1 Reserved on :
07. 06.2024 R Pronounced on :
25. 06.2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE25H DAY OF JUNE, 2024 BEFORE THE HON'BLE MR. JUSTICE M. NAGAPRASANNA WRIT PETITION No.8182 OF2022(GM - RES) BETWEEN: M/S. GVPR ENGINEERS LTD., REPRESENTED BY ITS VICE PRESIDENT MR.MANJUNATHA SWAMY J.R., PLOT NO.739-A, ROAD NO.37 JUBILEE HILLS HYDERABAD – 500 033 TELENGANA, INDIA ... PETITIONER (BY SRI MADHUSUDHAN R.NAIK, SR. ADVOCATE FOR SRI PRADEEP GAONKAR, ADVOCATE) AND:
1. . THE MANAGING DIRECTOR KARNATAKA NEERAVARI NIGAMA LTD., (GOVT. OF KARNATAKA ENTERPRISES) REPRESENTED BY ITS MANAGING DIRECTOR4H FLOOR, COFFEE BOARD DR.B.R.AMBEDKAR VEEDHI BENGALURU – 560 001. 2 2 . THE CHIEF ENGINEER, UTP ZONE KARNATAKA NEERAVARI NIGAMA LIMITED SAGAR ROAD SHIVAMOGGA – 577 201. 3 . THE EXECUTIVE ENGINEER KARNATAKA NEERAVARI NIGAMA LIMITED NO.5, UTP PROJECT DIVISION HONNALI, DAVANGERE – 577 217. 4 . THE EXECUTIVE ENGINEER UPPER TUNGA PROJECT DIVISION KARNATAKA NEERAVARI NIGAMA LTD., SAGAR ROAD, SHIVAMOGGA – 577 201. ... RESPONDENTS (BY SRI PRASHANTH B.R., ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES226AND227OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE RELEVANT RECORDS; ISSUE A WRIT,
ORDEROR DIRECTION IN THE NATURE OF MANDAMUS TO CONSIDER THE REPRESENTATION DATED2712/2021 FILED BY THE PETITIONER AS PER ANNEXURE F AND TO RELEASE RS.5.52 CRORES BY THE RESPONDENTS. THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR
ORDERS ON0706.2024, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:- 3
ORDERThe petitioner is before this Court seeking a direction by issuance of a writ in the nature of mandamus to release `5.52 crores on consideration of the representation dated 27-12-2021.
2. Heard Sri Madhusudhan R.Naik, learned senior counsel appearing for the petitioner and Sri B.R. Prashanth, learned counsel for the respondents.
3. Facts, in brief, germane are as follows:- On 09-04-2007 the respondent/Karnataka Neeravari Nigama Limited (‘the Company’ for short) issued a notice of tender for modernization of Anvery Canal including rehabilitation of structures, distributaries etc. falling within the reach of the said Canal. Pursuant to emerging of the petitioner as successful tenderer, an agreement comes to be executed on 25-06-2007 for the aforesaid work and work order was accordingly issued. The petitioner was issued work completion certificate with regard to the aforesaid work. Bank guarantees that were taken at the time of awarding of 4 contract were also released. On 11-05-2019 long after the work was over, it appears that one Chidananda Murthy complains to the Karnataka Lokayukta alleging sub-standard work that was completed by the petitioner in the Canal. On 27-12-2021 the petitioner communicates to the respondent/Company requesting release of `5.52 crores which was withheld for the work done in another project on the ground that the work done in the aforesaid project was alleged to be shoddy. Non-consideration of the representation for the release of the aforesaid amount has driven the petitioner to this Court in the subject petition.
4. The learned senior counsel representing the petitioner would submit that it is unheard of for a work that was completed in another project, the bills pertaining to the subsequent project are withheld on the ground that the earlier project had some shoddy work. It is his submission that the work was never complained of within the warrantee period that had been stipulated in the contract but based on some complaint later, it is alleged, that the work done by the petitioner was sub-standard. He would submit that no other person has complained of the same after due inspection of the work 5 so done by the petitioner. He would seek a mandamus for release of the amount along with interest.
5. Per-contra, the learned counsel representing the Company would refute the submissions to contend that the petitioner has not replied to any one of the communications directing it to complete the work which was allegedly shoddy or sub-standard or had repairs and maintenance. Therefore, invoking the clause in the contract, the amount is now withheld. He would submit that withholding of the amount is only due to lack of communication from the hands of the petitioner and no fault can be found in the action of the Company.
