Ali Mohammad vs Ut Of Ladakh And Ors
2022 Latest Caselaw 656 j&K/2

        HIGH COURT OF JAMMU & KASHMIRAND LADAKH
                       ATSRINAGAR


                                                   WP(C ) No. 977/2022
                                                   CM No.2451/2022

                                                 Reserved on 18.05.2022.
                                                 Pronounced on 21.05.2022.

Ali Mohammad                                                    .....petitioner (s)

                               Through :- Mr. S.A.Makroo Sr. Advocate with
                                          Mr. M. Amin Bhat Advocate.

                         V/s

UT of Ladakh and ors                                          .....Respondent(s)

                               Through :- Mr. T.M.Shamsi ASGI.

Coram:HON'BLE MR. JUSTICE SANJEEV KUMAR, JUDGE

                                JUDGMENT

1. In this petition, the petitioner has, inter alia, prayed for the

following writs:

(i) Writ of Prohibition, restraining the respondents from cancelling the contract awarded to the petitioner in terms of allotment order as contained in Annexure-I and allow the petitioner to execute the work after settling the dispute amicably in terms of the conditions of the contract;

(ii). Mandamus, commending the respondents to release the amount due to the petitioner in view of execution of part work to the tune of Rs.25.00 lacs along with interest at Bank rates, preferably 12% interest per annum and further writ of Mandamus may be issued directing the respondents to award costs of litigation in view of the mental agony, loss of time and inconvenience caused to the petitioner to the tune of Rs.1.00 lac.

2 Briefly stated the facts leading to filing of this petition as

projected by the petitioner are that the petitioner is a construction company

being run under the name of M/S Himalayan Construction Company, Kargil

and was allotted the work of 'Retrofitting/upgradation of water supply

scheme Chaniground from RD O to 17960 meters' by the PHE Division

Kargilpursuant to the tendering process initiated vide e-NIT No.E-tender-20 of

PHE Division Kargil dated 18.09.2020. The said work included the

construction of two numbers of collection chambers with estimated cost of

Rs.65,99,980/- and this cost included the cost of material, but excluded the cost

of pipes and fittings which, as per the petitioner, were to be supplied by the

respondent-Department. It is submitted that pursuant to the allotment of work

in question, the petitioner changed his position to his detriment and executed

the work strictly as per the terms and conditions of the contract. The work, as

per the terms and conditions of the agreement, was to be completed within 60

days from the date of allotment and the execution of the agreement. The

petitioner claims that he started the execution of thework by immediately

mobilizing men and machinery and was successful in completing almost 10

kilometers of trench cutting.

3 It is the grievance of the petitioner that as per the NIT and the

allotment order, the pipes of different dimensions were required to be supplied

by the respondent-Department, but unfortunately the Department failed to

supply pipes of 50mm/40mm/32mm. It is submitted that it is because of the

failure on the part of the respondent-Department to supply the pipes of

requisite dimensions, two collection chambers remained open, as a result

whereof, the inhabitants of the area raised hue and cry as these opened

chambers were posing serious threat to the lives of the inhabitants and live

stock. It is further submitted that due to the persistent demand of the

inhabitants of the area, the petitioner was harassed by the Department and was

forced to fill up the collection chambers for which the petitioner had dug out

the trenches etc. It is the further case of the petitioner that he could not

complete the work in time because of the failure of the Department to supply

the pipes and fittings of required dimensions. In nutshell, the grievance of

thepetitioner is that there has been a breach of various terms and conditions of

the contract by the respondent-Department. The petitioner claims that the work,

which was required to be completed by him within a period of 60 days, could

not be so completed because of non supply of HDP pipes/fittings.

4 Strong reliance is placed by the petitioner on the inspection report

prepared by a Committee of officers headed by the Assistant Engineer to urge

that the respondents have virtually admitted the breach of contract by them

and, therefore, they should not be permitted to cancel the contract awarded to

him, nor should they be allowed to retender the work. The petitioner also

claims payment to the tune of Rs.25.00 lac along with interest for the part of

work executed by him.

5 Having heard learned counsel for the petitioner and looking to

the nature of controversy and the allegations of breach of various terms and

conditions of the contract by the respondent-Department made by the

petitioner, the writ petition admittedly involves the determination of

complicated disputed questions of fact. The writ jurisdiction is, thus, not the

appropriate remedy for determination of such questions. Reference in this

regard is invited to a judgment of the Supreme Court in the case of Radha

Krishan Aggarwal and ors vs. State of Bihar, AIR 1977 SC 1496, wherein

the Hon'ble Supreme Court considered the question as to whether the

jurisdiction of the High Court under Article 226 of the Constitution would be

opened to resolve the disputes arising out of contract between the State and the

citizens. The Supreme Court drew a distinction with the case of a contract

entered into by the State in exercise of statutory power and it was held that in

cases where the contract entered into between the State and the person

aggrieved is non-statutory and purely contractual and the rights and liabilities

of the parties are governed by the terms and conditions of the contract and the

petitioner complains about breach of such contract, the remedy of Article 226

of the Constitution would not be open for such complaints and no writ or order

can be issuedunder Article 226 of the Constitution in such cases to compel

the authorities to remedy a breach of contract by the State. There is a long line

of decisions supporting the proposition that where the contract entered into

between the State and the person aggrieved is non-statutory and purely

contractual and the rights and liabilities of the parties are governed only by the

terms of the contract, no writ or order can be issued under Article 226 of the

Constitution, so as to compel the authorities to remedy a breach of contract by

the State. (See:Premji Bhai Parmar and ors vs. Delhi Development

Authority and ors,(1980) 2 SCC 129 and Divisional Forest Officer vs.

