Madhya Pradesh High Court

M/S Madhya Pradesh Saur Urja ... vs Union Of India on 7 July, 2021

Author: Gurpal Singh Ahluwalia

                                    1
            HIGH COURT OF MADHYA PRADESH
                     W.P. No. 11672 of 2020
     M/s Madhya Pradesh Saur Urja Solutions Vs. Union of India

Gwalior, dated 07-07-2021

        Shri Ankur Mody, Counsel for the Petitioner.

        Shri K.N. Gupta, Senior Advocate with Shri Rinku Shakya,

Counsel for the respondents.

Heard finally.

1. This petition under Article 226 of the Constitution of India has

been filed against the order dated 24-7-2020 passed by respondent

no.3, by which the claim of the petitioner for the price of one

additional solar water heater has been denied.

2. It is the case of the Petitioner that vide enquiry dated 25-3-

2019, bids were invited for various items including installation of

solar heater tanks and for providing annual maintenance services.

Thereafter, corrigendum was published and the quantity of one water

heater was enhanced to two. In response to the invitation, the

petitioner submitted its bid on 10-4-2019. The copy of bid has been

placed on record as Annexure P/4. Since, the petitioner was the L1,

therefore, he was awarded contract and work order dated 20-6-2019

was issued for a sum of Rs. 13,28,360/- towards execution of work

and for a sum of Rs. 2,99,250/- towards CAM services. It is the

claim of the petitioner, that the work was completed successfully and

two solar water heaters were installed and intimation of completion

of work was given by the petitioner. The petitioner also completed

the period of CAM, but it is claimed that no payment was made by

HIGH COURT OF MADHYA PRADESH W.P. No. 11672 of 2020 M/s Madhya Pradesh Saur Urja Solutions Vs. Union of India

the respondents for the installation done by the petitioner and

therefore, the petitioner vide email dated 13-9-2019, 9-7-2020, 21-7-

2020 and 23-7-2020 reminded the respondents.

3. By letter dated 10-6-2020, the respondents informed the

petitioner that against the claim of the petitioner for Rs. 8,75,700/-

for Entry No. 7 (Design Manufacture & Supply of 3000 LPD @ Solar

Water Heating Tank vertical type and with electrical backup), the

petitioner will be paid only Rs. 4,37,850/- because in the work order,

due to typographical error, the figure of Rs. 4,37,850/- was wrongly

mentioned as Rs. 8,75,700/-.

4. It is the case of the petitioner, that thereafter, the petitioner

submitted his representation dated 10-6-2020, which was replied by

the respondent no.3 by its letter dated 22-6-2020 that in terms of

corrigendum, the number of units of water heater was increased to

two and accordingly, price quoted by you for one water heater i.e.,

Rs. 4,37,850/- shall be treated as price for two water heaters.

5. Thereafter, the petitioner again by its letter dated 30-6-2020

demanded full amount, and the demand of the petitioner has been

turned down by the respondent no.3 by its letter dated 24-7-2020.

Accordingly, the petitioner made his final representation dated 12-8-

2020.

6. The respondents no. 2 and 3 have filed their return. It is the

case of the respondents no.2 and 3 that quotations were submitted

HIGH COURT OF MADHYA PRADESH W.P. No. 11672 of 2020 M/s Madhya Pradesh Saur Urja Solutions Vs. Union of India

after the corrigendum was issued. The bid of the petitioner was

lowest for Rs. 8,90,510/- plus CMAC, therefore, it was accepted by

treating the cost of 2 tanks of 3000 LPD water heating system. It is

submitted that although in the tender, the petitioner has quoted the

Price of one Design Manufacture & Supply of 3000 LPD @ Solar

Water Heating Tank vertical type and with electrical backup, as Rs.