6. In reply to the aforesaid submission, the learned senior counsel would take this Court through the rejoinder filed to the statement of objections to demonstrate that all the communications were replied to and also communicated that the repair work has been done. There is no repair work pending from the hands of the petitioner within the warrantee period in terms of the contract. He 6 would submit that it is only a ruse to withhold the bills of the petitioner.
7. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.
8. The afore-narrated facts are not in dispute. The petitioner emerging as the successful bidder pursuant to a tender notification issued in the year 2007, is not in dispute. An agreement is entered into between the petitioner and the respondent/Company. Certain clauses of the agreement become germane to be noticed, as the Company has placed heavy reliance on general conditions of contract in the agreement. They read as follows: “…. …. …. Addition or Reduction in Security Deposit: (b) In cases where additions are made to the tendered work under the provisions of clause-13 an additional amount of Security Deposit at the rates mentioned in Sub-clause (a) above should be paid by the Contractor. If a portion of the work is withdrawn from the Contractor under the provisions of Clause-15(a) a proportionate reduction in the amount of Security Deposit may be allowed by the Executive Engineer. 7 Conversion to interest bearing securities: (c) The Security Deposit paid in cash as also the F.S.D. deducted from the bills, may, at the cost of the depositor, be converted into interest bearing securities provided that the depositor has expressly desired this in writing. Release against Bank Guarantee: (d) When the Further Security Deposit deducted from the bills exceeds Rs. One lakh, the amount in excess of Rs. One lakh, at the request of the contractor, be released to him against the production of Bank Guarantee for an equivalent amount in the prescribed form. The Bank Guarantee should be kept valid till the completion of the period mentioned in Sub-clause (f) below. Dues to KNNL, to be set off against Security Deposit: (e) All compensation or other sums of money payable by the Contractor to KNNL under the terms of this contract may be realised or deducted from any amount payable to him or Security Deposit payable to him or from the interest arising there from, or from any sums which may be due or may become due by KNNL to the Contractor on any account whatsoever and in the event of his security deposit being reduced by reason of any such realisation or deduction as aforesaid, the Contractor shall, within ten days thereafter, make good in cash any sum or sums which have been deducted from, or raised by sale of his security deposit or any part thereof. Refund of Security Deposit: (f) The Security Deposit lodged/paid by a Contractor shall be refunded to him after the final bill are paid or after Twenty four months, from the date of completion of the work, during which period the work should be maintained by the Contractor in good order, whichever is later.”
(Emphasis added)8 Three clauses of the agreement are pressed into service by the respondent/Company. One, dues to the Company to be set off against security deposit; two refund of security deposit and three being, release of bank guarantee. Dues to the Company would mean that compensation and other sums of money payable by the Contractor in terms of the contract may be deducted from any amount payable in any sum that may become due or is already due in whatsoever manner that the Company would please.
