps in the matter following the directions given in the said offer letter, and therefore, we hold that they were bound to come within the clause 9 mentioned in the tender notice for forfeiture of the earnest money so deposited by them.
12. On these facts, we do not find that SAIL have acted irrationally or arbitrarily or unjustly in forfeiting the said earnest money. We have also considered the decision of the Supreme Court in ABL International Ltd.s case (Supra) where the Supreme Court held as follows :
'28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. 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".
13. After considering all the decisions cited by the parties and after analyzing the same, we must come to the conclusion in this matter on the given facts 10 that the steps taken by SAIL cannot be termed as arbitrary or unreasonable.
14. In our considered opinion, the requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters and in the instant case we have no hesitation in holding that there is no violation of Article 14 by SAIL.
15. Accordingly, we do not find any merit in the appeal.
16. For the reasons stated hereinabove, the appeal is dismissed.
17. Urgent certified photocopy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
[PINAKI CHANDRA GHOSE,J] I agree.
[SHUKLA KABIR (SINHA),J] km AR(CR)