Gujarat High Court
Maruti Enterprise Thro Jigneshbhai ... vs State Of Gujarat on 24 August, 2021
Author: J.B.Pardiwala
Bench: J.B.Pardiwala, Vaibhavi D. Nanavati
C/SCA/20864/2019 ORDER DATED: 24/08/2021
REPORTABLE
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 20864 of 2019
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MARUTI ENTERPRISE THRO JIGNESHBHAI BHARATBHAI TARPARA
Versus
STATE OF GUJARAT
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Appearance:
MR SHIRISH H GOHIL(3253) for the Petitioner(s) No. 1
MS. KITTY S MEHTA(7025) for the Petitioner(s) No. 1
MR NIRAL R MEHTA(3001) for the Respondent(s) No. 2
NOTICE SERVED BY DS(5) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 24/08/2021
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. Pursuant to our order dated 17.08.2021, Mr. Zala, the Chief Officer of the Halvad Nagarpalika is personally present in the Court today. We are happy to note some positive developments in the matter. Mr. Zala, the Chief Officer, tenders a cheque of the amount of Rs.1 Crore drawn on the HDFC Bank, Halvad, State of Gujarat dated 24th August, 2021 in favour of the Maruti Enterprise, i.e, the writ applicant. The cheque of the amount of Rs.1 Crore bearing No.000003 duly signed by the Chief Officer of the Halvad Nagarpalika is being handed over to Mr. Gautam Joshi, the learned counsel appearing for the writ applicant in the open Court.
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2. Mr. Zala pointed out that the amount due and payable by the Nagarpalika to the writ applicant is to the tune of Rs.3 Crore and odd. It is not in dispute that in the past, an amount of Rs.89 Lakh was paid to the writ applicant by the Nagarpalika. Today, an amount of Rs.1 Crore is being paid. That means, that on an average, an amount of Rs.1,89,00,000/- has been paid to the writ applicant. So far as the balance amount is concerned, it is understood between the parties that they shall sit together and arrive at a particular figure. Once the figure is arrived at of a particular amount, the same shall also be paid by the Nagarpalika to the writ applicant. Mr. Zala pointed out that the balance amount shall be paid to the writ applicant by 15th October, 2021. Mr. Zala further pointed out in the form of a request that the writ applicant may be asked to complete some work at the shopping center like electricity fixtures, colour etc. Mr. Joshi, the learned counsel appearing for the writ applicant, has assured this Court that the needful shall be done and he shall speak to his client to undertake the necessary work.
3. We are happy to note that the dispute has finally been resolved. If the dispute would not have been resolved and the parties would have gone to the civil court, then probably, it would have taken many more years. We appreciate the efforts put in by Mr. Niral Mehta, the learned counsel appearing for the Nagarpalika as well as the efforts put in by Mr. Zala, the Chief Officer of the Page 2 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 Nagarpalika in bringing around an amicable settlement. We want both the sides to file short affidavit. We want the Nagarpalika to file a short affidavit stating that the amount of Rs.1 Crore has been paid to the writ applicant by way of a cheque dated 24th August, 2021 which has been tendered today and the balance amount shall be worked out sitting across the table and that amount shall also be paid by 15th October,2021. We want the writ applicant also to file an affidavit that he shall undertake the work of electrical fixtures and colour and complete the same at the earliest.
4. The affidavits shall be filed by next week and those affidavits shall be placed on the record of the case.
5. In view of the aforesaid, we could have closed this matter today. However, considering the importance of the issue, we would like to dictate a detailed order explaining the position of law as to what should the Writ Court do in the litigations like the one on hand.
6. On 29th July, 2021, this Court passed the following order;
"1. We have heard Mr. Gautam Joshi, the learned senior counsel assisted by Ms. Kitty Mehta, the learned advocate appearing for the writ-applicant; Mr. Niral Mehta, the learned counsel appearing for the Halvad Nagarpalika and Mr. Ayan Patel, the learned AGP appearing for the State of Gujarat.
2. We called upon Mr. Joshi, the learned senior Page 3 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 counsel to make good his case so far as the maintainability of the present writapplication is concerned. We are saying so because this litigation arises from a contract between a private individual and a municipality.
3. The writ-applicant has to recover a particular amount for the work he has completed as assigned to him by way of contract. However, it appears that there are orders passed in the present matter by the Co-ordinate Benches of this Court recording that the Nagarpalika is looking into the matter and shall make all possible endeavours to release the payment. We would like to know the current status as regards the issue of clearing the bill put up by the writ-applicant. We would like to know how the Nagarpalika proposes to resolve this controversy.
