Kerala High Court
State Of Kerala And Ors. vs T.N. Anil on 21 December, 2001
Author: Kurian Joseph
Bench: B.N. Srikrishna, K.A. Abdul Gafoor, Kurian Joseph
ORDER Kurian Joseph, J.
1. "CONTRACTORS' BILL" is not an unfamiliar subject to this High Court for quite some time. There arc two reported Bench decisions of this court on the subject. The first one is reported in Anirudhan v. State of Kerala, 1999 (3) Ker. LT 1 : 1999 (2) Ker LJ 252 and the other is reported in State of Kerala v. K.P.W.S.W.L.C. Co-operative Society Limited, AIR 2001 Ker. 60. In the former case, the only defence of State was of financial difficulty. Considering the financial position explained in the affidavit filed by the State and particulars furnished in the additional statement dated 23.6.1999, the Government was granted four months' time at least for making payments to the Contractors who had filed Original Petitions on or before 23.6.1999 against the final bills submitted by them excluding the Original Petitions filed by the Associations /Union of Contractors. There was also a direction to make payments in the remaining cases strictly in accordance with the seniority of the bills under the respective head of accounts and subject to availability of funds, on the principle 'first done first paid'.
2. Coming to the latter decision, it may be seen that it is a case where the State filed Writ Appeal against the direction issued by the learned single Judge following Anirudhan's case, 1999 (2) Ker LJ 252 in various writ petitions. The main contention raised by the State was maintainability with particular reference to the prerogative writ of mandamus and the Division Bench held as follows :-
"The Original Petition under Article 226 of the Constitution for a writ of mandamus for enforcement of the contractual obligation, viz., payment of amount to the contractors in a contract, which is non-statutory, cannot be enforced through Article 226 of the Constitution/The petitioners have to approach the Civil Court for enforcement of the contractual obligations."
It was also held that:
"Conditions in the contract provide for everything including for payment under the contract and also for termination of the contract, recovery of damages, etc. Thus, essentially when the contractor moves this Court for payment of dues under the contract, this Court has to enforce the provisions of the contract and not the provisions of the statute or public duty"............"It cannot be said that they have no right to approach this Court"..........."Here, what is being done is not the enforcement of public duty. May be what is invoked in the contract is for the welfare of the public. But the right to be enforced is for the reimbursement of the amount spent by the contractors for the purpose of contract. We cannot say that they were exercising public duty in-sofar as there is no statutory contract. Hence, according to us, it is a case where a writ of mandamus cannot be issued."
The Bench also took the view that the dispute relating to interpretation of the terms and conditions of a contract could not have been agitated in a petition under Article 226 of the Constitution of India.
3. In view of the conflicting orders from the different Benches, and in view of the conflicting stand taken by the State before different Benches, by order dated 23.3.2001 another Division Bench referred the matter for authoritative pronouncement by a Full Bench.
4. Sri V.K. Beeran, learned Additional Advocate General who appeared for the State fairly conceded that the State does not dispute the liability to pay the amounts covered by the bills admitted by the departments. It is significant in this context to note that the directions issued in Judgments under appeal are only to disburse the admitted amounts. In that factual matrix, it is not necessary for us to investigate as to whether there was any disputed question of fact involved in these cases. When the State admits its liability and yet does not act in a fair, proper and reasonable manner, can it be said that the State shall not be compelled to act according to the Constitutional conscience of fairness and reasonableness in State actions.
5. Apparently, the impression that was given to the Court by the State in the said appeals is that the dispute in all these cases involve interpretation of the terms and conditions of such a contract and adjudication of facts and also that there was no public law element in matters where the State enters into a non-statutory contract and hence it cannot be said that there was a public duty. Having extensively heard the learned Additional Advocate General appearing for the State, Sri S. Venkatasubramania lyer, Senior Counsel, Sri K.M. Joseph and others appearing for the parties, we learn that unfortunately many of the crucial legal aspects on the issue have not been brought to the notice of the Division Bench in the said appeals. We do not want to refer extensively to the catena of decisions of the Apex Court. Yet, in view of the latter decision on maintainability, it has become necessary to refer to a few.
6. In Smt. Gunwant Kaur v. Municipal Committee, Bhatinda, 1969 (3) SCC 769 : AIR 1970 SC 802, the Supreme Court held as follows at p. 805 of AIR:
"14. The High Court observed that they will not determine disputed question of fact in a writ petition. But what facts were in dispute and what were admitted could only be determined after an affidavit in reply was filed by the State. The High Court, however, proceeded to dismiss the petition in limine. The High Court is not deprived of its Jurisdiction to entertain a petition under Article 226 merely because in considering the petitioner's right to relief questions of fact may fall to be determined. In a petition under Article 226 the High Court has Jurisdiction to try issues both of fact and law. Exercise of the Jurisdiction is, it is true, discretionary, but the discretion must be exercised on sound Judicial principles. When the petition raises questions of fact of a complex nature, which may for their determination require oral evidence to be taken, and on that account the High Court is of the view that the dispute may not appropriately be tried in a writ petition, the High Court may decline to try a petition."
