Ilead Foundation And Another vs State Of West Bengal And Another
2023 Latest Caselaw 7388 Cal

                      In the High Court at Calcutta
                     Constitutional Writ Jurisdiction
                              Appellate Side

The Hon'ble Justice Sabyasachi Bhattacharyya

                           W.P.A. No.25102 of 2022

                      ILEAD Foundation and another
                                    Vs.
                     State of West Bengal and another

     For the petitioners             :    Mr. Chayan Gupta,
                                          Mr. Rittick Chowdhury,
                                          Mr. Dwip Raj Basu

     For the State                   :    Mr. Sk. Md. Galib,
                                          Mr. K.M. Hossain

     Hearing concluded on           :     10.10.2023

     Judgment on                    :     17.11.2023



     Sabyasachi Bhattacharyya, J:-



1.   The petitioner no.1 is an institute of technology which approached the

     respondent no.2 for execution of a project floated by the Ministry of

Rural Development, Government of India by way of a Scheme named

"Din Dayal Upadhyaya Grameen Kaushaliya Yojana" (for short, "the

Scheme"). Under the Scheme, the subsidy was to be given in tranches

at different stages, upon completion of specific percentages of the

project. The petitioner no.1 was appointed as a Project Implementing

Agency (PIA). The proposal of the petitioner no.1 on such count was

accepted by the respondent no.2 by a sanction order dated August 30,

2017, stipulating that a total number of 880 residential candidates

were to be trained under the project and the total project cost would

be Rs.4,79,67,440/-. A Memorandum of Understanding (MOU) for

implementation of the project as per the Standard Operating

Procedure (SOP) and Guidelines were also executed on the same date.

The petitioner no.1 started its work accordingly. Although the first

instalment was paid to the petitioners, the second instalment was

withheld by the respondent no.2 on certain allegations, which has

prompted the petitioners to move this court in the writ jurisdiction.

2. Learned counsel for the petitioners relies on Clause 4.1.2 of the MOU

which ensures timely release of financial grants to the PIA. Clause 5

speaks about sanction for skill development training of 880 students

in the District of North 24 Parganas, Kolkata. It is submitted that the

petitioner no.1 was disbursed 25 per cent of the project cost as per the

conditions. Despite the petitioners having achieved the milestones

required for the release of the second instalment of 25 per cent of the

project cost and having submitted all requisite documents, it is argued

that the respondent have withheld the second instalment of

Rs.1,19,91,860/-.

3. Addressing the question of maintainability raised by the respondents,

it is argued that arbitration would not be an equally efficacious

alternative remedy since due to non-disbursal of the second

instalment, the entire training programme is being stalled and the

future of 880 enrolled students is at stake. By citing Union of India v.

Tantia Construction (P) Ltd., reported at (2011) 5 SCC 697, it is argued

that existence of arbitration clause is not an absolute bar to a writ

petition. The judgments cited by the respondent on such count have

been substantially watered down, since existence of an arbitration

clause is not an absolute bar to a writ petition, as there are no

disputed questions of fact requiring adjudication as per the

petitioners.

4. The quantum claimed by the writ petitioners is ascertained and there

are no disputed questions of fact. It is argued that the respondents

have sought to raise bogies of disputes in their opposition, which

never existed between the parties.

5. Learned counsel places reliance on the affidavit-in-reply of the

petitioners in their affidavit-in-reply to submit that the petitioners

have successfully answer all the queries raised by the respondents.

6. Learned counsel for the petitioners cites Khaitan Winding Wire Private

Limited and another Vs. Steel Authority of India Limited, in WP 8692

(W) of 2019for the proposition that even if there is admitted monetary

claim, a writ petition lies for recovery of the same.

7. Learned counsel also relies on M.P. Power Management Co. Ltd. v. Sky

Power Southeast Solar India (P) Ltd. and others, reported at (2023) 2

SCC 703,for the proposition that a writ petition is maintainable even

in contractual disputes.