Bishwanath T Company Ltd, (1981) 3 SCC 238).

6 In Joshi Technologies International Inc. vs Union of India, (2015) 7

SCC 728, Hon'ble Supreme Court in para (70) of the judgment summed up the

legal position in the following manner:

""70. Further, the legal position which emerges from various judgments of this Court dealing with different situations/aspects relating to contracts entered into by the State/public authority with private parties, can be summarised as under:

70.1. At the stage of entering into a contract, the State acts purely in its executive capacity and is bound by the obligations of fairness.

70.2. State in its executive capacity, even in the contractual field, is under obligation to act fairly and cannot practise some discriminations.

70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution. In such cases the Court can direct the aggrieved party to resort to alternate remedy of civil suit, etc.

70.4. Writ jurisdiction of the High Court under Article 226 of the Constitution was not intended to facilitate avoidance of obligation voluntarily incurred.

70.5. Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contract which the parties had accepted with open eyes. It cannot ever be that a licensee can work out the licence if he finds it profitable to do so: and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business.

70.6. Ordinarily, where a breach of contract is complained of, the party complaining of such breach may sue for specific performance of the contract, if contract is capable of being specifically performed. Otherwise, the party may sue for damages.

70.7. Writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is denial of equality before law or equal protection of law or if it can be shown that action of the public authorities was without giving any hearing and violation of principles of natural justice after holding that action could not have been taken without observing principles of natural justice.

70.8. If the contract between private party and the State/instrumentality and/or agency of the State is under the realm of a private law and there is no element of public law, the normal

course for the aggrieved party, is to invoke the remedies provided under ordinary civil law rather than approaching the High Court under Article 226 of the Constitution of India and invoking its extraordinary jurisdiction.

70.9. The distinction between public law and private law element in the contract with the State is getting blurred. However, it has not been totally obliterated and where the matter falls purely in private field of contract, this Court has maintained the position that writ petition is not maintainable. The dichotomy between public law and private law rights and remedies would depend on the factual matrix of each case and the distinction between the public law remedies and private law field, cannot be demarcated with precision. In fact, each case has to be examined, on its facts whether the contractual relations between the parties bear insignia of public element. Once on the facts of a particular case it is found that nature of the activity or controversy involves public law element, then the matter can be examined by the High Court in writ petitions under Article 226 of the Constitution of India to see whether action of the State and/or instrumentality or agency of the State is fair, just and equitable or that relevant factors are taken into consideration and irrelevant factors have not gone into the decision-making process or that the decision is not arbitrary.

70.10. Mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirements of due consideration of a legitimate expectation forms part of the principle of non- arbitrariness.

70.11. The scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes." Any restructuring proposal or contract like a loan contract is time bound. Time is the essence of such contract. The Petitioners should have known this while accepting the restructuring proposal. The Petitioners did not appear serious about benefitting from the restructuring proposal and the same was a subterfuge to delay the inevitable consequences of its financial failure.

7 Judgment relied upon by Mr. Makroo, learned Senior Counsel

i.e, Uttar Pradesh Power Transmission Corporation vs CG Power And

Industrial Solutions Ltd., (2021) 6 SCC 15, lays down nothing new, but

reiterates the law already well settled. It is trite law that in the disputes alleging

breach of contract, if there are serious disputed questions of fact of complex

nature and require evidence for their determination, Constitutional Court will

refuse to exercise its discretion under Article 226 of the Constitution of India.

Para 70.6 of Joshi Technologies' case (supra) reproduced above is complete

answer to the contrary argument of Mr. Makroo, learned Senior Counsel.

8 When the case of the petitioner is examined in the light of settled

legal position, it is seen that the contract between the petitioner and the

respondent-Department is in the realm of private law and is not a statutory

contract. It is governed by the provisions of the contract and the rights and

liabilities of the parties are governed by the terms and conditions of the

contract. The breach of contract alleged by the petitioner involves

determination of complicated disputed questions of fact which require their

determination by a process in which the parties are given opportunity to lead

evidence. The dispute arising out the contractual or commercial transactions

must be settled according to ordinary principles of law of contract. Whether

there has been a breach of contract by the State or not; and whether the contract

envisages actual payment demanded by the petitioner or not, is a question of

construction of contract and its various terms and conditions. Admittedly, the

petitioner has not been able to complete the work within a stipulated period of

60 days. Whether or not, the time was the essence of the contract is again a

disputed question of fact to be determined in the light of terms and conditions

of the contract. Whether failure of the petitioner to complete the work within

the stipulated period is attributable to the respondents or it is because of own

doings of the petitioner is also a question which needs evidence for

determination.

7 Viewed from any angle and particularly having regard to the

nature of relief prayed for, it is beyond any pale of doubt that the petitioner has

approached this Court invoking its extraordinary writ jurisdiction vested by

Article 226 of the Constitution to remedy the alleged breach of contract by the

respondent-Department. As explained above, such course is not permissible in

law. The writ petition is grossly misconceived and is, accordingly, dismissed.

It shall, however, remain open for the petitioner to work out his remedy in civil

law or by approaching the Chief Engineer concerned in terms of clause (20) of

the contract/agreement for redressal of his grievance, if any.

(SANJEEV KUMAR) JUDGE Srinagar 21.05.2022 Sanjeev

Whether order is speaking: Yes

Whether order is reportable: Yes/No