4,37,850/- but since, corrigendum was already issued prior to

submission of bids/offers, and the petitioner was aware of the fact

that he has to quote price for 2 Design Manufacture & Supply of

3000 LPD @ Solar Water Heating Tank vertical type and with

electrical backup, therefore, it cannot be said that the price quoted by

the petitioner was for one Design Manufacture & Supply of 3000

LPD @ Solar Water Heating Tank vertical type and with electrical

backup. It is further submitted that while issuing work order, a

typographical mistake was committed, which would not create any

right in favor of the petitioner. It is further submitted that all the

bidders had submitted their quotations for two Design Manufacture

& Supply of 3000 LPD @ Solar Water Heating Tank vertical type

and with electrical backup. As per the minutes of the meeting, it is

clear that the financial bid of the petitioner was Rs. 11,89,760,

whereas the financial bid of M/ sun Rays Akshya Urja was Rs.

12,98,790, M/s Balaji Contractor was Rs. 14,46,832 and M/s Aditya

Urja Bhopal was Rs. 15,32,496. However, by mistake in the work

HIGH COURT OF MADHYA PRADESH W.P. No. 11672 of 2020 M/s Madhya Pradesh Saur Urja Solutions Vs. Union of India

order, the amount was mentioned as Rs. 13,28,360 plus Rs.

2,99,2250/- towards CAMC charges and thus total amount comes to

Rs. 16,27,610/- which would make him the Highest Bidder. Further,

it is the case of the respondents no.2 and 3, that since, disputed

questions of facts are involved, therefore, the writ petition under

Article 226 of the Constitution of India is not maintainable, and the

petitioner should be relegated to the remedies available under the

Contract or Civil Law. It is also the case of the respondents no.2 and

3 that prior to issuance of Notice Inviting bids/offers, the respondents

had collected the rates, and the price of one Design Manufacture &

Supply of 3000 LPD @ Solar Water Heating Tank vertical type and

with electrical backup was 2,35,000/- and thus, it cannot be said that

the petitioner had quoted Rs. 4,37,350/- for one Design Manufacture

& Supply of 3000 LPD @ Solar Water Heating Tank vertical type

and with electrical backup.

7. In rejoinder, it is claimed by the petitioner, that previous

survey will not bind the petitioner and is irrelevant.

8. Heard the learned Counsels for the parties.

9. The facts lies in very narrow campus.

10. A notice inviting bids/offers was issued with proforma of

Financial bid (Annexure 1) which is at page 21 of the writ petition.

In this proforma, the total quantity of Design Manufacture & Supply

of 3000 LPD @ Solar Water Heating Tank vertical type and with

HIGH COURT OF MADHYA PRADESH W.P. No. 11672 of 2020 M/s Madhya Pradesh Saur Urja Solutions Vs. Union of India

electrical backup was mentioned as 01. Thereafter it appears that a

corrigendum 01 was issued and the quantity of Design Manufacture

& Supply of 3000 LPD @ Solar Water Heating Tank vertical type and

with electrical backup was enhanced from 01 to 02. However, it

appears that no fresh proforma of Financial bid was issued thereby

making the total quantity of Design Manufacture & Supply of 3000

LPD @ Solar Water Heating Tank vertical type and with electrical

backup from 01 to 02.

11. It appears that after the corrigendum was issued, the petitioner

submitted his bid in the old proforma of Financial bid, and quoted the

price of Design Manufacture & Supply of 3000 LPD @ Solar Water

Heating Tank vertical type and with electrical backup as Rs.

4,37,480. Since, the bid of the petitioner was in the old proforma of

Financial Bid, therefore, it was reflected that the said price is for one

unit of Design Manufacture & Supply of 3000 LPD @ Solar Water

Heating Tank vertical type and with electrical backup.

12. Thereafter, the work order was also issued by taking Rs.

4,37,480/- as price for one unit of Design Manufacture & Supply of

3000 LPD @ Solar Water Heating Tank vertical type and with

electrical backup and accordingly, an amount of Rs. 4,37,480/- was

additionally added in the total amount quoted by the petitioner.

13. However, it is clear from the minutes of the meeting, that the

respondents had taken the financial bid of the petitioner as Rs.