8. Learned counsel for the respondent nos.1 and 2 argues that the writ

petition is not maintainable as the lis involves liabilities arising out of

contractual relations between the parties and the contract between

the parties has an arbitration clause. The contract is non-statutory,

for which the writ petition is not maintainable, particularly since it

involves complex questions of fact and law requiring elucidation by

leading evidence.

9. In support of the objection as to maintainability, learned counsel cites

the following judgments:

I) 2022 SCC OnLine SC 1591 [M.P. Power Management Co. Ltd.,

Jabalpur v. Sky Power Southeast Solar India Pvt. Ltd. and ors.];

II) (1996) 6 SCC 22 [State of U.P. and ors. v. Bridge & Roof Co.

(India) Ltd.];

III) (2004) 3 SCC 553 [ABL International Ltd. and Anr. v. Export

Credit Guarantee Corpn. of India Ltd. and ors];

IV) (1975) 2 SCC 436 [Titagarh Paper Mills Ltd. v. Orissa State

Electricity Board and Anr.];

V) (2004) 9 SCC 786 [National Textile Corpn. Ltd. and ors. v. Haribox

Swalram and ors.];

VI) (1974) 2 SCC 706 [Babubhai Muljibhai Patel v. Nandlal Khodidas

Barot and ors.];

VII) (2000) 3 SCC 379 [India Thermal Power Ltd. v. State of M.P. and

ors.];

VIII) 2023 SCC OnLine SC 1223 [BTL EPC Ltd. v. Macawber Beekay

(P) Ltd. and ors.].

10. On merits, it is argued by the respondents that the petitioners failed

to comply with the necessary pre-conditions for release of the second

instalment of the funds as provided in the Notification dated October

21, 2019 annexed at page 25 of the affidavit-in-opposition filed by the

respondents.

11. Several inspections were held by the respondents, upon which various

irregularities were found. Many of the candidates enrolled by the

petitioners are not rural youth for whom the project is specifically

designated. That apart, there have been diversions of funds and

investment on unaccounted-for assets by the petitioners.

12. Upon due inspection being held and hearing being given to the

petitioners on December 22, 2021 by the Chairman of the hearing

committee and project director, a chance was given to the petitioners

to make good, within 30 days, all the irregularities regarding training,

placement of candidates and financial aspects. Instead of complying,

the petitioners issued a reminder on March 14, 2022 for disbursement

of the second instalment without bothering to rectify their deviations

and faults in terms of the directions as recorded in the minutes of

hearing dated December 22, 2021.

13. The Guidelines and SOP which are binding on both the parties were

contravened by the petitioners, it is alleged, leading to the withholding

of the amount-in-question by the respondents.

14. Upon hearing learned counsel for the parties, the issue of

maintainability acquires prime importance in the present case. Before

entering into the merits as such, the said issue it taken up for

adjudication.

15. The respondent nos. 1 and 2 have referred to several judgments. In

Titagarh Paper Mills (supra), interference by the High Court under

Article 226 to determine questions which formed the subject-matter of

arbitration was deprecated.

16. In National Textile Corpn. Ltd(supra) interference by the writ court in

simple business contracts has been discouraged.

17. In State of U.P. and ors. v. Bridge & Roof Co. (India) Ltd.(supra),

exhaustion of alternative remedy has been encouraged by the

Supreme Court before interference under Article 226 of the

Constitution.

18. In ABL International (supra), the Supreme Court observed that the writ

court can interfere in appropriate cases involving disputed questions

of fact and that there is no absolute bar in interference. It has also

been observed that in some cases, oral evidence can be taken.

Naturally, the respondents have placed strong reliance on the said

judgment.

19. The said judgment laid down the proposition that even in contractual

matters, the remedy of Article 226 lies in certain cases and is not

absolutely barred. The stress in the said judgment was on the

proposition that merely because disputed questions of fact are

involved, the writ court may not shy away in all cases.