4. Post this matter on 12.08.2021. On the next date of hearing, the Chief Officer of the Municipality shall join the video conference. We hope and trust that something is work out by the next date of hearing. "
7. Thereafter, on 17th August, 2021, this Court passed the following order;
"1. We have heard Mr. Gautam Joshi, the learned Senior Counsel assisted by Ms. Kitty Mehta, the learned advocate appearing for the writ applicant, Mr. Niral Mehta, the learned counsel appearing for the Halvad Nagarpalika and Ms. Manisha Shah, the learned Government Pleader assisted by Mr. Ayaan Patel, the learned AGP appearing for the State respondents.
2. The writ applicant has to recover an amount of Rs.2,69,63,144/- from the Nagarpalika towards the contract work of construction of a Shopping Centre. Although on the previous date of hearing, we were restrained or rather requested by Mr. Niral Mehta not Page 4 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 to observe, yet, today, the State Government itself has made its stance very clear. It has been pointed out by the learned Government Pleader that the construction of the Shopping Centre has been put up on a government land without any valid permission or sanction from the competent authority. The State Government has taken cognizance of the same. The Nagarpalika is now in a predicament because the Nagarpalika is not in a position to put the Shopping Centre to auction.
3. We have been informed that a High Power Committee has been constituted by way of a Notification and such committee is to look into many matters like the present one and decide what is to be done with all such constructions being put up on the government land without any valid sanction or permission.
4. The learned Government Pleader has made herself very clear that the dispute is between the Nagarpalika and the writ applicant. The writ applicant has to recover this particular amount and the Nagarpalika cannot decline the same. Therefore, ultimately whatever may be the decision that the High Power Committee may take one day, it is for the Nagarpalika to pay the requisite amount from its own coffers.
5. Pursuant to our order dated 29.07.2021, the Chief Officer of the Nagarpalika, Mr. Zala is also present. We want Mr. Zala to have a meeting with the President, Vice President and the Chairman of the Executive Committee of the Nagarpalika and apprise them of what has transpired today in the present proceedings.
6. We make ourselves very clear that it will be too much for this Court to tell the writ applicant to go to a Civil Court, file a Civil Suit and recover the amount. In such circumstances, we want the Nagarpalika to place before us some concrete proposal as regards Page 5 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 the payment.
7. We clarify that the hearing of this matter has been concluded. We could have proceeded today itself to dictate the judgment. However, we would like to give one opportunity to the Nagarpalika to place before us some concrete proposal.
8. Post this matter on 24.08.2021. On that date, Mr. Zala, the Chief Officer shall once again remain present before us and apprise us of the developments, if any.
9. The matter is treated as part heard."
8. There may be a case, where the demand for payment made by a contractor is disputed or there may be a cross- claim raised by the State against the contractor. There may, however, be cases, wherein the claim made by the contractor is admitted and there is no cross-claim between the parties to be determined. In such cases, there is really no dispute as regard the facts. Would it, in such a case, be necessary for the writ court to revert the party to the remedies available through the civil court ? The answer to this crucial question hinges on the principle that if an alternative efficacious remedy is available, the writ jurisdiction shall not be exercised. What is, of course, necessary to point out is that the existence of an alternative remedy is not an absolute bar to the jurisdiction of the court under Article 226, but is always a matter of exercise of discretion and remains, therefore, in the realm of prudence. What is, however, of great relevance to note is that though a disputed question of Page 6 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 fact is not normally entertained by a High Court in its writ jurisdiction, it will not, as a corollary, follow that if there is no disputed question of fact, the remedy under Article 226 would be available.