9. After entering into the contract, the petitioner completes the work under the contract. The completion report is submitted, inspection is conducted and certificate of appropriate completion is rendered which reads as follows: “-::ದೃ(cid:6)ೕಕರಣ ಪತ(cid:13)::- (Under para 185(d) of PWD code Vol-I) ¨sÀzÁæ DzsÀĤÃPÀgÀtzÀr Modernisation of Anvery branch canal (Length 67km) including rehabilitation of structures, Distributory, laterals etc., and Distributory network falling within the reach of Anvery Branch Canal including lining work Package 6(A) (cid:14)(cid:14)(cid:14)(cid:14)ಾಾಾಾಮಮಮಮ(cid:17)(cid:17)(cid:17)(cid:17)ಾಾಾಾ(cid:18)(cid:18)(cid:18)(cid:18)ಯಯಯಯುುುು ಪಪಪಪ(cid:21)(cid:21)(cid:21)(cid:21)ಣಣಣಣ(cid:22)(cid:22)(cid:22)(cid:22)(cid:17)(cid:17)(cid:17)(cid:17)ೆೆೆೊೂೂೂಂಂಂಂ(cid:26)(cid:26)(cid:26)(cid:26)(cid:27)(cid:27)(cid:27)(cid:27)ೆೆೆೆ(cid:28)(cid:28)(cid:28)(cid:28)ಂಂಂಂದದದದುುುು ಈಈಈಈ ಮಮಮಮೂೂೂೂಲಲಲಲಕಕಕಕ ದದದದೃೃೃೃ(cid:6)(cid:6)(cid:6)(cid:6)ೕೕೕೕಕಕಕಕ(cid:18)(cid:18)(cid:18)(cid:18)ಸಸಸಸ ಾಾಾಾ!!!!(cid:27)(cid:27)(cid:27)(cid:27)ೆೆೆೆ. ಈಈಈಈ ದದದದೃೃೃೃ(cid:6)(cid:6)(cid:6)(cid:6)ೕೕೕೕಕಕಕಕರರರರಣಣಣಣ ಪಪಪಪತತತತ(cid:13)(cid:13)(cid:13)(cid:13)ವವವವನನನನುುುು$$$$ %%%%&&&&ಾಾಾಾಂಂಂಂಕಕಕಕ:
12. 07.2016ರರರರಂಂಂಂದದದದುುುು &&&&ಾಾಾಾನನನನುುುು ಸಸಸಸದದದದ(cid:18)(cid:18)(cid:18)(cid:18) (cid:14)(cid:14)(cid:14)(cid:14)ಾಾಾಾಮಮಮಮ(cid:17)(cid:17)(cid:17)(cid:17)ಾಾಾಾ(cid:18)(cid:18)(cid:18)(cid:18)ಯಯಯಯ ಪಪಪಪ(cid:18)(cid:18)(cid:18)(cid:18)’’’’ೕೕೕೕ(((())))ೆೆೆೆಯಯಯಯನನನನುುುು$$$$ ****ಾಾಾಾ(cid:26)(cid:26)(cid:26)(cid:26)ರರರರುುುುವವವವ ++++&&&&ೆೆೆೆ$$$$ ೆೆೆೆಯಯಯಯ,,,,---- ....ೕೕೕೕಡಡಡಡ ಾಾಾಾ!!!!ರರರರುುುುತತತತ(cid:27)(cid:27)00(cid:27)(cid:27)00ೆೆೆೆ.”
(Emphasis added)9 It was not issued in thin air, as it was based upon a report of inspection which accompanied the completion certificate. The petitioner after completion of work, payment of bills and release of bank guarantee thereto, participates in subsequent tender notified by the Company. This time, a tender for the same work in Sasivehalli Lift Irrigation Scheme was notified, finalized and awarded in favour of the petitioner. During completion of the tender in the said scheme, a complaint emerges before the Karnataka Lokayukta that the work of the Canal which was awarded to the petitioner on 25-06-2007 was of sub-standard nature. This results in some communications from the hands of the Company to the petitioner. It is the allegation that the petitioner did not bother even to reply to the said communications. One such communication dated 16-10-2017 is placed on record. It reads as follows: “To GVPR Engineers Limited, #8-2-293/82/A. Plot No.739-A. Road No.37,Jubilee Hills, Hydrabad-33, Telangana State. Sir, 10 Sub: Modernisation of Anveri branch canal (length 67 kms) including rehabilitation of structures, distributors laterals etc., and distributory network falling within the reach of Anvery branch canal including lining works. (6A Package) Ref: Agreement No.02/2007-08 Dated:
25. 06-2007 ***** With reference to the above subject, The work of Modernisation of Anveri branch canal (length 67 kms) including rehabilitation of structures, distributors laterals etc.. and distributory network falling within the reach of Anvery branch canal including lining works (6A Package) has entrusted to you vide Agreement No.02/2007-08 Dated:
25. 06-2007. The said work has been completed on 23-06-2016. During the inspection, it is noticed that in some reaches of main canal and distributories the C.C. lining work has got damaged and scourages accured. Since the said works is under maintenance period, you are here by requested to take up necessary repair works immediately for smooth flow of water in the main canal and distributories.”