HIGH COURT OF MADHYA PRADESH W.P. No. 11672 of 2020 M/s Madhya Pradesh Saur Urja Solutions Vs. Union of India

11,89,760/- whereas the financial bid of other bidders including two

units of Design Manufacture & Supply of 3000 LPD @ Solar Water

Heating Tank vertical type and with electrical backup plus CAMC

were Rs. 12,98,790/-, 14,46,832/- and Rs. 15,32,496. If an additional

amount of Rs. 4,37,480/- is added to the financial bid of the

petitioner then it would come to Rs. 11,89,760/-+4,37,480/-

=16,37,240 (inclusive of CAMC). Thus, the financial bid of the

petitioner would have become the highest one, and he was not

entitled for award of work.

14. Thus, it appears that taking advantage of the old proforma of

Financial Bid, the petitioner has started claiming an additional

amount of Rs. 4,37,480/-.

15. Further, there is no variation in CAMC quoted by the

petitioner. If the petitioner had quoted CAMC for one unit of Design

Manufacture & Supply of 3000 LPD @ Solar Water Heating Tank

vertical type and with electrical backup, then in case of CAMC for 2

units of Design Manufacture & Supply of 3000 LPD @ Solar Water

Heating Tank vertical type and with electrical backup, the petitioner

should have increased the amount of CAMC also. As the petitioner

has not claimed any enhancement of CAMC, thus, it is clear that the

petitioner had quoted the CAMC for 2 units of Design Manufacture

& Supply of 3000 LPD @ Solar Water Heating Tank vertical type and

with electrical backup.

HIGH COURT OF MADHYA PRADESH W.P. No. 11672 of 2020 M/s Madhya Pradesh Saur Urja Solutions Vs. Union of India

16. Further, when in the meeting, the committee had taken the

quotation of the petitioner as Rs. 11,89,760/-, then the Deputy

Registrar (F&A) of respondents no.2 and 3 had no right or

jurisdiction to unilaterally add an additional amount of Rs. 4,37,480/-

in the work order.

17. Thus, the respondents no.2 and 3 are right in claiming that the

enhanced amount so mentioned in the work order dated 20-6-2019

was a mistake.

18. The Supreme Court in the case of Joshi Technologies

International Inc. v. Union of India,reported in (2015) 7 SCC 728

has held as under :

69. The position thus summarised in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, it can refuse to exercise. It also follows that under the following circumstances, "normally", the Court would not exercise such a discretion: 69.1. The Court may not examine the issue unless the action has some public law character attached to it. 69.2. Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said mode of settlement, particularly when settlement of disputes is to be resorted to through the means of arbitration.

69.3. If there are very serious disputed questions of fact which are of complex nature and require oral evidence for their determination.

69.4. Money claims per se particularly arising out of

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contractual obligations are normally not to be entertained except in exceptional circumstances.

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.

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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

HIGH COURT OF MADHYA PRADESH W.P. No. 11672 of 2020 M/s Madhya Pradesh Saur Urja Solutions Vs. Union of India

relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes.

19. The Supreme Court in the case of Unitech Limited Vs.

Telangana State Industrial by judgment dated 17-2-2021 passed in

C.A. No. 317/2021 has held as under :

31 The State of Telangana, in its submissions before this Court in the Special Leave Petition had similarly assailed the judgment of the High Court on several grounds including the following :

(i) The claim for refund is based on an unregistered Development Agreement which is invalid;

(ii) The land which is comprised in the project site can be made available for the project as the land owners have agreed to transfer the land to the Government of Telangana;

(iii) The terms and conditions of the LoA were not complied with by Unitech;

(iv) In view of the arbitration agreement, a writ petition under Article 226 could not be maintained; and

(v) The liability, if any, has to be shared between the successor states of Andhra Pradesh and Telangana in the ratio of 58:42.

E. Analysis E.1. Maintainability of the writ petition under Article 226 32 Much of the ground which was sought to be canvassed in the course of the pleadings is now subsumed in the submissions which have been urged before this Court on behalf of the State of Telangana and TSIIC.