9. Before proceeding further, what may be noted is that a writ of mandamus is a public remedy and this remedy lies, when a public authority fails to perform the duty entrusted to it by law. In other words, a writ is issued against a person, who has a legal duty to perform, but has failed or neglected to do so. Distinguishing a case, wherein a public duty of a State is sought to be enforced, and a case, wherein a contractual obligation of a State is sought to be enforced, Professor Wade, in his well-known treatise, 'Administrative Law', makes it clear that while a public duty is enforceable by the public law remedy of a writ of mandamus, a contractual duty is enforceable, as a matter of private law, through the avenues of civil courts. The observations made, in this regard, by Professor Wade read, thus, -
"...A distinction which needs to be clarified is that between public duties enforceable by mandamus, which are usually statutory and duties arising merely from contract. Contractual duties are enforceable as matters of private laws by the ordinary contractual remedies, such as damages, injunction, specific performance and declaration. They are not enforceable by mandamus, which in the first place is confined to public duties and secondly is not granted where there are other adequate remedies."Page 7 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021
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10. What, now, needs to be noted is that howsoever thin and subtle may be, there is, indeed, a real and definite line of demarcation not only between a public wrong and a private wrong, but also between a public law remedy and private law remedy. Article 226 is pre-eminently a public law remedy and is not, generally, available as a remedy against private wrongs. Resort to Article 226 can be had to enforce various rights of the public or to compel the public or statutory authorities to discharge their public duties and/or to act, in the realm of their public functions, within the bounds of law. The remedy under Article 226 can, no doubt, be availed of even against a private body or person; but the scope of the right of mandamus is limited to the enforcement of public duty. In minimum possible words, but with extreme exactitude, clarified the Supreme Court, in Binny Limited and Anr. v. Sadasivan and Ors., reported in (2005) 6 SCC 657, the position of law, in this regard, in these words, "Thus, it can be seen that a writ of mandamus or the remedy under Article 226 is pre-eminently a public law remedy and is not generally available as a remedy against private wrongs. It is used for enforcement of various rights of the public or to compel public/statutory authorities to discharge their duties and to act within their bounds. It may be used to do justice when there is wrongful exercise of power or a refusal to perform duties. This writ is admirably equipped to serve as a judicial control over administrative actions. This writ could also be issued against any private body or person, specially in view of the words used in Article 226 of the Constitution. However, the scope of mandamus is limited to Page 8 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 enforcement of public duty. The scope of mandamus is determined by the nature of the duty to be enforced, rather than the identity of the authority against whom it is sought. If the private body is discharging a public function and the denial of any right is in connection with the public duty imposed on such body, the public law remedy can be enforced. The duty cast on the public body may be either statutory or otherwise and the source of such power is immaterial, but, nevertheless, there must be the public law element in such action." (See also Kamala Kanta Kalita (DR.) and Ors. v. Assam Cricket Association and Ors. (2006) 1 GLT 528).
11. Thus, in the face of succinctly laid down position of law with regard to the issuance of a writ of mandamus under Article 226, what one has to bear in mind is that in a case of private wrong, in order to invoke the writ jurisdiction under Article 226, two conditions must be satisfied, namely, (i) the identity of the person, against whom the writ is sought, as a person or body, which is amenable to writ jurisdiction, and (ii) the nature of duty, which is sought to be enforced, is a public duty or has an element of public interest. In a given case, one may, perhaps, ignore the first pre-requisite, namely, the identity of the person or body as a person or body amenable to writ jurisdiction, but the second prerequisite, as indicated hereinbefore, cannot be ignored, for, in the absence of public interest or in the absence of breach of public duty or in the absence of any public wrong having been committed, no recourse to Article 226 is possible.
12. What also needs to be cautiously noted is that a Page 9 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 constitutional or statutory duty is a public duty and enforceable by a writ of mandamus. To put in differently, the rights and duties go hand-in-hand. When a right is given to a person by a State, the State cast upon itself a duty to enforce such a right. Logically, therefore, when a person is given fundamental right by the Constitution, a duty rests on the State to ensure that the person realizes his fundamental rights. In a given case, therefore, if a person, aggrieved by a breach of contract, shows that though the breach is in the realm of a contract, the duty, sought to be enforced, is a constitutional or statutory duty, the remedy of a writ of mandamus may not be refused, for, it is the constitutional obligation of the High Court, under Article 226, to enforce the constitutional and statutory duties of the State and its instrumentalities.
13. The present of writ application essentially raise a demand for payment of dues and seek a writ, in the nature of mandamus, forcing the Halvad Nagar Palika to pay its dues. Though the fact that the writ applicant was entitled to receive the dues claimed by him is not in dispute, the question raised is as to whether such a demand can be raised at all in a writ petition and be enforced by a writ to be issued in the nature of mandamus. Is it possible to recover from the State or Nagar Palika its unpaid dues arising out of a contract by invoking writ jurisdiction merely because of the fact that one of the parties to the contract is a State. That a writ Page 10 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 petition, under Article 226, will not lie for mere recovery of an amount due and payable, under a contract, by the Government is clear from the decision, in Improvement Trust, Roper v. S. Tejinder Singh Gujral and Ors. (1995) Supp (4) SCC 577, wherein the Supreme Court has held, in no uncertain words, thus, "No writ petition can lie for recovery of an amount under a contract. The High Court was clearly wrong in allowing and entertaining the writ petition."
