Kla India Public Ltd vs Export Credit Guarantee ...
2011 Latest Caselaw 4720 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                     Date of decision: 23rd September, 2011.

+                         W.P.(C) 7024/2011

%      KLA INDIA PUBLIC LTD                                   ..... Petitioner
                    Through:            Mr. Rajeev Nayar, Sr. Adv. with Mr.
                                        Diwakar Maheshwari & Mr. Ankur
                                        Khandelwal, Advs.

                                    Versus

    EXPORT CREDIT GUARANTEE CORPORATION OF
    INDIA LTD AND ANR                        ..... Respondents
                 Through: Mr. Himanshu Bajaj with Mr. Karan
                           Bindra, Mr. Sandeep Bajaj & Mr.
                           Gurpreet S. Parwanda, Advs. for R-2.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.     Whether reporters of Local papers may
       be allowed to see the judgment?                     Yes.

2.     To be referred to the reporter or not?              Yes.

3.     Whether the judgment should be reported
       in the Digest?                                      Yes.

RAJIV SAHAI ENDLAW, J.

1. The petition impugns the rejection by the respondent No.1 Export

Credit Guarantee Corporation of India Ltd. (ECGC) of the claim of the

petitioner under an insurance policy obtained from the respondent No.1

ECGC. The petition effectively seeks mandamus to the respondent No.1

ECGC to pay the insurance claim of the petitioner, with ABL International

Limited Vs. Export Credit Guarantee Corporation of India Ltd. (2004) 3

SCC 553 forming the anchor of the claim of the petitioner.

2. The Apex Court recently in Godavari Sugar Mills Ltd. Vs. State of

Maharashtra (2011) 2 SCC 439 after a consideration of the entire case law

including Suganmal Vs. State of Madhya Pradesh AIR 1965 SC 1741, U.P.

Pollution Control Board Vs. Kanoria Industrial Ltd. (2001) 2 SCC 549 and

ABL International Ltd. (supra) , made the legal proposition clear as under:-

(i) Normally, a petition under Article 226 of the Constitution of

India will not be entertained to enforce a civil liability arising out of a

breach of contract or a tort to pay an amount of money due to the

claimants. The aggrieved party will have to agitate the question in a

civil suit. But an order for payment of money may be made in a writ

proceeding, in enforcement of statutory functions of the State or its

officers;

(ii) If a right has been infringed--whether a fundamental right or a

statutory right and the aggrieved party comes to the Court for

enforcement of the right, it will not be giving complete relief if the

Court merely declares the existence of such right or the fact that

existing right has been infringed. The High Court, while enforcing

fundamental or statutory rights, has the power to give consequential

relief by ordering payment of money realized by the Government

without the authority of law;

(iii) A petition for issue of writ of mandamus will not normally be

entertained for the purpose of merely ordering a refund of money, to

the return of which the petitioner claims a right. The aggrieved party

seeking refund has to approach the Civil Court for claiming the

amount, though the High Courts have the power to pass appropriate

orders in the exercise of powers conferred under Article 226 for

payment of money;

(iv) There is a distinction between cases where a claimant

approaches the High Court seeking the relief of obtaining only refund

and those where refund is sought as a consequential relief after

striking down the order of assessment etc. While a petition praying

for mere issue of writ of mandamus to the State to refund the money

alleged to have been illegally collected is not ordinarily maintainable,

if the allegation is that the assessment was without a jurisdiction and

the tax collected was without authority of law and therefore the

respondents had no authority to retain the money collected without

any authority of law, the High Court has the power to direct refund in

a writ petition.

(v) It is one thing to say that the High Court has no power under

Article 226 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, where the facts are not in

dispute, where the collection of money was without authority of law,

there is no good reason to deny a relief of refund to the citizens.

(vi) Where the lis has a public law character or involves a question

arising out of public law functions on the part of the State or its

authorities, access to justice by way of a public law remedy will not

be denied.

3. In my view, the present case does not fall in any of the categories

enumerated hereinabove. As far as reliance on ABL International Ltd. is

concerned, a reading of the said judgment shows that the Court on a perusal

of the facts therein found no question which required any oral evidence and

found the dispute in that case to be only as to the interpretation of the

various clauses of the policy subject matter of that petition. However it is

not so here. The senior counsel for the petitioner has contended that the writ

remedy would lie because of the inconsistent stands taken by the respondent

No.1 ECGC from time to time. It is stated that as many as nine different

reasons have been stated from time to time for rejecting the claim of the

petitioner. It is contended that the same shows the rejection to be mala fide.