20. However, it is evident from the judgments cited by the parties, the writ

jurisdiction has evolved considerably since, thereby diluting the bar of

alternative remedy. However, the said bar does not altogether negate

the self-imposed restriction of Constitutional courts in case of

availability of alternative remedy. The jurisprudence which has

evolved in the field, as evident from the judgments relied on by both

sides, is clearly that interference under Article 226 by the High Court

is circumscribed by certain tests. If there is gross arbitrariness,

palpable illegality, violation of the Wednesbury principle, perversity,

mala fides, unreasonableness or violation of any fundamental right,

the writ court can interfere.

21. However, the Supreme Court has never laid down that in any and

every case where there is an existence of an alternative remedy, the

writ jurisdiction can be invoked despite such remedy as a matter of

rule, which would tantamount to erasing such alternative remedy

from the statute books.

22. One such important bar to the interference of the writ court is where

disputed questions of fact arise between the parties.

23. Even in the judgments cited by the petitioners, it is found that a writ

court may interfere in money claims or contractual cases or otherwise,

although the contract is not statutory, subject to the satisfaction of

the above window of interference. In the present case, there is

nothing palpable on the face of the materials to indicate that there

was any patent arbitrariness, unreasonableness or mala fides or

existence of such like ground calling for such interference by this

Court.

24. It is found from the annexures to the affidavit in opposition that

hearing was given to the petitioners. Moreover, there were several

reports and an elaborate prior exercise by the respondent-authorities

before refusing to disburse the second instalment of funds to the

petitioners under the concerned project. In the very provisions of the

Scheme, the training contemplated was to be imparted to rural

candidates. Admittedly, at least in certain cases, the said rule was

deviated from. That apart, there were specific delineated peripheries

of utilisation of the investments, which have arguably not been

adhered to by the petitioners.

25. The respondent nos. 1 and 2, in their opposition, have annexed

several inspection reports which are detailed and comprehensive in

nature and point out numerous major deficiencies and irregularities

on the part of the petitioners.

26. Although the petitioners have disputed those, the very nature of the

allegations are such that they strike at the root of the execution of the

project within the contemplation of the SOP and the MOU between the

parties.

27. The quality of training, the persons to whom it is imparted and the

subsequent placement, which are essential components of the project,

affected by the irregularities as per the allegations of the respondents.

28. Clause 5.3 of the MOU between the parties clearly stipulates that all

payments to the PIA may be suspended if the PIA fails to perform any

of its obligations under the MOU and the respondent-authorities shall

take the action after giving due notice to the PIA which has apparently

been given in the present case, granting the petitioners/PIA ample

opportunity to take remedial measures as specified in the Notice.

29. The right to get the subsequent instalment of disbursals are not

unfettered. Clause 4.1.2 of the MOU, strongly relied on by the writ

petitioners, itself provides that timely release of financial grants are to

be as per the prescribed service standards and operational norms

which are provided in the MOU as well as the SOP. In view of the

serious allegations of contravention of the said provisions by the

petitioners, it would not be prudent for the writ court, by the stroke of

a pen, to issue a Rule of Mandamus, which is a prerogative writ

against the respondents, without entering into the factual disputes

involved.

30. By their very nature, the allegations, defences and counter-allegations

by the parties call for a detailed adjudication upon an elaborate

factual assessment of materials and evidences, which is entirely

beyond the domain of the writ court.

31. In such view of the matter, since disputed questions of fact calling for

detailed assessment of evidence is required, this Court is not inclined

to interfere under the writ jurisdiction.

32. Thus, WPA No.25102 of 2022 is dismissed as not maintainable on the

grounds as indicated above.

33. Nothing in this order, however, shall preclude the parties from

approaching the appropriate Arbitral Tribunal and/or other forum, if

they are so entitled in law, for adjudication of the disputes raised

between the parties in the present writ petition.

34. For the sake of clarity, this Court has not entered into the merits of

the respective contentions of the parties and it will be open to any

forum having jurisdiction, as and when approached, to decide

independently all issues of law and fact involved between the parties

without being prejudiced in any manner by any of the observations

made herein.

35. There will be no order as to costs.

36. Urgent certified server copies, if applied for, be issued to the parties

upon compliance of due formalities.

( Sabyasachi Bhattacharyya, J. )