14. The question, therefore, is as to whether every breach of governmental obligation to pay its dues, under a contract, falls outside the purview of Article 226: This brings us to a more important question and the question is : Will the constitutional remedy of Article 226 never be available against a State even if the State refuses to carry out its contractual obligations with ulterior motives, mala fide, irrationally, arbitrarily, unreasonably, unfairly, whimsically or when the State, demonstratively discriminates, while making payment of its dues? Shall the writ court withdraw its hand resignedly and helplessly by saying that a writ of mandamus is a public law remedy and no writ of mandamus would be issued to any State directing it not to discriminate or act irrationally, arbitrarily, unreasonably, unfairly, whimsically, mala fide or with ulterior motives, while refusing or omitting to make payment of its dues arising out of contracts? Can a breach of contract ever give rise to any constitutional obligation Page 11 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 of the State to make payment of its dues ? Made it clear a three-Judge Bench, in Radha Krishna Agarwal vs.State of Bihar, 1977 AIR 1496, that every breach of contract by the State or by its officers is not a breach of public duty, for, such a proposition would make every breach of contract by the State or its agents subject of interference by the High Court in its extraordinary jurisdiction under Article 226 and, hence, remedy of a writ of mandamus cannot be had for every breach of contract. The relevant observations made, in this regard, in Radha Krishna Agarwal (supra), run, thus, "Learned Counsel contends that in the cases before us breaches of public duty are involved. The submission made before us is that, whenever a State or its agents or officers deal with the citizen, either when making a transaction or, after making it, acting in exercise of powers under the terms of contract between the parties, there is a dealing between the State and the citizen which involves performance of "certain legal and public duties". If we were to accept this very wide proposition, every case of a breach of contract by the State or its agents or its officers would call for interference under Article 226 of the Constitution. We do not consider this to be a sound proposition at all".
15. What is, now, of immense importance to note is that the case of Radha Krishna Agarwal (supra) was a case of pure and simple breach of contract. In such cases of breach, the remedy of payment of damages is available to Page 12 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 the person, who suffers alleged breach of contract. It is in such fact situation that the law with regard to invoking of the High Court's extraordinary jurisdiction, under Article 226, was discussed in Radha Krishna Agarwal (supra). The law, laid down in Radha Krishna Agarwal (supra), cannot, therefore, be extended to cases, which are not cases of mere breach of contract, but much more than that. This is clear from the fact that in paragraph 2 of Radha Krishna Agarwal (supra), the Supreme Court observed:
"...Primarily, the case of the petitioners is that of a breach of contract for which the State would be liable, ordinarily, to pay damages if it had broken it."
16. What emerges from the above discussion is that the remedy, available under Article 226, is an extraordinary remedy and is not intended for the purpose of declaring private rights of the parties. For the purpose of enforcing contractual rights and obligations, the remedy of filing of a civil suit is available to the aggrieved party and, hence, a High Court will not exercise its prerogative writ jurisdiction to enforce such contractual rights or obligations. A writ or direction in the nature of mandamus would not, therefore, lie to enforce private rights or contractual rights or obligations or even to avoid such obligations or rights. Contracts, which are non-statutory, and the rights, which are purely contractual and governed only by the terms of the contract, cannot be enforced by any writ or order under Article 226 of the Constitution of India. There is Page 13 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 formidable array of authorities, which may be referred to in this regard. (See Lekhraj S. Laluani v. N.M. Shah Deputy Custodian-Cum-Managing Officer, Bombay ; Radha Krishna Agarwal (supra); Divisional Forest Officer v. Biswanath Tea Co Ltd. ; State Bank of Haryana v. Jage Ram AIR 1980 SC 2018; Bihar Eastern Gangetic Fishermen Cooperative Society Ltd. v. Sipahi Singh ; Bareilly Development Authority v. Ajay Pal Singh ; Life Insurance Corporation of India v. Escorts Ltd. ; and Kulchinder Singh v. Hardayal Singh Brar ).
17. However, the principle that in an appropriate case, writ jurisdiction can be invoked even to enforce a contractual obligation of the State or its instrumentality was made clear by the Apex Court, in K.N. Guruswamy v. State of Mysore, AIR 1954 SC 992.
18. Where there is arbitrariness in State action, Article 14 springs in and judicial review strikes such an action down. Every action of the Executive Authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, it should meet the test of Article 14.