As we have noted earlier, during the course of the hearing, learned Senior Counsel appearing on behalf of the State of Telangana and TSIIC informed the Court that the entitlement of Unitech to seek a refund is not questioned nor is the availability of the land for carrying out the project being placed in issue. Learned Senior Counsel also did not agitate the ground that a remedy for the recovery of moneys arising out a contractual matter cannot be availed of under Article 226 of the Constitution. However, to clear the

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ground, it is necessary to postulate that recourse to the jurisdiction under Article 226 of the Constitution is not excluded altogether in a contractual matter. A public law remedy is available for enforcing legal rights subject to well-settled parameters. 33 A two judge Bench of this Court in ABL International Ltd. v. Export Credit Guarantee Corporation of India7 [ABL International] analyzed a long line of precedent of this Court8 to conclude that writs under Article 226 are maintainable for asserting contractual rights against the state, or its instrumentalities, as defined under Article 12 of the Indian Constitution. Speaking through Justice N Santosh Hegde, the Court held: "27. ...the following legal principles emerge as to the maintainability of a writ petition:

(a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.

(b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule.

(c) A writ petition involving a consequential relief of monetary claim is also maintainable." This exposition has been followed by this Court, and has been adopted by three- judge Bench decisions of this Court in State of UP v. Sudhir Kumar9 and Popatrao Vynkatrao Patil v. State of Maharashtra10. The decision in ABL International, cautions that the plenary power under Article 226 must be used with circumspection when other remedies have been provided by the contract. But as a statement of principle, the jurisdiction under Article 226 is not excluded in contractual matters. (2004) 3 SCC 553 K.N. Guruswamy v. State of Mysore, AIR 1954 SC 592; Gujarat State Financial Corporation. v. Lotus Hotels (P) Ltd, (1983) 3 SCC 379; Gunwant Kaur v. Municipal Committee, Bhatinda, (1969) 3 SCC 769 2020 Scconline SC 847 Civil Appeal 1600 of 2000 (Supreme Court of India) Article 23.1 of the Development Agreement in the present case mandates the parties to resolve their disputes through an arbitration. However, the presence of an arbitration clause within a contract between a state instrumentality and a private party has not acted as an absolute bar to availing remedies

HIGH COURT OF MADHYA PRADESH W.P. No. 11672 of 2020 M/s Madhya Pradesh Saur Urja Solutions Vs. Union of India

under Article 226.11 If the state instrumentality violates its constitutional mandate under Article 14 to act fairly and reasonably, relief under the plenary powers of the Article 226 of the Constitution would lie. This principle was recognized in ABL International:

"28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power.

(See Whirlpool Corpn. v. Registrar of Trade Marks [(1998) 8 SCC 1] .) And this plenary right of the High Court to issue a 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 said jurisdiction." (emphasis supplied) Therefore, while exercising its jurisdiction under Article 226, the Court is entitled to enquire into whether the action of the State or its instrumentalities is arbitrary or unfair and in consequence, in violation of Article 14. The jurisdiction under Article 226 is a valuable constitutional safeguard against an arbitrary exercise of state Harbanslal Sahnia v. Indian Oil Corporation Ltd., (2003) 2 SCC 107; Ram Barai Singh & Co. v. State of Bihar & Ors., (2015) 13 SCC 592 power or a misuse of authority. In determining as to whether the jurisdiction should be exercised in a contractual dispute, the Court must, undoubtedly eschew, disputed questions of fact which would depend upon an evidentiary determination requiring a trial. But equally, it is well-settled that the jurisdiction under Article 226 cannot be ousted only on the basis that the dispute pertains to the contractual arena. This is for the simple reason that the State and its instrumentalities are not exempt from the duty to act fairly merely because in their business dealings they have entered

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into the realm of contract. Similarly, the presence of an arbitration clause does oust the jurisdiction under Article 226 in all cases though, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked...............

20. Thus, if the facts of this case are considered in the light of the

judgments passed by the Supreme Court, then it is clear that serious

disputed questions of facts are involved in the present case. The

observations made by this Court in the earlier part of the order, is

limited to find out as to whether any disputed questions of facts are

involved or any public law is involved or the respondents have not

acted fairly.

21. Since, serious disputed questions of facts are involved in the

present case, therefore, this Court is of the considered opinion, that

writ under Article 226 of the Constitution of India is not

maintainable. This Court in the case of Harsh Shivhare Vs. State of

M.P. and others by order dated 25-3-2019 passed in W.P. No.