(Emphasis added)The Company communicated that the lining work has got damaged and scourges have accrued. Since the work was under the maintenance period, it was directed that the petitioner should rectify the problem immediately for smooth flow of water. Taking cue from the said communication, the learned counsel for the respondent/Company would submit that since the petitioner did not rectify the problem and has not replied to the communications, the 11 amount has been withheld. The learned senior counsel for the petitioner would submit that these repair works have been undertaken by appropriate reply to the Company. One such reply reads as follows: “Ref: GVPREL/Davanagere/P. 6-A/17-18/009 Date 06-12-2017 TO The Executive Engineer, Karnataka Neeravari Nigama Limited, Upper Tunga Project Division, Shimoga, Karnataka State Sir, Sub: Package No.6-A: Modernisation of Anvery Branch Canal (Length 67 KMs), including Rehabilitation of Structures, Distributary, Laterals, etc. and Distributary Network falling within the reach of Anvery Branch Canal including lining works – Rectification completed-Reg. Ref:
1. Agreement No.002/2007-08 dated 25-6-2007. 2.Your letter No.EE/UTPDN/SMG/KNNL/PB- 3/2017-18/2186, dt.27-10-2017 *** With reference to the above subject, the work of Modernisation of Anveri branch canal (Length 67 Kms) including rehabilitation of structures, distributors laterals etc. and Distributor Network falling within the reach of Anvery Branch Canal including lining works. (6A Package) has entrusted to us vide Agreement No.02/2007-08 Dated:25-06-2007. The said work has 12 been completed on 23-06-2016 and accordingly completion certificate has been issued by the competent authority. As per above reference above 2. During the inspection you have noticed that some reaches of main canal and distributories the C.C. lining work has got damaged and scourges occurred. Since the said work is under maintenance period we have attended the said works and rectified. This is for your kind information.”
(Emphasis added)It is communicated that since it was in the maintenance period, the petitioner has completed the works at its end and rectified the problem. After satisfactory rectification, on 18-02-2020, a direction was issued by the Company to the Bank to release the bank guarantee. The Bank guarantee is also released, more so in the light of the fact that the bank guarantee had expired by then; but nevertheless stood in the account up to 26-12-2019. With all these factors, it is to be seen whether the Company could have withheld `5.52 crores alleging maintenance deficit relating to another contract, a previous contract. The clause in the agreement (supra) only stated for an amount that is due. It is an admitted fact that there is no determination of any amount that is in due by the petitioner. By a stroke of pen, the said clause cannot be invoked and the amount cannot be directed to be withheld by the Company. 13
10. The Company is a State under Article 12 of the Constitution of India. It has to act in a just and fair manner. Though the issue in the lis is with regard to payment of money or money claim, since one of the contracting party is a State under Article 12 of the Constitution of India, writ petition seeking a money claim also would become maintainable, as Article 14 pervades into every action of the State. It becomes apposite to refer to the judgment of the Apex Court in the case of ABL INTERNATIONAL LIMITED v. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED1 wherein it is held as follows: “…. …. ….
23. It is clear from the above observations of this Court, once the State or an instrumentality of the State is a party of the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the abovesaid requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent. In this context, we may note that though the first respondent is a company registered under the Companies Act, it is wholly owned by the Government of India. The total subscribed share capital of this Company is 2,50,000 shares out of which 2,49,998 shares are held by the President of India while one share each is held by 1 (2004) 3 SCC55314 the Joint Secretary, Ministry of Commerce and Industry and Officer on Special Duty, Ministry of Commerce and Industry respectively. The objects enumerated in the memorandum of association of the first respondent at para 10 read: “To undertake such functions as may be entrusted to it by the Government from time to time, including grant of credits and guarantees in foreign currency for the purpose of facilitating the import of raw materials and semi-finished goods for manufacture or processing goods for export.” Para 11 of the said object reads thus: “To act as agent of the Government, or with the sanction of the Government on its own account, to give the guarantees, undertake such responsibilities and discharge such functions as are considered by the Government as necessary in national interest.
24. It is clear from the above two objects of the Company that apart from the fact that the Company is wholly a Government-owned company, it discharges the functions of the Government and acts as an agent of the Government even when it gives guarantees and it has a responsibility to discharge such functions in the national interest. In this background it will be futile to contend that the actions of the first respondent impugned in the writ petition do not have a touch of public function or discharge of a public duty. Therefore, this argument of the first respondent must also fail.
25. The learned counsel for the respondent then contended that though the principal prayer in the writ petition is for quashing the letters of repudiation by the first respondent, in fact the writ petition is one for a “money claim” which cannot be granted in a writ petition under Article 226 of the Constitution of India. In our opinion, this argument of the learned counsel also cannot be accepted in its absolute terms. This Court in the case of U.P. Pollution Control Board v. Kanoria Industrial Ltd. [(2001) 2 SCC549 while dealing with the question of refund of money in a writ petition after discussing the earlier case-law on this subject held: (SCC pp. 556-58, paras 12 & 16-17) 15 “12. In the para extracted above, in a similar situation as arising in the present cases relating to the very question of refund, while answering the said question affirmatively, this Court pointed out that the courts have made distinction between those cases where a claimant approached a High Court seeking relief of obtaining refund only and those where refund was sought as a consequential relief after striking down of the order of assessment etc. In these cases also the claims made for refund in the writ petitions were consequent upon declaration of law made by this Court. Hence, the High Court committed no error in entertaining the writ petitions. *** 16. 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 of M.P. [AIR1965SC1740 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’.