7. In Life Insurance Corporation of India v. Escorts Ltd., 1986 (1) SCC 264 : AIR 1986 SC 1370, the view taken is that (at p. 1424 of AIR) :
"102. For example, if the action of the State is political or sovereign in character, the Court will keep away from It. The Court will not debate academic matters or concern itself with the intricacies of trade and commerce. If the action of the State is related to contractual obligations or obligations arising out of the tort, the Court may not ordinarily examine it unless the actions has some public law character attached to it. Broadly speaking, the Court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier between the public law domain and the private law field. It is Impossible to draw the line with precision and we do not want to attempt it. The question must be decided in each case with reference to the particular action, the activity In which, the State or the instrumentality of the State is engaged when performing the action, the public law or private law character of the action and a host of other relevant circumstances.
8. The question was also examined by the Apex Court in the background of Article 14 of the Constitution of India in Kumari Shrilekha Vidyarthi v. State of U.P., 1991 (1) SCC 212 : AIR 1991 SC 537. It was held as follows at pp. 549-550 of AIR :.
"22. There is an obvious difference in the contracts between private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good, and in public interest. The Impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirements of public law obligations and Impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the Impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation Is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions."
It was further held that (at p. 550 of AIR) :
"24. ..........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." Regarding the public law element in contractual matters, the Court settled the position in the case as follows 1991 (1) SCC 212 : AIR 1991 SC 537 at p. 551): .
"28. Even assuming that it is necessary to import the concept of presence of some public element In a State action to attract Article 14 and permit judicial review, we have no Hesitation in saying that the ultimate Impact of all actions of the State or a public body being undoubtedly on public interest, the requisite public element for this purpose is present also in contractual matters. We therefore, find it difficult and unrealistic to exclude the State actions in con-tractual matters, after the contract has been made, from the purview of Judicial review to test its validity on the anvil of Article 14."
9. Thus, the position is clear that once the State action is attacked to be unreasonable, unfair and against public Interest irrespective of the sphere, the State action Is amenable to Judicial review. In the words of Verma, J. in Shrilekha Vidyarthl's case, 1991 (1) SCC 212 : AIR 1991 SC 537:
"The basic requirement of Article 14 Is fairness in action by the State and we find It difficult to accept that the State can be permitted to act otherwise in any field of its activity. Irrespective of the nature of its functions when it has the uppermost duty to be governed by the rule of law. Non-arbitrariness, in substance, is only fair play in action. We have no doubt that this obvious requirement must be satisfied by every action of the State or its instrumentality in order to satisfy the test of validity."
10. It is also now a well-settled position following International Airport Authority's case, AIR 1979 SC 1628 that an executive authority must be vigorously held to the standards by which it professes Its action to be Judged. In Judging the State action thus, the Court can even review whether the State demonstrates its actions to its professed standards;
11. It may not also be out of context to refer to the scope of exercise of the power of the High Court in Article 226 of the Constitution of India. There also, it Is not as if the question is res Integra, Barring the self-imposed limitations, it is well settled that the arm of the Court is long enough to strike at injustice wherever it is found.
12. In Air India Statutory Corporation v. United Labour Union, 1997 (9) SCC 377 : AIR 1997 SC 645, it was observed as follows (Paras 59, 60 at p. 630 of AIR) :
"Founding Fathers placed no limitation or fetters on the power of the High Court under Article 226 of the Constitution except self-imposed limitations. The arm of the Court is long enough to reach Injustice wherever it is found. The Court as 'sentinel on the qul vive' is to mete out Justice In given facts..........
The public law remedy given by Article 226 of the Constitution is to issue not only the prerogative writs provided therein but also any order or direction to enforce any of the fundamental rights and "for any other purpose".
13. Yet another decision referring to interference in contractual matters is one reported in Hindustan Petroleum Corporation Ltd. v. Dolly Das, 1999 (4) SCC 450, wherein it is held as follows :
"9. We may now advert to the contention that the writ remedy is not appropriate In this case. Where interpretation of a contract arises in relation to immovable property and in working such a contract or relief thereof or any other fallout thereto may have the effect of giving rise to an action in tort or for damages, the appropriate remedy would be a civil suit. But if the facts pleaded before the Court are of such it nature which do not involve any complicated questions of fact needing elaborate Investigation of the same, the High Court could also exercise writ Jurisdiction under Article 226 of the Constitution in such matters. There can be no hard and fast rule in such matters. When the High Court has chosen to exercise its powers under Article 226 of the Constitution we cannot say that the discretion exercised in entertaining the petition is wrong."