19. If the decision, in Dwarka Das Marfatia & Sons vs. Board of Trustees of the Port of Bombay, 1989 AIR 1642,, is carefully read, it becomes more than abundantly clear that though at the first blush, the decision, in Radha Krishna Agarwal (supra), appears to Page 14 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 have laid down that the remedy of every breach of contract lies in civil suits and writ jurisdiction would never be applicable to enforce even constitutional obligations of the State in contractual matters, the later decision of the Apex Court, in Dwarka Das Marfatia (supra), clearly shows that having considered the decision in Radha Krishna Agarwal (supra) and also the Constitution Bench decision in Life Insurance Corporatio of India vs. Escorts Ltd. 1986 AIR 1370, it has clearly held that there is no absolute bar to the exercise of jurisdiction under Article 226 in a contractual matter, particularly, when the act or conduct of the State or its instrumentality is challenged on the anvil of Article 14. It is also clear from Dwarka Das Marfatia (supra) that a writ court will enforce even a contractual obligation of the State if the breach of obligation by the State fails to satisfy the test of reasonableness under Article 14, for, in such a case, what the writ court would be enforcing is the constitutional duty of the State, though such a duty might have arisen in the realm of contractual obligation. It has been further made clear, in Dwarka Das Marfatia (supra), that even in contractual matters, the State's action must be reasonable, lawful and 'on relevant ground of public interest'.
20. What emerges from the above discussion is that when a writ petition is filed alleging breach of contractual obligation by the State or its instrumentality, the High Page 15 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 Court shall determine whether the writ petitioner is merely demanding to enforce his contractual rights or he has raised some important questions of law and/or constitutional issues. If he aims at merely enforcing his contractual rights and raises no important question of law or constitutional issue, writ jurisdiction will not be invoked; but if the writ petitioner raises a constitutional issue, there is no absolute bar to the exercise of jurisdiction under Article 226 even in a contractual matter. This position of law was made clear in Life Insurance Corporation of India v. Asha Goel, (2001) 2 SCC 160, wherein the court observed as under:
"Article 226 of the Constitution confers extraordinary jurisdiction on the High Court to issue high prerogative writs for enforcement of the fundamental rights or for any other purpose. It is wide and expansive. The Constitution does not place any fetter on exercise of the extraordinary jurisdiction. It is left to the discretion of the High Court. Therefore, 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 claim under a life insurance policy. It is neither possible nor proper to enumerate exhaustively the circumstances in which such a claim can or cannot be enforced by filing a writ petition. The determination of the question depends on consideration of several factors like, whether a writ petitioner is merely attempting to enforce his/her contractual rights or the case raises important questions of law and constitutional issues, the nature of the dispute raised; the nature of inquiry necessary for determination of the dispute, etc. The matter is to be considered in the facts and circumstances of each case. While the jurisdiction of the High Court to Page 16 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 entertain a writ petition under Article 226 of the Constitution cannot be denied altogether, courts must bear in mind the self-imposed restriction consistently followed by High Courts all these years after the constitutional power came into existence in not entertaining writ petitions filed for enforcement of purely contractual rights and obligations which involve disputed questions of facts. The courts have consistently taken the view that in a case where for determination of the dispute raised, it is necessary to inquire into facts for determination of which it may become necessary to record oral evidence a proceeding under Article 226 of the Constitution, is not the appropriate forum. The position is also well settled that if the contract entered between the parties provide an alternate forum for resolution of disputes arising from the contract, then the parties should approach the forum agreed by them and the High Court in writ jurisdiction should not permit them to bypass the agreed forum of dispute resolution. At the cost of repetition it may be stated that in the above discussions we have only indicated some of the circumstances in which the High Court have declined to entertain petitions filed under Article 226 of the Constitution for enforcement of contractual rights and obligation; the discussions are not intended to be exhaustive. This Court from time to time disapproved of a High Court entertaining a petition under Article 226 of the Constitution in matters of enforcement of contractual rights and obligation particularly where the claim by one party is contested by the other and adjudication of the dispute requires inquiry into facts. We may notice a few such cases; Mohd. Hanif v. State of Assam ; Banchhanidhi Rath v. State of Orissa ; Rukmanibai Gupta v. Collector, Jabalpur ; Food Corpn. of India v. Jagannath Dutta (1993) Supp 3 SCC 635 and State of H.P. v. Raja Mahendra Pal .