17. 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.’ This 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 is unconstitutional or without the authority of law. It is one thing to say that the High Court has no power under 16 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 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.
26. Therefore, this objection must also fail because in a given case it is open to the writ court to give such monetary relief also.
27. From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition: (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 fact 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.
28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the 17 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. (See Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC1.) 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.” (Emphasis supplied) The Apex Court in the case of M.P. POWER MANAGEMENT COMPANY LIMITED v. SKY POWER SOUTHEAST SOLAR INDIA PRIVATE LIMITED2, has held as follows: “The facts 2. The appellant, which is “a wholly owned company of the Government of Madhya Pradesh” (as described by the appellant in the special leave petition), is responsible for the bulk purchase of electricity in the State of Madhya Pradesh for onward sale/supply to the distribution utilities (DISCOMS). The appellant issued a request for proposal (“RFP”) dated 6-5-2015 for long-term procurement of 300 MW of solar energy through tariff-based competitive bidding. The bid of M/s Sky Power Southeast Asia Holding Ltd. was accepted. It was declared the successful bidder for three units of 50 MW each at different tariff rates. The bidder subsequently incorporated the first respondent viz. M/s Sky Power Southeast Solar India Pvt. Ltd. as a special purpose company. This was for developing one project of 50 2 (2023) 2 SCC70318 MW. The rate, which is applicable in respect of the first respondent, was Rs 5.109 per unit. In respect of the other two bids, the bidder incorporated other companies viz. M/s Sky Power Solar India Pvt. Ltd. and M/s Sky Power Southeast Asia One Pvt. Ltd. The rates applicable in respect of the said companies for the other two projects consisting of 50 MW each was Rs 5.298 per unit and Rs 5.051 per unit, respectively. The PPA was entered into on 18-9-2015. The agreement, inter alia, provided for pre-commissioning activities. They are described as satisfaction of conditions subsequent by the seller. The first respondent is the seller under the PPA. ... … … 82. We may cull out our conclusions in regard to the points, which we have framed:
82. 1. It is, undoubtedly, true that the writ jurisdiction is a public law remedy. A matter, which lies entirely within a private realm of affairs of public body, may not lend itself for being dealt with under the writ jurisdiction of the Court. 82.2. The principle laid down in Bareilly Development Authority [Bareilly Development Authority v. Ajai Pal Singh, (1989) 2 SCC116 that in the case of a non-statutory contract the rights are governed only by the terms of the contract and the decisions, which are purported to be followed, including Radhakrishna Agarwal [Radhakrishna Agarwal v. State of Bihar, (1977) 3 SCC457 , may not continue to hold good, in the light of what has been laid down in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC553 and as followed in the recent judgment in Sudhir Kumar Singh [State of U.P. v. Sudhir Kumar Singh, (2021) 19 SCC706:
2020. SCC OnLine SC847 . 82.3. The mere fact that relief is sought under a contract which is not statutory, will not entitle the respondent State in a case by itself to ward off scrutiny of its action or inaction under the contract, if the complaining party is able to establish that the action/inaction is, per se, arbitrary. 19
82.4. An action will lie, undoubtedly, when the State purports to award any largesse and, undoubtedly, this relates to the stage prior to the contract being entered into (see Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC489 ). This scrutiny, no doubt, would be undertaken within the nature of the judicial review, which has been declared in the decision in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC651 . 82.5. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a writ petition. 82.6. Without intending to be exhaustive, it may include the relief of seeking payment of amounts due to the aggrieved party from the State. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dispute raised relating to the liability of the State to make the payment. Such dispute, ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence. 82.7. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the writ court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit. 20
82.8. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a writ petition [see in this regard, the view of this Court even in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC553 explaining how it distinguished the decision of this Court in State of U.P. v. Bridge & Roof Co. (India) Ltd. [State of U.P. v. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC22 , by its observations in SCC para 14 in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC553 ].. 82.9. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a writ petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant. 82.10. The reach of Article 14 enables a writ court to deal with arbitrary State action even after a contract is entered into by the State. A wide variety of circumstances can generate causes of action for invoking Article 14. The Court's approach in dealing with the same, would be guided by, undoubtedly, the overwhelming need to obviate arbitrary State action, in cases where the writ remedy provides an effective and fair means of preventing miscarriage of justice arising from palpably unreasonable action by the State. 