14. The latest decision on this aspect Is Life Insurance Corporation v. Smt. Asha Gael, 2001 (2) SCC 160 : AIR 2001 SC 549, wherein it was observed as follows (at p. 553 of AIR) :
"10. 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 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 thai 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."
15. Since the Division Bench in State appeal cases has referred to the inapplicability of the prerogative writ of mandamus in contractual matters, we shall also deal with the said issue. In Anadi Mukta Sadguru Shree Muktajee Vandasji Swami Suvana Jayanti Mahotsav Smarak Trust v. V.K. Rudani, 1989 (2) SCC 691 : AIR 1989 SC 1607, the said issue has been squarely dealt with and paras 17 and 22 (of SCC) : (Paras 16 and 21 of AIR) reads as follows:
"17. There, however, the prerogative writ of mandamus is confined only to public authorities to compel performance of public duty. The 'public authority' for them mean everybody which is created by statute - and whose powers and duties are defined by statute. So Government departments, local authorities, police authorities, and statutory undertakings and corporations, are all 'public authorities'. But there is no such limitation for our High Courts to issue the writ 'in the nature of mandamus'. Article 226 confers wide powers on the High Courts to Issue writs in the nature of prerogative writs. This is a striking departure from the English law. Under Article 226, writs can be Issued to "any person or authority". It can be issued "for the enforcement of any of the fundamental rights and for any other purpose".
22. Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not Imposed by the statute. Commenting on the development of this law, Professor de Smith states ; "To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract." We share this view. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put Into watertight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available 'to reach. Injustice wherever it is found'. Technicalities should not come in the way of granting that relief under Article 226. We, therefore, reject the contention urged for the appellants on the maintainability of the writ petition."
16. In Halsbury's Laws of England, Volume 1, Para 89, the nature of the writ of mandamus is dealt with :
"89. Nature of mandamus. The order of mandamus is of a most extensive remedial nature, and Is, in forum, a command issuing from the High Court of Justice, directed to any person, corporation or inferior tribunal, requiring him or them to do some' particular thing therein specified which appertains to his or their office and is in the nature of a public duty. Its purpose is to remedy defects of justice; and accordingly it will issue, to the end that justice may be done, in all cases where there is a specific legal right and no specific legal remedy for enforcing that right; and it may issue in cases where, although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual."
17. We do not think it is necessary to deal with the said issue in more details. Mandamus is an accepted and powerful item in the armoury, particularly of High Court under Article 226 of the Constitution of India to strike at injustice and reach justice. It Is significant, interesting and in a sense heartening to note that the Division Bench in the State appeal cases granted relief to the Contractors even while holding that the writ petition is not maintainable, apparently moved by the constitutional obligation to strike at injustice resulting from unfair and unreasonable conduct on the part of the State.
18. Guided by the statutory principles in the subject-matter and as particularly laid down by the Supreme Court, and applying the same on the issue referred to us, it has to be held that it cannot be said in absolute terms that a writ petition is not maintainable in contractual matters including where the Contractors seek enforcement of the obligation on the part of the State to pay the bill amounts admitted by the State. Though couched in different terms, all the decisions referred by us above lead to the said conclusion. All the activities of the State are in public interest and for public good. There is public law element in contracts where State is a party, and it naturally follows that there is public duty. And above all, any State action is liable to be tested on the touchstone of Article 14 of the Constitution of India. Essentially, the only limitation of the High Court is the self-imposed restriction. A few relevant factors in exercising the self-imposed limitation under Article 226 of the Constitution of India in the matter of payment of Contractors' bills are :
(1) When there is no disputed question of fact requiring adjudication on detailed evidence.
(2) When no alternate form is provided in the resolution of any disputes pertaining to a contract.
(3) When claim by one party is not contested by the other and the contest does not require adjudication requiring detailed enquiry into facts.
19. In the instant case as already noted by us, there is no such dispute on the factual position. The State admits its liability to pay the bill amounts. The direction by the Court is only to pay the admitted amounts. True, in some of the cases, there is a direction to pay interest. The correctness of the view is certainly open to the State to canvass in writ appeal and it is for the respective Bench to decide the issue and the larger Bench need not go into that issue.
20. While the reference was pending before the larger Bench, certain directions had been issued in the matter of payment of the bills on 'first done first paid' basis. It is made clear that those orders passed by the larger Bench will be a guideline for the State in the matter of payment of the bills and it will be open to the respective Benches to issue appropriate orders, if required and if found necessary, suitably varying those general directions in the interest of justice. Therefore, answering the reference as stated above, we send back all the cases to the respective Benches for final orders in the matter.