The position that emerges from the discussions in the decided cases is that ordinarily the High Court should not entertain a writ petition filed under Article 226 of Page 17 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 the Constitution for mere enforcement of a claim under a contract of insurance. Where an insurer has repudiated the claim, in case such a writ petition is filed, the High Court has to consider the facts and circumstances of the case, the nature of the dispute raised and the nature of the inquiry necessary to be made for determination of the questions raised and other relevant factors before taking a decision whether it should entertain the writ petition or reject it as not maintainable. It has also to be kept in mind that in case an insured or nominee of the deceased insured is refused relief merely on the ground that the claim relates to contractual rights and obligations and he/she is driven to a long-drawn litigation in the civil court it will cause serious prejudice to the claimant/other beneficiaries of the policy. The pros and cons of the matter in the context of the fact- situation of the case should be carefully weighed and appropriate decision should be taken. In a case where claim by an insured or a nominee is repudiated raising a serious dispute and the court finds the dispute to be a bona fide one which requires oral and documentary evidence for its determination then the appropriate remedy is a civil suit and not a writ petition under Article 226 of the Constitution. Similarly, where a plea of fraud is pleaded by the insurer and on examination is found prima facie to have merit and oral and documentary evidence may become necessary for determination of the issue raised, then a writ petition is not an appropriate remedy."
21. Moreover, when a writ court finds that the refusal to extend constitutional remedy of Article 226 to enforce a contractual right or obligation would drive a person, knocking at the doors of a writ court, to a long-drawn litigation in the civil court causing serious prejudice to the person seeking relief against the State, the writ court may not, according to Asha Goel (supra), decline to interfere in Page 18 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 such a matter and hence, reminds the Apex Court in Asha Goel (supra), thus: "the pros and cons of the matter in the context of the fact situation of the case should be carefully weighed and appropriate decision should be taken". From the law, so laid down in Asha Goel (supra), it becomes transparent that when non-interference by a writ court would drive a person to a long-drawn civil litigation causing serious prejudice to him, the writ court's interference is not only desirable, but even necessary. As a corollary to this proposition of law, one can safely say that when a contractor's dues are admitted by a State and the fact situation of a given case satisfies the writ court that asking the contractor to take recourse to the civil court would cause serious prejudice to the contractor, the writ court should step in. For instance, a contractor, whose dues are admitted but not paid by the State, approaches a writ court with the plea that his son is a terminal case of cancer and the State's breach of its contractual obligation of not paying its dues is not only unfair and unreasonable, but may even threaten his son's survival and existence, the High Court may, in the absence of any plausible explanation offered by the State for non-payment of the admitted dues, invoke its extraordinary jurisdiction under Article 226 to remedy the wrong, though such a wrong may have arisen out of the States omission to discharge its contractual obligation, for, the High Court, in such a case, would not be merely enforcing the contractual obligation of the State, but also the State's constitutional Page 19 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 obligation to act with reasonableness and fairness as envisaged by Article 14 and not to act in breach of the mandates thereof, which may have the effect of extinguishing the life of one of its citizens, though Article 21 guarantees that the State would act with greatest of promptitude in protecting the lives of its citizens against its own unreasonable and unfair actions.
22. From the decision in Asha Goel (supra), what emerges is that ordinarily, a High Court should not entertain a writ petition, under Article 226, for mere enforcement of claims under a contract of insurance; however, the Constitution having not placed any fetters on the exercise of extraordinary jurisdiction by the High Court under Article 226, it is in the discretion of the High Court to interfere or not to interfere in a contractual matter. No exercise of discretionary power can be unfettered, unguided, unsettled or arbitrary, and, hence, the position of law, on a given subject, should not be completely unforeseen and legal decisions must have some standards or parameters in order to enable the people at large to know as to what the position of law, on a given subject, is. Considered, thus, the exercise of jurisdiction under Article 226 cannot be unfettered or arbitrary. However, it is not possible to enumerate exhaustively the circumstances in which a writ application even in contractual matter would lie, for, exercise of jurisdiction would depend upon a considerable number of factors, such as, the question as to whether the Page 20 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 writ applicant is merely attempting to enforce his or her contractual rights or has raised important questions of law or constitutional issues, the nature of the dispute raised and the nature of enquiry necessary for determination of the dispute, etc. In short, the exercise of jurisdiction would depend on the facts and circumstances of each given case. While jurisdiction of the High Court to entertain a writ petition, under Article 226, should not be denied altogether, the courts must bear in mind the self-imposed restrictions constitutionally followed by the High Courts not to, ordinarily, entertain writ petitions for enforcement of purely contractual rights and obligations, particularly, when determination of such questions necessitates taking of oral evidence or when the parties had agreed to resolve their disputes, arising out of the contract, in the alternative forum selected by them.