82.11. Termination of contract can again arise in a wide variety of situations. If for instance, a contract is terminated, by a person, who is demonstrated, without any need for any argument, to be the person, who is completely unauthorised to cancel the contract, there may not be any necessity to drive the party to the unnecessary ordeal of a prolix and avoidable round of litigation. The intervention by the High Court, in such a case, where there is no dispute to be resolved, would also be conducive in public interest, apart from ensuring the fundamental right of the petitioner under Article 14 of the Constitution of India. When it comes to a challenge to the termination of a contract by the State, which is a non-statutory body, which is acting in purported exercise of the powers/rights under such a contract, it would be over simplifying a complex 21 issue to lay down any inflexible rule in favour of the Court turning away the petitioner to alternate fora. Ordinarily, the cases of termination of contract by the State, acting within its contractual domain, may not lend itself for appropriate redress by the writ court. This is, undoubtedly, so if the Court is duty- bound to arrive at findings, which involve untying knots, which are presented by disputed questions of facts. Undoubtedly, in view of ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC553 , if resolving the dispute, in a case of repudiation of a contract, involves only appreciating the true scope of documentary material in the light of pleadings, the Court may still grant relief to an applicant. We must enter a caveat. The Courts are today reeling under the weight of a docket explosion, which is truly alarming. If a case involves a large body of documents and the Court is called upon to enter upon findings of facts and involves merely the construction of the document, it may not be an unsound discretion to relegate the party to the alternate remedy. This is not to deprive the Court of its constitutional power as laid down in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC553 . It all depends upon the facts of each case as to whether, having regard to the scope of the dispute to be resolved, whether the Court will still entertain the petition. 82.12. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to act fairly and to eschew arbitrariness in all its actions, resort to the constitutional remedy on the cause of action, that the action is arbitrary, is permissible (see in this regard Shrilekha Vidyarthi v. State of U.P. [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC212:
1991. SCC (L&S) 742]. ). However, it must be made clear that every case involving breach of contract by the State, cannot be dressed up and disguised as a case of arbitrary State action. While the concept of an arbitrary action or inaction cannot be cribbed or confined to any immutable mantra, and must be laid bare, with reference to the facts of each case, it cannot be a mere allegation of breach of contract that would suffice. What must be involved in the case must be action/inaction, which must be 22 palpably unreasonable or absolutely irrational and bereft of any principle. An action, which is completely mala fide, can hardly be described as a fair action and may, depending on the facts, amount to arbitrary action. The question must be posed and answered by the Court and all we intend to lay down is that there is a discretion available to the Court to grant relief in appropriate cases. 82.13. A lodestar, which may illumine the path of the Court, would be the dimension of public interest subserved by the Court interfering in the matter, rather than relegating the matter to the alternate forum. 82.14. Another relevant criteria is, if the Court has entertained the matter, then, while it is not tabooed that the Court should not relegate the party at a later stage, ordinarily, it would be a germane consideration, which may persuade the Court to complete what it had started, provided it is otherwise a sound exercise of jurisdiction to decide the matter on merits in the writ petition itself. 82.15. Violation of natural justice has been recognised as a ground signifying the presence of a public law element and can found a cause of action premised on breach of Article 14. (See Sudhir Kumar Singh [State of U.P. v. Sudhir Kumar Singh, (2021) 19 SCC706 2020 SCC OnLine SC847).” (Emphasis supplied) The aforesaid judgments have been further reiterated by the Apex Court in the case of GAS AUTHORITY OF INDIA LIMITED v. INDIAN PETROCHEMICALS CORPORATION LIMITED3. In the light of the law laid down by the Apex Court and the fact that there is no determination of any due or quantification of any due by the 3 (2023) 3 SCC62923 Company, an omnibus clause being invoked is unsustainable. The unsustainability would lead to a direction for release of the amount.
11. For the aforesaid reasons, the following:
ORDER(i) Writ Petition is allowed. (ii) A mandamus issues to the respondents to release the amount of `5.52 crores to the petitioner, within a period of four weeks from the date of receipt of a copy of this order. (iii) In the event the amount would not be released within four weeks as aforesaid, the petitioner would be entitled to the interest at the rate of 6% per annum from the date it fell due, till the date of payment. Consequently, I.A.No.1 of 2023 also stands disposed. Sd/- JUDGE bkp CT:MJ