Judgment:
M.Y. Eqbal, J.
1. This appeal is directed against the judgment dated 07.9.2007 passed C.W.J.C. No. 227 of 1999 (R) whereby the learned Single Judge allowed the writ petition filed by the respondents and directed the appellant to pay the amount claimed by the respondents together with interest.
2. The facts of the case lie in a narrow compass:
The appellant invited tender on behalf of Central Coalfields Limited, Sayal Area for the work for transportation of coal from stock of Urimari to Central Saunda Railway siding vide tender notice dated 25.8.1992. The respondent along with others submitted tenders and the work was finally allotted to the respondent for transportation of coal in between 13.10.1992 to 12.10.1993. The respondent started work and after some time stock of coal available to Urimari stock was exhausted from 10.10.1993 and the appellant closed the work and paid the agreed amount. However, respondent received letter from the appellant dated 3.10.1993 directing the respondent to continue the transportation beyond 12.10.1993 on the existing terms and conditions. In response thereto, respondent by letter dated 7.10.93 informed the General Manager that the coal stock depot within the agreed distance was almost liquidated and the new stock depot is not covered under the agreement, hence the question of transportation of balance quantity beyond 12.10.1993 from longer distance did not arise. However, the respondent agreed to continue transportation of coal from new site beyond 12.10.1993 on the assurance given by the appellant that payment shall be made as per the new rate to be arrived at and the respondent would be paid provisional payment subject to the adjustment according to new tender rate. Respondent-contractor executed the work and demanded difference of the rate which was ultimately refused. Hence writ petition was filed for direction upon the appellant (respondent in the writ petition) for payment of the promised amount with interest and cost.
3. Learned Single Judge referred some of the letters issued by the appellant. First letter is dated 4.11.1993 which reads as under:
Sub: Transporation of coal from Urimari stock to C. Saunda Rly. Siding beyond 12.10.93 against agreement No. Dev/TraUrimari/ C.Saunda/92-3/2905 dt. 28.4.93. Extension of time granted from 13.10.93 to 12.1.94 vide this office letter No. 10408 dated 20.10.93.
Dear Sir,
You are requested to continue the above work beyond 12.10.93 and for the quantity transported with effect from 13.10.93, provisional payment will be made at the existing rate i.e. Rs. 18.15/Mt subject to adjustment to the new final tendered rates. If the new rate is below the existing rate, recovery will be made from the bills/dues and if the new rate is higher, excess payment will be made for the quantity transported from 13.10.93 for the extension granted upto 12.1.94.
This has got the approval of competent authority with the concurrent of finance vide Conc. No. AFM(S)/conc./112/Uri/CT/Adjudication in rate/Rev/93-4 dtd. 28.10.93.
4. Second letter dated 13.12.1993 issued by the appellant to the respondent which reads as under:
You are directed to continue the transportation from Portanga to C/Saunda Rly. Siding at the existing terms and condition of the agreement for transportation of coal from Urimari to C/Saunda siding vide award No. Dev/Trans-Uri/C.BND/92-93/2176R dated 16.3.193 on the new tender rate to be finalized.
Payment for this job shall be made provisionally as per existing rate i.e. Rs. 1815 per M.T. subject to adjustment with the new tender rate till finalization of the tender.
5. Learned Single Judge found that in spite of the aforesaid promise and assurance made by the appellant, the difference amount was not paid rather refusal letter was issued on 12.5.1997 which reads as under:
Sub: Transportation of coal from Urimari Potanga stock to Central Saunda Rly Siding - 13.10.93 to 31.1.94.
Ref: Your representation vide No. ATC/Coal/Uri.C. SND/94 dated 1.2.1996.
This is in reference to your representation vide letter No. ATC/Coal/Uri/C SND/94 dt. 1.2.96 with a copy to CMD, CCL, Ranchi, D(T)(O), CCL AND D(F) for release of payment for the subject work at approved new tendered rates for the period w.e.f. 1.2.94.
The matter has been examined at various levels at Area and HQr and it is observed that there is no justification for reopening the issue beyond approval already communicated and implemented.
This is for your information.
6. Learned Single Judge following the ratio decided by the Supreme Court in the case of ABL International Ltd and Anr. v. Export Credit Guarantee Corporation of India Ltd and Ors. : (2004)3SCC553 and in the case of Gujarat State Financial Corporation v. Lotus Hotels Pvt Ltd (1993) 3 S.C.C. 379 held that the action of the appellant in refusing to pay the amount is absolutely arbitrary and unreasonable and illegal. Accordingly, the writ application was allowed and direction was issued for payment of the amount claimed by the respondents.
7. Mr. Gulam Mustafa, learned Counsel appearing for the appellant, assailed the impugned judgment passed by the learned Single Judge as being contrary to law and facts on record. Learned Counsel submitted that the writ application seeking relief for payment of contractual amount which became time barred was not maintainable. According to the learned Counsel, a direction cannot be issued by a writ Court for payment of contractual amount which became barred by limitation. Learned Counsel further submitted that the contract entered into between the parties for transportation of coal contained an arbitration clause whereby dispute and differences arising out of a contract was to be decided only through arbitration. In that view of the matter, learned Counsel submitted that the writ application ought to have been dismissed on the sole ground that the contract contains an arbitration clause. Learned Counsel relied upon the decisions of the Supreme Court in the case of ABL International Ltd and Anr. v. Export Credit Guarantee Corporation of India Ltd and Ors. : (2004)3SCC553 and in the case of ' Ganesh Chandra Dey. v. State of Bihar and Ors.' 2001(1) JLJR 108.