23. Having taken note of the various judicial pronouncements with regard to the maintainability of writ petitions aimed at enforcing contractual obligations of the State or its instrumentality and having discussed the law on the subject, the Apex Court, in para 27 of ABL International Ltd. v. Export Credit Guarantee Ltd., reported in (2004) 3 SCC 553 culled out the legal principles governing the maintainability of such a writ petition in the following words:
"From the above discussion of ours, following legal principles emerge as to the maintainability of a writ petition:Page 21 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021
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(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 facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.
(c) A writ petition involving a consequential relief of monetary claim is also maintainable.
(Emphasis is supplied)."
24. From what has been culled out above, there remains no manner of doubt that in an appropriate case like the present case, the remedy under Article 226 would be available to enforce the contractual obligations of the State, its instrumentality and all public bodies.
25. Having discussed the law on the subject and taking into account the facts in ABL International Ltd. (supra), the court finally observed, at para 53, thus:
"53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus, if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering Page 22 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 the risk of the appellants was issued by the first respondent after seeking all required information and after receiving huge sums of money as premium exceeding Rs. 16 lacs.
On facts we have found that the terms of the policy does not give room to any ambiguity as to the risk covered by the first respondent. We are also of the considered opinion that the liability of the first respondent under the policy arose when the default of the exporter occurred and thereafter when Kazakhstan Government failed to fulfil its guarantee. There is no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such factual situation, we are of the opinion, the facts of this case do not and should not inhibit the High Court or this court from granting the relief sought for by the petitioner.
(emphasis is supplied)"
26. From the above observations made in para 53, what emerges is that when the State or its instrumentality acts contrary to public good, public interest, unfairly, unjustly and unreasonably in the realm of its contractual obligations, arising out of even non-statutory contract, it really acts contrary to the constitutional guarantee given under Article 14 and, in an appropriate case, when this guarantee is found to have been denied, remedy under Article 226 would be available to undo the wrong done by the State and to command the State to pay its unpaid dues, which it is, under its contractual obligation, bound to pay, but has unfairly, unjustly and unreasonably refused to pay.
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27. From what has been held in Suganmal vs. State of M.P. & Ors., AIR 1965 SC 1740, it becomes transparent that 'ordinarily', a writ petition solely praying for direction to the State to refund money is not maintainable, for, the aggrieved party has the right to approach civil court for relief and it would, then, be open to the State to raise all possible defences, which it may have. In a case, therefore, where the State admits the claims and has no defence to offer, the issue of writ of mandamus has not been barred by the Constitution Bench in Suganmal (supra), particularly, when a writ applicant challenges the withholding of his dues by the State as an act of unfairness, unreasonableness, arbitrariness and contrary to the principles governing Article 14. It is for this reason that the Constitution Bench, in Suganmal (supra), has used the word 'normally,' while laying down that "petitions solely praying for refund of money against the State by way of writ petition are not to be entertained".
28. Moreover, we may also point out that in ABL International Ltd. (supra) too, it was argued, on behalf of the first respondent, that since the writ petition was one for recovery of money, it was not permissible to allow such a writ petition. While turning down this submission, the Apex Court, in ABL International Ltd. (supra), observed as follows:
"In support of the submission that a writ petition seeking mandamus for mere refund of money was not maintainable, the decision in Suganmal v. State Page 24 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 of M.P. was cited. In AIR para 6 of the said judgment, it is stated that-
We are of the opinion that though the High Courts have power to pass any appropriate order in the exercise of the powers conferred under Article 226 of the Constitution, such a petition solely praying for the issue of a writ of mandamus directing the State to refund the money is not ordinarily maintainable for the simple reason that a claim for such a refund can always be made in a suit against the authority which had illegally collected the money as a tax."
Again in AIR para 9, the court held:
We, therefore, hold that normally petitions solely praying for the refund of money against the State by a writ of mandamus are not to be entertained. The aggrieved party has the right of going to the civil court for claiming the amount and it is open to the State to raise all possible defences to the claim, defences which cannot, in most cases, be appropriately raised and considered in the exercise of writ jurisdiction.