4. However merely because different reasons have been stated from time

to time for rejecting the claim, would not mean that the dispute in the present

case also is purely as to the interpretation of the terms of a contract. The

question of mala fide also is a question of fact which cannot be adjudicated

in writ jurisdiction. It was held in D.D. Suri Vs. A.K. Barren (1970) 3 SCC

313 that even where substance in the allegation of mala fide is found, the

proper course in a given case may still be to seek relief by way of a suit if

several disputed questions of fact are required to be adjudicated.

5. A perusal of the letter dated 27th December, 2010 of the respondent

no.1 ECGC to the petitioner shows that the claim of the petitioner was

rejected for the reason of the foreign buyer having raised quality dispute, as

the foreign buyer under the contract with the petitioner was entitled to raise

and that the petitioner delayed joint taking of the sample and the test got

done showed the goods to be not of the quality as claimed; it was thus the

case of the respondent no1. ECGC that these developments had not been

revealed by the petitioner to the respondent no.1 ECGC and the petitioner

went ahead with shipment after agreeing to an amendment of the contract

with the buyer; it is the case of the respondent no.1 ECGC that owing to the

amendment so carried out, no claim under the policy was maintainable.

6. The respondent no.1 ECGC in its letter dated 21st March, 2011 also

stated that the discrepancies in the document was not among the risks

covered under the policy and since non-payment of the bills was owing to

discrepancy cited by the Letter of Credit opening Bank, no claim under the

policy was maintainable.

7. The respondent no.1 ECGC in its letter dated 5th April, 2011 again

cited the reasons of existence of a dispute over quality and other aspects of

contract for being not liable under the policy.

8. I may also notice that the policy on the basis of which the petitioner

claims, in Clause 20 of Part II (Terms & Conditions) thereof provides for the

exclusive power of the Courts at Mumbai or at the place or issue specified in

the Schedule to the policy. It is not the plea of the petitioner in the petition

that the policy was issued within the territorial jurisdiction of this Court;

rather it appears to be issued at Moradabad. Thus the said aspect may also

arise for consideration.

9. The Supreme Court in Jagdish Mandal Vs. State of Orissa (2007) 14

SCC 517 held that the power of judicial review will not be permitted to be

invoked to protect private interest at the cost of public interest or to decide

contractual disputes. It was also held that a writ petition in the contractual

matters would be entertained only if there is an element of public interest in

the litigation. No such element of public interest is found in the instant case.

10. Recently, the Apex Court in Kisan Sahkari Chini Mills Ltd. Vs.

Vardan Linkers AIR 2008 SC 2160 also reiterated that public law remedy

under Article 226 of the Constitution of India is not available to seek

damages for breach of contract or specific performance of contract unless

the contractual dispute has a public law element. Reference may also be

made to Binny Ltd. Vs. V. Sadasivan (2005) 6 SCC 657 where the Apex

Court held that even in the matter of termination of employment, no public

law element is involved and the remedy of the employees is under the civil

or labour law only. It was further held that the powers under Article 226 are

to be exercised by applying the Constitutional provisions and judicial

guidelines and violation, if any of the fundamental rights and the Court

would be reluctant to exercise the power of judicial review in rights on the

basis of contracts. It was further held that a contract would not become

statutory simply because it has been awarded by a statutory body.

11. I am also of the opinion that the contractual claim of the petitioner

requires the petitioner to prove the loss which was insured. Without the loss

being proved, the petitioner cannot succeed in a claim under an insurance

policy.

12. The senior counsel for the petitioner has of course contended that the

respondent No.1 ECGC has in none of the nine reasons given for rejection,

disputed the quantum of the loss. He thus contends that the loss as claimed

by the petitioner should be deemed to be admitted. In my view, without an

admission, the loss would be required to be proved.

13. The writ petition is therefore dismissed as not maintainable with

liberty to the petitioner to avail the alternative remedies available aforesaid.

No order as to costs.

CM No.16067/2011 (for exemption) Allowed, subject to just exceptions.

RAJIV SAHAI ENDLAW (JUDGE) SEPTEMBER 23, 2011 Bs (corrected and released on 3rd October, 2011)