8. Mr. V.P. Singh learned Senior Counsel appearing for the respondent, on the other hand, submitted that earlier contract was for transportation of 9 lacs M.T. of coal from the specified place to the Railway side and the period of contract was 13.9.1992 to 12.10.1996. Learned Counsel drawn our attention to the letter dated 4.1.1993, 13.12.1993 and report of the Project Officer and submitted that learned Single Judge has rightly held that action of the Officers of the B.C.C.L. was wholly illegal, arbitrary and unjustified.
9. It has not been disputed by the appellant that the letters quoted herein before have not been issued by the authority of the appellant- B.C.C.L. It is also clear that on the assurance given by the appellant, the respondent executed the work and made a claim for payment of transportation cost. In that view of the matter, no disputed questions of facts were involved. Learned Single Judge, therefore, rightly followed the decision of the Supreme Court rendered in the case of Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd. : AIR1983SC848 and ABL International Ltd. and Anr. v. Exprot Credit Guarantee Corporation of India Ltd. and Ors. : (2004)3SCC553 . In the case of Gujarat State Financial Corporation (supra), the Apex Court observed that where one party has, by his words of conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party, to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to back upon it. Their Lordship further observed:
12. Viewing the matter from a slightly different angle altogether, it would appear that the appellant is acting in a very unreasonable manner. It is not in dispute that the appellant is an instrumentality of the Government and would be 'other authority' under Article 12 of the Constitution. If it be so, as held by this Court in R.D. Shetty v. International Airport Authority of India the rule inhibiting arbitrary action by the Government would equally apply where such corporation dealing with the public whether by way of giving jobs or entering into contracts or otherwise and it cannot act arbitrarily and its action must be in conformity with some principle which meets the test of reason and relevance.
13. Now if appellant entered into a solemn contract in discharge and performance of its statutory duty and the respondent acted upon it, the statutory corporation cannot be allowed to act arbitrarily so as to cause harm and injury, flowing from its unreasonable conduct, to the respondent. In such a situation, the court is not powerless from holding the appellant to its promise and it can be enforced by a writ of mandamus directing it to perform its statutory duty. A petition under Article 226 of the Constitution would certainly lie to direct performance of a statutory duty by 'other authority' as envisaged by Article 12.
10. In the case of ABL International Ltd and Anr. v. Export Credit Guarantee Corporation of India Ltd and Ors. : (2004)3SCC553 , the question arose with regard to maintainability of the writ petition involving serious disputed question of facts. Their Lordships observed:
10. It is clear from the above observations of this Court in the said case, though a writ was not issued on the facts of that case, this Court has held that on a given set of facts if a State acts in an arbitrary manner even in a matter of contract, an aggrieved party can approach the court by way of writ under Article 226 of the Constitution and the court depending on facts of the said case is empowered to grant the relief. This judgment in K.N. Guruswamy v. State of Mysore was followed subsequently by this Court in the case of D.F.O. v. Ram Sanehi Singh wherein this Court held: (SCC p. 865, para 4)
By that order he has deprived the respondent of a valuable right. We are unable to hold that merely because the source of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of a writ. In view of the judgment of this Court in K.N. Guruswamy case there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power.
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 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.
11. Undisputedly, the claim made by the contractor is limited to the period from 13.10.1993 to 31.1.1994. After completion of the work for the aforesaid period which was not in the earlier contract the appellant raised demand for payment of difference of amount. At this stage, I would like to refer annexure 12 of the memo of appeal which is a letter dated 20.12.1995 which will show that a new rate was finalized and fresh contract was awarded to the respondent for transportation of coal. Thereafter, by letter dated 29.1.1996, respondent-contractor requested for payment of difference of amount on the basis of new tender finalized for the period 13.10.1993 to 31.1.1994, during which transportation work was done on the assurance of the appellant. This demand was refused by the appellant-C.C.L. and the same was communicated vide letter dated 12.5.1997. The letter dated 12.5.1997 reads as under:
Ref. No. GM(T)/CL/CT/Sayal/97/880
Dated May, 12, 1997
M/s. Ajay Transport Company,
Main Road, Ramgarh Cantt.
Dist.:-Hazaribagh
Dear Sir,
Sub: Transportation of Coal from Urimari Potanga stock to Central Saunda Rly. Siding- 13.10.93 to 31.1.94
Ref: Your representation vide No. ATC/Coal/Uri. C.SND/94 dated 1.2.96
This is in reerence to your representation vide letter No. ATC/Coal/Uri C.SND/94 dt. 1.2.96 with a copy to CMD, CCL Ranchi, D(T) (O), CCL and D(F) for release of payment for the subject work at approved new tendered rates for the period w.e.f. 1.2.94.
The matter has been examined at various levels at Area and Hqr. And it is observed that there is no justification for reopening the issue beyond approval already communicated and implemented.
This is for your information.
Yours faithfully,
Sd/General
Maznager (Transport)
12.5.97
12. After the aforesaid refusal made by the appellant vide letter dated 12.5.1997, respondent (writ petitioner) filed writ application seeking a direction for payment of difference of the amount which the appellant in an unequivocal term agreed to pay.
13. In the facts and circumstances of the case, we agree with the view taken by the Learned Single Judge. The impugned judgment, therefore, needs no interference by this Court.
14. For the aforesaid reasons, there is no merit in this appeal, which is, accordingly, dismissed.