The judgment cannot be read as laying down the law that no writ petition at all can be entertained where claim is made for only refund of money consequent upon declaration of law that levy and collection of tax/cess as unconstitutional or without the authority of law. It is one thing to say that the High Court has no power under Article 226 of the Constitution to issue a writ of mandamus for making refund of the money illegally collected. It is yet another thing to say that such power can be exercised sparingly depending on facts and circumstances of each case. For instance, in the cases on hand where facts are not in dispute, collection of money as cess was itself without the authority of law; no case of undue enrichment was made out and the amount of cess was paid under protest; the writ petitions were filed within a reasonable time from the date of the Page 25 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 declaration that the law under which tax/cess was collected was unconstitutional. There is no good reason to deny a relief of refund to the citizens in such cases on the principles of public interest and equity in the light of the cases cited above.
However, it must not be understood that in all cases where collection of cess, levy or tax is held to be unconstitutional or invalid, the refund should necessarily follow.
We wish to add that even in cases where collection of cess, levy or tax is held to be unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending on facts and circumstances of a given case.
Therefore, this objection must also fail because in a given case it is open to the writ court to give such monetary relief also.
(emphasis is supplied)"
29. From the above observations made in ABL International Ltd. (supra), it becomes abundantly clear that there is no absolute bar in entertaining a writ application, under Article 226, if the writ applicant aims at enforcing contractual obligation of the State to make payment of its unpaid dues to the writ applicant, though it will depend, we must hasten to point out, on the cumulative effect of all the facts of a given case as to whether the High Court will or will not entertain such a writ petition and pass directions for payment of dues.
30. In the last, we may refer to and rely upon the recent decision of the Supreme Court in the case of Punjab Page 26 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 National Bank & Ors. vs. Atmanand Singh & Ors., reported in 2020 SCC Online SC 433, wherein the Supreme Court,in para-23, observed thus;
"We restate the above position that when the petition raises questions of fact of complex nature, such as in the present case, which may for their determination require oral and documentary evidence to be produced and proved by the concerned party and also because the relief sought is merely for ordering a refund of money, the High Court should be loath in entertaining such writ petition and instead must relegate the parties to remedy of a civil suit. Had it been a case where material facts referred to in the writ petition are admitted facts or indisputable facts, the High Court may be justified in examining the claim of the writ petitioner on its own merits in accordance with law."
31. As in the present case, the Nagar Palika very fairly admitted the claim put forward by the writ applicant and has resolved the dispute, there is no need now to issue a Writ of Mandamus. Had this writ application been contested, we would not have hesitated to issue a Writ of Mandamus to the Nagar Palika to make the payment of the legitimate dues of the writ applicant.
32. We may give one more illustration as we have come across one such matter. Take a case wherein the State or any instrumentality of State or any other authority has entered into a lease agreement with a private individual for use of office premises etc. owned by him. The lease agreement would stipulate the terms and conditions and the parties are obliged to abide by such terms and Page 27 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 conditions. Take a case wherein the lease period has expired and there is no fresh lease deed executed between the parties, or there is no further extension of the lease period in any manner and still if the lessee retains the possession of such leased premises, and declines or refuses to vacate the premises and handover the vacant and peaceful possession of the owner (lessor), should the lessor, in such circumstances, be told to go and file a civil suit and obtain a decree of eviction against the lessee. In such circumstances, the principles of law explained by us, as referred to above, would come into play. Asking the lessor to go and file a suit for recovery of possession despite the fact that the lease has come to an end and the lesssee is in unlawful occupation and possession of the leased premises, would be nothing short of mockery of justice. In such circumstances, the Writ Court would be justified in directing the State or the instrumentality of State or any authority to immediately vacate the premises and handover the possession to the lessor, and in a given case, may even award compensation in terms of money towards damages.
33. It is the obligation of the State or any of its instrumentality to discharge its public duties fairly, justly and reasonably which are the basic requirements of Article 14 of the Constitution of India. It is also public function of the State to discharge its obligations to the public fairly, justly and reasonably. It is no more res-integra that even in contract works and also in entering into contract Page 28 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021 C/SCA/20864/2019 ORDER DATED: 24/08/2021 agreement with the private party the State Government cannot act like a private individual inasmuch as the State has to act justly, fairly and reasonably even in contractual field and the State's constitutional obligations co-exists with contractual obligations.
34. With the aforesaid, this writ application is disposed of. This order is made reportable.
(J. B. PARDIWALA, J) (VAIBHAVI D. NANAVATI,J) Vahid Page 29 of 29 Downloaded on : Fri Aug 27 21:01:13 IST 2021