IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI
HON'BLE MR. JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE
&
HON'BLE MR. JUSTICE R. RAGHUNANDAN RAO
W.A.No.612 of 2023
Andhra Pradesh State Co-operative Marketing Federation Ltd,
Rep. by its Managing Director, 5-9-58/B, 7th Floor,
Parishram Bhavan, Basheerbagh, Hyderabad.
...Appellant
Versus
Revathi Zinc Products,
Rep. by its Managing Director,
Vytla Ramababu, S/o. Soma Sekhara Rao,
1st Floor, Lakshminarayana Nagar,
Ring Road, Anakapalle & fifteen others.
...Respondents
Counsel for the appellant : Ms. Y. Mahalakshmi Standing Counsel for AP Co-Operative MARKFED Counsel for Respondent No.1 : Mr. Chandra Sekhar Ilapakurthi Counsel for Respondent Nos.2 and 16 : GP for Agriculture Counsel for Respondent Nos.3 to 15 : -
HCJ & RRR, J 2 W.A.No.612 of 2023 Dt.:13.10.2023 PER DHIRAJ SINGH THAKUR, CJ:
1. The present writ appeal under Clause 15 of the Letters Patent has been preferred against the judgment and order dated 13.12.2022 passed in W.P.No.12980 of 2012. The writ Court while allowing the writ petition has directed the Andhra Pradesh State Co-operative Marketing Federation Limited/appellant herein to pay an amount of Rs.28,00,000/- to the petitioner for the Zinc Sulphate it supplied to respondent Nos.3 to 15 in the writ petition.
2. Briefly stated the material facts are as under: 2.1. The petitioner/Revathi Zinc Products, is a company involved in the manufacture of Zinc Sulphate which is used for agricultural purposes. During the year 2005, the Andhra Pradesh State Co- operative Marketing Federation limited invited tenders for the supply of Zinc Sulphate. The petitioner was found to be a successful bidder and an agreement dated 23.07.2005, came to be executed between the two. A supply order was placed by the federation with the petitioner to supply 155 metric tonnes of Zinc Sulphate to respondent Nos.3 to 15 in the writ petition.
HCJ & RRR, J 3 W.A.No.612 of 2023 2.2. Needless to say that the agreement executed between the federation and the petitioner dated 23.07.2005, also contained an arbitration clause in the following terms:
"18. The Deputy Registrar of Co. operative Societies (Enforcement) A.P. Markfed (who is Registrar for the purposes under section 61 of A.P.C.S Act VII of 1964) shall be nominated as the Arbitrator and he shall decide any such reference at the instance of either party, as if it is a dispute under Section 61 of the A.P.C.S Act VII of 1964."
2.3. It appears that quality checks were carried out on the material supplied by the petitioner from different locations. 13 of the samples so collected, after testing the same were found to be substandard. The Department of agriculture accordingly, brought this fact to the notice of the Andhra Pradesh State Marketing Federation Ltd./appellant herein who immediately instructed the petitioner to stop further supplies.
2.4. A case under Section 6A of the Essential Commodities Act, 1955 was also filed in this regard. The Joint Collector ordered the confiscation of the entire quantity and instructed the disposal of stocks in open auction based on available nutrient content. Accordingly, the concerned officers disposed the stocks and deposited the amount released from the open auction to the HCJ & RRR, J 4 W.A.No.612 of 2023 Government account, in regard to 30 metric tonnes of Zinc Sulphate which was supplied in West Godavari region. A complaint also came to be preferred against the petitioner under Section 19(1) (a)(b)(c) of Fertiliser (Control) Order, 1985 punishable under Section 7(1)(a)(i) of the Essential Commodities Act, 1955. However, the petitioners were acquitted primarily on the ground that the complainant did not mention the procedure which had been adopted for collection of samples in the complaint. In that backdrop, the petitioner claimed that a Mandamus must be issued to the respondent No.2/appellant herein to pay an amount of Rs.28,00,000/- to the petitioner for the supply of Zinc Sulphate as per their supply orders placed with it.
2.5. The writ Court by virtue of judgment and order impugned allowed the petition primarily on the ground that non-payment of the amount on account of supplies made, despite the acquittal of the petitioner was illegal and arbitrary and therefore, directed that Rs.28,00,000/- be paid to the petitioner on account of the supplies made.
3. Counsel for the appellant urged that the judgment and order impugned is not sustainable in law as no amount was due and HCJ & RRR, J 5 W.A.No.612 of 2023 payable on account of the supplies made, as the same was not in accordance with the supply orders which required Zinc Sulphate of a particular quality to be supplied and further that the supplies in fact were made by the petitioner of a substandard Zinc Sulphate.
4. In any case, it was urged that there was an arbitration Clause 18 which the petitioner ought to have invoked as per the terms and conditions of the agreement dated 23.07.2005, entered into between the parties and was urged that the writ Court ought not to have exercised writ jurisdiction in the matter when the petitioner did have an alternate forum to approach.
5. Counsel for the respondents on the other hand, reiterated the views expressed by the writ Court in the judgment.
6. We have heard learned counsel for the parties.
7. Admittedly, as per the agreement entered into between the appellant and the respondents Zinc Sulphate 21% ISI grade was to be supplied. Supplies were made however, the case of the appellant is that the supplies made were substandard and not as per the agreement entered into between the parties.
HCJ & RRR, J 6 W.A.No.612 of 2023
8. Clause 11 of the agreement envisaged that there would be quality checks conducted periodically by the buyer and the enforcing department authorities and payment would be made only after satisfying the quality and quantity as per specification. It further envisaged that if goods or a material of any one consignment did not conform to the standard, the supply order would be terminated summarily and action initiated.
9. Admittedly, there is a dispute between the parties as regards the supply of the material in regard to its quality. Whereas the appellant claims that the supplies were substandard, the petitioner claims that they were not substandard inasmuch as the petitioner stood acquitted in the criminal case which was filed against it on that basis.
10. In our opinion, acquittal in a criminal case would not per se indicate that the Zinc Sulphate supplied by the petitioner was as per the agreement and the supply order. As stated earlier, the acquittal was on a technical ground as can be seen from the order passed by the Court of the II Additional J.F.C. Magistrate, Rajahmundry. There was therefore, no basis for the writ Court to HCJ & RRR, J 7 W.A.No.612 of 2023 have proceeded to direct the appellant to pay an amount of Rs.28,00,000/- to the petitioner on account of the supply of Zinc Sulphate and in the ordinary course ought to have relegated the petitioner to the remedy of arbitration in terms of the arbitration Clause 18 contained in the agreement.
11. We would like to refer to the Apex Court judgment in ABL International Limited vs. Export Credit Guarantee Corporation of India Ltd1 wherein it was held that the 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 writ jurisdiction.
12. On the issue of the right to issue prerogative writs to the exclusion of other available remedies, in State of U.P. vs. Bridge and Roof Company (India) Ltd.2, the Court held:
"16.....The contract in question contains a clause providing inter a1ia for settlement of disputes by reference to arbitration 1 2004 3 SCC 553 2 1996 6 SCC 22 HCJ & RRR, J 8 W.A.No.612 of 2023 [Clause 67 of the Contract]. The Arbitrators can decide both questions of fact as well as questions of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extra-ordinary jurisdiction of the High Court under Article 226....."
13. Following the ratio of the aforementioned judgments, in our opinion, the writ Court ought to have refused to exercise the writ jurisdiction and relegated the parties to the remedy of arbitration which was provided for in the contract entered into between the parties as a board of settlement of disputes arising from the contract.
14. For the aforementioned reasons, we find that the judgment and order impugned passed by the learned Single Judge is unsustainable in law and is accordingly set aside.
15. In the result, the Writ Appeal is allowed. No costs.
Pending miscellaneous applications, if any, shall stand closed. DHIRAJ SINGH THAKUR, CJ R. RAGHUNANDAN RAO, J SSN HCJ & RRR, J 9 W.A.No.612 of 2023 HON'BLE MR. JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE & HON'BLE MR. JUSTICE R. RAGHUNANDAN RAO WRIT APPEAL No.612 OF 2023 (per Dhiraj Singh Thakur, CJ) Dt:13.10.2023 SSN